WellPoint and WellChoice Complete Merger, Forming the Largest Publicly Traded Commercial Health Benefits Company

Strategic Insights -

In a significant move in the health insurance industry, WellPoint, Inc. and WellChoice, Inc. have completed their merger, creating the largest publicly traded commercial health benefits company in the United States. The merged company, WellPoint, Inc., now serves approximately 34 million medical members across 14 states and several other states through its Blue Cross or Blue Cross and Blue Shield operations. The company has over 42,000 associates nationwide, with a focus on providing affordable quality care to its customers.

Key Takeaways:

  • The merger between WellPoint, Inc. and WellChoice, Inc. was completed on December 28, 2005, with WellPoint acquiring WellChoice stockholders for $38.25 in cash and WellPoint stock at a fixed exchange ratio of 0.5191 of a share of WellPoint stock for each share of WellChoice stock.
  • The value of the transaction as of September 26, 2005, was approximately $6.5 billion.
  • Larry C. Glasscock, chairman, president, and CEO of WellPoint, Inc., emphasized the company's focus on becoming the most trusted choice for consumers and a leader in affordable quality care, through continuous innovation and investment in products and services that enable consumers to make better-informed health decisions.
  • Michael Stocker, M.D., president and CEO of WellChoice, now serves as president and CEO of the newly formed East Region of WellPoint, with responsibility for business operations in six states.
  • WellPoint, Inc. expects earnings in 2006 to reach approximately $4.51 per share, with approximately $25 million in synergies expected to be realized in 2006 from the merger and at least $125 million in annual synergies expected to be realized beginning in 2010.

Statistics:

  • About 34 million medical members are now served by the merged company, with operations in 14 states and several other states.
  • The company has over 42,000 associates nationwide.
  • The value of the transaction was approximately $6.5 billion as of September 26, 2005.
  • WellPoint, Inc. expects earnings in 2006 to reach approximately $4.51 per share.
  • Approximately $25 million in synergies are expected to be realized in 2006 from the merger.
  • At least $125 million in annual synergies are expected to be realized beginning in 2010.

Sources:

  • WellPoint, Inc. press release dated December 28, 2005
  • "Private Securities Litigation Reform Act of 1995 Safe Harbor Statement"
  • http://www.wellpoint.com/
  • SEC filings, including Annual Reports on Form 10-K for the year ended December 31, 2004 and Quarterly Reports on Form 10-Q for the reporting periods of 2005.