<PAGE>

                                   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 MARCH 31, 1998

                                         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  001-13803

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

                DELAWARE                                  95-4635504
     (State or other jurisdiction of           (IRS Employer Identification No.)
     incorporation or organization)


  21555 OXNARD STREET, WOODLAND HILLS, CALIFORNIA           91367
     (Address of principal executive offices)             (Zip Code)


     Registrant's telephone number, including area code     (8l8) 703-4000

                                    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 MAY 13, 1998
           -------------------                 ---------------------------
      Common Stock, $0.0l par value                70,108,086    shares
                                                 ---------------

                                       1


<PAGE>

                           WELLPOINT HEALTH NETWORKS INC.
                            FIRST QUARTER 1998 FORM 10-Q
                                 TABLE OF CONTENTS


<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                 
                                                                           PAGE

  <S>                                                                      <C>
    ITEM 1.    Financial Statements

               Consolidated Balance Sheets as of March 31, 1998 and
                    December 31, 1997....................................... 1

               Consolidated Income Statements for the Three Months
                    Ended March 31, 1998 and 1997........................... 2

               Consolidated Statement of Changes in Stockholders' Equity
                    for the Three Months Ended March 31, 1998............... 3

               Consolidated Statements of Cash Flows for the
                    Three Months Ended March 31, 1998 and 1997.............. 4

               Notes to Consolidated Financial Statements................... 5

    ITEM 2.    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations........... 9

PART II.  OTHER INFORMATION

    ITEM 6.    Exhibits and Reports on Form 8-K............................ 22

SIGNATURES   .............................................................. 23

</TABLE>

                                       2
<PAGE>

ITEM 1.   FINANCIAL STATEMENTS

                           WELLPOINT HEALTH NETWORKS INC.
                            Consolidated Balance Sheets

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT SHARE DATA)                                      March 31,    December 31,
                                                                         1998           1997
                                                                      -----------   ------------
                                                                      (unaudited)
<S>                                                                 <C>            <C>
ASSETS   
Current Assets:
   Cash and cash equivalents                                          $  230,946     $  283,851
   Investment securities, at market value                              2,595,826      2,552,775
   Receivables, net                                                      634,529        537,454
   Deferred tax assets                                                    72,879         79,733
   Other current assets                                                   60,763         52,004
                                                                      -----------   ------------
      Total Current Assets                                             3,594,943      3,505,817
Property and equipment, net                                              117,411        115,193
Intangible assets                                                        716,897        698,507
Long-term investments                                                    102,908        102,819
Deferred tax assets                                                       62,472         62,487
Other non-current assets                                                  47,727         48,592
                                                                      -----------   ------------
         Total Assets                                                 $4,642,358     $4,533,415
                                                                      -----------   ------------
                                                                      -----------   ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Medical claims payable                                             $  980,833     $  922,658
   Loss and loss adjustment expense reserves                             121,373        115,325
   Reserves for future policy benefits                                    52,487         51,189
   Unearned premiums                                                     217,076        210,337
   Accounts payable and accrued expenses                                 341,846        372,441
   Experience rated and other refunds                                    246,891        255,625
   Income taxes payable                                                  145,566        107,018
   Other current liabilities                                             336,888        309,712
                                                                      -----------   ------------
      Total Current Liabilities                                        2,442,960      2,344,305
Accrued postretirement benefits                                           65,177         63,891
Loss and loss adjustment expense reserves, non-current                   136,641        134,933
Reserves for future policy benefits, non-current                         334,297        332,033
Long-term debt                                                           313,000        388,000
Other non-current liabilities                                             46,358         47,084
                                                                      -----------   ------------
      Total Liabilities                                                3,338,433      3,310,246
Stockholders' Equity:
   Preferred stock - $0.01 par value, 50,000,000 shares
      authorized, none issued and outstanding                                  -              -
   Common stock - $0.01 par value, 300,000,000 shares
      authorized, 70,062,031 and 69,778,086 issued
      at March 31, 1998 and December 31, 1997, respectively                  701            698
   Treasury stock, at cost, 5,927 and 4,571 shares at
      March 31, 1998 and December 31, 1997, respectively                    (143)          (103)
   Additional paid-in capital                                            894,740        882,312
   Retained earnings                                                     403,832        345,318
   Accumulated other comprehensive income                                  4,795         (5,056)
                                                                      -----------   ------------
      Total Stockholders' Equity                                       1,303,925      1,223,169
                                                                      -----------   ------------
         Total Liabilities and Stockholders' Equity                 $  4,642,358   $  4,533,415
                                                                      -----------   ------------
                                                                      -----------   ------------
</TABLE>

        See the accompanying notes to the consolidated financial statements.


                                         1
<PAGE>

                           WELLPOINT HEALTH NETWORKS INC.
                           Consolidated Income Statements
                                    (unaudited)

<TABLE>
<CAPTION>

(IN THOUSANDS, EXCEPT EARNINGS PER SHARE)                           Three Months Ended March 31,
                                                                    ---------------------------
                                                                        1998           1997
                                                                    ------------   ------------
<S>                                                               <C>            <C>
Revenues:
   Premium revenue                                                  $  1,464,537   $  1,168,838
   Management services revenue                                           115,243         62,445
   Investment income                                                      44,713         40,349
                                                                    ------------   ------------
                                                                       1,624,493      1,271,632
Operating Expenses:
   Health care services and other benefits                             1,191,458        920,872
   Selling expense                                                        70,190         59,770
   General and administrative expense                                    250,139        180,567
   Nonrecurring costs                                                          -          6,507
                                                                    ------------   ------------
                                                                       1,511,787      1,167,716
                                                                    ------------   ------------
Operating Income                                                         112,706        103,916
   Interest expense                                                        7,324         10,768
   Other expense, net                                                      7,017          7,869
                                                                    ------------   ------------

Income before Provision for Income Taxes                                  98,365         85,279
   Provision for income taxes                                             39,851         34,524
                                                                    ------------   ------------
Net Income                                                             $  58,514      $  50,755
                                                                    ------------   ------------
                                                                    ------------   ------------


Earnings Per Share                                                       $  0.84        $  0.76
                                                                    ------------   ------------
                                                                    ------------   ------------

Earnings Per Share Assuming Full Dilution                                $  0.83        $  0.76
                                                                    ------------   ------------
                                                                    ------------   ------------

</TABLE>

        See the accompanying notes to the consolidated financial statements.


                                         2
<PAGE>
                                                                      
                                    WELLPOINT HEALTH NETWORKS INC.
                       Consolidated Statement of Changes in Stockholders' Equity
                                             (unaudited)

<TABLE>
<CAPTION>

(In thousands)

                                                         Common Stock              
                                                -----------------------------                           Accumulated  
                                                    Issued        In Treasury   Additional                 Other
                                     Preferred  ---------------   -----------    Paid - in   Retained   Comprehensive
                                       Stock    Shares   Amount     Amount        Capital    Earnings      Income          Total
                                     ---------  ------   ------   -----------   ----------   --------   -------------   -----------
<S>                                   <C>     <C>      <C>      <C>           <C>          <C>        <C>             <C>
Balance as of December 31, 1997         $ -     69,778   $  698   $     (103)   $  882,312   $345,318   $     (5,056)   $ 1,223,169

Comprehensive income                                             
    Net income                                                                                 58,514                        58,514
    Other comprehensive income, 
     net of tax                       
       Change in unrealized valuation                           
        adjustment on investment 
        securities, net of 
        reclassification adjustment 
        (see Note 4)                                                                                           9,851          9,851
                                                                                             --------   -------------   -----------
Total comprehensive income                                                                     58,514          9,851         68,365
                                                                                             --------   -------------   -----------

Stock repurchased, 1,356 shares at cost                                  (40)                                                  (40)

Stock issued under Company's stock 
 option / award plan                               284        3                     12,428                                   12,431
                                       -----    ------   ------   -----------   ----------   --------   -------------   -----------
Balance as of March 31, 1998            $ -     70,062   $  701   $     (143)   $  894,740   $403,832   $      4,795   $  1,303,925
                                       -----    ------   ------   -----------   ----------   --------   -------------   -----------
                                       -----    ------   ------   -----------   ----------   --------   -------------   -----------
</TABLE>

   See the accompanying notes to the consolidated financial statements.


                                       3
<PAGE>

                           WELLPOINT HEALTH NETWORKS INC.
                       Consolidated Statements of Cash Flows
                                    (unaudited)
                                          

<TABLE>
<CAPTION>

(IN THOUSANDS)                                                 Three Months Ended March 31,
                                                               ---------------------------
                                                                  1998             1997
                                                               ----------       ----------
<S>                                                          <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                   $  58,514        $  50,755
  Adjustments to reconcile net income to net cash                             
    provided by operating activities:                                         
     Depreciation and amortization, net of accretion              16,158           12,805
     Gains on sales of assets, net                                (4,128)          (6,289)
     Provision (benefit) for deferred income taxes                    45             (566)
     Amortization of deferred gain on sale of building            (1,106)          (1,106)
     (Increase) decrease in certain assets:                                   
        Receivables, net                                         (97,075)         (16,072)
        Other current assets                                      (8,759)           1,007
        Other non-current assets                                     865             (215)
     Increase (decrease) in certain liabilities:                              
        Medical claims payable                                    58,175           23,603
        Loss and loss adjustment expense reserves                  7,756            9,776
        Reserves for future policy benefits                        3,562          (12,106)
        Unearned premiums                                          6,739            7,313
        Accounts payable and accrued expenses                    (30,595)          17,039
        Experience rated and other refunds                        (8,734)          (2,018)
        Income taxes payable and other current liabilities        41,676          108,303
        Accrued postretirement benefits                            1,286            1,103
        Other non-current liabilities                                380            9,045
                                                               ----------       ----------
            Net cash provided by operating activities             44,759          202,377
                                                               ----------       ----------
CASH FLOWS FROM INVESTING ACTIVITIES:                                         
  Investments purchased                                         (556,069)      (1,295,324)
  Proceeds from investments sold and matured                     532,730        1,051,912
  Property and equipment purchased, net                          (11,716)         (10,296)
  Additional investment in subsidiaries                                -          (18,683)
  Purchase of subsidiaries, net of cash acquired                       -          361,977
                                                               ----------       ----------
            Net cash provided by (used in) investing                          
              activities                                         (35,055)          89,586
                                                               ----------       ----------
CASH FLOWS FROM FINANCING ACTIVITIES:                                         
   Proceeds from long-term debt                                        -          150,000
   Repayment of long-term debt                                   (75,000)        (181,000)
   Proceeds from issuance of common stock                         12,431            3,065
   Common stock repurchased                                          (40)               -
                                                               ----------       ----------
            Net cash used in financing activities                (62,609)         (27,935)
                                                               ----------       ----------
Net increase (decrease) in cash and cash equivalents             (52,905)         264,028
Cash and cash equivalents at beginning of period                 283,851          313,256
                                                               ----------       ----------
Cash and cash equivalents at end of period                    $  230,946       $  577,284
                                                               ----------       ----------
                                                               ----------       ----------

</TABLE>

        See the accompanying notes to the consolidated financial statements.


                                         4
<PAGE>

                           WellPoint Health Networks Inc.
                     Notes to Consolidated Financial Statements
                                    (unaudited)


1.   ORGANIZATION

     WellPoint Health Networks Inc. (the "Company" or "WellPoint"), one of the 
     nation's largest publicly traded managed health care companies, is 
     organized under the laws of Delaware and holds the exclusive license for
     the right to use the Blue Cross name and related service marks in 
     California.  The Company has medical members in all 50 states and the 
     District of Columbia.

     The Company offers a broad spectrum of quality network-based health plans, 
     including health maintenance organizations ("HMOs"), preferred provider 
     organizations ("PPOs"), point-of-service ("POS") plans, other hybrid plans 
     and traditional indemnity products to large and small employers, 
     individuals and seniors.  The Company's managed care plans incorporate a 
     full range of financial incentives and cost controls for both members and 
     providers.  In addition, the Company provides underwriting, actuarial 
     services, network access, medical cost management, claims processing and 
     administrative services to self-funded employers under management services 
     contracts. The Company also provides a broad array of specialty and other 
     products, including pharmacy, dental, utilization management, life, 
     integrated workers' compensation, preventive care, disability, behavioral 
     health, COBRA and flexible benefits account administration.

2.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of WellPoint, 
     in the opinion of management, reflect all material adjustments (which are 
     of a normal recurring nature) necessary for the fair presentation of its 
     financial position as of  March 31, 1998, the results of its operations 
     for the quarter ended March 31, 1998 and 1997, cash flows for the quarter 
     ended March 31, 1998 and 1997, and its changes in stockholders' equity for 
     the quarter ended March 31, 1998.  The results of operations for the 
     interim periods presented are not necessarily indicative of the operating 
     results for the full year. 

     Effective January 1, 1998, the Company adopted the provisions of Statement 
     of Financial Accounting Standards No. 130, "Comprehensive Income" ("SFAS 
     No. 130"). Comprehensive income encompasses all changes in stockholders' 
     equity (except those arising from transactions with shareholders) and 
     includes net income and net unrealized gains or losses on 
     available-for-sale securities.  Comprehensive income is net of 
     reclassification adjustments to adjust for items previously included in 
     net income, such as realized gains on investment securities.
          
     RECLASSIFICATIONS
     
     Certain amounts in the prior year consolidated financial statements have 
     been reclassified to conform to the 1998 presentation.


                                       5
<PAGE>

                           WellPoint Health Networks Inc.
                     Notes to Consolidated Financial Statements
                                    (unaudited)


3.   EARNINGS PER SHARE

     The following summarizes the dilutive effect of the Company's common stock 
     equivalents on earnings per share.  There were no antidilutive securities 
     in either of the periods presented.

<TABLE>
<CAPTION>

             (In thousands, except earnings per share)              Three Months Ended March 31,
                                                                    ----------------------------
                                                                        1998            1997
                                                                    ------------    ------------
     <S>                                                          <C>             <C>
     Net Income                                                     $     58,514    $     50,755
                                                                    ------------    ------------
                                                                    ------------    ------------
                                                                
     Weighted average shares outstanding                                  69,875          66,544
     Net effect of dilutive stock options                                  1,033             -  
                                                                    ------------    ------------
     Fully diluted weighted average shares outstanding                    70,908          66,544
                                                                    ------------    ------------
                                                                    ------------    ------------
                                                                                    
     Earnings Per Share                                             $       0.84    $       0.76
                                                                    ------------    ------------
                                                                    ------------    ------------
     Earnings Per Share Assuming Full Dilution                      $       0.83    $       0.76
                                                                    ------------    ------------
                                                                    ------------    ------------

</TABLE>

4.   COMPREHENSIVE INCOME

         The following summarizes comprehensive income reclassification 
     adjustments required under SFAS No. 130.

<TABLE>
<CAPTION>
                                                                               Three
                                                                            Months Ended
                                                                           March 31, 1998
     (In thousands)                                                        --------------
     <S>                                                                  <C>
     Holding gain on investment securities arising during the period 
     (net of tax of $8,366)                                                  $  12,292
     Less:  reclassification adjustment for realized gains on  
     investment securities (net of tax of $1,661)                                2,441
                                                                           --------------
     Net gain recognized in other comprehensive income (net of tax 
     of $6,705)                                                               $  9,851
                                                                           --------------
                                                                           --------------

</TABLE>

5.   NEW PRONOUNCEMENTS

     In June 1997, the Financial Accounting Standards Board (the "FASB") issued 
     Statement of Financial Accounting Standards No. 131, "Disclosures About 
     Segments of an Enterprise and Related Information" ("SFAS No. 131"). SFAS 
     No. 131 requires that companies disclose "operating segments" based on the 
     way management disaggregates the Company for making internal operating 
     decisions. The new disclosures will be effective for the Company's fiscal


                                       6
<PAGE>

                           WellPoint Health Networks Inc.
                     Notes to Consolidated Financial Statements
                                    (unaudited)


5.   NEW PRONOUNCEMENTS, CONTINUED

     year ending on December 31, 1998.  Abbreviated quarterly disclosure will 
     be required beginning with the period ending March 31, 1999, with 
     comparative information required for the corresponding period in the 
     prior fiscal year.
     
     In February 1998, the FASB issued Statement of Financial Accounting 
     Standards No. 132, "Employer's Disclosures about Pensions and Other 
     Postretirement Benefits" ("SFAS No. 132").  SFAS No. 132 standardizes the 
     disclosure requirements of pension and other postretirement benefits 
     under previous guidance.  In addition, SFAS No. 132 requires additional 
     disclosures regarding changes in the benefit obligations and fair values 
     of plan assets, eliminates certain disclosures no longer deemed useful, 
     permits aggregation of information about certain plans and revises 
     disclosure about defined contribution plans. The new disclosures are 
     required for year-end financial statements for the year ending December 
     31, 1998. 
     
     The Company is presently assessing the presentation and effect of SFAS 
     Nos. 131 and 132 on the financial statements of the Company.
     
6.   CONTINGENCIES

     From time to time, the Company and certain of its subsidiaries are 
     parties to various legal proceedings, many of which involve claims for 
     coverage encountered in the ordinary course of business.  The Company, 
     like health insurers and HMOs generally, excludes certain health care 
     services from coverage under its PPO, HMO and other plans.  The Company 
     is, in its ordinary course of business, subject to the claims of its 
     members arising out of decisions to restrict treatment or reimbursement 
     for certain services.  The loss of even one such claim, if it results in 
     a significant punitive damage award, could have a material adverse effect 
     on the Company. 
     
     In addition, the risk of potential liability under punitive damage 
     theories may increase significantly the difficulty of obtaining 
     reasonable settlements of coverage claims.  However, the financial and 
     operational impact that such evolving theories of recovery will have on 
     the managed care industry generally, or the Company in particular, is at 
     present unknown.
     
     Certain of such legal proceedings are or may be covered under insurance 
     policies or indemnification agreements.  Based upon information presently 
     available, management of the Company believes that the final outcome of 
     all such proceedings should not have a material adverse effect on the 
     Company's results of operations or financial condition.


                                       7
<PAGE>

                           WellPoint Health Networks Inc.
                     Notes to Consolidated Financial Statements
                                    (unaudited)


7.   BUSINESS SEGMENT INFORMATION

     Unique competitive pressures in the California workers' compensation 
     environment (particularly for the large group accounts) have continued to 
     inhibit the Company's ability to maintain adequate premium rates or 
     implement adequate premium increases in its workers' compensation products 
     similar to those implemented for its managed care and related products. For
     the three months ended March 31, 1998, the Company experienced an unusual 
     level of losses in its workers' compensation business relative to the 
     profitability of its managed care and related products.  Therefore, the 
     Company has determined that it operates in two industry segments: Managed 
     Care and Related Products and Property/Casualty -Workers' Compensation.  
     The following table depicts the financial results of each business segment.

<TABLE>
<CAPTION>

          (In thousands)                                            Three Months Ended
                                                                        March 31,
                                                                    1998         1997
                                                                 ----------   ----------
          <S>                                                  <C>          <C>
          MANAGED CARE AND RELATED PRODUCTS
          Operating revenue                                      $1,544,176   $1,185,304
          Income before provision for income taxes                  112,129       84,671
          Identifiable assets                                     4,135,293    3,746,966
          
          PROPERTY/CASUALTY - WORKERS' COMPENSATION
          Operating revenue                                         $35,604      $45,979
          Income (loss) before provision for income taxes           (13,764)         608
          Identifiable assets                                       507,065      456,890
          
          CONSOLIDATED
          Operating revenue                                      $1,579,780   $1,231,283
          Income before provision for income taxes                   98,365       85,279
          Identifiable assets                                     4,642,358    4,203,856
</TABLE>

          
8.   SUBSEQUENT EVENTS
     
     On April 21, 1998, the California HealthCare Foundation (the 
     "Foundation") completed its offering of 12 million shares of WellPoint 
     common stock in a registered public offering.  The Company received no 
     proceeds from such sale. Upon completion of the sale, the Foundation 
     owned 17,910,000 shares or approximately 25.6% of the Company's total 
     outstanding shares.


                                       8
<PAGE>

     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
               RESULTS OF OPERATIONS
     
     This discussion contains forward-looking statements which involve risks 
     and uncertainties.  The Company's actual results may differ materially 
     from those anticipated in these forward-looking statements as a result of 
     certain factors including, but not limited to, those set forth under 
     "Factors That May Affect Future Results of Operations."
     
     GENERAL
     
     The Company is one of the nation's largest publicly traded managed health 
     care companies with approximately 6.7 million medical members and over 22 
     million specialty members as of March 31, 1998.  The Company offers a 
     broad spectrum of quality network-based managed care plans, including 
     health maintenance organizations ("HMOs"), preferred provider 
     organizations ("PPOs"), point-of-service ("POS") plans, other hybrid 
     plans and traditional indemnity plans to the large and small employer, 
     individual and senior markets. In addition, WellPoint offers managed care 
     services for self-funded employers under management services contracts, 
     including claims processing, actuarial services, network access, medical 
     cost management and other administrative services. The Company also 
     provides a broad array of specialty and other products, including 
     pharmacy, dental, utilization management, life, integrated workers' 
     compensation, preventive care, disability, behavioral health, COBRA and 
     flexible benefits account administration.
     
     NATIONAL EXPANSION AND OTHER RECENT DEVELOPMENTS
     
     On March 1, 1997, the Company completed its acquisition of certain 
     portions of the Group Benefits Operations (the "GBO") of John Hancock 
     Mutual Life Insurance Company.  The purchase price was $89.7 million, 
     subject to adjustment upon completion of a post-closing audit (which is 
     still pending).  The purchase method of accounting has been used to 
     account for the acquisition of the GBO. The GBO, with an associated 1.3 
     million acquired members, targets large employers with 5,000 or more 
     employees and a majority of the medical members it serves are in health 
     plans that are self-funded by employers.  The GBO offers indemnity and 
     PPO plans and also provides life, dental, pharmacy, utilization 
     management and disability coverage to a variety of employer groups.  The 
     GBO has historically experienced a higher administrative expense ratio 
     than the Company's traditional California business due to the GBO's 
     higher percentage of management services business.  The higher 
     administrative expense ratio of the GBO has contributed to an increase in 
     the Company's overall administrative expense ratio since the date of 
     acquisition.
     
     The Company expects to incur approximately $21 to $25 million of costs 
     relating to the GBO acquisition during 1998, a portion of which is 
     expected to be reflected in the Company's results of operations.  At the 
     time that the GBO acquisition was consummated, the Company expected that 
     it would experience material membership attrition of up to 30% as it 
     integrated the GBO operations and implemented its strategy of motivating 
     traditional indemnity insurance members to select managed care products 
     through, among other things, product 

                                       9
<PAGE>

     GENERAL, CONTINUED

     design and premium increases.  Premium increases implemented since the 
     time of the acquisition have not resulted in the expected membership 
     attrition.  The Company is currently unable to determine if and to what 
     extent the Company may experience membership attrition as it continues to 
     integrate this acquired business.
     
     On March 31, 1996, the Company acquired the Life and Health Benefits 
     Management Division ("MMHD") of Massachusetts Mutual Life Insurance 
     Company (the "MMHD Acquisition").  The acquired MMHD operations focus on 
     employers with 250 to 5,000 employees and provide administrative 
     services, PPO and indemnity insurance products. The Company has 
     experienced membership attrition of approximately 30%, exclusive of new 
     account sales, through March 31, 1998 on acquired membership, a portion of
     which is the result of recently instituted premium increases with respect 
     to certain accounts. The Company expects that it will experience some 
     level of further membership attrition of its acquired MMHD members as it 
     continues to evaluate the need for further price increases and pursues its 
     strategy of motivating members to select managed care products.
     
     The Company has acquired certain businesses over the last two years which 
     historically experienced a higher overall loss ratio than the Company.  
     These acquired businesses have contributed to an increase in the 
     Company's overall loss ratio.  In order to control the respective loss 
     ratio and reduce the financial risk of these acquired businesses, the 
     Company has undertaken a variety of measures, including significant 
     premium increases and changes in product design.  The Company has also 
     implemented a series of price increases for certain of its California 
     managed care businesses in response to an increased loss ratio in the 
     second and third quarters of 1997.  The Company will continue to evaluate 
     the need for further price increases, plan design changes and other 
     appropriate actions in the future.  There can be no assurances, however, 
     that the Company will be able to take subsequent pricing or other actions 
     or that any actions previously taken or implemented in the future will be 
     successful in addressing any concerns that may arise with respect to the 
     performance of certain businesses.
     
     Since 1996, the Company has significantly expanded its operations outside 
     of California.  In order to integrate its acquired businesses and 
     implement its regional expansion strategy, the Company will need to 
     finish building its provider and sales networks and successfully convert 
     some or all of these books of business to the Company's existing 
     information systems, which will require additional expenditures by the 
     Company.
     
     LEGISLATION
     
     A variety of health care reform measures are currently pending or have 
     been recently enacted at the Federal, state and local levels.  Recent 
     Federal legislation seeks, among other things, to insure the portability 
     of health coverage and mandates minimum maternity hospital stays.  These 
     and other proposed measures may have the effect of dramatically altering 
     the regulation of health care and of increasing the Company's loss ratio 
     or decrease the affordability of the Company's products.  In May 1997, 
     the Texas Legislature adopted Senate Bill No. 386 ("SB

                                       10
<PAGE>
     GENERAL, CONTINUED
     
     386").  Among other things, this legislation purports to make managed 
     care organizations ("MCOs") such as the Company liable for the failure by
     the MCO, its employees or agents to exercise ordinary care when making 
     "health care treatment decisions" (as defined in SB 386).  The 
     legislation was effective as of September 1, 1997.  It is too early to 
     determine what effect, if any, this legislation may have on the Company.  
     Although the Company maintains insurance covering such liabilities, to 
     the extent that this legislation (or similar legislation that may be 
     subsequently adopted at the Federal or state level) effectively expands 
     the scope of liability of MCOs such as the Company, it may have a 
     material adverse effect on the Company's results of operations and 
     financial condition.
     
     YEAR 2000

     The Company is substantially dependent on its computer systems and 
     applications due to the nature of its managed health care business and 
     the increasing number of electronic transactions in the industry.  
     Historically, some computer systems and applications were developed to 
     recognize the year as a two-digit number, with the digits "00" being 
     recognized as the year 1900.  The year 2000 presents a number of 
     potential problems for such systems, including potentially significant 
     processing errors or failure.  In order to address these problems the 
     Company has developed and is in the midst of executing a comprehensive 
     plan designed to address the "year 2000" issue for its computer systems 
     and applications.  During 1997, the Company completed a detailed risk 
     assessment of its various computer systems and applications, formulated a 
     plan for specific remediation efforts and began certain of such 
     remediation efforts.  During 1998 and the first quarter of 1999, the 
     Company expects to continue and complete its remediation efforts and to 
     undertake internal testing of its systems and applications.  By the 
     second quarter of 1999, the Company expects to undergo third-party 
     testing of its applications and systems.  The Company currently estimates 
     that its costs related to year 2000 compliance remediation for 
     Company-owned systems and applications will be approximately $20 million 
     in 1998 and approximately $2.0 million in 1999.  The Company expenses 
     these costs as incurred and funds these costs through cash flow from 
     operations.
     
     The Company has begun to assemble survey data from health care providers, 
     health care transaction clearing houses, employers, agents and brokers 
     and other parties with which it communicates electronically to determine 
     the compliance efforts being undertaken by these parties and to assess 
     WellPoint's potential business exposure to any non-compliant systems 
     operated by these parties. Although the Company has put into place 
     programs and procedures designed to mitigate the aforementioned risks, 
     there can be no assurances that all potential problems may be mitigated 
     by these procedures.
     

                                       11
<PAGE>

     RESULTS OF OPERATIONS
     
     WellPoint's revenues are primarily generated from premiums earned for 
     risk-based health care and specialty services provided to its members, 
     fees for administrative services, including claims processing and access 
     to provider networks for self-insured employers, and investment income.  
     Operating expenses include health care services and other benefits 
     expenses, consisting primarily of payments for physicians, hospitals and 
     other providers for health care and specialty products claims; selling 
     expenses for broker and agent commissions; general and administrative 
     expenses; interest expense; depreciation and amortization expense; and 
     income taxes.
     
     The Company's results of operations for the quarter ended March 31, 1998 
     include a full quarter of earnings for the acquired operations of the 
     GBO.  For the quarter ended March 31, 1997, the results of operations 
     include earnings from March 1, the effective date of acquisition.
     
     The following table sets forth selected operating ratios.  The loss ratio 
     for health care services and other benefits is shown as a percentage of 
     premium revenue.  All other ratios are shown as a percentage of premium 
     revenue and management services revenue combined.

<TABLE>
<CAPTION>
                                                           Three Months Ended
                                                                March 31,
                                                         -----------------------
                                                            1998         1997
                                                         ----------   ----------
<S>                                                      <C>          <C>
Operating Revenues:
  Premium revenue                                           92.7%        94.9%
  Management services revenue                                7.3%         5.1%
                                                         ----------   ----------
                                                           100.0%       100.0%
Operating Expenses:
  Health care services and other
        benefits (loss ratio)                               81.4%        78.8%
  Selling expense                                            4.4%         4.9%
  General and administrative expense                        15.8%        14.7%

</TABLE>


                                       12
<PAGE>

MEMBERSHIP

The following table sets forth membership data and the percent change in
membership:
<TABLE>
<CAPTION>
MEDICAL MEMBERSHIP(a):                                       As of March 31,
                                                        ------------------------
                                                                                          Percent
                                                           1998           1997            Change
                                                        ---------      ---------         --------
<S>                                                   <C>            <C>               <C>
CALIFORNIA
   Group Services:
      HMO                                                 894,022        722,137            23.8%
      PPO and Other                                     1,530,676      1,330,542            15.0%
                                                        ---------      ---------    
         Total                                          2,424,698      2,052,679            18.1%
                                                        ---------      ---------    
   Individual, Small Group and Senior:                                              
      HMO                                                 324,364        280,528            15.6%
      PPO and Other                                     1,289,988      1,204,322             7.1%
                                                        ---------      ---------    
         Total                                          1,614,352      1,484,850             8.7%
                                                        ---------      ---------    
   Medi-Cal HMO Programs                                  320,573        180,112            78.0%
                                                        ---------      ---------    
Total California Medical Membership                     4,359,623      3,717,641            17.3%
                                                        ---------      ---------    
TEXAS                                                                               
   Group Services                                         175,668        207,650           (15.4%)
   Individual, Small Group and Senior                      80,441         37,610           113.9%
                                                        ---------      ---------    
         Total                                            256,109        245,260             4.4%
                                                        ---------      ---------    
GEORGIA                                                                             
   Group Services                                          97,189         91,281             6.5%
   Individual, Small Group and Senior                       9,906          2,749           260.3%
                                                        ---------      ---------    
         Total                                            107,095         94,030            13.9%
                                                        ---------      ---------    
OTHER STATES                                                                        
   Group Services                                       1,992,954      1,857,795             7.3%
   Individual, Small Group and Senior                      11,805              -              N/A
                                                        ---------      ---------    
         Total                                          2,004,759      1,857,795             7.9%
                                                        ---------      ---------    
Total National Medical Membership                       2,367,963      2,197,085             7.8%
                                                        ---------      ---------    
TOTAL MEDICAL MEMBERSHIP (b)                            6,727,586      5,914,726            13.7%
                                                        ---------      ---------
                                                        ---------      ---------
NETWORKS (c)
   Proprietary Networks                                 4,172,563      3,551,467            17.5%
   Other Networks                                       1,464,463      1,281,056            14.3%
   Non-Network                                          1,090,560      1,082,203             0.8%
                                                        ---------      ---------
TOTAL MEDICAL MEMBERSHIP                                6,727,586      5,914,726            13.7%
                                                        ---------      ---------
                                                        ---------      ---------
</TABLE>

 (a) Membership numbers are approximate and include some estimates based upon
     the number of contracts at the relevant date and an actuarial estimate of
     the number of members represented by the contract.
 (b) Medical membership includes 2,717,103 and 2,329,313 management services
     members as of March  31, 1998 and 1997, respectively, of which those
     management services members outside of California were 1,768,338 and
     1,657,363 as of March 31, 1998 and 1997, respectively.
 (c) Proprietary networks consist of California, Texas and other 
     WellPoint-developed networks.  Other networks consist of third-party 
     networks and networks owned by the Company as a result of acquisitions 
     that incorporate provider discounts and some basic managed care elements. 
     Non-network consists of fee for service and percentage-of-billed charges 
     contracts with providers. 
                                       13
<PAGE>

MEMBERSHIP, CONTINUED
     
<TABLE>
<CAPTION>
                                                            As of March 31,
                                                       -------------------------        Percent
                                                          1998           1997           Change
                                                       ----------     ----------        -------
<S>                                                  <C>            <C>                 <C>
SPECIALTY MEMBERSHIP:

   Pharmacy                                            12,912,648     12,891,280           0.2%
   Dental                                               3,178,866      3,040,748           4.5%
   Utilization Management                               2,942,120      2,777,788           5.9%
   Life                                                 1,720,577      1,633,586           5.3%
   Disability                                           1,069,833      1,135,231          (5.8%)
   Behavioral Health                                      740,111        642,467          15.2%

</TABLE>

     COMPARISON OF RESULTS FOR THE FIRST QUARTER 1998 TO THE FIRST QUARTER 1997
     
     Premium revenue increased 25.3%, or $295.7 million, to $1,464.5 million 
     for the quarter ended March 31, 1998 from $1,168.8 million for the 
     quarter ended March 31, 1997.  The additional two months of the GBO 
     operations in 1998 versus 1997 contributed 31.7% or $93.8 million of the 
     premium revenue increase.  Also contributing to increased premium revenue 
     in the first quarter was an increase in insured member months of 20.2%, 
     excluding the GBO. Additionally, there was an increase in the per member 
     per month premiums associated with many of the Company's insured medical 
     products.
     
     Management services revenue increased 84.6%, or $52.8 million, to $115.2 
     million for the quarter ended March 31, 1998 from $62.4 million for the 
     quarter ended March 31, 1997.  The increase was primarily due to $40.3 
     million of incremental management services revenue related to the GBO 
     acquisition, representing 76.3% of the increase.  Also contributing to 
     increased management services revenue was a rate increase in management 
     services fees related to the MMHD acquired business.
     
     Investment income increased $4.4 million to $44.7 million for the quarter 
     ended March 31, 1998 compared to $40.3 million for the quarter ended 
     March 31, 1997. Net realized gains on equity securities decreased $6.8 
     million to $0.4 million for the quarter ended March 31, 1998 in 
     comparison to $7.2 million for the quarter ended March 31, 1997.  The 
     decline in net realized gains on equity securities was partially offset 
     by net realized gains from debt securities which increased $3.6 million 
     to $3.8 million for the quarter ended March 31, 1998. Net interest and 
     dividend income increased $6.5 million to $39.5 million for the quarter 
     ended March 31, 1998 in comparison to $33.0 million for the quarter ended 
     March 31, 1997.  This increase was primarily due to increased interest 
     income on the investment portfolios of the acquired GBO business and 
     slightly higher yields in 1998 over 1997, partially offset by the cash 
     used for repayment of indebtedness under the Company's senior credit 
     facility.
     
     Health care services and other benefits expense increased 29.4%, or 
     $270.6 million, to $1,191.5 million for the quarter ended  March 31, 1998 
     from $920.9 million for the quarter ended March 31, 1997. The additional 
     two months of the GBO operations in 1998 versus 1997


                                       14
<PAGE>

     COMPARISON OF RESULTS FOR THE FIRST QUARTER 1998 TO THE FIRST QUARTER 
     1997, CONTINUED
     
     contributed 35.1% of the increase and accounted for $94.9 million. 
     Additionally, the previously mentioned increase in insured member months 
     of 20.2% contributed to the increased claims expense.
     
     The loss ratio attributable to managed care and related products for the 
     quarter ended March 31, 1998 increased to 80.2% compared to 78.3% for the 
     quarter ended March 31, 1997, due partially to the additional two months 
     of the GBO operations in 1998 versus 1997 on the Company's overall 
     results. The acquired GBO business has traditionally experienced a higher 
     loss ratio than the Company's managed care products.  Excluding the GBO 
     on the same basis in both periods, the loss ratio would have been 78.7% 
     for the quarter ended March 31, 1998.  The increase in loss ratio 
     excluding the GBO is due to adverse development in the acquired MMHD 
     business.
     
     The loss ratio attributable to Property/Casualty - Workers' Compensation 
     segment for the quarter ended March 31, 1998 increased to 129.7% compared 
     to 90.9% for the quarter ended March 31, 1997, due principally to the 
     adverse development of prior year losses, primarily in the Company's 
     standalone workers' compensation product.
     
     Selling expense consists of commissions paid to outside brokers and 
     agents representing the Company.  Selling expense for the quarter ended 
     March 31, 1998 increased 17.4% to $70.2 million compared to $59.8 million 
     for the quarter ended March 31, 1997, corresponding with continued 
     overall premium revenue growth. The selling expense ratio for the quarter 
     ended March 31, 1998 decreased to 4.4% from 4.9% for the quarter ended 
     March 31, 1997, largely due to the acquisition of the GBO, which has a 
     lower selling expense ratio than the Company's existing business due to 
     use of an internal sales force.  Excluding the GBO for the period prior 
     to its acquisition for the quarter ended March 31, 1998, the selling 
     expense ratio would have been 4.8%.  The Company's growth in Medi-Cal and 
     large employer group medical products had an impact on lowering the 
     selling expense ratio as a result of the lower selling costs associated 
     with these products in comparison to the Company's other products.
     
     General and administrative expense for the quarter ended March 31, 1998 
     increased 38.5%, or $69.5 million, to $250.1 million for the quarter 
     ended March 31, 1998 from $180.6 million for the quarter ended March 31, 
     1997.  The additional two months of the GBO operations in 1998 versus 
     1997 accounted for 32.5% or $22.6 million of the increase.  Additional 
     increases resulted from costs associated with increased membership 
     growth, primarily related to medical products, including Medi-Cal 
     business, and the Company's continuing national expansion efforts.  In 
     connection with the Company's national expansion efforts, the Company 
     also incurred additional information systems and service costs which are 
     anticipated to continue as the Company expands its national business.
     
     The administrative expense ratio increased to 15.8% for the quarter ended 
     March 31, 1998, compared to 14.7% for the quarter ended March 31, 1997, 
     primarily due to the increased
     

                                       15
<PAGE>

     COMPARISON OF RESULTS FOR THE FIRST QUARTER 1998 TO THE FIRST QUARTER 
     1997, CONTINUED
     
     administrative expense associated with the GBO acquisition.  The GBO has 
     historically had higher administrative expense ratios than the Company's 
     California-based businesses, due to its higher percentage of management 
     services business. The administrative expense ratio, excluding the GBO 
     for the period prior to its acquisition for the quarter ended March 31, 
     1998, was 14.2% for the quarter ended March 31, 1998.
     
     Interest expense was $7.3 million for the quarter ended March 31, 1998 
     and $10.8 million for the quarter ended March 31, 1997.  The decrease in 
     interest expense related to repayment of indebtedness as the effective 
     interest rate paid by the Company remained relatively stable.   The 
     Company's long-term indebtedness at March 31, 1998 was $313.0 million 
     compared to $594.0 million at March 31, 1997. The weighted average 
     interest rate for all debt for the quarter ended March 31, 1998, 
     including the fees associated with the borrowings and interest rate 
     swaps, was 7.6%.
     
     The Company's net income for the quarter ended March 31, 1998 was $58.5 
     million, compared to $50.8 million for the quarter ended March 31, 1997.  
     Earnings per share totaled $0.84 and $0.76 for the quarters ended March 
     31, 1998 and 1997, respectively.  Earnings per share assuming full 
     dilution totaled $0.83 and $0.76 for the quarters ended March 31, 1998 
     and 1997, respectively.  Earnings per share for the quarter ended March 
     31, 1997 included nonrecurring costs of $0.06 per share.  Earnings per 
     share for all periods presented has been calculated in accordance with 
     Statement of Financial Accounting Standards No. 128, "Earnings Per Share" 
     ("SFAS No. 128").
     
     Earnings per share for the quarter ended March 31, 1998 is based upon 
     weighted average shares outstanding of 69.9 million, excluding common 
     stock equivalents, and 70.9 million shares, assuming full dilution. 
     Earnings per share for the quarter ended March 31, 1997 has been 
     calculated using 66.5 million shares for both measures.  Common stock 
     equivalents did not have a dilutive effect during the first quarter of 
     1997.  For the quarter ended March 31, 1998, the increase in weighted 
     average shares outstanding primarily relates to the issuance of common 
     stock through a public offering on April 10, 1997 for the sale of 3 
     million shares in addition to common stock issued through the Company's 
     stock option plans.
     
     FINANCIAL CONDITION
     
     The Company's consolidated assets increased by $109.0 million, or 2.4%, 
     from $4,533.4 million as of December 31, 1997 to $4,642.4 million as of 
     March 31, 1998. Cash and investments were $2.9 billion as of March 31, 
     1998, or 63.1% of total assets.
     
     As of March 31, 1998, $313.0 million was outstanding under the Company's 
     long-term debt facilities, compared to $388.0 million at December 31 
     1997.  Debt repayments were funded from internally generated cash flow.


                                       16
<PAGE>

     FINANCIAL CONDITION, CONTINUED
     
     Stockholders' equity totaled $1,303.9 million as of March 31, 1998, an 
     increase of $80.7 million from $1,223.2 million as of December 31, 1997.  
     The increase resulted primarily from net income of $58.5 million for the 
     quarter ended March 31, 1998, $12.4 million of stock issuances under the 
     Company's stock option/award plan and $9.9 million change in net 
     unrealized valuation gain adjustments on investment securities, net of 
     tax.
     
     LIQUIDITY AND CAPITAL RESOURCES
     
     The Company's primary sources of cash are premium and management services 
     revenues received and investment income.  The primary uses of cash 
     include health care claims and other benefits, capitation payments, 
     income taxes, repayment of long-term debt, interest expense, broker and 
     agent commissions, administrative expenses and capital expenditures.  In 
     addition to the foregoing, other uses of cash include costs of provider 
     networks and systems development, and costs associated with acquisitions 
     and the integration of acquired businesses.  The Company receives premium 
     revenue in advance of anticipated claims for related health care services 
     and other benefits.  The Company's investment policies are designed to 
     provide liquidity, preserve capital and maximize yield.  Cash and 
     investment balances maintained by the Company are sufficient to meet 
     applicable regulatory financial stability and net worth requirements.  As 
     of March 31, 1998, the Company's investment portfolio consisted primarily 
     of investment grade fixed maturity securities and equity securities.
     
     Net cash flow provided by operating activities was $44.8 million for the 
     quarter ended March 31, 1998, compared with $202.4 million for the 
     quarter ended March 31, 1997.  Cash flow from operations for the quarter 
     ended March 31, 1998 is due primarily to net income of $58.5 million, 
     adjusted for an increase in receivables of $97.1 million, which is 
     primarily related to the timing of the collection of several large 
     customer receivables in the normal course of business, increases in 
     liabilities related to growth of insured members and timing of other 
     operating liability payments.  Cash flow for the quarter ended March 31, 
     1997 was significantly affected by the timing of collection of GBO 
     acquired receivables and timing of certain income tax payments.
     
     Net cash used in investing activities for the quarter ended March 31, 
     1998 totaled $35.1 million, compared with net cash provided by investing 
     activities of $89.6 million for the quarter ended March 31, 1997.  The 
     cash used in 1998 was attributable primarily to the purchase of 
     investments for $556.1 million, partially offset by the proceeds from 
     investments sold and matured of $532.7 million.
     
     Net cash used in financing activities totaled $62.6 million for the 
     quarter ended March 31, 1998, compared to net cash used in financing 
     activities of $27.9 million for the quarter ended March 31, 1997.  
     Repayments on long-term debt totaled $75.0 million for the quarter ended 
     March 31, 1998.  The Company received proceeds of $12.4 million from the 
     issuance of common stock related to its stock option plans.
     

                                       17
<PAGE>

     LIQUIDITY AND CAPITAL RESOURCES, CONTINUED
     
     The Company has a $1.0 billion unsecured revolving credit facility.  
     Borrowings under the credit facility bear interest at rates determined by 
     reference to the bank's base rate or to the London Interbank Offered Rate 
     ("LIBOR") plus a margin determined by reference to the Company's leverage 
     ratio (as defined in the credit agreement) or the then-current rating of 
     the Company's unsecured long-term debt by specified rating agencies.  
     Borrowings under the credit facility are made on a committed basis or 
     pursuant to an auction-bid process.  The credit facility expires as of 
     May 15, 2002, although it may be extended for an additional one-year 
     period under certain circumstances.  The credit agreement requires the 
     Company to maintain certain financial ratios and contains restrictive 
     covenants, including restrictions on the occurrence of additional 
     indebtedness and the granting of certain liens, limitations on 
     acquisitions and investments and limitations on changes in control.  The 
     total amount outstanding under the credit facility was $293.0 million and 
     $368.0 million as of March 31, 1998 and December 31, 1997, respectively.  
     The weighted average interest rate, including the Company's interest rate 
     swap agreements, for the quarter ended March 31, 1998 was 7.6%.
     
     As part of a hedging strategy to limit its exposure to interest rate 
     increases, in August 1996 the Company entered into a swap agreement for a 
     notional amount of $100.0 million bearing a fixed interest rate of 6.45% 
     and having a maturity date of August 17, 1999.  In September 1996, the 
     Company entered into two additional swap agreements for notional amounts 
     of $150.0 million each, bearing fixed interest rates of 6.99% and 7.05%, 
     respectively, and having maturity dates of October 17, 2003 and October 
     17, 2006, respectively.
     
     As a licensee of the Blue Cross Blue Shield Association (the "BCBSA"), 
     the Company and certain subsidiaries must maintain certain capital 
     requirements. As of March 31, 1998, the Company and its subsidiaries were 
     in compliance with these requirements.
     
     Certain of the Company's subsidiaries are required to maintain minimum 
     capital requirements prescribed by various regulatory agencies, including 
     the California Department of Corporations, and the Departments of 
     Insurance in various states. As of March 31, 1998, those subsidiaries of 
     the Company were in compliance with all minimum capital requirements.
     
     In July 1996, the Company filed a registration statement relating to the 
     issuance of $1.0 billion of senior or subordinated unsecured 
     indebtedness.  As of March 31, 1998, no indebtedness had been issued 
     pursuant to this registration statement.
     
     The Company believes that cash flow generated by operations, its cash and 
     investment balances, supplemented by the Company's ability to borrow 
     under its existing revolving credit facility or to conduct a public 
     offering under its debt registration statement will be sufficient to fund 
     continuing operations and expected capital requirements for the 
     foreseeable future.


                                       18
<PAGE>

     FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS
     
     Certain statements contained herein, such as statements concerning 
     potential or future loss ratios, expected membership attrition as the 
     Company continues to integrate its recently acquired operations and other 
     statements regarding matters that are not historical facts, are 
     forward-looking statements (as such term is defined in the Securities 
     Exchange Act of 1934).  Such statements involve a number of risks and 
     uncertainties that may cause actual results to differ from those 
     projected.  Factors that can cause actual results to differ materially 
     include, but are not limited to, those discussed below and those 
     discussed from time to time in the Company's various filings with the 
     Securities and Exchange Commission, including the Company's Annual Report 
     on Form 10-K.
     
     As part of the Company's business strategy, the Company has recently 
     acquired substantial operations in new geographic markets.  These 
     businesses, which include substantial indemnity- based insurance 
     operations, have experienced varying profitability or losses in recent 
     periods.  Since the relevant dates of acquisition, the Company has 
     continued to work extensively on the integration of these businesses; 
     however, there can be no assurances regarding the ultimate success of the 
     Company's integration efforts or regarding the ability of the Company to 
     maintain or improve the results of operations of these businesses as the 
     Company pursues its strategy of motivating the acquired members to select 
     managed care products.  In order to implement this strategy, the Company 
     has and will, among other things, need to continue to incur considerable 
     expenditures for provider networks, distribution channels and information 
     systems in addition to the costs associated with the integration of these 
     acquisitions.  The integration of these complex businesses may result in, 
     among other things, temporary increases in claims inventory or other 
     service-related issues that may negatively affect the Company's 
     relationship with its customers.  The Company's results of operations 
     could be adversely affected in the event that the Company experiences 
     such problems or is otherwise unable to implement fully its expansion 
     strategy.
     
     The Company's operations are subject to substantial regulation by 
     Federal, state and local agencies in all jurisdictions in which the 
     Company now operates.  Many of these agencies have increased their 
     scrutiny of managed health care companies in recent periods.  The Company 
     also provides administrative services to the California Department of 
     Health Services for Medi-Cal in various California counties and provides 
     similar services to the Health Care Finance Administration ("HCFA") in 
     various capacities.  There can be no assurance that acting as a 
     government contractor in these circumstances will not increase the risk 
     of heightened scrutiny by such government agencies.  Future regulatory 
     actions by any regulatory agencies may have a material adverse affect on 
     the Company's business.
     
     The Company and certain of its subsidiaries are subject to capital 
     requirements by the California Department of Corporations, various other 
     state regulatory agencies and the Blue Cross Blue Shield Association.  
     Although the Company is currently in compliance with all applicable 
     requirements, there can be no assurances that such requirements will not 
     be increased in the future.
     

                                       19
<PAGE>

     FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED
     
     The Company's future results will depend in large part on accurately 
     predicting health care costs and upon the Company's ability to control 
     future health care costs through underwriting criteria, utilization 
     management and negotiation of favorable provider contracts.  Changes in 
     utilization rates, demographic characteristics, health care practices, 
     provider consolidation,  inflation, new technologies, clusters of 
     high-cost, the regulatory environment and numerous other factors are 
     beyond the control of any health plan and may adversely affect the 
     Company's ability to predict and control health care costs and claims, as 
     well as the Company's financial condition or results of operations.  
     Periodic renegotiation of hospital contracts coupled with continued 
     consolidation of physician, hospital and other provider groups may result 
     in increased health care costs, limit the Company's ability to control 
     such costs or subject the Company to increased credit risk related to 
     provider groups.  Additionally, the Company faces competitive pressure to 
     contain premium prices.  Fiscal concerns regarding the continued 
     viability of government-sponsored programs such as Medicare and Medicaid 
     may cause decreasing reimbursement rates for these programs.  Any 
     limitation on the Company's ability to increase or maintain its premium 
     levels, design products or select underwriting criteria may adversely 
     affect the Company's financial condition or results of operations.
     
     Managed care organizations, both inside and outside California, operate 
     in a highly competitive environment that has undergone significant change 
     in recent periods as a result of business consolidations, new strategic 
     alliances, aggressive marketing practices by competitors and other market 
     pressures. Additional increases in competition could adversely affect the 
     Company's financial condition or results of operations.
     
     As a result of the Company's recent acquisitions, the Company now 
     operates on a national basis and offers a spectrum of health care and 
     specialty products through various risk sharing arrangements.  The 
     Company's health care products include a variety of managed care 
     offerings as well as traditional fee-for-service coverage.  With respect 
     to product type, fee-for-service products are generally less profitable 
     than managed care products.  A critical component of the Company's 
     expansion strategy is to transition over time the traditional insurance 
     members of the Company's acquired businesses to more managed care 
     products. With respect to the risk-sharing nature of products, managed 
     care products that involve greater potential risk to the Company 
     generally tend to be more profitable than management services products 
     and those managed care products where the Company is able to shift risks 
     to employer groups. Individuals and small employer groups are more likely 
     to purchase the Company's higher-risk managed care products because such 
     purchasers are generally unable or unwilling to bear greater liability 
     for health care expenditures.  Over the past few years, the Company has 
     experienced greater margin erosion in its higher risk managed care 
     products than in its lower-risk managed care and management services 
     products.  This margin erosion is attributable to product mix change, 
     competitive pressure and greater regulatory restrictions applicable to 
     the small employer group market. During the last three fiscal quarters, 
     the


                                       20
<PAGE>

     FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED
     
     Company has implemented price increases in certain of its managed care 
     businesses.  While these price increases are intended to improve 
     profitability, there can be no assurance that this will occur.  
     Subsequent unfavorable changes in the relative profitability between the 
     Company's various products could have a material adverse effect on the 
     Company's results of operations and on the continued feasibility of the 
     Company's geographic expansion strategy.
     
     Substantially all of the Company's investment assets are in yielding 
     securities of varying maturities.  The value of such securities are 
     highly sensitive to fluctuations in short-and long-term interest rates, 
     with the value decreasing as such rates increase or increasing as such 
     rates decrease.  Changes in the value of the Company's investment assets, 
     as a result of interest rate fluctuations, can impact the Company's 
     results of operations.  There can be no assurances that interest rate 
     fluctuations will not have a material adverse affect on the results of 
     operations of financial condition of the Company.
     
     The Company is dependent on retaining existing employees and attracting 
     additional qualified employees to meet its future needs.  The Company 
     faces intense competition for qualified personnel, especially qualified 
     computer programmers and other information technology employees.  There 
     can be no assurances that an inability to retain existing employees or 
     attract additional employees will not have a material adverse effect on 
     the Company's results of operations.


                                       21
<PAGE>

PART II   OTHER INFORMATION

<TABLE>
<CAPTION>
ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K
     (a)  Exhibits
         <S>       <C>
          2.01      Amended and Restated Recapitalization Agreement dated as of 
                    March 31, 1995 by and among the Registrant, Blue Cross of 
                    California, Western Health Partnership and Western 
                    Foundation for Health Improvement, incorporated by reference
                    to Exhibit 2.1 of Registrant's Registration Statement on 
                    Form S-4 dated April 8, 1996

          2.02      Purchase and Sale Agreement, dated as of October 10, 1996, 
                    by and between the Registrant and John Hancock Mutual Life 
                    Insurance Company ("John Hancock"), incorporated by 
                    reference to Exhibit 2.1 of Registrant's Current Report on 
                    Form 8-K dated October 9, 1996

          2.03      Agreement and Plan of Reorganization dated as of July 22, 
                    1997 by and among the Registrant, WellPoint Health Networks 
                    Inc., a California corporation ("WellPoint California"), and 
                    WLP Acquisition Corp., incorporated by reference to Exhibit 
                    99.1 of Registrant's Current Report on Form 8-K filed on 
                    August 5, 1997
     
          3.01      Restated Certificate of Incorporation of the Registrant, 
                    incorporated by reference to Exhibit 3.1 of Registrant's 
                    Current Report on Form 8-K filed on August 5, 1997.
     
          3.02      Bylaws of the Registrant, incorporated by reference to 
                    Appendix B to the Proxy Statement on Schedule 14A of 
                    WellPoint California filed on May 8, 1997, File No. 
                    333-03292-01
     
          4.01      Specimen of common stock certificate of WellPoint Health 
                    Networks Inc., incorporated by reference to Exhibit 4.4 of 
                    Registrant's Registration Statement on Form 8-B, 
                    Registration No. 001-13083

          4.02      Restated Certificate of Incorporation of the Registrant 
                    (included in Exhibit 3.01)

          4.03      Bylaws of the Registrant (included in Exhibit 3.02)

          10.01     Fifth Amendment dated as of May 1, 1998 to the Registrant's 
                    Credit Agreement dated as of May 15, 1996.

          10.02     Amendment No. 2 dated May 1, 1998 to the Employment 
                    Agreement by and between the Registrant and Leonard D. 
                    Schaeffer.
                    
          10.03     Amendment No. 1 to the Salary Deferral Savings Program of 
                    WellPoint Health Networks Inc.
   
          27.1      Financial Data Schedule

          (b)       Reports on Form 8-K

</TABLE>

          The Company did not file any Current Reports on Form 8-K during the
     quarter ended March 31, 1998.



                                       22
<PAGE>

                                    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.

                                       WELLPOINT HEALTH NETWORKS INC.
                                       Registrant


Date: May 15, 1998                     By: \s\ LEONARD D. SCHAEFFER
                                           -------------------------
                                           Leonard D. Schaeffer
                                           Chairman of the Board of Directors
                                           and Chief Executive Officer



Date: May 15, 1998                     By: \s\ DAVID C. COLBY
                                           -------------------
                                           David C. Colby
                                           Executive Vice President
                                           and Chief Financial Officer



Date: May 15, 1998                     By: \s\ S. LOUISE MCCRARY
                                          ----------------------
                                           S. Louise McCrary
                                           Senior Vice President and
                                           Chief Accounting Officer
                    

                                       23