SOURCE: Lumenos

May 05, 2005 09:00 ET

What Does the Acquisition of Lumenos Mean?

WellPoint, Inc. and Lumenos Partner to Create the Nation's Leading Consumer-Driven Health Care Company

ALEXANDRIA, VA -- (MARKET WIRE) -- May 5, 2005 -- The recently announced Lumenos® (www.lumenos.com) acquisition means that the combination of a powerhouse like WellPoint and a pioneer like Lumenos will enable a quantum leap in consumer-driven health care expansion and innovation.

"Almost six years ago we set out to transform this industry," said Chip Tooke, chief executive officer of Lumenos. "We accomplished that by tackling health care at its most basic level -- by empowering consumers with financial accounts (HSAs and HRAs), information, support tools and incentives that help improve and maintain health and wellness. We recognized it was not just a challenge to take on the economic health of the industry, but also of improving the health of the consumers using it. Now it is time to expand the benefits to millions of health care users. Our partnership with WellPoint will provide the means to this expansion."

To be clear, it is not the expansion of account-based products alone that is exciting about this partnership. It's the impact the combined companies can have on the people who will be given the means to take an active role in their health care. Experience says when consumers take an active role, their overall health can improve. That's the true measure of success.

For instance, Lumenos has demonstrated that when consumers are rewarded for changing behavior, they do. The Company pioneered financial incentives that encourage enrollment in Personal Health Coach programs for those with chronic conditions, like diabetes. The results are startling. When financial incentives are provided, self-enrollment into those programs increased dramatically -- 40% self-refer. They're not being dragged into the program, but are volunteering. That is an engaged consumer. And that will lead to better health outcomes.

"WellPoint recognizes the unique capabilities the team at Lumenos has built and has every intention of preserving and expanding those capabilities as we move health care to a new level," said Larry C. Glasscock, president and chief executive officer of WellPoint, Inc. "We value the innovation, entrepreneurial spirit, culture and energy of this organization and wish to see it flourish. As such, Lumenos will remain headquartered in Alexandria as a wholly owned operating division of WellPoint. Chip Tooke and his very talented management group will continue to run the Company."

Under the terms of the agreement, the stockholders of Lumenos will receive approximately $185 million in cash. The acquisition is expected to close in the second quarter of 2005, subject to standard closing conditions and customary approvals required under the Hart-Scott-Rodino Antitrust Improvements Act. Lumenos currently serves approximately 214,000 members and is expected to have operating revenue of approximately $45 million in 2005. Lehman Brothers acted as the exclusive financial advisor to Lumenos.

About Lumenos

Lumenos® is a pioneer in the Consumer-Driven Health Care industry. The Company's vision is to foster health care that actually cares about health. Lumenos' award winning approach empowers consumers with health accounts (including Health Reimbursement Accounts and Health Savings Accounts), information, services and incentives to become better informed about their health and engage in health-promoting behaviors. The Company's goal is to improve consumers' health outcomes, and by doing so, to achieve long-term cost efficiency for employers. Lumenos plans are available in all 50 states and are offered by many Fortune 500 companies. For more information on Lumenos, please visit www.lumenos.com.

About WellPoint, Inc.

WellPoint, Inc. is the largest publicly traded commercial health benefits company in terms of membership in the United States. WellPoint, Inc. is an independent licensee of the Blue Cross and Blue Shield Association and serves its members as the Blue Cross licensee for California; the Blue Cross and Blue Shield licensee for Colorado, Connecticut, Georgia, Indiana, Kentucky, Maine, Missouri (excluding 30 counties in the Kansas City area), Nevada, New Hampshire, Ohio, Virginia (excluding the Northern Virginia suburbs of Washington, D.C.), Wisconsin; and through HealthLink and UniCare. Additional information about WellPoint is available at www.wellpoint.com.

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