- Health insurer Aetna announced Tuesday it earned $244 million in net income in Q4 2017, $0.74 per share, with adjusted earnings of $411 million, $1.25 per share. Over the course of 2017, the company collected $1.9 billion in net income, with $3.3 billion in adjusted earnings.
- The insurer says its Q4 net income represents a 76% increase compared to the $139 million of profit posted during Q4 2016.
- Aetna, which is in the process of being bought by CVS Health, did not hold an earnings call, citing the pending $69 billion deal. The company says that it does not expect to hold earnings calls in future quarters.
CVS Health and Aetna agreed to merge December 3. The deal, if completed, would combine Aetna's health insurance business and CVS's pharmacy benefit manager and retail pharmacy services to create a new company with annual revenues of about $240 billion.
According to Aetna's Q4 announcement, the deal is expected to close in the second half of 2018. Ahead of the CVS merger, Aetna suspended repurchases of its common shares.
The company's total revenue fell from $15.7 billion in Q4 2016 to $14.9 billion in Q4 2017. The company said the decrease was "primarily due to lower premiums in Aetna's Health Care segment, including lower membership in Aetna's ACA compliant individual and small group products and the temporary suspension of the HIF [health insurance fee] in 2017."
The insurer reported a slight decrease in medical membership from 23.1 million at the end of 2016 compared to 22.2 million at the end of 2017, with a drop in its commercial and Medicaid membership partially offset by higher Medicare Advantage and Medicare Supplement coverage.
Aetna says that the GOP tax bill will increase 2018 adjusted earnings by about $800 million due to a decrease in its corporate income tax rate.
Health insurers tend to pay close to above the prior corporate tax rate of 35%. The tax bill cut the statutory rate to 21%.
The insurer said it effective tax rate was 51.7% for fourth-quarter 2017 compared with 53.5% for fourth-quarter 2016.
Shawn Guertin, Aetna executive vice president and CFO, pointed to Q4 as evidence the company is in a strong position.
“Continued strength within our government business and moderate medical cost trend drove our better than projected total company results in the period. This momentum, combined with our targeted investments position Aetna for another year of operational success in 2018," he said.