Aetna 2015 Annual Report Download - page 83

Annual Report- Page 77
disruption or unavailability, reduced service quality and effectiveness, increased or duplicative costs, an inability to
meet our obligations to our customers or require us to seek alternative service providers on less favorable contract
terms, any of which can adversely affect our business, reputation and/or operating results. Furthermore, where our
arrangements with these service providers are not acceptable to our customers, we must make alternate
arrangements, which may be more costly and difficult to implement.
In particular, we have entered into agreements with our PBM services suppliers to provide us and certain of our
customers and members with certain PBM services. If our PBM agreement with CVS or our agreements with our
other PBM services supplier were to terminate for any reason or one of our PBM services supplier’s ability to
perform their respective obligations under their agreements with us were impaired, we may not be able to find an
alternative supplier in a timely manner or on acceptable financial terms. As a result, our costs may increase, we
would not realize the anticipated benefits of our PBM agreement with CVS or our other agreements for PBM
services (including projected operating efficiencies), and we may not be able to meet the full demands of our
customers, any of which could have a material adverse effect on our business, reputation and/or operating results.
Risks Related to Our Acquisitions and International Operations
We expect to continue to pursue acquisitions and other inorganic growth opportunities, which may be
unsuccessful, cause us to assume unanticipated liabilities, disrupt our existing business, be dilutive or lead us to
assume significant debt, among other things.
We completed the bswift and InterGlobal group acquisitions in 2014 and the Coventry acquisition in 2013 and
currently expect to complete the Proposed Acquisition in the second half of 2016. We expect to continue to pursue
acquisitions, joint ventures, strategic alliances and other inorganic growth opportunities as part of our growth
strategy. In addition to integration risks, some other risks we face with respect to acquisitions and other inorganic
growth strategies include:
• We frequently compete with other firms, some of which may have greater financial and other resources and
a greater tolerance for risk, to acquire attractive companies;
• The acquired and/or joint venture businesses may not perform as projected;
• The goodwill or other intangible assets established as a result of our acquisitions may be incorrectly valued
or may become non-recoverable;
• We may not obtain the projected synergies as we integrate the acquired businesses (including Humana
following the completion of the Proposed Acquisition);
• We may assume unanticipated liabilities, including those that were not disclosed to us or which we
underestimated;
• We may experience difficulties in integrating acquired businesses into our existing operations (including
our internal control environment), be unable to integrate acquired businesses successfully or as quickly as
expected, and be unable to realize anticipated economic, operational and/or other benefits in a timely
manner or at all, which could result in substantial costs and delays or other operational, technical or
financial problems;
• The acquired businesses, or the pursuit of other inorganic growth strategies, could disrupt or compete with
our existing businesses, distract management, result in the loss of key employees, divert resources, result in
tax costs or inefficiencies and make it difficult to maintain our current business standards, controls,
information technology systems, policies, procedures and performance;
• We may finance future acquisitions and other inorganic growth strategies by issuing common stock for
some or all of the purchase price, which would dilute the ownership interests of our shareholders;
• We will incur significant debt to complete the Proposed Acquisition and may incur significant debt in
connection with other acquisitions (whether to finance acquisitions or by assuming debt from the businesses
we acquire);
• We may not have the expertise to manage and profitably grow the businesses we acquire, and we may need
to rely on the retention of key personnel and other suppliers of companies we acquire, which may be
difficult or impossible to accomplish;