Safety in numbers
WellPoint Health increases its market share through acquisition.
By Telis Demos, Fortune reporter

(Fortune Magazine) -- It seems like cheating, but it's not: Acquisition is the way many companies, like WellPoint Health Network (Charts), make it onto the Fastest-Growing list. WellPoint, created in 1993 when Blue Cross of California spun it off as a holding company, was a deal machine. Scale is crucial in health insurance; having millions of members enables a company to negotiate profitable deals with hospitals and drugmakers. In 2002, WellPoint bought the Blue Cross plans in Missouri, resulting in 28% revenue growth in 2003 -- and a place on the Fastest-Growing list.

By that time, however, other health insurers were pursuing the same strategy. One was Indianapolis-based Anthem, which had bought Blue Cross plans in Indiana and other states. So Anthem CEO Larry Glasscock and Leonard Schaeffer, WellPoint's then-CEO, worked out a deal: Anthem would buy WellPoint in exchange for stock in the new company. Glasscock stayed on as CEO, but the merged entity would use the WellPoint name, and the new leadership would comprise executives from both companies.

For the team at WellPoint, giving up some autonomy was the best way to keep growing. When the deal closed in November 2004, the new WellPoint was insuring more people than any other company in the world. And it could finally undertake big projects, like targeting young uninsured workers and launching preventive-care programs. Says Glasscock: "We felt that at the end of the day we were both going to be better companies." The market agrees, so far: WellPoint's stock is up 40% since the deal closed.

At a Glance

Headquarters

Indianapolis

CEO

Larry Glasscock

2005 sales

$45 billion

Market value

$46 billion

Employees

42,000 Top of page