WELLPOINT HEALTH NETWORKS INC /DE/, S-3/A, 1998-04-16

WELLPOINT HEALTH NETWORKS INC /DE/
S-3/A, 1998-04-16
HOSPITAL & MEDICAL SERVICE PLANS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 16, 1998

REGISTRATION NO. 333-48941
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- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------

PRE-EFFECTIVE AMENDMENT NO. 2

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933
-------------------

WELLPOINT HEALTH NETWORKS INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C>
DELAWARE 95-4635504
(State or other jurisdiction (I.R.S. Employer
of Identification
incorporation or organization) Number)
</TABLE>

21555 OXNARD STREET
WOODLAND HILLS, CALIFORNIA 91367
(818) 703-4000
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

THOMAS C. GEISER, ESQ.
EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL
WELLPOINT HEALTH NETWORKS INC.
21555 OXNARD STREET
WOODLAND HILLS, CALIFORNIA 91367
(818) 703-4000

(Name and address, including zip code, and telephone number,
including area code, of agent for service)
---------------------

COPIES TO:

WILLIAM L. HUDSON, ESQ. GARY OLSON, ESQ.
Gibson, Dunn & Crutcher LLP Latham & Watkins
One Montgomery Street, Telesis Tower 633 West Fifth Street, Suite 4000
San Francisco, CA 94104 Los Angeles, CA 90071
(415) 393-8200 (213) 485-1234

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
---------------------

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. / /
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED(1) OFFERING PRICE(2) FEE(3)
<S> <C> <C> <C>
Common Stock, par value $0.01 per share.................. 13,800,000 $941,490,625 $277,741
</TABLE>

(1) Includes 1,800,000 shares which the Underwriters have the option to purchase
to cover over-allotments, if any.

(2) Estimated solely for purposes of computing the registration fee. Includes
$775,890,625 for 11,500,000 shares which were previously registered.

(3) The registration fee for 11,500,000 shares of $228,889 was paid in
connection with previous filings of the Registration Statement.

-------------------

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

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<PAGE>
EXPLANATORY NOTE

This Registration Statement contains two forms of prospectus, one to be used
in connection with an underwritten offering in the United States and Canada (the
"U.S. Prospectus") and one to be used in connection with a concurrent
international offering outside the United States and Canada (the "International
Prospectus"). The two prospectuses relate to a public offering of up to
13,800,000 shares of Common Stock, $0.01 par value, of WellPoint Health Networks
Inc., including up to 1,800,000 shares that may be sold pursuant to the
underwriters' over-allotment option, if exercised. The complete U.S. Prospectus
follows this explanatory note. After the U.S. Prospectus are the following
alternate pages for the International Prospectus: a front cover page, page 2,
and a section entitled "Certain United States Federal Tax Consequences to
Non-United States Purchasers" to be inserted after "Description of Capital
Stock" and before "Underwriting" in the International Prospectus. All other
pages of the U.S. Prospectus are to be used for both the United States offering
and the international offering. Each alternate page for the International
Prospectus included herein is labeled "Alternate Page for International
Prospectus." Final forms for each Prospectus will be filed with the Securities
and Exchange Commission pursuant to Rule 424(b).

<PAGE>

PROSPECTUS

12,000,000 SHARES

[LOGO]

COMMON STOCK
-----------------

OF THE 12,000,000 SHARES OF COMMON STOCK OFFERED HEREBY, 9,600,000 SHARES ARE
BEING OFFERED INITIALLY IN THE UNITED STATES AND CANADA BY THE U.S.
UNDERWRITERS AND 2,400,000 SHARES ARE BEING OFFERED INITIALLY OUTSIDE OF
THE UNITED STATES AND CANADA BY THE INTERNATIONAL UNDERWRITERS. SEE
"UNDERWRITERS." ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE
BEING SOLD BY THE CALIFORNIA HEALTHCARE FOUNDATION (THE "FOUNDATION"
OR "SELLING STOCKHOLDER"). SEE "SELLING STOCKHOLDER." THE COMPANY
WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES
OFFERED HEREBY. THE COMPANY'S COMMON STOCK IS LISTED ON THE
NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "WLP." ON APRIL 15,
1998, THE REPORTED LAST SALE PRICE OF THE COMMON
STOCK ON THE NEW YORK STOCK EXCHANGE WAS $72 3/8 PER
SHARE.

AS OF MARCH 15, 1998, THE FOUNDATION OWNED 29,910,000 SHARES OF COMMON STOCK,
REPRESENTING APPROXIMATELY 42.7% OF THE TOTAL SHARES OUTSTANDING. FOLLOWING
THE OFFERING, THE FOUNDATION WILL OWN 17,910,000 SHARES OF THE COMPANY'S
COMMON STOCK, WHICH WILL REPRESENT APPROXIMATELY 25.6% OF THE
OUTSTANDING SHARES (OR, IF THE OVER-ALLOTMENT OPTION IS EXERCISED IN
FULL, 16,110,000 SHARES OF THE COMPANY'S COMMON STOCK, WHICH WILL
REPRESENT APPROXIMATELY 23.0% OF THE OUTSTANDING SHARES). THE
COMPANY'S CERTIFICATE OF INCORPORATION PROHIBITS CERTAIN
INSTITUTIONAL INVESTORS FROM OWNING MORE THAN ONE SHARE LESS
THAN 10% OF THE COMPANY'S OUTSTANDING VOTING SECURITIES AND
ANY OTHER PERSON OR ENTITY OR AFFILIATED PERSONS OR ENTITIES
(OTHER THAN THE FOUNDATION) FROM BENEFICIALLY OWNING MORE
THAN ONE SHARE LESS THAN 5% OF THE COMPANY'S
OUTSTANDING VOTING SECURITIES. SEE "DESCRIPTION OF
CAPITAL STOCK."

--------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.

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PRICE $72 A SHARE

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC COMMISSIONS(1) STOCKHOLDER(2)
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<S> <C> <C> <C>
PER SHARE............................................. $72.00 $2.16 $69.84
TOTAL(3).............................................. $864,000,000 $25,920,000 $838,080,000
</TABLE>

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(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.

(2) EXPENSES ASSOCIATED WITH THE OFFERING, ESTIMATED AT $550,000, ARE
PAYABLE BY THE COMPANY.

(3) THE SELLING STOCKHOLDER HAS GRANTED THE U.S. UNDERWRITERS AN OPTION,
EXERCISABLE WITHIN 30 DAYS OF THE DATE HEREOF, TO PURCHASE UP TO
1,800,000 ADDITIONAL SHARES AT THE PRICE TO PUBLIC LESS UNDERWRITING
DISCOUNTS AND COMMISSIONS FOR THE PURPOSE OF COVERING OVER-ALLOTMENTS, IF
ANY. IF THE U.S. UNDERWRITERS EXERCISE SUCH OPTION IN FULL, THE TOTAL
PRICE TO PUBLIC, UNDERWRITING DISCOUNTS AND COMMISSIONS AND PROCEEDS TO
SELLING STOCKHOLDER WILL BE $993,600,000, $29,808,000 AND $963,792,000,
RESPECTIVELY. SEE "UNDERWRITERS."

----------------------

THE SHARES ARE OFFERED, SUBJECT TO PRIOR SALE, WHEN, AS AND IF ACCEPTED BY
THE UNDERWRITERS NAMED HEREIN AND SUBJECT TO APPROVAL OF CERTAIN LEGAL MATTERS
BY LATHAM & WATKINS, COUNSEL FOR THE UNDERWRITERS. IT IS EXPECTED THAT DELIVERY
OF THE SHARES WILL BE MADE ON OR ABOUT APRIL 21, 1998 AT THE OFFICE OF MORGAN
STANLEY & CO. INCORPORATED, NEW YORK, N.Y., AGAINST PAYMENT THEREFOR IN
IMMEDIATELY AVAILABLE FUNDS.

------------------
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY
BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

APRIL 16, 1998

<PAGE>
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE
BY THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR ANY OF THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATES AS OF WHICH INFORMATION IS GIVEN IN THIS PROSPECTUS. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING
SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH SOLICITATION.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Documents Incorporated by Reference................................................................................ 2
Prospectus Summary................................................................................................. 3
Cautionary Disclosure Regarding Forward-Looking Statements......................................................... 8
May 1996 Recapitalization.......................................................................................... 8
August 1997 Reincorporation........................................................................................ 9
Use of Proceeds.................................................................................................... 10
Dividend Policy.................................................................................................... 10
Price Range of Common Stock........................................................................................ 10
Selling Stockholder................................................................................................ 10
Description of Capital Stock....................................................................................... 11
Underwriters....................................................................................................... 14
Legal Matters...................................................................................................... 18
Experts............................................................................................................ 18
Additional Information............................................................................................. 18
</TABLE>

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DOCUMENTS INCORPORATED BY REFERENCE

The following documents of the Company filed with the Securities and
Exchange Commission (the "Commission") (File No. 001-13803) are incorporated
herein by reference:

(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1997; and

(ii) the Company's Registration Statement on Form 8-B filed June 12, 1997.

All documents filed by the Company pursuant to sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
after the date of this Prospectus and prior to the termination of the Offering
made hereby shall be deemed to be incorporated in this Prospectus by reference
and to be a part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.

The Company will provide, without charge to any person to whom a copy of
this Prospectus is delivered, upon the written or oral request of such person, a
copy of any document incorporated by reference herein, other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
in such document. Requests should be directed to 21555 Oxnard Street, Woodland
Hills, California 91367, Attention: Secretary. The Company's telephone number is
(818) 703-4000.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY. SPECIFICALLY, THE UNDERWRITERS MAY OVER-ALLOT IN CONNECTION WITH
THE OFFERING AND MAY BID FOR AND PURCHASE SHARES IN THE OPEN MARKET. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITERS."

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES
THERETO AND OTHER INFORMATION INCORPORATED HEREIN BY REFERENCE. UNLESS THE
CONTEXT OTHERWISE INDICATES, REFERENCES IN THIS PROSPECTUS TO THE "COMPANY" OR
"WELLPOINT" ARE TO WELLPOINT HEALTH NETWORKS INC. AND ITS SUBSIDIARIES.

THE COMPANY

The Company is one of the nation's largest publicly traded managed care
companies with approximately 6.6 million medical members and approximately 22
million specialty members as of December 31, 1997. The Company's revenues for
1997 increased 39.7% from 1996 to $5.8 billion and its net income increased
12.6% to $227.4 million. The Company's medical membership increased by 48.0%
during 1997, or approximately 2,153,000 members, to 6,638,000 members.
Membership growth was primarily driven by the acquisition of approximately 1.3
million medical members associated with the health and related life group
benefit operations (the "GBO") of John Hancock Mutual Life Insurance Company
(the "GBO Acquisition") in addition to medical membership growth of
approximately 854,000 members or 19% in 1997.

The Company offers a broad spectrum of network-based managed care products,
including preferred provider organizations ("PPOs"), health maintenance
organizations ("HMOs") and point-of-service ("POS") and other hybrid plans and
indemnity plans to the large and small employer, individual and senior markets.
The Company offers a continuum of managed care products while providing
incentives to members and employers to select more intensively managed products.
Such products are typically offered at a lower cost in exchange for additional
cost-control measures, such as limited flexibility in choosing non-network
providers. The Company uses its risk management expertise and medical management
skills in managing the medical costs associated with its products. The Company
believes that it is better able to predict and control its health care costs as
its members select more intensively managed products. In addition, the Company
offers managed care services for self-funded employers, including underwriting,
actuarial services, network access, medical cost management and claims
processing. The Company also provides a broad array of specialty and other
products and services, including pharmacy, dental, utilization management, life,
integrated workers' compensation, preventive care, disability, behavioral
health, COBRA and flexible benefits account administration.

The Company markets its products in California primarily under the name Blue
Cross of California and outside of California primarily under the name UNICARE.

BLUE CROSS OF CALIFORNIA. Historically, the Company's primary market for
its managed care products has been California. The Company holds the exclusive
right in California to market its products under the Blue Cross name and mark.
The Company is diversified in its California customer base, with extensive
membership among large and small employer groups and individuals and a growing
presence in the Medicare and Medicaid markets. The Company's California medical
membership increased 17.4% during 1997 to approximately 4.2 million members (2.8
million PPO members and 1.4 million HMO members). As of December 31, 1997, the
PPO network included approximately 42,000 physicians and 440 hospitals and the
HMO network included approximately 28,000 physicians and 430 hospitals.
WellPoint uses its large California membership to negotiate provider contracts
at favorable rates.

UNICARE. In 1996, the Company began pursuing a nationwide expansion
strategy through selective acquisitions and start-up activities in key
geographic areas. With the acquisition in March 1996 of the Life & Health
Benefits Management division of Massachusetts Mutual Life Insurance Company (the
"MMHD Acquisition") and the GBO Acquisition, the Company has significantly
expanded its operations outside of California. At December 31, 1997, the Company
had approximately 2.4 million members covered under its UNICARE health plans
(including approximately 57,000 members in California), the majority of which
are covered under traditional indemnity and other health insurance products.
Approximately 55% of UNICARE medical membership as of such date was concentrated
in eight states: Illinois, Texas, Massachusetts, Ohio, Michigan, New York,
Georgia and Indiana.

3
<PAGE>
Over the past decade, the Company has transitioned substantially all of its
California indemnity insurance members to managed care products. An element of
the Company's geographic expansion strategy is to replicate its experience in
California in motivating traditional indemnity members to transition to the
Company's broad range of managed care products. The Company believes that its
current UNICARE medical membership provides its UNICARE operations with
sufficient scale to begin development of proprietary provider network systems in
key geographic areas which will enable the Company over time to begin offering a
broader range of managed care products. The Company also intends to use these
new networks to introduce individual, small group and senior products in these
markets. The Company has developed or is actively developing proprietary
networks in Texas, Georgia, Illinois, Indiana, Ohio and Virginia and has
introduced new managed care products in, among other states, Texas, Georgia and
Illinois. The Company intends to use the risk management expertise and medical
management skills that it has developed and refined in the California
marketplace to manage the medical costs in these networks. As of December 31,
1997, UNICARE's proprietary networks included approximately 42,000 primary and
specialty physicians and 350 hospitals.

SPECIALTY MANAGED HEALTH CARE AND OTHER PLANS AND SERVICES. The Company
offers pharmacy, dental, life and disability insurance, mental health,
integrated workers' compensation, and other specialty products and services. As
of December 31, 1997, WellPoint's pharmacy plans served approximately 12.3
million risk and non-risk members and had approximately 49,000 participating
pharmacies. The Company's dental products (which include a dental HMO and PPO)
served approximately 3.2 million members as of December 31, 1997. WellPoint
believes that these specialty networks and plans complement and facilitate the
marketing of WellPoint's PPO, HMO and POS plans and help in attracting employer
groups and other members that are increasingly seeking a wider variety of
options and services. WellPoint also markets these specialty products on a
stand-alone basis to other health plans and other payors.

In May 1996, the Company completed a recapitalization (the
"Recapitalization") with its former majority stockholder, Blue Cross of
California ("BCC"). See "May 1996 Recapitalization." In August 1997, the Company
was effectively reincorporated in Delaware. See "August 1997 Reincorporation."

The Company is a corporation organized under the laws of the State of
Delaware. The Company's principal executive offices are located at 21555 Oxnard
Street, Woodland Hills, California 91367 and its telephone number is (818)
703-4000.

4
<PAGE>
THE OFFERING

<TABLE>
<S> <C> <C>
Common Stock offered by Selling Stockholder
U.S. Offering.......................... 9,600,000 shares
International Offering................. 2,400,000 shares
Total................................ 12,000,000 shares

Common Stock to be outstanding after the
Offering................................ 69,971,937 shares(1)

Common Stock to be owned by the Selling
Stockholder after the Offering.......... 17,910,000 shares(2)

Use of Proceeds.......................... The Company will not receive any proceeds from the
sale of shares offered hereby by the Selling
Stockholder. See "Use of Proceeds."

New York Stock Exchange symbol........... WLP
</TABLE>

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(1) Excludes approximately 4,099,000 shares of Common Stock subject to
outstanding options granted by the Company under certain stock option plans,
of which approximately 1,077,000 were exercisable as of December 31, 1997.

(2) Assumes that the over-allotment option of 1,800,000 shares granted by the
Selling Stockholder to the U.S. Underwriters is not exercised. Upon
completion of the Offering, the Selling Stockholder will continue to own
approximately 25.6% of the Company's outstanding Common Stock. If such
over-allotment option is exercised in full, the Selling Stockholder will own
16,110,000 shares of Common Stock, or 23.0% of the Company's outstanding
Common Stock, after the Offering.

5
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table sets forth for the periods indicated selected historical
consolidated financial data and historical operating statistics for the Company.
For the years ended December 31, 1993 through 1995 and for the period January 1,
1996 through May 20, 1996 (the effective date of the Recapitalization), the
selected historical consolidated financial data do not include the commercial
operations of BCC (the "BCC Commercial Operations"). Information as of December
31, 1997 and for each of the three years ended December 31, 1997 has been
derived from the Consolidated Financial Statements of WellPoint incorporated
herein by reference, which have been audited by Coopers & Lybrand L.L.P.,
independent public accountants for WellPoint, whose report is incorporated
herein by reference. Information for the years ended December 31, 1993 and 1994
has been derived from WellPoint's audited consolidated financial statements.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
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1993 1994 1995 1996 1997
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<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA AND OPERATING STATISTICS)
INCOME STATEMENT DATA:
Revenues............................ $ 2,449,175 $ 2,791,672 $ 3,107,079 $ 4,169,782 $ 5,826,444
Operating expenses:
Operating expenses (excluding
nonrecurring costs)............. 2,133,245 2,431,643 2,734,541 3,773,512 5,358,904
Nonrecurring costs................ -- -- 57,074(5) -- 14,535(5)
Operating income.................... 315,930 360,029 315,464 396,270 453,005
Interest expense.................... -- -- -- 36,628 36,658
Net income.......................... $ 165,384 $ 213,170 $ 179,989 $ 202,002 $ 227,409
------------ ------------ ------------ --------------- ------------
------------ ------------ ------------ --------------- ------------
Per share data(1)(2)
Earnings per share................ $ 2.49 $ 3.21 $ 2.71(6) $ 3.04 $ 3.30(6)
Earnings per share assuming full
dilution........................ $ 2.49 $ 3.21 $ 2.71(6) $ 3.04 $ 3.27(6)
OPERATING STATISTICS:(3)
Loss ratio.......................... 73.0% 72.8% 75.6% 77.4% 81.2%
Selling expense ratio............... 6.2% 6.3% 6.4% 5.6% 4.6%
General and administrative expense
ratio............................. 11.2% 12.5% 11.6% 13.6% 15.2%
Net income ratio.................... 7.0% 7.9% 6.1% 5.0% 4.1%
Number of medical members at end of
period(4)......................... 2,322,000 2,617,000 2,797,000 4,485,000 6,638,000

AS OF DECEMBER 31,
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1993 1994 1995 1996 1997
------------ ------------ ------------ --------------- ------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and investments................ $ 1,779,495 $ 1,973,388 $ 2,257,269 $ 2,165,492 $ 2,939,445
Total assets........................ 1,921,832 2,385,636 2,679,257 3,405,542 4,533,415
Long-term debt...................... -- -- -- 625,000 388,000
Total equity........................ 1,233,190 1,418,919 1,670,226 870,459(7) 1,223,169
</TABLE>

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(1) Per share data for all periods presented prior to 1996 has been recomputed
using 66,366,500 shares, the number of shares outstanding immediately
following completion of the Recapitalization on May 20, 1996. Per share data
for 1996 has been calculated using such 66,366,500 shares, plus the weighted
average number of shares issued during 1996 after the Recapitalization.

(2) Per share data for periods prior to 1997 has been restated to reflect the
adoption of SFAS No. 128, "Earnings Per Share."

6
<PAGE>
(3) The loss ratio represents health care services and other benefits as a
percentage of premium revenue. All other ratios are shown as a percentage of
premium revenue and management services revenue combined.

(4) Membership numbers are unaudited and approximate and include some estimates
based upon the number of contracts at the relevant date and an actuarial
estimate of the number of members represented by each contract.

(5) The nonrecurring costs in 1995 included $29.8 million of costs, primarily
professional fees, associated with the proposed recapitalization of the
Company and the terminated acquisition of Health Systems International, Inc.
and $27.3 million for the impairment of the Company's pharmaceutical
benefits management business. The nonrecurring costs in 1997 included $8.0
million related to the write-down of certain California dental and medical
practices being developed by the Company and $6.5 million of severance and
retention payments associated with the GBO Acquisition.

(6) Per share data for the year ended December 31, 1995 includes nonrecurring
costs of $0.52 per share and for the year ended December 31, 1997 includes
nonrecurring costs of $0.13 per share.

(7) Reflects the impact of the Company's May 1996 Recapitalization. See "May
1996 Recapitalization" and "Dividend Policy."

7
<PAGE>
CAUTIONARY DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements contained herein regarding matters that are not
historical facts are forward-looking statements (as such term is defined in the
Securities Act of 1933, as amended (the "Securities Act")). Such statements
involve a number of risks and uncertainties which may cause actual results to
differ from those projected. Factors that can cause actual results to differ
materially include, but are not limited to, those discussed under
"Business--Factors That May Affect Future Results of Operations" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Factors That May Affect Future Results of Operations" in the
Company's Annual Report on Form 10-K and in other documents filed from time to
time by the Company with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date made. The Company undertakes no obligation to update
these forward-looking statements as a result of any events or circumstances
after the date made or to reflect the occurrence of unanticipated events.

MAY 1996 RECAPITALIZATION

On May 20, 1996, BCC and one of the Company's predecessors, WellPoint Health
Networks Inc., a Delaware corporation ("Old WellPoint"), concluded the
Recapitalization pursuant to which, (a) Old WellPoint distributed an aggregate
of $995.0 million by means of a special dividend of $10.00 per share of its
common stock, and BCC, as a California nonprofit public benefit corporation,
thereupon immediately donated its portion thereof ($800 million) to the
California Endowment (the "Endowment"), a newly created foundation; (b) BCC
donated its assets, other than BCC's Old WellPoint Class B Common Stock and the
BCC Commercial Operations to the Foundation; (c) BCC changed its status to a
California for-profit business corporation and issued to the Foundation
53,360,000 shares of its common stock; and (d) Old WellPoint merged with and
into BCC (the "Merger") and the surviving California corporation changed its
name to WellPoint Health Networks Inc. ("WellPoint California"). In the Merger,
(i) each outstanding share of Old WellPoint Class A Common stock was converted
into 0.667 shares of WellPoint California's Common Stock, (ii) the outstanding
shares of WellPoint California's Common Stock held by the Foundation prior to
the Merger were converted into 53,360,000 shares of the post-Merger WellPoint
California's Common Stock and a cash payment of $235.0 million to reflect the
value of the BCC Commercial Operations and the value of the Blue Cross mark and
(iii) the outstanding shares of Old WellPoint Class B Common Stock were
canceled.

In connection with the Recapitalization, BCC relinquished its rights under
the Blue Cross License Agreement dated January 1, 1991, between Blue Cross of
California and the Blue Cross Blue Shield Association (the "BCBSA"), which owns
the rights to the Blue Cross name and mark. The BCBSA and the Company entered
into the License Agreement effective as of May 20, 1996 (the "License
Agreement"), pursuant to which the Company became the exclusive licensee for the
right to use the Blue Cross name and related service marks in California and
became a member of the BCBSA.

The License Agreement required that the Foundation enter into a voting trust
agreement (the "Voting Trust Agreement"), pursuant to which the Foundation
deposited into a voting trust (the "Voting Trust") the number of shares of the
Company's Common Stock sufficient to reduce the Foundation's holdings outside
such Voting Trust to a level not in excess of 50% of the voting power of the
outstanding shares of the Company's Common Stock. The shares held by the trustee
under the Voting Trust Agreement (the "Voting Trust Shares") generally will be
voted (i) with respect to elections and removal of directors, calling of
stockholder meetings and amendment of the Company's Certificate of Incorporation
and Bylaws, where such actions are opposed by the Board of Directors, to support
the position of the Board of Directors, (ii) with certain exceptions, on matters
requiring a vote of at least an absolute majority of all outstanding shares of
Common Stock, as the majority of non-Voting Trust Shares vote, and (iii) on all
other matters, in the identical proportion in favor of or in opposition to such
matters as non-Voting Trust Shares vote. In addition, the Voting Trust Agreement
requires that the Foundation, through sales (which may involve additional
exercises of its registration rights discussed below) or additional deposits
into the Voting

8
<PAGE>
Trust, reduce its holdings outside the Voting Trust to 20% and 5% of the
outstanding Common Stock on and after three and five years, respectively, from
May 20, 1996.

Pursuant to an addendum to the License Agreement, the Foundation's Board of
Directors was required to consist of a majority of persons that served as
directors of BCC on or before May 17, 1996 (the "Original Blue Cross
Directors"). In March 1998, the Company, the BCBSA and the Foundation
tentatively agreed to modify this restriction. Pursuant to a proposed amendment
to the Voting Trust Agreement (the "Amended Voting Trust Agreement"), in the
event that the number of Original Blue Cross Directors were to become equal to
the number of non-Original Blue Cross Directors (such occurrence being known as
the "Even Division Date"), the Foundation would be required to immediately make
deposits into the Voting Trust to reduce its holdings outside the Voting Trust
to 20% of the outstanding Common Stock and make additional deposits into the
Voting Trust within one year thereafter to reduce its holdings outside of the
Voting Trust to 5% of the outstanding Common Stock. The Foundation has indicated
to the Company that an Even Division Date may occur in April 1998. In order for
a change in composition of the Foundation Board to be permitted, the Foundation
must obtain the approval of the California Department of Corporations. There can
be no assurance that such approval will be obtained or that the Amended Voting
Trust Agreement will be executed.

With respect to those shares held by the Foundation in excess of the
Ownership Limit (discussed in "Description of Capital Stock" below) that are not
subject to the Voting Trust Agreement, the Foundation has also entered into a
voting agreement (the "Voting Agreement"). The Voting Agreement provides among
other things, that the Foundation, during the period that it continues to own in
excess of the Ownership Limit, will vote all shares of the Company's Common
Stock owned by it in excess of 5% of the outstanding shares (except those shares
held pursuant to the Voting Trust Agreement) in favor of each nominee to the
Board of Directors of the Company, or under certain circumstances, other subsets
of the board, all as set forth in the Company's Bylaws. With respect to the
removal of directors, calling of stockholder meetings and amendment of the
Company's Certificate of Incorporation and Bylaws, where such actions are
opposed by the Board of Directors, the Foundation has also agreed under the
Voting Agreement to support the position of the Board of Directors.

In connection with the Recapitalization, the Company and the Foundation also
entered into the Registration Rights Agreement with respect to the shares of the
Company held by the Foundation. The Registration Rights Agreement grants the
Foundation (and certain transferees of the shares covered by the Registration
Rights Agreement) certain annual demand and unlimited "piggyback" registration
rights. The sale of Common Stock offered hereby by the Foundation is being made
pursuant to the exercise of demand registration rights.

AUGUST 1997 REINCORPORATION

On August 4, 1997, WellPoint California was effectively reincorporated in
Delaware as the Company by virtue of a merger transaction which resulted in the
Company becoming substantially a holding company with Wellpoint California as a
wholly owned subsidiary (the "Reincorporation"). The shareholders of WellPoint
California became the stockholders of the Company and the directors of WellPoint
California became the directors of the Company, maintaining their same class
designations.

In connection with the Reincorporation, the Company assumed the obligations
under various agreements and plans of WellPoint California, including its
existing stock option plans and employee stock purchase plan. In addition,
WellPoint California's license agreement with BCBSA was terminated, and a new
license agreement between the Company and the BCBSA, having substantially the
same terms, became effective. Certain of the agreements with the Foundation
(including the Voting Agreement, Voting Trust Agreement and Registration Rights
Agreement) were amended and restated and assumed by the Company. The Company
also assumed the obligations under WellPoint California's senior credit
agreement, pursuant to an amendment to such agreement.

9
<PAGE>
USE OF PROCEEDS

The Company will not receive any proceeds from the sale of shares of Common
Stock being offered hereby by the Selling Stockholder. See "Selling
Stockholder."

DIVIDEND POLICY

The Company currently intends to retain all of its current and future
earnings for use in its business and does not anticipate paying any cash
dividends in the foreseeable future. In connection with the Recapitalization,
Old WellPoint paid a special dividend of $10.00 per share to the holders of its
Class A and Class B Common Stock. See "May 1996 Recapitalization." The payment
of any future dividends will be at the discretion of the Company's Board of
Directors.

PRICE RANGE OF COMMON STOCK

The Company's Common Stock is traded on the New York Stock Exchange under
the symbol "WLP." The following table sets forth for the periods indicated the
high and low sale prices for the Common Stock since the completion of the
Recapitalization.

<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
Year Ended December 31, 1996 (Post-Recapitalization)
Second Quarter (May 21, 1996 to June 30, 1996)............................................... $ 39.13 $ 31.13
Third Quarter................................................................................ 33.75 23.38
Fourth Quarter............................................................................... 35.50 28.25
Year Ended December 31, 1997
First Quarter................................................................................ 45.88 32.88
Second Quarter............................................................................... 51.00 37.75
Third Quarter................................................................................ 60.50 46.25
Fourth Quarter............................................................................... 58.81 38.81
Year Ending December 31, 1998
First Quarter................................................................................ 70.06 42.25
Second Quarter (through April 15, 1998)...................................................... 72.75 66.75
</TABLE>

On April 15, 1998 the closing price on the New York Stock Exchange for the
Company's Common Stock was $72.38 per share. As of March 27, 1998, there were
approximately 1,110 holders of record of Common Stock.

SELLING STOCKHOLDER

As of March 15, 1998, the Foundation owned 29,910,000 shares of the
Company's Common Stock, representing approximately 42.7% of the total 69,971,937
shares of Common Stock outstanding. Following the Offering, the Foundation will
own 17,910,000 shares of WellPoint Common Stock, which will represent
approximately 25.6% of the outstanding shares (or, if the over-allotment option
is exercised in full, 16,110,000 shares of WellPoint Common Stock, which will
represent approximately 23.0% of the outstanding shares). Such ownership,
however, is subject to the provisions of a Voting Agreement, which may inhibit
or delay changes of control or other significant corporate events. In certain
instances, the shares owned by the Foundation may also become subject to the
provisions of the Voting Trust Agreement. See "May 1996 Recapitalization." The
Foundation, while not being entitled to exercise a majority of the outstanding
voting power of WellPoint, will by virtue of the voting power under its control
have the ability to exert influence over stockholder actions, including the sale
or merger of WellPoint. In exercising this voting power, the Foundation may have
interests that diverge from those of WellPoint's other stockholders.

The Company has entered into a Registration Rights Agreement with the
Foundation, granting the Foundation certain annual demand and unlimited
"piggyback" registration rights. Sales of substantial amounts of Common Stock in
the public market pursuant to any exercise of such rights may adversely

10
<PAGE>
affect the market price of WellPoint Common Stock. The shares being sold in the
Offering by the Foundation are being sold pursuant to the exercise of its demand
registration rights.

DESCRIPTION OF CAPITAL STOCK

COMMON STOCK

Under the Company's Restated Certificate of Incorporation (the "Certificate
of Incorporation"), the Company is authorized to issue up to 300,000,000 shares
of Common Stock, $0.01 par value ("Common Stock"). As of March 15, 1998, there
were 69,971,937 shares of Common Stock issued and outstanding. In addition, up
to 7,400,000 shares (excluding any decreases that have occurred as a result of
issuances) have been reserved for issuance upon the exercise of options and
awards or upon purchase under the Company's 1994 Stock Option/Award Plan,
Employee Stock Purchase Plan and Employee Stock Option Plan. ChaseMellon
Shareholder Services, L.L.C. is the transfer agent and registrar of the shares
of Common Stock.

The Common Stock is not redeemable, does not have any conversion rights and
is not subject to call. Holders of shares of Common Stock have no preemptive
rights to maintain their percentage of ownership in future offerings or sales of
stock of the Company. Holders of shares of Common Stock have one vote per share
on all matters submitted to a vote of stockholders of the Company, except with
respect to shares of Common Stock owned by the Selling Stockholder pursuant to
the Voting Agreement and the Voting Trust Agreement as described under the
caption "May 1996 Recapitalization." Subject to the restrictions on shares owned
in excess of the Ownership Limit as described below, the holders of Common Stock
are entitled to receive dividends, if any, as and when declared from time to
time by the Board of Directors of the Company out of assets or funds legally
available therefor. See "--Certain Charter Provisions That May Limit Changes in
Control--Restrictions on Ownership and Transfer." The holders of Common Stock do
not have cumulative voting rights. Upon liquidation, dissolution or winding up
of the affairs of the Company, the holders of Common Stock will be entitled to
participate ratably, in proportion to the number of shares held, in the net
assets of the Company available for distribution to holders of Common Stock. The
shares of Common Stock currently outstanding (including the shares offered
hereby by the Selling Stockholder) are fully paid and nonassessable.

PREFERRED STOCK

The Company is authorized to issue up to 50,000,000 shares of Preferred
Stock, $0.01 par value ("Preferred Stock"), none of which is outstanding as of
the date hereof. The Board of Directors has the authority to issue Preferred
Stock in one or more series and to fix the rights, preferences, privileges and
restrictions, including dividend rights, voting rights, conversion rights, terms
of redemption and liquidation preferences, without any further vote or action by
the Company's stockholders, unless action is required by applicable laws or
regulations or by the terms of other outstanding preferred stock. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company.

CERTAIN CHARTER PROVISIONS THAT MAY LIMIT CHANGES IN CONTROL

The License Agreement requires as a condition to the Company's retention of
the Blue Cross license that the Company's Certificate of Incorporation contains
the following provisions:

RESTRICTIONS ON OWNERSHIP AND TRANSFER

The Company's Certificate of Incorporation provides that no person other
than the Foundation may Beneficially Own (as defined) shares of voting capital
stock of the Company in excess of the Ownership Limit. As a result of an
agreement between the Company and the BCBSA executed in December 1997, in
accordance with the provisions of Article VII, Section 14(f)(2) of the Company's
Certificate of Incorporation, the Ownership Limit is the following: (i) for any
"Institutional Investor," one share less than 10% of the Company's outstanding
voting securities; and (ii) for any "Noninstitutional Investor," other than the

11
<PAGE>
Foundation, one share less than 5% of the company's outstanding voting
securities. For these purposes, "Institutional Investor" means any person if
(but only if) such person is (1) a broker or dealer registered under Section 15
of the Exchange Act, (2) a bank as defined in Section 3(a)(6) of the Exchange
Act, (3) an insurance company as defined in Section 3(a)(19) of the Exchange
Act, (4) an investment company registered under Section 8 of the Investment
Company Act of 1940, (5) an investment adviser registered under Section 203 of
the Investment Advisers Act of 1940, (6) an employee benefit plan, or pension
fund which is subject to the provisions of the Employee Retirement Income
Security Act of 1974 or an endowment fund, (7) a parent holding company,
provided the aggregate amount held directly by the parent, and directly and
indirectly by its subsidiaries which are not persons specified in paragraphs (1)
through (6), does not exceed one percent of the securities of the subject class,
or (8) a group, provided that all the members are persons specified in
paragraphs (1) through (7). In addition, every filing made by such person with
the SEC under Regulations 13D-G (or any successor Regulations) under the
Exchange Act with respect to such person's beneficial ownership must contain a
certification (or a substantially similar one) that the WellPoint Common Stock
acquired by such person was acquired in the ordinary course of business and was
not acquired for the purpose of and does not have the effect of changing or
influencing the control of WellPoint and was not acquired in connection with or
as a participant in any transaction having such purpose or effect. For such
purposes, "Noninstitutional Investor" means any person that is not an
Institutional Investor.

Any transfer of stock that would result in any person Beneficially Owning
shares of voting capital stock in excess of the Ownership Limit will result in
such intended transferee acquiring no rights in such shares (with certain
exceptions) and such shares will be deemed transferred to an escrow agent to be
held until such time as such shares are transferred to a person whose
acquisition thereof will not violate the Ownership Limit. These provisions
prevent a third party from obtaining control of the Company without obtaining
the supermajority vote required to amend the Company's Certificate of
Incorporation and may have the effect of discouraging or even preventing a
merger or business confirmation, a tender offer or similar extraordinary
transaction involving WellPoint.

STOCKHOLDERS' MEETINGS

The Company's Certificate of Incorporation provides that special meetings of
the stockholders may be called at any time only by a majority of the Board of
Directors, the Chairman of the Board, the President or the holders of shares
entitled to cast not less than 10% of the votes at the meeting. This provision
will make it more difficult for stockholders to take actions opposed by the
Board of Directors.

NO ACTION BY STOCKHOLDER CONSENT

The Company's Certificate of Incorporation prohibits action that is required
or permitted to be taken at any annual or special meeting of stockholders of the
Company from being taken by the written consent of stockholders without a
meeting.

CLASSIFIED BOARD OF DIRECTORS

The Company's Certificate of Incorporation and Bylaws provide that the
Company's Board of Directors is divided into three classes, with each class
consisting, as nearly as possible, of one-third of the total number of directors
constituting the entire Board of Directors. These classes (after an interim
period) will serve for staggered three-year terms. The classified Board
provisions could have the effect of discouraging a third party from making a
tender offer or otherwise attempting to obtain control of the Company, even
though such an attempt might be beneficial to the Company and its stockholders.
In addition, these provisions could delay stockholders who do not like the
policies of the Board of Directors from removing a majority of the members of
the Board for two years unless such stockholders can show cause and obtain the
requisite vote.

12
<PAGE>
SUPERMAJORITY PROVISIONS

Under the Company's Certificate of Incorporation, the affirmative vote of
the holders of at least 75% of each class of the shares of voting capital stock
represented and voting at a duly held meeting of stockholders at which a quorum
is present, voting by class, is required to amend certain provisions of the
Certificate of Incorporation, including the provisions concerning (i) the number
of directors, (ii) the classified board provision, (iii) the filling of
vacancies on the Board of Directors, (iv) the power of directors to amend the
Company's Certificate of Incorporation, (v) the prohibition on stockholder
action by written consent, (vi) the ownership and transfer restrictions, (vii)
the prohibition on cumulative voting by stockholders and (viii) the requirement
for supermajority stockholder approval to amend such provisions. In addition,
any amendment of the Company's Certificate of Incorporation, and amendment of
certain provisions of the Company's Bylaws, requires the approval of the greater
of two-thirds or seven of the Company's directors.

13
<PAGE>
UNDERWRITERS

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated the date hereof (the "Underwriting Agreement"), the U.S.
Underwriters named below for whom Morgan Stanley & Co. Incorporated, Smith
Barney Inc., Bear, Stearns & Co. Inc. and Donaldson, Lufkin & Jenrette
Securities Corporation are acting as U.S. Representatives, and the International
Underwriters named below for whom Morgan Stanley & Co. International Limited,
Smith Barney Inc., Bear, Stearns International Limited and Donaldson, Lufkin &
Jenrette International are acting as International Representatives, have
severally agreed to purchase, and the Selling Stockholder has agreed to sell to
them, the respective number of shares of Common Stock set forth opposite the
names of such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
U.S. Underwriters:
Morgan Stanley & Co. Incorporated................................................................. 2,173,500
Smith Barney Inc. ................................................................................ 2,173,500
Bear, Stearns & Co. Inc........................................................................... 1,449,000
Donaldson, Lufkin & Jenrette Securities Corporation............................................... 1,449,000
Credit Suisse First Boston Corporation............................................................ 314,000
A.G. Edwards & Sons, Inc.......................................................................... 314,000
Furman Selz LLC................................................................................... 314,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated................................................ 314,000
Cowen & Company................................................................................... 314,000
Sanford C. Bernstein & Co., Inc................................................................... 157,000
Fox-Pitt, Kelton Inc.............................................................................. 157,000
Edward D. Jones & Co., L.P........................................................................ 157,000
Neuberger & Berman................................................................................ 157,000
Piper Jaffray Inc................................................................................. 157,000
------------
Subtotal........................................................................................ 9,600,000
------------

International Underwriters:
Morgan Stanley & Co. International Limited........................................................ 638,000
Smith Barney Inc.................................................................................. 638,000
Bear, Stearns International Limited............................................................... 436,000
Donaldson, Lufkin & Jenrette International........................................................ 436,000
Credit Lyonnais Securities........................................................................ 42,000
BANCA D'INTERMEDIAZIONE MOBILIARE IMI S.P.A....................................................... 42,000
J. Henry Schroder & Co............................................................................ 42,000
Deutsche Bank AG London........................................................................... 42,000
Rabo Securities N.V............................................................................... 42,000
ABN AMRO Rothschild............................................................................... 42,000
------------

Subtotal........................................................................................ 2,400,000
------------
Total......................................................................................... 12,000,000
------------
------------
</TABLE>

The U.S. Underwriters and the International Underwriters, and the U.S.
Representatives and the International Representatives, are collectively referred
to as the "Underwriters" and the "Representatives," respectively. The
Underwriting Agreement provides that the obligations of the several Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby are
subject to the approval of certain legal matters by their counsel and to certain
other conditions. The Underwriters are obligated to take and pay for all of the
shares of Common Stock offered hereby (other than those covered by the U.S.
Underwriters' over-allotment option described below) if any such shares are
taken.

14
<PAGE>
Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the Agreement between
U.S. and International Underwriters. As used herein, "United States or Canadian
Person" means any national or resident of the United States or Canada, or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States and Canada of any
United States or Canadian Person), and includes any United States or Canadian
branch of a person who is otherwise not a United States or Canadian Person. All
shares of Common Stock to be purchased by the Underwriters under the
Underwriting Agreement are referred to herein as the "Shares."

Pursuant to the Agreement between U.S. and International Underwriters, sales
may be made between the U.S. Underwriters and International Underwriters of any
number of Shares as may be mutually agreed. The per share price of any Shares so
sold shall be the public offering price set forth on the cover page hereof, in
United States dollars, less an amount not greater than the per share amount of
the concession to dealers set forth below.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented that it has not offered or sold, and has agreed
not to offer or sell, any Shares, directly or indirectly, in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and has
represented that any offer or sale of Shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which such offer or sale is made. Each U.S.
Underwriter has further agreed to send to any dealer who purchases from it any
of the Shares a notice stating in substance that, by purchasing such Shares,
such dealer represents and agrees that it has not offered or sold, and will not
offer or sell, directly or indirectly, any of such Shares in any province or
territory of Canada or to, or for the benefit of, any resident of any province
or territory of Canada in contravention of the securities laws thereof and that
any offer or sale of Shares in Canada will be made only pursuant to an exemption
from the requirement to file a prospectus in the province or territory of Canada
in which such offer of sale is made, and that such dealer will deliver to any
other dealer to whom it sells any of such Shares a notice containing
substantially the same statement as is contained in this sentence.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that (i) it has not offered
or sold and, prior to the date six months after the closing date for the sale of
the Shares to the International Underwriters, will not offer or sell, any Shares
to persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act of 1986 with respect to
anything done by it in relation to the Shares in, from or otherwise involving
the United

15
<PAGE>
Kingdom; and (iii) it has only issued or passed on and will only issue or pass
on in the United Kingdom any document received by it in connection with the
offering of the Shares to a person who is of a kind described in Article II(3)
of the Financial Services Act of 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.

Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell, directly or indirectly, in Japan or
to or for the account of any resident thereof, any of the Shares acquired in
connection with the distribution contemplated hereby, except for offers or sales
to Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law. Each
International Underwriter has further agreed to send to any dealer who purchases
from it any of the Shares a notice stating in substance that, by purchasing such
Shares, such dealer represents and agrees that it has not offered or sold, and
will not offer or sell, any of such Shares, directly or indirectly, in Japan or
to or for the account of any resident thereof except for offers or sales to
Japanese International Underwriters or dealers and except pursuant to any
exemption from the registration requirements of the Securities and Exchange Law
and otherwise in compliance with applicable provisions of Japanese law, and that
such dealer will send to any other dealer to whom it sells any of such Shares a
notice containing substantially the same statement as is contained in this
sentence.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price that represents a concession
not in excess of $1.30 a share under the public offering price. Any Underwriter
may allow, and such dealers may reallow, a concession not in excess of $0.10 a
share to other Underwriters or to certain dealers. After the initial offering of
the shares of Common Stock, the offering price and other selling terms may from
time to time be varied by the Representatives.

The Selling Stockholder has granted to the U.S. Underwriters an option,
exercisable for 30 days from the date of this Prospectus, to purchase up to an
aggregate of 1,800,000 additional shares of Common Stock at the public offering
price set forth on the cover page hereof, less underwriting discounts and
commissions. The U.S. Underwriters may exercise such option solely for the
purpose of covering over-allotments, if any, made in connection with the
offering of the shares of Common Stock offered hereby. To the extent such option
is exercised, each U.S. Underwriter will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares of Common Stock as the number set forth next to such U.S. Underwriter's
name in the preceding table bears to the total number of shares of Common Stock
set forth next to the names of all U.S. Underwriters in the preceding table.

The Company, the Selling Stockholder and certain executive officers of the
Company have agreed not to sell, offer to sell, grant any options for the sale
of or otherwise dispose of any shares of Common Stock or securities convertible
into or exchangeable or exercisable for Common Stock (other than shares issued
by the Company in connection with the acquisition of a business or pursuant to
the Company's employee benefit plans and other than sales by the Selling
Stockholder to the Company) for a period of 90 days after the date of this
Prospectus without the prior written consent of Morgan Stanley & Co.
Incorporated and subject to certain limited exceptions included in the
Underwriting Agreement.

Certain of the Underwriters have been engaged from time to time, and may in
the future be engaged, to perform investment banking and other advisory-related
services to the Company and its affiliates, including the Selling Stockholder,
in the ordinary course of business. In connection with rendering such services
in the past, such Underwriters have received customary compensation, including
reimbursement of related expenses.

16
<PAGE>
Underwriters may bid for, and purchase, shares of Common Stock in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an Underwriter or a dealer for distributing the Common Stock in the
offering, if the syndicate repurchases previously distributed Common Stock in
transactions to cover syndicate short positions, in stabilization transactions
or otherwise. Any of these activities may stabilize or maintain the market price
of the Common Stock above independent market levels. The Underwriters are not
required to engage in these activities, and may end any of these activities at
any time.

The Company, the Selling Stockholder and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

17
<PAGE>
LEGAL MATTERS

The validity of WellPoint Common Stock to be offered in the Offering will be
passed upon for the Company by Gibson, Dunn & Crutcher LLP, San Francisco,
California. Certain legal matters in connection with the Offering will be passed
upon for the Selling Stockholder by Munger, Tolles & Olson LLP, Los Angeles,
California and for the Underwriters by Latham & Watkins, Los Angeles,
California. Latham & Watkins has from time to time represented the independent
directors of WellPoint in various matters, including their consideration and
approval of the Recapitalization.

EXPERTS

The audited consolidated financial statements of WellPoint Health Networks
Inc. and subsidiaries as of December 31, 1997 and 1996 and for each of the three
years in the period ended December 31, 1997, incorporated herein by reference,
have been audited by Coopers & Lybrand L.L.P., independent accountants, as
stated in their report with respect thereto incorporated herein by reference in
reliance upon the authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports, proxy and information statements
and other information with the Commission. Reports, proxy and information
statements and other information filed by the Company with the Commission
pursuant to the Exchange Act may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices located at
Seven World Trade Center, 13th Floor, New York, New York 10048. Copies of such
material also can be obtained from the Public Reference Branch of the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Company is required to file electronic versions of such material with the
Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system. The Commission maintains a World Wide Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. Electronic
filings are publicly available at http://www.sec.gov within 24 hours of
acceptance. The Company's stock is listed on the New York Stock Exchange.
Reports, proxy and information statements and other information filed by the
Company can also be inspected at the offices of the New York Stock Exchange,
Inc., 20 Broad Street, New York, New York 10005, the Chicago Stock Exchange, 440
South LaSalle Street, Chicago, Illinois 60605, and the Pacific Stock Exchange,
Inc., 301 Pine Street, San Francisco, California 94104, or 233 South Beaudry
Avenue, Los Angeles, California 90012.

The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is hereby made to the
Registration Statement.

18
<PAGE>
[LOGO]
<PAGE>

PROSPECTUS

12,000,000 SHARES

[LOGO]

COMMON STOCK
-----------------

OF THE 12,000,000 SHARES OF COMMON STOCK OFFERED HEREBY, 2,400,000 SHARES ARE
BEING OFFERED INITIALLY OUTSIDE OF THE UNITED STATES AND CANADA BY THE
INTERNATIONAL UNDERWRITERS AND 9,600,000 SHARES ARE BEING OFFERED INITIALLY
IN THE UNITED STATES AND CANADA BY THE U.S. UNDERWRITERS. SEE
"UNDERWRITERS." ALL OF THE SHARES OF COMMON STOCK OFFERED HEREBY ARE
BEING SOLD BY THE CALIFORNIA HEALTHCARE FOUNDATION (THE "FOUNDATION"
OR "SELLING STOCKHOLDER"). SEE "SELLING STOCKHOLDER." THE COMPANY
WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF SHARES
OFFERED HEREBY. THE COMPANY'S COMMON STOCK IS LISTED ON THE
NEW YORK STOCK EXCHANGE UNDER THE SYMBOL "WLP." ON APRIL 15,
1998, THE REPORTED LAST SALE PRICE OF THE COMMON
STOCK ON THE NEW YORK STOCK EXCHANGE WAS $72 3/8 PER
SHARE.

AS OF MARCH 15, 1998, THE FOUNDATION OWNED 29,910,000 SHARES OF COMMON STOCK,
REPRESENTING APPROXIMATELY 42.7% OF THE TOTAL SHARES OUTSTANDING. FOLLOWING THE
OFFERING, THE FOUNDATION WILL OWN 17,910,000 SHARES OF THE COMPANY'S COMMON
STOCK, WHICH WILL REPRESENT APPROXIMATELY 25.6% OF THE OUTSTANDING SHARES
(OR, IF THE OVER-ALLOTMENT OPTION IS EXERCISED IN FULL, 16,110,000
SHARES OF THE COMPANY'S COMMON STOCK, WHICH WILL REPRESENT
APPROXIMATELY 23.0% OF THE OUTSTANDING SHARES). THE COMPANY'S
CERTIFICATE OF INCORPORATION PROHIBITS CERTAIN INSTITUTIONAL
INVESTORS FROM OWNING MORE THAN ONE SHARE LESS THAN 10% OF THE
COMPANY'S OUTSTANDING VOTING SECURITIES AND FOR ANY OTHER PERSON
OR ENTITY OR AFFILIATED PERSONS OR ENTITIES (OTHER THAN THE
FOUNDATION) FROM BENEFICIALLY OWNING MORE THAN ONE SHARE
LESS THAN 5% OF THE COMPANY'S OUTSTANDING VOTING
SECURITIES. SEE "DESCRIPTION OF CAPITAL STOCK."

--------------------

------------------

PRICE $72 A SHARE

------------------

- ------------
(1) THE COMPANY AND THE SELLING STOCKHOLDER HAVE AGREED TO INDEMNIFY THE
UNDERWRITERS AGAINST CERTAIN LIABILITIES, INCLUDING LIABILITIES UNDER THE
SECURITIES ACT OF 1933, AS AMENDED.

(2) EXPENSES ASSOCIATED WITH THE OFFERING, ESTIMATED AT $550,000, ARE
PAYABLE BY THE COMPANY.

----------------------

------------------
MORGAN STANLEY DEAN WITTER SALOMON SMITH BARNEY INTERNATIONAL
BEAR, STEARNS INTERNATIONAL LIMITED
DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL

APRIL 16, 1998

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Documents Incorporated by Reference................................................................................ 2
Prospectus Summary................................................................................................. 3
Cautionary Disclosure Regarding Forward-Looking Statements......................................................... 8
May 1996 Recapitalization.......................................................................................... 8
August 1997 Reincorporation........................................................................................ 9
Use of Proceeds.................................................................................................... 10
Dividend Policy.................................................................................................... 10
Price Range of Common Stock........................................................................................ 10
Selling Stockholder................................................................................................ 10
Description of Capital Stock....................................................................................... 11
Certain United States Tax Consequences to Non-United States Holders................................................ 14
Underwriters....................................................................................................... 17
Legal Matters...................................................................................................... 21
Experts............................................................................................................ 21
Additional Information............................................................................................. 21
</TABLE>

------------------------

DOCUMENTS INCORPORATED BY REFERENCE

The following documents of the Company filed with the Securities and
Exchange Commission (the "Commission") (File No. 001-13803) are incorporated
herein by reference:

(i) the Company's Annual Report on Form 10-K for the year ended December 31,
1997; and

(ii) the Company's Registration Statement on Form 8-B filed June 12, 1997.

2
<PAGE>

CERTAIN UNITED STATES TAX CONSEQUENCES TO
NON-UNITED STATES HOLDERS

The following is a discussion of certain anticipated United States income
and estate tax consequences of the ownership and disposition of the Common Stock
by a "Non-U.S. Holder." For the purpose of this discussion, a "Non-U.S. Holder"
is any person or entity that is, as to the United States, a foreign corporation,
a non-resident alien individual, a foreign partnership or a foreign estate or
trust as such terms are defined in the Internal Revenue Code of 1986, as amended
(the "Code"). This discussion does not deal with all aspects of United States
income and estate taxation and does not address foreign, state and local tax
consequences that may be relevant to Non-U.S. Holders in light of their personal
circumstances. Furthermore, the following discussion is based on current
provisions of the Code, existing and proposed regulations promulgated thereunder
and administrative and judicial interpretations as of the date hereof, all of
which are subject to change. Prospective foreign investors are urged to consult
their tax advisors regarding the United States Federal, state, local and
non-United States income and other tax consequences of owning and disposing of
Common Stock.

DIVIDENDS

Distributions by the Company to a Non-U.S. Holder will be treated as
dividends of ordinary income to the extent that they are made out of current or
accumulated earnings and profits of the Company. Generally, any such dividend
paid to a Non-U.S. Holder of Common stock will be subject to United States
withholding tax either at a rate of 30% of the gross amount of the dividend or
at a lesser rate as may be specified by an applicable income tax treaty. On the
other hand, dividends received by a Non-U.S. Holder that are effectively
connected with a United States trade or business (or, if an income tax treaty
applies, a permanent establishment) conducted by such Non-U.S. Holder are exempt
from such withholding tax. However, such effectively connected dividends, net of
certain deductions and credits, are taxed at the same graduated rates applicable
to United States individuals and corporations. In addition to the graduated tax
described above, dividends received by a corporate Non-U.S. Holder that are
effectively connected with a United States trade or business (or, if an income
tax treaty applies, a permanent establishment) of the corporate Non-U.S. Holder
may also be subject to a branch profits tax at a rate of 30% or at a lesser rate
as may be specified by an applicable income tax treaty.

Under current United States Treasury regulations, dividends paid to an
address in a country other than the United States are presumed to be paid to a
resident of such country for purposes of the withholding discussed above (unless
the payor has knowledge to the contrary) and, under the current interpretation
of United States Treasury regulations, for purposes of determining the
applicability of a tax treaty rate (the "address rule"). Thus, Non-U.S. Holders
who receive dividends at addresses outside the United States generally are not
yet required to file tax forms to obtain the benefit of an applicable treaty
rate. Under recently issued Treasury Regulations scheduled to take effect
January 1, 2000 (the "Final Regulations"), the address rule will no longer
apply, and a Non-U.S. Holder who seeks to claim the benefit of an applicable
treaty rate would be required to satisfy certain certification and other
requirements. The Final Regulations also provide special rules regarding
whether, for purposes of determining the applicability of an income tax treaty,
dividends paid to a Non-U.S. Holder that is an entity should be treated as being
paid to the entity itself or to the persons holding an interest in that entity.

A Non-U.S. Holder must file a properly completed and executed U.S. Internal
Revenue Service ("IRS") Form 4224 (or, under the Final Regulations, for
distributions after December 31, 1999, an IRS Form W-8A) with the Company's
withholding agent certifying that the investment to which the distribution
relates is effectively connected with the conduct of a United States trade or
business or is attributable to a permanent establishment of such Non-U.S. Holder
in order to qualify for the exemption from withholding under the effectively
connected income and permanent establishment exemptions discussed above.

14
<PAGE>
Distributions in excess of current or accumulated earnings and profits of
the Company will not be taxable to a Non-U.S. Holder to the extent that they do
not exceed the adjusted basis of the stockholder's Common Stock, but rather will
reduce the adjusted basis of such stock. To the extent that such distributions
exceed the adjusted basis of a Non-U.S. Holder's Common Stock, they will give
rise to gain from the sale or exchange of his stock, the tax treatment of which
is described below. Under current regulations, if it cannot be determined at the
time a distribution is made whether or not such distribution will be in excess
of current or accumulated earnings and profits, the distribution will generally
be treated as a dividend for withholding purposes. Under the Final Regulations,
the Company will generally be permitted to make a reasonable estimate of the
amount of such distribution that should be treated as a dividend and therefore
subject to withholding.

A Non-U.S. Holder eligible for a reduced rate of United States withholding
tax pursuant to an income tax treaty or whose dividends have otherwise been
subjected to withholding in an amount that exceeds such holder's United States
federal income tax liability may obtain a refund for any excess amount withheld
by filing an appropriate claim for refund with the IRS.

DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to United States Federal
income tax on any gain realized upon the sale or other disposition of Common
Stock unless (i) such gain is effectively connected with a United States trade
or business of the Non-U.S. Holder, (ii) in the case of certain Non-U.S. Holders
who are non-resident alien individuals and hold the Common Stock as a capital
asset, such individuals are present in the United States for 183 or more days in
the taxable year of disposition and certain other conditions are met, (iii) the
Non-U.S. Holder is subject to tax pursuant to the provisions of U.S. tax law
applicable to certain U.S. expatriates or (iv) under certain circumstances, the
Company is or has been a "United States real property holding corporation" for
Federal income tax purposes at any time within the shorter of the five-year
period preceding such disposition or such holder's holding period. The Company
has determined that it is not and does not believe that it will become a "United
States real property holding corporation" for Federal income tax purposes. If a
Non-U.S. Holder falls under clause (i) above, the holder will be taxed on the
net gain derived from the sale under regular graduated United States Federal
income tax rates (and, with respect to corporate Non-U.S. Holders, may also be
subject to the branch profits tax described above). If an individual Non-U.S.
Holder falls under clause (ii) above, the holder generally will be subject to a
30% tax on the gain derived from the sale, which gain may be offset by the
capital losses recognized within the same taxable year of such sale.

BACKUP WITHHOLDING AND INFORMATION REPORTING

Generally, the Company must report to the IRS the amount of dividends paid,
the name and address of the recipient, and the amount, if any, of tax withheld.
A similar report is sent to the holder. Pursuant to tax treaties or other
agreements, the IRS may make its reports available to tax authorities in the
recipient's country of residence.

Dividends paid to a Non-U.S. Holder at an address within the United States
may be subject to backup withholding at a rate of 31% if the Non-U.S. Holder
fails to establish that it is entitled to an exemption or to provide a correct
taxpayer identification number and other information to the payor. In addition,
the payor of dividends may rely on the payee's foreign address in determining
that the payee is exempt from backup withholding, unless the payor has knowledge
that the payee is a United States person (as such term is defined in the Code),
except that with regard to payments made after December 31, 1999, the Final
Regulations provide that a Non-U.S. Holder will be entitled to such an exemption
only if it provides an IRS Form W-8 (or satisfies certain documentary evidence
requirements for establishing that it is a non-United States person).

15
<PAGE>
The payment of the proceeds of the disposition of Common Stock to or through
the United States office of a broker is subject to information reporting and
backup withholding at a rate of 31% unless the beneficial owner certifies under
penalties of perjury that it is a non-U.S. Holder or otherwise establishes an
exemption. Generally, U.S. information reporting and backup withholding will not
apply to a payment of disposition proceeds if the payment is made outside the
United States through a non-United States office of a non-United States broker.
However, information reporting requirements (but not backup withholding) will
apply to a payment of disposition proceeds outside the United States through an
office outside the United States of a broker that is (a) a United States person;
(b) a United States controlled foreign corporation or (c) a foreign person 50%
or more of whose gross income for certain periods is from a United States trade
or business unless such broker has documentary evidence in its files of the
owner's foreign status and has no actual knowledge to the contrary.

Backup withholding is not an additional tax. Rather, the tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained, provided that the required information is furnished to the IRS.

ESTATE TAX

An individual Non-U.S. Holder who owns Common Stock at the time of his death
or has made certain lifetime transfers of an interest in Common Stock will be
required to include the value of such Common Stock in his gross estate for
United Stated Federal estate tax purposes, unless an applicable estate tax
treaty provides otherwise.

16
<PAGE>
UNDERWRITERS

17
<PAGE>
take and pay for all of the shares of Common Stock offered hereby (other than
those covered by the U.S. Underwriters' over-allotment option described below)
if any such shares are taken.

Pursuant to the Agreement between U.S. and International Underwriters, each
U.S. Underwriter has represented and agreed that, with certain exceptions: (i)
it is not purchasing any Shares (as defined herein) for the account of anyone
other than a United States or Canadian Person (as defined herein) and (ii) it
has not offered or sold, and will not offer or sell, directly or indirectly, any
Shares or distribute any prospectus relating to the Shares outside the United
States or Canada or to anyone other than a United States or Canadian Person.
Pursuant to the Agreement between U.S. and International Underwriters, each
International Underwriter has represented and agreed that, with certain
exceptions: (i) it is not purchasing any Shares for the account of any United
States or Canadian Person and (ii) it has not offered or sold, and will not
offer or sell, directly or indirectly, any Shares or distribute any prospectus
relating to the Shares in the United States or Canada or to any United States or
Canadian Person. With respect to any Underwriter that is a U.S. Underwriter and
an International Underwriter, the foregoing representations and agreements (i)
made by it in its capacity as a U.S. Underwriter apply only to it in its
capacity as a U.S. Underwriter and (ii) made by it in its capacity as an
International Underwriter apply only to it in its capacity as an International
Underwriter. The foregoing limitations do not apply to stabilization
transactions or to certain other transactions specified in the Agreement between
U.S. and International Underwriters. As used herein, "United States or Canadian
Person" means any national or resident of the United States or Canada, or any
corporation, pension, profit-sharing or other trust or other entity organized
under the laws of the United States or Canada or of any political subdivision
thereof (other than a branch located outside the United States and Canada of any
United States or Canadian Person), and includes any United States or Canadian
branch of a person who is otherwise not a United States or Canadian Person. All
shares of Common Stock to be purchased by the Underwriters under the
Underwriting Agreement are referred to herein as the "Shares."

18
<PAGE>
businesses or otherwise in circumstances which have not resulted and will not
result in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995; (ii) it has complied and will
comply with all applicable provisions of the Financial Services Act of 1986 with
respect to anything done by it in relation to the Shares in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the offering of the Shares to a person who is of a kind
described in Article II(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom such document may
otherwise lawfully be issued or passed on.

19
<PAGE>
services in the past, such Underwriters have received customary compensation,
including reimbursement of related expenses.

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may over-allot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover over-allotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an Underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

The Company, the Selling Stockholder and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

20
<PAGE>
LEGAL MATTERS

EXPERTS

ADDITIONAL INFORMATION

21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses payable by the Company
in connection with the sale of Common Stock being registered. All amounts are
estimates except the registration fee and the NASD fee.

<TABLE>
<CAPTION>
AMOUNT TO BE
PAID
------------
<S> <C>
Registration fee................................................................ $ 277,741
NASD fee........................................................................ 30,500
Printing and engraving.......................................................... 50,000
Legal fees and expenses......................................................... 75,000
Accounting fees and expenses.................................................... 75,000
Blue sky fees and expenses...................................................... 10,000
Transfer agent fees............................................................. 5,000
Miscellaneous................................................................... 26,759
------------
Total......................................................................... $ 550,000
------------
------------
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company is a Delaware corporation. Section 145 of the General
Corporation Law of the state of Delaware (the "Delaware Law") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed legal action, suit or
proceedings, whether civil, criminal, administrative or investigative (other
than action by or in the right of such corporation), by reason of the fact that
such person was an officer or director of such corporation, or is or was serving
at the request of such corporation as a director, officer, employee or agent of
another corporation or enterprise. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding, provided that such officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the corporation's best
interests, and, for criminal proceedings, had no reasonable cause to believe his
conduct was illegal. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation in the
performance of his duty. Where an officer or director is successful on the
merits or otherwise in the defense of any action referred to above, the
corporation must indemnify him against the expenses which such officer or
director actually and reasonably incurred.

The Company's Certificate of Incorporation provides that the liability of
the Company's directors to the Company or the Company's stockholders for
monetary damages for breach of fiduciary duty will be eliminated to the fullest
extent permissible under Delaware Law except for (i) breaches of the duty of
loyalty; (ii) acts or omissions not in good faith or involving intentional
misconduct or knowing violations of the law; (iii) the payment of unlawful
dividends or unlawful stock repurchases or redemptions; or (iv) transactions in
which a director received an improper personal benefit.

The effect of these provisions is to eliminate the rights of the Company and
its stockholders (through stockholders' derivative suits on behalf of the
Company) to recover monetary damages against a director for a breach of
fiduciary duty of care as a director (including breaches resulting from
negligent or grossly negligent behavior) except in certain limited situations.
These provisions do not limit or eliminate the rights of the Company or any
stockholder to seek non-monetary relief such as an injunction or rescission in
the event of a breach of a director's duty of care. These provisions will not
alter the liability of directors under federal securities law.

II-1
<PAGE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. (CONTINUED)
The Company's Bylaws provide that the Company will indemnify each present
and former director and officer of the Company or a predecessor company and each
of their respective subsidiaries, as such companies exist or have existed, and
such agents of the Company as the Board of Directors shall determine, to the
fullest extent provided by law. In addition, the Company has entered into
indemnification agreements with its directors and certain officers that provide
for the maximum indemnification permitted by law.

Under the terms of the Underwriting Agreement filed as an exhibit hereto,
directors, certain officers and controlling persons of the Company are entitled
to indemnification under certain circumstances, including proceedings under the
Securities Act of 1933 and the Securities Exchange Act of 1934.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ----------- ---------------------------------------------------------------------------------------------------
<S> <C>
1.1* Form of U.S. Underwriting Agreement.
1.2* Form of International Underwriting Agreement.
2.1 Amended and Restated Recapitalization Agreement dated as of March 31, 1995, by and among the
Registrant, Blue Cross of California, WellPoint Health Partnership and Western Foundation for
Health Improvements, incorporated by reference to Exhibit 2.1 of Registrant's Form S-4 dated April
8, 1996
2.2 Agreement and Plan of Reorganization dated as of July 22, 1997 by and among the Registrant,
WellPoint Health Networks Inc., a California corporation ("WellPoint California"), and WLP
Acquisition Corp., incorporated by reference to Exhibit 99.1 of Registrant's Current Report on Form
8-K filed on August 5, 1997
4.1 Restated Certificate of Incorporation of the Company (incorporated by reference from Exhibit 3.1 to
the Company's Current Report on Form 8-K filed on August 5, 1997).
4.2 Bylaws of the Company (originally filed as Appendix B to WellPoint California's Schedule 14A filed
May 8, 1997, File No. 333-03292-01, and incorporated herein by reference).
4.3 Specimen of common stock certificate of Wellpoint Health Networks, Inc., incorporated by reference
to Exhibit 4.4 of Registrant's Registration Statement on Form 8-K, Registration No. 001-13083.
5.1 Opinion of Gibson, Dunn & Crutcher LLP.
9.1 Amended and Restated Voting Agreement (incorporated by reference from Exhibit 99.3 to the Company's
Current Report on Form 8-K filed on August 5, 1997).
9.2 Amended and Restated Voting Trust Agreement (incorporated by reference from Exhibit 99.2 to the
Company's Current Report on Form 8-K filed on August 5, 1997).
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Gibson, Dunn & Crutcher LLP (included in its Opinion filed as Exhibit 5.1).
24.1* Powers of Attorney (see signature page included in Registration Statement).
</TABLE>

- ---------

* Previously filed

(b) Financial Statement Schedules.

Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.

II-2
<PAGE>
ITEM 17. UNDERTAKINGS.

The Company hereby undertakes that, for purpose of determining any liability
under the Securities Act of 1933, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the provisions described in Item 15 or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. If a claim for
indemnification against such liabilities (other than the payment by the Company
of expenses incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

The Company hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>
SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS AMENDMENT NO. 2 TO
ITS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF LOS ANGELES, CALIFORNIA, ON THE 15TH
DAY OF APRIL, 1998.

WELLPOINT HEALTH NETWORKS INC.

By: /S/ THOMAS C. GEISER
--------------------------------------

Thomas C. Geiser
EXECUTIVE VICE PRESIDENT

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons in
the capacities indicated on the 15th day of April, 1998.

SIGNATURE TITLE
- ------------------------------ --------------------------

Chairman of the Board and
/s/ LEONARD D. SCHAEFFER Chief Executive Officer
- ------------------------------ (Principal Executive
Leonard D. Schaeffer Officer)

Executive Vice President
/s/ DAVID C. COLBY* and Chief Financial
- ------------------------------ Officer (Principal
David C. Colby Financial Officer)

Senior Vice President,
/s/ S. LOUISE MCCRARY* Controller and Chief
- ------------------------------ Accounting Officer
S. Louise McCrary (Principal Accounting
Officer)

/s/ DAVID R. BANKS*
- ------------------------------ Director
David R. Banks

/s/ W. TOLIVER BESSON*
- ------------------------------ Director
W. Toliver Besson

/s/ ROGER E. BIRK*
- ------------------------------ Director
Roger E. Birk

/s/ SHEILA A. BURKE*
- ------------------------------ Director
Sheila A. Burke

/s/ STEPHEN L. DAVENPORT*
- ------------------------------ Director
Stephen L. Davenport

/s/ JULIE A. HILL*
- ------------------------------ Director
Julie A. Hill

/s/ ELIZABETH A. SANDERS*
- ------------------------------ Director
Elizabeth A. Sanders

*By: /s/ THOMAS C. GEISER
-------------------------
Thomas C. Geiser
ATTORNEY-IN-FACT

II-4

<PAGE>

EXHIBIT 5.1

April 16, 1998

WellPoint Health Networks Inc.
21555 Oxnard Street
Woodland Hills, California 91367

Re: PRE-EFFECTIVE AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT ON
FORM S-3 ("REGISTRATION STATEMENT") OF WELLPOINT HEALTH
NETWORKS INC. AND "PROSPECTUS" CONTAINED THEREIN

Ladies and Gentlemen:

We have acted as counsel to WellPoint Health Networks Inc., a Delaware
corporation (the "Company"), with respect to the issuance of this opinion
relating to the proposed offering by California HealthCare Foundation (the
"Selling Shareholder") of up to 13,800,000 shares (the "Shares") of the Common
Stock of the Company, par value $.01 per share (the "Common Stock").

For purposes of rendering this opinion, we have made such legal and
factual examinations as we have deemed necessary under the circumstances and,
as part of such examination, we have examined, among other things, originals
and copies, certified or otherwise, identified to our satisfaction, of such
documents, corporate records and other instruments as we have deemed
necessary or appropriate. For the purposes of such examination, we have
assumed the genuineness of all signatures on original documents and the
conformity to original documents of all copies submitted to us.

On the basis of and in reliance upon the forgoing examinations and
assumptions, we are of the opinion that the Shares have been duly and validly
issued and are outstanding, fully paid and non-assessable shares of Common
Stock.

We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus.

Very truly yours,

/s/ Gibson, Dunn & Crutcher LLP

GIBSON, DUNN & CRUTCHER LLP

<PAGE>
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this Pre-effective Amendment
No. 2 to the registration statement of WellPoint Health Networks Inc. on Form
S-3 (File No. 333-48941) of our report dated February 2, 1998, on our audits of
the consolidated financial statements of WellPoint Health Networks Inc. We also
consent to the reference to our firm under the captions "Consolidated Financial
and Operating Data" and "Experts."

Coopers & Lybrand L.L.P.

Los Angeles, California
April 15, 1998