New WellCare Execs Have History of Sales

OKLAHOMA CITY -- On the surface, at least, WellCare WCG looks like it has chosen the perfect leaders to pursue a sale of the challenged health insurer.

The company hasn't said it's on the block. But both incoming CEO Heath Schiesser and new Executive Chairman Charles Berg have pulled off some impressive transactions in the past.

History suggests, though, that at least a couple of those deals led to serious buyer's remorse.

Meanwhile, WellCare could prove to be the toughest sell of all. Notably, the company remains threatened by a sweeping government probe that makes the insurer virtually impossible to value.

"It would be like buying a house with an open septic tank in the back and not even getting it inspected," says Sheryl Skolnick, a veteran health care analyst at CRT Capital Group. "It could be really, really, really expensive to fix. And then you may not even be able to use it once you're finished."

For its part, WellCare said it "does not comment on speculation or rumors about the company." The company also declined to answer most questions about its new leaders for this story.

Late last month, WellCare redecorated its executive suite by removing the company's top three executives -- including veteran CEO Todd Farha -- and installing two new leaders.

Schiesser is no stranger to WellCare or its ousted CEO. Rather, six years ago, Schiesser was hand-picked by Farha -- his old college classmate -- as part of the company's original management team.

After building a Medicare empire at WellCare, helped by a government official who would go on to replace him, Schiesser shifted into a part-time advisory position in mid-2006. His CEO experience is limited to a brief stint at a doomed Internet startup.

In comparison, Berg looks like a true newcomer to the scene. Berg also ran a company that has since gone out of business. But he made a real name for himself as CEO of Oxford Health -- a company launched by his own college buddy -- and engineering its lucrative buyout by UnitedHealth UNH.

WellCare is now banking on both men to revive its fortunes and, some hope, arrange the company's sale.

"The board has confidence in these new executives," WellCare Director Ruben Jose King-Shaw Jr. stated last month. "They will provide fresh leadership to the company to help meet the challenges and opportunities it faces.

"The creation of the role of executive chairman, along with the appointment of Heath Schiesser as president and CEO, are important steps in that process."

Close Ties

Schiesser and Farha go way back.

As young men, they attended Trinity University together before going on to secure their MBAs from Harvard Business School. Then, for a while, they parted ways in pursuit of their respective fortunes.

Schiesser got his first break in the late 1990s, when he cofounded an online pharmacy for Express Scripts ESRX. But Express Scripts soon sold that startup venture to heavyweight PlanetRx.com, which would later write off much of the investment in a struggle to survive.

Meanwhile, Schiesser had gone on to chase other Internet dreams.

At the height of the Internet boom, Schiesser served as a managing director at idealab -- an incubator for such one-time highfliers as etoys and pets.com -- before pulling a brief stint as acting CEO of idealab's flailing iExchange.com.

A bio published by WellCare claims that Schiesser "led the turnaround and sale" of that online stock-picking company. Yet iExchange.com shows up as one of many doomed idealab startups highlighted in the book F'd Companies: Spectacular Dot-Com Flameouts.