WellPoint profit beats, but 2013 outlook ‘prudent’

INDIANAPOLIS, Wed Jan 23, 2013 — WellPoint Inc. reported a higher-than-expected fourth-quarter profit on Wednesday as it kept medical costs down, but the second-largest U.S. health insurer said it was taking a “prudent” view of 2013 in the face of industry reform.

WellPoint, which sells private health insurance to businesses and individuals and also provides government insurance for the elderly and the poor, is preparing for a round of changes resulting from the U.S. Affordable Care Act.

Later this year, states and the federal government will begin selling health insurance on exchanges for 2014, and new insurance taxes are on the way. Pressure on prices for medical services is also a concern for insurers.

WellPoint said that given the “fluid and dynamic” market over the next 18 to 24 months, it expected a 2013 net profit of at least $7.60 per share, including the costs of integrating its recent acquisition of smaller competitor Amerigroup.

Analysts on average have been expecting $7.98 a share, according to Thomson Reuters I/B/E/S. It was not immediately clear if the two numbers are comparable.

“It’s lighter than we thought, but it’s also including Amerigroup’s integration costs,” Leerink Swann analyst Jason Gurda said, so it was not clear that investors would be disappointed by the outlook.

Shares of WellPoint were down 0.4 percent at $63.54 in early trading.

Management changes might be behind the conservative forecast, Gurda said. WellPoint is being run by an interim chief executive officer, John Cannon, who took over following the abrupt resignation of Angela Braly in August.

CFO Wayne DeVeydt told analysts on a conference call on Wednesday that the company still expected to name a new CEO this quarter.

He said the 2013 outlook included 20 cents to 25 cents a share in Amerigroup-related costs and $300 million in additional investments such as preparation for the health insurance exchanges.

WellPoint CEO Braly steps down, Cannon named interim CEO

INDIANAPOLIS, Wed Aug 29, 2012 – WellPoint Inc. CEO Angela Braly abruptly stepped down from her post on Tuesday following growing investor dissatisfaction with the health insurer’s financial performance.

WellPoint, the No. 2 U.S. health insurer, said it will look at both internal and external candidates for a replacement. Shares in the company rose more than 4 percent in after-hours trading.

John Cannon, the company’s executive vice president, general counsel, corporate secretary and chief public affairs officer, will serve as interim president and CEO, WellPoint said. Lead director Jackie Ward was named non-executive chair.

“We thought the board would provide Ms. Braly with some more time to right this ship but view the executive change as a step in the right direction,” BMO Capital Markets analyst Dave Shove said in a note to clients.

WellPoint still has an uphill battle ahead, with fierce competition among health plans in states like California and Virginia that may not be resolved by year’s end, Shove said.

“Regardless of who is at the helm, we need to see a quarter of clean operations before we get constructive,” he said. “We believe a change at the top is positive, but new leadership will not grow earnings on its own.”

As CEO since 2007, Braly has shepherded WellPoint as the U.S. healthcare system faces one of the biggest transitions in its history, including a new law that will extend coverage to more than 30 million uninsured Americans and the expansion of private management of government-run health plans Medicare and Medicaid.

More recently, Braly helped orchestrate the company’s planned purchase of Amerigroup Corp. for $4.46 billion, a deal that will nearly double its Medicaid business, managing the U.S. government’s health plan for the poor.

But the company has also made missteps in its expansion, including a proposed rate increase in California that made headlines in early 2010 at the height of a Congressional fight over the healthcare overhaul. Surprising losses from its Medicare plans in northern California weighed on financial results last year.

In its most recent quarterly report, the company cut its full-year profit forecast, saying it was trying to maintain its pricing levels even with greater competitive pressure from rival health plans. Since then, it has been meeting with investors to lay out its strategy for improving performance and the board recently issued a statement in support of the direction taken by management.

“Our Board continues to believe that time will prove the wisdom of potentially transformative actions taken under Angela’s leadership,” Ward said in a statement. “But now is the right time for a leadership change.”

Cannon will help oversee the integration of Amerigroup, whose shareholders have sued over accusations that its advisers at Goldman Sachs Group Inc. had a “hopelessly conflicted” role in the company’s sale. Goldman, according to the lawsuit, pushed Amerigroup toward a quick deal with WellPoint over a more lucrative merger with another unnamed company.

WellPoint To buy 1-800 Contacts for $900 million, according to report

INDIANAPOLIS, Mon Jun 4, 2012 –  Health insurer WellPoint Inc. plans to buy contact-lens and eyewear retailer 1-800 Contacts Inc. for a transaction value close to $900 million, the Wall Street Journal reported, citing a person familiar with the matter.

The deal will close in the third quarter and will start adding to the company’s per-share earnings in 2014, the Journal said in its report. The deal will be financed with cash on hand, the report said.

“We see a unique way of tying 1-800 Contacts into our product design,” WellPoint Chief Financial Officer Wayne DeVeydt is quoted as saying in the report.

WellPoint would also get “a diversified revenue stream into a higher-margin business,” the report said, quoting the CFO.

1-800 Contacts has after-tax margins in the “double digit range,” compared with around 4 percent to 5 percent across WellPoint’s health-insurance business lines, the report quoted DeVeydt as saying.

WellPoint and 1-800 Contacts Inc. could not reached for comments.

WellPoint to buy seniors specialist CareMore to become bigger Medicare competitor

NEW YORK ― WellPoint Inc. plans to buy privately held Medicare specialist CareMore to expand its presence in the U.S. government program for the elderly.

The deal advances WellPoint’s plans to become a bigger competitor in Medicare, rivaling leaders UnitedHealth Group Inc. and Humana Inc., as it seeks to take advantage of the post-war baby boom generation becoming eligible for the program.

WellPoint did not announce the price, but The New York Times said it was about $800 million, citing unnamed sources.

The acquisition may signal increased deal activity that has been expected in the industry since the U.S. healthcare overhaul passed last year.

“It is good to see WellPoint return to the M&A market, which has slowed due to a tighter regulatory environment and the uncertainty surrounding healthcare reform,” Oppenheimer & Co analyst Michael Weiderhorn said in a research note.

“We expect an industry consolidation to accelerate at some point due to the advantages the larger players have in this environment,” he added.

The deal is expected to close by the end of the year, be neutral to 2012 earnings and add to profits in 2013 and beyond, WellPoint said on Wednesday. WellPoint shares were off 1 percent in morning trading, on a down day for health insurer shares.

CareMore, which is owned by private equity firm CCMP Capital Advisors, focuses on seniors, including Medicare Advantage plans as well as clinics. The Cerritos, California-based company, which is focused in California, Arizona and Nevada, serves about 54,000 Medicare Advantage members and operates 26 clinics.

WellPoint, the largest U.S. health insurer by membership, which runs Blue Cross and Blue Shield plans, reported 1.33 million senior members at the end of the first quarter.

WellPoint Chief Financial Officer Wayne DeVeydt told Reuters last year the company wanted to expand more into Medicare, calling it a “huge growth opportunity for us.”

The insurer expects more than 1 million “baby boomers” will become eligible for the program every year through 2030 across the 14 states in which its Blue Cross and Blue Shield plans have a presence, it said on Wednesday.

WellPoint’s Laura Hancock receives Ones to Watch Award

INDIANAPOLIS ― Laura Hancock, WellPoint’s vice president, operational excellence, is a recipient of the 2011 CIO Ones to Watch awards from IDG’s CIO Magazine and CIO Executive Council.

This honor is given to 25 rising stars in information technology (IT) who bring leadership, innovation and value to their organization and are primed to become future CIOs. Hancock accepted her award at the CIO Ones to Watch awards ceremony May 2 during the magazine’s Leadership Event.

“Laura is well deserving of this honor.” said Lori Beer, executive vice president of WellPoint’s Enterprise Business Service. “Her focus on delivering business value, along with her expertise, leadership and dedication, are a true asset to our organization.”

“The Ones to Watch honorees bring an impressive range of leadership skills to their companies,” says CIO Editor-in-Chief Maryfran Johnson. “We see in this next wave of future CIOs a broader business perspective that’s so vital to innovation and growth.”

All Ones to Watch honorees must be nominated or endorsed by a practicing CIO.

Nominations were submitted between May and November 2010 and reviewed by a judging panel of leading CIOs.

WellPoint is the nation’s largest health benefits company in terms of medical membership, with 34 million members in its affiliated health plans, and a total of more than 70 million individuals served through its subsidiaries.