UNITED STATES
                     SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                  FORM 10-Q

(Mark One)

[X]            QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

              For the quarterly period ended September 30, 2001

                                 OR

[  ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                   OF THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period from ________ to ________

                      Commission File Number 1-15907

                       RIGHTCHOICE MANAGED CARE, INC.
           (Exact name of registrant as specified in its charter)

                Delaware                              43-0303080
     (State or other jurisdiction of      (IRS Employer Identification No.)
      incorporation or organization)

   1831 Chestnut Street, St. Louis, Missouri          63103-2275
   (Address of principal executive offices)           (Zip Code)

Registrant's telephone number, including area code   (314) 923-4444


                          Not Applicable
        (Former name, former address and former fiscal year,
                  if changed since last report)

      Indicate by check mark whether the registrant  (1)  has
filed all reports required to be filed by Section 13 or 15(d)
of  the  Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was
required  to file such reports), and (2) has been subject  to
such  filing  requirements for the past  90  days.   Yes [X]  No [ ]

     Indicate the number of shares outstanding of each of the
issuer's   classes  of  common  stock,  as  of   the   latest
practicable date:

          Title of each class           Outstanding at November 1, 2001

      Common stock, $0.01 par value             19,569,207 shares

                   RIGHTCHOICE MANAGED CARE, INC.
                    Third Quarter 2001 Form 10-Q
                          Table of Contents



PART  I.      FINANCIAL INFORMATION                                     PAGE

     ITEM 1.  Financial Statements

              Consolidated Balance Sheets as of September 30, 2001
              and December 31, 2000                                       3

              Consolidated Statements of Income for the three and nine
              months ended September 30, 2001 and 2000                    4

              Consolidated Statements of Changes in Stockholders' Equity
              for the three and nine months ended September 30, 2001
              and 2000                                                    5

              Consolidated Statements of Cash Flows for the nine months
              ended September 30, 2001 and 2000                           6

              Notes to Consolidated Financial Statements                  7

     ITEM 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                        16

     ITEM 3.  Quantitative and Qualitative Disclosures about Market
              Risks                                                      27

PART II.      OTHER INFORMATION

     ITEM 1.  Legal Proceedings                                          27

     ITEM 2.  Changes in Securities and Use of Proceeds                  27

     ITEM 3.  Defaults Upon Senior Securities                            27

     ITEM 4.  Submission of Matters to a Vote of Security Holders        27

     ITEM 5.  Other Information                                          27

     ITEM 6.  Exhibits and Reports on Form 8-K                           27

SIGNATURES                                                               29

PART 1.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

<TABLE>
                                           RightCHOICE Managed Care, Inc.
                                             Consolidated Balance Sheets
                                   (in thousands, except shares and per share data)
<CAPTION>

                                                                           September 30, 2001       December 31, 2000
    ASSETS                                                                   (unaudited)
<S>                                                                        <C>                      <C>
Current assets:
  Cash and cash equivalents                                                        $51,327               $56,026
  Investments available for sale, at market value                                  323,080               262,039
  Receivables, net of allowances                                                   138,951               132,260
  Deferred income taxes                                                              8,233                10,430
  Other assets                                                                      21,053                18,798
    Total current assets                                                           542,644               479,553

Property and equipment, net                                                        114,133               110,010
Deferred income taxes                                                                8,665                 5,413
Investments in affiliates                                                            6,074                 6,475
Goodwill and intangible assets, net                                                 88,951                91,963
    Total assets                                                                  $760,467              $693,414

    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Medical claims payable                                                          $151,232              $145,980
  Unearned premiums                                                                 76,993                69,073
  Accounts payable and accrued expenses                                             83,883                88,720
  Current portion of long-term debt                                                                        6,000
  Obligations for employee benefits                                                  2,366                 1,574
  Income taxes payable                                                              19,271                20,938
  Current portion of obligations under capital leases                                5,354                 3,883
    Total current liabilities                                                      339,099               336,168
Long-term debt                                                                                            20,063
Obligations for employee benefits                                                   32,176                29,554
Obligations under capital leases                                                     5,106                 4,860
    Total liabilities                                                              376,381               390,645

Stockholders' equity:
  Preferred stock, $0.01 par, 25,000,000 shares authorized,
    no shares issued and outstanding
  Common stock, $0.01 par, 225,000,000 shares authorized,
    19,564,176 and 18,696,040 shares issued, respectively,
    19,564,176 and 18,678,503 shares outstanding, respectively                         196                   187
  Additional paid-in capital                                                       328,896               300,317
  Retained earnings                                                                 53,263                 3,976
  Treasury stock, 0 and 17,537 shares, respectively, at cost                                                (234)
  Accumulated other comprehensive income (loss)                                      1,731                (1,477)
    Total stockholders' equity                                                     384,086               302,769
    Total liabilities and stockholders' equity                                    $760,467              $693,414

                            See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
                                       RightCHOICE Managed Care, Inc.
                                Consolidated Statements of Income (unaudited)
                               (in thousands, except shares and per share data)
<CAPTION>

                                                      Three months ended              Nine months ended
                                                         September 30,                   September 30,
                                                      2001            2000            2001            2000
<S>                                              <C>              <C>            <C>              <C>
 Revenues:
   Premium                                         $265,149         $242,197       $765,945         $692,274
   Fees and other income                             35,023           29,875        104,191           89,596
     Total revenues                                 300,172          272,072        870,136          781,870

 Operating expenses:
   Health care services                             212,629          198,360        616,562          568,004
   Commissions                                       11,337            9,191         32,443           27,037
   General and administrative (excludes
     depreciation and amortization)                  47,455           46,341        142,524          134,400
   Depreciation and amortization                      5,613            5,100         16,865           15,323
     Total operating expenses                       277,034          258,992        808,394          744,764
 Operating income                                    23,138           13,080         61,742           37,106

 Investment income:
   Interest and dividends                             3,944            4,565         12,620           12,971
   Realized gains (losses), net                         367             (127)         1,005              938
     Total investment income, net                     4,311            4,438         13,625           13,909

 Other:
   Interest expense                                    (258)            (923)        (1,446)          (2,901)
   Other (expense) income, net                           (2)             624           (119)           1,435
     Total other, net                                  (260)            (299)        (1,565)          (1,466)

 Income before minority interest and
   provision for income taxes                        27,189           17,219         73,802           49,549

 Minority interest in consolidated subsidiary                         (1,879)                         (5,021)
 Provision for income taxes                          (6,116)          (6,783)       (24,515)         (19,641)

 Net income                                         $21,073           $8,557        $49,287          $24,887

 Weighted average common shares outstanding      19,556,632       14,962,500     19,165,070       14,962,500
 Potential dilutive common shares                   477,219          462,904        471,970          315,436
 Basic earnings per share                             $1.08            $0.57          $2.57            $1.66
 Diluted earnings per share                           $1.05            $0.55          $2.51            $1.63

                        See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
                                                  RightCHOICE Managed Care, Inc.
                                                Consolidated Statements of Changes
                                                in Stockholders' Equity (unaudited)
                                                   (in thousands, except shares)
<CAPTION>
                                                                                          Net Assets       Accumulated
                                                        Additional                        Available           Other
                                                         Paid-in   Retained  Treasury  for the Benefit    Comprehensive
                                           Common Stock  Capital   Earnings   Stock       of Members      Income (Loss)      Total
<S>                                        <C>          <C>        <C>       <C>       <C>                <C>             <C>
Balance at December 31, 1999                                                                 $217,281          $(3,557)   $213,724
 Comprehensive income:
  Net income                                                                                   16,330                       16,330

  Change in unrealized depreciation on
  available-for-sale securities, net of
  income tax provision of $130 and
  net of minority interest charge of $33                                                                           124         124
 Comprehensive income                                                                                                       16,454

 Other                                                                                              2                            2

 Balance at June 30, 2000                                                                     233,613           (3,433)    230,180
 Comprehensive income:
  Net income                                                                                    8,557                        8,557

  Change in unrealized depreciation on
  available-for-sale securities, net of
  income tax provision of $840 and
  net of minority interest charge of $303                                                                        1,242       1,242
 Comprehensive income                                                                                                        9,799

 Other                                                                                              6                            6

 Balance at September 30, 2000                                                                242,176           (2,191)    239,985
 Comprehensive income:
  Net income                                                         $3,976                     6,663                       10,639

  Change in unrealized depreciation on
  available-for-sale securities, net of
  income tax provision of $774 and
  net of minority interest charge of $61                                                                         1,250       1,250

  Minimum pension liability adjustment,
  net of income tax benefit of $33                                                                                 (63)        (63)
 Comprehensive income                                                                                                       11,826

 Other                                                                                            110                          110

 Payment to The Missouri Foundation
 For Health                                                                                   (12,780)                     (12,780)

 Issuance of common stock pursuant to
 the Reorganization (see Note 2)                   $187   $300,277             $(490)        (236,169)            (473)     63,332

 Common shares issued under the
 company's stock option plan
 subsequent to the Reorganization                               40               256                                           296

 Balance at December 31, 2000                       187    300,317    3,976     (234)               0           (1,477)    302,769
 Comprehensive income:
  Net income                                                         28,214                                                 28,214

  Change in unrealized depreciation on
  available-for-sale securities, net of
  income tax provision of $199                                                                                     334         334
 Comprehensive income                                                                                                       28,548

 Issuance of 750,000 shares pursuant to the
 company's stock offering (see Note 10)               8     26,445                                                          26,453

 100,160 common shares issued under
 the company's stock option plan                             1,463               234                                         1,697

 Balance at June 30, 2001                           195    328,225   32,190        0                0           (1,143)    359,467
 Comprehensive income:
  Net income                                                         21,073                                                 21,073

  Change in unrealized appreciation on
  available-for-sale securities, net of
  income tax provision of $1,689                                                                                 2,874       2,874
 Comprehensive income                                                                                                       23,947

 35,513 common shares issued under
 the company's stock option plan                      1        649                                                             650
 Other                                                          22                                                              22

 Balance at September 30, 2001                     $196   $328,896  $53,263       $0               $0           $1,731    $384,086

                                   See accompanying Notes to Consolidated Financial Statements.
</TABLE>

<TABLE>
                              RightCHOICE Managed Care, Inc.
                     Consolidated Statements of Cash Flows (unaudited)
                                      (in thousands)
<CAPTION>
                                                                  For the nine months ended
                                                                          September 30,
                                                                      2001           2000
<S>                                                                <C>            <C>
Cash flows from operating activities:
 Net income                                                         $49,287        $24,887
 Adjustments to reconcile net income to net cash
 provided by operating activities:
  Benefit for deferred income taxes                                  (2,943)        (3,684)
  Depreciation and amortization                                      16,865         15,323
  Distributions net of undistributed earnings
     from an unconsolidated affiliate                                   401           (283)
  Gain on sale of investments                                        (1,005)          (938)
  Amortization of premiums and accretion of discounts, net              155           (127)
  Gain on sale of property and equipment                                (41)          (655)
  Minority interest in consolidated subsidiary                                       5,021
 (Increase) decrease in certain assets:
  Receivables                                                        (6,691)       (20,306)
  Other assets                                                       (2,868)         4,055
 Increase (decrease) in certain liabilities:
  Medical claims payable                                              5,252          4,612
  Unearned premiums                                                   7,920            110
  Accounts payable and accrued expenses                              (4,837)         5,788
  Reserve for loss contract                                                         (4,945)
  Obligations for employee benefits                                   3,414          1,161
  Income taxes payable                                                  389          3,204
Net cash provided by operating activities                            65,298         33,223
Cash flows from investing activities:
 Proceeds from matured investments:
  Fixed maturities                                                   25,198         48,805
 Proceeds from investments sold:
  Fixed maturities                                                  155,087         58,915
  Equity securities                                                     618         21,820
  Other                                                               1,283            965
 Investments purchased:
  Fixed maturities                                                 (235,881)      (115,105)
  Equity securities                                                    (778)       (26,063)
  Other                                                                (174)          (490)
 Proceeds from property and equipment sold                               41          3,598
 Property and equipment purchased                                   (12,641)        (6,438)
Net cash used in investing activities                               (67,247)       (13,993)
Cash flows from financing activities:
 Issuance of common stock under stock plans                             292             20
 Net proceeds from stock offering                                    26,475
 Payments of long-term debt                                         (26,063)        (6,000)
 Payments of capital lease obligations                               (3,454)        (3,358)
Net cash used in financing activities                                (2,750)        (9,338)
Net (decrease) increase in cash and cash equivalents                 (4,699)         9,892
Cash and cash equivalents at beginning of period                     56,026         63,477
Cash and cash equivalents at end of period                          $51,327        $73,369

Supplemental Disclosure of Cash Information:
 Interest paid                                                       $1,458         $2,885
 Income taxes paid, net                                              27,069         20,122
Supplemental Schedule of Noncash Investing and Financing Activities:
 Equipment acquired through capital leases                            5,171          3,417
 Disposal of equipment under capital leases                                            665

               See accompanying Notes to Consolidated Financial Statements.
</TABLE>

                   RightCHOICE Managed Care, Inc.
             Notes to Consolidated Financial Statements
                             (unaudited)


1. Financial statement presentation

The interim consolidated financial statements included herein have
been prepared by RightCHOICE Managed Care, Inc., a Delaware
corporation (RightCHOICE or the company), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission
(the SEC).  Certain information and footnote disclosures, normally
included in the financial statements prepared in accordance with
generally accepted accounting principles, have been condensed or
omitted pursuant to such SEC rules and regulations; however, the
management of the company believes that the disclosures herein are
adequate to make the information presented not misleading.  In the
opinion of management, all adjustments, consisting only of normal
recurring adjustments necessary to present fairly the consolidated
financial position of the company with respect to the interim
consolidated financial statements, and the consolidated results of
its operations and its cash flows for the interim periods then
ended, have been included.  The results of operations for the
interim periods are not necessarily indicative of the results for
the full year.

2. Organization

RightCHOICE is the largest provider of health care benefits in the
state of Missouri in terms of members.  The company offers a
comprehensive array of managed health care products and services,
including preferred provider organizations (PPO), point of service
(POS), health maintenance organizations (HMO), Medicare supplement,
specialty managed care, short-term medical and managed indemnity
benefit plans, third-party administrator (TPA) services,
administrative services only (ASO), network rental services and life
insurance agency services.  The company offers these products and
services to large and small employers as well as individuals.

On November 30, 2000, the company completed a series of transactions
(collectively, the Reorganization) pursuant to the Agreement and
Plan of Reorganization, dated as of March 14, 2000, by and among
Blue Cross and Blue Shield of Missouri (BCBSMo), RightCHOICE Managed
Care, Inc., a Missouri corporation (Old RightCHOICE), The Missouri
Foundation For Health (the Foundation), and RightCHOICE.  In
connection with the Reorganization, (a) BCBSMo transferred its
insurance contracts and associated assets and liabilities to Healthy
Alliance Life Insurance Company, a subsidiary of Old RightCHOICE,
(b) BCBSMo converted from a Missouri non-profit non-stock health
services corporation to a Missouri for-profit stock corporation by
amending its charter documents, (c) BCBSMo then issued one share of
its common stock to the Foundation, (d) BCBSMo reincorporated as a
Delaware corporation by merging with RightCHOICE, which the
Foundation owned at the time, and (e) Old RightCHOICE merged with
RightCHOICE with RightCHOICE emerging as the surviving corporation
in the merger.  The last step of this transaction resulted in the
following: (a) the class A stockholders of Old RightCHOICE received
an equal number of shares of RightCHOICE common stock in exchange
for their shares of Old RightCHOICE, (b) each outstanding share of
Old RightCHOICE class B common stock was cancelled, and (c) the one
outstanding share of RightCHOICE common stock owned by the
Foundation was converted into 14,962,500 shares of RightCHOICE
common stock.  Also, immediately prior to the Reorganization, BCBSMo
paid $12.8 million to the Foundation in partial satisfaction of
claims by various parties.

RightCHOICE accounted for the Reorganization in a manner similar to
a pooling of interests transaction except for (1) the class A
stockholders' exchange of their minority ownership of Old
RightCHOICE class A common stock for RightCHOICE common stock and
(2) the exchange of options to purchase shares of Old RightCHOICE
class A common stock for options to purchase shares of RightCHOICE
common stock.  RightCHOICE accounted for these exchanges of shares
and options as a purchase.  In connection with this purchase
accounting treatment, RightCHOICE recorded goodwill and intangible
assets of $25.3 million as of November 30, 2000, the effective date
of the Reorganization.  In addition, upon issuance of the shares of
RightCHOICE common stock to the public minority stockholders of Old
RightCHOICE, the public minority stockholders' interest in the net
assets of Old RightCHOICE of $38.0 million was eliminated from the
Consolidated Balance Sheet.  The net change to stockholders' equity
due to the Reorganization is a combination of these two items -
goodwill and intangible asset recognition and minority interest
elimination - which total $63.3 million.

Upon completion of the Reorganization on November 30, 2000, there
were 18,659,300 outstanding common shares of RightCHOICE, of which
14,962,500 shares (or approximately 80%) were held beneficially by
the Foundation.  As of September 30, 2001, there were 19,564,176
shares outstanding of which 11,112,500 shares (or approximately 57%)
were held beneficially by the Foundation.  See Note 10, "Stock
offering," for information regarding the sale of RightCHOICE stock
by the company and the Foundation in May 2001.  The Foundation had
approximately 57% of the voting power of RightCHOICE at September
30, 2001, although a voting trust held approximately 92% of the
Foundation's shares at September 30, 2001.  The Foundation will vote
and sell shares as required by the voting trust and divestiture
agreement.

See Note 9, "Unaudited pro forma financial information," for
additional information related to the Reorganization referred to
above.

See Note 11, "Subsequent event," for information relating to the
merger agreement entered into by RightCHOICE, WellPoint Health
Networks Inc. and RWP Acquisition Corp.

3. Contingencies

Litigation relating to corporate status of Blue Cross and Blue
Shield of Missouri

As a result of the Reorganization and related settlement that
occurred on November 30, 2000, the predecessors of RightCHOICE,
namely Old RightCHOICE and Blue Cross and Blue Shield of Missouri,
have resolved all of the outstanding litigation and regulatory
issues with the state of Missouri related to Blue Cross and Blue
Shield of Missouri's operation of Old RightCHOICE following the
organization of Old RightCHOICE in 1994.  There remains pending,
however, the appeal of a judgment related to the corporate status of
Blue Cross and Blue Shield of Missouri described below.

On November 3, 2000, the Circuit Court of Cole County entered a
judgment in a declaratory judgment action brought by our predecessor
Blue Cross and Blue Shield of Missouri against the Missouri Attorney
General, finding that Blue Cross and Blue Shield of Missouri is a
public benefit corporation.  This ruling was consistent with the
positions ultimately taken by all parties to our settlement
agreement.

An individual plaintiff representing a class of Blue Cross and Blue
Shield of Missouri subscribers who had intervened and was joined in
the action appealed the circuit court's judgment to the Missouri
Court of Appeals, Western District.  This plaintiff on his behalf
and on behalf of the class contends that Blue Cross and Blue Shield
of Missouri was a mutual benefit corporation, that its assets should
not be transferred to a charitable trust or other charitable
organization such as The Missouri Foundation For Health and that the
existing parties to the action would not adequately represent their
interests in the resolution of the question whether Blue Cross and
Blue Shield of Missouri is a public benefit or a mutual benefit
corporation.  Briefs have been filed in the appeal and oral
arguments have been scheduled for December 7, 2001.  If the circuit
court's judgment is reversed, our company, as successor to Blue
Cross and Blue Shield of Missouri, could be obligated to pay
substantial money damages.  It is also possible that if the circuit
court's judgment is reversed, a court could order the Reorganization
be rescinded as if it never happened, although we believe that this
would be unlikely.  If a court enters those orders or orders like
those, it would have a material adverse effect on us.

The Missouri Foundation For Health is required to maintain a minimum
net worth of approximately $85 million and is required by contract
to indemnify us against claims asserted in this litigation that
arise out of the Reorganization and relate to the corporate status
of Blue Cross and Blue Shield of Missouri.  However, this
indemnification may not be sufficient to reimburse us for all of the
damages we could suffer.

Subscriber and Provider Class Actions

Class Action Litigation relating to Medicare supplement premiums

In August of 1995, suit was filed in St. Louis City Circuit Court
against our predecessors Blue Cross and Blue Shield of Missouri and
Old RightCHOICE, by two plaintiffs seeking to represent two classes
of subscribers of Medicare supplement policies issued by our
predecessor Blue Cross and Blue Shield of Missouri.  When filed, the
plaintiffs sought to represent subscribers that fell into two
groups, those holding standardized Medicare supplement policies and
those holding pre-standardized Medicare supplement policies.  Both
plaintiffs claimed that from July 1, 1992 through August 10, 1994
Blue Cross and Blue Shield of Missouri collected premiums on
Medicare supplement policies that were in excess of the premiums
approved by the Missouri Department of Insurance in violation of the
contracts between Blue Cross and Blue Shield of Missouri and its
members.  The plaintiffs also claimed that Blue Cross and Blue
Shield of Missouri made fraudulent representations about these
premium increases.  The plaintiffs claimed that Blue Cross and Blue
Shield of Missouri collected allegedly unauthorized premiums
totaling more that $29 million.  They sought recovery of at least
that amount as damages, plus prejudgment interest and punitive
damages.

While Blue Cross and Blue Shield of Missouri won summary judgment in
the trial court and appellate court, the Missouri Supreme Court
reversed in part and remanded in part the case to the circuit court.

The plaintiff seeking to represent subscribers holding pre-
standardized policies was disqualified by the circuit court from
serving as a class representative due to ill health.  She
subsequently voluntarily dismissed without prejudice her claim and
the claim she had sought to make on behalf of other pre-standardized
plan subscribers.  The pre-standardized policies represent
approximately $27 million of the approximately $29 million in
allegedly unauthorized premiums.  As a result of the dismissal by
the class representative, there are now no claims pending on behalf
of holders of the pre-standardized policies although there can be no
assurance that a new claim will not be asserted on their behalf.

On July 2, 2001, the circuit court certified the class of the
holders of standardized plans, and denied a motion to dismiss filed
by Blue Cross and Blue Shield of Missouri.  The Court ordered that
notice of the action be sent to all subscribers of standardized Blue
Cross and Blue Shield of Missouri Medicare supplement plans whose
rates increased between July 1, 1992 and August 10, 1994.  As
successor to Blue Cross and Blue Shield of Missouri, we are now the
defendant in that class action.  An adverse decision in this lawsuit
could subject us to substantial damages.

Actions alleging breach of provider contracts

In July 2001, two individual physicians seeking to represent a class
of physicians, hospitals and other providers brought suit in the
Circuit Court of Madison County, Illinois, against our subsidiary,
HealthLink, Inc.  The physicians allege that HealthLink breached the
contracts with these physicians by engaging in the practices of
"bundling" and "down-coding" in its processing and payment of
provider claims.  The relief sought includes an injunction against
these practices and damages in an unspecified amount.  HealthLink
intends to vigorously defend the action but cannot predict the
outcome.

A similar action was brought by physicians (including one of the
physicians in the case described above) in the same court in Madison
County, Illinois, on behalf of a nationwide class of providers who
contract with Blue Cross and Blue Shield plans against the Blue
Cross and Blue Shield Association and another Blue Cross Blue Shield
plan.  The complaint recites that it is brought against those
entities and their "unnamed subsidiaries, licensees, and
affiliates," listing a large number of Blue Cross and Blue Shield
plans, including "Alliance Blue Cross Blue Shield of Missouri."  The
plaintiffs also allege that the plans have systematically engaged in
practices known as "short paying," "bundling," and "down-coding" in
their processing and payment of subscriber claims.  We have not been
formally named or served as a defendant in this suit.

Other contingencies

In addition to the matters described above, from time to time in the
ordinary course of business, RightCHOICE and certain of its
subsidiaries are parties to various legal proceedings and are
subject to proceedings that may be brought pursuant to evolving
theories of liability, including those claims of providers, members
and others arising from contracts, health plan benefit coverage
issues, and federal and state laws.  The financial and operational
impact that such evolving theories of recovery will have on the
managed care industry generally, or RightCHOICE in particular, is
presently unknown.

4. Recently issued accounting standards

In July 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 141,
"Business Combinations," and SFAS No. 142, "Goodwill and Other
Intangible Assets."  SFAS No. 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase
method of accounting, and broadens the criteria for recording
intangible assets separate from goodwill.  Recorded goodwill and
intangible assets will be evaluated against this new criteria and
may result in certain intangibles being reclassified into goodwill,
or alternatively, amounts initially recorded as goodwill may be
separately identified and recognized apart from goodwill.  SFAS No.
142 requires the use of a nonamortization approach to account for
purchased goodwill and certain intangibles.  Under a nonamortization
approach, goodwill and certain intangible assets will not be
amortized into results of operations, but instead would be reviewed
for impairment and written down and charged to results of operations
only in the periods in which the recorded value of goodwill and
certain intangible assets is more than its fair value.  The
provisions of each statement which apply to goodwill and intangible
assets acquired prior to June 30, 2001 will be adopted by the
company on January 1, 2002.  We expect the adoption of these
accounting standards will reduce our amortization expense related to
goodwill and intangible assets in 2002 by approximately $2 million
as compared to 2001; however, impairment reviews may result in
future periodic write-downs.

RightCHOICE's subsidiaries, Healthy Alliance Life Insurance Company,
HMO Missouri, Inc., HealthLink HMO, Inc., and RightCHOICE Insurance
Company, file statutory-based financial statements with the
Departments of Insurance in numerous states.  On January 1, 2001,
changes to the statutory basis of accounting became effective.  The
cumulative effect of these changes, known as the Codification of
Statutory Accounting Principles guidance (the Codification), was
recorded as a direct adjustment to the statutory surplus of the
company's subsidiaries.  The company's adoption of the Codification
did not have a material adverse effect on the company or its
subsidiaries.  The statutory surplus of the company's subsidiaries
after adoption of the Codification continues to be in excess of the
minimum regulatory risk-based capital requirements.

5. Provision for income taxes

The company's effective income tax provision rate was 22.5% and
39.4% for the third quarter of 2001 and 2000, respectively, and
33.2% and 39.6% for the first nine months of 2001 and 2000,
respectively. The provisions for income taxes for the third quarter
and first nine months of 2001 include a non-recurring tax benefit of
$4.5 million.  The tax benefit relates to the previously described
$12.8 million cash payment to the Foundation in November 2000.
RightCHOICE did not record a tax benefit for this payment in 2000
due to the lack of guidance in this area.  Subsequently, in 2001,
an additional ruling was issued by the IRS that clarified the
ability to treat the payment as a tax deduction.  As a result, the
payment to the Foundation was deducted in the company's 2000 tax
return, which was filed in September 2001, and the benefit for this
deduction was recognized in the tax provision in the third quarter
of 2001.  Excluding this non-recurring tax benefit, the company's
effective income tax provision rate was 38.9% and 39.3% for the
third quarter and first nine months of 2001, respectively.  The
effective tax provision rates in 2001 and 2000 were also affected by
non-deductible goodwill amortization, among other things.  SFAS No.
109, "Accounting for Income Taxes," requires a valuation allowance
against deferred tax assets if, based on the weight of available
evidence, it is more likely than not that some or all of the
deferred tax assets will not be realized.  Based upon all the
available evidence, management believes it is more likely than not
that the company will realize its deferred tax assets as of
September 30, 2001, and, accordingly, no valuation allowance has
been provided against such assets as of September 30, 2001.

6. Earnings per share

Basic earnings per share are computed by dividing net income by the
weighted average number of common and common equivalent shares
outstanding during the year.  Diluted earnings per share are
calculated by dividing net income by the number of weighted average
shares outstanding plus additional shares representing stock
distributable under stock-based compensation plans using the
treasury stock method.  Share and per share data for the third
quarter of 2000 and the first nine months of 2000 give effect to the
Reorganization (see Note 2, "Organization," above) in a manner
similar to a stock split (i.e. as if the 14,962,500 shares of
RightCHOICE existed for all prior periods before the Reorganization
was completed in place of the one share of RightCHOICE that the
Foundation owned prior to the Reorganization).  Because the
Reorganization was accounted for in a manner similar to a pooling of
interests, except for the exchange of the 3.7 million shares of
class A common stock held by the public minority stockholders of Old
RightCHOICE and the exchange of options to purchase shares of Old
RightCHOICE for options to purchase shares of RightCHOICE, the
weighted average shares outstanding used for computing the third
quarter of 2000 and the first nine months of 2000 earnings per share
consist only of the 14,962,500 shares owned by the Foundation.  For
the third quarter of 2001 and the first nine months of 2001,
weighted average shares outstanding consist of the 14,962,500 shares
plus approximately 3.7 million common shares issued to the former
public minority stockholders of Old RightCHOICE on November 30,
2000, the date of the Reorganization, plus the weighted average of
approximately 0.9 million shares issued subsequent to the
Reorganization pursuant to the stock offering described in Note 10
as well as pursuant to stock-based compensation plans.  There were
477,219 and 462,904 potential dilutive common shares for the third
quarter of 2001 and 2000, respectively, and 471,970 and 315,436
potential dilutive common shares for the first nine months of 2001
and 2000, respectively.

7. Comprehensive income

The components of other comprehensive income related to the
unrealized gains or losses on RightCHOICE's available-for-sale
securities for the three and nine month periods ended September 30,
2001 and 2000 are as follows:

                                                Three months       Nine months
                                                    ended             ended
                                                September 30,      September 30,
                                                2001    2000       2001    2000
                                               (in thousands)     (in thousands)
Unrealized holding gains arising during
        period, net  of  taxes and
        minority interest                      $3,107  $1,131    $3,868  $1,949
Less:   reclassification  adjustment  for
        (gains) losses included in net
        income, net of taxes                     (233)    111      (660)   (583)
Net  unrealized gains on securities,  net
        of taxes and minority interest         $2,874  $1,242    $3,208  $1,366


The components of accumulated other comprehensive income (loss) on
the Consolidated Balance Sheets include unrealized net appreciation
(depreciation) of investments as well as a minimum pension liability
adjustment.  The unrealized net appreciation (depreciation) of
investments, net of taxes, was $2,089 and $(1,119) at September 30,
2001 and December 31, 2000, respectively.  The minimum pension
liability increase, net of taxes, was $358 and $358 at September 30,
2001 and December 31, 2000, respectively.

8. Segment information

The company operates in three segments, which it defines as
underwritten, self-funded, and other.  The company's underwritten
segment includes a comprehensive array of products including PPO,
POS, HMO, Medicare supplement, managed indemnity, specialty managed
care and short-term medical coverages.  The company's self-funded
segment includes TPA, ASO for self-insured organizations, network
rental services for self-insured organizations, insurance companies
and other organizations, including network rental for workers'
compensation, national service accounts through the Blue Cross Blue
Shield Association for which RightCHOICE accepts no underwriting
risk, and life insurance agency services.  The other segment
primarily includes the company's real estate assets and related
rental and lease revenues and expenses.  All of the company's
revenues, including underwritten premiums and self-funded fees and
other income and real estate revenue, are derived from domestic
(United States) sources, and no single customer accounts for more
than 10% of total revenues.

Operating income for the company's underwritten segment is
determined by deducting from premium revenue the health care service
costs, commissions, and general and administrative expenses that are
attributable to that segment's operations.  Operating income for the
self-funded segment is determined by deducting from fees and other
income the commissions and general and administrative expenses
attributable to the segment.  Operating income for the other segment
is determined by deducting from rental revenues the general and
administrative expenses (including depreciation) attributable to the
segment.  Expenses not directly traceable to an industry segment are
allocated on a consistent and reasonable basis utilizing membership,
groups, claims, and other key drivers.  Net investment income is
allocated to segments separately for each subsidiary of the company
based on the amount of segment revenue generated at each entity.
Net investment income of the parent company is allocated to segments
based on the company's total consolidated underwritten and self-
funded segment revenue.  Corporate identifiable assets for the
underwritten and self-funded segments include only receivables
because the company does not produce more detailed information by
segment internally.  Corporate identifiable assets for the company's
other segment include the net book value of the company's real
estate and related assets.  Intersegment revenues include the rental
income related to the company's corporate headquarters.  This
related party transaction is eliminated in the company's
Consolidated Financial Statements.  Financial information by segment
is as follows (in thousands):

As of and for the
three months ended
September 30, 2001  Underwritten  Self-funded  Other  Eliminations  Consolidated
Revenues                $265,499      $33,908  $2,124     $(1,359)     $300,172
Operating income           9,133       13,132     873                    23,138
Investment income, net     4,013          298                             4,311
Depreciation and
  amortization expense     3,341        1,560     712                     5,613
Identifiable assets       98,529       40,422  57,349                   196,300

As of and for the
nine months ended
September 30, 2001  Underwritten  Self-funded  Other  Eliminations  Consolidated
Revenues                $766,570     $101,105  $6,327     $(3,866)     $870,136
Operating income          19,975       39,258   2,509                    61,742
Investment income, net    12,654          971                            13,625
Depreciation and
  amortization expense     9,974        4,755   2,136                    16,865

As of and for the
three months ended
September 30, 2000  Underwritten  Self-funded  Other  Eliminations  Consolidated
Revenues                $242,447      $29,122  $1,728     $(1,225)     $272,072
Operating income           3,363        9,211     506                    13,080
Investment income, net     4,000          438                             4,438
Depreciation and
  amortization expense     3,021        1,420     659                     5,100
Identifiable assets       77,248       38,518  59,865                   175,631

As of and for the
nine months ended
September 30, 2000  Underwritten  Self-funded  Other  Eliminations  Consolidated
Revenues                $692,704      $87,205  $5,651     $(3,690)     $781,870
Operating income           6,256       28,844   2,006                    37,106
Investment income, net    12,770        1,139                            13,909
Depreciation and
  amortization expense     8,989        4,246   2,088                    15,323

9. Unaudited pro forma financial information

In accordance with Accounting Principles Board Opinion 16, "Business
Combinations," the following unaudited pro forma summary for the
third quarter and first nine months of 2000 presents revenues,
operating income, net income and per share data of RightCHOICE as if
the Reorganization had occurred as of the beginning of the year.
The pro forma information includes the results of operations of
BCBSMo combined with Old RightCHOICE.  In addition, results include
amortization of intangible assets resulting from the Reorganization,
additional premium tax expense for the underwritten business of
BCBSMo that was not previously subject to premium tax, foregone
interest on the cash that was paid to the Foundation, and the
related income tax effects of such adjustments.  In addition, the
results below exclude approximately $0.7 million and $1.0 million of
costs (before tax) incurred in the third quarter and first nine
months of 2000, respectively, for legal, consulting, and other fees
resulting directly from the Reorganization, along with the related
tax effects of such costs.  The charge for the minority
stockholders' interest in Old RightCHOICE has been excluded because
the information below assumes the Reorganization took place at the
beginning of the year.  The pro forma financial information is
presented for informational purposes only and may not be indicative
of the results of operations as they would have been if BCBSMo and
Old RightCHOICE had been a single entity during the third quarter
and first nine months of 2000, nor is it indicative of the results
of operations which may occur in the future.  Pro forma basic
earnings per share is calculated based on approximately 18.6 million
shares for the third quarter of 2000 and the first nine months of
2000.  Pro forma diluted earnings per share is calculated based on
approximately 19.1 million and 19.0 million shares for the third
quarter and first nine months of 2000, respectively.  Actual results
for the third quarter and first nine months of 2001 are included for
comparative purposes.

(unaudited)                 Three months ended            Nine months ended
                               September 30,                September 30,
                              2001       2000              2001       2000
                            (actual)  (pro forma)        (actual)  (pro forma)
Revenues                    $300,172     $272,072        $870,136     $781,870
Operating income              23,138       13,044          61,742       35,944
Net income                    21,073       10,140          49,287       28,754
Basic earnings per share       $1.08        $0.54           $2.57        $1.54
Diluted earnings per share     $1.05        $0.53           $2.51        $1.52

10. Stock offering

On May 7, 2001, the Foundation and the company completed a sale of
4,000,000 shares of common stock of the company.  Of the total,
3,250,000 shares were sold by the Foundation.  RightCHOICE did not
receive any proceeds from this sale of shares by the Foundation.
The company sold 750,000 shares of RightCHOICE common stock which
resulted in net proceeds to the company of approximately $26.5
million after deducting the underwriting discounts and commissions
and other expenses.  The proceeds of the sale of these shares were
used primarily to repay the remaining $24.1 million of borrowed
funds outstanding under the company's credit facility.  Upon
repayment of these borrowings on May 7, 2001, the company's credit
facility was terminated.  The remaining net proceeds from the
company's stock sale will be used for capital expenditures and other
general corporate purposes.  On May 10, 2001, the Foundation sold an
additional 600,000 shares pursuant to the underwriters' over-
allotment option.  RightCHOICE did not receive any proceeds from
this sale of shares by the Foundation.  After these sales, the
Foundation owned approximately 11.1 million shares, or approximately
57% of the company's outstanding common stock as of November 1,
2001.  A voting trust holds approximately 92% of the Foundation's
shares as of November 1, 2001.

11. Subsequent event

On October 17, 2001, RightCHOICE entered into a merger agreement
with WellPoint Health Networks Inc. (WellPoint) and RWP Acquisition
Corp., a wholly-owned subsidiary of WellPoint.  Under the merger
agreement, RightCHOICE will merge into RWP Acquisition Corp. with
RWP Acquisition Corp. surviving as a wholly-owned subsidiary of
WellPoint under the name RightCHOICE Managed Care, Inc.  The
consideration to be received by the stockholders of RightCHOICE in
the merger for each of their shares of RightCHOICE common stock will
be either (i) WellPoint common stock at a fixed exchange ratio of
0.6161 shares of WellPoint common stock or (ii) at the election of
the RightCHOICE stockholder, $66.00 cash.  RightCHOICE stockholders
will be able to elect to receive cash for any or all shares of
RightCHOICE common stock held by such holder, subject to a
prorationing mechanism so that 30 percent of the outstanding shares
of RightCHOICE common stock will be converted into cash and
70 percent of the outstanding shares of RightCHOICE common stock will
be converted into WellPoint common stock.  In addition, WellPoint will assume
all options to purchase common stock of RightCHOICE outstanding under
RightCHOICE's existing stock option plans, each option that is unvested at the
effective time of the merger will become vested and exercisable at the
effective time of the merger, and all options will become exercisable for
shares of WellPoint common stock rather than shares of RightCHOICE common
stock, in a number and at an exercise price adjusted to reflect the exchange
ratio in the merger.

Consummation of the merger is subject to approval of the
stockholders of RightCHOICE, receipt of approvals under applicable
insurance and anti-trust laws, approval of the Blue Cross Blue
Shield Association and other customary closing conditions.  The
merger is intended to be a tax-free reorganization under Section
368(a) of the Internal Revenue Code and will be accounted for under
the purchase method of accounting.  WellPoint and RightCHOICE
currently expect the transaction to close in the first quarter of
2002.

Concurrently with the execution of the merger agreement, The
Missouri Foundation For Health, RightCHOICE's largest stockholder
owning approximately 57% of the outstanding shares of RightCHOICE
stock, and WellPoint entered into a voting and lockup agreement.
Under the voting and lockup agreement, the Foundation agreed among
other things to vote all of its shares of RightCHOICE stock in favor
of the merger unless the merger agreement is terminated or is
amended in any manner materially adverse to the Foundation without
its consent or unless, at the time of the RightCHOICE stockholders'
meeting to vote on the merger, any event has occurred that has had
or would reasonably be expected to have a material adverse effect on
WellPoint.

In conjunction with the execution of the voting and lockup
agreement, RightCHOICE and the Foundation entered into an agreement
under which RightCHOICE will consult with the Foundation prior to
RightCHOICE's exercise of various termination rights or the waiver
of various conditions under the merger agreement.

ITEM 2.     Management's Discussion and Analysis
            of Financial Condition and Results of Operations



The following discussion should be read in conjunction with the
consolidated financial statements and notes thereto.

Except for the historical information included herein, this Report
includes forward-looking statements that involve risks and
uncertainties.  We intend that these forward-looking statements be
covered by the safe harbor provisions for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are often accompanied in this
Report by words such as "believe," "plan," "anticipate," "project,"
"expect," "estimate," and similar expressions.  These forward-
looking statements are based on management's current expectations
and are subject to risks, uncertainties and changes in
circumstances.  These forward-looking statements are not guarantees
of future performance.  Actual results may differ materially from
the expectations described in this Report due to, among other
things, the factors detailed in our Annual Report on Form 10-K under
the caption "Factors That May Affect Future Results of Operations"
and as otherwise described in this quarterly report on Form 10-Q.
We are under no obligation, and expressly disclaim any obligation,
to update or alter these forward-looking statements whether as a
result of new information, future events or otherwise.

Results of operations

Revenues

The following table sets forth revenue (in thousands) by funding
type and product group for the three and nine month periods ended
September 30, 2001 and 2000 (unaudited):


                                    Three months ended     Nine months ended
                                       September 30,         September 30,
Underwritten premium revenue:        2001        2000       2001       2000
   PPO                             $111,524     $95,921    $326,718   $263,944
   POS                               66,028      50,715     187,570    145,380
   HMO (includes other POS)          40,742      55,718     117,264    166,369
   Medicare supplement               21,433      22,049      64,996     67,302
   Managed indemnity                    717         734       2,091      2,021
   Other specialty services          24,705      17,060      67,306     47,258
     Total premium revenue          265,149     242,197     765,945    692,274
Self-funded PPO/POS, HMO and ASO
   revenue (includes HealthLink
   and other income)                 34,258      29,372     101,730     87,635
Non-affiliated real estate rental
   income                               765         503       2,461      1,961
     Total fees and other income     35,023      29,875     104,191     89,596
     Total revenues                $300,172    $272,072    $870,136   $781,870

Operating ratios

The following table sets forth selected operating ratios.  The
medical cost ratio reflects health care services expense as a
percentage of premium revenue.  All other ratios are shown as a
percentage of total revenues:


                                    Three months ended     Nine months ended
                                       September 30,         September 30,
                                     2001        2000       2001       2000
Operating revenue ratios:
  Premium revenue                    88.3%       89.0%      88.0%      88.5%
  Self-funded fees and other income  11.4%       10.8%      11.7%      11.2%
  Non-affiliated rental income        0.3%        0.2%       0.3%       0.3%
                                    100.0%      100.0%     100.0%     100.0%

Operating ratios:
  Medical cost ratio                 80.2%       81.9%      80.5%      82.0%
  Commission expense ratio            3.8%        3.4%       3.7%       3.5%
  General and administrative expense
     ratio                           17.7%       18.9%      18.3%      19.1%
  Adjusted general and administrative
     expense ratio (excludes
     depreciation and amortization)  15.8%       17.0%      16.4%      17.2%
  Underwritten general and
     administrative expense ratio    12.3%       13.1%      12.8%      13.2%

Membership

The following table sets forth the number of members by funding type
and product group:


                                                                   %
                                         September 30,         Increase/
                                         2001       2000      (Decrease)
Underwritten:
  PPO                                  253,615    228,219        11.1
  POS                                  156,303    138,928        12.5
  HMO (includes other POS)              86,885    127,722       (32.0)
  Medicare supplement                   47,383     49,888        (5.0)
  Managed indemnity                      2,064      1,755        17.6
     Total underwritten membership     546,250    546,512        (0.0)

Self-funded:
  PPO/POS                               61,324     47,699        28.6
  HMO                                    5,778      7,723       (25.2)
  ASO (includes HealthLink):
     Workers' compensation             718,300    723,771        (0.8)
     Other ASO(1)                    1,493,085  1,368,024         9.1
      Total self-funded membership   2,278,487  2,147,217         6.1

      Total membership               2,824,737  2,693,729         4.9

(1)Does not include 683,325 and 411,026 additional third-party
 administrator members as of September 30, 2001 and 2000,
 respectively, that are part of The EPOCH Group, L.C. (EPOCH), a
 joint venture with Blue Cross and Blue Shield of Kansas City
 formed in December 1995.  The membership above does include
 196,997 and 167,110 members of EPOCH as of September 30, 2001 and
 2000, respectively, whose employers are primarily located in our
 Blue Cross and Blue Shield service area.  Our share of the
 earnings of EPOCH is included within the caption, "Other (expense)
 income, net" in the Consolidated Statements of Income.

COMPARISON OF 2001 RESULTS TO 2000 RESULTS

Revenues

Underwritten

Premium revenue increased $22.9 million, or 9.5%, to $265.1 million
in the third quarter of 2001 from $242.2 million in the third
quarter of 2000.  For the first nine months of 2001, premium revenue
increased $73.6 million, or 10.6%, to $765.9 million from $692.3
million in the first nine months of 2000.  As described below,
components of premium revenue were affected by shifts in product
mix, rate increases, enrollment growth, and other factors.  As a
result, such increase in premium revenue may not be indicative of
future periods.  We will continue to strive to establish premium
rates based on anticipated health care costs.  Depending on future
competition, customer acceptance of premium increases, future health
care cost trends and other factors, we cannot provide any assurances
that we will be able to price the products of our subsidiaries in
excess of health care cost trends.

PPO premium revenue, including our Illinois PPO products and Federal
Employee Program, increased approximately $15.6 million, or 16.3%,
to $111.5 million in the third quarter of 2001 from $95.9 million in
the third quarter of 2000 -- $11.6 million due to a 12.4% increase
in member months and a $4.0 million increase resulting from a 3.5%
increase in net premium rates.  For the first nine months of 2001,
PPO premium revenue increased $62.8 million, or 23.8%, to $326.7
million from $263.9 million in the first nine months of 2000 --
$41.9 million due to a 15.8% increase in member months and a $20.9
million increase resulting from a 6.9% increase in net premium
rates.  Excluding the Federal Employee Program which is described
further below, net premium rates increased 7.3% and 8.3% in the
third quarter and first nine months of 2001, respectively, as
compared to the same periods of 2000.  The term member months refers
to the cumulative number of members added together over a specific
time period.  Thus, for a quarter, member months are determined by
adding together the membership counts for all three months.  Net
premium rates increased due in part to our premium renewal rate
increases, which are affected by medical cost inflation, changes in
deductibles, the timing of group renewals throughout the year and
product mix changes.  Member months increases reflect the membership
growth in our PPO products that we began offering in Illinois under
the RightCHOICE of Illinois brand at the end of the first quarter of
1997.  Included in the number of underwritten PPO members are 28,955
PPO Illinois members as of September 30, 2001, an increase of 2,090
members from September 30, 2000.  Also, member months increased due
to an increase in large group sales partially due to the popularity
of the BlueCard(R) PPO program.  The BlueCard(R) PPO program allows our
Alliance PPO and POS members access to Blue Cross and Blue Shield
plans' providers throughout essentially all of the United States and
200 countries worldwide.

PPO premium revenue for the Federal Employee Program decreased $1.9
million, or 8.0%, to $22.7 million in the third quarter of 2001 from
$24.6 million in the third quarter of 2000.  For the first nine
months of 2001, Federal Employee Program revenue increased $3.2
million, or 4.6%, to $72.3 million from $69.1 million in the first
nine months of 2000.  Federal Employee Program revenue typically
fluctuates based on actual administrative costs incurred and claims
submitted.   The decrease in the Federal Employee Program revenue in
the third quarter of 2001 is primarily due to a reduction in related
claims costs of approximately $1.6 million as compared to the third
quarter of 2000.  The increase in Federal Employee Program revenue
for the first nine months of 2001 is primarily due to an increase in
claims costs of approximately $3.6 million as compared to the first
nine months of 2000.

POS premium revenue, which includes our AllianceChoice and
AlliancePreferred group and individual products, increased $15.3
million, or 30.2%, to $66.0 million for the third quarter of 2001
from $50.7 million for the third quarter of 2000 --  $8.2 million of
the increase due to a 16.3% increase in net premium rates and $7.1
million of the increase resulting from an 11.9% increase in member
months.  For the first nine months of 2001, POS premium revenue
increased $42.2 million, or 29.0%, to $187.6 million from $145.4
million in the first nine months of 2000 -- $23.5 million of the
increase due to a 16.4% increase in net premium rates and $18.7
million of the increase resulting from a 10.9% increase in member
months.  Net premium rates increased due in part to premium renewal
rate increases which are affected by medical cost inflation, changes
in deductibles, the timing of group renewals throughout the year and
product mix changes.  Member months increased in part due to the
popularity of the aforementioned BlueCard(R) PPO program.  In addition,
we began offering our AlliancePreferred POS products in January
2001.  AlliancePreferred POS offers the same benefits and service
area as AllianceChoice POS, but with a complementary network of
providers.  We had approximately 3,300 members enrolled in
AlliancePreferred POS as of September 30, 2001.

HMO (including other POS) premium revenue decreased $15.0 million,
or 26.9%, to $40.7 million in the third quarter of 2001 from $55.7
million in the third quarter of 2000 primarily due to the planned
and intentional termination, effective December 31, 2000, of our
participation in the Missouri Consolidated Health Care Plan (MCHCP)
and Blue Horizons Medicare HMO.  Excluding these two programs,
premium revenue increased approximately $6.3 million, or 18.5%, to
$40.7 million in the third quarter of 2001 from $34.4 million in the
third quarter of 2000 -- $2.4 million due to a 3.5% increase in
member months and $3.9 million due to a 14.4% increase in net
premium rates.  For the first nine months of 2001, excluding these
two programs, premium revenue increased approximately $15.5 million,
or 15.2%, to $117.3 million from $101.8 million in the first nine
months of 2000 -- $5.6 million due to a 3.8% increase in member
months and $9.9 million due to an 11.1% increase in net premium
rates.  Membership in underwritten HMO (and other POS) products
declined by 40,837 members from September 30, 2000 to September 30,
2001.  However, excluding the two aforementioned terminated
programs, membership increased by 3,386 members over this same time
period.

Medicare supplement premium revenue decreased by $0.6 million, or
2.8%, to $21.4 million in the third quarter of 2001 from $22.0
million in the third quarter of 2000 -- $1.2 million of the decrease
resulting from a 5.3% decrease in member months, partially offset by
a $0.6 million increase due to a 2.7% increase in net premium rates.
For the first nine months of 2001, Medicare supplement premium
revenue decreased approximately $2.3 million, or 3.4%, to $65.0
million from $67.3 million for the first nine months of 2000 -- $4.4
million of the decrease resulting from a 6.3% decrease in member
months, partially offset by a $2.1 million increase due to a 3.0%
increase in net premium rates.

Membership in our Medicare supplement products has decreased in part
due to subscribers opting for competitors' Medicare-risk HMO
programs in which medical benefits are at least as comprehensive as
benefits for persons eligible to receive benefits under a Medicare
supplement program.  These Medicare-risk HMO programs have
historically been offered at either no additional cost to the member
or at a lower cost than our Medicare supplement products.

Managed indemnity premium revenue was $0.7 million for both the
third quarter of 2001 and the third quarter of 2000.  For the first
nine months of 2001, managed indemnity premium revenue increased
slightly to $2.1 million from $2.0 million in the first nine months
of 2000.

Other specialty services premium revenue, which is derived from our
PPO and POS group pharmacy plans as well as all of our group dental
benefit plans, increased $7.6 million, or 44.8%, to $24.7 million in
the third quarter of 2001 from $17.1 million in the third quarter of
2000 -- $2.9 million due to an 11.4% increase in member months and
$4.7 million resulting from a 30.0% increase in net premium rates.
For the first nine months of 2001, other specialty services premium
revenue increased $20.0 million, or 42.4%, to $67.3 million from
$47.3 million in the first nine months of 2000 -- $9.0 million of
the increase as a result of a 13.4% increase in member months and
$11.0 million resulting from a 25.5% increase in net premium rates.
Specialty product membership related to our pharmacy products
increased during this period as a result of growth in our PPO and
POS group underwritten membership.  The increase in membership for
pharmacy products was offset slightly by decreases in our dental
product member months, which decreased by 15.9% in the third quarter
of 2001 as compared to the third quarter of 2000 and 15.5% in the
first nine months of 2001 as compared to the first nine months of
2000, due to competition from dental products that have lower
premiums than our dental product.  We do not separately report
membership related to other specialty services in our total
underwritten membership because these members are already counted as
members of our other underwritten products.  The increases in net
premium rates primarily relates to our pharmacy products and
corresponds to the high levels of prescription utilization and
trends that our company, as well as the industry as a whole, have
experienced in recent years.

Self-funded

Fees and other income from administrative services only, self-funded
network services and life insurance commission revenues increased
$4.9 million, or 16.6%, to $34.3 million in the third quarter of
2001 from $29.4 million in the third quarter of 2000.  For the first
nine months of 2001, fees and other income increased $14.1 million,
or 16.1%, to $101.7 million from $87.6 million in the first nine
months of 2000.  These increases are partially due to increased
revenues from HealthLink, Inc. (HealthLink), our network rental and
managed care service subsidiary, of $2.3 million and $6.0 million
for the third quarter and first nine months of 2001, respectively,
as compared to the same periods of 2000.  HealthLink's increase in
revenues was partially due to membership growth as well as rate
increases in HealthLink's managed health care and workers'
compensation programs, which together resulted in an increase in
fees earned from providers and payors.  Our BlueCard(R) PPO and
National Account ASO revenues increased by $1.1 million and $3.4
million in the third quarter and first nine months of 2001,
respectively, as compared to the same periods of 2000 primarily due
to member month increases of 27.0% and 23.9% in the third quarter
and first nine months of 2001, respectively, as compared to the same
periods of 2000.  In addition, our self-funded PPO/POS and PPO
network rental revenues (non-HealthLink) increased by $1.3 million
and $4.4 million in the third quarter and first nine months of 2001,
respectively, as compared to the same periods of 2000 due in part to
rate and product mix changes as well as an increase in member months
of 2.6% in the first nine months of 2001 as compared to the first
nine months of 2000.

Other income

Rental income related to non-affiliated tenants increased to $0.8
million and $2.5 million in the third quarter and first nine months
of 2001, respectively, from $0.5 million and $2.0 million in the
same periods of 2000.

Operating expenses

Our medical cost ratio decreased to 80.2% in the third quarter of
2001 from 81.9% in the third quarter of 2000.  Our medical cost
ratio decreased to 80.5% in the first nine months of 2001 from 82.0%
in the first nine months of 2000.  The medical cost ratio represents
health care services expense divided by premium revenue.  The
medical cost ratios in 2001 are lower compared to the ratios in 2000
due in part to our pricing strategy, which resulted in an overall
increase in the premium per member per month of approximately 9.5%
and 10.0% in the third quarter and first nine months of 2001,
respectively, as compared to the same periods of 2000.  The medical
expense on a per member per month basis increased by approximately
7.2% and 7.9% in the third quarter and first nine months of 2001,
respectively, as compared to the same periods of 2000.  Inclusive in
the medical expense on a per member per month basis in 2001 is a
pharmacy cost trend increase in the mid twenty percent range which
was driven by a combination of factors, including introduction of
new drug therapies, physicians' use of newer, more expensive drugs,
and greater utilization of drugs driven in part by direct-to-
consumer advertising.  Approximately 96% of our underwritten members
with a pharmacy benefit participate in a three-tier copayment
program that encourages members and physicians to use the most cost-
effective drugs in a drug class.  We manage our medical costs
through a variety of medical management programs.

Commission expense increased by approximately $2.1 million, or
23.3%, to $11.3 million in the third quarter of 2001 from $9.2
million in the third quarter of 2000.  For the first nine months of
2001, commission expense increased by $5.4 million, or 20.0%, to
$32.4 million from $27.0 million in the first nine months of 2000.
The commission expense ratio increased to 3.8% and 3.7% for the
third quarter and first nine months of 2001, respectively, from 3.4%
and 3.5% in the third quarter and first nine months of 2000,
respectively.  This ratio represents commission expense divided by
total revenues.  The increase in commission expense in the third
quarter and first nine months of 2001 is primarily due to an
increase in overall premium and membership as compared to the same
periods of 2000.  In addition, the increase in the commission
expense ratio is partially due to the aforementioned termination of
MCHCP.  MCHCP premium revenue, which was not subject to commission
expense, was $14.9 million and $44.3 million in the third quarter
and first nine months of 2000, respectively.

General and administrative expenses, excluding depreciation and
amortization, increased $1.2 million, or 2.4%, to $47.5 million in
the third quarter of 2001 from $46.3 million in the third quarter of
2000.  For the first nine months of 2001, general and administrative
expenses, excluding depreciation and amortization, increased $8.1
million, or 6.0%, to $142.5 million from $134.4 million in the first
nine months of 2000.  The increase in these expenses is partially
attributable to HealthLink's member expansion efforts, which
resulted in increased HealthLink expenses of $0.8 million and $2.1
million in the third quarter and first nine months of 2001,
respectively, as compared to the same periods of 2000.  The increase
in general and administrative expenses is also attributable to an
increase of $1.0 million and $2.2 million in corporate initiative
expenses for corporate projects in the third quarter and first nine
months of 2001, respectively, as compared to the same periods in
2000.  These corporate projects include our efforts to comply with
the Health Insurance Portability and Accountability Act (HIPAA), our
software migration to Facets, a newer client server software package
to handle our primary transaction functions, internet development,
and various other corporate projects.

Our adjusted general and administrative expense ratio decreased to
15.8% and 16.4% in the third quarter and first nine months of 2001,
respectively, from 17.0% and 17.2% in the same periods of 2000.  The
ratio represents general and administrative expenses, excluding
depreciation and amortization, divided by total revenues.  The
decrease reflects our continued focus on cost containment and
increased economies of scale associated with membership and revenue
growth during 2001.

Depreciation and amortization expenses increased to $5.6 million in
the third quarter of 2001 from $5.1 million in the third quarter of
2000.  For the first nine months of 2001, depreciation and
amortization expenses increased to $16.9 million from $15.3 million
in the first nine months of 2000.  During the third quarter and
first nine months of 2001, we amortized $0.4 million and $1.2
million, respectively, of the goodwill and intangible assets
resulting from our Reorganization on November 30, 2000, as described
in Note 2, "Organization," in the Notes to Consolidated Financial
Statements.  In addition, amortization expenses for the completed
components of the company's information and operations strategy
project increased by $0.1 million and $0.5 million in the third
quarter and first nine months of 2001, respectively, as compared to
the same periods in 2000.

Operating expenses for our underwritten segment include health care
service costs, commissions, and general and administrative expenses
attributable to that segment's operations.  Operating expenses for
the self-funded segment include commissions and general and
administrative expenses attributable to that segment.  Operating
expenses for the other segment include general and administrative
expenses primarily related to our real estate activities.  Operating
expenses for the underwritten segment increased $17.3 million to
$256.4 million in the third quarter of 2001 from $239.1 million in
the third quarter of 2000 primarily due to an increase in health
care service costs of $14.3 million.  For the first nine months of
2001, operating expenses for the underwritten segment increased
$60.2 million to $746.6 million from $686.4 million in the first
nine months of 2000 due primarily to an increase in health care
service costs of $48.6 million.  Health care service costs increased
due primarily to an increase in our per member claims costs, as
previously described.  General and administrative and commission
expenses also increased by $0.9 million and $2.1 million,
respectively, in the third quarter of 2001 as compared to the third
quarter of 2000.  For the first nine months of 2001, general and
administrative and commission expenses increased by $6.2 million and
$5.4 million, respectively, as compared to the first nine months of
2000.  These increases were partially attributable to an increase in
corporate initiative expenses in the third quarter and first nine
months of 2001.  As previously noted, the commission expense
increased due to increased premiums as well as the impact of gaining
new underwritten membership that is subject to commission expense
while terminating the MCHCP membership that was not subject to
commission expense.

Operating expenses for the self-funded segment increased
$0.9 million to $20.8 million in the third quarter of 2001 from
$19.9 million in the third quarter of 2000.  For the first nine
months of 2001, operating expenses increased $3.4 million to $61.8
million from $58.4 million in the first nine months of 2000.  These
increases were partially due to an increase in HealthLink's general
and administrative expenses of $0.8 million and $2.1 million in the
third quarter and first nine months of 2001, respectively, as
compared to the same periods in 2000, as previously described.  In
addition, general and administrative expenses primarily related to our Blue
Cross Blue Shield self-funded products increased $0.1 million and
$1.3 million in the third quarter and first nine months of 2001,
respectively, as compared to the same periods in 2000 due largely to
the increase in our other self-funded membership, as previously
described.

Operating expenses for the other segment increased to $1.3 million
in the third quarter of 2001 from $1.2 million in the third quarter
of 2000.  For the first nine months of 2001, operating expenses for
the other segment increased to $3.8 million from $3.6 million for
the first nine months of 2000.

Operating income

Operating income increased $10.0 million, or 76.9%, to $23.1 million
in the third quarter of 2001 from $13.1 million in the third quarter
of 2000.  For the first nine months of 2001, operating income
increased $24.6 million, or 66.4%, to $61.7 million from $37.1
million in the first nine months of 2000.  Our operating margin
increased to 7.7% in the third quarter of 2001 from 4.8% in the
third quarter of 2000.  Our operating margin increased to 7.1% in
the first nine months of 2001 from 4.7% in the first nine months of
2000.  Operating margin represents operating income divided by total
revenue.

Operating income for our underwritten segment increased $5.7 million
to $9.1 million in the third quarter of 2001 from $3.4 million in
the third quarter of 2000.  For the first nine months of 2001,
operating income for our underwritten segment increased $13.7
million to $20.0 million from $6.3 million in the first nine months
of 2000.  The improvement in 2001 as compared to 2000 was primarily
due to the improved general and administrative expense and medical
cost ratios.  Our underwritten segment's operating margin increased
to 3.4% and 2.6% in the third quarter and first nine months of 2001,
respectively, from 1.4% and 0.9% in the third quarter and first nine
months of 2000, respectively.

Operating income for our self-funded segment increased $3.9 million,
or 42.6%, to $13.1 million in the third quarter of 2001 from $9.2
million in the third quarter of 2000.  For the first nine months of
2001, operating income for our self-funded segment increased $10.5
million, or 36.1%, to $39.3 million from $28.8 million in the first
nine months of 2000.  The improvements in 2001 are due partially to
HealthLink's continued profit growth from increased revenues, as
previously described.  The increase in operating income is also due
to the increase in our other self-funded membership, as previously
described.

Operating income for the other segment increased to $0.9 million in
the third quarter of 2001 from $0.5 million in the third quarter of
2000.  For the first nine months of 2001, operating income increased
to $2.5 million from $2.0 million in the first nine months of 2000.

Net investment income

Net investment income decreased $0.1 million, or 2.9%, to $4.3
million in the third quarter of 2001 from $4.4 million in the third
quarter of 2000.  For the first nine months of 2001, net investment
income decreased by $0.3 million, or 2.0%, to $13.6 million from
$13.9 million in the first nine months of 2000.  Net investment
income includes investment income in the form of interest and
dividend income and net realized gains or losses from the sale of
portfolio securities.  Net investment income declined in 2001 as
compared to 2000 due primarily to the poor investment performance of
certain invested assets.

Other, net

Other, net expenses were $0.3 million and $0.3 million in the third
quarter of 2001 and 2000, respectively.  For the first nine months
of 2001, other, net expenses increased $0.1 million, or 6.8%, to
$1.6 million from $1.5 million in the first nine months of 2000.
Other, net includes interest expense, equity in unconsolidated
affiliates, realized gains and losses from the sale of property and
equipment, and other items.  Interest expense decreased by $0.7
million and $1.5 million in the third quarter and first nine months
of 2001, respectively, as compared to the same periods of 2000
primarily due to a reduction in the total amount of debt
outstanding.  We repaid the remaining $24.1 million of borrowed
funds outstanding under our credit facility in May 2001.  Our share
of the earnings of our unconsolidated EPOCH affiliate decreased by
$0.1 million and $0.3 million in the third quarter and first nine
months of 2001, respectively, as compared to the same periods of
2000.  In the third quarter of 2000, we recorded a gain of $0.2
million related to a principal repayment of an investment that the
company had previously written off in a prior year.  We also
realized a $0.7 million gain on the sale of our Southwest Missouri
regional office building in May 2000.  We relocated the employees
and operations to a larger leased facility within the same region.

Minority interest in consolidated subsidiary

The charge for the minority interest in the third quarter and first
nine months of 2000 relates to the public minority stockholders'
interest in the results of operations of RightCHOICE Managed Care,
Inc., a Missouri corporation (Old RightCHOICE), as further described
in Note 2, "Organization," of the Notes to Consolidated Financial
Statements.  The public minority stockholders consisted of the
holders of the 3.7 million class A common shares of Old RightCHOICE,
which represented approximately 20% of the total outstanding shares
of Old RightCHOICE prior to the Reorganization on November 30, 2000
as further described in Note 2.

Provision for income taxes

Our effective income tax provision rate was 22.5% and 39.4% for the
third quarter of 2001 and 2000, respectively.  Our effective income
tax provision rate was 33.2% and 39.6% for the first nine months of
2001 and 2000, respectively.  The provisions for income taxes for
the third quarter and first nine months of 2001 include a non-
recurring tax benefit of $4.5 million.  The tax benefit relates to
the $12.8 million cash payment to The Missouri Foundation For Health
in November 2000 as described in Note 2, "Organization," of the
Notes to Consolidated Financial Statements.  We did not record a tax
benefit for this payment in 2000 due to the lack of guidance in this area.
Subsequently, in 2001, an additional ruling was issued by the IRS that
clarified the ability to treat the payment as a tax deduction.  As a
result, the payment to the Foundation was deducted in our 2000 tax return,
which was filed in September 2001, and the benefit for this deduction was
recognized in the tax provision in the third quarter of 2001.  Excluding
this non-recurring tax benefit, the company's effective income tax provision
rate was 38.9% and 39.3% for the third quarter and first nine months of 2001,
respectively.  Our effective income tax rates for 2001 and 2000 were also
affected by non-deductible goodwill amortization, among other things.
Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," requires a valuation allowance against deferred tax assets if, based
on the weight of available evidence, it is more likely than not that some or
all of the deferred tax assets will not be realized. Based upon all the
available evidence, we believe it is more likely than not that we will
realize our deferred tax assets as of September 30, 2001, and, accordingly,
no valuation allowance has been provided against such assets as of
September 30, 2001.

Net income

Our net income for the third quarter of 2001 increased $12.5
million, or 146.3%, to $21.1 million as compared to net income of
$8.6 million for the third quarter of 2000 as a result of the
factors noted above.  Basic and diluted earnings per share for the
third quarter of 2001 were $1.08 and $1.05, respectively, compared
to basic and diluted earnings per share for the third quarter of
2000 of $0.57 and $0.55, respectively.  For the first nine months of
2001, net income increased $24.4 million, or 98.0%, to $49.3 million
from $24.9 million in the first nine months of 2000.  Basic and
diluted earnings per share for the first nine months of 2001 were
$2.57 and $2.51, respectively, compared to basic and diluted
earnings per share for the first nine months of 2000 of $1.66 and
$1.63, respectively.  The non-recurring tax benefit recorded in the
third quarter of 2001, as previously described, represented $0.22
and $0.23 of the company's diluted earnings per share for the third
quarter and first nine months of 2001, respectively.  Earnings per
share for the third quarter and first nine months of 2001 are based
upon weighted average shares outstanding of approximately 19.6
million and 19.2 million, respectively, excluding potential common
stock, and 20.0 million and 19.6 million, respectively, assuming
full dilution.  Earnings per share for the third quarter and first
nine months of 2000 are based on 15.0 million shares, excluding
potential common stock, and 15.4 million and 15.3 million shares,
respectively, assuming full dilution.  The increase in weighted
average shares outstanding in 2001 compared to 2000 primarily
relates to the effect of the Reorganization on November 30, 2000
which resulted in the issuance of 3.7 million shares as further
described in Note 2, "Organization," of the Notes to Consolidated
Financial Statements.  In addition, the company completed a sale of
common stock in May 2001 as described below under "Stock offering."
This stock offering resulted in an increase of 750,000 shares to the
company's total outstanding shares.  In addition, for weighted
average shares outstanding assuming full dilution, the increase in
2001 was primarily due to the aforementioned Reorganization and
stock offering as well as the impact of a higher stock price during
2001 as compared to 2000.

Liquidity and Capital Resources

Our working capital as of September 30, 2001 was $203.5 million, an
increase of $60.1 million from $143.4 million as of December 31,
2000.  The increase is due in part to the company's stock offering
as described below under "Stock offering" which resulted in net
proceeds to the company of approximately $26.5 million.  The company
primarily used these proceeds to repay the remaining $24.1 million
of borrowed funds outstanding under the credit facility.  In total,
during the first nine months of 2001, the company repaid $26.1
million of debt under the credit facility, of which $6.0 million was
classified as current as of December 31, 2000.  Excluding this $6.4
million positive net impact to working capital related to the credit
facility and the stock offering, our working capital increased by
$53.7 million.  This increase is partially attributable to the net
income of $49.3 million in the first nine months of 2001.
Depreciation and amortization expenses related to noncurrent assets
was $16.9 million.  We capitalized $12.6 million of costs for
property and equipment purchases, $9.6 million of which relates to
capitalized software and capitalized internally developed software.
The purchased software and internally developed software consist of
our information and operations strategy development (Facets software
migration), compliance efforts related to HIPAA, and internet
development.  In addition, we repaid $3.5 million of debt related to
our capital leases.  Our unrealized net appreciation of investments
available for sale increased (improved) by $3.2 million in the first
nine months of 2001.

Net cash provided by operations totaled $65.3 million for the first
nine months of 2001 as compared to $33.2 million for the first nine
months of 2000.  For the first nine months of 2001, our net income
was $49.3 million, which included $16.9 million of depreciation and
amortization expenses.  In addition, receivables, accounts payable
and accrued expenses, and medical claims payable were affected by
the timing of cash payments and receipts as well as changes in
membership and net premium rates and claims payments.  Receivables
increased by $6.7 million in part due to rate increases related to
the company's underwritten products, and other timing factors.  One
timing factor relates to an increase in billings for future service
periods.  This increase is directly related to the increase in
unearned premiums of $7.9 million since billings that are produced
for future service periods are recorded by the company as unearned
premium and recognized as income over the applicable service period.
Accounts payable and accrued expenses decreased by $4.8 million due
to the timing of various operating cash payments and accruals.
Medical claims payable increased by $5.3 million, due in part to an
increase in the medical expense per member per month, as previously
described, as well as other timing factors.

Proposed merger

On October 17, 2001, RightCHOICE entered into a merger agreement
with WellPoint Health Networks Inc. (WellPoint) and RWP Acquisition
Corp., a wholly-owned subsidiary of WellPoint.  Under the merger
agreement, RightCHOICE will merge into RWP Acquisition Corp. with
RWP Acquisition Corp. surviving as a wholly-owned subsidiary of
WellPoint under the name RightCHOICE Managed Care, Inc.  The
consideration to be received by the stockholders of RightCHOICE in
the merger for each of their shares of RightCHOICE common stock will
be either (i) WellPoint common stock at a fixed exchange ratio of
0.6161 shares of WellPoint common stock or (ii) at the election of
the RightCHOICE stockholder, $66.00 cash.  RightCHOICE stockholders
will be able to elect to receive cash for any or all shares of
RightCHOICE common stock held by such holder, subject to a
prorationing mechanism so that 30 percent of the outstanding shares of
RightCHOICE common stock will be converted into cash and 70 percent
of the outstanding shares of RightCHOICE common stock will be
converted into WellPoint common stock. In addition, WellPoint will assume all
options to purchase common stock of RightCHOICE outstanding under
RightCHOICE's existing stock option plans, each option that is unvested at the
effective time of the merger will become vested and exercisable at the
effective time of the merger, and all options will become exercisable for
shares of WellPoint common stock rather than shares of RightCHOICE common
stock, in a number and at an exercise price adjusted to reflect the exchange
ratio in the merger.

Consummation of the merger is subject to approval of the
stockholders of RightCHOICE, receipt of approvals under applicable
insurance and anti-trust laws, approval of the Blue Cross Blue
Shield Association and other customary closing conditions.  The
merger is intended to be a tax-free reorganization under Section
368(a) of the Internal Revenue Code and will be accounted for under
the purchase method of accounting.  WellPoint and RightCHOICE
currently expect the transaction to close in the first quarter of
2002.

Concurrently with the execution of the merger agreement, The
Missouri Foundation For Health, RightCHOICE's largest stockholder
owning approximately 57% of the outstanding shares of RightCHOICE
stock, and WellPoint entered into a voting and lockup agreement.
Under the voting and lockup agreement, the Foundation agreed, among
other things, to vote all of its shares of RightCHOICE stock in
favor of the merger unless the merger agreement is terminated or is
amended in any manner materially adverse to the Foundation without
its consent or unless, at the time of the RightCHOICE stockholders'
meeting to vote on the merger, any event has occurred that has had
or would reasonably be expected to have a material adverse effect on
WellPoint.

In conjunction with the execution of the voting and lockup
agreement, RightCHOICE and the Foundation entered into an agreement
under which RightCHOICE will consult with the Foundation prior to
RightCHOICE's exercise of various termination rights or the waiver
of various conditions under the merger agreement.

Stock offering

On May 7, 2001, the Foundation and our company completed a sale of
4,000,000 shares of our common stock.  Of the total, 3,250,000
shares were sold by the Foundation.  We did not receive any proceeds
from this sale of shares by the Foundation.  We sold 750,000 shares
of common stock which resulted in net proceeds to our company of
approximately $26.5 million after deducting the underwriting
discounts and commissions and other expenses.  The proceeds of the
sale of these shares were used primarily to repay the remaining
$24.1 million of borrowed funds outstanding under our credit
facility.  Upon repayment of these borrowings on May 7, 2001, our
credit facility was terminated.  The remaining net proceeds from our
stock sale will be used for capital expenditures and other general
corporate purposes.  On May 10, 2001, the Foundation sold an
additional 600,000 shares pursuant to the underwriters' over-
allotment option.  We did not receive any proceeds from this sale of
shares by the Foundation.  After these sales, the Foundation owned
approximately 11.1 million shares, or approximately 57% of our
outstanding common stock as of November 1, 2001.  A voting trust
holds approximately 92% of the Foundation's shares as of November 1,
2001.

Health Insurance Portability and Accountability Act of 1996

The United States Department of Health and Human Services has issued
rules, as mandated by the Health Insurance Portability and
Accountability Act of 1996, known as HIPAA, which would, among other
things, impose security and privacy requirements with respect to
individually identifiable patient data, including a member's
transactions with health care providers and payors, as well as
requirements for the standardization of certain electronic
transaction code sets and provider identifiers.  The privacy
standards were issued on December 28, 2000, and the final privacy
regulations became effective on April 14, 2001, and require
compliance by April 14, 2003.  Additional guidance with respect to
the privacy standards was issued on July 8, 2001, and additional
guidance as well as amendments to the regulation are expected before
the end of the year.  The current compliance date for the
transaction code sets is October 15, 2002.

We anticipate expending approximately $2.3 million to $2.7 million
in 2001, of which approximately $1.3 million to $1.7 million will be
capitalized, related to our efforts to comply with the electronic
transaction code sets and provider identifier standards.  In 2002,
we anticipate expending approximately $1.6 million to $2.0 million, of
which approximately $1.0 million to $1.4 million will be capitalized.  In
the first nine months of 2001, we have expended approximately $1.6
million, of which approximately $1.0 million has been capitalized.
We have not fully assessed the financial impact of the privacy
standards.  We believe, however, the additional financial impact
could be material.

Recent and proposed health care legislation

Congress and state legislatures continue to focus on issues
regarding health care.  Congress is considering various forms of
legislation, generally referred to as the Patients' Bill of Rights,
and the administration has outlined President Bush's principles for
Patients' Bill of Rights legislation. Although the legislative
proposals have significant differences, both seek to hold health
plans liable for, among other things, claims regarding health care
delivery and allegations of improper denial of care.  If Patients'
Bill of Rights legislation is passed, particularly without some
limitations on liability, it could expose us to significant
increased costs and increased risk of litigation.  There can be no
assurance that we will be able, through increases in premiums and
other fees or changes in benefits, to recoup or cover the costs
which could result from any Patients' Bill of Rights legislation or
the other costs incurred in connection with complying with any
Patients' Bill of Rights or similar legislation.

Other recent and proposed bills and regulations at federal and state
levels may impact certain aspects of our business including provider
contracting, fees paid by providers to our subsidiaries HealthLink
and HealthLink HMO, Inc. for support and administrative services,
interest payments or penalties due as a result of prompt payment
requirements for claims payments and processing, and confidentiality
of health information.  These recent laws and regulations, or
initiatives if they ultimately become binding law or regulation,
could increase our costs, decrease our revenues, expose us to
expanded liability, and require us to modify the ways in which we
conduct business.

Contingencies

See the description under the same caption in Note 3 of the Notes to
Consolidated Financial Statements of Item I, which is incorporated
herein by reference.

Financial Outlook

From time to time in press releases and otherwise, we may publish
forecasts, projections, outlooks or other forward-looking statements
regarding our future results, including estimated revenues or net
earnings.  Any forecasts of our future performance reflect various
assumptions.  These assumptions are subject to significant
uncertainties, and as a matter of course, any number of them may
prove to be incorrect.  Further, the achievement of any forecast or
projection depends upon numerous risks and other facts, many of
which are beyond our control.  As a result, our performance may not
be consistent with any management forecast or projection and the
variation from such forecast or projection could be material and
adverse.  Current and potential stockholders are cautioned not to
base their entire analysis of our business and prospects upon
isolated predictions, but instead are encouraged to utilize our
entire publicly available mix of historical and forward-looking
information, as well as other available information affecting us and
our services, when evaluating our prospective results of operations.

Recently issued accounting standards

See the description under the same caption in Note 4 of the Notes to
Consolidated Financial Statements of Item I, which is incorporated
herein by reference.

ITEM 3.     Quantitative and Qualitative Disclosures about Market Risks

There have been no material changes in market risk exposures that
affect the quantitative and qualitative disclosures presented in our
annual report on Form 10-K for the year ended December 31, 2000.

PART II.  OTHER INFORMATION

ITEM 1.     Legal Proceedings

Note 3, "Contingencies," of Part I, Item 1, contains a description
of various pending and threatened claims involving the company and
its affiliates and is incorporated herein by reference.  See the
description of this litigation under the headings "Litigation
relating to corporate status of Blue Cross and Blue Shield of
Missouri" and "Subscriber and Provider Class Actions."

ITEM 2.     Changes in Securities and Use of Proceeds

             None.

ITEM 3.     Defaults Upon Senior Securities

             None.

ITEM 4.     Submission of Matters to a Vote of Security Holders

             None.

ITEM 5.     Other Information

             None.

ITEM 6.     Exhibits and Reports on Form 8-K

     a) Exhibits:

Exhibit
Number       Exhibit

The following exhibits are submitted herewith:

10.1          Summary of Approved Changes to the Blue Cross and Blue Shield
              Primary License Agreements.

10.2          Summary of Approved Changes to the Blue Cross and Blue Shield
              Controlled Affiliate License Agreements.

              b)      Reports on Form 8-K:

              The company filed a report with the Securities and
              Exchange Commission on Form 8-K on October 23, 2001,
              regarding the merger agreement by and among WellPoint
              Health Networks Inc., RWP Acquisition Corp., and the
              Registrant.

                             SIGNATURES











Pursuant  to the requirements of the Securities Exchange  Act  of
1934, the registrant has duly caused this report to be signed  on
its behalf by the undersigned thereunto duly authorized.



                               RIGHTCHOICE MANAGED CARE, INC.
                               Registrant


Date:  November 9, 2001               By:  /s/ Sandra Van Trease
                                           Sandra A. Van Trease
                                           President and Chief Operating Officer

Date:  November 9, 2001               By:  /s/ Stuart K. Campbell
                                           Stuart K. Campbell
                                           Senior Vice President
                                           and Chief Financial Officer