Elevance Health, Inc. · NYSE:ELV
Elevance Health — Anthem — Merger or Acquisition (November 2003)
39 slides from Elevance Health's merger presentation, Nov 6, 2003
Slide 1: Filed by Anthem, Inc. Pursuant to Rule 425
2003 November Filed by: Anthem, Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 of the Securities Exchange Act of 1934 Subject Company: WellPoint Health Networks Inc. Commission File Number: 1-13083
Slide 2: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This presentation contains certain forward-looking information about Anthem, Inc. (“Anthem”), WellPoint Health Networks Inc. (“WellPoint”) and the combined company after completion of the transactions that are intended
Slide 3: Additional Information and Where to Find It
ADDITIONAL INFORMATION AND WHERE TO FIND IT This presentation may be deemed to be solicitation material in respect of the proposed merger of Anthem and WellPoint. In connection with the proposed transaction, a registration statement on Form S-4 will be filed with the SEC. SHAREHOLDERS OF ANTHEM AND
Slide 4: Today's Agenda
Today’s Agenda Financial results Third quarter Membership growth WellPoint merger Q&A and open discussion
Slide 5: Financial Results
Financial Results
Slide 6: Financial Highlights
Financials Financial Highlights Three Months Ended September 30, 2003 Diluted earnings per share of $1.38 exceeded the investor consensus estimate and improved over prior year third quarter by 7.0% Financial Highlights Nine Months Ended September 30, 2003 Diluted earnings per share of $3.98 improved
Slide 7: Summary Results of Operations: Nine Months Ended September 30, 2003
Financials Summary Results of Operations: Nine Months Ended September 30, 2003 ($ in millions except EPS) (1) Administrative expense ratio calculated using total operating revenue. Actual Change Prior Year 2002 Membership (000s) 11,847 10,952 8% Operating Revenue $12,260.9 $9,090.2 35% Net Income 56
Slide 8: Operating Gain by Segment
Financials Operating Gain by Segment Nine Months Ended September 30, 2003 (in millions) Actual 2003 Prior Year 2002 Operating Gain (Loss): (1) If Anthem had owned Trigon for the entire nine months ended September 2002, operating results would have included an additional $117.9 million in operating g
Slide 9: Peer Information Compared to Anthem - 2004
Financials Peer Information Compared to Anthem - 2004 Peer Average (A) Top 2 Peer Average (B) Operating Revenue Growth 8.2% 11.5% Low double- digit growth Administrative Expense Ratio 18.4% 16.5% 17.8% - 18.3% Benefit Expense Ratio 83.0% 81.8% 82% - 83% Diluted Earnings per Share Growth 13.9% 17.1%
Slide 10: Membership Growth
Membership Growth
Slide 11: Total Membership by Region
Total Membership by Region Sept-03 Dec-02 Chg %Chg Membership in 000s Midwest 5,624 5,234 7.5% East 2,621 2,434 7.7% Southeast 2,671 2,549 4.8% West 11.4% Total 11,847 11,053 7.2%
Slide 12: Total Membership by Funding Arrangement
Total Membership by Funding Arrangement Sept-03 Dec-02 Chg %Chg Membership in 000s Total 11,847 11,053 7.2% Large Group 3,868 3,867 --- Small Group 1,223 1,168 4.7% Individual 1,182 1,084 9.0% National Natl Excl. BlueCard 1,765 1,532 15.2% BlueCard 2,809 2,419 16.1% Total National 4,574 3,951 15.8%
Slide 13: Total Membership by Funding Arrangement (cont.)
Total Membership by Funding Arrangement (cont.) Sept-03 Dec-02 Chg %Chg Membership in 000s Fully Insured 5,479 5,436 0.8% ASO 6,368 5,617 13.4% Total 11,847 11,053 7.2%
Slide 14: Anthem WellPoint
Anthem Sm WELLPOINT
Slide 15: WellPoint Overview
WellPoint Overview WellPoint is the second largest health plan in the U.S. million medical members 49 million specialty members 20,000 associates $13.9 billion in assets $19.4 billion in revenue Fortune Magazine’s “Most Admired” health care company
Slide 16: WellPoint: Family of Companies
WellPoint: Family of Companies Blue Cross of California Blue Cross Blue Shield of Georgia Blue Cross Blue Shield of Missouri Blue Cross Blue Shield of Wisconsin* Unicare Specialty: Pharmacy, Dental and Vision, Behavioral, Life, Disability, Worker’s Compensation Health Link: Network rental and admini
Slide 17: WellPoint: Recognition
Wellpoint: Recognition Executive Female BusinessWeek 50 Wellpoint ranked number two on the magazines list of 50 best- performing large public corporations in the S&P500. Fortune’s Most Admired Health Care Company Wellpoint topped FORTUNE’s list for an unprecedented fifth consecutive year. Forbes Mag
Slide 18: Why Merge with WellPoint?
Why Merge with WellPoint? Creates the nation’s leading health benefits company Geographic diversification with local focus and national reach Growth opportunities in regional and national markets Building on combined strength to create operating synergies Operational excellence with strong, consiste
Slide 19: Growth Opportunities
Growth Opportunities Utilize strong local presence to add members in all segments Introduce new products to under-served markets Offer an enhanced Specialty product portfolio Penetrate fragmented markets Complement portfolio with disciplined acquisitions Implement best practices across the enterpris
Slide 20: Transaction Summary
Transaction Summary Offer Per WellPoint Share: $23.80 cash and 1 Anthem share Offer Price 1 : $101.06 per WellPoint share Consideration: 76% stock, 24% cash Expected Closing: Mid-2004 Required Approvals: Anthem and WellPoint shareholders State Departments of Insurance and Other Regulators Blue Cross
Slide 21: Transaction Summary
Transaction Summary Name: WellPoint, Inc.* Headquarters: Indiana Board Representation: 60% Anthem, 40% WellPoint Chairman: Leonard Schaeffer President and CEO: Larry Glasscock Chief Financial Officer: David Colby Co-Heads of Integration: Mike Smith, Alice Rosenblatt *Anthem will continue to do busin
Slide 22: Reaching Across the Nation
Reaching Across the Nation CO OH KY VA 2 IN GA MO NV CA ME WI TX IL Anthem WellPoint CT NH UNICARE and HealthLink greater than 100K members MA
Slide 23: Geographic Diversification
Geographic Diversification California 26% Virginia 10% Ohio 10% Georgia 8% Indiana 7% Missouri 6% Connecticut 6% Kentucky 5% Non-Branded 12% Combined Membership at 9/30/2003 = 26 million (Excludes BlueCard Host Members for WellPoint) Colorado 3% Wisconsin 2% New Hampshire 2% Maine 2% Nevada 1%
Slide 24: Creating Operating Synergies
Creating 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 million
Slide 25: Industry Leading Size and Scale
Industry Leading Size and Scale Membership (a) Latest 12 Months Revenues (b) Source: Latest company filings as of 9/30/03 or 6/30/03. (a) Excludes BlueCard host membership for WellPoint. (b) Latest 12 months(LTM) revenues as of 9/30/03 for Anthem, WellPoint and UnitedHealth. LTM as of 6/30/03 for CI
Slide 26: Anthem WellPoint Operational Excellence
Anthem WellPoint Operational Excellence Mid-4% Mid-4% 4.1% 4.1% 3.3% 2.6% 3.3% 1 After-tax margin is calculated by dividing net income by total revenue. ~$16.7 ~$20.4 Revenue CAGR 24% Revenue CAGR 30% $17.3 $12.4 $9.2 $13.3 $10.4 $8.8 3.7%
Slide 27: A Commitment to Values
A Commitment to Values WellPoint Be customer-focused in everything we do and everyone we serve Take personal responsibility for achieving planned results Be a leader Be creative and entrepreneurial Embody ethics, pride, integrity and passion in everything we do Collaborate to achieve company results
Slide 28: Day One - The Reaction
Day One - The Reaction October 28, 2003 October 27, 2003 October 28, 2003 October 28, 2003
Slide 29: Day One - The Reaction (cont.)
Day One - The Reaction (cont.) October 27, 2003 998 participated in the analyst call and 440 on Webcast More than 100 media inquiries to Anthem and WellPoint 8 broadcast interviews including: Bloomberg CNBC 175 print stories including: The Chicago Tribune The Los Angeles Times The New York Times The
Slide 30: Day One - The Reaction (cont.)
Day One - The Reaction (cont.) The WellPoint Merger and Stock Price Performance The 8% decline in Anthem’s stock price after the deal was announced was not unusual In addition, the decline on the day of the announcement was relatively consistent with that experienced with Trigon WellPoint naturally
Slide 31: What This Means for All Associates
What This Means for All Associates Additional opportunities for professional growth Greater opportunities for advancement Larger, growing company with an eye for talent Opportunity to leverage best practices
Slide 32: What Doesn't Change
What Doesn’t Change Our commitment to associates Our commitment to communicating Our focus on customers and the business at hand Our commitment to core values
Slide 33: What We Need You to Do
What We Need You to Do Stay focused -- Lots of excitement ahead Remember the customer -- continue to give exceptional service Talk to your manager; support your peers Best security comes from profitable growth Together, we are making a difference and heading in the right direction Believe in the fut
Slide 34: Next Steps
Next Steps Filing S-4 Filing form A’s Participating in regulatory hearings Regulatory approval Multiple states Securities and Exchange Commission Blue Cross Blue Shield Association Shareholders of both companies Transition planning teams being put in place Anthem CFO Mike Smith co-leading team Expec
Slide 35: Summary of Key Points
Summary of Key Points Strong competitive position as a leading health benefits company Complementary cultures focused on customer needs and quality service Geographically diverse with strong local focus and national reach Significant operational synergies Well positioned for future growth
Slide 36: The Challenge
The Challenge “This is a good time for us to introduce some new products that can compete with them, while this acquisition consumes their time and energy.” - President and CEO of PacifiCare Health Systems (Source: The New York Times 10/30/03)
Slide 37: What questions do you have?
What questions do you have?
Slide 38: Reminder: Follow-up & Expectations
Reminder: Follow-up & Expectations Upon the conclusion of this session of Management Meetings, you will receive a streamlined version of the presentation (11/11/03) and talking points by e-mail to share with your staff Please remember The reason that we send the presentation material after the end o
Slide 39: Open Forum
Open Forum What Questions/Concerns Do You Have About Our Direction and Progress?