Aetna Inc (NYSE: AET) stock lost over 3% in the pre-market session on Jan 30th, 2018 due to their weak top line and consequently bottom line for the fourth quarter of 2017 as compared to the prior corresponding period. Aetna stock delivered over 7.4% in this year to date (as of Jan 29th, 2018; Source: Google finance) and rose over 65% in the last one year.
The group’s overall revenue and adjusted revenue reached $14.9 billion and $14.7 billion, respectively, during the fourth-quarter 2017 against $15.7 billion each in the prior corresponding fourth-quarter. For Full-year of 2017, the total revenue and adjusted revenue fell to $60.5 billion and $60.7 billion against $63.2 billion and $63.0 billion respectively, in 2016. 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 in 2017 hurt the overall performance. The group sold Aetna’s domestic group life insurance, group disability insurance, and absence management businesses which also led to the weak total revenue and adjusted revenue in 2017.
The adjusted earnings fell to $411 million for the fourth-quarter 2017 against $578 million in pcp hurt by the lower favorable development of prior-period health care costs estimates in Aetna’s Health Care segment. Investment spending on Aetna’s growth initiatives also hurt the performance.
Consequently, the Net income fell to $1.9 billion against the $2.3 billion for full-year 2016. Lower restructuring and transaction and integration-related costs in 2017 against 2016, offset the fall in adjusted earnings due to costs associated with the termination of the Humana Merger Agreement during first-quarter 2017.
Health Care and Group Insurance cash flows used for operations reached over $178 million during the full-year of 2017 on the back of cash payments related with the termination of the Humana Merger Agreement, the timing of cash collections in Aetna’s Medicare products and a tax payment related with the Group Insurance sale.
Last month, the group and CVS Health made a definitive merger agreement under which CVS Health would acquire all outstanding shares of Aetna. The group’s shareholders would get $145 in cash and 0.8378 of a CVS Health common share for each Aetna common share. The transaction would close by the second half of 2018.