Aetna 2012 Annual Report Download - page 58

Annual Report- Page 52
management, which would otherwise have been devoted to day-to-day operations and other opportunities
that may have been beneficial to Aetna.
There can be no assurance that the risks described above will not materialize. If any of those risks materialize, they
may adversely affect Aetna's business, operations, cash flows, financial condition, operating results and/or stock
price.
In addition, Aetna could be subject to litigation related to any failure to complete the proposed acquisition or related
to any proceeding commenced against Aetna to require Aetna to perform its obligations under the Merger
Agreement or the MOU. If the proposed acquisition is not completed, these risks may materialize and may
adversely affect Aetna's business, operations, cash flows, financial condition, operating results and/or stock price.
Certain Risks of Aetna's Business
We operate in an evolving industry that requires us to anticipate changes in customer preferences and to
innovate and deliver products and solutions that demonstrate value to our customers, particularly in
response to marketplace changes from public policy. Our continued business success is dependent on our
ability to grow alternative sources of revenue and earnings and depends upon our ability to achieve
transformational change in our business model through consumer engagement, accountable care
organizations (“ACOs”) and collaborative provider networks, and optimizing business platforms. If we fail
to execute on these strategic pillars, we may not be able to grow and diversify our businesses and offer our
customers products and solutions that are differentiated from those of our competitors.
We operate in a highly competitive environment and in an industry that is subject to significant ongoing changes
from marketplace pressures brought about by customer demands, business consolidations, strategic alliances,
Health Care Reform, and other legislative and regulatory changes and marketing practices. As a result of Health
Care Reform, the declining number of commercially insured people and other factors, our ability to grow profitably
through the sale of traditional Insured health care and related benefits products in the U.S. may be limited. In order
to profitably grow our business in the future, we need to diversify the sources of our revenue and earnings and
transform our business model through investments in consumer engagement, technology and other services for
health systems and provider organizations, including ACOs, and collaborative provider networks, optimizing our
business platforms, HIT and international expansion.
Historically, our direct-to-consumer sales have been limited, and our individual Health Care business has been
small relative to the other businesses in our Health Care segment. Beginning in 2014, we expect to compete for
sales on Insurance Exchanges. Competing on existing and future private health insurance exchanges as well as
Insurance Exchanges will require us to develop or acquire the tools (including social media tools) necessary to
interact with Insurance Exchanges and engage individual consumers using Insurance Exchanges, increase our focus
on individual consumers and expand and improve our consumer-focused sales and marketing channels, customer
interfaces and product offerings. In order to compete effectively on private insurance exchanges and Insurance
Exchanges, we also will have to respond to pricing and other actions taken by existing competitors and potentially
disruptive new entrants. We can provide no assurance that we will be able to compete successfully on Insurance
Exchanges or that we will be able to benefit from any opportunities presented by Insurance Exchanges.
We are seeking to enhance our health care provider networks by entering into collaborative risk-sharing
arrangements, including ACOs, with health care providers. If we fail to execute on this objective, or are less
successful at implementation than our competitors, our ability to profitably grow our business and/or our operating
results may be adversely affected, including by medical costs that are higher than we project and/or medical
membership that is lower than we project.
We are re-engineering our business platforms to meet changing consumer needs and improve our productivity. If
we fail to execute on this objective, or are less successful at implementation than our competitors, our ability to
profitably grow our business and/or our operating results may be adversely affected, including by medical
membership that is lower than we project and/or general and administrative expenses that are higher than we
project.