What fu­ture holds for Wel­lpoint

How will Braly’s suc­ces­sor fix Wel­lpoint’s troubles?

Modern Healthcare - - FRONT PAGE - Me­lanie Evans

The sud­den exit last week of Wel­lPoint Pres­i­dent and CEO An­gela Braly met with ap­proval from in­vestors and quickly spurred spec­u­la­tion about how Braly’s suc­ces­sor will ad­dress what an­a­lysts de­scribe as the com­pany’s mis­cues and un­der­per­for­mance.

Braly’s res­ig­na­tion as chair­woman, pres­i­dent and CEO, an­nounced af­ter mar­kets closed Aug. 28, leaves the com­pany to grap­ple with un­cer­tainty as its man­age­ment seeks to ready for mar­ket changes un­der health­care re­form and com­plete Wel­lPoint’s pro­posed $4.9 bil­lion ac­qui­si­tion of Ameri­group, a Medi­care and Med­i­caid man­aged­care provider based in Vir­ginia Beach, Va.

“While share­holder un­rest has been present for some time given a num­ber of mis­cues over the last cou­ple of years, the ques­tion re­mains who the board will se­lect as the suc­ces­sor and how quickly will they make their choice given key el­e­ments of health re­form are sched­uled to go into ef­fect in 2014 and com­mer­cial risk mar­gins are com­ing un­der pres­sure,” Ray­mond James an­a­lysts wrote in a re­port.

Matthew Cof­fina, an an­a­lyst with Morn­ingstar who cov­ers Wel­lPoint, said in a note to in­vestors that Wel­lPoint’s man­age­ment has raised con­cerns in re­cent years, as was the case in 2010 when the com­pany made a “high-pro­file ac­tu­ar­ial mis­take” in Cal­i­for­nia that “soured re­la­tion­ships with reg­u­la­tors across the coun­try.” The com­pany’s in­te­gra­tion af­ter merg­ers has strug­gled, as has its ac­tu­ar­ial depart­ment and Wel­lPoint “has not han­dled health re­form developments as pos­i­tively and proac­tively as we would like,” ac­cord­ing to the note.

Wel­lPoint’s re­ported sec­ond-quar­ter net in­come fell 8.3% com­pared with the pre­vi­ous year’s sec­ond quar­ter to $643.6 mil­lion.

Sep­a­rately, Ameri­group had dis­closed it re­ceived a sec­ond re­quest from fed­eral an­titrust of­fi­cials on the deal the same day Braly re­signed.

In­vestors and an­a­lysts ap­peared to wel­come Braly’s de­par­ture, with Wel­lPoint’s stock clos­ing up 7.7% at $61.80 the day af­ter her exit, and end­ing the week at $59.87, which is up 4.3% from the pre-an­nounce­ment close.

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