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NEW YORK (AP) — Shares of WellPoint Inc. rose before Wednesday's opening bell, after the insurance company's CEO resigned amid investor frustration with the company's disappointing financial results.
The Indianapolis-based company said late Tuesday Angela Braly is departing, and executive vice president and general counsel, John Cannon, will serve as interim president and CEO. In addition, lead director Jackie Ward was named the non-executive chair of the company's board.
The company said hired an executive search firm to help in find a replacement for Braly, who took over as president and CEO in 2007 and added the title of board chair in 2010. Cannon does not wish to be considered for the permanent job.
Investors had become increasing anxious about WellPoint's performance over the past year. Last month, WellPoint cut its 2012 profit forecast and reported second-quarter earnings that fell short of Wall Street's expectations, triggering a sharp drop in its share price.
Jefferies analyst David Windley backed his "Hold" rating for the company. He said that given WellPoint's recent financial missteps, Braly's departure wasn't a surprise and predicted that the company's shares will rise Wednesday on the news.
But Windley noted that the timing is less than ideal, because Braly's departure comes amid WellPoint's acquisition of Amerigroup Corp.
"This adds an extra element of risk and complexity to a company that is just beginning its CEO search," Windley wrote in a note to investors.
WellPoint said last month it would pay about $4.46 billion for Amerigroup, which runs Medicaid coverage in 13 states. Medicaid is the state-federal program that provides coverage for the needy and disabled. Insurers see lucrative growth opportunities in working with people who qualify for both Medicaid and the federally funded Medicare program.
WellPoint shares rose $2.37, or 4.1 percent, to $59.76 in premarket trading. The stock closed Tuesday at $57.39, down about 13 percent since the start of the year.