Slide 1: Anthem and WellPoint merger presentation, October 27, 2003
Larry Glasscock, Chairman, President and Chief Executive Officer Mike Smith, Chief Financial Officer Leonard Schaeffer, Chairman and Chief Executive Officer David Colby, Chief Financial Officer October 27, 2003 SM Filed by: Anthem, Inc. Pursuant to Rule 425 under the Securities Act of 1933 and deeme
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: Transaction Summary
Transaction Summary Offer Per WellPoint Share: Offer Price 1 : Consideration: Pro Forma Fully-Diluted Ownership: Expected Closing: Required Approvals: Anthem and WellPoint shareholders State Departments of Insurance and Other Regulators Blue Cross Blue Shield Association Hart-Scott-Rodino 1 Based on
Slide 5: Transaction Summary: Combined Company Governance
Transaction Summary Name: Headquarters: Board Representation: Chairman: President and CEO: Chief Financial Officer: Co-Heads of Integration: WellPoint, Inc. WellPoint, Inc. Indiana 60% Anthem, 40% WellPoint Indiana Leonard Schaeffer Larry Glasscock David Colby Mike Smith, Alice Rosenblatt
Slide 6: Nation's Leading Health Benefits Company
Nation’s Leading Health Benefits Company Combined size and scale creates leadership position in industry Geographic diversification with local focus and national reach Growth opportunities in regional and national markets Building on combined strength to create operating synergies Operational excell
Slide 7: Industry Leading Size and Scale
Membership (a) Latest 12 Months Revenues (b) Industry Leading Size and Scale 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 8: Geographic Diversification
CO ME KY IN GA MO CA NV OH VA TX IL Geographic Diversification Anthem WellPoint CT WI NH UNICARE and HealthLink >100K members MA
Slide 9: Geographic Diversification
California 26% Virginia 10% Ohio 10% Georgia 8% Indiana 7% Missouri 6% Connecticut 6% Kentucky 5% Non-Branded 12% Geographic Diversification Colorado 3% Wisconsin 2% New Hampshire 2% Maine 2% Nevada 1% Combined Membership at 9/30/2003 = 26 million (Excludes BlueCard Host Members for WellPoint)
Slide 10: 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 11: 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 12: Operational Excellence
Anthem WellPoint 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 Operational Excellence ~$20.4 Revenue CAGR 24% Revenue CAGR 30% $17.3 $12.4 $9.2 $13.3 $10.4 $8.8 3.7%
Slide 13: Financial Strength and Flexibility
Operating Cash Flow Debt-to-Capital Ratio (a) Financial Strength and Flexibility Anthem stand-alone WellPoint stand-alone ($ in billions) (a) As of September 30, 2003
Slide 14: Financing Plan
Interim Permanent Financing Plan Financing Sources Available cash $3.0 billion bridge facility $1.0 billion revolving credit $2.0 billion note offering $2.5 billion credit facility ($ in billions) Available cash (interim) $ 0.7 New debt issuance (interim) $ 3.2 Equity issuance $12.5 Total $ 16.4
Slide 15: Anthem Consolidated Results: 3Q03 vs. 3Q02
Revenue Pre-tax income Diluted EPS Pre-tax margin Membership % Change Anthem Consolidated Results: 3Q03 vs. 3Q02 3Q03 3Q02 (a) Includes $0.04 per diluted share for realized gains and a $0.20 per share benefit for a tax valuation allowance. $4.3 billion $3.6 billion 19% $310 million $229 million 35%
Slide 16: Anthem Reportable Segments: 3Q03 vs. 3Q02
Midwest East Southeast West Specialty Other Membership Growth Anthem Reportable Segments: 3Q03 vs. 3Q02 Operating Revenue Growth Operating Gain Growth ($ in millions) ($ in millions) $1,694 11% $109 62% 8% $1,161 8% $75 22% 9% $267 18% $33 3% 13% $950 - $82 - - 5% $194 43% $19 40% $(80) - $(39) - -
Slide 17: Anthem 2003 Full Year Guidance
Anthem 2003 Full Year Guidance 7% – 8% Membership Growth 100 – 150 bp Improvement Benefit Expense Ratio 50 – 100 bp Improvement Admin. Expense Ratio $(135) - $(145) Other $60 - $65 Specialty $100 - $105 West $330 - $340 Southeast $295 - $305 East $425 - $435 Midwest Operating Gain: Approximately $16
Slide 18: Anthem 2004 Full Year Guidance
Anthem 2004 Full Year Guidance 4% – 6% Membership Growth 82% – 83% Benefit Expense Ratio 17.8% – 18.3% Admin. Expense Ratio 15%+ growth Pre-tax income Low double-digit growth Revenue $6.05 - $6.15 Diluted EPS
Slide 19: WellPoint 3Q03 vs. 3Q02 Results & Outlook
WellPoint 3Q03 vs 3Q02 Results & Outlook 14.0M, up 8% 3Q03 Membership $6.00, up 37% Full Year 2003 EPS (c)(d) $430M, up 31% 3Q03 Operating Income (b) $5.0B, up 12% 3Q03 Revenue $1.63, up 42% 3Q03 EPS (a) $6.90 - $7.00, up 15 -17% Full Year 2004 EPS (c) (a) Excludes net realized gains of $0.00 and $0
Slide 20: 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 21: Presenters: Glasscock, Smith, Schaeffer, Colby
Larry Glasscock, Chairman, President and Chief Executive Officer Mike Smith, Chief Financial Officer Leonard Schaeffer, Chairman and Chief Executive Officer David Colby, Chief Financial Officer October 27, 2003 SM