Aetna 2015 Annual Report Download - page 9

Annual Report- Page 3
Total revenue increased during 2015 compared to 2014, primarily due to membership growth in our Government
business as well as higher Health Care premium yields, partially offset by membership losses in our group
Commercial Insured products. Total revenue increased in 2014 compared to 2013 primarily as a result of
membership growth in our Health Care segment and the effects of pricing actions designed to recover the fees and
taxes mandated by the ACA (as defined below), as well as higher Health Care premiums from the May 2013
acquisition of Coventry.
Total medical membership at December 31, 2015 remained relatively flat compared to December 31, 2014,
primarily reflecting declines in our Commercial Insured products substantially offset by growth in our Medicare
and Medicaid products. Refer to “Health Care - Membership” on page 10 for further information.
During the past three years our cash flows supported both new and ongoing initiatives.
We generated substantial cash flows in the past three years, which we used to support our ordinary course operating
activities; support our growth strategies, including partially funding the Coventry acquisition, funding other
acquisitions, and investing in our Government and Healthagen® (including Consumer) businesses; repurchase our
common stock; repurchase our long-term debt; and increase our shareholder dividend. During 2015, 2014 and 2013,
we repurchased 3 million, 16 million and 23 million shares of our common stock, respectively, at a cost of $296
million, $1.2 billion and $1.4 billion, respectively, under share repurchase programs authorized by Aetna’s Board of
Directors (our “Board”). Prior to the closing of our proposed acquisition of Humana Inc. (“Humana”), our ability to
repurchase shares of our common stock will be limited. We expect to suspend our share repurchase programs for
approximately six months following the closing of our proposed acquisition of Humana. Refer to Note 16 beginning
on page 135 for additional information on share repurchases.
Refer to “Liquidity and Capital” resources beginning on page 16 for additional information on our primary sources
and uses of cash flows.
Proposed Acquisition of Humana
On July 2, 2015, we entered into a definitive agreement (as it may be amended, the “Merger Agreement”) to acquire
Humana Inc. (the “Proposed Acquisition”) in a transaction valued at approximately $37 billion, based on the closing
price of Aetna common shares on July 2, 2015, including the assumption of Humana debt and Humana cash and
cash equivalents. Under the terms of the Merger Agreement, Humana stockholders will receive $125.00 in cash and
0.8375 Aetna common shares for each Humana share. We expect to finance the cash portion of the purchase price
through a combination of cash on hand and by issuing approximately $16.2 billion of new debt, including senior
notes, term loans and commercial paper. We made customary representations, warranties and covenants in the
Merger Agreement, including, among others, a covenant, subject to certain exceptions, to conduct our business in
the ordinary course between the execution of the Merger Agreement and the closing of the transaction.
On October 19, 2015, Aetna and Humana each obtained the approval of their respective shareholders necessary for
the Proposed Acquisition.
We continue to work with the U.S. Department of Justice to obtain clearance for the Proposed Acquisition, and as of
February 15, 2016, we had obtained ten of the twenty state change of control regulatory approvals necessary to
close the transaction. The Proposed Acquisition is currently projected to close in the second half of 2016 and
remains subject to customary closing conditions, including expiration of the federal Hart-Scott-Rodino Antitrust
Improvements Act of 1976 (the “HSR Act”) waiting period and approvals of state departments of insurance and
other regulators, and therefore has not been reflected in this Annual Report on Form 10-K unless expressly stated
otherwise.
Refer to Notes 3 and 15 on pages 99 and 131, respectively, and “Forward-Looking Information/Risk Factors”
beginning on page 42 for additional information on the Proposed Acquisition.