Aetna (NYSE: AET) today announced that second-quarter 2018
results will be made public on Thursday, August 2, at 6:30 a.m. ET.
Given the pending transaction with CVS Health, Aetna will not host
a conference call in conjunction with its earnings release.
About AetnaAetna is one of the nation's leading
diversified health care benefits companies, serving an estimated
40.3 million people with information and resources to help them
make better informed decisions about their health care. Aetna
offers a broad range of traditional, voluntary and
consumer-directed health insurance products and related services,
including medical, pharmacy, dental and behavioral health plans,
and medical management capabilities, Medicaid health care
management services, workers' compensation administrative services
and health information technology products and services. Aetna's
customers include employer groups, individuals, college students,
part-time and hourly workers, health plans, health care providers,
governmental units, government-sponsored plans, labor groups and
expatriates. For more information, see www.aetna.com and learn
about how Aetna is helping to build a healthier world.
@AetnaNews
Statements of Income Before Income Taxes Attributable to
Aetna by Segment (Unaudited) Health
Care (Millions)
Q1 2017 Q2 2017
Q3 2017 Q4 2017
Full Year 2017 Revenue: Premiums
$ 13,240 $ 13,242 $ 12,730 $ 12,890 $ 52,102 Fees and other revenue
1,448 1,458 1,416 1,428 5,750 Net investment income 117 114 113 138
482 Net realized capital gains 1 7 26 21
55 Total revenue 14,806 14,821 14,285
14,477 58,389
Benefits and expenses:
Benefit costs 10,928 10,591 10,423 10,862 42,804 Operating expenses
2,625 2,472 2,521 2,934 10,552 Amortization of other acquired
intangible assets 60 58 58 96 272
Total benefits and expenses 13,613 13,121
13,002 13,892 53,628 Income before income
taxes including non-controlling interests 1,193 1,700
1,283 585 4,761 Less: Income (loss) before
income taxes attributable to non-controlling interests 2 (23
) 14 (4 ) (11 ) Income before income taxes attributable to
Aetna $ 1,191 $ 1,723 $ 1,269 $ 589 $
4,772
Reconciliation of the Most Directly
Comparable GAAP Measure to Certain Reported Amounts
(Millions)
Health Care Reconciliation of total
revenue to adjusted revenue Q1 2017 Q2
2017 Q3 2017 Q4 2017
Full Year 2017 Total revenue (GAAP measure) $
14,806 $ 14,821 $ 14,285 $ 14,477 $ 58,389 Net
realized capital gains (1 ) (7 ) (26 ) (21 ) (55 ) Adjusted
revenue(2) (excludes net realized capital gains) $ 14,805 $
14,814 $ 14,259 $ 14,456 $ 58,334
Reconciliation of income before income taxes to pre-tax
adjusted earnings Income before income taxes (GAAP measure) $
1,193 $ 1,700 $ 1,283 $ 585 $ 4,761 Less: Income (loss) before
income taxes attributable to non-controlling interests (GAAP
measure) 2 (23 ) 14 (4 ) (11 ) Income before income
taxes attributable to Aetna (GAAP measure) 1,191 1,723 1,269 589
4,772 Penn Treaty-related guaranty fund assessments 231 — — — 231
Amortization of other acquired intangible assets 60 58 58 96 272
Net realized capital gains (1 ) (7 ) (26 ) (21 ) (55 ) Pre-tax
adjusted earnings(1) $ 1,481 $ 1,774 $ 1,301 $
664 $ 5,220
Statements of Income
Before Income Taxes Attributable to Aetna by Segment
(Unaudited) Corporate/Other
(3) (Millions)
Q1 2017 Q2 2017
Q3 2017 Q4 2017
Full Year 2017 Revenue: Premiums
$ 523 $ 533 $ 542 $ 194 $ 1,792 Fees and other revenue 27 28 27 98
180 Net investment income 143 123 120 82 468 Net realized capital
(losses) gains (334 ) 18 20 2 (294 ) Total
revenue 359 702 709 376 2,146
Benefits and expenses: Benefit costs 533 525 537 229 1,824
Operating expenses 1,228 80 91 113 1,512 Interest expense 173 86 90
93 442 Loss on early extinguishment of long-term debt 246 — — — 246
Reduction of reserve for anticipated future losses on discontinued
products — (109 ) — — (109 ) Total benefits
and expenses 2,180 582 718 435 3,915
(Loss) income before income taxes including non-controlling
interests (1,821 ) 120 (9 ) (59 ) (1,769 ) Less: Income
before income taxes attributable to non-controlling interests 1
— — — 1 (Loss) income before
income taxes attributable to Aetna $ (1,822 ) $ 120 $ (9 ) $
(59 ) $ (1,770 )
Reconciliation of the Most
Directly Comparable GAAP Measure to Certain Reported Amounts
(Millions)
Corporate/Other (3)
Reconciliation of total revenue to adjusted revenue Q1
2017 Q2 2017 Q3 2017
Q4 2017 Full Year 2017
Total revenue (GAAP measure) $ 359 $ 702 $ 709 $ 376
$ 2,146 Gain related to sale of certain domestic group insurance
businesses — — — (88 ) (88 ) Interest income on proceeds of
transaction-related debt (11 ) — — — (11 ) Net realized capital
losses (gains) 334 (18 ) (20 ) (2 ) 294 Adjusted
revenue(2) (excludes net realized capital losses (gains) and other
items) $ 682 $ 684 $ 689 $ 286 $ 2,341
Reconciliation of income before income taxes to
pre-tax adjusted loss (Loss) income before income taxes (GAAP
measure) $ (1,821 ) $ 120 $ (9 ) $ (59 ) $ (1,769 ) Less: Income
before income taxes attributable to non-controlling interests (GAAP
measure) 1 — — — 1 (Loss) income
before income taxes attributable to Aetna (GAAP measure) (1,822 )
120 (9 ) (59 ) (1,770 ) Gain related to sale of certain domestic
group insurance businesses — — — (88 ) (88 ) Loss on early
extinguishment of long-term debt 246 — — — 246 Transaction and
integration-related costs 1,212 (10 ) — 38 1,240 Restructuring
costs — — — 60 60 Reduction of reserve for anticipated future
losses on discontinued products — (109 ) — — (109 ) Net realized
capital losses (gains) 334 (18 ) (20 ) (2 ) 294
Pre-tax adjusted loss(1) $ (30 ) $ (17 ) $ (29 ) $ (51 ) $ (127 )
Statements of Income Before Income Taxes
Attributable to Aetna (Unaudited) Total
Company (Millions)
Q1 2017 Q2 2017
Q3 2017 Q4 2017
Full Year 2017 Revenue: Premiums
$ 13,763 $ 13,775 $ 13,272 $ 13,084 $ 53,894 Fees and other revenue
1,475 1,486 1,443 1,526 5,930 Net investment income 260 237 233 220
950 Net realized capital (losses) gains (333 ) 25 46
23 (239 ) Total revenue 15,165 15,523 14,994
14,853 60,535
Benefits and expenses:
Benefit costs 11,461 11,116 10,960 11,091 44,628 Operating expenses
3,853 2,552 2,612 3,047 12,064 Interest expense 173 86 90 93 442
Loss on early extinguishment of long-term debt 246 — — — 246
Amortization of other acquired intangible assets 60 58 58 96 272
Reduction of reserve for anticipated future losses on discontinued
products — (109 ) — — (109 ) Total benefits
and expenses 15,793 13,703 13,720 14,327
57,543 (Loss) income before income taxes including
non-controlling interests (628 ) 1,820 1,274 526
2,992 Less: Income (loss) before income taxes
attributable to non-controlling interests 3 (23 ) 14
(4 ) (10 ) (Loss) income before income taxes attributable to Aetna
$ (631 ) $ 1,843 $ 1,260 $ 530 $ 3,002
Reconciliation of the Most Directly Comparable
GAAP Measure to Certain Reported Amounts (Millions)
Total Company Reconciliation of total revenue to
adjusted revenue Q1 2017 Q2 2017
Q3 2017 Q4 2017
Full Year 2017 Total revenue (GAAP measure) $ 15,165
$ 15,523 $ 14,994 $ 14,853 $ 60,535 Gain related to
sale of certain domestic group insurance businesses — — — (88 ) (88
) Interest income on proceeds of transaction-related debt (11 ) — —
— (11 ) Net realized capital losses (gains) 333 (25 ) (46 )
(23 ) 239 Adjusted revenue(2) (excludes net realized capital
losses (gains) and other items) $ 15,487 $ 15,498 $
14,948 $ 14,742 $ 60,675
Reconciliation of income before income taxes to pre-tax adjusted
earnings (Loss) income before income taxes (GAAP measure) $
(628 ) $ 1,820 $ 1,274 $ 526 $ 2,992 Less: Income (loss) before
income taxes attributable to non-controlling interests (GAAP
measure) 3 (23 ) 14 (4 ) (10 ) (Loss) income before
income taxes attributable to Aetna (GAAP measure) (631 ) 1,843
1,260 530 3,002 Gain related to sale of certain domestic group
insurance businesses — — — (88 ) (88 ) Loss on early extinguishment
of long-term debt 246 — — — 246 Penn Treaty-related guaranty fund
assessments 231 — — — 231 Transaction and integration-related costs
1,212 (10 ) — 38 1,240 Restructuring costs — — — 60 60 Reduction of
reserve for anticipated future losses on discontinued products —
(109 ) — — (109 ) Amortization of other acquired intangible assets
60 58 58 96 272 Net realized capital losses (gains) 333 (25
) (46 ) (23 ) 239 Pre-tax adjusted earnings(1) $ 1,451
$ 1,757 $ 1,272 $ 613 $ 5,093
Health Care Medical Benefit Ratios
(Millions)
Q1 2017
Q2 2017 Q3 2017 Q4
2017 Full Year 2017 Premiums (GAAP measure)
Commercial $ 6,129 $ 6,287 $ 6,063 $ 6,149 $ 24,628
Government 7,111 6,955 6,667 6,741
27,474 Health Care $ 13,240 $ 13,242 $ 12,730
$ 12,890 $ 52,102
Health Care Costs (GAAP
measure) Commercial $ 4,860 $ 4,938 $ 4,928 $ 5,277 $ 20,003
Government 6,068 5,653 5,495 5,585
22,801 Health Care $ 10,928 $ 10,591 $ 10,423
$ 10,862 $ 42,804
Medical Benefit Ratios
"MBRs" Commercial 79.3 % 78.5 % 81.3 % 85.8 % 81.2 % Government
85.3 % 81.3 % 82.4 % 82.9 % 83.0 % Health Care 82.5 % 80.0 % 81.9 %
84.3 % 82.2 %
Footnotes
(1) Non-GAAP financial measures such as pre-tax adjusted
earnings (loss) and adjusted revenue exclude from the relevant GAAP
metrics, as applicable:
- Amortization of other acquired
intangible assets;
- Net realized capital gains or losses;
and
- Other items, if any, that neither
relate to the ordinary course of Aetna's business nor reflect
Aetna's underlying business performance.
Although the excluded items may recur, management believes that
non-GAAP financial measures Aetna discloses, including those
described above, provide a more useful comparison of Aetna's
underlying business performance from period to period. The chief
executive officer assesses consolidated Aetna results based on
adjusted earnings and assesses business segment results based on
pre-tax adjusted earnings because income taxes are recorded in
Aetna’s Corporate/Other segment and are not allocated to Aetna’s
business operations. The non-GAAP financial measures Aetna
discloses, including those described above, should not be
considered a substitute for, or superior to, financial measures
determined or calculated in accordance with GAAP.
For the periods covered in this press release, the following
items are excluded from the non-GAAP financial measures described
above, as applicable, because Aetna believes they neither relate to
the ordinary course of Aetna's business nor reflect Aetna's
underlying business performance:
- During the three months ended
December 31, 2017, Aetna sold its domestic group life
insurance, group disability insurance and absence management
businesses (the "Group Insurance sale"). The transaction was
accomplished through an indemnity reinsurance arrangement. A
significant portion of the gain has been deferred and will be
amortized into earnings: (a) over the remaining contract period
(estimated to be approximately 3 years) in proportion to the amount
of insurance protection provided for the prospective reinsurance
portion of the gain and (b) as Aetna recovers amounts due from the
buyer over a period estimated to be approximately 30 years for the
retrospective reinsurance portion of the gain. The gain recognized
does not directly relate to the underwriting or servicing of
products for customers and is not directly related to the core
performance of Aetna's business operations.
- During the three months ended March 31,
2017, Aetna incurred losses on the early extinguishment of
long-term debt due to (a) the mandatory redemption of $10.2 billion
aggregate principal amount of certain of its senior notes issued in
June 2016 (collectively, the "SMR Notes") following the termination
of the definitive agreement (the "Humana Merger Agreement") to
acquire Humana Inc. ("Humana") and (b) the early redemption of $750
million aggregate principal amount of its outstanding senior notes
due 2020.
- During the three months ended March 31,
2017, Aetna recorded an expense for estimated future guaranty fund
assessments related to Penn Treaty Network America Insurance
Company and one of its subsidiaries (collectively, "Penn Treaty"),
which was placed in rehabilitation in 2009 and placed in
liquidation in March 2017. This expense does not directly relate to
the underwriting or servicing of products for customers and is not
directly related to the core performance of Aetna's business
operations.
- Aetna recorded transaction and
integration-related costs during the year ended December 31,
2017 primarily related to its proposed acquisition by CVS Health
and its proposed acquisition of Humana (the "Humana Transaction").
Transaction costs include costs associated with the transactions
contemplated by the merger agreement under which CVS Health
Corporation has agreed to acquire all of Aetna's outstanding stock,
the termination of the Humana Merger Agreement, the termination of
Aetna's agreement to sell certain assets to Molina Healthcare, Inc.
and advisory, legal and other professional fees which are reflected
in Aetna's GAAP Consolidated Statements of Income in general and
administrative expenses. Transaction costs also include the
negative cost of carry associated with the debt financing that
Aetna obtained in June 2016 for the Humana Transaction. Prior to
the mandatory redemption of the SMR Notes, the negative cost of
carry associated with these senior notes was excluded from pre-tax
adjusted earnings. The negative cost of carry associated with the
$2.8 billion aggregate principal amount of Aetna's senior notes
issued in June 2016 that are not subject to mandatory redemption
(the "Other 2016 Senior Notes") was excluded from pre-tax adjusted
earnings through the date of the termination of the Humana Merger
Agreement. The components of the negative cost of carry are
reflected in Aetna's GAAP Consolidated Statements of Income in
interest expense and net investment income. Subsequent to the
termination of the Humana Merger Agreement, the interest expense
and net investment income associated with the Other 2016 Senior
Notes were no longer excluded from pre-tax adjusted earnings.
- Restructuring costs for the three
months ended December 31, 2017 include severance costs
associated with Aetna's expense management and cost control
initiatives. The restructuring costs are reflected in Aetna's GAAP
Consolidated Statements of Income in general and administrative
expenses.
- In 1993, Aetna discontinued the sale of
fully guaranteed large case pensions products and established a
reserve for anticipated future losses on these products, which
Aetna reviews quarterly. During the three months ended June 30,
2017, Aetna reduced the reserve for anticipated future losses on
discontinued products. Aetna believes excluding any changes in the
reserve for anticipated future losses on discontinued products from
pre-tax adjusted earnings provides more useful information as to
Aetna's continuing products and is consistent with the treatment of
the operating results of these discontinued products, which are
credited or charged to the reserve and do not affect Aetna's
operating results.
- Other acquired intangible assets relate
to Aetna's acquisition activities and are amortized over their
useful lives. However, this amortization does not directly relate
to the underwriting or servicing of products for customers and is
not directly related to the core performance of Aetna's business
operations.
- Net realized capital gains and losses
arise from various types of transactions, primarily in the course
of managing a portfolio of assets that support the payment of
liabilities. However, these transactions do not directly relate to
the underwriting or servicing of products for customers and are not
directly related to the core performance of Aetna's business
operations.
For a reconciliation of financial measures calculated under GAAP
to these items, refer to the tables on pages 3 through 5 of this
press release.
(2) Adjusted revenue excludes net realized capital gains and
losses, gain related to the Group Insurance sale and interest
income on the proceeds of Aetna's senior notes issued in June 2016
as noted in (1) above. Refer to the tables on pages 3 through 5 of
this press release for a reconciliation of total revenue calculated
under GAAP to adjusted revenue.
(3) Aetna's Corporate/Other category is not a business segment.
It is added to Aetna's business segment to reconcile segment
reporting to Aetna's consolidated results. The Corporate/Other
category includes:
- Products for which Aetna no longer
solicits or accepts new customers such as its large case pensions
and long-term care products;
- Contracts Aetna has divested through
reinsurance or other contracts, such as its domestic group life
insurance, group disability insurance and absence management
businesses; and
- Corporate expenses not supporting
Aetna’s business operations, including transaction and
integration-related costs, income taxes, interest expense on its
outstanding debt and the financing components of its pension and
other postretirement employee benefit plans expense.
As described in (1) above, the pre-tax adjusted earnings of the
Corporate/Other category exclude other items, if any, that neither
relate to the ordinary course of Aetna's business nor reflect
Aetna's underlying business performance.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180719005011/en/
AetnaMedia Contact:T.J. Crawford,
212-457-0583crawfordt2@aetna.comorInvestor Contact:Joe
Krocheski, 860-273-0896krocheskij@aetna.com
Aetna (NYSE:AET)
Historical Stock Chart
From Aug 2024 to Sep 2024
Aetna (NYSE:AET)
Historical Stock Chart
From Sep 2023 to Sep 2024