[February 01, 2016] |
|
Aetna Reports Fourth-Quarter and Full-Year 2015 Results
Aetna (NYSE: AET)
announced fourth-quarter 2015 operating earnings (1) of
$482.1 million, or $1.37 per share, a per-share increase of 12 percent
over the fourth quarter of 2014. Full-year 2015 operating earnings were
$2.7 billion, or $7.71 per share, a per-share increase of 15 percent
over full-year 2014. Net income (2) for the fourth quarter of
2015 was $320.8 million, or $0.91 per share. Full-year 2015 net income
was $2.4 billion, or $6.78 per share. Net income for the fourth quarter
and full year of 2015 includes $0.46 per share and $0.93 per share of
net charges, respectively, which are detailed in the Summary of Results
table on page 9.
Fourth-Quarter Financial Results at a Glance
|
(Millions, except per share results)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
Change
|
Operating revenue (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
15,090.0
|
|
|
|
|
|
|
$
|
|
|
|
|
14,771.4
|
|
|
|
|
|
|
2%
|
Total revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,048.5
|
|
|
|
|
|
|
14,771.2
|
|
|
|
|
|
|
2%
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
482.1
|
|
|
|
|
|
|
434.0
|
|
|
|
|
|
|
11%
|
Net income (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
320.8
|
|
|
|
|
|
|
232.0
|
|
|
|
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
1.37
|
|
|
|
|
|
|
$
|
|
|
|
|
1.22
|
|
|
|
|
|
|
12%
|
Net income (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
.91
|
|
|
|
|
|
|
.65
|
|
|
|
|
|
|
40%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352.9
|
|
|
|
|
|
|
354.6
|
|
|
|
|
|
|
|
|
|
|
Full-Year Financial Results at a Glance
|
(Millions, except per share results)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
|
|
|
|
2014
|
|
|
|
|
|
|
Change
|
Operating revenue (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
60,291.4
|
|
|
|
|
|
|
$
|
|
|
|
|
57,922.8
|
|
|
|
|
|
|
4%
|
Total revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,336.5
|
|
|
|
|
|
|
58,003.2
|
|
|
|
|
|
|
4%
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,717.1
|
|
|
|
|
|
|
2,404.6
|
|
|
|
|
|
|
13%
|
Net income (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,390.2
|
|
|
|
|
|
|
2,040.8
|
|
|
|
|
|
|
17%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per share results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
7.71
|
|
|
|
|
|
|
$
|
|
|
|
|
6.70
|
|
|
|
|
|
|
15%
|
Net income (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6.78
|
|
|
|
|
|
|
5.68
|
|
|
|
|
|
|
19%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
352.6
|
|
|
|
|
|
|
359.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
"Aetna achieved record annual operating revenue and operating earnings
in 2015, and delivered full-year operating EPS that was above our most
recent projection," said Mark T. Bertolini, Aetna chairman and CEO.
"Aetna's strong 2015 results speak to our continued focus on disciplined
pricing and execution of our growth strategy. Based on this performance,
we are projecting 2016 operating earnings per share of at least $7.75.
"We continue to work diligently with the Department of Justice and state
regulators toward final approval of our proposed acquisition of Humana,
and we continue to advance our integration readiness plans. We have
obtained seven of the necessary state approvals, and we believe we
remain on track to close the transaction in the second half of 2016,"
said Bertolini.
"We are quite pleased with the strength of our fourth quarter and full
year results," said Shawn M. Guertin, Aetna executive vice president and
CFO. "Aetna's operating results continue to be supported by strong cash
flow and operating margins.
"Our Government business saw strong growth in membership and premiums,
as well as improved underwriting margins. These reflect our ongoing
execution of strategies to improve our margin profile in Medicare, as
well as strong performance in our Medicaid business," said Guertin.
Total company results
-
Operating earnings (1) were $482.1 million
for the fourth quarter of 2015 compared with $434.0 million for the
fourth quarter of 2014. Full-year 2015 operating earnings were $2.7
billion compared with $2.4 billion for the full-year 2014. The
increase in operating earnings during the fourth quarter and full-year
2015 is primarily due to higher underwriting margins and higher fees
and other revenue in Aetna's Health Care segment, partially offset by
an increase in general and administrative expenses.
-
Net income (2) was $320.8 million for the
fourth quarter of 2015 compared with $232.0 million for the fourth
quarter of 2014. Full-year 2015 net income was $2.4 billion compared
with $2.0 billion for the full-year 2014. Net income in all periods
reflects net charges, which are detailed in the Summary of Results
table.
-
Operating revenues (3) were $15.1 billion for
the fourth quarter of 2015 compared with $14.8 billion for the fourth
quarter of 2014. Full-year 2015 operating revenues were $60.3 billion
compared with $57.9 billion for the full-year 2014. The increase in
operating revenues during the fourth quarter and full-year 2015 is
primarily the result of membership growth in Aetna's Government
business as well as higher Health Care premium yields, partially
offset by membership losses in Aetna's group Commercial Insured
products. Total revenue was $15.0 billion and $14.8 billion for the
fourth quarters of 2015 and 2014, respectively, and $60.3 billion and
$58.0 billion for full-year 2015 and 2014, respectively.
-
Operating expenses (1) were $3.1
billion for the fourth quarter of 2015. The operating expense ratio (5)
was 20.5 percent and 19.7 percent for the fourth quarters of 2015 and
2014, respectively. For the full-year 2015, operating expenses were
$11.4 billion. Aetna's operating expense ratio was 19.0 percent and
18.3 percent for full-year 2015 and 2014, respectively. The increase
in the operating expense ratio during the fourth quarter of 2015 is
primarily due to higher employee related costs and increased
investment spend to support Aetna's growth initiatives that outpaced
the increase in operating revenue described above. The increase in the
operating expense ratio during the full-year 2015 is primarily due to
increased investment spend as discussed above. The total company
expense ratio was 21.3 percent and 20.8 percent for the fourth
quarters of 2015 and 2014, respectively, and 19.3 percent and 18.7
percent for the full years of 2015 and 2014, respectively.
-
Pretax operating margin (6) was 6.0 percent
for the fourth quarter of 2015 compared with 5.5 percent for the
fourth quarter of 2014. For full-year 2015, the pretax operating
margin was 8.3 percent compared with 7.6 percent for full-year 2014.
The pretax operating margin increased in all periods primarily as a
result of higher underwriting margins in Aetna's Government business.
The after-tax net income margin was 2.1 percent and 1.6 percent for
the fourth quarters of 2015 and 2014, respectively. For full-year 2015
and 2014, the after-tax net income margin was 4.0 percent and 3.5
percent, respectively.
-
Effective tax rate was 45.0 percent for the fourth quarter of
2015 compared with 46.4 percent for the fourth quarter of 2014. The
decrease in the effective tax rate during the fourth quarter of 2015
is primarily due to lower estimated state taxes. For the full-year
2015, the effective tax rate was 43.5 percent compared with 41.6
percent for 2014. The increase in the effective tax rate for the
full-year 2015 primarily reflects a higher 2015 non-deductible health
care reform health insurer fee, partially offset by lower estimated
state taxes.
Health Care segment results
Health Care, which provides a full range of insured and self-insured
medical, pharmacy, dental and behavioral health products and services,
reported:
-
Operating earnings (1) were $492.8 million for the fourth
quarter of 2015 compared with $447.6 million for the fourth quarter of
2014. Operating earnings increased primarily as a result of higher
underwriting margins in Aetna's Government business and higher fees
and other revenue, partially offset by an increase in general and
administrative expenses as described in Operating expenses above.
-
Net income (2) was $360.9 million for the fourth quarter of
2015 compared with $373.9 million for the fourth quarter of 2014.
-
Operating revenues (3) were $14.4 billion for the fourth
quarter of 2015 compared with $14.1 billion for the fourth quarter of
2014. The increase is due primarily to membership growth in Aetna's
Government business as well as higher premium yields in Aetna's
Commercial business, partially offset by membership losses in Aetna's
group Commercial Insured products. Total revenues were $14.4 billion
and $14.1 billion for the fourth quarters of 2015 and 2014,
respectively.
-
Sequentially, fourth-quarter 2015 medical membership remained flat at
23.5 million at December 31, 2015.
-
Medical benefit ratios (MBRs) for the three months and year ended
December 31, 2015 and 2014 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
|
|
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
|
|
December 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81.3
|
%
|
|
|
|
|
82.0
|
%
|
|
|
|
|
|
|
80.3
|
%
|
|
|
|
|
80.2
|
%
|
|
|
|
|
|
|
|
|
|
Government
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82.6
|
%
|
|
|
|
|
84.4
|
%
|
|
|
|
|
|
|
81.4
|
%
|
|
|
|
|
84.9
|
%
|
|
|
|
|
|
|
|
|
|
Total Health Care
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81.9
|
%
|
|
|
|
|
83.0
|
%
|
|
|
|
|
|
|
80.8
|
%
|
|
|
|
|
82.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-
Aetna's fourth-quarter 2015 Commercial MBR improved over the fourth
quarter of 2014 primarily as a result of increased favorable
development of prior-period health care cost estimates primarily
related to Aetna's Individual Commercial business.
-
Aetna's fourth-quarter 2015 Government MBR improved over the fourth
quarter of 2014 primarily as a result of actions impacting revenue and
medical costs designed to solve for the gap between Medicare premiums
and medical costs and other expenses.
-
In the fourth quarter of 2015, Aetna experienced favorable development
of prior-period health care cost estimates in its Commercial, Medicaid
and Medicare products, primarily attributable to third-quarter 2015
performance.
-
Prior-years' health care costs payable estimates developed favorably
by $840.6 million and $580.8 million during 2015 and 2014,
respectively. This development is reported on a basis consistent with
the prior years' development reported in the health care costs payable
table in Aetna's annual audited financial statements and does not
directly correspond to an increase in 2015 operating results.
Full-year 2015 operating earnings (1) for Health Care were
$2.7 billion, compared with $2.4 billion in 2014. Operating earnings
increased primarily as a result of higher underwriting margins in
Aetna's Government business, partially offset by an increase in general
and administrative expenses. Full-year 2015 net income for Health Care
was $2.4 billion compared with $2.2 billion in 2014.
Group Insurance segment results
Group Insurance, which includes group life, disability and long-term
care products, reported:
-
Operating earnings (1) were $21.7 million for the fourth
quarter of 2015 compared with $21.3 million for the fourth quarter of
2014.
-
Net income (2) was $17.8 million for the fourth quarter of
2015 compared with $23.2 million for the fourth quarter of 2014,
primarily reflecting net realized capital losses during the fourth
quarter of 2015.
-
Operating revenues (3) were $618.3 million for the fourth
quarter of 2015 compared with $615.6 million for the fourth quarter of
2014. Total revenues were $612.5 million and $618.5 million for the
fourth quarters of 2015 and 2014, respectively.
Full-year 2015 operating earnings (1) for Group Insurance
were $136.0 million, compared with $171.0 million in 2014. Operating
earnings for 2015 decreased compared with 2014, primarily due to lower
underwriting margins in Aetna's Long-Term Care and Life products as well
as lower net investment income, partially offset by higher underwriting
margins in Aetna's Disability products. Full-year 2015 net income (2)
for Group Insurance was $135.5 million, compared with $179.6 million in
2014.
Large Case Pensions segment results
Large Case Pensions, which manages a variety of discontinued and other
retirement and savings products, primarily for qualified pension plans,
reported:
-
Operating earnings (1) were $4.3 million for the fourth
quarter of 2015 compared with $5.6 million for the fourth quarter of
2014.
-
Net loss (2) was $0.6 million for the fourth quarter of
2015 compared with net income of $6.0 million for the fourth quarter
of 2014, primarily reflecting net realized capital losses during the
fourth quarter of 2015.
-
Operating revenues (3) were $67.5 million for the fourth
quarter of 2015 compared with $87.7 million for the fourth quarter of
2014, primarily reflecting lower net investment income. Total revenues
were $59.9 million and $88.3 million for the fourth quarters of 2015
and 2014, respectively.
Full-year 2015 operating earnings (1) for Large Case Pensions
were $17.0 million compared with $20.7 million for 2014. Full-year 2015
net income (2) for Large Case Pensions was $8.1 million,
compared with $21.7 million in 2014.
Aetna's conference call to discuss fourth-quarter and full-year 2015
results will begin at 8:30 a.m. ET today. The public may access the
conference call through a live audio webcast available on Aetna's
Investor Information website at www.aetna.com/investor.
Financial, statistical and other information, including GAAP
reconciliations, related to the conference call also will be available
on Aetna's Investor Information website.
The conference call also can be accessed by dialing 1-877-709-8150, or
+1-201-689-8354 for international callers. The company suggests
participants dial in approximately 10 minutes before the call. No access
code is required. Individuals who dial in will be asked to identify
themselves and their affiliations.
A replay of the call may be accessed through Aetna's Investor
Information link on the Internet at www.aetna.com
or by dialing 1-877-660-6853, or +1-201-612-7415 for international
callers. The replay conference ID is 13627765. Telephone replays will be
available until 11 p.m. ET on February 15, 2016.
About Aetna Aetna is one of the nation's leading diversified
health care benefits companies, serving an estimated 46.5 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, behavioral
health, group life and disability 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
|
Consolidated Statements of Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Year
|
|
|
|
|
|
Ended December 31,
|
|
|
Ended December 31,
|
(Millions)
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health care premiums
|
|
|
|
|
$
|
|
12,906.7
|
|
|
|
$
|
|
12,646.0
|
|
|
|
$
|
|
51,618.1
|
|
|
|
$
|
|
49,562.2
|
Other premiums
|
|
|
|
|
543.2
|
|
|
|
534.2
|
|
|
|
2,170.7
|
|
|
|
2,186.3
|
Fees and other revenue
|
|
|
|
|
1,417.3
|
|
|
|
1,352.4
|
|
|
|
5,695.8
|
|
|
|
5,228.4
|
Net investment income
|
|
|
|
|
222.8
|
|
|
|
238.8
|
|
|
|
916.4
|
|
|
|
945.9
|
Net realized capital (losses) gains
|
|
|
|
|
(41.5
|
)
|
|
|
(.2
|
)
|
|
|
(64.5
|
)
|
|
|
80.4
|
Total revenue
|
|
|
|
|
15,048.5
|
|
|
|
14,771.2
|
|
|
|
60,336.5
|
|
|
|
58,003.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benefits and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health care costs
|
|
|
|
|
10,565.7
|
|
|
|
10,501.1
|
|
|
|
41,712.0
|
|
|
|
40,746.7
|
Current and future benefits
|
|
|
|
|
524.5
|
|
|
|
539.1
|
|
|
|
2,120.6
|
|
|
|
2,165.0
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
|
|
|
397.5
|
|
|
|
414.9
|
|
|
|
1,611.1
|
|
|
|
1,653.0
|
General and administrative expenses
|
|
|
|
|
2,803.0
|
|
|
|
2,656.5
|
|
|
|
10,038.2
|
|
|
|
9,184.7
|
Total operating expenses
|
|
|
|
|
3,200.5
|
|
|
|
3,071.4
|
|
|
|
11,649.3
|
|
|
|
10,837.7
|
Interest expense
|
|
|
|
|
109.9
|
|
|
|
81.8
|
|
|
|
363.6
|
|
|
|
329.3
|
Amortization of other acquired intangible assets
|
|
|
|
|
63.4
|
|
|
|
59.8
|
|
|
|
255.4
|
|
|
|
243.4
|
Loss on early extinguishment of long-term debt
|
|
|
|
|
-
|
|
|
|
89.3
|
|
|
|
-
|
|
|
|
181.2
|
Total benefits and expenses
|
|
|
|
|
14,464.0
|
|
|
|
14,342.5
|
|
|
|
56,100.9
|
|
|
|
54,503.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
|
|
584.5
|
|
|
|
428.7
|
|
|
|
4,235.6
|
|
|
|
3,499.9
|
Income taxes
|
|
|
|
|
263.2
|
|
|
|
198.9
|
|
|
|
1,841.0
|
|
|
|
1,454.7
|
Net income including non-controlling interests
|
|
|
|
|
321.3
|
|
|
|
229.8
|
|
|
|
2,394.6
|
|
|
|
2,045.2
|
Less: Net income (loss) attributable to non-controlling interests
|
|
|
|
|
.5
|
|
|
|
(2.2
|
)
|
|
|
4.4
|
|
|
|
4.4
|
Net income attributable to Aetna
|
|
|
|
|
$
|
|
320.8
|
|
|
|
$
|
|
232.0
|
|
|
|
$
|
|
2,390.2
|
|
|
|
$
|
|
2,040.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of Results
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
|
For the Year
|
|
|
|
|
|
|
|
|
|
Ended December 31,
|
|
|
Ended December 31,
|
(Millions)
|
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
$
|
|
|
482.1
|
|
|
$
|
|
|
434.0
|
|
|
$
|
|
|
2,717.1
|
|
|
$
|
|
|
2,404.6
|
Transaction, integration-related and restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs, net of tax
|
|
|
|
|
|
|
|
|
(93.3)
|
|
|
(32.3)
|
|
|
(189.8)
|
|
|
(134.2)
|
Litigation-related proceeds, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
71.3
|
|
|
-
|
Loss on early extinguishment of long-term debt, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
(58.1)
|
|
|
-
|
|
|
(117.8)
|
Pension settlement charge, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
(72.5)
|
|
|
-
|
|
|
(72.5)
|
Release of litigation-related reserve, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
67.0
|
Amortization of other acquired intangible assets, net of tax
|
|
|
|
|
|
|
|
|
(41.2)
|
|
|
(38.8)
|
|
|
(166.0)
|
|
|
(158.2)
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
|
|
|
(26.8)
|
|
|
(.3)
|
|
|
(42.4)
|
|
|
51.9
|
Net income (2) (GAAP measure)
|
|
|
|
|
|
|
|
|
$
|
|
|
320.8
|
|
|
$
|
|
|
232.0
|
|
|
$
|
|
|
2,390.2
|
|
|
$
|
|
|
2,040.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - basic
|
|
|
|
|
|
|
|
|
349.5
|
|
|
350.7
|
|
|
349.3
|
|
|
355.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - diluted
|
|
|
|
|
|
|
|
|
352.9
|
|
|
354.6
|
|
|
352.6
|
|
|
359.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
|
|
|
$
|
|
|
1.37
|
|
|
$
|
|
|
1.22
|
|
|
$
|
|
|
7.71
|
|
|
$
|
|
|
6.70
|
Transaction, integration-related and restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs, net of tax
|
|
|
|
|
|
|
|
|
(.26)
|
|
|
(.09)
|
|
|
(.54)
|
|
|
(.38)
|
Litigation-related proceeds, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
.20
|
|
|
-
|
Loss on early extinguishment of long-term debt, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
(.16)
|
|
|
-
|
|
|
(.33)
|
Pension settlement charge, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
(.21)
|
|
|
-
|
|
|
(.20)
|
Release of litigation-related reserve, net of tax
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
.19
|
Amortization of other acquired intangible assets, net of tax
|
|
|
|
|
|
|
|
|
(.12)
|
|
|
(.11)
|
|
|
(.47)
|
|
|
(.44)
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
|
|
|
(.08)
|
|
|
-
|
|
|
(.12)
|
|
|
.14
|
Net income (2) (GAAP measure)
|
|
|
|
|
|
|
|
|
$
|
|
|
.91
|
|
|
$
|
|
|
.65
|
|
|
$
|
|
|
6.78
|
|
|
$
|
|
|
5.68
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Information (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Year
|
|
|
|
|
|
|
|
|
Ended December 31,
|
|
Ended December 31,
|
(Millions)
|
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
2015
|
|
|
2014
|
Health Care:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (3) (excludes net realized capital
(losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gains and an other item)
|
|
|
|
|
|
|
|
$
|
14,404.2
|
|
|
|
$
|
14,068.1
|
|
|
$
|
57,501.4
|
|
|
|
$
|
55,044.2
|
|
Litigation-related proceeds
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
109.6
|
|
|
|
-
|
|
Net realized capital (losses) gains
|
|
|
|
|
|
|
|
(28.1
|
)
|
|
|
(3.7
|
)
|
|
(50.4
|
)
|
|
|
64.4
|
|
Total revenue (GAAP measure)
|
|
|
|
|
|
|
|
$
|
14,376.1
|
|
|
|
$
|
14,064.4
|
|
|
$
|
57,560.6
|
|
|
|
$
|
55,108.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial Medical Benefit Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
|
|
|
|
|
$
|
7,100.0
|
|
|
|
$
|
7,284.2
|
|
|
$
|
28,708.6
|
|
|
|
$
|
28,563.2
|
|
Health care costs
|
|
|
|
|
|
|
|
$
|
5,770.0
|
|
|
|
$
|
5,975.8
|
|
|
$
|
23,056.5
|
|
|
|
$
|
22,917.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial MBR (GAAP measure)
|
|
|
|
|
|
|
|
81.3
|
%
|
|
|
82.0
|
%
|
|
80.3
|
%
|
|
|
80.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government Medical Benefit Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
|
|
|
|
|
$
|
5,806.7
|
|
|
|
$
|
5,361.8
|
|
|
$
|
22,909.5
|
|
|
|
$
|
20,999.0
|
|
Health care costs
|
|
|
|
|
|
|
|
$
|
4,795.7
|
|
|
|
$
|
4,525.3
|
|
|
$
|
18,655.5
|
|
|
|
$
|
17,829.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Government MBR (GAAP measure)
|
|
|
|
|
|
|
|
82.6
|
%
|
|
|
84.4
|
%
|
|
81.4
|
%
|
|
|
84.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Medical Benefit Ratio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Premiums
|
|
|
|
|
|
|
|
$
|
12,906.7
|
|
|
|
$
|
12,646.0
|
|
|
$
|
51,618.1
|
|
|
|
$
|
49,562.2
|
|
Health care costs
|
|
|
|
|
|
|
|
$
|
10,565.7
|
|
|
|
$
|
10,501.1
|
|
|
$
|
41,712.0
|
|
|
|
$
|
40,746.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total MBR (GAAP measure)
|
|
|
|
|
|
|
|
81.9
|
%
|
|
|
83.0
|
%
|
|
80.8
|
%
|
|
|
82.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
|
|
$
|
492.8
|
|
|
|
$
|
447.6
|
|
|
$
|
2,711.8
|
|
|
|
$
|
2,376.5
|
|
Transaction, integration-related and restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs, net of tax
|
|
|
|
|
|
|
|
(72.7
|
)
|
|
|
(32.3
|
)
|
|
(157.3
|
)
|
|
|
(134.2
|
)
|
Litigation-related proceeds, net of tax
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
71.3
|
|
|
|
-
|
|
Release of litigation-related reserve, net of tax
|
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
67.0
|
|
Amortization of other acquired intangible assets, net of tax
|
|
|
|
|
|
|
|
(41.1
|
)
|
|
|
(38.8
|
)
|
|
(165.8
|
)
|
|
|
(157.4
|
)
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
|
|
(18.1
|
)
|
|
|
(2.6
|
)
|
|
(33.2
|
)
|
|
|
41.5
|
|
Net income (2) (GAAP measure)
|
|
|
|
|
|
|
|
$
|
360.9
|
|
|
|
$
|
373.9
|
|
|
$
|
2,426.8
|
|
|
|
$
|
2,193.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Information continued (7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Year
|
|
|
|
|
|
|
Ended December 31,
|
|
Ended December 31,
|
(Millions)
|
|
|
|
|
|
2015
|
|
|
2014
|
|
2015
|
|
|
2014
|
Group Insurance:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (3) (excludes net realized capital
(losses) gains)
|
|
|
|
|
|
$
|
618.3
|
|
|
|
$
|
615.6
|
|
|
$
|
2,478.3
|
|
|
|
$
|
2,475.4
|
|
Net realized capital (losses) gains
|
|
|
|
|
|
(5.8
|
)
|
|
|
2.9
|
|
|
(.4
|
)
|
|
|
14.4
|
|
Total revenue (GAAP measure)
|
|
|
|
|
|
$
|
612.5
|
|
|
|
$
|
618.5
|
|
|
$
|
2,477.9
|
|
|
|
$
|
2,489.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
$
|
21.7
|
|
|
|
$
|
21.3
|
|
|
$
|
136.0
|
|
|
|
$
|
171.0
|
|
Amortization of other acquired intangible assets, net of tax
|
|
|
|
|
|
(.1
|
)
|
|
|
-
|
|
|
(.2
|
)
|
|
|
(.8
|
)
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
(3.8
|
)
|
|
|
1.9
|
|
|
(.3
|
)
|
|
|
9.4
|
|
Net income (2) (GAAP measure)
|
|
|
|
|
|
$
|
17.8
|
|
|
|
$
|
23.2
|
|
|
$
|
135.5
|
|
|
|
$
|
179.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Large Case Pensions:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (3) (excludes net realized capital
(losses) gains)
|
|
|
|
|
|
$
|
67.5
|
|
|
|
$
|
87.7
|
|
|
$
|
311.7
|
|
|
|
$
|
403.2
|
|
Net realized capital (losses) gains
|
|
|
|
|
|
(7.6
|
)
|
|
|
.6
|
|
|
(13.7
|
)
|
|
|
1.6
|
|
Total revenue (GAAP measure)
|
|
|
|
|
|
$
|
59.9
|
|
|
|
$
|
88.3
|
|
|
$
|
298.0
|
|
|
|
$
|
404.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1)
|
|
|
|
|
|
$
|
4.3
|
|
|
|
$
|
5.6
|
|
|
$
|
17.0
|
|
|
|
$
|
20.7
|
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
(4.9
|
)
|
|
|
.4
|
|
|
(8.9
|
)
|
|
|
1.0
|
|
Net (loss) income (2) (GAAP measure)
|
|
|
|
|
|
$
|
(.6
|
)
|
|
|
$
|
6.0
|
|
|
$
|
8.1
|
|
|
|
$
|
21.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Financing: (8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating loss (1)
|
|
|
|
|
|
$
|
(36.7
|
)
|
|
|
$
|
(40.5
|
)
|
|
$
|
(147.7
|
)
|
|
|
$
|
(163.6
|
)
|
Transaction-related costs, net of tax
|
|
|
|
|
|
(20.6
|
)
|
|
|
-
|
|
|
(32.5
|
)
|
|
|
-
|
|
Loss on early extinguishment of long-term debt, net of tax
|
|
|
|
|
|
-
|
|
|
|
(58.1
|
)
|
|
-
|
|
|
|
(117.8
|
)
|
Pension settlement charge, net of tax
|
|
|
|
|
|
-
|
|
|
|
(72.5
|
)
|
|
-
|
|
|
|
(72.5
|
)
|
Net loss (2) (GAAP measure)
|
|
|
|
|
|
$
|
(57.3
|
)
|
|
|
$
|
(171.1
|
)
|
|
$
|
(180.2
|
)
|
|
|
$
|
(353.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Company:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (3) (excludes net realized capital
(losses) gains
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and an other item) (A)
|
|
|
|
|
|
$
|
15,090.0
|
|
|
|
$
|
14,771.4
|
|
|
$
|
60,291.4
|
|
|
|
$
|
57,922.8
|
|
Litigation-related proceeds
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
109.6
|
|
|
|
-
|
|
Net realized capital (losses) gains
|
|
|
|
|
|
(41.5
|
)
|
|
|
(.2
|
)
|
|
(64.5
|
)
|
|
|
80.4
|
|
Total revenue (GAAP measure) (B)
|
|
|
|
|
|
$
|
15,048.5
|
|
|
|
$
|
14,771.2
|
|
|
$
|
60,336.5
|
|
|
|
$
|
58,003.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses (C)
|
|
|
|
|
|
$
|
3,097.6
|
|
|
|
$
|
2,913.9
|
|
|
$
|
11,426.1
|
|
|
|
$
|
10,628.4
|
|
Transaction, integration-related and restructuring costs
|
|
|
|
|
|
102.9
|
|
|
|
45.9
|
|
|
223.2
|
|
|
|
200.7
|
|
Pension settlement charge
|
|
|
|
|
|
-
|
|
|
|
111.6
|
|
|
-
|
|
|
|
111.6
|
|
Release of litigation-related reserve
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
(103.0
|
)
|
Total operating expenses (GAAP measure) (D)
|
|
|
|
|
|
$
|
3,200.5
|
|
|
|
$
|
3,071.4
|
|
|
$
|
11,649.3
|
|
|
|
$
|
10,837.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expense Ratios:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expense ratio (5) (C)/(A)
|
|
|
|
|
|
20.5
|
%
|
|
|
19.7
|
%
|
|
19.0
|
%
|
|
|
18.3
|
%
|
Total company expense ratio (D)/(B) (GAAP measure)
|
|
|
|
|
|
21.3
|
%
|
|
|
20.8
|
%
|
|
19.3
|
%
|
|
|
18.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Membership
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
September 30,
|
|
|
December 31,
|
|
(Thousands)
|
|
2015
|
|
|
2015
|
|
|
2014
|
|
Medical Membership:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
19,370
|
|
|
19,503
|
|
|
19,822
|
|
Medicare Advantage
|
|
1,251
|
|
|
1,246
|
|
|
1,140
|
|
Medicare Supplement
|
|
566
|
|
|
534
|
|
|
462
|
|
Medicaid (9)
|
|
2,300
|
|
|
2,223
|
|
|
2,124
|
|
Total Medical Membership
|
|
23,487
|
|
|
23,506
|
|
|
23,548
|
|
|
|
|
|
|
|
|
|
|
|
Consumer-Directed Health Plans (10)
|
|
4,029
|
|
|
4,006
|
|
|
3,830
|
|
|
|
|
|
|
|
|
|
|
|
Dually-Eligible for Medicare and Medicaid (9)
|
|
27
|
|
|
28
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
|
Dental Membership:
|
|
|
|
|
|
|
|
|
|
Total Dental Membership
|
|
14,634
|
|
|
14,643
|
|
|
14,529
|
(a)
|
|
|
|
|
|
|
|
|
|
|
Pharmacy Benefit Management Membership:
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
10,237
|
|
|
10,434
|
|
|
10,731
|
|
Medicare Prescription Drug Plan (stand-alone)
|
|
1,466
|
|
|
1,443
|
|
|
1,572
|
|
Medicare Advantage Prescription Drug Plan
|
|
863
|
|
|
861
|
|
|
754
|
|
Medicaid (9)
|
|
2,587
|
|
|
2,568
|
|
|
2,262
|
|
Total Pharmacy Benefit Management Services
|
|
15,153
|
|
|
15,306
|
|
|
15,319
|
|
|
|
|
|
|
|
|
|
|
|
(a) Dental ASC membership at December 31, 2014 has been
revised to reflect a reduction of approximately 1 million Dental
ASC members, as the applicable Medicaid ASC members did not
have a Dental ASC product at such date. This revision did not
affect Aetna's financial statements.
|
|
Operating Margins
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months
|
|
For the Year
|
|
|
|
|
|
|
|
Ended December 31,
|
|
Ended December 31,
|
(Millions)
|
|
|
|
|
|
|
2015
|
|
|
2014
|
|
2015
|
|
|
2014
|
Reconciliation to Income Before Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings (1) before income taxes, excluding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
interest expense (A)
|
|
|
|
|
|
|
$
|
902.2
|
|
|
|
$
|
817.3
|
|
|
$
|
5,032.7
|
|
|
|
$
|
4,382.7
|
|
Interest expense *
|
|
|
|
|
|
|
(78.1
|
)
|
|
|
(81.8
|
)
|
|
(313.5
|
)
|
|
|
(329.3
|
)
|
Transaction, integration-related and restructuring costs
|
|
|
|
|
|
|
(134.7
|
)
|
|
|
(45.9
|
)
|
|
(273.3
|
)
|
|
|
(200.7
|
)
|
Litigation-related proceeds
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
109.6
|
|
|
|
-
|
|
Loss on early extinguishment of long-term debt
|
|
|
|
|
|
|
-
|
|
|
|
(89.3
|
)
|
|
-
|
|
|
|
(181.2
|
)
|
Pension settlement charge
|
|
|
|
|
|
|
-
|
|
|
|
(111.6
|
)
|
|
-
|
|
|
|
(111.6
|
)
|
Release of litigation-related reserve
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
103.0
|
|
Amortization of other acquired intangible assets
|
|
|
|
|
|
|
(63.4
|
)
|
|
|
(59.8
|
)
|
|
(255.4
|
)
|
|
|
(243.4
|
)
|
Net realized capital (losses) gains
|
|
|
|
|
|
|
(41.5
|
)
|
|
|
(.2
|
)
|
|
(64.5
|
)
|
|
|
80.4
|
|
Income before income taxes (GAAP measure)
|
|
|
|
|
|
|
$
|
584.5
|
|
|
|
$
|
428.7
|
|
|
$
|
4,235.6
|
|
|
|
$
|
3,499.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation to Net Income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating earnings,(1) excluding interest expense, net of
tax
|
|
|
|
|
|
|
$
|
532.9
|
|
|
|
$
|
487.1
|
|
|
$
|
2,920.9
|
|
|
|
$
|
2,618.6
|
|
Interest expense, net of tax *
|
|
|
|
|
|
|
(50.8
|
)
|
|
|
(53.1
|
)
|
|
(203.8
|
)
|
|
|
(214.0
|
)
|
Transaction, integration-related and restructuring
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
costs, net of tax
|
|
|
|
|
|
|
(93.3
|
)
|
|
|
(32.3
|
)
|
|
(189.8
|
)
|
|
|
(134.2
|
)
|
Litigation-related proceeds, net of tax
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
71.3
|
|
|
|
-
|
|
Loss on early extinguishment of long-term debt, net of tax
|
|
|
|
|
|
|
-
|
|
|
|
(58.1
|
)
|
|
-
|
|
|
|
(117.8
|
)
|
Pension settlement charge, net of tax
|
|
|
|
|
|
|
-
|
|
|
|
(72.5
|
)
|
|
-
|
|
|
|
(72.5
|
)
|
Release of litigation-related reserve, net of tax
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
|
67.0
|
|
Amortization of other acquired intangible assets, net of tax
|
|
|
|
|
|
|
(41.2
|
)
|
|
|
(38.8
|
)
|
|
(166.0
|
)
|
|
|
(158.2
|
)
|
Net realized capital (losses) gains, net of tax
|
|
|
|
|
|
|
(26.8
|
)
|
|
|
(.3
|
)
|
|
(42.4
|
)
|
|
|
51.9
|
|
Net income (2) (GAAP measure) (B)
|
|
|
|
|
|
|
$
|
320.8
|
|
|
|
$
|
232.0
|
|
|
$
|
2,390.2
|
|
|
|
$
|
2,040.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating revenue (3) (excludes net realized capital
(losses)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
gains and an other item) (C)
|
|
|
|
|
|
|
$
|
15,090.0
|
|
|
|
$
|
14,771.4
|
|
|
$
|
60,291.4
|
|
|
|
$
|
57,922.8
|
|
Litigation-related proceeds
|
|
|
|
|
|
|
-
|
|
|
|
-
|
|
|
109.6
|
|
|
|
-
|
|
Net realized capital (losses) gains
|
|
|
|
|
|
|
(41.5
|
)
|
|
|
(.2
|
)
|
|
(64.5
|
)
|
|
|
80.4
|
|
Total revenue (GAAP measure) (D)
|
|
|
|
|
|
|
$
|
15,048.5
|
|
|
|
$
|
14,771.2
|
|
|
$
|
60,336.5
|
|
|
|
$
|
58,003.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating and Net Income Margins:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pretax operating margin (6) (A)/(C)
|
|
|
|
|
|
|
6.0
|
%
|
|
|
5.5
|
%
|
|
8.3
|
%
|
|
|
7.6
|
%
|
After-tax net income margin (B)/(D) (GAAP measure)
|
|
|
|
|
|
|
2.1
|
%
|
|
|
1.6
|
%
|
|
4.0
|
%
|
|
|
3.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Interest expense of $50.8 million ($78.1 million pretax) and
$203.8 million ($313.5 million pretax), for the three months and
year ended December 31, 2015, respectively, each exclude
costs associated with the bridge credit agreement and term loan
credit agreement executed in connection with the proposed
acquisition of Humana Inc. ("Humana"). These costs are included
within transaction, integration-related and restructuring
costs.
|
|
(1) Operating earnings and operating earnings per share
exclude from net income attributable to Aetna and operating expenses and
operating revenues exclude, 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
operating earnings, operating earnings per share, operating revenues,
operating expenses and the operating expense ratio provide a more useful
comparison of Aetna's underlying business performance from period to
period. Management uses operating earnings to assess business
performance and to make decisions regarding Aetna's operations and the
allocation of resources among Aetna's businesses. Operating earnings is
also the measure reported to the Chief Executive Officer for these
purposes. Non-GAAP financial measures Aetna discloses, such as operating
earnings, operating earnings per share, operating earnings per share
baseline, operating revenues, operating expenses, pretax operating
margin and the operating expense ratio, should not be considered a
substitute for, or superior to, financial measures determined or
calculated in accordance with U.S. generally accepted accounting
principles ("GAAP").
For the periods covered in this press release, the following items are
excluded from operating earnings, operating expenses and operating
revenues, as applicable, because Aetna believes they neither relate to
the ordinary course of Aetna's business nor reflect Aetna's underlying
business performance:
-
Aetna incurred transaction, integration-related and restructuring
costs of $93.3 million ($134.7 million pretax) and $189.8 million
($273.3 million pretax) during the three months and year ended
December 31, 2015, respectively. Transaction and integration-related
costs relate to the acquisitions of Coventry Health Care, Inc.
("Coventry"), the InterGlobal group ("InterGlobal") and bswift LLC
("bswift") and the proposed acquisition of Humana. Aetna incurred
transaction and integration-related costs of $32.3 million ($45.9
million pretax) and $134.2 million ($200.7 million pretax) during the
three months and year ended December 31, 2014, respectively, related
to the acquisitions of Coventry, InterGlobal and bswift. Transaction
costs include advisory, legal and other professional fees which are
not deductible for tax purposes and are reflected in Aetna's GAAP
Consolidated Statements of Income in general and administrative
expenses, as well as the cost of the bridge credit agreement and the
term loan credit agreement executed in connection with the proposed
Humana acquisition, which are reflected in Aetna's GAAP Consolidated
Statements of Income in interest expense. Restructuring costs
primarily consist of severance costs associated with Aetna's expense
management and cost control initiatives and are reflected in Aetna's
GAAP Consolidated Statements of Income in general and administrative
expenses.
-
In the year ended December 31, 2015, Aetna received proceeds of $71.3
million ($109.6 million pretax), net of legal costs, in connection
with a litigation settlement. These net proceeds were recorded in fees
and other revenue in Aetna's GAAP Consolidated Statements of Income.
-
Aetna incurred losses on the early extinguishment of long-term debt of
$58.1 million ($89.3 million pretax) and $117.8 million ($181.2
million pretax) during the three months and year ended December 31,
2014, respectively. The loss in the first quarter of 2014 related to
the redemption of Aetna's 6.0% senior notes due 2016, and the loss in
the fourth quarter of 2014 related to the redemption of Aetna's 6.5%
senior notes due 2018.
-
During 2014, Aetna enhanced its tax-qualified noncontributory defined
benefit pension plan (the "Aetna Pension Plan") to allow certain
current and former employees to elect a 100% lump-sum distribution. In
addition, Aetna also announced a limited-time offer permitting certain
former employees with deferred vested balances to elect a 100%
lump-sum distribution. The distributions in 2014 were funded from
existing Aetna Pension Plan assets, and Aetna recorded a related
non-cash settlement charge of $72.5 million ($111.6 million pretax)
during 2014 in general and administrative expenses.
-
Aetna recorded a charge of $78.0 million ($120.0 million pretax)
during the year ended December 31, 2012 related to the settlement of
purported class action litigation regarding Aetna's payment practices
related to out-of-network health care providers. That charge included
the estimated cost of legal fees of plaintiffs' counsel and the costs
of administering the settlement. During the year ended December 31,
2014, Aetna exercised its right to terminate the settlement agreement.
As a result, Aetna released the reserve established in connection with
the settlement agreement, net of amounts due to the settlement
administrator, which reduced general and administrative expenses by
$67.0 million ($103.0 million pretax) in the year ended December 31,
2014.
-
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 these items to financial measures calculated
under GAAP, refer to the tables on pages 9 through 11 and 13 of this
press release.
Aetna's full year 2015 operating earnings per share baseline is
approximately $7.04. This baseline excludes from operating earnings per
share the net impact of favorable development of prior years' health
care cost estimates and contractual premium reductions of approximately
$0.77 per share and the unfavorable impact of accruals related to 2014
for Health Care Reform's reinsurance, risk adjustment and risk corridor
programs of approximately $0.10 per share.
(2) Net Income (Loss) refers to net income (loss)
attributable to Aetna reported in Aetna's GAAP Consolidated Statements
of Income. Unless otherwise indicated, all references in this press
release to operating earnings, operating earnings per share, net income
(loss) and net income per share are based upon net income (loss)
attributable to Aetna, which excludes amounts attributable to
non-controlling interests.
(3) Operating revenue excludes net realized capital gains and
losses and an other item as noted in (1) above. Refer to the
tables on pages 10, 11 and 13 of this press release for a reconciliation
of operating revenue to total revenue calculated under GAAP.
(4) Projected 2016 operating earnings per share exclude from
net income estimated after-tax amortization of other acquired intangible
assets of approximately $160 million ($247 million pretax), projected
integration-related costs related to the Coventry and bswift
acquisitions and the proposed Humana acquisition, projected
transaction-related costs related to the proposed Humana acquisition,
any future net realized capital gains and losses and other items, if
any, that neither relate to the ordinary course of Aetna's business nor
reflect Aetna's underlying business performance. After-tax amortization
of other acquired intangible assets relates to Aetna's acquisition
activities, including Coventry, InterGlobal and bswift. Aetna is not
able to project the amount of future net realized capital gains and
losses or any such other items (other than estimated after-tax
amortization of other acquired intangible assets and projected
transaction and integration-related costs related to the Coventry and
bswift acquisitions and the proposed Humana acquisition) and therefore
cannot reconcile projected operating earnings per share to projected net
income per share in any period. Projected full-year 2016 operating
earnings per share reflect a range of 354 million to 355 million
weighted average diluted shares. The projected information in this press
release does not include or reflect any benefit or impact from or any
transaction or other costs associated with Aetna's proposed acquisition
of Humana.
(5) The operating expense ratio excludes net realized capital
gains and losses and other items, if any, that are excluded from
operating revenues or operating expenses, as noted in (1)
above. For a reconciliation of this metric to the comparable GAAP
measure refer to page 11 of this press release.
(6) In order to provide useful information regarding Aetna's
profitability on a basis comparable to others in the industry, without
regard to financing decisions, income taxes or amortization of other
acquired intangible assets (each of which may vary for reasons not
directly related to the performance of the underlying business), Aetna's
pretax operating margin is based on operating earnings excluding
interest expense and income taxes. Management also uses pretax operating
margin to assess Aetna's performance, including performance versus
competitors.
(7) Operating revenue and operating expense information is
presented before income taxes. Operating earnings information is
presented net of income taxes.
(8) Aetna's Corporate Financing segment is not a business
segment. It is added to Aetna's business segments to reconcile segment
reporting to Aetna's consolidated results. The net loss of the Corporate
Financing segment includes interest expense on Aetna's outstanding debt
and the financing components of Aetna's pension and other postretirement
employee benefit plan expenses (benefits). As described in (1)
above, the operating earnings of the Corporate Financing segment exclude
other items, if any, that neither relate to the ordinary course of
Aetna's business nor reflect Aetna's underlying business performance.
(9) Medicaid membership includes members who are
dually-eligible for both Medicare and Medicaid.
(10) Represents members in consumer-directed health plans
included in Commercial medical membership.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. You can
generally identify forward-looking statements by the use of
forward-looking terminology such as "anticipate," "believe," "continue,"
"could," "estimate," "expect," "explore," "evaluate," "intend," "may,"
"might," "plan," "potential," "predict," "project," "seek," "should," or
"will," or the negative thereof or other variations thereon or
comparable terminology. These forward-looking statements are only
predictions and involve known and unknown risks and uncertainties, many
of which are beyond Aetna's and Humana's control.
Statements in this press release regarding Aetna that are
forward-looking, including Aetna's projections as to operating earnings
per share, the closing date of the proposed Humana acquisition,
amortization of other acquired intangible assets and weighted average
diluted shares are based on management's estimates, assumptions and
projections, and are subject to significant uncertainties and other
factors, many of which are beyond Aetna's and Humana's control.
Important risk factors could cause actual future results and other
future events to differ materially from those currently estimated by
management, including, but not limited to: the timing to consummate the
proposed Humana acquisition; the risk that a condition to closing of the
proposed Humana acquisition may not be satisfied; the risk that a
regulatory approval that may be required for the proposed Humana
acquisition is delayed, is not obtained or is obtained subject to
conditions that are not anticipated; the outcome of various litigation
matters related to the proposed Humana acquisition; Aetna's ability to
achieve the synergies and value creation projected to be realized
following the completion of the proposed Humana acquisition; Aetna's
ability to promptly and effectively integrate Humana's businesses; the
diversion of management time on acquisition-related issues;
unanticipated increases in medical costs (including increased intensity
or medical utilization as a result of flu or otherwise; changes in
membership mix to higher cost or lower-premium products or membership
adverse selection; medical cost increases resulting from unfavorable
changes in contracting or re-contracting with providers (including as a
result of provider consolidation and/or integration); and increased
pharmacy costs (including in Aetna's and/or Humana's health insurance
exchange products)); the profitability of Aetna's and Humana's public
health insurance exchange products, where membership (particularly
members who join outside of the annual enrollment period) may have more
adverse health status and/or higher medical benefit utilization than
Aetna and/or Humana projected; uncertainty related to Aetna's and
Humana's accruals for health care reform's reinsurance, risk adjustment
and risk corridor programs ("3R's"); the implementation of health care
reform legislation, including collection of health care reform fees,
assessments and taxes through increased premiums; adverse legislative,
regulatory and/or judicial changes to or interpretations of existing
health care reform legislation and/or regulations (including those
relating to minimum medical loss ratio ("MLR") rebates); the
implementation of health insurance exchanges; Aetna's and Humana's
ability to offset Medicare Advantage and PDP rate pressures; and changes
in Aetna's and Humana's future cash requirements, capital requirements,
results of operations, financial condition and/or cash flows. Health
care reform will continue to significantly impact Aetna's business
operations and financial results, including Aetna's pricing and medical
benefit ratios. Key components of the legislation will continue to be
phased in through 2020, and Aetna will be required to dedicate material
resources and incur material expenses during 2016 to implement health
care reform. Significant parts of the legislation, including aspects of
public health insurance exchanges, nondiscrimination requirements,
reinsurance, risk corridor and risk adjustment continue to evolve
through the promulgation of regulations and guidance at the federal
level. In addition, pending efforts in the U.S. Congress to amend or
restrict funding for various aspects of health care reform, and pending
litigation challenging aspects of the law continue to create additional
uncertainty about the ultimate impact of health care reform. As a
result, many of the impacts of health care reform will not be known for
the next several years. Other important risk factors include: adverse
changes in health care reform and/or other federal or state government
policies or regulations as a result of health care reform or otherwise
(including legislative, judicial or regulatory measures that would
affect Aetna's and/or Humana's business model, restrict funding for or
amend various aspects of health care reform, limit Aetna's and/or
Humana's ability to price for the risk it assumes and/or reflect
reasonable costs or profits in its pricing, such as mandated minimum
medical benefit ratios, or eliminate or reduce ERISA pre-emption of
state laws (increasing Aetna's and/or Humana's potential litigation
exposure)); adverse and less predictable economic conditions in the U.S.
and abroad (including unanticipated levels of, or increases in the rate
of, unemployment); reputational or financial issues arising from Aetna's
and/or Humana's social media activities, data security breaches, other
cybersecurity risks or other causes; Aetna's ability to diversify
Aetna's sources of revenue and earnings (including by developing,
operating and expanding Aetna's consumer business and expanding Aetna's
foreign operations), transform Aetna's business model, develop new
products and optimize Aetna's business platforms; the success of Aetna's
Healthagen® (including Accountable Care Solutions and health information
technology) initiatives; adverse changes in size, product or geographic
mix or medical cost experience of membership; managing executive
succession and key talent retention, recruitment and development;
failure to achieve and/or delays in achieving desired rate increases
and/or profitable membership growth due to regulatory review or other
regulatory restrictions, the difficult economy and/or significant
competition, especially in key geographic areas where membership is
concentrated, including successful protests of business awarded to Aetna
and/or Humana; failure to adequately implement health care reform; the
outcome of various litigation and regulatory matters, including audits,
challenges to Aetna's and/or Humana's minimum MLR rebate methodology
and/or reports, guaranty fund assessments, intellectual property
litigation and litigation concerning, and ongoing reviews by various
regulatory authorities of, certain of Aetna's and/or Humana's payment
practices with respect to out-of-network providers, other providers
and/or life insurance policies; Aetna's ability to integrate, simplify,
and enhance Aetna's existing products, processes and information
technology systems and platforms to keep pace with changing customer and
regulatory needs; Aetna's ability to successfully integrate Aetna's
businesses (including Humana, Coventry, bswift LLC and other businesses
Aetna may acquire in the future) and implement multiple strategic and
operational initiatives simultaneously; Aetna's and/or Humana's ability
to manage health care and other benefit costs; adverse program, pricing,
funding or audit actions by federal or state government payors,
including as a result of sequestration and/or curtailment or elimination
of the Centers for Medicare & Medicaid Services' star rating bonus
payments; Aetna's ability to reduce administrative expenses while
maintaining targeted levels of service and operating performance;
failure by a service provider to meet its obligations to Aetna or
Humana; Aetna's and Humana's ability to develop and maintain
relationships (including collaborative risk-sharing agreements) with
providers while taking actions to reduce medical costs and/or expand the
services each company offers; Aetna's ability to demonstrate that
Aetna's products and processes lead to access to quality affordable care
by Aetna's members; Aetna's and/or Humana's ability to maintain their
relationships with third-party brokers, consultants and agents who sell
their products; increases in medical costs or Group Insurance claims
resulting from any epidemics, acts of terrorism or other extreme events;
changes in medical cost estimates due to the necessary extensive
judgment that is used in the medical cost estimation process, the
considerable variability inherent in such estimates, and the sensitivity
of such estimates to changes in medical claims payment patterns and
changes in medical cost trends; a downgrade in Aetna's financial
ratings; and adverse impacts from any failure to raise the U.S. Federal
government's debt ceiling or any sustained U.S. Federal government shut
down. For more discussion of important risk factors that may materially
affect Aetna, please see the risk factors contained in Aetna's 2014
Annual Report on Form 10-K ("Aetna's 2014 Annual Report") and Aetna's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2015
("Aetna's September 2015 Quarterly Report"), each on file with the
Securities and Exchange Commission ("SEC"). For more discussion of
important risk factors that may materially affect Humana, please see the
risk factors contained in Humana's 2014 Annual Report on Form 10-K
("Humana's 2014 Annual Report"), Humana's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2015 ("Humana's September 2015
Quarterly Report") and Humana's Current Reports on Form 8-K filed or
furnished during 2015, each on file with the SEC. You should also read
Aetna's 2014 Annual Report and Aetna's September 2015 Quarterly Report,
each on file with the SEC, and Aetna's 2015 Annual Report on Form 10-K,
when filed with the SEC, for a discussion of Aetna's historical results
of operations and financial condition. You should also read Humana's
2014 Annual Report and Humana's September 2015 Quarterly Report for a
discussion of Humana's historical results of operations and financial
condition.
No assurances can be given that any of the events anticipated by the
forward-looking statements will transpire or occur, or if any of them do
occur, what impact they will have on the results of operations,
financial condition or cash flows of Aetna or Humana. Aetna does not
assume any duty to update or revise forward-looking statements, whether
as a result of new information, future events or otherwise, as of any
future date.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160201005506/en/
[ Back To TMCnet.com's Homepage ]
|