Anthem Remains ‘Very Committed’ to Merger With WellPoint
Anthem Chair and CEO Larry Glasscock on Wednesday in a statement said that the company remains "very committed to completing [its] proposed merger with WellPoint Health Networks," the Richmond Times-Dispatch reports (Richmond Times-Dispatch, 10/28). The proposed merger, announced in October 2003, would combine the companies under the name WellPoint and establish headquarters in Indiana.
Insurance Commissioner John Garamendi (D) in July rejected part of the proposed merger because he said that Anthem would use as much as $400 million annually in health insurance premiums paid by California residents to finance the merger in the first three years and an unlimited amount after that time. Anthem and WellPoint shareholders, as well as a number of entities with direct regulatory authority -- such as the Department of Justice, the California Department of Managed Health Care, nine other states and Puerto Rico -- had approved the proposed merger.
However, since Garamendi announced that he would not approve the proposed merger, insurance regulators in Georgia, Missouri and Texas have raised new concerns over the solvency of WellPoint and the terms of the merger. In August, Anthem filed a lawsuit against Garamendi that seeks to overturn his decision not to approve the proposed merger (California Healthline, 10/27).
In a conference call with analysts on Wednesday, one year after Anthem first announced the proposed merger, Glasscock said that in addition to the lawsuit against Garamendi, company officials have continued "to evaluate all options available to us to complete this transaction." The proposed merger would create the largest U.S. health insurer (Tamaki, Los Angeles Times, 10/28).
Anthem officials reported on Wednesday that the company's third-quarter earnings rose 23% from a year earlier, in large part because of an 8% increase in health plan enrollment, the AP/Lexington Herald-Leader reports. Enrollment has increased by 890,000 members since the end of the third quarter in September 2003 and by 810,000 members since Jan. 1. Anthem posted third-quarter earnings of $242.1 million, or $1.70 per share, compared with $196.5 million, or $1.38 per share, a year earlier.
Third-quarter revenue increased 13% to $4.8 billion from $4.3 billion a year earlier (Kusmer, AP/Lexington Herald-Leader, 10/28). Anthem also increased full-year earnings estimates to between $7.05 and $7.10 per share from previous estimates of between $6.95 and $7.05 per share. Anthem expects earnings of at least $7.60 per share for 2005 (Los Angeles Times, 10/28).