Aetna 2013 Annual Report Download - page 12

Annual Report- Page 6
(including accountable care organizations (“ACOs”)), and prepare for the consumer retail marketplace by, among
other things, executing on our Public Exchange and private health insurance exchange (“Private Exchange”)
strategies.
Refer to “Forward-Looking Information/Risk Factors” beginning on page 46 for information regarding other
important factors that may cause our actual results to differ from those currently projected in “Outlook for 2014”
and/or otherwise materially affect us.
Management Update
Lonny Reisman, M.D., Aetna's Chief Medical Officer, is expected to leave the Company in April 2014.
2011 Acquisitions
During 2011, we completed the acquisitions of Medicity Inc. (“Medicity”), Prodigy Health Group (“Prodigy”),
Genworth Financial, Inc.'s (“Genworth's”) Medicare Supplement business and related blocks of in-force business
and PayFlex Holdings, Inc. (“PayFlex”).
• Medicity Inc.
In January 2011, we acquired Medicity, a health information exchange company, for approximately $490
million, net of cash acquired. We recorded goodwill related to this transaction of approximately $385
million, an immaterial amount of which is tax deductible. This acquisition enabled us to offer a set of
convenient, easy-to-access technology solutions for physicians, hospitals and other health care providers.
Medicity is a key component of our ACS offerings. Our ACS solutions are focused on growing
membership in our medical products through provider collaborations that are designed to lower medical
costs for us and our customers, making our products more affordable.
• Prodigy Health Group
In June 2011, we acquired Prodigy, a third-party administrator of self-funded health care plans, for
approximately $600 million, net of cash acquired. We recorded goodwill related to this transaction of
approximately $445 million, of which approximately $52 million is tax deductible. Prodigy extended our
capabilities in the third-party administrator business and provided a separate option under the Prodigy
brands that addresses affordability and quality for middle-sized and small businesses and customers who
are primarily price-focused. In addition to enhancing our medical product offerings, Prodigy complements
our ACS initiatives.
• Genworth Financial, Inc.’s Medicare Supplement Business and Related Blocks of In-Force Business
In October 2011, we acquired Genworth's Medicare Supplement business and related blocks of in-force
business for approximately $276 million. We recorded $53 million of goodwill related to this transaction.
The excess of the purchase price over the fair market value of the net assets acquired, including goodwill, is
tax deductible as a result of the transaction being treated as an asset purchase for tax purposes. This
acquisition brought members and enhanced our capabilities to grow our Medicare Supplement business,
which include access to commercial retirees and Medicare Prescription Drug Plan members, multi-channel
distribution and our other product offerings.
• PayFlex Holdings, Inc.
In October 2011, we acquired PayFlex, one of the nation’s largest independent account-based health plan
administrators, for approximately $200 million, net of cash acquired. We recorded goodwill related to this
transaction of approximately $149 million, an immaterial amount of which is tax deductible. Acquiring
PayFlex extended our ability to provide members with flexible, customized, easy-to-use tools and solutions
to better manage their health care expenses, and those capabilities enhance our medical product offerings.
Refer to Notes 3 and 7 of Notes to Consolidated Financial Statements beginning on pages 91 and 99, respectively
for additional information.