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WellPoint expects to reap M-Plan customers

October 24, 2007

WellPoint Inc. officials expect to win about 50,000 new customers from M-Plan Inc. as part of an endorsement deal the two health plans signed in September, WellPoint CEO Angela F. Braly said in a conference call with analysts this morning.

WellPoint's Indiana subsidiary, Anthem Blue Cross Blue Shield, will pay a commission to M-Plan for every employer group that chooses Anthem. Braly did not specify the amounts of those commissions.

M-Plan currently provides its HMO, or health maintenance organization, benefits to 125,000 customers. M-Plan, the largest HMO in Indiana, tried to sell itself for at least two years before agreeing to the endorsement deal with Anthem. M-Plan will now exit the HMO business.

Anthem boasted 1.73 million customers in Indiana as of Jan. 1, making it the state's largest health insurer by far.

Braly's comments came after
WellPoint reported profit growing 7.1 percent to $868 million, or $1.45 per share. Revenue in the quarter rose 5.5 percent to $13.9 billion.

WellPoint raised its year-end per-share profit forecast by a penny, to $5.56 per share. On the news, WellPoint stock fell 87 cents, to $78.61 a share.

Braly also said today that WellPoint expects to add about 47,000 customers as an administrator of the new Healthy Indiana Plan. The plan, approved by the General Assembly this year, will use cigarette-tax revenue to pay for health benefits for 140,000 previously uninsured Hoosiers. The two other contractors are Golden Rule Insurance Co. and MDWise Inc.

Customer growth for all of WellPoint has been slower than expected. The company aid it expects to total 800,000 new customers for all of 2007. In July, company officials expected that number to hit 1 million, and at the beginning of the year, they expected it to hit 1.4 million.

WellPoint has lost members as some of its national customers have laid off workers.

But WellPoint's operating margins have improved, noted Wayne DeVeydt, WellPoint's chief financial officer, as the company has resisted the urge to lower prices to boost its customer base. "We've always said, we're not going to buy membership," DeVeydt told the analysts.

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