Aetna Inc. operates as a health care benefits company in the United States. It operates through three segments: Health Care, Group Insurance, and Large Case Pensions. The Health Care segment offers medical, pharmacy benefit management service, dental, behavioral health, and vision plans on an insured and employer-funded basis. It also provides point-of-service, preferred provider organization, health maintenance organization, and indemnity benefit plans, as well as health savings accounts and consumer-directed health plans. In addition, this segment offers Medicare and Medicaid products and services, as well as other medical products, such as medical management and data analytics services, medical stop loss insurance, workers' compensation administrative services, and products that provide access to its provider networks in select geographies. The Group Insurance segment offers life insurance products, including group term life insurance, voluntary spouse and dependent term life insurance, group universal life insurance, and accidental death and dismemberment insurance; disability insurance products; and long-term care insurance products, which provide the benefits to cover the cost of care in private home settings, adult day care, assisted living, or nursing facilities. The Large Case Pensions segment manages various retirement products, including pension and annuity products primarily for tax-qualified pension plans. The company provides its products and services to employer groups, individuals, college students, part-time and hourly workers, health plans, health care providers, governmental units, government-sponsored plans, labor groups, and expatriates. Aetna Inc. has a collaborative agreement with Community Care Physician Network, LLC to deliver healthcare services in North Carolina. The company was founded in 1853 and is based in Hartford, Connecticut.
Business Analysis of Aetna
The Healthcare Services Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Aetna compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Aetna to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.
Here is the performance snapshot of Aetna with an interactive chart.
- Revenue Growth: Aetna reported a revenue growth of 4.7% year-on-year during 2016. Healthcare Payers Industry grew at 13.5% in the same period
- COGS share of Revenues: As a percentage of revenue, Aetna spent 73.4% of its total revenues on COGS. Healthcare Payers industry average (COGS share of revenue) in the same period was 78.2%
- R&D share of Revenues: Aetna R&D share of Revenues details are not available because either company does not share the data or we do not have it
- SG&A share of Revenues: As a percentage of revenue, Aetna spent 19.1% of its total revenues on Sales, Marketing, and General Administration (SG&A). Healthcare Payers industry average SG&A spending in the same period was 15.1%
- Inventory share of Revenues: Aetna Inventory share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Payable share of Revenues: Aetna Accounts Payable share of Revenues details are not available because either company does not share the data or we do not have it
- Accounts Receivable share of Revenues: As a percentage of revenue, Aetna invested 8.4% of its total revenues on Accounts Receivable (A/R). Healthcare Payers industry average Accounts Receivable investment in the same period was 9.0%
- PP&E share of Revenues: As a percentage of revenue, Aetna invested 0.9% of its total revenues on Property, Plants, and Equipments (PP&E). Healthcare Payers industry average PPE investment in the same period was 2.6%
- Intangibles share of Revenues: As a percentage of revenue, Aetna invested 19.1% of its total revenues on Intangibles. Healthcare Payers industry average Intangibles investment in the same period was 21.9%
- Net Margins: Aetna Net Margins in the year 2016 were 3.6%. Healthcare Payers industry average Net Margins in the same period were 3.0%
Sector and Industry Association of Aetna
For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries. For high-level analysis purposes, related/similar sectors are grouped into sector groups.
Aetna is associated with Healthcare Sector Group, Healthcare Services Sector, and Healthcare Payers Industry.
Healthcare Services sector is comprised of the following industries: Drug Stores, PBM and Distributors; Healthcare Payers; Healthcare Providers; Medical Software; Healthcare Research Services. The definitions for each of the industries is as follows:
- Drug Stores, PBM and Distributors industry includes nationwide drugstore chains, pharmacy benefit management (PBM) companies, and drug distributors. Drug stores also offer walk-in clinics and related pharmacy services. Distributors distribute branded and generic pharmaceutical and other healthcare products to hospitals, pharmacies and other healthcare providers. PBMs are primarily responsible for developing and maintaining the formulary, contracting with pharmacies, negotiating discounts and rebates with drug manufacturers, and processing and paying prescription drug claims.
- Healthcare Payers industry includes healthcare insurance companies that finance or reimburse the cost of health services. These companies also offer collaborative care, population health management, healthcare technology, Pharmacy Benefit Management, analytics, consulting and administrative services.
- Healthcare Providers industry consist primarily of hospitals but recent changes in the health services industry have contributed to both increasing numbers of other types of facility providers. Companies in this industry include traditional healthcare providers and emerging healthcare facility providers like ambulatory surgery centers, behavioral healthcare facilities, dialysis clinics, home health care companies and others.
- Medical Software industry includes companies that offer any software item or system used within a healthcare context. These companies offer standalone software used for diagnostic, therapeutic purposes, clinical financial and operational purposes.
- Healthcare Research Services industry includes companies that offer biopharmaceutical development services, commercial outsourcing services; commercial pharmaceutical sales and service organizations, consulting, health information analytics and technology consulting.
Industry Ranking of Aetna
With $63.2 billion revenues, Aetna ranked number 3 of all the companies in the US Healthcare Payers industry. There were a total of 14 public companies in the US Healthcare Payers industry that had revenues greater than $50 million during 2016.
The top-10 companies in the US Healthcare Payers industry by revenues during 2016 were:
Business Model Analysis (BMA) Framework
We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.