When Joe Swedish was named the next CEO of WellPoint Inc., investors frowned.
How could a lifetime hospital executive be the right person to lead the Indianapolis-based insurance giant through the implementation of Obamacare, one of the most uncertain times in the company’s history?
“WellPoint had a lay-up, but the board chose to increase the degree of difficulty instead,” Citigroup analyst Carl McDonald told investors.
But pretty soon, investors didn’t care. Swedish sounded capable enough in his presentations to investors, who had soured on his predecessor, Angela Braly, after repeated miscues.
“WellPoint now has an adult in the room,” said Rob Medway, a partner at Royal Capital Management LLC, which holds a stake in WellPoint, after listening to Swedish talk to investors at a conference.
It also helped that the markets overall fell back in love with health insurance stocks. From March 25, the day Swedish took the helm, until Dec. 18, WellPoint’s shares rose 39 percent.
That was the second-best performance among the five largest health insurers, behind only Louisville-based Humana Inc. The major health insurers far outpaced the Standard & Poor’s 500 index in 2013.
Swedish benefited from improvements made by WellPoint’s lead attorney, John Cannon, who served as interim CEO after Braly’s departure in August 2012.
That positioned WellPoint to post better-than-expected profits this year, which were also helped by slower-than-expected rises in overall health care spending. WellPoint’s profits during the first three quarters of the year totaled $656 million, down 5 percent from the same period a year earlier.
Swedish is bullish on Obamacare. While the law will pinch WellPoint’s profit margins, he predicted the law’s subsidization of health insurance will send WellPoint’s revenue soaring to $90 billion in 2016.