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Wellpoint, Inc. (WLP)

The 30th Annual JPMorgan Chase Healthcare Conference

January 10, 2012 5:30 pm ET


Angela F. Braly - Chairman, Chief Executive Officer, President and Chairman of Executive Committee


John F. Rex - JP Morgan Chase & Co, Research Division


John F. Rex - JP Morgan Chase & Co, Research Division

Good afternoon. Next up, I have -- welcome, first of all. I'm John Rex to cover the services stocks here at JPMorgan. And next up, we have WellPoint presenting. Up on the stand, you have Angela Braly, CEO; Wayne Deveydt, CFO; and Michael Kleinman who runs the Investor Relations effort for the company. So I'm going to turn the time over to Angela. She's going to give the presentation, and of course, we're going to have a breakout session directly afterwards.

Angela F. Braly

Thank you. I want to thank you all for participating today and having an interest in our company. Let me go ahead and get started. Of course, we have to remind you that my presentation will include some forward-looking statements, and there are factors that could cause actual results to differ materially from these forward-looking statements. And we advise you to review the risk factors in our SEC filings.

I also want to make sure you know that we confirmed our guidance for 2011 on an adjusted basis at $6.95 to $7, and we plan to give guidance for 2012 on our earnings call on January 25. We invite you to participate in that as well.

So I'm going to take you through a brief profile of WellPoint, and highlight for you our compelling value proposition, talk about our strategy and our outlook over the long term.

So let me get started with an understanding of who WellPoint is. We are Anthem Blue Cross of California. We're Anthem Blue Cross Blue Shield in 13 states or 12 states. We're Empire Blue Cross Blue Shield in New York and Blue Cross Blue Shield of Georgia. We have 34 million medical members, many more members when we count our specialty and ancillary benefits that we provide. We have a top line of about $60 billion and market cap of $23 billion.

When you think about WellPoint, think about the -- both the geographic diversity of our membership because we're in 14 states, and those states vary and cross the country from California to Maine. But we also have a diversity in the business segments that we serve. Our largest block of business is in the Local Group market where we have over 15 million lives. We have -- we're the largest provider of individual policies in the marketplace with almost 2 million members. We serve National Accounts, which has been a book that has grown for us historically over the last decade or so. We're over 12 million National Account lives. We have one of the largest Medicaid managed care plans. We serve the Medi-Cal program here in California and a number of other states. We also act as the back office for a number of other Blue plans who participate in Medicaid programs in their Blue licensed state. We have a senior membership of over 1 million, about 1.4 million lives, and we expect growth in our senior membership, which I'll talk about. We have about 1.5 million Federal Employee Program lives, and we serve that program proudly as part of the Blue Cross system. About 60% of our medical management is -- or medical membership is in the ASO or self-funded market, and about 40% is fully insured. We do have a broad portfolio of specialty products. We have Medicare Part D business, and we also have a government business that serves as the administrator or back office for Parts A and B, providing claims processing capabilities.

I think the point here is that all of these diverse segments are going to be meaningful in terms of the strategy of the future. So our presence in the Medicaid market and in the Medicare market make it a great opportunity for us to consider the dual-eligible market. We also have the opportunity to participate in the exchanges of the future, but we are not obligated to participate in any specific exchange or all exchanges across our states.

When you look at us by each state, the fact that we have a significant market share in the states is meaningful for a couple of reasons. One is it gives us obviously an advantage in terms of negotiating network contracts with our providers and hospitals. And we have advantages there, but as we get into our care management and utilization management capability, having a significant portion of a physician's patient group be Blue Cross Blue Shield members is meaningful in terms of the changes we may make around care management will really have an impact on their practice. And we intend to utilize and focus there in the way we have an influence on the utilization and cost of care.

It's also important what we've done while we've been these 14 former Blue Cross companies that came together, we've brought the data all together. So we have an enterprise data warehouse that has all of the data for all of our customers. We have a Master Consumer Profile. We think that data is very valuable and useful. And then the way we operate is to have a local plan president in each of our states that has a material P&L responsibility. And so they also have a real feel for the marketplace. They know the presidents of the hospitals. They work with the local regulators. And we think that's a long-standing differentiating advantage. And while we think the marketplace will change, we think that advantage will be meaningful to our company and to our customers. Obviously, the Blue Cross and Blue Shield brands are widely recognized, more recognized than any of our customers, and you'll see us continue to focus on the brand and continue to make investments in the brand because it's a very strong brand to go into a consumer market. It's very attractive in the Medicare or the senior market. And so between ourself that has 34 million lives and the other Blue plans, together we have about 100 million lives. So 1 in 3 Americans is carrying a Blue Cross Blue Shield card.

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