WellPoint“We continue to improve our cost structure… not willing to give up

margin for membership” -

Chairman/CEO

Research Methods

• SEC Filings of Discussed Companies and Firms

• Questionaire to WellPoint employee random sample

• Secondary Data from accredited News Sources

• Personal Interview w/ Anthem Executive Director

• Industry Data provided by: NASDAQ, S&P 500, and New York Stock Exchange

• WellPoint Press Releases/Corporate Website

A Leader is Born…

Year2004

28 million members makes WellPoint #1!

Wellchoice New Jersey

Meridian Resource Co.

Anthem Behavioral Health

WellPoint Worker’s Compensation Managed Care

Services

Golden West Dental & Vision

AdminaStar Federal

WellPoint Pharmacy Mgmt

Health Management Corp.

Lumenos

WellPoint Dental Services

HealthLinkEmpire BCBS (New York)

WellPoint Behavioral Health

HealthCoreBCBS of Wisconsin

United Government Services

Anthem VisionBCBS of Missouri

UniCareAnthem Prescription Mgmt

BCBS of Georgia

PrecisonRXAnthem Life Insurance Co.

Blue Cross of California

OneNation Benefit Administrators

Anthem DentalAnthem BCBS

1 - 10 insured

areWellPoint members

?

Did you Know?

34 Million Strong!

In Recent Times…

WellPoint’s Objectives

• Seek to insure the uninsured

• Pursue new markets • Grow National Accounts• EPS 2Q of 2006 = $1.14

($4.63 for year)• Lower SGA associated

costs• Think Big… Act Local• Economics of Scale

The Industry

The Healthcare

Industryis the largest

employer. 1-9

Americans!

Did you Know?

• 21.9% Annual Growth• Public Opinion

Increasing

Health Insurance Industry “SnapShot”

New Market Entrants• Credibility essential• Too expensive to compete

nationally• Economics of Scale will force

entityto be more expensive

Supplier Power• Generic drug

options is forcing name brands to lower costs

• General Healthcare rising but at a lower rate.

• Physicals/Hospitals also in highly competitive industries. Prefer strategic partnerships

• Hospital Consolidations limit options, raising costs.

Buyer Power

• Generally based on employers’ choice

• Cost is increased w/o group participation

• Several Markets bordering monopoly

Substitute Products• Comparable Options

Available• Health Savings

Account• Self Insure• Government Aid• Do without

Competitive Rivalry

• Strong industry rivals• Industry growth based

on acquisition• Product offerings

similar• Shareholder

expectations

United Health Care

Cigna

WellPoint

Aetna

High Profit Margin

Low Profit Margin

Low Products & Services

High Products & Services

FierceCompetition

Key Business

Core Competencies

Blue Cross/Blue Shield

Specialty Plans

Bundle Packages

‘Cross Selling’

Economics of Scale

Proactive Solutions

• Highly leveraged by large cash flow

• Lowest Potential CostMedicare Plan D

• Lawsuits• Spikes in health care

costs• Competitors more efficient

• 45 million uninsured• National Employee

Accounts• Acquisitions of smaller

firms• Capitalize on competitors

dissatisfied customers

ThreatsOpportunities

• High cost of SGA• Synergy of previous

mergers not optimized• “non-core” investments

may distract management• Untimely physician

payments

• Strong bargaining power • Wide array of products• Strong brand recognition• BCBS provider for 14

states• Economics of Scale

WeaknessesStrengths

Strategic Results

NationalAccounts

WellChoice Acquisition

1.5 million new

members in 2005

Uninsured Americans

Specialty Programs

753,000 new members in

2005

Shareholder Value Promised

Earnings

Recommendations

• Pursue National Accounts that can add an additional 115 million members.

• Medicare Plan D Awareness program targeted from the 40 million eligible.

• Advertise Blue Value Access Plan to ensure Baby Boomer membership.

• Avoid non-core business investments• Lower SGA costs associated from mergers. Lack

of synergy could easily be the ‘hole in the boat”. • Acquire Blue Cross/Blue Shields if financially

able. 1/3 of all Insured are BCBS customers.