Professional Documents
Culture Documents
2017Investor
Update
AetnaInc.2017
Allrightsreserved.
CautionaryStatement;AdditionalInformation
Certaininformationinthispresentationisforwardlooking,includingAetnasprojectionsastonetincome,adjustedearnings,weightedaveragedilutedshares,netincomepershare,adjustedearningspershare,adjustedpretaxmargin,adjusted
revenueanditscomponents,PennTreatyrelatedguarantyfundassessment,transactionandintegrationrelatedcosts(includingterminationcosts),amortizationofotheracquiredintangibleassets,theincometaxbenefitrelatedtotheitemsexcluded
fromnetincome,Governmentpremiums,MedicareAdvantagepremiums,MedicareAdvantagemembershipgrowthandbeneficiarieswithaccesstoAetnaplans,Medicaidrevenue,U.S.largegroupCommercialrevenue,2018healthinsuranceexchange
participationandindividualCommercialproductexposureandchangestothehealthcaredeliverymodel,AetnasbusinessmodelandAetnasinteractionswithmembers
Forwardlookinginformationisbasedonmanagementsestimates,assumptionsandprojections,andissubjecttosignificantuncertaintiesandotherfactors,manyofwhicharebeyondAetnascontrol.Importantriskfactorscouldcauseactualfuture
resultsandotherfutureeventstodiffermateriallyfromthosecurrentlyestimatedbymanagement,including,butnotlimited to:significantdisruptionsinthemarketforAetnascommonsharesand/orfinancialmarkets;unanticipatedincreasesin
medicalcosts(includingincreasedintensityormedicalutilizationasaresultoffluorotherwise;changesinmembershipmixtohighercostorlowerpremiumproductsormembershipadverseselection;medicalcostincreasesresultingfromunfavorable
changesincontractingorrecontractingwithproviders(includingasaresultofproviderconsolidationand/orintegration);increasedpharmacycosts(includinginAetnaspublichealthinsuranceexchangeproducts));theprofitabilityofAetnasindividual
products,wheremembershipishigherthanAetnapreviouslyprojectedandhashadandmaycontinuetohavemoreadversehealth statusand/orhighermedicalbenefitutilizationthanAetnaprojected;anysuspensionoftheACAshealthinsurerfeefor
2018;adverseimpactsfromanyfailuretoraisetheU.S.FederalgovernmentsdebtceilingoranysustainedU.S.Federalgovernmentshutdown;andchangesinAetnasfuturecashrequirements,capitalrequirements,resultsofoperations,financial
conditionand/orcashflows.Ascurrentlyenacted,healthcarereformwillcontinuetosignificantlyimpactAetnasbusinessoperationsandfinancialresults,includingAetnaspricingandmedicalbenefitratios,andkeycomponentsofthelegislationwill
continuetobephasedinthrough2020.Aetnawillberequiredtodedicatematerialresourcesandincurmaterialexpensesduring2017toimplementhealthcarereform.Significantpartsofthelegislation,includingaspectsofnondiscrimination
requirements,continuetoevolvethroughthepromulgationofregulationsandguidance.Inaddition,pendingeffortsintheU.S.Congresstorepeal,amend,replaceorrestrictfundingforvariousaspectsofhealthcarereformandpendinglitigation
challengingaspectsofthelawcontinuetocreateadditionaluncertaintyabouttheultimateimpactofhealthcarereform.Asaresult,manyoftheimpactsofhealthcarereformareunknown.Otherimportantriskfactorsinclude:adversechangesin
federalorstategovernmentpolicies,legislationorregulations(includinglegislative,judicialorregulatorymeasuresthat wouldaffectAetnasbusinessmodel,repeal,restrictfundingfororamendvariousaspectsofhealthcarereform,limitAetnas ability
topricefortheriskitassumesand/orreflectreasonablecostsorprofitsinitspricing,suchasmandatedminimummedicalbenefitratios,oreliminateorreduceERISApreemptionofstatelaws(increasingAetnaspotentiallitigationexposure));
uncertaintyrelatedtoAetnasaccrualsfortheACA'sreinsurance,riskadjustmentandriskcorridorprograms(3Rs);uncertaintyrelatedtothefundingforandfinalreconciliationswithrespecttotheACA'sriskmanagementandsubsidyprograms;the
implementationofhealthcarereformlegislation,collectionofACAfees,assessmentsandtaxesthroughincreasedpremiums;adverselegislative,regulatoryand/orjudicialchangestoorinterpretationsofexistinghealthcarereformlegislationand/or
regulations(includingthoserelatingtominimummedicallossratio(MLR)rebates);theimplementationofpublichealthinsuranceexchanges;thetimingandamountofandpaymentmethodsforsatisfyingassessmentsforPennTreatyNetwork
AmericaInsuranceCompanyandotherinsolventpayors understateguarantyfundlaws;adverseandlesspredictableeconomicconditionsintheU.S.andabroad(includingunanticipatedlevelsof,orincreasesintherateof,unemployment);reputational
orfinancialissuesarisingfromAetnassocialmediaactivities,datasecuritybreaches,othercybersecurityrisksorothercauses;AetnasabilitytodiversifyAetnassourcesofrevenueandearnings(includingbydevelopingandexpandingAetna'sconsumer
businessandexpandingAetnasforeignoperations),transformAetnasbusinessmodel,developnewproductsandoptimizeAetnasbusinessplatforms;thesuccessofAetnasconsumerhealthandservicesinitiatives;adversechangesinsize,productor
geographicmixormedicalcostexperienceofmembership;managingexecutivesuccessionandkeytalentretention,recruitmentand development;failuretoachieveand/ordelaysinachievingdesiredrateincreasesand/orprofitablemembershipgrowth
duetoregulatoryrevieworotherregulatoryrestrictions,anuncertaineconomyand/orsignificantcompetition,especiallyin keygeographicareaswheremembershipisconcentrated,includingsuccessfulprotestsofbusinessawardedtoAetna;failureto
adequatelyimplementhealthcarereformand/orrepealoforchangesinhealthcarereform;theoutcomeofvariouslitigationand regulatorymatters,includingaudits,challengestoAetnasminimumMLRrebatemethodologyand/orreports,intellectual
propertylitigationandlitigationconcerning,andongoingreviewsbyvariousregulatoryauthoritiesof,certainofAetnaspaymentpracticeswithrespecttooutofnetworkproviders,otherprovidersand/orlifeinsurancepolicies;Aetnasabilityto
integrate,simplify,andenhanceAetnasexistingproducts,processesandinformationtechnologysystemsandplatformstokeeppacewithchangingcustomerandregulatoryneeds;AetnasabilitytosuccessfullyintegrateAetnasbusinesses(including
businessesAetnamayacquireinthefuture)andimplementmultiplestrategicandoperationalinitiativessimultaneously;Aetnas abilitytomanagehealthcareandotherbenefitcosts;adverseprogram,pricing,fundingorauditactionsbyfederalorstate
governmentpayors,includingasaresultofsequestrationand/orchangestoorcurtailmentoreliminationoftheCentersforMedicare&MedicaidServices("CMS")starratingbonuspayments;Aetna'sabilitytomaintainand/orenhanceitsCMSstar
ratings;Aetnasabilitytoreduceadministrativeexpenseswhilemaintainingtargetedlevelsofserviceandoperatingperformance;failurebyaserviceprovidertomeetitsobligationstoAetna;Aetnasabilitytodevelopandmaintainrelationships
(includingjointventuresorothercollaborativerisksharingagreements)withproviderswhiletakingactionstoreducemedicalcostsand/orexpandtheservicesAetnaoffers;AetnasabilitytodemonstratethatAetnasproductsandprocessesleadto
accesstoqualityaffordablecarebyAetnasmembers;Aetnasabilitytomaintainitsrelationshipswiththirdpartybrokers,consultantsandagentswhosellitsproducts;increasesinmedicalcostsorGroupInsuranceclaimsresultingfromanyepidemics,
actsofterrorismorotherextremeevents;changesinmedicalcostestimatesduetothenecessaryextensivejudgmentthatisusedinthemedicalcostestimationprocess,theconsiderablevariabilityinherentinsuchestimates,andthesensitivityofsuch
estimatestochangesinmedicalclaimspaymentpatternsandchangesinmedicalcosttrends;andadowngradeinAetnasfinancial ratings.FormorediscussionofimportantriskfactorsthatmaymateriallyaffectAetna,pleaseseetheriskfactors
containedinAetnas2016AnnualReportonForm10K(Aetnas2016AnnualReport)andAetnasQuarterlyReportonForm10QforthequarterendedMarch31,2017(AetnasQuarterlyReport),eachonfilewiththeSecuritiesandExchange
Commission.YoushouldalsoreadAetnas2016AnnualReportandAetna'sQuarterlyReportforadiscussionofAetnashistoricalresultsofoperationsandfinancialcondition.
Noassurancescanbegiventhatanyoftheeventsanticipatedbytheforwardlookingstatementswilltranspireoroccur,orifanyofthemdooccur,whatimpacttheywillhaveontheresultsofoperations,financialconditionorcashflowsofAetna.Aetna
doesnotassumeanydutytoupdateorreviseforwardlookingstatements,whetherasaresultofnewinformation,futureeventsorotherwise,asofanyfuturedate.
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 2
Welcome
Consistentmissionandstrategy
HowAetnasstrategywilldrivegrowth
Aetnastrackrecordofexecution
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 3
Agenda
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 4
Consistent
MissionandStrategy
MarkBertolini
ChairmanandChiefExecutiveOfficer
2017AetnaInvestorUpdate|May12,2017 AetnaInc.
Whoweare:theAetnaWay
Weputthepeopleweserveat
thecenterofeverythingwedo
TheAetnaWayoutlinesthevalues
bywhichwelive,asthe
foundationforourculture,
strategyandhowwerunour
business
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 6
AetnasExecutiveTeam
Karen S. Lynch Richard di Benedetto Thomas W. Weidenkopf
President EVP, Aetna International EVP, Chief Human Resources
Officer
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 7
EvolvingHealthcareLandscape
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 8
NavigatingtheEvolvingLandscape
$63B $8.23
Aetnahasaproven
$34B trackrecordof
$3.82 deliveringresultsin
11% 14%
CAGR CAGR aneverchanging
industry
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 9
andDeliveringSuperiorShareholderReturn
TotalShareholderReturn
(TSR) Overthelast6+years,
(2010YTD2017)*
405% AetnasTSRhasexceeded
342% theaverageofour
representativepublicly
tradeddiversifiedpeers
118% andismorethan3x the
returnoftheS&P500
S&P500 MCOAverage
*TotalShareholderReturnfromDecember31,2010 May9,2017 Source:Bloomberg;MCOAverageTSRincludesUNH,ANTM,HUM,CI
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 10
AetnasMission:
Buildinga
HealthierWorld
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 11
CurrentSystemisFailingtooManyPeople
Poorlymanaged
Consumer chronicconditions Lowvaluefor
directeddecision caredelivered
Overspending makingontherise 50% (6)
onhealthcare, U.S.ranked
underspending
43% growth OFPOPULATIONIS
CHRONIC,COSTS$2.25T(7)
34th of34
INENROLLMENTOFCONSUMER AMONGDEVELOPEDCOUNTRY
onsocial DIRECTEDHEALTHCAREPLANS PEERS,DESPITESPENDING
(20162020)(5) 2X3XMOREPERCAPITA(8)
RATIOOFHEALTH TO
SOCIALSPENDING(4)
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 12
ConventionalOperatingModelisnotEffective
Conventional
ManagedCare
Operating Contractwith Underwrite Manage
Model providersfor risk utilization
bestprice
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 13
FactorsImpactingLifeExpectancy
Economicstability Careplanadherence
Source:KaiserFoundation:BeyondHealthCare:TheRoleofSocialDeterminantsinPromotingHealthandHealthEquity2015
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 14
TheFocusHasBeenTooNarrow
Conventionalfocusof
managedcare
10% 40%
HEALTH INDIVIDUAL
CARE BEHAVIOR
Clinicalcare
Limiteddiseasemanagementand
Stressmanagement
wellnesseffortstargettheaverage
Dietandexercise
Careplanadherence
Source:KaiserFoundation:BeyondHealthCare:TheRoleofSocialDeterminantsinPromotingHealthandHealthEquity2015
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 15
NeedtoBroadenDefinitionofHealth
Aetnaistakingamoreholisticviewofhealth
Source:KaiserFoundation:BeyondHealthCare:TheRoleofSocialDeterminantsinPromotingHealthandHealthEquity2015
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 16
totheOneEstablishedin1948
Astateofcompletephysical,mental
andsocialwellbeingandnotmerely
theabsenceofdiseaseorinfirmity
WHOConstitution
Source:WorldHealthOrganization,http://www.euro.who.int/__data/assets/pdf_file/0003/152184/RD_Dastein_speech_wellbeing_07Oct.pdf
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 17
Changingthe
DeliveryModel
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 18
AetnasProviderCollaborationExperience
Create adifferentiatedrelationship
Simplify providerconsumerinteractions
Optimize andenhancecaredelivery
Equip providerswiththetoolstosucceed
Aetnacontinuestoworkwithproviderstoredefineour
relationshipandalignincentives
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 19
MeetingProviderswheretheyare
JointVenture
(JV)
themmoveup HighPerformanceNetwork(HPN)
thecontinuum AccountableCareOrganization(ACO)
Attribution
ofvaluebased Episode Based BundledPayments
PayforPerformance(P4P)
Risk
FeeforService
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 20
VBCModelsCanDeliverLowerCost
Wemadeapositive,
longtermchoice,whichallowed
2015ACOriskadjustedcosts ustoprovidehigherquality
optionsforouremployees.And,
were 12.4% betterthan wepaidless overthelastfour
nonACOcosts yearsthanwedidwithourother
carrier.
VPofHRandOrganizationalDevelopment
CurrentClient
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 21
Provider
Collaboration:
Necessary,but 10%
HEALTH
NotSufficient CARE
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 22
Fromthe
doctors
office
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 23
tothe
kitchen
table
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 24
AetnaisTakingaPersonalizedApproach
Meetingmembers HEALTH
CARE
whereTHEY are,to INDIVIDUAL
BEHAVIOR
SOCIALAND
addresstheentire ENVIRONMENTAL
pictureofeach
membershealth
determinants GENETICS
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 25
MakingtheJourneyFeelLessLikeThis
Specialists
HealthcareSystem
Lackofsimplicity Tertiary Diagnostics Pharmacy
care
Outpatient Clinics
services
Lackofpersonalization
PCPs
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 26
andMoreLikeThis
Personalized
careplan
Holistic
assessment Community Achieve
basedcare
personal
health
ambitions
Guidance
throughlife
Accessto events
value
basedcare
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 27
AetnaisPositioningto
Rewards
Advanced Care
Analytics Models becomethehealth
partnerofchoicefor
peopletorealizetheir
Digital Member
personalizedhealth
Tools Data ambitions
Price
Transparency
Tools
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 28
IdentifyingPersonalizedHealthAmbitions
andjoiningour
memberstohelp
achievethem
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 29
ItsNotJustWhat,ItsWhere
Buildingonretailrelationships Community
Touch
Keepingmembersintheir
Points
communities
Connectivityinthehome
LocalCare NextGen
Coordinationofservices Teams DigitalTools Platformtoempower
selfsupport
Engagefamilyandfriends
inmemberscare
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 30
AetnaCareModelsinAction
MedicaidVideo
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 31
Strategy
Mission:
Buildinga
Healthier
World
Results Tactics
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 32
BuildOffAetnasCoreBusinesses
Integrated
ValueBased Pharmacy Developingthenext
CareModels Solutions generationtools,
capabilitiesandcost
structuretodrive
Digital
coregrowth
Enhanced Engagement
Analytics Tools
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 33
AetnasValueBasedCareGoals
Over48% ofAetnas
medicalcostsflow
throughsomeformof
valuebasedcaremodel*
75%
goalby
2020
*At1/31/17
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 34
AetnasIntegratedPharmacySolution
CaseStudy
AetnaIntegratedRxversusMedicalOnly
ReductioninMedical
34% PMPMtrend20122015
Increaseinengagementof IntegratedMedical
memberswithdiabetesor andPharmacy
45%+ hypertension
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 35
EnhancingConsumerEngagement
Finances
Navigate QualityCare Aetnaisapplying
Benefits
advancedanalyticsand
nextgenerationdigital
Shop/Buy Pharmacy toolstosupport
memberengagementin
anincreasinglyretail
Rewards Wellness marketplace
CareManagement
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 36
BuildingaPremierAnalyticsEngine
Consumer/
Member
Socioeconomic
Provided
Data
Data
DeviceData
Utilizingawealthof
Clinical datatobetterinform
Data
allaspectsofAetnas
Member
business
Interaction
Data
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 37
DataDrivenApproachtoIncreaseEngagement
Enabletodeeply understandcommunities
Activate
Help
community
providers
based
deliver
consumer
qualitycare
engagement
Careplanrecommendations Communitybasedcare
Populationhealthdata Personalizedengagement
Holisticviewofmember Nextgendigitaltools
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 38
AConsumerFocusBenefitsallParties
DifferentiatedConsumer
Employer
Experience
Winning
Proposition
Improvedhealth Consumer
Moreproductive
Reducedlifetimecost
Government
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 39
Aetna,aTrustedHealthPartner
Youdontjoinus,
wejoinyou
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 40
Q&A
MarkBertolini
ChairmanandChiefExecutiveOfficer
2017AetnaInvestorUpdate|May12,2017 AetnaInc.
DrivingResults
ShawnGuertin
ChiefFinancialOfficer
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 42
Strategy
Mission:
Buildinga
Healthier
World
Results Tactics
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 43
AetnasGrowthPriorities
DriveContinuedGovernmentGrowth
consistently
grow
MaintainCommercialStrength revenue&adjusted
earnings
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 44
GovernmentProgramsareDrivingGrowth
2%
8%
2017PAdjustedRevenue(1) 43%
Government
LargeGroup& Other
SmallGroup
Individual 47%
Note:OtherincludesInternationalHealthandGroupInsurancesegment.LargeCasePensionsrevenueisexcluded
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 45
AetnasGrowthPriorities
AccelerateDiversifiedGrowth
Anopportunityto
DriveContinuedGovernmentGrowth servemorelives
whilegrowingthe
MaintainCommercialStrength
topandbottomline
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 46
AetnasGovernmentGrowthTrackRecord
GovernmentPremiums
(billions)
Aetnahasdelivered:
~$28
$26.2
$22.9 Consistentmembershipgrowth
$21.0
$15.2 Strongtoplinetrajectory
SolidAdjustedPretaxMargin
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 47
LedbyMedicareAdvantageGrowth
Medicare AdvantagePremium
(billions)
~$16.4
Placingfocuson $14.9
$13.3
quality&access $12.0
allowsAetnatodrive $9.0
significantgrowth
inMedicareAdvantage
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 48
AetnaAchievedIndustryLeading*StarRatings
%ofMembersin4+StarPlans
92% Realtimedatadrivenapproach
85%
79% Strongprovidercollaboration
models
Caremanagementmodelsthat
engagemembers
Serviceexcellence
Source:calculatedbasedonCMSpublications
2015 2016 2017 *Highest%ofmembersinMAplanswith2017Starratingsofatleast4.0amongour
publiclytradedpeers.Basedon2014,2015and2016DecemberCMSenrollment.
StarRatings StarRatings StarRatings
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 49
OpportunitytoExpandOurFootprint
%ofMABeneficiaries
Expandingourreach
WithAccesstoAetnaPlans Upto
inMedicare 60%
isatoppriority 56%
49%
45%
Newgeographieswill
compliment
aboveindustry
growth 2015 2016 2017 2018P
Source:CMSenrollment(2015,2016)
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 50
AetnasMedicareGrowthModel
Targeted
Geographic expansion
Aetna Expansion
specific
growth Strongstars
drivers Existing Caremodel Project
Footprint Providerrelationships midteens
SG&A
growth
1011Kageinto
Industry Medicareeveryday
drivers IncreasedMA
Penetration
Aetnaprojectsmidteensgrowthinits
MedicareAdvantagemembership
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 51
TrackRecordofSignificantMedicaidGrowth
MedicaidRevenue
$8.4B ~$8.4B
$7.4B Newcontractwins
$6.7B
andexpansion
$4.1B ofexistingrelationships
drive growth
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 52
BuildingonOurConsistentMedicaidQuality
2016NCQAHEDISscoresacrossmultiple
90th childhood,maternity,behavioraland
Percentile chronicconditionmeasures
2016NCQArankingforAetnas
#1 FloridaMedicaidprogram
#1 Rankingin2016NevadaRFP
#2 Rankingin2016VirginiaRFP
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 53
RecentlyAwardedMedicaidBusiness
2015 2017
FL CHIP IL MLTSS
50% of2016
IL TANF/ACA
KY Medicaid
LA ACA
Medicaidrevenue NV Medicaid
camefromrecently LA BehavioralHealth VA LTSS
awardedbusiness MI Medicaid WV Medicaid
TX STARKids AZ LTSS
WV BehavioralHealth/ACA
Withasizablenewbusinesspipeline,Aetnaiswell
positionedforlongtermgrowth
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 54
AetnasGrowthPriorities
AccelerateDiversifiedGrowth Deploycapabilities&
expertiseto
DriveContinuedGovernmentGrowth
preserve
MaintainCommercialStrength margin&
membership
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 55
StableProfitability,LargeGroupCommercial
U.S.LargeGroup
CommercialRevenue(billions)/
AdjustedPreTaxMargin% Pricedconsistentwithprojected
$17.5 ~$18.0 trendinLargeGroupCommercial
$17.0 $17.0
Insured
12.7% 12.5%
12.3%
11.8% Strongadjustedpretaxmargin
profile
Deliversconsistentcashflow
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 56
U.S.LargeGroupCommercialBusiness
+20%
11.8m adjusted
Lowsingledigit
ASC members pretaxmargin
volumegrowth
served projection
target
Midtohigh
2.7m singledigitadjusted
Toplinegrowth
Insured members pretaxmargin
drivenbypricing
served totrend
target
Note:Enrollmentat3/31/17
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 57
SmallGroupTransition
2017PMembership
AetnasFocus: 26%
14%
TransitionKeepWhatYouHave ~1M
andACAtoalternativefunding Members 33%
products 27%
Technologyenabledsolutions
KWYH ACA 51100 AFA
Midsingledigitadjustedpretax
margintarget Relativeto
targetmargins + In line In line
Note:AFAisAetnaFundingAdvantageproduct
~8%of2017PAdjustedRevenue(1)
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 58
ExchangeParticipation
2016 2017 2018
15ExchangeStates 4ExchangeStates Expecttosignificantly
reduceexposureto
960kyearendindividual 255k1Q2017individual individualCommercial
membership membership products
~$4billioninrevenue ~$1billioninrevenue
$450millionpretaxloss Projectedlowerlosses
Aetnas2017exchangeparticipationprojected
toreducefinancialexposure
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 59
ConsistentNonACACompliantRevenueGrowth
AdjustedRevenue(1)
(inbillions)
7.4%NonACACAGR
Aetnas
ACACompliant*
nonACA
revenueexhibits
steadygrowth
2013 2014 2015 2016 2017P
*CommercialSmallGroupandIndividualproducts
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 60
AetnasRevenueGrowthPotential
2017PAdjustedRevenue(1)Profile
RevenueGrowth
Products
Profile
Lowtomid
Government teensCAGR
47% Aetnaispositioned
todrivemidtohigh
singledigit topline
Lowmid organicgrowth
LargeGroup&Other singledigitCAGR
43%
SmallGroup
8% Flattodeclining
IndividualCommercial
2%
Note:OtherincludesInternationalHealthandGroupInsurancesegment.LargeCasePensionsrevenueisexcluded
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 61
AetnaHasProducedConsistentMargins
Aetnaprojectswewillachieve
ourhighsingledigit
adjustedpretax 7.9% 7.6% 8.4% 8.3% ~8.0%
margin(3) targets in
2017despiteincreasedmixof
governmentbusinessand
continueddragfromACA
compliantproducts 2013 2014 2015 2016 2017P
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 62
StrongCapitalDeploymentTrackRecord
20102016CapitalDeployment
$1.7B ShareholderDividend In1Q2017
$2.4B InvestforOrganicGrowth
Nearly Doubled
$23B $10.9B TargetedM&A
shareholder
dividendpayable
ofcapital
in2Q
deployed
20102016 $3.3B
AcceleratedShare
$7.8B ShareRepurchases
Repurchase
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 63
CreatingValueThroughCapitalDeployment
TargetedM&A
OrganicAdjusted 1.4%*
+
EarningsGrowth DividendYield
ShareRepurchase
LongTermGrowthModel: ShareholderDividend
LowDoubleDigitAdjustedEPSGrowthOverTime
*Basedon5/8/17closingstockprice
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 64
92% ~13%
MAMembers
GrowthinIndividual ~7.4%
MAMembersin1Q17 NonACACompliant
In4starplans
RevenueCAGR
orbetterbasedon 2013 2017P
2017Starratings
29%
~8% AnnualizedTotalShareholder
Return12/31/10 5/9/2017 ~13%
2017P
Adjusted EPS(2)
Adjusted
PreTax 100% CAGR
2010 2017Pmidpoint
Margin(3) IncreaseinShareholder
DividendasofQ22017
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 65
KeyTakeaways
Aetnaiswellpositionedtodrive
midtohighsingledigit
toplinegrowth
Aetnahasgeneratedconsistent
adjustedpretaxmargins hasproducedstrong
totalshareholderreturn
Aetnahasconsistentlydelivered
strongadjustedEPSgrowth
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 66
Q&A
MarkBertolini ShawnGuertin
ChairmanandChiefExecutiveOfficer
2017AetnaInvestorUpdate|May12,2017
ChiefFinancialOfficer
AetnaInc.
Conclusion
MarkBertolini
ChairmanandChiefExecutiveOfficer
2017AetnaInvestorUpdate|May12,2017 AetnaInc.
Footnotes
(1)Projectedfullyear2017adjustedrevenueexcludesfromtotalrevenue(GAAPmeasure)interestincomeontheproceedsoftheJune2016debtfinancing ofless
than$0.1billionpretaxandnetrealizedcapitallossesof$0.3billionpretax.TheinterestincomeontheproceedsoftheJune 2016debtfinancingwasexcludedfrom
totalrevenueasitneitherrelatestotheordinarycourseofAetnasbusinessnorreflectsAetnasunderlyingbusinessperformance.Aetnawillexperiencenetrealized
capitalgainsornetrealizedcapitallossesduringtheremainderof2017,howeverAetnacannotprojecttheamountofsuchfuturegainsorlossesasdescribedbelow
in(2).BelowisareconciliationofAetnastotalrevenuetoadjustedrevenuefortheyearsendedDecember31,2010and2016:
2010 2016
TotalRevenue(GAAPMeasure) $34,252 $63,155
Interestincomeonproceedsoftransactionrelateddebt 0 (23)
Netrealizedcapitalgains (228) (86)
AdjustedRevenue $34,025 $63,046
(2)NetincomereferstonetincomeattributabletoAetnareportedinAetnasConsolidatedStatementsofIncomeinaccordancewithU.S.generallyaccepted
accountingprinciples(GAAP).Unlessotherwiseindicated,allreferencesinthisdocumenttonetincomeandnetincomepersharearebaseduponnetincome
attributabletoAetna,whichexcludesamountsattributabletononcontrollinginterests.Projectedfullyear2017netincomeandadjustedearningspersharereflect
arangeof334millionto335millionweightedaveragedilutedshares.Projectedfullyear2017adjustedearningsexcludefromnetincomethelossonearly
extinguishmentoflongtermdebt,theprojectedPennTreatyrelatedguarantyfundassessments,projectedtransactionandintegrationrelatedcosts(including
terminationcosts)primarilyrelatedtotheproposedacquisitionofHumanaInc.(theHumanaTransaction),estimatedamortizationofotheracquiredintangible
assets,netrealizedcapitalgainsandlosses,otheritems,ifany,thatneitherrelatetotheordinarycourseofAetna'sbusinessnorreflectAetna'sunderlyingbusiness
performanceandthecorrespondingtaxbenefitorexpenserelatedtotheitemsexcludedfromnetincomeandnetincomepersharediscussedabove.
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 69
Footnotes(contd.)
Thetablebelowreconcilesprojected2017netincomeandnetincomepersharetoprojected2017adjustedearningsandadjustedearningspershare,
respectively:
ReconciliationofProjected2017NetIncome(TotalandEPS)toProjected2017AdjustedEarnings(TotalandEPS)
(Billions,exceptpercommonsharedata) Total$ EPS
Projectednetincome(GAAPmeasure) Approximately$1.6 $4.48to$4.68
Lossonearlyextinguishmentoflongtermdebt 0.3 0.74
PennTreatyrelatedguarantyfundassessments 0.2 0.69
Transactionandintegrationrelatedcosts(includingterminationcosts) 1.2 3.69
Amortizationofotheracquiredintangibleassets 0.2 0.70
Netrealizedcapitallosses 0.3 1.00
Incometaxbenefit (0.8) (2.50)
Projectedadjustedearnings Approximately$3.0 $8.80to$9.00
Aetnawillexperiencenetrealizedcapitalgainsornetrealizedcapitallossesduringtheremainderof2017,howeverAetnacannotprojecttheamountofsuchfuture
gainsorlosses.Therefore,AetnahasassumednonetrealizedcapitalgainsorlossesafterMarch31,2017forpurposesofprojectingnetincomeandnetincomeper
share.Aetna'sannualnetrealizedcapitalgainsorlossesrangedfromanetrealizedcapitallossof$65milliontoanetrealizedcapitalgainof$86millionduring
calendaryears2014through2016.
Althoughtheexcludeditemsmayrecur,managementbelievesthatadjustedearningsandadjustedearningspershareprovideamore usefulcomparisonofAetna's
underlyingbusinessperformancefromperiodtoperiod.AmortizationofotheracquiredintangibleassetsrelatestoAetna'sacquisitionactivities,howeverthis
amortizationdoesnotdirectlyrelatetotheunderwritingorservicingofproductsforcustomersandisnotdirectlyrelatedtothecoreperformanceofAetnas
businessoperations.Netrealizedcapitalgainsandlossesarisefromvarioustypesoftransactions,primarilyinthecourseofmanagingaportfolioofassetsthat
supportthepaymentofliabilities.However,thesetransactionsdonotdirectlyrelatetotheunderwritingorservicingofproductsforcustomersandarenotdirectly
relatedtothecoreperformanceofAetna'sbusinessoperations.Adjustedearningsisthemeasurereportedtothechiefexecutive officerforpurposesofassessing
consolidatedfinancialperformanceandmakingoperatingdecisions.NonGAAPfinancialmeasureswedisclose,suchasadjustedearnings,adjustedearningsper
share,adjustedpretaxmarginandadjustedrevenue,shouldnotbeconsideredasubstitutefor,orsuperiorto,financialmeasuresdeterminedorcalculatedin
accordancewithGAAP.
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 70
Footnotes(contd.)
BelowisareconciliationofAetnasnetincomepersharetoadjustedearningspersharefortheyearsendedDecember31,2010and2016:
2010 2016
Netincomepershare(GAAPMeasure) $4.18 $6.41
Transactionandintegrationrelatedcosts 0.16 1.46
Litigationrelatedproceeds (0.37) 0
Restructuringcosts 0.11 1.14
Reductionofreserveforanticipatedfuturelosseson
0 (0.36)
discontinuedproducts
Amortizationofotheracquiredintangibleassets 0.23 0.70
Netrealizedcapitalgains (0.54) (0.25)
Incometaxbenefit 0.05 (0.87)
Adjustedearningspershare $3.82 $8.23
(3)InordertoprovideusefulinformationregardingAetna'sprofitabilityonabasiscomparabletoothersintheindustry,withoutregardtofinancingdecisions,
incometaxesoramortizationofotheracquiredintangibleassets(eachofwhichmayvaryforreasonsnotdirectlyrelatedtothe performanceoftheunderlying
business),Aetna'sadjustedpretaxmarginisbasedonadjustedearningsexcludinginterestexpenseandincometaxes.Managementalsousesadjustedpretax
margintoassessAetna'sperformance,includingperformanceversuscompetitors.
Theprojectedfullyear2017adjustedpretaxmarginiscalculatedbydividingadjustedearningsbeforeincometaxes(excludinginterestexpense)byadjusted
revenue.Adjustedearningsbeforeincometaxes(excludinginterestexpense)excludesfromincomebeforeincometaxes(GAAPmeasure)thepretaxreconciling
itemsinthenetincometoadjustedearningsreconciliationprovidedin(2)aboveandinterestexpenseofapproximately$0.3billion.Theapproximately$0.3billion
ofinterestexpenseexcludesapproximately$0.1billionofcostsassociatedwiththetermloancreditagreementexecutedinconnectionwiththeHumana
Transactionandthenegativecostofcarryonthe$13.0billionseniornotedebtfinancingthatAetnaobtainedinJune2016topartiallyfundtheHumanaTransaction.
Thesecostsareincludedwithintransactionandintegrationrelatedcosts.Referto(1)aboveforadescriptionofprojectedfullyear2017adjustedrevenue.
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 71
Footnotes(contd.)
BelowarereconciliationsofAetnasIncomebeforeincometaxestoadjustedearningsbeforeincometaxesandtotalrevenueto adjustedrevenueanda
calculationofadjustedpretaxmarginfortheyearsendedDecember31,2013to2016:
2013 2014 2015 2016
Incomebeforeincometaxes(GAAPmeasure) $2,941 $3,500 $4,236 $3,991
InterestExpense 313 329 319 317
Transactionandintegrationrelatedcosts 333 201 258 517
Restructuringcosts 0 0 15 404
Reductionofreserveforanticipatedfuturelossesondiscontinuedproducts (86) 0 0 (128)
Litigationrelatedproceeds 0 0 (110) 0
Lossonearlyextinguishmentoflongtermdebt 0 181 0 0
Pensionsettlementcharge 0 112 0 0
Releaseoflitigationrelatedreserve 0 (103) 0 0
Chargeforchangeinlifeinsuranceclaimpaymentpractices 55 0 0 0
Reversalofallowanceandgainonsaleofreinsurancerecoverable (50) 0 0 0
Amortizationofotheracquiredintangibleassets 214 243 255 247
Netrealizedcapitallosses(gains) 9 (80) 65 (86)
Adjustedearningsbeforeincometaxes (A) $3,729 $4,383 $5,038 $5,262
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 72
Footnotes(contd.)
(4)ElizabethBradleyandLaurenTaylor,TheAmericanHealthcareParadox:WhySpendingmoreisgettingusless(NewYork:PublicAffairs,
2013).
(5)AetnaEnterpriseStrategy2015MarketOutlookModel(Consumer=PublicandPrivateExchanges,IndividualMedicareAdvantage,
ManagedMedicaid)
(6)TheGrowingCrisisofChronicDiseaseintheUnitedStates;availablefrom:
http://www.fightchronicdisease.org/sites/default/files/docs/GrowingCrisisofChronicDiseaseintheUSfactsheet_81009.pdf.
(7)MultipleChronicConditionsChartbook,AgencyforHealthcareResearchandQuality;availablefrom:
https://www.ahrq.gov/sites/default/files/wysiwyg/professionals/preventionchroniccare/decision/mcc/mccchartbook.pdf
NationalHealthExpenditureProjections;availablefrom:https://www.cms.gov/ResearchStatisticsDataandSystems/StatisticsTrends
andReports/NationalHealthExpendData/NationalHealthAccountsProjected.html.
(8)TheCommonwealthFund,June2014;availablefrom:http://www.commonwealthfund.org/~/media/files/publications/fund
report/2014/jun/1755_davis_mirror_mirror_2014.pdf
(9)NicoleCafarella Lallemand,ReducingWasteinHealthCare,HealthAffairs(2012);availablefrom:
http://healthaffairs.org/healthpolicybriefs/brief_pdfs/healthpolicybrief_82.pdf.
(10)RealMedianHouseholdIncomeintheUnitedStates;availablefrom:https://fred.stlouisfed.org/series/MEHOINUSA672N.
(11)ConsumerExpenditureSurvey;availablefrom:https://www.bls.gov/cex/.
2017AetnaInvestorUpdate|May12,2017 AetnaInc. 73