Anthem CEO Joseph Swedish to Step Down -- WSJ
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (November 4, 2017).
Anthem Inc.'s Chief Executive Joseph R. Swedish will step down, and the insurance giant will name veteran managed-care executive Gail K. Boudreaux as its next leader, according to people with knowledge of the matter.
It wasn't immediately clear how quickly the transition will occur, but the plan is expected to be announced as soon as next week, the people said. Mr. Swedish is expected to keep his title as chairman for a transition period, one of the people said.
Ms. Boudreauxis 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.
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%, amid 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, CEO 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 wordsover 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 footprintthan 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. In the case of a company-initiated termination that is "not for cause," the payout and benefits would be worth around $34.9 million, according to the proxy.
Ms. Boudreaux left UnitedHealth in 2015, at a time when some analysts said the company was facing challenges with its Medicare business. She left 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.
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 email@example.com
(END) Dow Jones Newswires
November 04, 2017 02:47 ET (06:47 GMT)