Aetna (AET) was founded in 1853. It’s one of the largest private managed care organizations (XLV) in the US. For more details about how a managed care organization works, read 2 key business models of the health insurance industry.
Aetna’s headquarters are in Hartford, Connecticut. The company serves over 46 million customers throughout the US and other markets in the Middle East, Asia, Africa, and Europe. Aetna has a market capitalization of about $34.9 billion. This is less than other companies in the industry—like UnitedHealth Group and Anthem (ANTM). It’s market capitalization was greater than Humana (HUM) and Cigna (CI).
4Q14 earnings review
On February 3, 2015, Aetna reported its 4Q14 financial results. The company reported revenue of $14.7 billion in 4Q14—an increase of 12.1% year-over-year, or YoY. Aetna also reported net income of $232 million in 4Q14. This was a decline of 37.1%—compared to the company’s net income of $368.9 million in 4Q13.
Aetna reported $1.22 in adjusted diluted EPS (earnings per share) in 4Q14. This was a 15.9% decline from the $1.45 diluted EPS in 4Q13. The decline was mainly attributed to the company’s higher spending on growth opportunities. It was also attributed to expenses related to fees and taxes imposed by the Affordable Care Act.
In 4Q14, despite the drop in profits, Aetna managed to deliver profits in line with Wall Street analysts’ expectations. However, the company’s revenue in 4Q14 beat analysts’ expected revenue of $14.55 billion. In 2014, Aetna returned about $1.5 billion to its shareholders through cash and share repurchases. As a result, the company maintained high share prices due to strong operational performance, share repurchases, and investments in future growth opportunities.