Elevance Health, Inc. · NYSE:ELV
Elevance Health — Anthem — Banc of America Securities Health Care Conference 2004
31 slides from Elevance Health's conference presentation, May 21, 2004
Slide 1: Banc of America Securities Health Care Conference
Larry Glasscock, Chairman, President & Chief Executive Officer David Colby, Executive Vice President & Chief Financial Officer Banc of America Securities Health Care Conference May 21, 2004
Slide 2: Safe Harbor
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This document contains certain forward-looking information about Anthem, Inc. (“Anthem”), WellPoint Health Networks Inc. (“WellPoint”) and the combined company after completion of the proposed transactions that are inte
Slide 3: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT Anthem has filed on May 11, 2004 Amendment No. 1 to its registration statement on Form S-4, including the joint proxy statement/prospectus constituting a part thereof, with the SEC in connection with Anthem’s proposed merger with WellPoint. SHAREHOLDERS OF
Slide 4: Agenda
Agenda Anthem Profile WellPoint Profile Merger Summary
Slide 5: Anthem Profile
Anthem Profile Maine New Hampshire Connecticut Nevada Colorado Ohio Indiana Virginia Kentucky Anthem BCBS Coverage BCBS licenses in 9 states #1 market share in 8 of 9 states Regional business model National capabilities Full range of healthcare and specialty products Among the fastest growing health
Slide 6: Profitable Enrollment Growth
Profitable Enrollment Growth 9% Same Store CAGR, 1999—2004E (In Millions) 6.3 7.3 7.9 11.1 11.9 12.5+ 2004E Acquisition-related membership in the applicable year
Slide 7: National Accounts
National Accounts Gaining Strength in the Market Place Strong retention of existing accounts 30 new account wins for 1Q04 Value Proposition Blue Cross Blue Shield Brand Access to BlueCard networks nationwide Dedicated Business Unit Model ClaimsQuest Interactive Realtime Information System (IRIS) 5/2
Slide 8: Line of Business Growth
Line of Business Growth Membership Growth (3/31/2003—3/31/2004) 17% 1% 8% 1% 10% National Accounts Large Group Small Group Government - Individual 5/21/2004 4:44 AM
Slide 9: Strong Financial Momentum
Strong Financial Momentum Diluted EPS $3.30 $4.51 $5.45 $6.90—$7.00 2004E Operating Revenue ($ in billions) $10.1 $13.0 $16.5 $18.3+ 2004E
Slide 10: Long Term Earnings Growth
Long Term Earnings Growth 15% + Earnings Growth Model Profitable Membership Growth Continuous Administrative Expense Ratio Improvement Maintain Gross Margins Enrollment growth in every region Maintain strong retention rates Specialty penetration Systems consolidation Contain costs in non-customer to
Slide 11: Agenda
Agenda Anthem Profile WellPoint Profile Merger Summary This presentation contains non-GAAP financial measures, as defined in the rules of the Securities and Exchange Commission. As required by the rules, a reconciliation of those measures to the most directly comparable GAAP measures is available at
Slide 12: WellPoint Profile
WellPoint Profile Second largest health plan in U.S. Broad range of medical and specialty products Organized by customer segment with a diverse customer base Regional geographic focus One Company, multiple brands Non-Blue Brands
Slide 13: Membership Growth
Membership Growth Total Medical Membership (in thousands) 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 2,797 4,485 6,638 6,892 7,515 8,201 10,908 13,811 15,011 15,377 1995 1996 1997 1998 1999 2000 2001* 2002* 2003* 1Q04* * Total medical membership as Dec. 31, 2001, 2002, and 2003 and March 31
Slide 14: Membership Growth
Membership Growth (in thousands) BCC 1Q04 BCBSGA 1Q04 BCBSMO 1Q04 Same store growth:(1) 21% medical membership growth since 1999 20% growth in ISG business since 1999 121% growth in BlueCard Program “home” membership since 2001 Note: Membership numbers exclude BlueCard “host” members. (1) Same store
Slide 15: Big Plans Will Get Larger
Big Plans Will Get Larger Top Ten Health Plans* Medical Members Total Insured 223.7 Million Top 10 = 61.1 Million 2003* Medical Members Total Insured 245.4 Million Top 10 = 102.4 Million * Top 10 Health Plans as of 9/30/03: UNH, WLP, AET, ATH, CI, Kaiser Foundation, HUM, Health Care Services Corp.,
Slide 16: Fragmented Industry
Fragmented Industry Many smaller, regional players in key geographies California Alameda Alliance for Health Care 1st Health Plan Chinese Community Health Plan Community Health Group Community Health Plan Contra Costa Health Plan Health Plan of San Joaquin Inland Empire Health Plan Interplan Corp On
Slide 17: Uninsured Opportunity
Uninsured Opportunity Uninsured 18 million Moderate to high income 11.4 million earn >300% FPL 6.4 million earn 200–299% FPL 14 million Eligible for public programs but not enrolled Earn <100% FPL 9 million Low income, not eligible for public programs Earn 100-199% FPL Demonstrate value Potential ta
Slide 18: WellPoint Pharmacy Management
WellPoint Pharmacy Management Fourth largest PBM with more than 31 million members Offers full spectrum of PBM services Pharmacy Care Management Clinical / Medical Management Clinical Business Plan Intervention Programs Therapy Management Disease Management Patients-At-Risk ReViewPoint® Online Repor
Slide 19: Other Specialty Products
Other Specialty Products Dental PPO, DHMO & FFS Life Basic & supplemental group term, dependent coverage, AD&D Disability Group STD & LTD Behavioral Health Full range of Behavioral Health services, including EAP plans WC MCS Network management, bill review, medical management and case management, al
Slide 20: Specialty Products Contribute to WellPoint's Profitability
Specialty Products Contribute to WellPoint’s Profitability WellPoint Profitability* Quarter Ended March 31, 2004 Specialty Segment 12% 88% Health Care Segment *Excludes Corporate and Other segment
Slide 21: Operational Improvements
Operational Improvements Medical Care Ratio (a) 80.2% 79.7% 80 70 60 50 40 30 20 10 1Q98 1Q04 SG & A Ratio (b) 20.2% 17.0% 20 18 16 14 12 10 8 6 4 2 0 1Q98 1Q04 Investment Income/Pre-tax Income (c) 35.2% 17.0% 40 35 30 25 20 15 10 5 1Q98 1Q04 Pre-Tax Margin (d) 7.3% 8.8% 8 6 4 2 0 1Q98 1Q04 (a) The
Slide 22: WLP Financial Highlights
WLP Financial Highlights Total Revenue (in billions) CAGR = 26%* $6.5 $5.6 $4.0 $12.4 $9.2 $7.5 $17.3 $20.4 $ 24 20 16 12 8 4 0 1996 1997 1998 1999 2000 2001 2002 2003 *As of December 31, 2003. CAGR = (FV/PV)1/n –1, where FV is the future value, PV is the present value, and n is the number of years.
Slide 23: WLP Financial Highlights
WLP Financial Highlights Income from Continuing Operations(a) (in millions) CAGR = 25%(f) $198.5 (b) $224.9 (c) $263.0 (d) $299.1 $342.3 $414.7 (d) (e) $935.2 $660.9 1996 1997 1998 1999 2000 2001 2002 2003 (a) Before extraordinary items and cumulative effect of accounting change, if applicable (b) 1
Slide 24: Agenda
Agenda Anthem Profile WellPoint Profile Merger Summary 5/21/2004 4:44 AM
Slide 25: Leading Market Positions
Leading Market Positions NV CA CO TX WI MO IL IN KY OH GA VA ME NH MA CT Anthem WellPoint UNICARE and HealthLink >100K members
Slide 26: Merger Benefits: Growth Opportunities
Merger Benefits Growth Opportunities Target individual products in ATH markets “Young invincibles” Early retirees Other uninsured Utilize ATH experience with national accounts ATH national accounts same store growth 1Q04 12% over 4Q03 1Q04 17% over 1Q03 Multi-state employers focusing more on medical
Slide 27: Merger Benefits: Growth Opportunities
Merger Benefits Growth Opportunities Increase penetration of PBM services Increased size enhances value proposition WLP PBM experienced with external sales Cross-sell other specialty product sales to existing members Utilize best practices in health improvement programs and contracting to better man
Slide 28: Merger Benefits: Operating Synergies
Merger Benefits Operating Synergies Recognize at least $250 million in pre-tax synergies Information technology $75 million + Specialty businesses $75 million + Operations $50 million + Corporate & Shared Services $50 million + Positioned to implement over 18—24 months: $50 million in 2004, $175 mil
Slide 29: Merger Update
Merger Update Registration statement declared effective on May 13, 2004 “No-review” by SEC Hart Scott Rodino clearance BCBSA approval Approved in 9 of 11 states Shareholder meetings scheduled for June 28, 2004 Anticipate mid-year 2004 closing
Slide 30: WellPoint + Anthem: A Very Compelling Transaction
WellPoint + Anthem . .. . . . . A Very Compelling Transaction . . . Geographic diversification with strong local focus and national reach Diversified membership base Realize significant growth potential in ISG, national accounts and specialty businesses Leverage technology Enhance product offerings,
Slide 31: Questions?
Questions? A * Anthem WELLPOINT.
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