Aetna

April 27 (Bloomberg) -- Aetna Inc. said first-quarter profit increased 3.2 percent, benefiting from new services gained through acquisitions that helped draw customers.

First-quarter profit for the third-biggest U.S. health insurer rose to $402 million, or 68 cents a share, from $389 million, or 64 cents a share, in the year-earlier period, the Hartford, Connecticut-based company said in a statement on BusinessWire. Revenue rose 15 percent to $6.2 billion.

Aetna bought four companies since 2004, adding services including psychiatric care, disability insurance and tools to organize health costs. The latest acquisition came this month, signaling that newly named Chief Executive Officer Ronald Williams is following his predecessor's plan to raise profitability by selling new, tightly managed products that help employers trim health costs.

``What drives this business now is pricing its products correctly and making the right assumptions on costs,'' said David Heupel, a Minneapolis-based portfolio manager for the Thrivent Large Cap Growth fund, which owns Aetna shares, in an April 25 telephone interview. ``They also are entering into areas that will be more growth driven in the future.''

Aetna shares rose 36 cents to $46.43 yesterday in New York Stock Exchange composite trading. They have risen 34 percent in the past 12 months, beating the 1.4 percent return of the Standard & Poor's 500 Health Care Index.

Membership

Aetna, which said today that membership in its health insurance plans rose 663,000 in the quarter to 15.4 million people, is the third insurer with rising profit for the quarter. Last week, No. 2 UnitedHealth reported a 21 percent gain in first-quarter profit to $899 million. WellPoint, the largest U.S. insurer, yesterday said earnings rose 20 percent to $731.8 million.

Williams in March said integrated health and disability programs for employers was a one of the ``future growth areas'' for the company.

``Our research shows that if we can integrate your health benefits and the disability coverage, we have an ability to help identify the disability sooner and actually -- the employee gets back to work sooner and therefore is more productive for the employee,'' Williams said in an interview.

Williams had said that for 2006 the company expects to have about 400,000 members enrolled in Aetna's drug benefit plans under Medicare, the U.S. government insurance program for people 65 and older. While growth from the new Medicare plan has been cited as a plus for the insurance industry, Heupel said the benefit probably won't add to Aetna's first-quarter profit.

``It may be more of a drag because there is more upfront spending to get everything set up,'' including new marketing efforts and administration.

Forecast

Aetna today raised its forecast for 2006 operating earnings to $2.74 a share to $2.76 a share, from a prior number of $2.71 a share to $2.74 a share.

Williams announced on Feb. 27, during his first month as CEO, that Aetna would buy closely held Broadspire's disability business for $160 million. The purchase ``fits well with Aetna's stated strategy of making acquisitions designed to enhance the company's capabilities,'' he said in a statement.

Under William's predecessor John Rowe, Aetna pushed products beyond traditional health insurance such as dental plans. Rowe also pushed the company to decreasing the portion of revenue needed to operate the business.

During 2005, Aetna acquired Strategic Resource Co., ActiveHealth Management Inc., HMS Healthcare Inc. and certain operations of Magellan Health Services Inc. and Priority Healthcare Corp. The Strategic Resource transaction alone added about 140,000 members, according to Aetna.

(To hear Aetna's conference call at 8:30 a.m. New York time, dial 800-810-0924 from the U.S. or 913-981-4900 from other countries.)