December 15, 2017

Aetna Reports Third Quarter 2013 Results

Hartford, CT -(BusinessWire)- Aetna (NYSE: AET) recently announced third-quarter 2013 operating earnings of $561.8 million, an increase of 7 percent over the third quarter of 2012. Third-quarter operating earnings per share were $1.50 in 2013 and $1.55 in 2012. Net income for the third quarter of 2013 was $518.6 million, or $1.38 per share and includes $.09 per share of integration-related costs and $.03 per share of net realized capital losses.

“Aetna’s diversified business model produced another solid performance in the third quarter, which includes our first full quarter of results from the Coventry operations,” said Mark T. Bertolini, Aetna chairman, CEO and president. “Bolstered by the acquisition and continued strong performance in our Commercial and Medicaid businesses, Aetna generated higher operating earnings and operating revenues year over year. As we look to the final quarter of 2013, we continue to project strong year-over-year performance.

“In October, CMS released the 2014 star ratings data, which is the basis for Medicare Advantage star bonus revenue payments in 2015. Aetna now has more than 60 percent of our members in four star or greater plans, a meaningful improvement over last year and the highest percentage among national carriers. These ratings are a testament to our continued focus and execution in this important business,” said Bertolini.

“Aetna reported solid progress and execution this quarter,” said Shawn M. Guertin, Aetna senior vice president and CFO. “Operating revenue increased by nearly 46 percent year over year, primarily from the addition of Coventry. Coventry’s businesses performed well, giving us increased confidence in our ability to achieve our synergy and accretion targets.

“Our capital generation is strong, allowing us to execute upon our strategic vision and return cash to shareholders. This quarter we paid a dividend of $74 million and repurchased $333 million of shares. Year to date, Aetna has returned nearly $1.2 billion of capital to our shareholders through these two programs. Our financial position, capital structure, and liquidity all continue to be very strong,” said Guertin.

Total company results

  • Operating earnings were $561.8 million for the third quarter of 2013 compared with $523.2 million for the third quarter of 2012. Operating earnings were 7 percent higher in the third quarter of 2013 due to the inclusion of results from the acquisition of Coventry partially offset by lower underwriting margins primarily in our underlying Medicare and Group Life businesses.
  • Operating revenues for the third quarter of 2013 were $13.0 billion compared with $8.9 billion for the third quarter of 2012. The 46 percent increase is primarily the result of higher Commercial, Medicare and Medicaid Health Care premiums from the acquisition of Coventry as well as growth in our underlying Medicare membership. Total revenue was $13.0 billion and $8.9 billion for the third quarters of 2013 and 2012, respectively.
  • Operating Expenses were $2.3 billion for the third quarter of 2013. The operating expense ratio was 17.3 percent and 18.3 percent for the third quarters of 2013 and 2012, respectively. The improvement in the operating expense ratio is primarily driven by operating revenue growth and continued execution of our expense initiatives, including execution on our Coventry-related cost synergies. The total company expense ratio was 17.7 percent and 18.4 percent for the third quarters of 2013 and 2012, respectively.
  • Pre-tax Operating Margin was 7.9 percent for the third quarter of 2013 compared with 10.2 percent for the third quarter of 2012 primarily due to lower underwriting margins in our underlying Medicare business. For the third quarter of 2013, the after-tax net income margin was 4.0 percent compared to 5.6 percent for 2012.
  • Outstanding Shares were 367.5 million and 334.5 million as of September 30, 2013 and 2012, respectively. Share repurchases in the third quarter of 2013 totaled 5.2 million shares at a cost of $333 million.

The complete earnings release is available here: Aetna Third Quarter 2013 Results

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