By Anna Wilde Mathews
Anthem Inc. Chief Executive Joseph R. Swedish will step down,
and veteran managed-care executive Gail K. Boudreaux will take over
as the insurance giant's next leader Nov. 20.
Ms. Boudreaux will take the titles of chief executive and
president, the company said. She will also join Anthem's board. Mr.
Swedish will remain as executive chairman until May 2018 and will
be a senior adviser through May 2020.
Ms. Boudreaux, 57, is well-known among managed-care investors,
previously serving as chief executive of the biggest U.S. health
insurer, the insurance arm of UnitedHealth Group Inc. She is
regarded as a strong operator, and she has experience overseeing
Blue Cross Blue Shield plans like those that Anthem operates.
In a statement, Anthem's lead independent director, George A.
Schaefer, Jr., said the insurer's board was "confident Gail will
draw from her extensive experience to deliver strong operating
performance, excellent financial results and a laser focus on
customer experience and shareholder value. In an evolving industry,
Gail brings the right skills for the times." He also credited Mr.
Swedish with "a foundation of strong performance that allows us the
opportunity to transition to a new Chief Executive Officer."
After the move was reported by The Wall Street Journal on
Friday, industry analysts reacted favorably to the choice. Leerink
Partners LLC's Ana Gupte called Ms. Boudreaux "a very highly
seasoned and respected managed-care executive" who is "likely to
drive immediate multiple expansion and get [Anthem] to its
well-deserved premium to peers."
Anthem, the second-biggest health insurer, had revenue of around
$84.9 billion last year.
Mr. Swedish, 66, would be leaving after his signature strategic
effort, Anthem's $48 billion bid to buy Cigna Corp., ran aground
earlier this year. However, since the beginning of the year, Anthem
shares have risen by 47%, along with strong results across the
health-insurance sector and Anthem's announced pullback from the
Affordable Care Act exchange business.
The Cigna deal was blocked by courts on antitrust grounds, but
it was already mired in well-publicized acrimony between the
companies' top executives, including Mr. Swedish and his opposite
number at Cigna, Chief Executive David Cordani.
Anthem and Cigna are currently suing each other for billions of
dollars in damages. The litigation focuses partly on the CEOs'
actions and words over the years, as the two insurers were
negotiating and then trying to consummate their deal.
Anthem has accused Cigna and Mr. Cordani of sabotaging the deal,
and Cigna has said that Anthem, over Cigna's objections, chose an
antitrust defense and strategy that failed. Cigna has said Anthem
didn't use its "reasonable best efforts" to get regulatory
approval, and as a result the acquisition was blocked.
Mr. Swedish has led Anthem since 2013, replacing previous CEO
Angela Braly, who resigned under pressure from investors unhappy
with the company's direction. The board turned to Mr. Swedish, a
hospital-industry veteran with no experience leading a managed-care
company, to steer the insurer through the challenges of the ACA
marketplace launch. Anthem, which had revenue of $71 billion in
2013, has grown under Mr. Swedish's watch, but his tenure has been
marked by challenges.
Anthem remains locked in litigation with its current
pharmacy-benefit manager, Express Scripts Holdings Inc., with
Anthem alleging that Express overcharged for drugs. Express has
denied the allegations and made its own counterclaims.
Mr. Swedish unveiled a plan last month for Anthem to start its
own pharmacy-benefit manager, to be serviced by CVS Health Corp. A
little over a week later, The Wall Street Journal reported that CVS
was in talks to take over Aetna Inc., an Anthem rival. Anthem
factored in the possibility that CVS might buy another insurer in
structuring its contract with the drugstore giant, according to a
person with knowledge of the matter. The new PBM is slated to
launch in 2020, after the end of Anthem's current contract with
Express Scripts.
Mr. Swedish also made the call for Anthem to pull back in the
ACA's exchanges in most of its markets amid uncertainty in the
business. The law's marketplaces were once expected to be an engine
of growth for the company. But Anthem has retained a bigger
footprint than other big national insurers such as Aetna. Anthem
has projected that next year its enrollment in ACA plans will drop
by around 70%, but it said the business is expected to be
profitable in 2018, after break-even results in this year.
Anthem's 2017 proxy statement says Mr. Swedish could be due to
receive a payout worth around $26.5 million upon his retirement.
According to a regulatory filing made by Anthem on Monday, Mr.
Swedish will receive his current salary while he remains chairman,
and will receive $4.5 million in annual salary while he is senior
adviser.
Anthem will become the latest member of the Fortune 500 list of
corporate giants to name a female CEO, though Ms. Boudreaux won't
be the first woman to lead the insurer. When the magazine released
its annual list in June, it reported that 32 of the companies were
led by women, a record and a sharp increase on a percentage basis
from the previous year, when the total was 21.
Ms. Boudreaux left UnitedHealth in 2015, with a two-year
noncompete agreement, according to a filing that UnitedHealth made
when her departure was announced.
Before coming to UnitedHealth in 2008, Ms. Boudreaux was an
executive at Health Care Service Corp. -- like Anthem, the parent
of Blue Cross Blue Shield plans -- which gave her an understanding
of the how Blue insurers work. Ms. Boudreaux's UnitedHealth
experience may be appealing to Anthem because of its burgeoning
Optum health-services arm; other insurers are eager to add similar
operations.
According to Anthem's filing Monday, Ms. Boudreaux will receive
an annual base salary of $1.4 million, as well as being eligible
for an incentive bonus as well as long-term incentive awards with a
target value of $10.25 million for 2018. Upon starting with Anthem,
she will also get a grant of "performance stock units" with a
target value of $2 million that vests "based on the level of
achievement of company performance" from 2017 through 2019.
Among Mr. Swedish's most visible legacies at Anthem is the name
of the company, which changed from WellPoint Inc. in 2014.
Joann S. Lublin contributed to this article.
Write to Anna Wilde Mathews at anna.mathews@wsj.com
(END) Dow Jones Newswires
November 06, 2017 15:30 ET (20:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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