(Bloomberg) -- Aetna Inc., the U.S.’s third-biggesthealth insurer by enrollment, posted operating profit that beatanalysts’ expectations after the company spent less on medical carethan a year ago.

In the fourth quarter, net income rose 38 percent to $321million, or 91 cents a share, from $232 million, or 65 cents ashare, a year before, the company said in a statement on Monday.Operating earnings were $1.37 a share, compared with the $1.21average of analysts’ estimates.

One of Aetna’s biggest lines of business is Medicare, where it runs private-sectorplans to care for the elderly.

The insurer is expanding its bet on the program with anagreement to buy Humana Inc. for about $37 billion incash and stock, a deal that could close this year.

Humana, with about 3.2 million Medicare Advantage clients, isNo. 2 in that line of business behind UnitedHealth Group Inc. Aetnasaid it had 1.25 million people in the program at the end of lastyear.

For the fourth quarter, Aetna said that its costs to care forpatients dropped in both its commercial and government businesses,which includes Medicare Advantage as well as privately run Medicaidplans.

It spent 81.9 cents of every premium dollar on care, comparedwith 83 cents a year before, leaving more money for profits.

The company also forecast 2016 results, which don’t include theacquisition of Humana:

• Medical costs may rise slightly, to 81.6 cents of every premiumdollar in 2016, from 80.8 cents for all of 2015

• Operating margins may narrow, to at least 8 percent from 8.3percent last year

• Operating earnings will be at least $7.75 a share, compared withanalysts’ estimates of $8.03 a share

• Membership will decline to 22.7 million to 22.8 million peopleat the end of the first quarter, from 23.5 million people at theend of 2015

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