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Analysis

Aetna Posts $1B in Net Income During Q3

By Jack O'Brien  
   October 30, 2018

Tuesday's earnings report was Aetna's first produced since the Department of Justice approved the proposed $69 merger with CVS Health in September.

Hartford, Connecticut-based Aetna Inc. achieved a net income of $1 billion while revenues and earnings per share (EPS) rose, according to its third-quarter earnings report released Tuesday morning.

The insurer recorded revenues of $15.5 billion and adjusted revenues of $15.3 billion, both exceeding what the insurer recorded in Q2 2018 and Q3 2017. Additionally, Aetna's adjusted earnings per share of $2.96 marked a 21% improvement year-over-year.

Related: CVS-Aetna Merger Secures DOJ Approval, With Strings Attached

Cash flows continue to be on the rise for the insurer as well. In Q2, Aetna reported that it tripled its cash flows from operating activities year-over-year, posting $2.4 billion. In Q3, the company reported cash flows of $3.4 billion, more than double what it recorded this time last year. 

C-Suite Perspective:

“Aetna’s solid third quarter performance builds on the positive momentum from the first half of 2018,” Mark Bertolini, CEO of Aetna, said in a statement. “Our combination with CVS Health will drive the next phase of Aetna’s growth and accelerate our opportunity to help transform the health care system.”

Aetna's earnings report did not come with an accompanying conference call due to the pending merger with CVS Health. The proposed megamerger received government approval in late September and now is on track to officially close by the end of the year, potentially reshaping the trajectory of the two companies and the healthcare industry as a whole. 

The insurer's earnings came out the same day as WellCare's, the company which is purchasing Aetna's Part D plans as one of the conditions to approve the CVS merger. 

Related: CVS-Aetna Deal Tests Who Has The Right Data

Related: CVS-Aetna Forcing Hospitals to Rethink Their Business Models

 

ADDITIONAL Aetna Q3 EARNINGS REPORT HIGHLIGHTS:

  • For the second quarter in a row, Aetna paid $164 million in shareholder dividends. 

  • Net subsidiary dividends to the parent rose from $717 million in Q2 to $1.3 billion in Q3.

  • Aetna's total debt to capitalization ratio fell to 30.8%, compared to 31.9% in Q2, and 37% at the end of Q4 2017.

  • By the end of Q3, Aetna reported a net income of $3.4 billion and an adjusted EPS of $9.58 for the first nine months of 2018. 

For complete financial information, review Aetna's filing with the Securities and Exchange Commission.

Jack O'Brien is the finance editor at HealthLeaders. 


KEY TAKEAWAYS

The insurer produced 3% year-over-year growth in total revenue and a 19% increase in net income.

For the second quarter in a row, Aetna paid $164 million in shareholder dividends. 

Aetna CEO Mark Bertolini says the CVS Health merger will "drive the next phase" of the company's growth.


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