Aetna 2006 Annual Report Download - page 36

Page 34
Regulation of Pharmacy Operations
We own two mail-order pharmacy facilities and one specialty pharmacy facility. One mail order pharmacy is
located in Missouri and the specialty pharmacy and our second mail order pharmacy are located in Florida. These
facilities dispense pharmaceuticals throughout the U.S. The pharmacy practice is generally regulated at the state
level by state boards of pharmacy. Each of our pharmacies is licensed in the state where it is located, as well as in
the states that require registration or licensure with the state’ s board of pharmacy or similar regulatory body. Loss
or suspension of any such licenses could have a material effect on our pharmacy business and/operating results.
FORWARD-LOOKING INFORMATION/RISK FACTORS
The Private Securities Litigation Reform Act of 1995 (the “1995 Act”) provides a “safe harbor” for forward-
looking statements, so long as (1) those statements are identified as forward-looking, and (2) the statements are
accompanied by meaningful cautionary statements that identify important factors that could cause actual results to
differ materially from those discussed in the statement. We want to take advantage of these safe harbor provisions.
Certain information contained in this MD&A is forward-looking within the meaning of the 1995 Act or Securities
and Exchange Commission rules. This information includes, but is not limited to: the Outlook for 2007 beginning
on page 3 and Risk Management and Market-Sensitive Instruments on page 17. In addition, throughout this
MD&A, where we use the following words, or variations or negatives of these words and similar expressions, we
intend to identify forward-looking statements:
• Expects • Intends •Seeks •Will • Potential
• Projects • Plans •Estimates •Should • Continue
• Anticipates • Believes •May
Forward-looking statements rely on a number of assumptions concerning future events, and are subject to a number
of significant uncertainties and other factors, many of which are outside our control, that could cause actual results
to differ materially from those statements. You should not put undue reliance on forward-looking statements. We
disclaim any intention or obligation to update or revise forward-looking statements, whether as a result of new
information, future events or otherwise.
Risk Factors
You should carefully consider each of the following risks and all of the other information set forth in this MD&A or
elsewhere in our Annual Report or our Form 10-K. These risks and other factors may affect forward-looking
statements, including those in this MD&A or made by us elsewhere, such as in investor calls or conference
presentations. The risks and uncertainties described below are not the only ones we face. Additional risks and
uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our
business.
If any of the following risks or uncertainties develops into actual events, this could have a material adverse effect on
our business, financial condition or results of operations. In that case, the trading price of our common stock could
decline materially.
Loss of membership or failure to achieve profitable membership growth and diversify geographic
concentrations in our core insured membership (including strategies to increase membership for targeted
product types and customers, such as commercial or public sector business) could materially adversely affect
our results of operations.
Competitive factors and ongoing changes in the health benefits industry create pressure to contain premium price
increases despite being faced with increasing medical costs. Our customer contracts are subject to negotiation as
customers seek to contain their costs, and customers may elect to reduce benefits in order to limit increases in their
benefit costs or self-insure; such elections may result in reduced membership in our more profitable Risk products
and lower premiums for our Risk products, although such elections also may reduce our health care costs.
Alternatively, our customers may purchase different types of products from us that are less profitable, or move to a
competitor to obtain more favorable premiums. Our membership is also concentrated in certain geographic areas,
and increased competition in those geographic areas could therefore have a disproportionate adverse effect on our
operating results. Among other factors, we compete on the basis of overall cost, plan design, customer service,