Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - Anthem, Inc. | d378958d8k.htm |
| EX-99.1 - JOINT PRESS RELEASE, DATED JULY 9, 2012 - Anthem, Inc. | d378958dex991.htm |
 WellPoint and Amerigroup:
Leadership in High Growth
Government Managed Care
July 9, 2012
Exhibit 99.2 |
 Agenda
2
Angela Braly, Chair, President & CEO, WellPoint, Inc.
•
Transaction overview
•
Strategic rationale
Jim Carlson, Chairman & CEO, Amerigroup Corp.
•
Benefits of WellPoint-Amerigroup combination
Wayne DeVeydt, Executive Vice President & CFO, WellPoint, Inc.
•
Financial review
•
Q&A
Jim Truess, Executive Vice President & CFO, Amerigroup Corp
|
 3
3
3
3
Safe Harbor Statement
Cautionary Statement Regarding Forward-Looking Statements
•
This communication contains certain “forward-looking” statements as that term is
defined by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Statements that are predictive in nature, that
depend on or relate to future events or conditions, or that include words such as “believes”, “anticipates”, “expects”, “may”,
“will”, “should”, “estimates”, “intends”, “plans”
and other similar expressions are forward-looking statements. Forward-looking
statements involve known and unknown risks and uncertainties that may cause our actual results in
future periods to differ materially from those projected or contemplated in the
forward-looking statements as a result of, but not limited to, the following factors: the
failure to receive, on a timely basis or otherwise, the required approvals by Amerigroup’s stockholders and government
or regulatory agencies; the risk that a condition to closing of the proposed transaction may not be
satisfied; Amerigroup’s and WellPoint’s ability to consummate the merger; the
possibility that the anticipated benefits and synergies from the proposed transaction cannot
be fully realized or may take longer to realize than expected; the failure by WellPoint to obtain the necessary
debt financing arrangements set forth in the commitment letter received in connection with the
merger; the possibility that costs or difficulties related to the integration of
Amerigroup’s and WellPoint’s operations will be greater than expected; operating costs and
business disruption may be greater than expected; the ability of Amerigroup to retain and hire key
personnel and maintain relationships with providers or other business partners pending the
consummation of the transaction; and the impact of legislative, regulatory and competitive
changes and other risk factors relating to the industries in which Amerigroup and WellPoint operate, as
detailed from time to time in each of Amerigroup’s and WellPoint’s reports filed with the
Securities and Exchange Commission (the “SEC”). There can be no assurance that the
proposed transaction will in fact be consummated.
•
Additional information about these factors and about the material factors or assumptions underlying
such forward-looking statements may be found under Item 1.A in each of Amerigroup’s
and WellPoint’s Annual Report on Form 10-K for the fiscal year ended December 31,
2011, and Item 1.A in each of Amerigroup’s and WellPoint’s most recent Quarterly Report on Form 10-Q for
the quarter ended March 31, 2012. Amerigroup and WellPoint caution that the foregoing list of
important factors that may affect future results is not exhaustive. When relying on
forward-looking statements to make decisions with respect to the proposed transaction,
stockholders and others should carefully consider the foregoing factors and other uncertainties and potential events.
All subsequent written and oral forward-looking statements concerning the proposed transaction or
other matters attributable to Amerigroup and WellPoint or any other person acting on their
behalf are expressly qualified in their entirety by the cautionary statements referenced
above. The forward-looking statements contained herein speak only as of the date of this communication.
Neither Amerigroup nor WellPoint undertakes any obligation to update or revise any
forward-looking statements for any reason, even if new information becomes available or
other events occur in the future, except as may be required by law. |
 4
Safe Harbor Statement
Additional Information and Where to Find It
•
This communication is being made in respect of the proposed transaction involving Amerigroup and
WellPoint. The proposed transaction will be submitted to the stockholders of Amerigroup
for their consideration. In connection with the proposed transaction, Amerigroup will
prepare a proxy statement to be filed with the SEC. Amerigroup and WellPoint plan to file with
the SEC other documents regarding the proposed transaction. STOCKHOLDERS ARE URGED TO
READ THE PROXY STATEMENT REGARDING THE PROPOSED TRANSACTION AND ANY OTHER RELEVANT DOCUMENTS
CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION ABOUT THE PROPOSED TRANSACTION. The definitive proxy statement will be mailed
to Amerigroup’s stockholders. You may obtain copies of all documents filed with the
SEC concerning the proposed transaction, free of charge, at the SEC’s website at www.sec.gov. In
addition, stockholders may obtain free copies of the documents filed with the SEC by Amerigroup by
going to Amerigroup’s Investor Relations website page by clicking the "Investors"
link at www.amerigroup.com or by sending a written request to Amerigroup’s Secretary at
Amerigroup Corporation, 4425 Corporation Lane, Virginia Beach, Virginia 23462, or by
calling the Secretary at (757) 490-6900.
Interests of Participants
•
Amerigroup and WellPoint and each of their respective directors and executive officers may be deemed
to be participants in the solicitation of proxies from the stockholders of Amerigroup in
connection with the proposed transaction. Information regarding Amerigroup’s
directors and executive officers is set forth in Amerigroup’s proxy statement for its 2012
annual meeting of stockholders and its Annual Report on Form 10-K for the fiscal year ended
December 31, 2011, which were filed with the SEC on April 27, 2012 and February 24, 2012,
respectively. Information regarding WellPoint’s directors and executive officers is
set forth in WellPoint’s proxy statement for its 2012 annual meeting of shareholders and
its Annual Report on Form 10-K for the fiscal year ended December 31, 2011, which were
filed with the SEC on April 2, 2012 and February 22, 2012, respectively. Additional information
regarding persons who may be deemed to be participants in the solicitation of proxies in respect of
the proposed transaction will be contained in the proxy statement to be filed by Amerigroup
with the SEC when it becomes available. |
 Advancing Our Future Growth Potential
5
•
Acquiring a leading company in the high growth government-sponsored
marketplace •
Broadens Medicaid footprint to include 19 states that have nearly 60% of
nation’s Medicaid enrollment
•
Establishes
presence
in
13
states
with
significant
dual
eligible
opportunities
•
Advances capabilities in seniors & persons with disabilities market and
long-term services & support programs
•
Enhances competitive positioning for health insurance exchanges
•
Doubles proportion of state-sponsored membership
•
Accretive in the first year and strong long-term return on investment*
* Estimated based on current projections. |
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6
Key Transaction Terms
•
$92.00 per share in cash to acquire all outstanding Amerigroup shares
•
Transaction value of approximately $4.9 billion
•
Financed through cash on hand, commercial paper and debt issuance
Price
Path to
Completion
Operational
•
Amerigroup shareholder vote
•
Regulatory approvals including Hart-Scott-Rodino, state departments of
insurance and other regulators
•
Anticipated closing by the end of the first quarter 2013*
•
Amerigroup will be a subsidiary focused on effectively managing state
sponsored programs and further expanding this business
•
Key Amerigroup management team members to remain with WellPoint
* Estimated based on current projections. |
 7
7
Now is the Right Time for this Highly
Compelling Opportunity
Eyes wide open
Right deal,
Right time
•
Recognized issues
•
Medicaid MCOs are
trading at a premium to
historical levels
•
With political and
economic distinctions,
states will take varying
approaches to fiscal
challenges
•
Compelling opportunity
•
Significant growth
opportunities ahead
•
Managed care is a solution to
state fiscal issues
•
Best partner to serve the
rapidly-emerging dual eligible
and Medicaid mandates |
 Total Expenditures: $457 billion
8
8
Medicaid Managed Care is
Underpenetrated and Poised for Growth
8
8
Sources: www.statehealthfacts.org, CMS, HMA, Wall Street equity research.
Unmanaged
Comprehensive Managed Care
8
Current
Future (2014)
Total Expenditures: $587 billion
29M
24M
(45%)
$359B
$98B
(21%)
Total Beneficiaries: 53 million
$184B
(31%)
$403B
27M
41M
(60%)
Total Beneficiaries: 68 million |
 9
9
Outsized Growth Potential
9
9
2012 –
2020
RFP Pipeline –
~$50 Billion
9
2012 –
2014
2013 –
2022
Long-term
Services and
Support
Dual Eligibles |
 Dual
Eligible Opportunity 10
37 million people
51 million people
20
population
31
15%
population
39%
Dual Eligibles
9 million people
$300 billion
opportunity
Duals are managed through government programs and account for
$300 billion growing to $700 billion in 10 years
Sources: Kaiser Family Foundation, www.statehealthfacts.org, Wall Street equity
research %
of
Medicare
% of costs
of
Medicaid
of
costs |
 11
11
Adjacent Growth: Long-Term Services and
Support (“LTSS”)
Medicare /
CareMore
Medicaid
Capabilities
Geographic
footprint
LTSS
Opportunity
LTSS Opportunity
Positioning to Capture Market Share
LTSS model of care is scalable, cost efficient and synergistic with CareMore
Significant and broad growth opportunity
in Medicaid (~15 million lives today) High-cost
populations in every state Home
and community based services Amerigroup has 5
LTSS programs
CareMore provides additional
capabilities
Duals initiative creates stimulative
effect for LTSS
CMS currently working with more than
two dozen states |
 Government Business Expected to Increase
Income Distribution By State
% of 2010 state population
<133% of Federal Poverty Level
133-200% of Federal Poverty Level
200-400% of Federal Poverty Level
>400% of Federal Poverty Level
11
Virginia
25
8
Ohio
30
32
11
New Hampshire
17
8
Nevada
New York
Total
29
11
Wisconsin
23
10
26
13
Missouri
29
11
12
Maine
24
11
Kentucky
33
11
Indiana
29
Georgia
33
10
Connecticut
19
9
Colorado
24
9
California
32
11
Approximately 29% of the
population in our Blue
markets have incomes that
would make them eligible
for Medicaid under PPACA
Approximately 38% of the
population in our Blue
markets have incomes that
would make them eligible
for exchange subsidies
State
12
Source: MPACT 5.0.0, WLP estimates.
24
27
26
26
30
27
32
30
31
29
25
29
25
32
27
33
40
46
31
29
28
33
30
30
46
32
30
42
35
33 |
 13
13
Amerigroup is Exceptionally Attractive
•
Superior pure-play government managed care platform and management team
•
Leader in serving high needs populations
•
Disciplined approach to growth –
thoughtfulness in selecting markets
•
Well-positioned for future RFPs
* SPD= Seniors & Persons with Disabilities; LTSS = Long-Term Services &
Support; MA = Medicare Advantage. 1,711
1,579
1,788
1,931
2,024
2007
2008
2009
2010
2011
Premium revenue
Membership
$3,872
$4,445
$5,159
$5,783
$6,301
2007
2008
2009
2010
2011
(Members in ‘000s)
($ in millions)
•
40% of revenues from SPD, LTSS, MA and dual members*
|
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14
Geographic Breadth and Diversification
14
14
14
•
19 combined Medicaid states (excludes OH)
•
17 primarily fully insured
•
2 ASO (SC, MA)
•
30% of Amerigroup membership is in
WellPoint Blue markets
Pro Forma Combination
Pro Forma Combination
2014 Duals Combined Opportunity
2014 Duals Combined Opportunity
Near-term Duals Opportunity
WellPoint states
Amerigroup states
WellPoint & Amerigroup
Recently-awarded
•
Presence in 13 states with near-term dual
eligible opportunities
•
Potential for nearly $16 billion of revenue*
* Estimated based on current projections. |
 15
15
Large and Attractive Government Managed
Care Presence
Sources: Kaiser Family Foundation, CMS, Wall Street equity research.
•
19 combined states comprise more than $180 billion of the nation’s $300
billion dual spending WellPoint becomes a leader in the four largest dual
spending states ($ in millions, lives in thousands)
Medicaid
Dual
ABD
Uninsured
Duals
enrollment
eligible lives
lives
lives
spending ($)
California
7,327
1,168
1,268
7,084
$36,559
New York
4,741
724
680
2,779
35,009
Texas
3,764
609
617
6,259
17,551
Florida
2,853
561
485
3,868
16,232
Massachusetts
1,417
251
193
324
9,899
New Jersey
1,039
200
168
1,286
7,780
Tennessee
1,204
276
174
947
7,593
Wisconsin
1,144
215
108
531
7,004
Georgia
1,497
262
229
1,844
6,850
Virginia
884
168
149
988
5,345
Louisiana
892
182
175
790
5,148
Indiana
1,035
149
118
837
4,921
Washington
1,121
144
138
839
4,864
South Carolina
808
149
112
737
4,286
Maryland
902
108
108
731
4,146
West Virginia
335
77
80
262
2,346
Kansas
326
62
46
347
2,215
New Mexico
546
53
60
449
1,736
Nevada
265
38
41
517
1,157
Total
32,100
5,398
4,948
31,418
$180,639
% of US total
59%
61%
63%
65%
60% |
 Similar
cultures and organizational values 16
•
Track records of excellent customer service, strong clinical care management
and deep provider collaboration
•
Strong and valued relationships with federal, state and local governments
•
Focus on access, affordability and consumer experience
•
Commitment to improving health care costs and quality
•
Management teams committed to successfully integrating and achieving future
growth targets |
 Name
Role
Age
Years with
Amerigroup
Remaining with
Company?
Jim Carlson
Chairman and CEO
60
9
Jim Truess
Executive Vice President and CFO
46
6
Richard Zoretic
Executive Vice President and COO
54
9
17
17
Proven Management Team
•
Amerigroup has approximately 6,600 associates in total
|
 Furthers WellPoint’s Leadership in
Government Managed Care
•
Pro forma Medicaid membership of more than 4.5 million lives
•
Pro forma 2012E Medicaid revenue of more than $12 billion*
Creates Market Leader in the Medicaid Space
18
Note: Medicaid membership as of 3/31/12, except for Amerigroup as of May 2012 and
Company H as of 12/31/11. * Estimated based on current projections.
(# of Medicaid members in thousands)
Company
A
Company
B
Company
C
Company
D
Company
E
Company
F
Company
G
Company
H
4,525
3,590
2,658
2,150
1,867
1,825
1,486
1,174
1,034
924
614 |
 19
19
Doubles Proportion of State Sponsored
Membership
19
19
Note: WLP data as of 3/31/12 and Amerigroup data as of May 2012
Total Membership: 33.7 million
Total Membership: 36.4 million
Current WellPoint Business Mix
Pro forma Business Mix
19
Senior
4%
BlueCard
15%
State
Sponsored
6%
Individual
6%
National
Accounts
21%
Local Group
44%
FEP
4%
Senior
4%
BlueCard
14%
State
Sponsored
12%
Individual
5%
National
Accounts
20%
Local Group
41%
FEP
4% |
 20
20
Pro Forma Financial Data & Synergies*
* Estimated based on current projections.
Medical
Members
36.4 million in total
More than 4.5
million Medicaid
1 in 9 Americans &
1 in 12 Medicaid
recipients
2012E
Revenue
Total revenue:
More than
$70 billion
Medicaid revenue:
More than
$12 billion
Financial
Metrics
Low SG&A
expense ratio
Strong statutory
capital position
Annual
Synergies
Fully integrated:
More than
$125 million
Investment income
Administrative
efficiencies
PBM and other
ancillary services |
 21
21
Financially Compelling*
* Estimated based on current projections.
•
No change to 2012 guidance
•
Accretive in 2013, including one time transaction
and integration costs
•
Increasing accretion in 2014, exceeding $1.00 per
share by 2015
EPS
•
Double-digit long-term cash on cash return
•
Mid-teens IRR
ROI
•
Pro forma debt to capital ratio up to 39%
•
Intention to steadily lower over 18-24 months
•
Expect solid investment grade debt rating
Balance
Sheet |
 22
22
Continued Commitment to Delivering
Shareholder Value
Share Buybacks
Invest in Core Business
Invest in Future Growth
Opportunities
Dividends
Capital Allocation
Strategy |
 23
23
A Compelling Combination
•
Furthers our objective of creating the best health care value in
the industry
•
Advances leadership in government sponsored managed care
•
Enhances future growth potential in multiple market segments
•
Strong long-term return on investment for shareholders*
•
Retains proven management team with a highly compatible culture
* Estimated based on current projections. |
 24
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