AETNA INC /PA/

CIK:0001122304|SEC Filings

Consolidated Statements of Income (Unaudited) - USD ($)
$ in Millions

3 Months Ended

9 Months Ended

Sep. 30, 2018

Sep. 30, 2017

Sep. 30, 2018

Sep. 30, 2017

Revenue:

Health care premiums

$ 13,237

$ 13,272

$ 39,663

$ 40,810

Fees and other revenue

^[1]

2,068

1,443

6,152

4,404

Net investment income

202

233

605

730

Net realized capital gains (losses)

(23)

(40)

(262)

Total revenue

15,484

14,994

46,380

45,682

Benefits and expenses:

Health care costs

^[2]

10,852

10,960

32,096

33,537

Cost of Goods and Services Sold

^[1]

390

1,154

Operating Expenses

2,742

2,612

8,298

9,017

Interest expense

262

349

Amortization of other acquired intangible assets

142

176

Loss on early extinguishment of long-term debt

246

Reduction of reserve for anticipated future losses on discontinued products

(70)

(109)

Total benefits and expenses

14,117

13,720

41,882

43,216

Income before income taxes

1,367

1,274

4,498

2,466

Income taxes:

Current

248

470

901

955

Deferred

127

(44)

169

(140)

Total income taxes

375

426

1,070

815

Net Income including non-controlling interests

992

848

3,428

1,651

Less: Net income (loss) attributable to non-controlling interests

(8)

(9)

Net income attributable to Aetna

$ 1,000

$ 838

$ 3,421

$ 1,660

Earnings per common share:

Basic

$ 3.05

$ 2.54

$ 10.44

$ 4.95

Diluted

$ 3.03

$ 2.52

$ 10.37

$ 4.92

Administrative Services Contract Member Co Payments And Plan Sponsor Reimbursements

$ 31

$ 100

Pharmaceutical And Processing Costs

350

1,000

Insured Member Co Payments

$ 26

$ 30

$ 86

$ 96

[1]

Fees and other revenue include administrative services contract member co-payments and plan sponsor reimbursements related to our home delivery and specialty pharmacy operations of $31 million and $100 million (net of pharmaceutical and processing costs of $350 million and $1.0 billion) for the three and nine months ended September 30, 2017, respectively. As a result of the adoption of new accounting guidance related to revenue recognition from contracts with customers for the three and nine months ended September 30, 2018, (a) specialty and home delivery pharmacy revenue reflects the price of the prescription on a gross basis and (b) specialty and home delivery pharmacy costs of products sold reflects the cost of the prescription and certain administrative expenses. Refer to Note 2 for further discussion.

[2]

Health care costs have been reduced by Insured member co-payments related to our home delivery and specialty pharmacy operations of $26 million and $86 million for the three and nine months ended September 30, 2018, respectively, and $30 million and $96 million for the three and nine months ended September 30, 2017, respectively.

Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Cash flows from operating activities:
Net Income including non-controlling interests	$ 3,428	$ 1,651
Adjustments to reconcile net income to net cash provided by operating activities:
Net realized capital (gains) losses	40	262
Depreciation and amortization	400	499
Debt fair value amortization	(10)	(14)
Equity in earnings of affiliates, net	(30)	(80)
Stock-based compensation expense	125	135
Reduction of reserve for anticipated future losses on discontinued products	(70)	(109)
Amortization of net investment premium	38	54
Loss on early extinguishment of long-term debt	0	246
Loss (Gain) on Disposition of Business	(355)	0
Changes in assets and liabilities:
Premiums due and other receivables	(486)	(184)
Income taxes	625	(15)
Other assets and other liabilities	136	(1,196)
Health care and insurance liabilities	(156)	931
Proceeds from Equity Method Investment, Distribution	0	44
Net cash provided by operating activities	3,685	2,224
Cash flows used for investing activities:
Proceeds from sales and maturities of investments	7,164	8,854
Cost of investments	(6,235)	(7,860)
Additions to property, equipment and software	(336)	(301)
Payments to Acquire Businesses, Net of Cash Acquired	(8)	(24)
Net cash provided by (used for) investing activities	585	669
Cash flows used for financing activities:
Proceeds from Issuance of Long-term Debt	0	988
Repayment of long-term debt	(1,000)	(11,734)
Common shares issued under benefit plans, net	(95)	(132)
Common shares repurchased	0	(3,845)
Dividends paid to shareholders	(491)	(420)
(Distributions) contributions, non-controlling interests	9	182
Net cash provided by (used for) financing activities	(1,577)	(14,961)
Net increase (decrease) in cash and cash equivalents	2,693	(12,068)
Cash and cash equivalents, beginning of period	4,076	17,996
Cash and cash equivalents, end of period	6,769	5,928
Supplemental cash flow information:
Interest paid	212	301
Income taxes paid	$ 446	$ 791

Consolidated Balance Sheets (Unaudited) - USD ($) $ in Millions	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 6,769	$ 4,076
Investments	2,796	2,280
Premiums receivable, net	2,484	2,240
Other receivables, net	3,220	2,831
Reinsurance Recoverable for Paid and Unpaid Claims and Claims Adjustments	1,063	1,050
Income taxes receivable	0	365
Other current assets	3,039	2,681
Total current assets	19,371	15,523
Long-term investments	15,764	17,793
Reinsurance recoverables	3,177	3,323
Goodwill	10,576	10,571
Other acquired intangible assets, net	1,058	1,180
Property and equipment, net	568	586
Deferred Tax Assets, Net, Noncurrent	127	195
Other long-term assets	2,257	1,684
Separate Account assets	4,205	4,296
Total assets	57,103	55,151
Current liabilities:
Health care costs payable	5,831	5,815
Future policy benefits	565	604
Unpaid claims	826	850
Unearned premiums	749	654
Policyholders' funds	3,019	2,918
Current portion of long-term debt	375	999
Taxes Payable, Current	83	0
Accrued expenses and other current liabilities	5,222	4,997
Total current liabilities	16,670	16,837
Future policy benefits	5,568	5,763
Unpaid claims	1,918	1,922
Policyholders' funds	636	739
Long-term debt, less current portion	7,782	8,160
Other long-term liabilities	1,761	1,597
Separate Accounts liabilities	4,205	4,296
Total liabilities	38,540	39,314
Commitments and contingencies (Note 14)
Shareholders' equity:
Common stock ($.01 par value; 2.5 billion shares authorized and 327.4 million shares issued and outstanding in 2018; 2.5 billion shares authorized and 326.8 million shares issued and outstanding in 2017) and additional paid-in capital	4,779	4,706
Retained earnings	15,325	12,118
Accumulated other comprehensive loss	(1,813)	(1,244)
Total Aetna shareholders' equity	18,291	15,580
Non-controlling interests	272	257
Total equity	18,563	15,837
Total liabilities and equity	$ 57,103	$ 55,151