Known to skip monthly management team meetings for her daughter’s birthday and to reschedule a board meeting so she could attend her daughter’s 4th grade play, Angela Braly at 46 is one of the youngest women CEOs, as well as the only one running a Fortune 50 company. With three children, Angela managed the family life balance through a suggestion by her husband that he become a stay at home dad.
Rather than ‘coming from nowhere’ to take the CEO position, Angela has a long history of health care involvement, first working passionately for Blue Cross Blue Shield of Missouri, then setting up a foundation for uninsured Missourians, becoming General Council for RightChoice, the parent company for Blue Cross Blue Shield of Missouri. RightChoice was acquired by Wellpoint, and Angela became CEO of Wellpoint’s Missouri operation. In 2005 Angela became General Counsel of Wellpoint in Indianapolis. Subsequently in June of 2007, Angela was appointed CEO.
Her colleagues say she is a skilled and tough negotiator and coalition builder. Angela is well paid for these skills. Her salary for 2007 was approximately $0.9 million, with other long term compensation of more than $8.1 million for a total of about $9 million. Not bad, especially for someone who thought she would just be practicing law in St Louis for her entire working life!
Interested in the stock? Here are some things you might want to know:
Company Overview
WellPoint is the nation’s largest health benefits company in terms of commercial membership—more than 35 million Americans nationwide are covered through its subsidiary health plans. The company employs more than 40,000 associates and generates operating revenue in excess of $60 billion.
Current Season
The stock price tumbled for the first time in 3 years to a low of $43.02 on March 10, 2008. Earnings for 4th quarter of 2007 and 1st quarter of 2008 were worse than expected, leading many analysts to downgrade the stock. Goldman-Sachs cited concerns that Wellpoint is ignoring certain underlying root causes for the earnings issue in core commercial underwriting. However, with a P/E ratio at 9.5 in the mid range of companies in the managed health care sector, and 2008 expected EPS of $5.48, 11 of the 18 analysts following the stock are saying to hold the stock, 3 suggest a buy (2 of these are dated in 2006 and should be discounted) and 4 suggest a strong buy.
Recent News
Several positive announcements follow the current season’s earnings disappointments such as winning a Medicare Administrative contract worth as much as $323 million and the April 29 acquisition of DeCare Dental, which boosts Wellpoint’s presence in the dental care arena. Also, on June 24, Wellpoint Websites won 6 World Wide Web Health awards from the Health Information Resource Center.
Balance Sheet
The company sits financially in the middle of the sector, with a debt to equity ratio of .3, an EPS growth rate of 15% and a profit margin of 5.5%. However, Wellpoint is the second highest in the industry sector in terms of market capitalization, leaving it plenty of capital for acquisition.
Bottom Line
Wellpoint is currently trading at approximately $51.35, with a PEG ratio of .70 compared to industry ratios of 1.17 and sector ratios of 1.45 according to 1st call. This could indicate the stock is a bargain compared to others in the same category. The balance sheet shows they are not over-extended for an acquisition strategy, if they do it carefully. Analysts are recommending hold or better. Now might be the time to start watching this stock.
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