Date of Report (Date of earliest event reported): | August 4, 2015 |
Pennsylvania | 1-16095 | 23-2229683 |
(State or other jurisdiction of | (Commission | (IRS Employer |
incorporation) | File Number) | Identification No.) |
151 Farmington Avenue, Hartford, CT | 06156 |
(Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: | (860) 273-0123 |
Former name or former address, if changed since last report: | N/A |
99.1 | Press release of Aetna Inc. dated August 4, 2015 announcing results for the quarter ended June 30, 2015 |
Aetna Inc. |
Date: August 4, 2015 | By: | /s/ Sharon A. Virag |
Name: Sharon A. Virag | ||
Title: Vice President, Controller and Chief Accounting Officer |
Exhibit Number | Description |
Exhibit 99.1 | Press release of Aetna Inc. dated August 4, 2015 announcing results for the quarter ended June 30, 2015 |
![]() | 151 Farmington Avenue Hartford, Conn. 06156 | Media Contact: Cynthia Michener 860-273-8553 michenerc@aetna.com |
Investor Contact: Tom Cowhey 860-273-2402 cowheyt@aetna.com | ||
• | Operating earnings per share (1) were $2.05 for the second quarter of 2015 |
• | Net income (2) per share was $2.08 for the second quarter of 2015 |
• | Medical membership totaled approximately 23.7 million at June 30, 2015 |
• | Operating revenue (3) was $15.1 billion for the second quarter of 2015, a 4 percent increase over the corresponding period in 2014 |
• | Aetna now projects full-year 2015 operating earnings per share of at least $7.40 (4) |
Second-Quarter Financial Results at a Glance | ||||||||
(Millions, except per share results) | 2015 | 2014 | Change | |||||
Operating revenue (3) | $ | 15,129.3 | $ | 14,485.6 | 4 | % | ||
Total revenue | 15,240.9 | 14,509.4 | 5 | % | ||||
Operating earnings (1) | 722.1 | 610.0 | 18 | % | ||||
Net income (2) | 731.8 | 548.8 | 33 | % | ||||
Per share results: | ||||||||
Operating earnings (1) | $ | 2.05 | $ | 1.69 | 21 | % | ||
Net income (2) | 2.08 | 1.52 | 37 | % | ||||
Weighted average common shares - diluted | 352.2 | 360.3 |
• | Operating earnings (1) were $722.1 million for the second quarter of 2015 compared with $610.0 million for the second quarter of 2014. The 18 percent increase in operating earnings is primarily due to higher underwriting margins in Aetna's Health Care segment, partially offset by an increase in general and administrative expenses. |
• | Net income (2) was $731.8 million for the second quarter of 2015 compared with $548.8 million for the second quarter of 2014. Net income in both periods reflects net benefits (charges), which are detailed in the Summary of Results table. |
• | Operating revenues (3) were $15.1 billion for the second quarter of 2015 compared with $14.5 billion for the second quarter of 2014. The 4 percent increase in operating revenues is primarily the result of higher Health Care premium yields as well as membership growth in Aetna's Government business partially offset by membership losses in Aetna's middle-market Commercial Insured products. Total revenue was $15.2 billion and $14.5 billion for the second quarters of 2015 and 2014, respectively. Total |
• | Operating expenses (1) were $2.8 billion for the second quarter of 2015. The operating expense ratio (5) was 18.3 percent and 17.6 percent for the second quarters of 2015 and 2014, respectively. The increase in the operating expense ratio is primarily the result of increased investment spend to support Aetna's growth initiatives that outpaced the increase in operating revenue described above. The total company expense ratio was 18.4 percent and 17.9 percent for the second quarters of 2015 and 2014, respectively. |
• | Pretax operating margin (6) was 8.7 percent for the second quarter of 2015 compared with 7.6 percent for the second quarter of 2014. The pretax operating margin increased primarily as a result of higher underwriting margins in Aetna's Government business. The after-tax net income margin was 4.8 percent and 3.8 percent for the second quarters of 2015 and 2014, respectively. |
• | Effective tax rate was 41.8 percent for the second quarter of 2015 compared with 40.8 percent for the second quarter of 2014. The increase in the effective tax rate reflects the impact of health care reform, primarily from the 2015 increase in the non-deductible health insurer fee. |
• | Share repurchases totaled 0.9 million shares at a cost of $100 million for the second quarter of 2015. |
• | Operating earnings (1) were $708.0 million for the second quarter of 2015 compared with $584.3 million for the second quarter of 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 as described in Operating expenses above. |
• | Net income (2) was $714.0 million for the second quarter of 2015 compared with $521.1 million for the second quarter of 2014. |
• | Operating revenues (3) were $14.4 billion for the second quarter of 2015 compared with $13.8 billion for the second quarter of 2014. The 5 percent increase is due primarily to higher premium yields as well as membership growth in Aetna's Government business partially offset by membership losses in Aetna's middle-market Commercial Insured |
• | Sequentially, second-quarter 2015 medical membership remained essentially flat due to growth in Aetna's Commercial ASC products and Government business, substantially offset by a decline in Aetna's Commercial Insured products. |
• | Medical benefit ratios (MBRs) for the three and six months ended June 30, 2015 and 2014 were as follows: |
Three Months Ended | Six Months Ended | ||||||||||
June 30, | June 30, | ||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||
Commercial | 81.8 | % | 80.6 | % | 79.6 | % | 78.9 | % | |||
Government | 80.3 | % | 86.5 | % | 80.8 | % | 85.6 | % | |||
Health Care | 81.1 | % | 83.1 | % | 80.1 | % | 81.8 | % | |||
• | Aetna's second-quarter 2015 Commercial MBR increased when compared to the second quarter of 2014 primarily as a result of the impact of programs mandated by health care reform (the "3Rs"), partially offset by improved performance in Aetna's large group business. In the second quarter of 2015, Aetna recorded an additional $252 million of net health care reform risk adjustment payables compared with no amount recorded in the second quarter of 2014. Aetna did not record any health care reform risk corridor receivables at June 30, 2015, or June 30, 2014. In aggregate, the incremental net charges incurred in connection with the 3Rs during the second quarter of 2015 were $177 million, compared with net benefits of $48 million in the second quarter of 2014. |
• | Aetna's second-quarter 2015 Government MBR improved over the second 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 and improved performance in Aetna's Medicaid business as well as increased favorable development of prior-period health care cost estimates in 2015. |
• | In the second quarter of 2015, Aetna experienced favorable development of prior-period health care cost estimates in its Commercial, Medicaid and Medicare products, primarily attributable to first-quarter 2015 performance. In addition, in the second quarter of 2015, Aetna experienced additional favorable development of prior-years' health care cost estimates which resulted in contractual premium reductions under certain customer |
• | Prior-years' health care costs payable estimates developed favorably by $699.0 million and $531.9 million during the first half of 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. |
• | Operating earnings (1) were $44.8 million for the second quarter of 2015 compared with $60.6 million for the second quarter of 2014, primarily due to lower underwriting margins in Aetna's Life and Long-term Care products as well as lower net investment income. |
• | Net income (2) was $49.1 million for the second quarter of 2015 compared with $61.4 million for the second quarter of 2014. |
• | Operating revenues (3) were $628.9 million for the second quarter of 2015 compared with $626.4 million for the second quarter of 2014. Total revenues were $635.7 million and $627.7 million for the second quarters of 2015 and 2014, respectively. |
• | Operating earnings (1) were $6.2 million for the second quarter of 2015 compared with $5.4 million for the second quarter of 2014. |
• | Net income (2) was $5.6 million for the second quarter of 2015 compared with $6.6 million for the second quarter of 2014. |
• | Operating revenues (3) were $90.3 million for the second quarter of 2015 compared with $93.2 million for the second quarter of 2014. Total revenues were $89.4 million and $95.1 million for the second quarters of 2015 and 2014, respectively. |
Consolidated Statements of Income | ||||||||||||||||||
For the Three Months | For the Six Months | |||||||||||||||||
Ended June 30, | Ended June 30, | |||||||||||||||||
(Millions) | 2015 | 2014 | 2015 | 2014 | ||||||||||||||
Revenue: | ||||||||||||||||||
Health care premiums | $ | 12,936.5 | $ | 12,416.1 | $ | 25,876.6 | $ | 24,327.8 | ||||||||||
Other premiums | 546.0 | 551.7 | 1,084.0 | 1,113.3 | ||||||||||||||
Fees and other revenue | 1,509.0 | 1,289.5 | 2,884.0 | 2,538.3 | ||||||||||||||
Net investment income | 247.4 | 228.3 | 480.3 | 472.5 | ||||||||||||||
Net realized capital gains | 2.0 | 23.8 | 10.1 | 52.3 | ||||||||||||||
Total revenue | 15,240.9 | 14,509.4 | 30,335.0 | 28,504.2 | ||||||||||||||
Benefits and expenses: | ||||||||||||||||||
Health care costs | 10,496.3 | 10,314.8 | 20,736.8 | 19,891.1 | ||||||||||||||
Current and future benefits | 539.2 | 525.6 | 1,067.3 | 1,104.3 | ||||||||||||||
Operating expenses: | ||||||||||||||||||
Selling expenses | 405.7 | 413.0 | 820.6 | 815.8 | ||||||||||||||
General and administrative expenses | 2,396.1 | 2,188.2 | 4,797.9 | 4,235.8 | ||||||||||||||
Total operating expenses | 2,801.8 | 2,601.2 | 5,618.5 | 5,051.6 | ||||||||||||||
Interest expense | 78.3 | 81.3 | 157.3 | 166.9 | ||||||||||||||
Amortization of other acquired intangible assets | 63.7 | 61.9 | 126.9 | 124.1 | ||||||||||||||
Loss on early extinguishment of long-term debt | — | — | — | 91.9 | ||||||||||||||
Total benefits and expenses | 13,979.3 | 13,584.8 | 27,706.8 | 26,429.9 | ||||||||||||||
Income before income taxes | 1,261.6 | 924.6 | 2,628.2 | 2,074.3 | ||||||||||||||
Income taxes | 527.0 | 377.4 | 1,117.3 | 857.7 | ||||||||||||||
Net income including non-controlling interests | 734.6 | 547.2 | 1,510.9 | 1,216.6 | ||||||||||||||
Less: Net income (loss) attributable to non-controlling interests | 2.8 | (1.6 | ) | 1.6 | 2.3 | |||||||||||||
Net income attributable to Aetna | $ | 731.8 | $ | 548.8 | $ | 1,509.3 | $ | 1,214.3 | ||||||||||
Summary of Results | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Operating earnings (1) | $ | 722.1 | $ | 610.0 | $ | 1,566.4 | $ | 1,332.0 | |||||||
Transaction and integration-related costs, net of tax | (21.4 | ) | (36.3 | ) | (52.1 | ) | (78.2 | ) | |||||||
Litigation-related proceeds, net of tax | 71.3 | — | 71.3 | — | |||||||||||
Loss on early extinguishment of long-term debt, net of tax | — | — | — | (59.7 | ) | ||||||||||
Release of litigation-related reserve, net of tax | — | — | — | 67.0 | |||||||||||
Amortization of other acquired intangible assets, net of tax | (41.4 | ) | (40.3 | ) | (82.5 | ) | (80.7 | ) | |||||||
Net realized capital gains, net of tax | 1.2 | 15.4 | 6.2 | 33.9 | |||||||||||
Net income (2) (GAAP measure) | $ | 731.8 | $ | 548.8 | $ | 1,509.3 | $ | 1,214.3 | |||||||
Weighted average common shares - basic | 349.0 | 356.8 | 349.2 | 359.2 | |||||||||||
Weighted average common shares - diluted | 352.2 | 360.3 | 352.5 | 362.6 | |||||||||||
Per Common Share | |||||||||||||||
Operating earnings (1) | $ | 2.05 | $ | 1.69 | $ | 4.44 | $ | 3.67 | |||||||
Transaction and integration-related costs, net of tax | (.06 | ) | (.10 | ) | (.15 | ) | (.22 | ) | |||||||
Litigation-related proceeds, net of tax | .20 | — | .20 | — | |||||||||||
Loss on early extinguishment of long-term debt, net of tax | — | — | — | (.16 | ) | ||||||||||
Release of litigation-related reserve, net of tax | — | — | — | .19 | |||||||||||
Amortization of other acquired intangible assets, net of tax | (.12 | ) | (.11 | ) | (.23 | ) | (.22 | ) | |||||||
Net realized capital gains, net of tax | .01 | .04 | .02 | .09 | |||||||||||
Net income (2) (GAAP measure) | $ | 2.08 | $ | 1.52 | $ | 4.28 | $ | 3.35 |
Segment Information (7) | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Health Care: | |||||||||||||||
Operating revenue (3) (excludes net realized capital (losses) | |||||||||||||||
gains and an other item) | $ | 14,410.1 | $ | 13,766.0 | $ | 28,793.4 | $ | 26,984.3 | |||||||
Litigation-related proceeds | 109.6 | — | 109.6 | — | |||||||||||
Net realized capital (losses) gains | (3.9 | ) | 20.6 | .7 | 47.3 | ||||||||||
Total revenue (GAAP measure) | $ | 14,515.8 | $ | 13,786.6 | $ | 28,903.7 | $ | 27,031.6 | |||||||
Commercial Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 7,232.1 | $ | 7,195.5 | $ | 14,441.8 | $ | 14,010.1 | |||||||
Health care costs | $ | 5,916.6 | $ | 5,797.2 | $ | 11,499.6 | $ | 11,054.7 | |||||||
Commercial MBR (GAAP measure) | 81.8 | % | 80.6 | % | 79.6 | % | 78.9 | % | |||||||
Government Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 5,704.4 | $ | 5,220.6 | $ | 11,434.8 | $ | 10,317.7 | |||||||
Health care costs | $ | 4,579.7 | $ | 4,517.6 | $ | 9,237.2 | $ | 8,836.4 | |||||||
Government MBR (GAAP measure) | 80.3 | % | 86.5 | % | 80.8 | % | 85.6 | % | |||||||
Total Medical Benefit Ratio: | |||||||||||||||
Premiums | $ | 12,936.5 | $ | 12,416.1 | $ | 25,876.6 | $ | 24,327.8 | |||||||
Health care costs | $ | 10,496.3 | $ | 10,314.8 | $ | 20,736.8 | $ | 19,891.1 | |||||||
Total MBR (GAAP measure) | 81.1 | % | 83.1 | % | 80.1 | % | 81.8 | % | |||||||
Operating earnings (1) | $ | 708.0 | $ | 584.3 | $ | 1,543.6 | $ | 1,303.3 | |||||||
Transaction and integration-related costs, net of tax | (21.4 | ) | (36.3 | ) | (52.1 | ) | (78.2 | ) | |||||||
Litigation-related proceeds, net of tax | 71.3 | — | 71.3 | — | |||||||||||
Release of litigation-related reserve, net of tax | — | — | — | 67.0 | |||||||||||
Amortization of other acquired intangible assets, net of tax | (41.3 | ) | (40.3 | ) | (82.4 | ) | (80.0 | ) | |||||||
Net realized capital (losses) gains, net of tax | (2.6 | ) | 13.4 | .1 | 30.7 | ||||||||||
Net income (2) (GAAP measure) | $ | 714.0 | $ | 521.1 | $ | 1,480.5 | $ | 1,242.8 | |||||||
Segment Information continued (7) | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Group Insurance: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains) | $ | 628.9 | $ | 626.4 | $ | 1,245.9 | $ | 1,238.4 | |||||||
Net realized capital gains | 6.8 | 1.3 | 9.7 | 4.2 | |||||||||||
Total revenue (GAAP measure) | $ | 635.7 | $ | 627.7 | $ | 1,255.6 | $ | 1,242.6 | |||||||
Operating earnings (1) | $ | 44.8 | $ | 60.6 | $ | 88.7 | $ | 101.8 | |||||||
Amortization of other acquired intangible assets, net of tax | (.1 | ) | — | (.1 | ) | (.7 | ) | ||||||||
Net realized capital gains, net of tax | 4.4 | .8 | 6.3 | 2.7 | |||||||||||
Net income (2) (GAAP measure) | $ | 49.1 | $ | 61.4 | $ | 94.9 | $ | 103.8 | |||||||
Large Case Pensions: | |||||||||||||||
Operating revenue (3) (excludes net realized capital (losses) gains) | $ | 90.3 | $ | 93.2 | $ | 176.0 | $ | 229.2 | |||||||
Net realized capital (losses) gains | (.9 | ) | 1.9 | (.3 | ) | .8 | |||||||||
Total revenue (GAAP measure) | $ | 89.4 | $ | 95.1 | $ | 175.7 | $ | 230.0 | |||||||
Operating earnings (1) | $ | 6.2 | $ | 5.4 | $ | 8.3 | $ | 10.2 | |||||||
Net realized capital (losses) gains, net of tax | (.6 | ) | 1.2 | (.2 | ) | .5 | |||||||||
Net income (2) (GAAP measure) | $ | 5.6 | $ | 6.6 | $ | 8.1 | $ | 10.7 | |||||||
Corporate Financing: (8) | |||||||||||||||
Operating loss (1) | $ | (36.9 | ) | $ | (40.3 | ) | $ | (74.2 | ) | $ | (83.3 | ) | |||
Loss on early extinguishment of long-term debt, net of tax | — | — | — | (59.7 | ) | ||||||||||
Net loss (2) (GAAP measure) | $ | (36.9 | ) | $ | (40.3 | ) | $ | (74.2 | ) | $ | (143.0 | ) | |||
Total Company: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains and | |||||||||||||||
an other item) (A) | $ | 15,129.3 | $ | 14,485.6 | $ | 30,215.3 | $ | 28,451.9 | |||||||
Litigation-related proceeds | 109.6 | — | 109.6 | — | |||||||||||
Net realized capital gains | 2.0 | 23.8 | 10.1 | 52.3 | |||||||||||
Total revenue (GAAP measure) (B) | $ | 15,240.9 | $ | 14,509.4 | $ | 30,335.0 | $ | 28,504.2 | |||||||
Operating expenses (C) | $ | 2,771.1 | $ | 2,545.4 | $ | 5,542.2 | $ | 5,035.1 | |||||||
Transaction and integration-related costs | 30.7 | 55.8 | 76.3 | 119.5 | |||||||||||
Release of litigation-related reserve | — | — | — | (103.0 | ) | ||||||||||
Total operating expenses (GAAP measure) (D) | $ | 2,801.8 | $ | 2,601.2 | $ | 5,618.5 | $ | 5,051.6 | |||||||
Operating Expense Ratios: | |||||||||||||||
Operating expense ratio (5) (C)/(A) | 18.3 | % | 17.6 | % | 18.3 | % | 17.7 | % | |||||||
Total company expense ratio (D)/(B) (GAAP measure) | 18.4 | % | 17.9 | % | 18.5 | % | 17.7 | % |
Membership | |||||||||||
June 30, | March 31, | December 31, | June 30, | ||||||||
(Thousands) | 2015 | 2015 | 2014 | 2014 | |||||||
Medical Membership: | |||||||||||
Commercial | 19,798 | 19,859 | 19,822 | 19,503 | |||||||
Medicare Advantage | 1,233 | 1,228 | 1,140 | 1,113 | |||||||
Medicare Supplement | 507 | 488 | 462 | 434 | |||||||
Medicaid (9) | 2,137 | 2,095 | 2,124 | 2,054 | |||||||
Total Medical Membership | 23,675 | 23,670 | 23,548 | 23,104 | |||||||
Consumer-Directed Health Plans (10) | 4,136 | 3,981 | 3,830 | 3,566 | |||||||
Dually-Eligible for Medicare and Medicaid (9) | 25 | 23 | 11 | — | |||||||
Dental Membership: | |||||||||||
Total Dental Membership | 14,623 | 14,595 | (a) | 14,529 | (a) | 14,439 | |||||
Pharmacy Benefit Management Membership: | |||||||||||
Commercial | 10,645 | 10,789 | 10,731 | 10,840 | |||||||
Medicare Prescription Drug Plan (stand-alone) | 1,433 | 1,435 | 1,572 | 1,609 | |||||||
Medicare Advantage Prescription Drug Plan | 854 | 850 | 754 | 735 | |||||||
Medicaid (9) | 2,439 | 2,351 | 2,262 | 2,105 | |||||||
Total Pharmacy Benefit Management Services | 15,371 | 15,425 | 15,319 | 15,289 | |||||||
(a) | Dental ASC membership at March 31, 2015 and 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 dates. These revisions did not affect Aetna's financial statements. |
Operating Margins | |||||||||||||||
For the Three Months | For the Six Months | ||||||||||||||
Ended June 30, | Ended June 30, | ||||||||||||||
(Millions) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Reconciliation to Income Before Income Taxes: | |||||||||||||||
Operating earnings (1) before income taxes, excluding | |||||||||||||||
interest expense (A) | $ | 1,322.7 | $ | 1,099.8 | $ | 2,869.0 | $ | 2,421.4 | |||||||
Interest expense | (78.3 | ) | (81.3 | ) | (157.3 | ) | (166.9 | ) | |||||||
Transaction and integration-related costs | (30.7 | ) | (55.8 | ) | (76.3 | ) | (119.5 | ) | |||||||
Litigation-related proceeds | 109.6 | — | 109.6 | — | |||||||||||
Loss on early extinguishment of long-term debt | — | — | — | (91.9 | ) | ||||||||||
Release of litigation-related reserve | — | — | — | 103.0 | |||||||||||
Amortization of other acquired intangible assets | (63.7 | ) | (61.9 | ) | (126.9 | ) | (124.1 | ) | |||||||
Net realized capital gains | 2.0 | 23.8 | 10.1 | 52.3 | |||||||||||
Income before income taxes (GAAP measure) | $ | 1,261.6 | $ | 924.6 | $ | 2,628.2 | $ | 2,074.3 | |||||||
Reconciliation to Net Income: | |||||||||||||||
Operating earnings,(1) excluding interest expense, net of tax | $ | 772.9 | $ | 662.9 | $ | 1,668.6 | $ | 1,440.5 | |||||||
Interest expense, net of tax | (50.8 | ) | (52.9 | ) | (102.2 | ) | (108.5 | ) | |||||||
Transaction and integration-related costs, net of tax | (21.4 | ) | (36.3 | ) | (52.1 | ) | (78.2 | ) | |||||||
Litigation-related proceeds, net of tax | 71.3 | — | 71.3 | — | |||||||||||
Loss on early extinguishment of long-term debt, net of tax | — | — | — | (59.7 | ) | ||||||||||
Release of litigation-related reserve, net of tax | — | — | — | 67.0 | |||||||||||
Amortization of other acquired intangible assets, net of tax | (41.4 | ) | (40.3 | ) | (82.5 | ) | (80.7 | ) | |||||||
Net realized capital gains, net of tax | 1.2 | 15.4 | 6.2 | 33.9 | |||||||||||
Net income (2) (GAAP measure) (B) | $ | 731.8 | $ | 548.8 | $ | 1,509.3 | $ | 1,214.3 | |||||||
Reconciliation of Revenue: | |||||||||||||||
Operating revenue (3) (excludes net realized capital gains and | |||||||||||||||
an other item) (C) | $ | 15,129.3 | $ | 14,485.6 | $ | 30,215.3 | $ | 28,451.9 | |||||||
Litigation-related proceeds | 109.6 | — | 109.6 | — | |||||||||||
Net realized capital gains | 2.0 | 23.8 | 10.1 | 52.3 | |||||||||||
Total revenue (GAAP measure) (D) | $ | 15,240.9 | $ | 14,509.4 | $ | 30,335.0 | $ | 28,504.2 | |||||||
Operating and Net Income Margins: | |||||||||||||||
Pretax operating margin (6) (A)/(C) | 8.7 | % | 7.6 | % | 9.5 | % | 8.5 | % | |||||||
After-tax net income margin (B)/(D) (GAAP measure) | 4.8 | % | 3.8 | % | 5.0 | % | 4.3 | % | |||||||
• | Aetna incurred transaction and integration-related costs of $21.4 million ($30.7 million pretax) and $52.1 million ($76.3 million pretax) during the three and six months ended June 30, 2015, respectively, related to the acquisitions of Coventry Health Care, Inc. (“Coventry”), the InterGlobal group (“InterGlobal”) and bSwift LLC ("bswift"). Aetna incurred transaction and integration-related costs of $36.3 million ($55.8 million pretax) and $78.2 million ($199.5 million pretax) during the three and six months ended June 30, 2014, respectively, related to the acquisitions of Coventry and InterGlobal. 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. |
• | In the three months ended June 30, 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 a loss on the early extinguishment of long-term debt of $59.7 million ($91.9 million pretax) during the three months ended March 31, 2014 related to the redemption of Aetna's 6.0% senior notes due 2016. |
• | Aetna recorded a charge of $78.0 million ($120.0 million pretax) during the three months 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 three months ended March 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 three months ended March 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. |
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