Angela Braly abruptly resigned yesterday as chairman and CEO of WellPoint amid a growing outcry from the investment community for her ouster driven by a slumping stock price and lagging earnings.
Storm clouds had been building over Braly's leadership for some time and intensified last week when New York-based investment firm Royal Capital Management LLC sent a letter to the WellPoint Board of Directors urging them to make a change in leadership. In the letter, dated August 22, Royal Capital partners Robert Medway and John Lancefield wrote that Braly had "failed miserably" in her leadership of the insurance giant.
"The market has spoken, as evidenced by WellPoint's stock price… Leadership that demands excellence, accuracy and results is needed, and she simply does not fit the bill," Medway and Lancefield concluded.
The market is again speaking today, the first day of trading since the announcement. WellPoint shares were trading at $61.50 up $4.11 per share, an increase of more than 7 percent in intraday trading.
The WellPoint board had expressed continued support for Braly even as the tide of discontent began to grow after its latest quarterly earnings report in which it missed analysts earnings estimates, its second such miss in the last three quarters.
In announcing her resignation yesterday, the board appointed John Cannon, the company's executive vice president, general counsel, corporate secretary and chief public affairs officer, as interim president and CEO. Jackie M. Ward, WellPoint's lead director on the board, was named interim non-executive board chair.
"Our Board continues to believe that time will prove the wisdom of potentially transformative actions taken under Angela's leadership, from the sale of the pharmacy benefit management business to Express Scripts to the recent and proposed acquisitions of CareMore, 1-800-CONTACTS and Amerigroup," said Ward in a press release announcing Braly's resignation. "But now is the right time for a leadership change."
Of those deals, the most important to the company is likely the planned $4.9 billion acquisition of Amerigroup, a managed care company that focuses on the Medicaid market, announced in early July. With that deal, WellPoint will double the number of Medicaid patients it serves and will likely be well-positioned to serve the anticipated growth of Medicaid under the Affordable Care Act, as well as the dual-eligible population, the high-cost group of patients who are eligible to receive both Medicare and Medicaid.
Speculation on who may replace Braly started shortly after news of the letter from Royal Capital calling for Braly's ouster.
Jason Gurda, a healthcare analyst with New York-based firm Leerink Swan & Co. told Bloomberg last week that possible replacements could include James G. Carlson, Amerigroup's chairman and CEO and former Medco Health Solutions CEO David B. Snow Jr. Medco merged with fellow PBM company Express Scripts earlier this year in a $29 billion deal.