Aetna Warns of Lower Earnings Due to Surging Health Costs

Strategic Insights -

Aetna Inc.'s shareholders are bracing for a second-quarter earnings miss as rising health costs put pressure on the company's profit margins. The health insurer's forecast of 85-95 cents per share falls short of the predicted $1.20. This decline is largely attributed to increased costs as Aetna relaxed restrictions on patient access to medical care. Meanwhile, Sykes Enterprises is gearing up to buy back up to 2 million shares and reassessing its net gain from the sale of its SHPS Inc. subsidiary, while Office Depot has named Bruce Nelson as its new CEO, replacing David Fuente.

Key Takeaways:

  • Aetna expects to report a profit of 85 cents to 95 cents per share, missing its earnings estimates.
  • The company's health costs have surged due to relaxed restrictions on patient access to medical care.
  • Sykes Enterprises plans to buy back up to 2 million shares over an unspecified period.
  • The company overestimated the net gain from the sale of its SHPS Inc. subsidiary by 13% to 20%.
  • The initial estimated net gain was $68.7 million, but it is now revised to $55-$60 million.
  • Sykes cited various accounting mishaps for the reduction.
  • Office Depot has appointed Bruce Nelson as its new CEO, replacing David Fuente.
  • Nelson, 55, has been the company's president of international business and led its Viking office-products unit since 1998.
  • Shares of Office Depot rose 44 cents to $6.63.

Statistics:

  • Aetna's revised earnings forecast: 85-95 cents per share.
  • Initial earnings forecast: $1.20 per share.
  • Sykes Enterprises' buyback plan: up to 2 million shares.
  • Initial estimated net gain from the sale of SHPS Inc. subsidiary: $68.7 million.
  • Revised estimated net gain from the sale of SHPS Inc. subsidiary: $55-$60 million.
  • Percentage of SHPS' stock received for the sale: 6.5%.
  • Cash received for the sale: $165.5 million.
  • Sykes' shares closed at: $14.56.

Sources:

  • [Source 1: Aetna Inc.'s press release]
  • [Source 2: Sykes Enterprises Inc.'s press release]
  • [Source 3: Office Depot Inc.'s press release]