Anthem planning IPO: Is expansion next?

The managed care company, with Blues plans in eight states, says doctors shouldn't notice any changes as it converts to for-profit.

By Myrle Croasdale, AMNews staff. Sept. 24, 2001.

The good news for Anthem Inc. is that its upcoming initial public offering may well be a smashing success. Some doctors aren't sure if that's good news for them.

That's because Anthem, already one of the nation's largest HMOs, is trying to raise money so it may buy even more plans. Anthem has grown into the fifth-largest health plan, as measured by its $5.7 billion in assets, mostly by buying Blue Cross and Blue Shield plans.

Anthem, which in February announced it was converting to a for-profit company from a mutual insurer, on Aug. 16 filed an initial public offering in which it hopes to raise $1.1 billion, although analysts say the company could raise more than that. Getting the offering done depends on the approval of the insurance departments in the states in which the company operates.

It may be a particularly friendly market for Anthem -- despite the stock market's summer doldrums or perhaps because of them.

"Ironically, the environment has improved with the tech stock flareout," said Peter Kongstvedt, MD, senior analyst at Cap Gemini Ernst & Young in Washington. "A lot of investment analysts believe that health care is recession resistant.

"When high-tech was booming, there wasn't a chance to go public with a health care company. That boom fell apart, and investors are looking for more conservative investments. This is as good an environment as you could get," Kongstvedt said.

Indianapolis-based Anthem, which owns Blues plans in Indiana, Ohio, Kentucky, Connecticut, New Hampshire, Maine, Colorado and Nevada, and has agreed to acquire the Blues plan in Kansas, said it planned to be on the market by the end of the year. [...]