Aetna reported $1 billion in net income during the third quarter of 2018, in what is likely the insurer's last earnings report before it is absorbed by CVS.
The strong quarter was buoyed by growth in the Medicare Advantage segment, where the insurer added 283,000 members since the same quarter last year. All told, the Medicare Advantage segment is closing in on 1.8 million people.
However, Aetna also absorbed a $130 million judgment tied to an “unfavorable provider arbitration ruling related to Aetna's exited individual public health insurance exchange,” according to Tuesday’s financial filing.
Aetna began leaving the Affordable Care Act marketplace in 2016 and fully exited the exchanges this year, shortly after the Department of Justice blocked its merger with Humana. A court ruling showed that Aetna initially left some of those exchanges to bolster its defense of the merger, and CEO Mark Bertolini tried to leverage the company’s exchange participation in communications with government officials.
The arbitration payment was just a blip in the company’s $15.4 billion in third-quarter revenue, although there could be more trouble ahead. An arbitration judgment of $150 million was issued against the company on Oct. 15 involving Florida hospitals owned by HCA that challenged out-of-network benefit payments made by Aetna’s exchange plans, according to the company's financial filing.
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Aetna’s total net income in 2018 reached $3.4 billion following the third-quarter earnings results, more than double the $1.7 billion it reported during the nine-month period last year. Aetna is poised to close its $69 billion merger with CVS by the end of the year once it clears a final regulatory hurdle from New York regulators.
“Aetna’s solid third quarter performance builds on the positive momentum from the first half of 2018,” Bertolini said in a statement. “Our combination with CVS Health will drive the next phase of Aetna’s growth and accelerate our opportunity to help transform the health care system.”