Aetna Net Income Improves Ahead of CVS Merger

The insurer's earnings report highlighted the results of an organizational and strategic realignment. 

Aetna Inc. released its first-quarter earnings report Tuesday, posting a net income of $1.2 billion, an improvement on the $381 million loss during the first quarter of 2017. Adjusted earnings were $1.1 billion.

The insurer recorded revenues of $15.3 billion, adjusted revenues of $15.2 billion, and an adjusted earnings per share of $3.19, an 18% improvement year-over-year. This is the first earnings report since Aetna instituted realignment measures, such as changes to its internal management reporting and organization structure.

"Our core businesses performed well in the quarter, generating strong earnings per share growth and delivering significant value to our members, clients and shareholders," Mark Bertolini, CEO of Aetna, said in a statement. "Our Medicare growth strategy remains on track as we grew to serve nearly 250,000 additional Medicare Advantage members in the first quarter. We are pleased with our strong start to the year and remain focused on our business priorities as we plan for our projected combination with CVS Health in the second half of 2018."

Aetna's earnings report comes as the organization explores a potential blockbuster merger with CVS Health.

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Below are highlights from Aetna's first quarter earnings report:

• Adjusted expense ratio was 17.9%, up nearly 2% year-over-year.

• Aetna said this increase was due to the reinstatement of the health insurer fee.

• The organization's operating cash flow, excluding large case pensions products as a percentage of net income, totalled 282.5%.

• Total debt to consolidated capitalization ratio was 35.8%.

• Aetna's effective tax rate for Q1 was 16.8%, down from 39.6% compared to the first quarter of 2017.

• The organization's prior years' health care costs payable estimates totalled $503 million for Q1, down from $614 million for the first quarter of 2017.

• Aetna gained $100 million in cash and investments at the parent during Q1.

• The organization paid a shareholder dividend of $164 million, up from $88 million compared to the first quarter of 2017.