Aetna 1Q15 Earnings Call Notes

21% EPS increase

This morning, Aetna reported record first quarter operating earnings of $2.39 a share, a 21% increase from last year’s very strong first quarter. Our first quarter performance speaks to Aetna’s focus on operating fundamentals and the continued execution of our growth strategy.”

Expanding margins thanks to moderate cost trends

The combination of this membership growth and strong yields from disciplined pricing actions drove solid topline growth as quarterly operating revenue reached $15.1 billion. Medical cost trends remain moderate and we experienced a healthy level of reserve development in the quarter and we now project that pretax operating margins will expand in 2015, despite an increasing mix of lower margin government sponsored business.”

Raising EPS projection

With this strong start to 2015, today we’re increasing our operating EPS projection to $7.20 to $7.40 per share from our previous projection of at least $7. At the top end of the range Aetna would achieve its low double-digit operating EPS growth call in 2015.”

Medicare advantage funding will increase in 2016 for the first time in several years

“For the first time in several years federal funding for this program will increase in 2016, which we expect will help us to further improve the value we offer to seniors as well as our returns to shareholders.”

90% of public exchange membership is subsidized by the government

“The demographic profile of Aetna’s public exchange membership remains generally consistent with last year. While the average age of our membership has declined modestly, the vast majority remains in silver and bronze plans and nearly 90% of our members receive a subsidy from the federal government, consistent with national averages.”

Optimistic that exchanges could develop into a growth opportunity

“We remain cautiously optimistic on the potential for the public exchanges to develop into an attractive growth opportunity where we can continue to offer value to customers and generate a reasonable return for our shareholders.”

We anticipated that cost trends would increase this year, but they haven’t

“I would say that there is really two things, obviously the preferred drug pricing contract is part of that movement. And as you know we anticipated that we would see a trend increase this year, utilization increase. We really did not see that, trend was very moderate in the first quarter.

So those are really the two items when we think about 2015 trend that are bringing that down.

Under the covers looking at it by category, there really hasn’t been anything I would say that is fundamentally changed in the story. Outpatient, emergency department usage continues to be one area that’s running.

Specialty Pharma continues to be part of the story, but there is really nothing that I would say is very different or extraordinary in the other categories compared to what we talked about over the last couple of quarters.”

UnitedHealth 1Q15 Earnings Call Notes

Expecting double digit revenue and net income growth this year

“We are advancing our 2015 full year outlook, taking revenues to $143 billion, a $2 billion increase and a nearly 10% year-over-year growth pace. Net per share earnings advanced to a new tighter range of $6.15 to $6.30 per share and an 11% year-over-year gain at the upper end.”

Serving 1m more people

“The headline for UnitedHealthcare in the quarter is growth, growing organically to serve 1 million more people in the United States in the first quarter alone and 1.6 million more people year-over-year with notable strength this quarter in the seniors and commercial businesses.”

Medicare advantage rate increases did not keep pace with medical cost increases

“Two weeks ago CMS issued its final Medicare Advantage rate notice for 2016, while these rates will help provide some needed stability for seniors who continue to enroll in Medicare Advantage in record numbers, the rates simply did not keep up the pace of medical cost increases.”

Improving MLR is a driver of performance

“in terms of other profit contributors would be our performance on MLR and we expected to improve our MLR during this year as we said forth both in both the Investor Conference as well as on the fourth quarter call.

But we have clearly outperformed that this year as well. And I’d say that that’s due to the strength of the performance on several fronts mark clinical engagement strategies and our ability to manage medical cost”

The reason we bought Catamaran is that we needed scale

“the reason we bought and entered into this combination with Catamaran was because we needed to scale. We needed enhanced technology, we needed specialty and synchronization programs, we needed well grounded management team and as a result complementary business that same reasons that people want to do business with us, they have those same interest and that’s why we believe we really marry up really, really well with this new model.”

A lot of these clients are probably already clients

“overall we feel pretty good about this transaction but I think if you went back and you looked at what we do in OptumHealth, you would find that lot of these clients already clients of ours and they already work with us in various intervention and prevention and wellness programs.”

Unitedhealth 4Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Medicaid great, medicare good, commercial and international tough

“his past year, we experienced outstanding growth in Medicaid and better than expected performance across our Medicare portfolio, balanced off by challenges in the commercial and international markets as we entered the year.”

Optum hits some secular trends

“The secular trends toward more complex and expensive specialty medications play directly to Optum’s strength in synchronizing and integrating medical and pharmacy benefits, providing uniquely personalized service. Optum is advancing this approach with UnitedHealthcare commercial customers in 2015 and expects to see further market interest in its capabilities in 2016.”

Little erosion in small business market from exchanges

“’14 we were minor players in the exchange so we don’t have a lot of information. I will tell you that I think it’s well within that range that we have talked about over the last couple of years a few percent of that small group market eroding into the exchanges at least at this point. I think the growth in the exchanges both in ’14 and in ’15 are really driven by the uninsured and that expansion through the subsidy. So we have not seen a significant erosion of our small group business,”

Not seeing any increase in utilization

“with December behind us and the majority of January behind us as well, we’re not seeing any indication or evidence of an increase in utilization. So we feel very comfortable with our forward outlook, commercial cost trend for 2015 is 6% plus or minus 50 basis points.”

The stars are important, but not so much from a marketing point of view

“I’d like to make it clear that we believe stars matters and that we’re focused on improving our performance in stars and I think we have been very consistent on that theme. It’s not clear that, that has had really an impact with respect to how the product is marketed or acquired in markets, but we do believe that it is important — overtime obviously important from a financial point of view, important in terms of our relationship with CMS who basically established those performance guideline. “

United Health 3Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Some thoughts on positioning on exchanges

“we are targeting profitability in 2015 probably a little bit lower than that 3% to 5% long-term range that we’ve talked about, but still profitable and from what we know today we feel pretty good about where we’re positioned in many of the exchanges, particularly the larger states where we expect to grow the most. New York, I would say nothing’s changed much in New York from the competitive environment that we’re in the middle of this year”

Not seeing much change in medical cost trends

“We continue to see medical cost trends and inflation going forward and we position ourselves and price accordingly. All of that is completely consistent with the way we have approached the business for the last several years, no different, and we don’t plan on changing that in 2015.”

We expected higher utilization in the medicaid expansion population than we’ve seen

“We expected higher utilization in the expansion population. In almost every case, we got paid for that higher expectation of cost and that’s what we’ve seen. So we expect long term for the population to perform in that 3% to 5% margin and are very confident about the continued growth.”

Optum’s growth really stood out this quarter

“I think in the third quarter you saw that OptumHealth went to a 14% top-line growth and 16% bottom-line growth year over year, you also saw that the Optum Insight went 4% up on the top line and 6% up on the bottom line. So what you’re starting to see is what we said would happen during the year, that our investments are starting to tail off and as a result really our outcomes are starting to kick in”

Utilization patterns pretty stable

“I think some of the other things that are probably contributing to the performance and utilizations, certainly some greater consumer responsibility and higher concentrations of value-based reimbursement. And again, those are things that are a significant focus of our enterprise, so overall, very stable utilization pattern”

We expect to earn a profit on exchanges without subsidy, but it’s an evolving marketplace

” We see this market as a really good growth, long-term growth opportunity. As we said in the last several calls, we don’t expect to rely on subsidies as part of that, and we are pricing to profitability. But in any new market, as you enter a market, we don’t necessarily think that will see our 3% to 5% earnings range in the first year. And again, remember, 75% of this market is yet to develop, and we are seeing it firm and stabilize a little bit, but it’s still only the second year in the market. But overall, we went into this market with an expectation of earning a profit in it.’

We don’t expect to see a lot of dumping from small employers

” let me deal with your question on small employer dumping. We have not seen a lot of that. We don’t really expect an acceleration in that given how reform has played out some of the offerings that are in the marketplace. So I don’t expect any significant increase in dumping, although we do expect some decline in the market which has been happening over time but not a significant dumping.”

Wellpoint at Leerink Conference Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Speaker: Ken R. Goulet
Executive Vice President-President and CEO, Commercial and Specialty Division, WellPoint, Inc

Probably put more effort into the exchanges than our competitors

“So I’d first say the focus we gave on it was probably more than our competitors…we’ve really put a lot of effort into exchanges. And we did feel that it was a transition of more affordable lower-cost networks combined with our brand would put us in a good position.”

We needed to because we figured there would be some attrition from small group

“We thought we needed to be because, as we have said, there will be some attrition from small groups into public exchanges, and we wanted to have a good catcher’s mitt for it.”

Had better data to price exchange products than others

“We have more data than most carriers because we are the largest individual carrier; we’re the largest small group carrier. And the pricing had to be positioned at a point we did it off our small group because we felt that there would be no medical underwriting; that the profile would be more like a small group, and that was our starting point before…I do know we’re the only ones that are saying we’re comfortable that it’s going to produce some margin for us this year. ”

There will be a lot more offerings on the exchange right now

“I would say going into next year, it’s important to know and we know that there will be more competition. In our markets, competition will be up 20% in number of carriers. Half of that will be the national carriers. So you referenced the U [United], but I would say there will be more carriers involved. There will be more product involved in our markets right now. There will be 50% more product being offered next year”

We all buy

“We’re all consumers. We all buy. And you buy by price and you buy by brand…the data we find is that people did sort initially by product. Then they sort by price, and then they choose on that price spectrum who they want. And the Blue brand makes a difference, depending on the geographic area, of about 3% to 5%. So someone will pay a little bit more for us than our competitors, but not a ton more. We need to be affordable.”

most people don’t shop around their insurance carrier

” I do think it’s sticky. We have done a lot of research going into it, but think of your car insurance or homeowners insurance. I know I can get a better deal if I go to Priceline and bid it this year, but I don’t bid it every year. Some of us stick as long as your year-over-year increase is rational.”

Honestly, I was nervous

“I do think our data gives us an incredible advantage going into it. I was quite honestly nervous, as you would be in running something, making a business proposition that large. But there was enough data to make a reasonable choice on what our pricing should be in each of our markets.”

Small group are moving to the exchange

“given that 80% of the people on our exchanges are subsidy eligible, if you’re a small employer group that is struggling to pay insurance costs and realizes if I put my people into the exchange 80% of them will get some sort of government subsidy, they see that that might be the right business decision for them.

So I do think we’re seeing a transition. I do think our book has more small group than Aetna. I don’t United’s book as close, but I think we had more to potentially lose up front, and we were aware of that and that was our strategy. We’re going to manage that transition.”

Healthcare costs may be stabilizing

“I actually think the landscape is changing some. Trends are being more stable. And while we’re pricing for potential upticks, and we really have to take our risk pools in mind, trend is a component of unit cost and utilization. And that’s exactly what it’s tied into, the number of units and the cost per unit. The cost per unit is being negotiated quite well at a physician and hospital level either through value pricing or through just normal traditional pricing. But the price increases that facilities and medical groups used to see, they’re not getting any more on that front.”

We do believe that pricing is not sustainable for the Hep C drugs, but not betting on it to decline any time soon

” we do believe that the pricing is not sustainable. We think that it – everyone can argue from different viewpoints. My job is to give affordable care to my members, and that’s my whole job. So when I look at that, I’m pretty comfortable saying I don’t think that price, even though there is a true value and it’s a wonderful drug and we cover it, it’s all for the right reasons. We feel that in specialty drug pricing that for larger populations like hep C, you have to be aware of the total population as well as the value when you’re assessing your cost to offset R&D and other items. So we’re hoping for a lower price, but we’re not betting on it right now.”

UnitedHealth 2Q14 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. Full transcripts can be found at Seeking Alpha

Next 18 months are important

“We see the next 18 months as important given that by January 2016 the ACA will largely be in place and we will be entering an election cycle that will set the stage for shaping the next phases of health reforms.”

Raising revenue and earnings forecast because of:

“strong Medicaid growth, steadily strengthening Medicare and international performance, deeper entry into new, more established public exchange markets and continuing strong growth and earnings momentum at Optum.”

Seeing a significant expansion in Medicaid

“UnitedHealthcare is seeing significant and accelerating growth in Medicaid. 380,000 more people in the quarter and 635,000 through the first half of the year. Coming from expanded access to Medicaid in about half the states we serve, the launch of Florida’s planned Medicaid expansion, and core program growth from already established markets and programs.”

Continuing to grow Medicare business

“There is no question the private sector provides significant value to Medicare beneficiaries. Medicare has been and will continue to be a growth business at UnitedHealthcare. We are privileged to serve one out of every five American seniors. Today we serve 3 million people in Medicare Advantage plans and 12 million across all product types. We expect to deliver overall Medicare growth for years to come, driven by favorable demographic trends and our strong local market cost and value positions, supported by deeply integrated Optum resources in pharmacy services, primary care delivery, health calls, data analytics and compliance.”

Expanding on exchanges too

“In the individual market, we plan to grow next year as we expand our offerings to as many two dozen state exchanges.”

Employers not likely to dump employees onto exchanges

“We continue to believe that the employer dumping will be somewhat moderated, it was moderate this year. We are not sure next year is any year that would be much different than this year as these exchanges establish.”

Expansion into exchanges is what they had always planned

“it’s in line with what we had planned all along. So we always anticipated a more modest participation this year and then ramping in the 2015-2016 time period and that’s exactly how this is playing out”

Wellpoint 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.


Serve 1/9 Americans

“our 37 million members, representing roughly one in nine Americans.’

Robust growth from exchanges

“Applications especially near the end of the quarter were robust. Our March 31 membership includes applications through February 15th and we have enrolled over 400,000 members. Through the entire open enrollment period which officially ended April 15th, we now expect to add more than 600,000 members from public exchanges.”

“We are also serving approximately 100,000 members in private exchanges, which represent a new option for employers and their employees to obtain health coverage. Taken together, our overall enrollment growth and our positioning in the exchanges represent tangible examples of how our commitment to driving value for our customers is resonating with employers, individuals and their families on a daily basis.”

Exchange applicants match expectations, skew older. Younger people procrastinated

“For exchanges, the general characteristics of applicants, including average age are tracking well versus our expectations. We anticipated that exchange enrollees would generally be older than our legacy individual customers and our pricing assumptions for both on and off exchange products reflected this view. We did notice the average age of applicants decreased and further we got into the open enrollment period, indicating that younger age applicants signed up later in the period.”

PRoduct selection and actuarial value has been consistent with expectations

“Product selection has also been consistent with expectations as silver and bronze have been the two most popular metal levels by a wide margin. The actuarial value of the products selected by new applicants is also in line with our projections to date and we will continue to monitor product mix on a state-by-state basis.”

Brand name is helping

“We’re continued to see signs at our brand name and network quality are carrying more of an advantage in the market than we had expected. For example, there are geographies where we believe we are gaining share despite lower priced competition, which points to the value of our local market depth, knowledge, brand, reputation and networks.”‘

Small group member declines did exceed expectations

“with respect to our small group business, we continue to be mindful of the potential for employer coverage changes in light of the exchanges and we did see Q1 small group member declines above our expectations. However, this was offset by stronger large group membership trends in the quarter.”

Margins on exchange business coming in line with targets

“we are very pleased with the mix of business and probably more importantly the affirmation of the strategy we laid out around the design of our products and formulary. So our margins within our markets varied but they are still within our targeted range in total of 3% to 5% category.”

We’re in the sweet spot based on average age

“I would tell you that we saw in each day’s applications, the average age coming down in a meaningful fashion. And from our perspective, again, only time will tell but relative to the average age we’ve seen in that, we have hit the sweet spot. Relative to the claims activity, we have pushed over 90% of the claims we received in the first quarter through our predictive analytics and modeling we’ve done.”

Small group decline came faster than expected

“for all the areas that I performed on membership, the one that was a little surprising was the level of small group membership that actually no longer provided coverage post-January 1. So our early renewals were successful but for those, post that day, once the exchanges got up and running, we saw really — we missed our expectations in some of the small group in the quarter. From our perspective, we expected that to occur at some point in time. In fact, it occurred sooner was a little surprising but nonetheless we like the fact that our positioning on the exchanges is what is. It was more than offset though by a large group in and of itself in the exchanges.”

Happy with pricing strategy, better data in 2015

“we are really pleased with our strategy and the affirmation of our pricing strategy relative to what we built. We actually feel like we have more data to go into ’15 pricing than we did going into ’14 and we’ve got validation.”

Script trends a little better than expected on exchanges

“We’ve seen modest acceleration in script trends, but I think it’s important to recognize too for example on exchanges we expected acceleration in script trends, and in some ways the exchanges are so early but coming in slightly better than the acceleration we expected.”

Layoffs have substantially declined at large group employers

“I think what we are finding is we got good retention, we got good sales and it appears that the layoffs have substantially declined a large group employers.”

UnitedHealth 1Q14 Earnings Call Notes

A digest of some of the top insights that I’ve gathered from this week’s earnings calls.  Full notes can be found here.

This is the first full quarter under ACA

” This is was really the first quarter a full scale operation under the ACA. Everything else in the past three years has been more of a preamble.”

ACA’s impacts have been significant

“The ACA’s impacts on 2014 had been immediate and significant as we described at our Investor’s conference. Nondeductible insurance taxes, ACA prescribed Medicare Advantage funding pull backs, commercial underwriting changes and various other provisions cumulatively reduced our per share, net earnings by nearly $0.30 for this quarter and sequestration cut an additional $0.05 in this quarter.”

ACA distorts comparability

“The ACA impacts every major line item of our consolidated results and distorts comparisons virtually all performance ratio. This will continue as the year’s progresses, a new regulatory and tax baselines are established and settled in”

Nearly 400k new medicaid lives

“Let’s review, how this played out in the first quarter for UnitedHealth Group starting with UnitedHealthcare, whose revenues grew $1 billion or 3.6% year-over-year to $29.3 billion led by membership growth in Medicaid. Over the past 12 months alone, UnitedHealthcare has implemented six new or renewed Medicaid contracts and grown to serve 395,000 new members.”

Medicare advantage flat to down, planned exits due to funding cutbacks

“Medicare Advantage program was essentially flat down 5,000 people sequentially and well within the range we expected, despite significant market exists and products network adjustments made in response to the 2014 Medicare Advantage rate cuts of more than 6%.”

Individual coverage declined sharply

“Commercial membership also began the year generally in line with our expectation with a sharp decrease in people served through fee-based relationship as well as some expected declined in risk-based business. As expect our individual policy business declined this quarter as we decrease by 90,000 with the advent of the ACA.”

Some unsustainable price competition in small business markets

“Over the last quarter, we have seen intensified pricing in several markets including small group in New York, a large market for us. We believe several carriers there including new entrants are pricing well below cost and what we would view as unsustainable pricing levels.”

Medical costs still inflating

“We continued to project a 6% commercial medical cost trend plus or minus 50 basis points for 2014.”

Lots more Americans UNH doesn’t serve

“UnitedHealth Group faces an expansive long-term growth opportunity. In the US alone, there is the opportunity to approach and serve the more than 700, the Fortune 1,000 companies not yet our customers. Today we serve, more than 85 million people leaving more than 230 million Americans, we do not touch.”

The HepC treatments are effective but the costs need to be addressed

” I think as you mentioned first the hep C therapies as you know are very effective and one of the things that we are doing is working to ensure that appropriate clinical protocols and standards are in place, but as noted the price is exceptionally high and as Steve said in his opening comments that controversial and it’s putting a lot of pressure on States, CMS and in terms of our day as well as our employer sponsor, so the cost has to be addressed”

Exchanges still very early in life-cycle, we’re in the learning phase

“t is still very, very early in the life of the exchanges and second year in terms of how they will evolve, will be effectively somewhat by what I call, a lot of spontaneous change over the course of the first year implementation, which we understand that does require some consideration and calibration as we go”

UnitedHealth 4Q13 Earnings Call Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

2014 Headwinds for health insurance. Trading at 13x high end of forward guidance.

“There are certainly near-term 2014 pressures, particularly from ACA implementation and Medicare funding actions that will divert more than $1.50 per share in earnings from us in 2014. But we have plans and actions in place to offset these reductions and to grow revenue to a range of $128 billion to $129 billion and produce earnings in the range of $5.40 to $5.60 per share, with cash flows from operations between $7.8 billion and $8.2 billion.”

Already playing for 2015

“We will continue to focus on delivering earnings per share growth in 2015 with our ultimate performance, dependent in part on the results of the Medicare Advantage rate-setting processes for 2015.”

Medicare Advantage underfunded, UNH has to advocate for its revenue stream

“I don’t think we were really suggesting anything other than we have said at the investor conference that, obviously, there were rate active stake [ph] related to 2014 that we believe significantly underfunded the program. And we had indicated there that we are — continue to be watchful about the funding posture on the Medicare Advantage program. And we will continue to be watchful of that and continue to advocate strongly for consistence, reasoned funding of these program and continued commitment to American seniors who participate in them. I think we didn’t really mean anything more than that.”

Government trying to push industry toward more integration of care

“The themes we see and really, what the Affordable Care Act is telling us, this law, and CMS is suggesting us through regulations, is that the industry has to change and we have to change. We have to be more integrated. We need to be more aligned. We need to have a provider network that is aligned with us better, both in terms of data and financially. And we need to do all of that with far less resources. And I think these are the themes that we’re responding to. This is what you are seeing us and others do in the marketplace with respect to reaching out and making affirmative changes in our network. So we’re really evolving to meet the requirements of a Medicare program that’s going to be successful in the future.”

It’s going to be noisy and turbulent for a while though

“So while it’s going to be a little noisy and a little turbulent, we acknowledge that. I think we’re confirming our business in the right way to be successful in the Medicare program in the future.”

Optum bringing technology to the healthcare industry in a unique way

“we can bring technology outsourcing to this industry in a way that we think is unique to health care. And so we think there’s opportunity both in and out of the government for us to do that. ”

It would be really disruptive if MA rates weren’t raised in 2015

“as I’ve said before, I think that there is a broader sense of responsibility to American seniors than to have underfunded the program, by our measures, about 6.7% last year. And if there is speculation that there would be underfunding at that level again in this year, that would be almost a 13% pullback on Medicare Advantage over the course of 2 years. And we would think that, that would be extraordinarily disruptive. It remains to be seen.”

No plans to become a larger player on the exchanges for now

“in terms of the public exchanges, I think you know that we’ve got a very modest footprint. And as I shared at Investor Day, our decisions around 2015, our participation will really be very much reliant on how this market matures. So at this stage, we’re really not projecting our participation. We will be looking at sort of the — how robust the enrollment is, what the risks in those markets are and the consumers participating and, quite frankly, the cost structure is on those markets. So at this stage, I don’t know that we have any additional guidance to give you from what we shared at the investor conference, but that’s our outlook.”

Pricing strong in 2014

“Our pricing in 2014 is stronger than it was in 2013. And you mentioned it, a part of the reason that it’s stronger is because of the ACA fees, taxes, as well as the essential health benefits across all markets. And then when you look at small group and individual, the move to community rating, depending on which part of that marketplace you’re looking at, you could see some much stronger pricing.”

Plans priced forward looking, adjustments made for ACA

“we have not changed the discipline of pricing that has gotten us — has been successful for us for a very long time. We look at our forward cost, which now include, as I mentioned, some impacts due to the ACA. But we’re certainly as focused on medical trends as we had ever been in the prediction of medical trend. The medical trend for pricing was about a point higher in ’14 than it was for ’13, and we match our premium to that.”

No significant change in the marketplace. We think we are pricing well

“Good discipline, well-aligned with medical cost trends and, really, not particularly significant changes in the marketplace. We’re competitive, but we think we are pricing well.”

Small group seeing more pricing volatility because plans underwritten for community rating vs. medically underwritten

“in small group, there’s a lot more variability than there is in large group because small group’s going through the transition to adjust to community rating. And based on your health status previously, there’s more variation in the price differential at the group level in the market than there is at the large group, which is always okay. I don’t think there’s any really new change in the marketplace.”

Aetna Investor Day Notes

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings.

“At a recent investor conference, I was actually asked multiple times, “What do you think investors will look back on in a couple of years and really kick themselves over?” I really didn’t have to think about it very long because I think the fog of 2014 and all of the change in 2014 is masking the incredible growth opportunities that are before this company and, frankly, this industry.”

Mark T. Bertolini – Chairman, Chief Executive Officer

” Here’s how you want to think about taxes and fees. You’ve got to get them in the baseline and then — for in future years, the pain isn’t nearly as bad as it was this year.”

“there are 2 ways you solve for these taxes and fees. One is you price for it, and we will detail some of that later. And the other is you solve for it.”

“we believe in the future, that with virtual integration with the provider system, that we’ll become like the Intel Inside of the provider system through virtual integration, connecting with them in ways that allows them to do a bigger piece of what we do today.”

“Secondly, we believe that the marketplace is going to retail. And I’ll show you some statistics in a moment. And that retail marketplace is going to have individuals making the buying decision. And what they value is fundamentally different than the people we have dealt with in the past as benefit managers.”

“what’s happened with the Affordable Care Act is that it has — broke open the black box of managed care. How the business works has been exposed and regulated in far finer ways than it has in the past.”

“what does that cause you to do? Well, you have 2 choices. You can admit you’re a commodity. And when you do that, you put your thumb in your mouth, you get in a corner in a fetal position and you wait till it all goes away, till you’re out of business, or you keep cutting costs, cutting price and hope you’re the last standing. Think of the steel industry in the United States.”

“The other option is to take a look at the things you do as a company and decide which of those things that you do are of value to other parts of the value chain and create a different business model that makes you relevant in powering the rest of the value chain so that you’re no longer a commodity. And that’s the choice we have made.”

“We believe that we have the opportunity to enable the provider network to handle risk, to change the way the provider system works. And we have the opportunity to drive a retail market in health care. ”

“in the future. It will not be about employer-sponsored insurance, it will be about who is providing the subsidy to the individual who’s buying a health care policy. And we believe that subsidy will come in 1 of 3 places: it’ll be the employer providing a subsidy, the government providing a subsidy or people paying for all of it out of pocket.”

“when you get to a retail marketplace where the individuals making the decision based on the subsidy they get from either the employer or the government, their view of what is important changes, and it needs to be a system where the consumer gets what they want or finds what they want, value.”

“Third is that the distribution channel is going to change, and I think pretty dramatically over time. That’ll be more of a retail marketplace, not the model we have today.”

“the system is labyrinthian in its thinking and the way we work. Just take a look at And those people can’t figure it out, and so we have to make it a lot simpler.”

“When you incorporate out-of-pocket cost changes with the amount of premium employees are paying, employees, consumers are now paying 41% of the health care dollar in the United States. We are not far from them paying more than their employers. That’s a huge change.”

“More and more are asking their doctor, do I need to do this? Oh, by the way, how much does it cost? ”

“we believe that the retail marketplace, whether it’s fully insured or self-funded, the retail marketplace grows to 75 million by 2020.”

“here’s how we see it breaking out: we believe there will be 9% uninsured; that there’ll be 15% in government fee-for-service, Medicaid and Medicare; and then the retail market will be individual private and public exchanges, Individual MA, Medical Supplement, managed Medicaid, 46%; and there’ll be 30% remaining in the commercial employer-sponsored market but with largely, probably, employees making a greater part of the decision given their out-of-pocket.”

“CMS, every time they make a decision, impacts the rest of this industry. They’re like the blocking fullback going through the line, and we’re like tailbacks following them. Every time they fix the SGR, we reduce our physician fee schedules because we don’t have to make up for what we thought the SGR was going to generate.”

“if you’re one of those people trying to navigate the health care system, you’re looking in a system that was originally built in 1945 for — with the Hilbert and ACT and a whole bunch of other programs to create a health care system that takes care of people and to employ people after they came back from the war.”

“so this model has to change. This is too complex for consumers to figure out. The incentives are all wrong in dealing with an individual consumer. And so moving this payment model will get all of these parts of the system to work together.”

“all the tools that we invest in, the ACS investments we made, the retail exchange, private exchange models we will build and our public exchange participation is all aimed at having the system work for the individual versus having the individual trying to find their way through the maze.”

“And now if we can make that happen on an individual basis, then what happens is private exchanges allow us to take this across the country. ”

“If you have a health system that’s approaching its community, sign up individuals to be part of its health plan, the carrier doesn’t matter anymore. Multi carrier is extraneous as a concept. It’s really about, are you able to offer a breadth of plan designs, a breadth of care management capability, wellness, et cetera, a product set that provides value to consumers to want to purchase in that place.”

“That same experience is going to occur here when these retail marketplaces occur up. They’re going to want to stay with their system, the people who know them, not necessarily the benefit plan that they have before.”

“the only constant is change and change brings opportunity.”

“Public exchanges are struggling. The enrollment is lower than everybody expected. But my view is that by 2015, if we get it fixed right, it will be a new start, and 5 years from now, nobody will remember it. I think it’s just going to continue. I’m saying public exchanges are here to stay.”

“I don’t think we’re going to repeal the Affordable Care Act. I think we’re going to change it, we’re going to make it better, because it’s now starting to get metastatic to the system in the way we’re all changing and the way the system’s evolving. And while its intention wasn’t to have that all happen, it’s happening anyway, because the private sector is reacting to it.”

“So in the long term, public exchanges will survive. We believe there will be 25 million members on public exchanges and $75 billion in premium. That’s a CBO estimate. We think that’s legitimate”

“in 2016, it’s a completely different game. The ACA pressures abate, hopefully we’ll be over some of the kludginess of what’s going on today, longer-term revenue growth opportunities begin to mature and we’ll return to longer-term operating EPS growth dynamics. So we think the next couple of years is like hard work.”

“For every million members that go from self-insured to fully-insured, it’s $4 billion more in revenue. And 4x to 5x margin, dollars of margin. Public exchanges for every million members, $3 billion of revenue. Medicare Advantage, every 500,000 members, $5.5 billion of revenue. Every 100,000 of dual eligibles, which we’ve won a number of large contracts, $3.5 billion of revenue.”

“we believe that we can go from 2013 to 2020 all the way up to $100 billion in revenue. We believe we can more than double our revenue.”

Joseph M. Zubretsky – Senior Executive Vice President of National Businesses

“[Providers] now understand that by forming communities, health care communities, with physicians, ancillary and ambulatory facilities and acute care facilities and engaging in virtual integration themselves, they can change their revenue model, be reimbursed on the basis of value and not volume and completely change the game.”

“aiming our product line in our business at the large sophisticated integrated delivery systems and freestanding hospitals is the way to go. Because the hospitals are rolling up the docs. We thought about rolling up physician practices. We thought about buying bricks-and-mortar, vertical integration. Our view is, let the hospitals deploy their capital, monetizing the value of physician contracts and physician practices, let them create the communities and we’ll contract with the hospitals.”

“In order for these to work really nicely, having 30%, 40% and 50% market share aggregated in the ratio delivered to the insurance marketplace is about right. So in Chicago, where it’s very fragmented, you need 6, 8 or 10 ACO deals to make it work. But in Dallas and Houston, you may only need 1, 2 or 3. Concentration of patient market share is what make these work really well.”

“if anybody think that just because you own a physician’s contract, you can tell them what to do and how to behave, you’re wrong.”

“our differentiated solution allows us to then convert from volume-based reimbursement to value.”

“This is about enabling them to convert from episodic acute care to patient population health. Episodic acute care, when you show up, I’ll patch you up and send your home. Patient population health, I know everything there is to know about everybody in this room, you’re part of my medical community, you’re part of the medical home.”

“The shift from episodic acute care to patient population health allows the hospital system to convert from volume-based reimbursement to value-based reimbursement.”

“Aetna is your patient aggregator.”

“the business of provider contracting. We’re not in that business anymore. We’re in the business of Supply Chain Management. And the most complex, arcane, Byzantine supply chain ever designed is the healthcare delivery system”

“this is not an HMO. An HMO had a gatekeeper, that gatekeeper was sitting as a payer. That HMO shifted the risk, but it didn’t share the risk.”

“the intense clinical focus of the ACO is a completely new model and is completely anathema to the HMO model of the mid 1990s.”

Dijuana K. Lewis – Executive Vice President of Consumer Products and Enterprise Marketing

“the healthcare system was built to deliver healthcare. It was not built to deliver a simple shopping experience for consumers. That’s the transition that we are making”