WellPoint WLP +7.93% was up $4.31 to $61.70 in recent trades after Braly succumbed to investor demands that she step down as CEO, chairman and president after five years at the top of the managed-care giant, one of largest in the nation. John Cannon, the company’s executive vice president and general counsel will serve as interim CEO.
Braly had been under fire in recent months for not anticipating the higher costs that are plaguing much of the others in the industry, leading to a negative surprise in the company’s most recent earnings report.
But the news comes as the company is trying to complete its $4.9 billion acquisition of Medicaid specialist Amerigroup Corp. AGP +0.04%
Analysts say investors have been pleased with the company’s attempt to mix its revenue sources, particularly with the acquisition of Amerigroup. The biggest for-profit purveyor of Blue Cross and Blue Shield health plans, WellPoint was heavily reliant on commercial business for income.
“Nonetheless, the tenure of CEO Angela Braly — marked by [earnings before taxes and interest] reduction, pricing mishaps and [earnings-per-share] misses — kept us on the sidelines,” Bernstein Research analyst Ana Gupte said in a note to clients. “We expect that a new CEO and management team with an increasingly accountable board should mark the start of the turnaround.”
Said S&P’s Phillip Seligman: “We believe an overhang dissipated from [WellPoint] shares with Angela Braly’s resignation as chairman, president and CEO. Her departure was urged by several large investors disappointed with [WellPoint’s] performance, reflecting difficulties in forecasting medical costs and setting premium prices, and its member losses, we think
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