Uncertainty

The sudden exit last week of WellPoint President and CEO Angela Braly met with approval from investors and quickly spurred speculation about how Braly's successor will address what analysts describe as the company's miscues and underperformance.

Braly's resignation as chairwoman, president and CEO, announced after markets closed Aug. 28, leaves the company to grapple with uncertainty as its management seeks to ready for market changes under healthcare reform and complete WellPoint's proposed $4.9 billion acquisition of Amerigroup, a Medicare and Medicaid managed-care provider based in Virginia Beach, Va.

“While shareholder unrest has been present for some time given a number of miscues over the last couple of years, the question remains who the board will select as the successor and how quickly will they make their choice given key elements of health reform are scheduled to go into effect in 2014 and commercial risk margins are coming under pressure,” Raymond James analysts wrote in a report.

Matthew Coffina, an analyst with Morningstar who covers WellPoint, said in a note to investors that WellPoint's management has raised concerns in recent years, as was the case in 2010 when the company made a “high-profile actuarial mistake” in California that “soured relationships with regulators across the country.” The company's integration after mergers has struggled, as has its actuarial department and WellPoint “has not handled health reform developments as positively and proactively as we would like,” according to the note.

WellPoint's reported second-quarter net income fell 8.3% compared with the previous year's second quarter to $643.6 million.

Separately, Amerigroup had disclosed it received a second request from federal antitrust officials on the deal the same day Braly resigned.

Investors and analysts appeared to welcome Braly's departure, with WellPoint's stock closing up 7.7% at $61.80 the day after her exit, and ending the week at $59.87, which is up 4.3% from the pre-announcement close.