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Who’s Earning What
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Business New Haven
11/17/1997
By: Russell Stone
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HARTFORD - After months of anxiety, Aetna (NYSE: AET) released its third-quarter 1997 sales and earnings figures. Though the stock price has dropped from almost 120 in late summer to the low 70s, actual results are not especially poor. Third-quarter premium revenues rose 15.8 percent over the previous year to $3.152 billion, while total revenues moved up 10.7 percent to $4.632 billion. Benefits and expenses rose slightly faster than revenues, increasing 11.1 percent to $4.421 billion. After-tax income therefore dropped slightly, retreating to $0.69 per share from $0.77 in the previous year, a fall of 10.4 percent. Aetna management blames the decline in earnings at Aetna's US Healthcare to rising medical costs at HMOs. Schroder & Co. has downgraded Aetna to a rating of performing in line with the market, down from a buy rating. Schroder's downgrades of health stocks also hit Cigna.
NEW YORK - Cigna (NYSE: CI), unlike Aetna, turned in a slightly better performance in the third quarter. Though third-quarter revenues rose 11 percent to $5.182 billion, total net income fell from $281 to $279 million. Earnings per share, however, actually rose to $3.72, three cents better than 1996 results. Cigna has repurchased 857,000 shares of its own stock thus far in 1997, and its board has approved the purchase of an additional $500 million.
SHELTON - Physicians Health Services (NASDAQ: PHSV) showed strong growth in health-plan enrollment and revenues over the previous year while turning a quarterly loss into profits of $0.17 per share. The company, involved in a buy-out by Foundation Health Systems, achieved premium revenue growth of 43.9 percent over the previous year to $177.3 million and enrollment growth of 39.7 percent to 496,502. While the third quarter of 1996 showed a loss of $0.49 per share, a lower medical loss ratio and a drop in hospital bed days pushed profits to $1.6 million.
NEW HAVEN - Alexion Pharmaceuticals (NASDAQ: ALXN) reported that revenues from research done under contract and licensing fees for the fiscal year ending July 31, 1997 grew to $3.81 million from $2.64 million in 1996. Like many other start-up pharmaceutical firms, Alexion operates in the red until the long process of winning FDA approval for a drug is complete. Its R&D expenses grew along with revenues from $6.63 to $9.08 million. Despite continuing losses, investors have maintained confidence in the company. Alexion's holdings of cash and securities grew to $22.75 million in 1997, due in part to a private placement of common stock and development deal with a subsidiary of drug giant Novartis and Connecticut's U.S. Surgical (NYSE: USS). The company remains hopeful its drugs for treating immune-system disorders and xenograft technology for transplants will eventually bear fruit.
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