Aetna profit beats as government plans expand

The third-largest U.S. health insurer, which is in the process of buying rival Humana Inc , also raised its full-year forecast for adjusted net profit to at least $7.40 per share from $7.20-$7.40.

Memberships in government-sponsored plans have increased as Obamacare has expanded health insurance coverage to thousands of uninsured and under-insured U.S. citizens.

AETNA (AET.NY)said on Tuesday it continued to experience moderate medical cost trends during the quarter, which helped improve its medical benefit ratio to 81.1 percent from 83.1 percent.

The ratio, the percentage of premium income that an insurer spends on medical claims, is tracked by investors for signs of any increase in medical spending.

Medical costs are expected to rise as the economy improves and the rate of overall health spending increases, driving insurers to consolidate.

Aetna agreed to buy Humana in early July for $37 billion, just weeks before Anthem Inc and Cigna Corp reached a deal for $47 billion.

Aetna's net profit rose to $731.8 million, or $2.08 per share, in the second quarter ended June 30, from $548.8 million, or $1.52 per share, a year earlier.

Excluding items, the company earned $2.05 per share, beating average analyst estimate of $1.82 per share, according to Thomson Reuters I/B/E/S.

Revenue rose 5 percent to $15.24 billion, still short of analyst expectations of $15.43 billion.

(Reporting by Amrutha Penumudi in Bengaluru; Editing by Don Sebastian)