Analysts: Aetna Consolidation Called a Short-Term Solution.Aetna Inc.'s move to consolidate its business into two worldwide units is an attempt to reverse a sagging stock price hurt by rapid expansion, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. several equity analysts who follow the company. Aetna, Hartford, Conn., said in early January that it would form a Global Health division to run Aetna U.S. Healthcare U.S. Healthcare is a now-defunct healthcare company. The logo had an apple. The merger with Aetna In 1996, the company merged with Aetna, calling it Aetna U.S. Healthcare. The U.S. Healthcare apple logo was next to the Aetna name, and U.S. Healthcare under it. U.S. and Aetna International's health businesses. Its new Global Financial Services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. division would consist of Aetna Financial Services, Aetna International's international life and pension business and Aetna U.S. Healthcare's group insurance business. Analysts said the move will do little for the company's perceived value. "They have expanded too aggressively and have overpaid o·ver·pay v. o·ver·paid , o·ver·pay·ing, o·ver·pays v.tr. 1. To pay (a party) too much. 2. To pay an amount in excess of (a sum due). v.intr. To pay too much. for their acquisitions," said Todd B. Richter, analyst for Banc of America Securities. He said Aetna has been hurt by uncertainty following its $1 billion Prudential HealthCare acquisition. In August 1999, the Prudential acquisition made Aetna the largest health-benefits provider in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . The merged company has 21 million members, including 18 million managed-care members. Two months later, Aetna sought to explain to analysts the details of the Prudential buy, which was losing money for Aetna. James A. Lane, an analyst for Salomon Smith Barney Smith Barney is a division of Citigroup Global Capital Markets Inc., a global, full-service financial firm, that provides brokerage, investment banking and asset management services to corporations, governments and individuals around the world. , said the new realignment plan may have improved the overall perception of the company, but that Aetna must consistently improve its core underlying operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before in order to earn higher stock valuations. For example, the company must convey that the Prudential acquisition will show improvement and begin to contribute positively to operating earnings growth, "exclusive of the payments they're getting from the Prudential Insurance Company of America, because those will stop," he said. In the first year after the acquisition, Prudential reimburses Aetna if the PruCare business does not meet certain loss-ratio targets. |
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