Aetna posts $1 billion in income ahead of merger
Adjusted earnings for Q3 reflect a $130 million pre-tax impact from an unfavorable provider arbitration ruling related to Aetna's exit from the ACA.
"Aetna building in Hartford, Connecticut" by Ragesoss is licensed under CC BY 2.5
Aetna on Tuesday reported net income of $1 billion for the third quarter compared to $838 million for the same time period in 2017.
Adjusted earnings were $977 million compared to $814 million.
The increase is primarily due to earnings from the sale of Aetna's group life insurance, group disability and absence management business, which occurred during the fourth quarter of 2017.
Aetna sold the businesses for $1.45 billion to The Hartford Group in Connecticut to concentrate on its core business of health insurance, the company said.
IMPACT
Aetna's financial position is being looked at as its $69 billion deal to combine with CVS Health is expected to close by the end of the year.
THE TREND
The Department of Justice has granted conditional approval pending Aetna's divestiture of its Part D plans to satisfy anti-competitive concerns. Aetna is divesting the Medicare prescription drug plans to WellCare.
Given its pending merger with CVS Health, Aetna did not host a conference call on its earnings release.
WHAT ELSE YOU NEED TO KNOW
Aetna's revenue increased to $15.5 billion, compared to $15 billion during the third quarter last year, due to higher revenue in its health care segment, which provides a range of insured and self-insured medical, pharmacy, dental and behavioral health products and services.
Aetna saw strong performance in its Medicare products. Membership increased particularly in its Medicare and Medicaid lines.
Adjusted earnings for the third quarter reflect a $130 million pre-tax impact from an unfavorable provider arbitration ruling related to Aetna's exit from Affordable Care Act health insurance market, the insurer said.
Hospitals in Florida brought the lawsuit over how the insurer paid and handled claims from outside its network of providers, according to U.S. News & World Report.
Aetna last year was accused of pulling out of all but four of the 15 states, including Florida, where it offered products on the exchanges, not due to losing money, as the insurer had claimed, but because it was blocked in its $34 billion attempt to merge with Humana.
Aetna had tried to leverage its participation in the exchanges for favorable treatment for the merger, United States District Court Judge John D. Bates said in his ruling against the merger.
ON THE RECORD
"Aetna's solid third quarter performance builds on the positive momentum from the first half of 2018," said Mark T. Bertolini, Aetna's chairman and CEO. "Our combination with CVS health will drive the next phase of Aetna's growth and accelerate our opportunity to help transform the healthcare system."
Twitter: @SusanJMorse
Email the writer: susan.morse@himssmedia.com
