<PAGE>   1





                                 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, 1996

                                       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  1-11628

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


               CALIFORNIA                                95-3760980
     (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     (818) 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:

<TABLE>
<CAPTION>
                  TITLE OF EACH CLASS                              OUTSTANDING AT NOVEMBER 13, 1996
                  -------------------                              --------------------------------
             <S>                                                     <C>
             Common Stock, $0.0l par value                            66,484,298 shares
</TABLE>
<PAGE>   2
                         WELLPOINT HEALTH NETWORKS INC.
                          THIRD QUARTER 1996 FORM 10-Q
                               TABLE OF CONTENTS



<TABLE>
<CAPTION>
                                                                                                                           PAGE
                                                                                                                           ----
<S>                                                                                                                          <C>
PART I.  FINANCIAL INFORMATION

    ITEM 1.      Financial Statements

                 Consolidated Balance Sheets as of September 30, 1996 and
                      December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   1

                 Consolidated Income Statements for the Three and Nine Months
                      Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   2

                 Consolidated Statement of Changes in Stockholders' Equity
                      for the Nine Months Ended September 30, 1996  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   3

                 Consolidated Statements of Cash Flows for the
                      Nine Months Ended September 30, 1996 and 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . .   4

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

    ITEM 2.      Management's Discussion and Analysis of
                      Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . .  14

PART II.  OTHER INFORMATION

    ITEM 1.      Legal Proceedings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29

    ITEM 5.      Other Information  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  29

    ITEM 6.      Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  30

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  38
</TABLE>
<PAGE>   3




ITEM 1.     Financial Statements

                         WELLPOINT HEALTH NETWORKS INC.
                          Consolidated Balance Sheets

<TABLE>
<CAPTION>
(In thousands, except share data)                                     September 30,     December 31,
                                                                          1996               1995 
                                                                      ------------      ------------
ASSETS                                                                (unaudited)
<S>                                                                    <C>                <C>
Current Assets:
   Cash and cash equivalents                                             $322,785         $1,069,631
   Investment securities, at market value                               1,704,150          1,174,974
   Receivables, net                                                       443,198            149,081
   Deferred tax assets                                                     82,390             42,969
   Other current assets                                                    31,669             25,651 
                                                                       ----------         ----------
      Total Current Assets                                              2,584,192          2,462,306
Property and equipment, net                                                71,317             42,964
Intangible assets                                                         552,601            124,956
Long-term investments                                                     118,746             12,664
Other non-current assets                                                  121,027             36,367
                                                                       ----------         ----------
            Total Assets                                               $3,447,883         $2,679,257
                                                                       ==========         ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Medical claims payable                                                $672,999           $362,881
   Loss and loss adjustment expense reserves                              146,844             66,489
   Unearned premiums                                                      160,463            132,298
   Accounts payable and accrued expenses                                  266,047            111,005
   Experience rated and other refunds                                     151,191             93,478
   Income taxes payable and other current liabilities                     204,095             74,197
                                                                       ----------         ----------
      Total Current Liabilities                                         1,601,639            840,348
Accrued postretirement benefits                                            65,230             50,158
Loss and loss adjustment expense reserves, non-current                    142,998            107,000
Long-term debt                                                            747,000                  -
Other non-current liabilities                                              78,906             11,525
                                                                       ----------         ----------
      Total Liabilities                                                 2,635,773          1,009,031
Stockholders' Equity:
   Preferred Stock                                                              -                 -
   Common Stock
      September 30, 1996 - $0.01 par value, 300,000,000 shares
      authorized, 66,484,298 issued and outstanding;
      December 31, 1995 - none                                                665                 -
   Class A Common Stock
      September 30, 1996 - none; December 31, 1995 - $0.01 par
      value, 200,000,000 shares authorized, 19,500,000 issued
      and outstanding;                                                          -                195
   Class B Common Stock
      September 30, 1996 - none; December 31, 1995 - $0.01 par
      value 100,000,000 shares authorized, 80,000,000 issued                    -                800
      and outstanding
   Additional paid-in capital                                             760,917          1,100,288
   Unrealized valuation adjustment                                        (20,365)             1,820
   Retained earnings                                                       70,893            567,123
                                                                       ----------         ----------
      Total Stockholders' Equity                                          812,110          1,670,226
                                                                       ----------         ----------
            Total Liabilities and Stockholders' Equity                 $3,447,883         $2,679,257 
                                                                       ==========         ==========
</TABLE>

      See the accompanying notes to the consolidated financial statements.





                                       1
<PAGE>   4



                         WELLPOINT HEALTH NETWORKS INC.
                         Consolidated Income Statements
                                  (Unaudited)


<TABLE>
<CAPTION>
(In thousands, except earnings per share)           Three Months Ended September 30,   Nine Months Ended September 30,
                                                    --------------------------------   -------------------------------
                                                        1996            1995              1996              1995
                                                     ----------       ---------        ----------       -----------
<S>                                                  <C>               <C>             <C>               <C>
Revenues:
  Premium revenue                                    $1,052,297        $722,898        $2,801,246        $2,181,446
  Management services revenue                            43,810          15,823           105,473            44,484
  Investment income                                      34,579          33,109           107,008           102,488
                                                     ----------        --------        ----------        ----------
                                                      1,130,686         771,830         3,013,727         2,328,418
Operating Expenses:
  Health care services and
   other benefits                                       824,324         549,893         2,159,062         1,640,897
  Selling expense                                        59,078          46,933           166,805           141,932
  General and administrative expense                    153,103          84,556           388,868           256,110
                                                     ----------        --------        ----------        ----------
                                                      1,036,505         681,382         2,714,735         2,038,939
                                                     ----------        --------        ----------        ----------
Operating Income                                         94,181          90,448           298,992           289,479
  Interest expense                                       12,396               -            23,319                 -
  Other expense, net                                      5,926           2,962            15,107             8,845
                                                     ----------        --------        ----------        ----------

Income before Provision for
  Income Taxes                                           75,859          87,486           260,566           280,634
  Provision for income taxes                             30,758          35,686           105,580           113,924
                                                     ----------        --------        ----------        ----------
Net Income                                              $45,101         $51,800          $154,986          $166,710
                                                     ==========        ========        ==========        ==========


Earnings Per Share                                        $0.68           $0.78             $2.33             $2.51
                                                     ==========        ========        ==========        ==========



Weighted Average Number of
   Shares Outstanding                                    66,484          66,367            66,416            66,367
</TABLE>




      See the accompanying notes to the consolidated financial statements.





                                       2
<PAGE>   5




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



<TABLE>
<CAPTION>
(In thousands)                                                                                     CLASS A            CLASS B    
                                                                               COMMON STOCK      COMMON STOCK      COMMON STOCK  
                                                                   PREFERRED ---------------- ----------------- -----------------
                                                                     STOCK   SHARES   AMOUNT   SHARES   AMOUNT   SHARES   AMOUNT
                                                                   --------  ------- -------- -------- -------- --------- -------
<S>                                                                    <C>   <C>        <C>    <C>       <C>      <C>      <C>   
Balance as of December 31, 1995                                      $  -        -     $  -    19,500    $ 195    80,000   $ 800  

  Net income                                                                                                                     

  Recapitalization (see Note 3)
     Dividends                                                                                                                   
     Stock Exchange                                                          66,367      664  (19,500)    (195)  (80,000)   (800)

  Stock issued for employee long-term
    incentive plan and director compensation                                    117        1                                     

  Change in unrealized valuation adjustment
     on investment securities, net of tax                                                                                        
                                                                   -------- -------- -------- -------- -------- --------- -------

Balance as of September 30, 1996                                     $  -    66,484     $665       -     $  -         -    $  -  
                                                                   =======  =======  =======  =======  =======  ========  ====== 


<CAPTION>
(In thousands)                                                      ADDITIONAL   UNREALIZED
                                                                     PAID-IN     VALUATION    RETAINED
                                                                     CAPITAL     ADJUSTMENT   EARNINGS     TOTAL 
                                                                   ------------  ----------   ---------  ----------
<S>                                                                <C>             <C>        <C>        <C>
Balance as of December 31, 1995                                    $1,100,288      $ 1,820    $567,123   $1,670,226

  Net income                                                                                   154,986      154,986

  Recapitalization (see Note 3)
     Dividends                                                       (343,784)                (651,216)    (995,000)
     Stock Exchange                                                       331                                     -

  Stock issued for employee long-term
    incentive plan and director compensation                            4,082                                 4,083

  Change in unrealized valuation adjustment
     on investment securities, net of tax                                          (22,185)                 (22,185)
                                                                   ----------     --------    --------   ----------

Balance as of September 30, 1996                                   $  760,917     $(20,365)   $ 70,893   $  812,110 
                                                                   ==========     ========    ========   ========== 
</TABLE>





      See the accompanying notes to the consolidated financial statements.





                                       3
<PAGE>   6



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

<TABLE>
<CAPTION>
(In thousands)                                                                        Nine Months Ended September 30,
                                                                                      -------------------------------     
                                                                                          1996           1995 
                                                                                      ----------      ---------
<S>                                                                                    <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                          $  154,986       $166,710
  Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization, net of accretion                                      27,340         13,115
     Gains on sales of assets, net                                                       (10,144)       (13,050)
     Provision for deferred income tax benefits                                          (43,922)        (1,040)
     Amortization of deferred gain on sale of building                                    (1,475)             -
     Issuance of Common Stock                                                              4,082              -
     (Increase) decrease in certain assets, net of acquisitions:
        Receivables, net                                                                 (27,086)       (54,033)
        Other current assets                                                              37,913        (13,991)
        Other non-current assets                                                         (35,538)             -
     Increase (decrease) in certain liabilities, net of acquisitions:
        Medical claims payable                                                           (27,266)       (19,967)
        Loss and loss adjustment expense reserves                                         32,389         14,681
        Unearned premiums                                                                 20,809            203
        Accounts payable and accrued expenses                                             76,118         (1,862)
        Experience rated and other refunds                                                 6,869        (28,599)
        Income taxes payable and other current liabilities                                38,157         72,024
        Accrued postretirement benefits                                                    2,544          2,540
        Other non-current liabilities                                                     15,363              - 
                                                                                      ----------       -------- 
            Net cash provided by operating activities                                    271,139        136,731 
                                                                                      ----------       -------- 
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments purchased                                                                 (755,110)      (549,551)
  Proceeds from investments sold                                                         460,538        761,463
  Proceeds from matured investments                                                       54,225        246,634
  Property and equipment purchased, net                                                  (26,545)       (16,768)
  Purchase of subsidiaries, net of cash acquired                                        (441,093)       (13,177)
                                                                                      ----------       --------
            Net cash provided by (used in) investing activities                         (707,985)       428,601
                                                                                      ----------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                                          775,000              -
   Repayment of long-term debt                                                           (90,000)             -
   Recapitalization (see Note 3)                                                        (995,000)             -
                                                                                      ----------       --------
            Net cash used in financing activities                                       (310,000)             -
                                                                                      ----------       --------
Net increase (decrease) in cash and cash equivalents                                    (746,846)       565,332
Cash and cash equivalents at beginning of period                                       1,069,631        163,444
                                                                                      ----------       --------
Cash and cash equivalents at end of period                                            $  322,785       $728,776 
                                                                                      ==========       ========
</TABLE>





      See the accompanying notes to the consolidated financial statements.





                                       4
<PAGE>   7
                         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 California and holds the exclusive license for
    the right to use the Blue Cross name and related service marks in
    California.

    The Company offers a diversified mix of managed care products, including
    managed health maintenance organizations ("HMO"), preferred provider
    organizations ("PPO"), point-of-service ("POS") and other hybrid plans, and
    traditional indemnity products.  The Company also provides a broad array of
    specialty products, including pharmacy, dental, life, workers'
    compensation, preventive care, disability, behavioral health, COBRA and
    flexible benefits account administration.  In addition, WellPoint offers
    managed care services for self-funded employers, including actuarial
    services, network access, medical cost management, claims processing and
    administrative services.

    On May 20, 1996, the Company concluded a series of transactions
    (collectively, the "Recapitalization") to recapitalize the Company's
    predecessor, WellPoint Health Networks Inc., a Delaware corporation ("Old
    WellPoint"), and purchased the commercial operations of Blue Cross of
    California (the "BCC Commercial Operations").  In connection with the
    Recapitalization, Old WellPoint merged with and into the company formerly
    known as Blue Cross of California ("BCC").  (See Note 3 - Acquisitions and
    Recapitalization.)

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 condition as of September 30, 1996, the results of operations for
    each of the three and nine months ended September 30, 1996 and 1995, cash
    flows for each of the nine months ended September 30, 1996 and 1995, and
    the statement of changes in stockholders' equity for the nine months ended
    September 30, 1996.  The results of operations for the interim periods
    presented are not necessarily indicative of the operating results for the
    full year.  Certain amounts in previously issued financial statements have
    been reclassified to conform to the 1996 presentation.  The
    reclassifications had no effect on net income or stockholders' equity as
    previously reported.





                                       5
<PAGE>   8
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



3.  ACQUISITIONS AND RECAPITALIZATION

    Purchase of Massachusetts Mutual Life Insurance Company's Life and Health
    Benefits Management Division

    The Company completed its acquisition of the Life and Health Benefits
    Management Division ("MMHD") of Massachusetts Mutual Life Insurance Company
    ("MassMutual") through the acquisition of MMHD's parent, MassMutual Holding
    Company Two, Inc. on March 31, 1996 (the "MMHD Acquisition").  The acquired
    MMHD operations now conduct business under the name UNICARE Life & Health
    Insurance Company.  The $402.2 million purchase price was funded with
    $340.2 million in existing cash and a Series A term note for $62.0 million.

    The purchase method of accounting has been used to account for the MMHD
    Acquisition.  The excess purchase price over assets acquired was
    approximately $231.9 million and is being amortized on a straight-line basis
    over 35 years.  The Company has spent approximately $8.5 million on
    integration costs through September 30, 1996.  Through the end of 1997, the
    Company expects to incur a total of $30 million to $40 million of
    integration and other restructuring costs related to the MMHD Acquisition, a
    portion of which is expected to be reflected in the Company's results of
    operations and a portion of which is expected to affect the Company's
    intangible assets and property and equipment.

    As of September 30, 1996, the acquired MMHD operations provide medical
    services to approximately 1.1 million members, focusing on the large
    employer market (groups of 251 to 3,000), and have medical members in all
    50 states.  In addition, the acquired MMHD operations also have
    approximately 0.9 million dental members, 0.4 million life insurance
    members, 0.5 million pharmacy members and 0.1 million disability members.

    Recapitalization and Purchase of BCC Commercial Operations

    On May 20, 1996, the Company concluded a series of transactions
    (collectively, the "Recapitalization") to recapitalize its publicly traded,
    majority-owned subsidiary, WellPoint Health Networks Inc., a Delaware
    corporation ("Old WellPoint"), pursuant to the Amended and Restated
    Recapitalization Agreement dated as of March 31, 1995 (the "Amended
    Recapitalization Agreement"), by and among Old WellPoint, the company
    formerly known as Blue Cross of California ("BCC"), the California
    HealthCare Foundation (the "Foundation") and the California Endowment Fund
    (the "Endowment").  In connection with the Recapitalization, (a) Old
    WellPoint distributed an aggregate of $995.0 million by means of a special
    dividend of $10.00 per share to the record holders of its Class A and Class
    B Common Stock as of May





                                       6
<PAGE>   9
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



3.  ACQUISITIONS AND RECAPITALIZATION (CONTINUED)

    Recapitalization and Purchase of BCC Commercial Operations (continued)

    15, 1996, (b) BCC, the sole shareholder of Old WellPoint's Class B Common
    Stock, donated its portion of such dividend ($800.0 million) to the
    Endowment, (c) BCC donated its assets, other than the shares of the Old
    WellPoint Class B Common Stock held by BCC and the BCC Commercial
    Operations, to the Foundation, (d) BCC changed its status from a California
    nonprofit public benefit corporation to a California for-profit business
    corporation, in conformity with the terms and orders of the California
    Department of Corporations, by means of filing amended and restated articles
    of incorporation with the California Secretary of State, immediately
    following which BCC issued to the Foundation 53,360,000 shares of its common
    stock and (e) Old WellPoint merged with and into BCC (the "Merger"), with
    the resulting entity changing its name to WellPoint Health Networks Inc.

    In connection with the Merger, (i) each outstanding share of Old
    WellPoint's Class A Common Stock was converted into 0.667 shares of the
    Company's Common Stock, (ii) the outstanding shares of the Company's common
    stock issued to the Foundation prior to the Merger were converted into
    53,360,000 shares of the post-merger Company's Common Stock and a cash
    payment of  $235.0 million was made to the Foundation to reflect the value
    of the BCC Commercial Operations and (iii) the outstanding shares of Old
    WellPoint's Class B Common Stock were canceled.  The BCC Commercial
    Operations consisted of, among other things, the health care lines of
    business conducted by Blue Cross of California, substantially all
    agreements with health care providers that provided services to enrollees
    of Blue Cross of California and all of the cash and securities of Blue
    Cross of California on hand at the time of closing of the Recapitalization.

    By virtue of the Merger and the exchange of shares of Old WellPoint for
    those of the Company, as of May 20, 1996 (the effective date of the
    Merger), there were a total of 66,366,500 shares of the Company's Common
    Stock outstanding, of which 53,360,000 shares (or approximately 80.4%) were
    held beneficially by the Foundation.

    The purchase method of accounting has been used to account for the
    acquisition of the BCC Commercial Operations.  The excess purchase price
    over assets acquired was approximately $204.5 million and is being
    amortized on a straight-line basis over 40 years.





                                       7
<PAGE>   10
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



3.  ACQUISITIONS AND RECAPITALIZATION (CONTINUED)

    Recapitalization and Purchase of BCC Commercial Operations (continued)

    In accordance with the requirements of Accounting Principles Bulletin No.
    16, Business Combinations, the following unaudited pro forma summary
    combines the consolidated results of operations of the Company, MMHD and the
    BCC Commercial Operations as if the acquisitions had occurred as of the
    beginning of each period presented after giving effect to pro forma
    adjustments.  The pro forma adjustments represent interest expense on
    long-term debt incurred to fund the acquisitions and the Recapitalization,
    amortization of intangible assets, foregone interest on the net cash used
    for the purchases and the related income tax effect from the beginning of
    each period presented through the effective dates of the acquisitions. 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 the Company, MMHD and the BCC Commercial Operations had been a
    single entity during the three and nine months ended September 30, 1996 and
    1995, nor is it necessarily indicative of the results of operations which
    may occur in the future.  Pro forma earnings per share is calculated based
    on 66.4 million shares of common stock outstanding during all periods
    presented.

(In millions, except earnings per share)
                           
<TABLE>
<CAPTION>
                                                                       Pro Forma
                                                         Three Months Ended September 30, 1996
                               ------------------------------------------------------------------------------------------
                               WellPoint              BCC                MMHD              Adjustments            Total
                               ---------              ---                ----              -----------            -----
       <S>                       <C>                <C>                 <C>                 <C>                  <C>
       Revenues                  $834.1             $106.9              $189.7                 --                $1,130.7
       Net Income                $ 41.2             $  0.1              $  3.8                 --                $   45.1
       Earnings Per Share                                                                                        $   0.68
</TABLE>

(In millions, except earnings per share)
                           
<TABLE>
<CAPTION>
                                                                       Pro Forma
                                                         Three Months Ended September 30, 1995
                               ------------------------------------------------------------------------------------------
                               WellPoint              BCC                MMHD              Adjustments            Total
                               ---------              ---                ----              -----------            -----
       <S>                       <C>                <C>                 <C>                 <C>                  <C>
       Revenues                  $771.8             $106.9              $211.7              ($10.9)              $1,079.5
       Net Income                $ 51.8             $  2.3              $ 14.5              ($18.1)              $   50.5
       Earnings Per Share                                                                                        $   0.76
</TABLE>

    Lower MMHD net income for the 1996 third quarter compared to the 1995 third
    quarter was primarily caused by a decrease in investment income, a decrease
    in the gross underwriting margin from a lower volume of premiums and claims,
    goodwill amortization and interest expense in 1996.





                                       8
<PAGE>   11
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



3.  ACQUISITIONS AND RECAPITALIZATION (CONTINUED)

    Recapitalization and Purchase of BCC Commercial Operations (continued)

(In millions, except earnings per share)
                           
<TABLE>
<CAPTION>
                                                                       Pro Forma
                                                         Nine Months Ended September 30, 1996
                               ------------------------------------------------------------------------------------------
                               WellPoint              BCC                MMHD              Adjustments            Total
                               ---------              ---                ----              -----------            -----
       <S>                     <C>                  <C>                 <C>                 <C>                  <C>
       Revenues                $2,485.2             $ 319.9             $592.4              ($14.9)              $3,382.6
       Net Income              $  152.6             $   1.0             $ 11.8              ($24.9)              $  140.5
       Earnings Per Share                                                                                        $   2.11
</TABLE>

(In millions, except earnings per share)
                           
<TABLE>
<CAPTION>
                                                                       Pro Forma
                                                         Nine Months Ended September 30, 1995
                               ------------------------------------------------------------------------------------------
                               WellPoint              BCC                MMHD              Adjustments            Total
                               ---------              ---                ----              -----------            -----
       <S>                     <C>                  <C>                 <C>                 <C>                  <C>
       Revenues                $2,328.4             $337. 9             $680.0              ($32.8)              $3,313.5
       Net Income              $  166.7             $  5.7              $ 34.0              ($53.3)              $  153.1
       Earnings Per Share                                                                                        $   2.31
</TABLE>

    Lower MMHD net income for the nine months ended September 30, 1996 compared
    to September 30, 1995 was primarily due to a decrease in the gross
    underwriting margin from a lower volume of premiums and claims, a
    decrease in realized gains on investments, goodwill amortization and
    interest expense in 1996.

4.  LONG-TERM DEBT

    Notes Payable

    In connection with the MMHD Acquisition, the Company issued a Series A term
    note for $62.0 million during the first quarter of 1996.  The Series A note
    will mature on March 31, 1999. Interest is paid quarterly and is equal to
    the Company's average cost on the revolving credit facility, as described
    below.  The weighted average interest rate from March 31, 1996, the issue 
    date, through September 30, 1996 was 5.82%.

    Revolving Credit Facility

    In May 1996, the Company entered into an agreement with a consortium of
    financial institutions for a five-year unsecured revolving credit facility
    which provides a line of credit up to $1.25 billion through May 2001 with
    extension options through May 2003.  The agreement provides for interest on
    committed advances at a rate equal to the London Interbank Offered Rate
    ("LIBOR") plus the applicable margin determined by the long-term unsecured
    debt ratings or the leverage ratio as outlined in the





                                       9
<PAGE>   12
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



4.  LONG-TERM DEBT (CONTINUED)

    Revolving Credit Facility (continued)

    agreement, a reference rate or through a bid auction with the bank
    syndicate.  Interest is determined using whichever of these methods is the
    most favorable to the Company.  A facility fee based on the facility amount,
    regardless of utilization, is payable quarterly.  The facility fee rate is
    also determined by the unsecured debt ratings or the leverage ratio of the
    Company.  The agreement requires maintenance of certain financial ratios and
    contains other restrictive covenants.  At September 30, 1996, $685.0 million
    was outstanding under this facility which was used for the payment of a
    special dividend to Old WellPoint stockholders in connection with the
    Recapitalization.  At September 30, 1996, the Company was in compliance with
    the restrictive covenants outlined in the agreement.  The weighted average
    interest rate from May 15, 1996, the initial draw date, through September
    30, 1996 was 5.84%.  (See Note 3. Acquisitions and Recapitalization.)

5.  EARNINGS PER SHARE

    Earnings per share is determined by dividing net income by the weighted
    average number of shares outstanding during the period. The average number
    of shares outstanding for the periods prior to the Recapitalization have
    been recomputed to 66.4 million, the number of shares outstanding
    immediately following the Recapitalization, to give effect to the share
    exchange that occurred as part of the Recapitalization.  Earnings per share
    for the three and nine months ended September 30, 1996 has been calculated
    using such 66.4 million shares, plus the weighted average number of shares
    issued since the Recapitalization.  (See Note 3. Acquisitions and
    Recapitalization.)  The weighted average number of shares outstanding for
    the three and nine month periods ended September 30, 1996 is 66.5 million
    and 66.4 million, respectively.

    The following unaudited pro forma summary combines the consolidated results
    of operations of the Company and the BCC Commercial Operations as if the
    Recapitalization had occurred at the beginning of each period presented,
    after giving effect to pro forma adjustments, which represent interest
    expense on long-term debt incurred to pay the special dividend, foregone
    interest on net cash used for the purchase of BCC Commercial Operations and
    payment of the special dividend and the related income tax effect.





                                       10
<PAGE>   13
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



5.  EARNINGS PER SHARE (CONTINUED)

(In thousands, except earnings per share)
<TABLE>
<CAPTION>
                                                              Pro Forma
                             ------------------------------------------------------------------------
                               Three Months Ended September 30,       Nine Months Ended September 30,
                             ----------------------------------       -------------------------------
                                  1996                  1995              1996                 1995
                                  ----                  ----              ----                 ----
       <S>                       <C>                   <C>              <C>                  <C>
       Net Income                $45,101               $41,642          $139,290             $136,236
       Earnings per Share        $  0.68               $  0.63          $   2.09             $   2.06
</TABLE>


    Fully diluted earnings per share are equivalent to the earnings per share
    indicated.

6.  COMMITMENTS AND CONTINGENCIES

    WellPoint has had lawsuits filed against it on behalf of its stockholders
    pertaining to an alleged breach by its Board of Directors of fiduciary
    duties by pursuing a merger with Health Systems International ("HSI") and
    allegedly rejecting certain alternative proposals without due
    consideration.  All class action claims asserted on behalf of WellPoint's
    public stockholders were dismissed on August 10, 1995, leaving only claims
    asserted derivatively on behalf of WellPoint.

    On October 9, 1996, the settlement of the remaining claims asserted in the
    actions relating to the HSI transaction was approved by the court as fair,
    reasonable and adequate to WellPoint and its stockholders after notice to
    stockholders and the opportunity to object to its terms.  On October 21,
    1996, the court issued an order (i) extending the period for objections to
    the settlement to be filed until November 8, 1996 and (ii) setting a status
    conference regarding the proposed judgment for November 26, 1996.

    The management of WellPoint believe that its directors acted in good faith
    and in an independent, informed and appropriate manner in all aspects of
    the decision to approve the BCC/WellPoint transaction and the business
    combination with HSI, and to not approve the alternative proposals.  Based
    upon the foregoing, the management of WellPoint believes that these
    lawsuits are without merit and intends to continue to defend those actions
    vigorously if the settlement does not receive final approval from the
    Court.

    In addition, WellPoint and certain of its subsidiaries are also parties to
    various other legal proceedings, many of which involve claims for coverage
    encountered in the ordinary course of business.  WellPoint, like HMOs and
    health insurers generally, excludes certain health care services from
    coverage under its HMO, PPO and other plans.  WellPoint is, in its ordinary
    course of business, subject to the claims of its





                                       11
<PAGE>   14
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



6.  COMMITMENTS AND CONTINGENCIES (CONTINUED)

    enrollees 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 affect on
    WellPoint.  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 WellPoint 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 WellPoint believes that the final outcome of all
    such proceedings should not have a material adverse effect on WellPoint's
    results of operations or financial condition.

7.  SUBSEQUENT EVENTS

    Purchase of Group Benefits Operations of John Hancock Mutual Life Insurance
    Company

    On October 10, 1996, the Company signed a definitive agreement to acquire
    certain portions of the Group Benefits Operations ("GBO") of John Hancock
    Mutual Life Insurance Company for approximately $86.7 million.  GBO focuses
    on the "jumbo" employer segment (employers with 3,000 or more employees)
    and provides medical, life, dental, as well as disability services to some
    of the largest employers in the nation.  The acquisition, which is subject
    to regulatory approvals, is expected to be completed in January 1997.  The
    Company intends to finance the acquisition of GBO through the incurrence of
    subordinated debt.

    Sale of 13,000,000 Shares of Stock by the Foundation

    On October 25, 1996, the Company filed a registration statement with the
    Securities and Exchange Commission with respect to a proposed public
    offering of 13.0 million shares of its Common Stock currently held by the
    Foundation.  The Foundation has also granted the underwriters of this
    offering an over-allotment option of up to 1,950,000 shares.  The Company
    currently expects that this offering will be completed in November 1996.





                                       12
<PAGE>   15
                         WELLPOINT HEALTH NETWORKS INC.
                   Notes to Consolidated Financial Statements
                                  (unaudited)



7.  SUBSEQUENT EVENTS (CONTINUED)

    Subordinated Debt

    In October 1996, the Company entered into a commitment letter with the Bank
    of America National Trust and Savings Association for a two-year unsecured
    subordinated term loan facility for $200.0 million which would mature on
    December 31, 1998.  The Company expects that the loan will be available
    between December 15, 1996 and February 15, 1997.  The Company has not yet
    signed definitive documentation with respect to this facility.  It is
    anticipated that the definitive agreement will provide for interest at
    rates determined by reference to the Bank of America base rate or to the
    LIBOR plus a margin determined by reference to the Company's leverage ratio
    or the then-current rating of the Company's unsecured long-term debt by
    specified rating agencies.  Interest will be paid quarterly.





                                       13
<PAGE>   16



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

OVERVIEW

WellPoint Health Networks Inc. ("WellPoint" or the "Company") is one of the
nation's largest publicly traded managed health care companies with
approximately 4.4 million medical members, 12.2 million pharmacy members and
1.5 million dental members as of September 30, 1996.  The Company offers a
diversified mix of managed care products, including HMO, PPO, POS and other
hybrid plans, and traditional indemnity products.  The Company also offers a
broad array of specialty products, including pharmacy, dental, life, workers'
compensation, preventive care, disability, behavioral health, COBRA and
flexible benefits account administration.  In addition, WellPoint offers
managed care services for self-funded employers, including claims processing,
actuarial services, network access, medical cost management and administrative
services.  The Company's primary market for its managed care products is
California.

The Company is also actively pursuing expansion into new markets outside of
California. In March 1996, the Company completed its acquisition of the Life and
Health Benefits Management Division ("MMHD") of Massachusetts Mutual Life
Insurance Company ("MassMutual") through the acquisition of MMHD's parent,
MassMutual Holding Company Two, Inc. (the "MMHD Acquisition").  The acquired
MMHD operations now conduct business under the name UNICARE Life & Health
Insurance Company. Through the end of 1997, the Company expects to incur a total
of $30 million to $40 million of restructuring costs related to the MMHD
Acquisition, a portion of which is expected to be reflected in the Company's
results of operations and a portion of which is expected to affect intangible
assets and property and equipment. (See Note 3. Acquisitions and
Recapitalization.)  As a result of the MMHD Acquisition, WellPoint serves
medical members in 50 states. Approximately 50% of MMHD's medical membership is
concentrated in seven states: California, New York, Texas, Georgia,
Massachusetts, Illinois and Virginia.  The acquired MMHD operations also provide
specialty products, including dental, life, pharmacy and disability, to members
throughout the United States.  Due in part to this acquisition, the Company's
internal business units are now organized on a geographic basis, Blue Cross of
California serving California, and UNICARE serving all other states. These
business units target both individual and small business purchasers with up to
50 employees and large employers with 51 or more employees.  The Company's
networks and broad range of specialty managed care products allow it to pursue
growth with individual, small business and large business purchasers.

Prior to its acquisition by WellPoint, the MMHD large employer group operations
(as well as the BCC Commercial Operations) experienced a higher loss ratio than
the Company.  As a result, the Company may experience a higher overall loss
ratio in future periods.  In addition, there





                                       14
<PAGE>   17



OVERVIEW (CONTINUED)

can be no assurance that the Company will be able to successfully integrate MMHD
into its business or take appropriate measures to control its associated loss
ratio.

In October 1996, the Company signed a definitive agreement to purchase certain
portions of the Group Benefits Operations ("GBO") of John Hancock Mutual Life
Insurance Company.  The GBO targets the "jumbo" employer segment (employers
with 3,000 or more employees) and currently provides administrative services
and PPO and indemnity insurance products.  The transaction, which is subject to
regulatory approvals and other closing conditions, is currently expected to
close in January 1997.  Although a majority of the GBO involves the provision
of administrative services to self-funded employer plans, the indemnity-based
portions of the GBO have experienced a higher overall loss ratio than the
Company's core business.  If the acquisition of the GBO is completed, the
Company may experience a higher overall loss ratio.  In addition, the
integration of its operations may have an adverse effect on the Company's
financial condition or results of operations.  The Company expects to incur
approximately $35 million to $45 million of restructuring costs relating to this
acquisition during 1997, a portion of which is expected to be reflected in the
Company's results of operations.  The Company expects that it will experience
material membership attrition as it pursues its strategy of motivating
traditional indemnity health insurance members to select managed care products.

A variety of health care reform measures have been recently enacted at the
Federal and state 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 the provision of health care
and altering the Company's loss ratio.

Certain of the statements contained in this Quarterly Report on Form 10-Q are
of a forward-looking nature and involve a number of risks and uncertainties
which could cause actual results to differ from those projected and which are
described in the section of this report entitled "External Influences Which May
Impact Future Operations," the Company's 1995 Annual Report to Stockholders and
in other documents filed from time to time with the Securities and Exchange
Commission.  Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.

RESULTS OF OPERATIONS

WellPoint's revenues are generated from premiums earned for 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.  WellPoint's operating expenses include
health care services and other benefits expenses, consisting primarily of
payments for physicians, hospitals and other providers





                                       15
<PAGE>   18



RESULTS OF OPERATIONS (CONTINUED)

for health care and specialty products claims; selling expenses for broker and
agent commissions; general and administrative expenses; interest expense and
income taxes.

The Company's consolidated results of operations for the three and nine months
ended September 30, 1996 include the results of MMHD and the BCC Commercial
Operations from March 31, 1996 and May 20, 1996, respectively, the effective
dates 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             Nine Months Ended
                                                          September 30,                  September 30,
                                                       -------------------           -------------------
                                                       1996           1995           1996           1995
                                                       ----           ----           ----           ----
       <S>                                            <C>            <C>            <C>            <C>
       Operating Revenues:
          Premium revenue ratio                        96.0%          97.9%          96.4%          98.0%
          Management services revenue ratio             4.0            2.1            3.6            2.0
                                                      ------         ------         ------         ------
                                                      100.0          100.0          100.0          100.0
       Operating Expenses:
          Health care services and other
               benefits (loss ratio)                   78.3           76.1           77.1           75.2
          Selling expense ratio                         5.4            6.4            5.7            6.4
          General and administrative expense
             ratio                                     14.0           11.4           13.4           11.5
</TABLE>





                                       16
<PAGE>   19



MEMBERSHIP

The following table sets forth membership data and the percent change in
membership:

<TABLE>
<CAPTION>
                                                      As of September 30,
                                                    -----------------------        Percent
                                                    1996               1995        Change
                                                    ----               ----        -------
 <S>                                              <C>               <C>              <C>
 MEDICAL MEMBERSHIP:
 CALIFORNIA
    Group Services:
       HMO                                          663,271           615,623          7.7%
       PPO and Other (a)                          1,284,245           765,744         67.7%
                                                  ---------         ---------
          Total (b)                               1,947,516         1,381,367         41.0%
                                                  ---------         ---------
    Individual, Small Group and Senior:
       HMO                                          258,582           167,171         54.7%
       PPO and Other                              1,198,677         1,194,415          0.4%
                                                  ---------         ---------
          Total                                   1,457,259         1,361,586          7.0%
                                                  ---------         ---------
    Medi-Cal HMO Programs                            59,454            35,177         69.0%
                                                  ---------         ---------
 Total California Medical Membership (c)          3,464,229         2,778,130         24.7%
                                                  ---------         ---------
 OUT-OF-STATE
    Group Services:
       HMO                                            2,506           -                 N/A
       PPO and Other (a)                            899,759           -                 N/A
                                                  ---------         ---------
          Total (b)                                 902,265           -                 N/A
                                                  ---------         ---------

    Individual, Small Group and Senior:
       PPO and Other                                 21,016           -                 N/A
                                                  ---------         ---------
 
 Total Out-of-State Medical Membership              923,281           -                 N/A
                                                  ---------         ---------
 TOTAL MEDICAL MEMBERSHIP                         4,387,510         2,778,130         57.9%
                                                  =========         =========

    HMO                                             983,813           817,971         20.3%
    PPO and Other                                 3,403,697         1,960,159         73.6%
                                                  ---------         ---------

 TOTAL MEDICAL MEMBERSHIP                         4,387,510         2,778,130         57.9%
                                                  =========         =========
</TABLE>

(a)     California and Out-of-State include 723,857 and
        492,026 management services  members,
        respectively, as of September 30, 1996.  Of the
        723,857 California management services members,
        81,056 are from the acquired MMHD operations.
        California includes 476,401 management services
        members as of September 30, 1995.

(b)     As of September 30, 1996, total MMHD medical
        membership was approximately 1,051,000, of
        which approximately 149,000 were California
        members and approximately 902,000 were  Out-of-
        State members.

(c)     As of September 30, 1996, total BCC Commercial
        Operations membership was approximately
        264,100, of which all were California  members.





                                       17
<PAGE>   20



                     MEMBERSHIP (CONTINUED)
<TABLE>
<CAPTION>
                                                    As of September 30,
                                                  -----------------------                    Percent
                                                  1996               1995                    Change
                                                  ----               ----                    -------
 <S>                                           <C>                 <C>                        <C>
 SPECIALTY MEMBERSHIP:
    Pharmacy                                   12,218,839          8,726,438                   40.0%
    Dental                                      1,512,740            513,889                  194.4%
    Disability                                    108,231                 -                   N/A
    Behavioral Health                             472,235            372,648                   26.7%
    Life                                          724,295            326,130                  122.1%
</TABLE>

The 1996 specialty membership includes MMHD which has approximately 0.5 million
pharmacy members, 0.9 million dental members, 0.1 million disability members
and 0.4 million life members as of September 30, 1996.

COMPARISON OF RESULTS FOR THIRD QUARTER 1996 TO THIRD QUARTER 1995

Premium revenue increased 45.6% to $1,052.3 million for the quarter ended
September 30, 1996 from $722.9 million for the quarter ended September 30, 1995.
Of the $329.4 million increase, $166.6 million and $97.5 million were
attributable to the MMHD Acquisition and the BCC Commercial Operations,
respectively.  Also contributing to the increase was a 5.6% increase in medical
membership from September 30, 1995 to September 30, 1996, excluding MMHD and the
BCC Commercial Operations.  Workers' compensation premium revenue increased
25.7% from the 1995 third quarter to the 1996 third quarter due to a large
increase in the number of insured employer groups, primarily in the small
employer and California school districts workers' compensation markets.  In
addition, an increase in premium revenue resulted from moderate increases in the
medical premiums per member in the individual, small group and senior markets
and increases in dental premium revenue, largely due to membership growth as a
result of the introduction of a new dental PPO product.

Management services revenue increased $28.0 million, or 176.9%, to $43.8
million for the quarter ended September 30, 1996 from $15.8 million in 1995.
The increase was primarily due to $20.0 million of management services revenue
from MMHD. Also contributing to the increase were new pharmacy and clinical
management accounts and revenue from BCC Commercial Operations.  Excluding MMHD
and the BCC Commercial Operations, management services medical membership
increased 28.9%.

Investment income increased to $34.6 million for the quarter ended September
30, 1996 as compared to $33.1 million for the same period in 1995.  Interest
and dividend income increased from $30.6 million to $31.4 million for the
quarters ended September 30, 1995 and 1996, respectively.  This increase was
due to MMHD interest income of $7.2 million, partially offset by lower interest
income as a result of cash and investments used in the acquisitions of MMHD and
the BCC Commercial Operations.  Excluding MMHD, interest





                                       18
<PAGE>   21



COMPARISON OF RESULTS FOR THIRD QUARTER 1996 TO THIRD QUARTER 1995 (CONTINUED)

and dividend income would have decreased to $24.3 million as a result of cash
and investments used in the acquisitions of MMHD and the BCC Commercial
Operations.  Net gains on the sales of investment securities increased to $3.2
million for the quarter ended September 30, 1996 from $3.0 million for the
prior year.  This increase was a result of MMHD realized gains on sales of
$0.4 million.  Finally, net financing and investment expense decreased by $0.4
million.

Health care services and other benefits expense increased 49.9% to $824.3
million for the quarter ended September 30, 1996 from $549.9 million for the
same period in 1995.  Of the $274.4 million increase, $123.6 was attributable
to MMHD and $92.3 million was attributable to the BCC Commercial Operations.
Excluding MMHD and the BCC Commercial Operations, increased health care
services also resulted from medical membership growth, especially in the
individual HMO business.  Mix and product design changes, such as benefits
design changes which eliminated deductibles for some pharmacy products, and
growth in the workers' compensation business also contributed to the increase.
These increases were partially offset by savings from hospital recontracting,
which was implemented in January 1996.  

The loss ratio for the third quarter of 1996 increased to 78.3% compared to
76.1% in 1995 due partially to membership growth in the individual HMO, which
carries a lower margin and less risk than the Company's other individual
products.  The increase in the loss ratio was also attributable to an increase
in the loss and loss adjustment expense reserves related to a portion of the
Company's workers' compensation business and the incremental effect of the BCC
Commercial Operations on the Company's overall results. The BCC Commercial
Operations have traditionally experienced a higher loss ratio than the Company.
The Company may experience higher loss ratios during the remainder of 1996 and
in future periods due to the incremental effect of the BCC Commercial Operations
and MMHD (which have also historically experienced a higher medical loss ratio
than the Company).  The increase in the loss ratio was partially offset by the
Company's continuing cost containment efforts, such as the hospital
recontracting program implemented in 1996.  The program provides incentives to
those hospitals that are successful at controlling costs.  Excluding the
Company's workers' compensation business and the acquisitions of MMHD and the
BCC Commercial Operations, the loss ratio for the quarter ended September 30,
1996 was 75.8%.  The loss ratio for the third quarter in 1995, also excluding
the workers' compensation business, was 75.7%.





                                       19
<PAGE>   22



COMPARISON OF RESULTS FOR THIRD QUARTER 1996 TO THIRD QUARTER 1995 (CONTINUED)

Selling expense consists of commissions paid to outside brokers and agents
representing the Company.  Selling expense for the third quarter of 1996
increased 25.9% to $59.1 million compared to $46.9 million for the third
quarter of 1995.  Of the $12.2 million increase, $7.0 million was attributable
to MMHD.  In addition, the increase corresponded with continued overall premium
revenue growth.  However, the selling expense ratio decreased for the quarter
ended September 30, 1996 to 5.4% from 6.4%, largely due to the acquisitions of
MMHD and the BCC Commercial Operations which both have a lower selling expense
ratio than the Company has historically experienced.  Excluding the
acquisitions, the selling expense ratio would have remained constant at 6.4%.

General and administrative expense for the quarter ended September 30, 1996
increased 81.1% to $153.1 million from $84.6 million for the comparable quarter
in 1995, largely due to the MMHD Acquisition, which contributed $49.7 million
to general and administrative expense.  The administrative expense ratio
increased to 14.0% for the quarter ended September 30, 1996 compared to 11.4%
for the quarter ended September 30, 1995, primarily due to the MMHD Acquisition
and the Company's continued investment in geographic expansion.  The increase
was partially offset by the BCC Commercial Operations' lower administrative
expense ratio.  Excluding MMHD and the BCC Commercial Operations, the
administrative expense ratio was 12.4% for the third quarter of 1996.  MMHD has
historically had a higher administrative expense ratio due to its higher
percentage of management services business. The increased administrative
ratio in 1996, excluding acquisitions, was due in part to additional expenses
related to Los Angeles city business taxes.

Interest expense was $12.4 million for the quarter ended September 30, 1996.
The Company had no interest expense during the comparable period in 1995.  The
interest expense in the current period related to $775.0 million drawn under
the Company's revolving credit facility on May 15, 1996 to fund a special
dividend paid in connection with the Recapitalization, as well as interest on
amounts payable to MassMutual, including the Series A term note of $62.0
million issued in connection with the MMHD Acquisition.  During the third
quarter of 1996, the outstanding balance drawn under the credit facility was
reduced from $730.0 million to $685.0 million.  The weighted average rate of
interest during the third quarter of 1996 on all long-term debt was 5.91%.

WellPoint's net income for the quarter ended September 30, 1996 was $45.1
million or $0.68 per share compared to $51.8 million or $0.78 per share for the
quarter ended September 30, 1995.  The weighted average number of shares of
common stock outstanding for the quarter ended September 30, 1996 was 66.5
million.  Earnings per share for the quarter ended September 30, 1995 has been
recomputed using 66.4 million shares, the number of shares outstanding
immediately following the Recapitalization, to give effect to the share
exchange that occurred in connection with the Recapitalization.  Earnings per
share is determined by dividing net income by the weighted average number of
common shares outstanding.  (See Note 3 to the Consolidated Financial
Statements for a fuller description of the actions taken in connection with the
Recapitalization.)





                                       20
<PAGE>   23



COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995

Premium revenue increased 28.4% to $2,801.2 million for the nine months ended
September 30, 1996 from $2,181.4 million for the nine months ended September 30,
1995.  Premium revenue of $341.1 million and $122.4 million were attributable to
MMHD and the BCC Commercial Operations, respectively.  Also contributing to
increased premium revenue was a 5.6% increase in medical membership from
September 30, 1995 to September 30, 1996, excluding MMHD and the BCC Commercial
Operations.   Workers' compensation premium revenues increased 47.4% from the
first nine months of 1995 to the first nine months of 1996, due to a large
increase in the number of insured employer groups, primarily in the small
employer and California school districts workers' compensation markets.  In
addition, an increase in premium revenue resulted from moderate increases in the
premiums per member in the individual, small group and senior markets and
increases in dental premium revenue, largely due to membership growth as a
result of the introduction of a new dental PPO product.

Management services revenue increased $61.0 million to $105.5 million for the
nine months ended September 30, 1996 from $44.5 million for the nine months
ended September 30, 1995.  The increase was primarily due to $43.3 million of
management services revenue from MMHD.  Also contributing to the increase were
new pharmacy and clinical management accounts and revenue from the BCC
Commercial Operations.  Excluding MMHD and the BCC Commercial Operations,
management services medical membership increased 28.9% from September 30, 1995
to September 30, 1996.

Investment income increased to $107.0 million for the nine months ended
September 30, 1996 as compared to $102.5 million for the same period in 1995.
Interest and dividend income increased from $90.9 million to $95.3 million for
the nine months ended September 30, 1995 and 1996, respectively.  This increase
was due to MMHD interest income of $14.3 million and a decrease in net
financing and investment expense of $0.4 million.  Offsetting these increases
was a decrease in net gains on the sales of investment securities from $13.1
million for the nine months ended September 30, 1995 to $12.7 million for the
current period. Excluding MMHD, interest and dividend income would have
decreased to $81.1 million as a result of cash and investments used in the
acquisitions of MMHD and the BCC Commercial Operations.  Excluding MMHD net
gains on the disposal of assets of $0.7 million, net gains would have decreased
to $12.0 million.

Health care services and other benefits expense increased 31.6% to $2,159.1
million for the first nine months of 1996 from $1,640.9 million for the same
period in 1995.  Of the





                                       21
<PAGE>   24



COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995 (CONTINUED)

$518.2 million increase, $260.9 million was attributable to MMHD and $115.6
million was attributable to the BCC Commercial Operations.  Excluding MMHD and
the BCC Commercial Operations, increased health care services also resulted
from medical membership growth.  In addition, mix and product design changes,
such as the introduction of the Company's new Prudent Buyer Co-pay product
(which replaced deductibles with co- payments), benefits design changes which
eliminated deductibles for some pharmacy products, and growth in the workers'
compensation business also contributed to the increase.  These increases were
partially offset by savings from hospital recontracting, which was implemented
January 1, 1996. Additional savings were realized by savings from specialist
and laboratory recontracting, which was implemented during the third quarter of
1995.

The loss ratio for the first nine months of 1996 increased to 77.1% compared to
75.2% in 1995 due to the PPO benefits changes described above, an increase in
the loss and loss adjustment expense reserves related to a portion of the
Company's workers' compensation business and the incremental effect of the BCC
Commercial Operations on the Company's overall results. The BCC Commercial
Operations has traditionally experienced a higher loss ratio than the Company.
Additionally, the Company may experience higher loss ratios during the
remainder of 1996 and in future periods due to the incremental effect of the
BCC Commercial Operations and MMHD (which has also historically experienced a
higher loss ratio than the Company).  The increase in the loss ratio was
partially offset by the Company's continuing cost containment efforts, such as
the hospital recontracting program.  Excluding the Company's workers'
compensation business and the acquisitions of the MMHD operations and the BCC
Commercial Operations, the loss ratio was 75.0% for the nine months ended
September 30, 1996.  The loss ratio for the same period in 1995, also excluding
the workers' compensation business, was 74.9%.

Selling expense for the nine months ended September 30, 1996 increased 17.5% to
$166.8 million compared to $141.9 million for the comparable period in 1995,
corresponding with continued overall premium revenue growth and an additional
$14.1 million in selling expense attributable to MMHD.  The selling expense
ratio decreased for the first nine months of 1996 to 5.7% from 6.4% for the
prior year, largely due to the acquisitions of MMHD and the BCC Commercial
Operations, which both have a lower selling expense ratio than the Company's
existing business.  Excluding the acquisitions, the selling expense ratio would
have been 6.4% for the nine months ended September 30, 1996, consistent with
the comparable period in the prior year.

General and administrative expense for the nine months ended September 30, 1996
increased 51.8% to $388.9 million from $256.1 million for the same period in
1995.  Of the $132.8 million increase, $100.7 million resulted from the MMHD
Acquisition.  The administrative expense ratio increased to 13.4% for the first
nine months of 1996 compared





                                       22
<PAGE>   25



COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1995 (CONTINUED)

to 11.5% in 1995 primarily due to the increased administrative expense
associated with the Company's continued investment in geographic expansion and
the MMHD Acquisition. The increase was partially offset by the BCC Commercial
Operations' lower administrative expense ratio.  Excluding MMHD and the BCC
Commercial Operations, the administrative expense ratio would have been 11.8%.
MMHD has historically had a higher administrative expense ratio due to its
higher percentage of management services business.

Interest expense was $23.3 million for the nine months ended September 30,
1996.  The Company had no interest expense during the comparable period in
1995. The interest expense in the current period related to $775.0 million
drawn under the Company's revolving credit facility on May 15, 1996 to fund a
special dividend paid in connection with the Recapitalization, as well as
interest on the amounts payable to MassMutual, including a Series A term note
of $62.0 million issued in connection with the MMHD Acquisition.  At September
30, 1996, the outstanding balance drawn under the credit facility was $685.0
million. The weighted average interest rate for the nine months ended
September 30, 1996 was 6.00%.

WellPoint's net income for the nine months ended September 30, 1996 was $155.0
million or $2.33 per share compared to $166.7 million or $2.51 per share for
the nine months ended September 30, 1995.  Earnings per share for the nine
months ended September 30, 1996 have been recomputed using 66.4 million shares,
the number of shares outstanding immediately following the Recapitalization,
plus the weighted average number of shares issued since the Recapitalization.
The number of shares outstanding for the nine months ended September 30, 1995
has been recomputed to 66.4 million, the number of shares outstanding
immediately following the Recapitalization, to give effect to the share
exchange that occurred in connection with the Recapitalization.  Earnings per
share is determined by dividing net income by the weighted average number of
common shares outstanding.  (See Note 3 to the Consolidated Financial
Statements for a fuller description of the actions taken in connection with the
Recapitalization.)

FINANCIAL CONDITION

The Company's consolidated assets increased by $768.6 million to $3,447.9
million as of September 30, 1996.  This represents a 28.7% increase from
$2,679.3 million as of December 31, 1995 and resulted primarily from the
acquisitions of MMHD and the BCC Commercial Operations as well as cash flow
generated from operations.  Cash and investments were $2,145.7 million as of
September 30, 1996 or 62.2% of total assets.





                                       23
<PAGE>   26



FINANCIAL CONDITION (CONTINUED)

The Company issued a Series A term note for $62.0 million during the first
quarter of 1996 for the MMHD Acquisition.  Under the terms of the acquisition
agreement, the Company was obligated to issue a Series B term note based upon
the results of a post-closing audit.  During the first quarter of 1996, the
Company accrued for the Series B term note in an amount estimated at $18.0
million.  In August 1996, WellPoint paid $22.2 million to MassMutual in full
satisfaction of this obligation.  Also outstanding at September 30, 1996 was
$685.0 million under the Company's revolving credit facility incurred for
payment of a special dividend to the Old WellPoint stockholders in connection
with the Recapitalization. (See Note 3. Acquisitions and Recapitalization and
Note 4. Long-Term Debt.) The Company had no long-term borrowings outstanding as
of December 31, 1995.

Equity totaled $812.1 million as of September 30, 1996, a decrease of $858.1
million from December 31, 1995.  The decrease resulted primarily from the $995.0
million dividend to the Old WellPoint stockholders (see Note 3. Acquisitions and
Recapitalization) and a $22.2 million decrease in the unrealized valuation
adjustment on investment securities, net of deferred taxes, due to an increase
in market interest rates in 1996 compared to 1995.  The decrease was partially
offset by net income of $155.0 million for the first nine months of 1996.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of cash are from premiums and management services
revenues received and investment income.  The primary uses of cash include
health care claims, capitation payments, income taxes, repayment of long-term
debt, interest expense, broker and agent commissions and administrative
expenses.  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 September 30, 1996, the Company's investment portfolio
consisted primarily of fixed maturity securities (which are primarily rated "A"
or better by rating agencies) and equity securities.

Net cash flow provided by operating activities was $271.1 million for the nine
months ended September 30, 1996 compared with $136.7 million for the comparable
period in 1995.  The increase in positive cash flow from operations is mainly
due to continuing operations as well as additional revenue generated through
the acquisitions of MMHD and the BCC Commercial Operations as well as increased
membership growth in the individual, small group, senior and Medi-Cal segments.
The cash provided by these activities was partially offset by an increase in
the provision for deferred income tax benefits and an increase in other
non-current assets due to a net $23.6 million that the Company paid in the 1996
first quarter in connection with a new lease for the Company's headquarters
building.





                                       24
<PAGE>   27



LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

Net cash used by investing activities for the first nine months of 1996 totaled
$708.0 million, compared with net cash provided by investing activities of
$428.6 million for the comparable period in 1995.  The additional cash used
resulted in part from investment purchases of $755.1 million in 1996.  In 1995,
the net proceeds from the sale and maturities of investments were invested in
cash equivalents in anticipation of the cash requirements for the acquisitions
of MMHD and the BCC Commercial Operations as well as the dividend to the Old
WellPoint stockholders in connection with the Recapitalization.  Under the terms
of the acquisition agreement, the Company was obligated to issue a Series B term
note based upon the results of a post-closing audit.  In August 1996, the
Company paid $22.2 million in full satisfaction of this obligation.  The MMHD
operations were acquired for a total purchase price of $402.2 million (including
the payment in satisfaction of the Series B note obligation).  MMHD cash
acquired was $28.1 million.  The net cash used for the MMHD Acquisition amounted
to $312.1 million.  The BCC Commercial Operations were acquired during the
second quarter of 1996 for a purchase price of $235.0 million.  Cash acquired
from the BCC Commercial Operations was $122.7 million, resulting in net cash
used for the acquisition of $112.3 million. Additional costs of $16.7 million
were incurred for the acquisitions.  (See Note 3. Acquisitions and
Recapitalization.)

In connection with the Recapitalization, the Company entered into a $1.25
billion unsecured credit facility.  Borrowings under the credit facility bear
interest at rates determined by reference to the Bank of America base rate or
to the London Interbank Offered Rate ("LIBOR") plus a margin determined by
reference to the Company's leverage ratio 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, 2001, although
it may be extended for two additional one-year periods under certain
circumstances.  The credit agreement requires that the Company comply with
certain minimum net worth, leverage ratio and fixed charge coverage ratio
requirements and contains certain other customary restrictions, 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
$685.0 million as of September 30, 1996.  The indebtedness under the credit
facility had a weighted average interest rate of 5.84% as of September 30,
1996.  The weighted average interest rate for the credit facility from
May 15, 1996, the initial draw date, through September 30, 1996 was 5.84%.

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 September 30, 1996, no indebtedness had been issued pursuant to this
registration statement.

In order 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





                                       25
<PAGE>   28



LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

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.

The Company is required to maintain minimum tangible net equity ("TNE") by the
Company's primary regulator, the California Department of Corporations (the
"DOC"), and is required to meet minimum capital requirements prescribed by the
Blue Cross Blue Shield Association (the "BCBSA").  In measuring capital for the
BCBSA, the Company is required to use the method prescribed by the DOC.  The
failure to meet a specified level (the "Minimum BCBSA Capital") of the BCBSA's
base capital requirement can subject the Company to certain corrective actions,
while the failure to meet a lower specified level can result in termination of
the Company's license agreement with the BCBSA.  As of September 30, 1996, the
Company's TNE (and its capital for BCBSA purposes) was approximately $284.0
million and the Minimum BCBSA Capital was approximately $247.4 million.  The
Minimum BCBSA Capital requirement, which is more restrictive than DOC
requirements, will increase as of December 31, 1996.  In addition, the
acquisition of the GBO will cause a decrease in the Company's capital for
purposes of BCBSA requirements, because goodwill must be excluded from TNE (and
thus from BCBSA capital).

In order to address an anticipated shortfall in the Company's capital, in
October 1996, the Company received a commitment letter from the Bank of America
National Trust and Savings Association ("Bank of America NT&SA") for a two-year
unsecured subordinated term loan facility (the "Subordinated Debt Facility") for
$200.0 million which will mature on December 31, 1998.  The Company intends to
finance the acquisition of GBO through the incurrence of subordinated
indebtedness.  The DOC regulations permit the Company to include in TNE (and
thus in capital for BCBSA purposes) any indebtedness subordinated to the
Company's obligation to maintain the DOC's required minimum TNE (approximately
$20.0 million as of September 30, 1996).  Pursuant to the terms of this
commitment letter, the Company will be able to make borrowings under the
Subordinated Debt Facility between December 15, 1996 and February 15, 1997. Such
borrowings will bear interest at interest rates determined by reference to the
Bank of America base rate or to LIBOR plus a margin determined by reference to
the Company's leverage ratio or the then-current rating of the Company's
unsecured long-term debt by specified rating agencies.  The applicable margin
will increase with respect to any borrowings outstanding as of July 1, 1997.
Interest will be paid quarterly.  The Subordinated Debt Facility will require
compliance with certain financial ratio and other requirements similar to those
in the Company's current credit facility; however, the Company believes that
repayment of borrowings will be subordinated in a manner acceptable to the DOC
Commissioner to allow borrowings to be counted as TNE.  The Subordinated Debt
Facility will also require that the proceeds of certain sales of capital stock
or subordinated debt issued by the Company be used to repay outstanding amounts
under the Subordinated Debt Facility.  All borrowings under the Subordinated
Debt Facility will become due on December 31, 1998.  The Company intends to
promptly negotiate the terms of definitive





                                       26
<PAGE>   29





documentation related to the Subordinated Debt Facility or take other
appropriate actions so that the Company will meet the Minimum BCBSA Capital
requirements as of December 31, 1996 and after acquisition of the GBO.

The Company believes that cash flow generated by operations, its cash and
investment balances, its existing credit facility (see Note 4. Long- Term Debt),
its debt registration statement and the anticipated subordinated indebtedness
will be sufficient to fund continuing operations, the pending acquisition and
other capital requirements for the foreseeable future.

EXTERNAL INFLUENCES WHICH MAY IMPACT FUTURE OPERATIONS

The health care industry is affected by various external factors, including
rising health care costs, intense price competition, health care reform
(including the recently enacted federal health care reform legislation) and
other regulatory issues.  As the Company focuses on its future as a leader in
the health care industry, management continues to monitor these and other
factors that contribute to uncertainty in the health care environment.

The Company's future results will depend in large part on accurately predicting
health care costs and upon its ability to control future health care costs
through underwriting criteria, utilization management and negotiation of
favorable provider contracts.  The aging of the population and other
demographic characteristics and advances in medical technology continue to
contribute to rising health care costs.  Changes in health care practices,
inflation, new technologies and numerous other factors affecting the delivery
and cost of health care, many of which are beyond the control of the Company,
may adversely affect the Company's ability to predict and control health care
costs and claims.

WellPoint operates primarily in a single industry segment, managed health care.
The two primary business activities within the segment ([a] managed care
products and [b] management services products, including specialty managed care
services) are marketed through two internal business units which are organized
on a geographic basis, Blue Cross of California and UNICARE.  The geographic
business units are divided further into individual and small group businesses
versus larger employers because of the distinctive differences in the focus
needed in targeting each of these markets.  The combined cost ratios (medical
costs and expenses) for the small group and individual businesses and the large
group business vary due primarily to differing product mix between the managed
care and management services products and different distribution costs.  A
greater percentage of small group and individual membership is comprised of
higher risk managed care products, which tend to be more profitable than the
lower risk managed care and management services products as a result of higher
deductibles and co-payments and increased profit margins generally associated
with higher underwriting risks.  The group services membership is comprised
primarily of capitated managed care products and management services products
which result in lower margins as a result of the lower level of underwriting
risk related to the capitated products and the non-risk nature of the
management services products.  However, over the past three years, margin
erosion has been greater in the individual and small group business than in the
large group business





                                       27
<PAGE>   30



EXTERNAL INFLUENCES WHICH MAY IMPACT FUTURE OPERATIONS (CONTINUED)

primarily as a result of slower growth in membership, product mix change and
greater competitive pressure on premium increases.  The spread between the
profitability of the individual and small group business and large group
business in California was 6.4% for the nine months ended September 30, 1996
and 7.7% for the nine months ended September 30, 1995.





                                       28
<PAGE>   31



                          PART II.  OTHER INFORMATION


ITEM 1.  Legal Proceedings

See Note 6 - Commitments and Contingencies for information regarding legal
proceedings.


ITEM 5.  Other Information

See Note 3 - Acquisitions and Recapitalization.





                                       29
<PAGE>   32
         (a)     Exhibits

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>         <C>
          2.01        Recapitalization Agreement dated as of March 31, 1995
                      by and among Blue Cross of California, WellPoint
                      Health Networks Inc., Western Health Partnerships and
                      Western Foundation for Health Improvement,
                      incorporated by reference to Exhibit 2.1 of
                      Registrant's Form S-4 dated April 8, 1996

          2.02        Purchase and Sale Agreement, dated as of January 5,
                      1996, by and among the Registrant and Massachusetts
                      Mutual Life Insurance Company, incorporated by
                      reference to Exhibit 2.1 of Registrant's 8-K dated
                      January 5, 1996

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

          3.01        Amended and Restated Articles of Incorporation of the
                      Registrant, incorporated by reference to Exhibit 3.1
                      of Registrant's Form 8-K dated May 20, 1996

          3.02        Bylaws of the Registrant, incorporated by reference to
                      Exhibit 3.2 of Registrant's Form 8-K dated May 20,
                      1996

          3.03        Agreement of Merger dated as of May 20, 1996 by and
                      among the Registrant, WellPoint Health Networks Inc.,
                      a Delaware corporation, Western Health Partnerships
                      and Western Foundation for Health Improvement,
                      incorporated by reference to Exhibit 3.3 of
                      Registrant's Form 8-K dated May 20, 1996

          4.01        Specimen of common stock certificate of WellPoint
                      Health Networks Inc., incorporated by reference to
                      Exhibit 4.1 of Registrant's Form S-4 dated April 8,
                      1996

         10.01        Line of Business Assignment and Assumption Agreement
                      dated as of February 1, 1993 among the Registrant, its
                      subsidiaries and BCC, incorporated by reference to
                      exhibit 10.01 of Registrant's Form 10-K for the fiscal
                      year ended December 31, 1992

         10.02        Administrative Services and Product Marketing
                      Agreement dated as of February 1, 1993 among the
                      Registrant, its subsidiaries and BCC, incorporated by
                      reference to Exhibit 10.02 of Registrant's Form 10-K
                      for the fiscal year ended December 31, 1992
</TABLE>





                                       30
<PAGE>   33
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>         <C>
         10.03        Master Subscriber Agreements dated as of January 27,
                      1993 between the Registrant's subsidiaries and BCC,
                      incorporated by reference to Exhibit 10.03 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992

         10.04        Tax Allocation Agreement dated as of February 1, 1993
                      among the Registrant, its subsidiaries and BCC and its
                      subsidiaries, incorporated by reference to Exhibit
                      10.04 of Registrant's Form 10-K for the fiscal year
                      ended December 31, 1992

         10.05        Office Building Lease for Corporate Headquarters,
                      dated December 17, 1987, between BCC and JMB/Warner
                      Center Associates, incorporated by reference to
                      Exhibit 10.05 of the Registrant's Form S-1
                      Registration Statement No. 33-54898

         10.06        Office Space Lease for Oakland, CA offices, dated
                      December 10, 1985, between BCC and Webster Street
                      Partners, Ltd., incorporated by reference to Exhibit
                      10.06 of the Registrant's Form S-1 Registration
                      Statement No. 33-54898

         10.07        Office Space Lease for Westlake, CA offices, dated
                      October 29, 1986, between BCC and Westlake Business
                      Park, Ltd., incorporated by reference to Exhibit 10.07
                      of the Registrant's Form S-1 Registration Statement
                      No. 33-54898

         10.08        Administrative Agreement, dated as of June 1, 1988,
                      between BCC and INSURx, Inc., incorporated by
                      reference to Exhibit 10.08 of the Registrant's Form
                      S-1 Registration Statement No. 33-54898

         10.09        License Agreement dated January 1, 1991 between the
                      Blue Cross Blue Shield Association and BCC,
                      incorporated by reference to Exhibit 10.22 of
                      Registrant's Form S-1 Registration Statement No.
                      33-54898

         10.10        Controlled Affiliate License Agreement dated January
                      8, 1993 among the Blue Cross Blue Shield Association,
                      CaliforniaCare Health Plans and BCC, incorporated by
                      reference to Exhibit 10.23 of Registrant's Form S-1
                      Registration Statement No. 33-54898

         10.11        Undertakings dated January 7, 1993 by BCC, the
                      Registrant and the Registrant's subsidiaries to the
                      California Department of Corporations, incorporated by
                      reference to Exhibit 10.24 of Registrant's Form S-1
                      Registration Statement No. 33-54898
</TABLE>





                                       31
<PAGE>   34
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>         <C>
         10.12        Office Space Lease for Newbury Park, CA offices, dated
                      January 13, 1993 between BCC and Metropolitan Life
                      Insurance Company, incorporated by reference to
                      Exhibit 10.12 of Registrant's Form 10-K for the fiscal
                      year ended December 31, 1992

         10.13        Office Space Lease for Calabasas, CA offices, dated
                      August 26, 1992 between BCC and Lost Hills Office
                      Partners, First Amendment to Office Lease between Lost
                      Hills Office Partners and BCC, dated November 1, 1992,
                      and Subordination, Non-Disturbance and Attornment
                      Agreement, dated January 7, 1993, between BCC and DAG
                      Management, incorporated by reference to Exhibit 10.13
                      of Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992

         10.14        WellPoint Health Networks Inc. Officer Change in
                      Control Plan,  incorporated by reference to Exhibit
                      10.14 of Registrant's Form 10-K for the fiscal year
                      ended December 31, 1993

         10.15        Supplemental Pension Plan of Blue Cross of California,
                      incorporated by reference to Exhibit 10.15 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992

         10.16        Blue Cross of California Deferred Compensation Plan,
                      incorporated by reference to Exhibit 10.13 of the
                      Registrant's Form S-1 Registration Statement No.
                      33-54898

         10.17        Form of Supplemental Life and Disability Insurance
                      Policy, incorporated by reference to Exhibit 10.14 of
                      the Registrant's Form S-1 Registration Statement No.
                      33-54898

         10.18        Employment Agreement, dated June 6, 1991, between the
                      Registrant and Leonard D. Schaeffer, incorporated by
                      reference to Exhibit 10.15 of the Registrant's Form
                      S-1 Registration Statement No. 33-54898

         10.19        Special Executive Retirement Plan dated as of March
                      29, 1993 among BCC, the Registrant and Leonard D.
                      Schaeffer, incorporated by reference to Exhibit 10.19
                      of Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992

         10.20        Form of Indemnification Agreement between the
                      Registrant and its Directors and Officers,
                      incorporated by reference to Exhibit 10.17 of the
                      Registrant's Form S-1 Registration Statement No.
                      33-54898

         10.21        Management Retention Agreement, dated as of January 8,
                      1993 between the Registrant and D. Mark Weinberg,
                      incorporated by reference to Exhibit 10.21 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992
</TABLE>





                                       32
<PAGE>   35
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>          <C>
         10.22        Management Retention Agreement, dated as of January 8,
                      1993 between the Registrant and Ronald Williams,
                      incorporated by reference to Exhibit 10.22 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1992

         10.23        Management Retention Agreement, dated as of January 8,
                      1993 between the Registrant and Yon Y. Jorden,
                      incorporated by reference to Exhibit 10.23 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.24        Officer Severance Agreement, dated as of July 1, 1993,
                      between the Registrant and Thomas C. Geiser,
                      incorporated by reference to Exhibit 10.24 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.25        First Amendment to Special Executive Retirement Plan
                      dated as of March 29, 1993 among BCC, the Registrant
                      and Leonard D. Schaeffer (Exhibit 10.19), effective
                      January 1, 1993, incorporated by reference to Exhibit
                      10.25 of Registrant's Form 10-K for the fiscal year
                      ended December 31, 1993

         10.26        WellPoint Health Networks Inc. Long-Term Performance
                      Incentive Plan, effective February 1, 1993,
                      incorporated by reference to Exhibit 10.26 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.27        WellPoint Companies Management Incentive Award Plan
                      1993, incorporated by reference to Exhibit 10.27 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.28        CaliforniaCare Health Plans Management Incentive Award
                      Plan 1993, incorporated by reference to Exhibit 10.28
                      of Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.29        Executive Benefiting You Highlights Brochure,
                      incorporated by reference to Exhibit 10.29 of
                      Registrant's Form 10-K for the fiscal year ended
                      December 31, 1993

         10.30        Employment Agreement, dated November 9, 1994, between
                      the Registrant and Leonard D. Schaeffer, incorporated
                      by reference to Exhibit 10.30 of Registrant's Form
                      10-K for the fiscal year ended December 31, 1994

         10.31        Amendment to Employment Agreement dated June 6, 1991
                      between BCC and  Leonard D. Schaeffer (Exhibit 10.18),
                      effective December 8, 1994, incorporated by reference
                      to Exhibit 10.31 of Registrant's Form 10-K for the
                      fiscal year ended December 31, 1994
</TABLE>





                                       33
<PAGE>   36
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>     <C>
         10.32   WellPoint Health Networks Inc. 1994 Long-Term Incentive
                 Plan, incorporated by reference to Exhibit 10.32 of
                 Registrant's Form 10-K for the fiscal year ended December
                 31, 1994

         10.33   WellPoint Health Networks Inc. Officer Change in Control
                 Plan as amended January 5, 1995, incorporated by reference
                 to Exhibit 10.33 of Registrant's Form 10-K for the fiscal
                 year ended December 31, 1994

         10.34   Form of Officer Severance Agreement of the Registrant,
                 incorporated by reference to Exhibit 10.34 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1994

         10.35   WellPoint Health Networks Inc. Management Retention
                 Agreement between the Registrant and Ronald A. Williams,
                 amended and restated effective as of January 5, 1995,
                 incorporated by reference to Exhibit 10.35 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1994

         10.36   WellPoint Health Networks Inc. Management Retention
                 Agreement between the Registrant and D. Mark Weinberg,
                 amended and restated effective as of January 5, 1995,
                 incorporated by reference to Exhibit 10.36 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1994

         10.37   WellPoint Health Networks Inc. Management Retention
                 Agreement between the Registrant and David S. Helwig,
                 amended and restated effective as of January 5, 1995,
                 incorporated by reference to Exhibit 10.37 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1994

         10.38   WellPoint Health Networks Inc. Management Retention
                 Agreement between the Registrant and Yon Y. Jorden, amended
                 and restated January 5, 1995, incorporated by reference to
                 Exhibit 10.38 of Registrant's Form 10-K for the fiscal year
                 ended December 31, 1994

         10.39   Amendment to Administrative Services and Product Marketing
                 Agreement dated as of February 1, 1993 among the
                 Registrant, its subsidiaries and BCC (Exhibit 10.02),
                 amended as of January 1, 1995, incorporated by reference to
                 Exhibit 10.39 of Registrant's Form 10-K for the fiscal year
                 ended December 31, 1994

         10.40   Amendment to Administrative Services and Product Marketing
                 Agreement dated as of February 1, 1993 among the
                 Registrant, its subsidiaries and BCC (Exhibit 10.02),
                 amended as of February 1, 1995, incorporated by reference
                 to Exhibit 10.40 of Registrant's Form 10-K for the fiscal
                 year ended December 31, 1994
</TABLE>





                                       34
<PAGE>   37
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>     <C>
         10.41   Agreement of Purchase and Sale and Escrow Instructions,
                 dated as of December 16, 1994, between Registrant and
                 Pardee Construction Company, incorporated by reference to
                 Exhibit 10.41 of Registrant's Form 10-K for the fiscal year
                 ended December 31, 1994

         10.42   First Amendment to Office Building Lease for Corporate
                 Headquarters dated December 17, 1987 between BCC and
                 JMB/Warner Center Associates (Exhibit 10.05), dated as of
                 February 7, 1989, incorporated by reference to Exhibit
                 10.42 of Registrant's Form 10-K for the fiscal year ended
                 December 31, 1994

         10.43   Credit Agreement, dated as of October 19, 1994, among the
                 Registrant, Bank of America, National Trust and Savings
                 Association, Chemical Bank and Other Financial
                 Institutions, incorporated by reference to Exhibit 10.43 of
                 Registrant's Form 10-K for the fiscal year ended December
                 31, 1994

         10.44   First Amendment to Credit Agreement, dated as of March 7,
                 1995, among the Registrant, Bank of America National Trust
                 and Savings Association, and other Financial Institutions,
                 incorporated by reference to Exhibit 10.44 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1994

         10.45   Orders Approving Notice of Material Modification and
                 Undertakings dated September 7, 1995 by BCC, the Registrant
                 and the Registrant's subsidiaries to the California
                 Department of Corporations, incorporated by reference to
                 Exhibit 10.47 of Registrant's Form 10-Q for the quarter
                 ended September 30, 1995

         10.46   Second Amendment to Credit Agreement, dated as of October
                 16, 1995, among the Registrant, Bank of America National
                 Trust and Savings Association and other Financial
                 Institutions, incorporated by reference to Exhibit 10.48 of
                 Registrant's Form 10-Q for the quarter ended September 30,
                 1995

         10.47   WellPoint Health Networks Inc. Stock Option/Award Plan,
                 incorporated by reference to Exhibit 10.45 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1995

         10.48   Lease Agreement, dated as of January 1, 1996, by and
                 between TA/Warner Center Associates II, L.P., and the
                 Registrant (supersedes Exhibit 10.05 and Exhibit 10.42),
                 incorporated by reference to Exhibit 10.46 of Registrant's
                 Form 10-K for the fiscal year ended December 31, 1995

         10.49   Letter, dated November 13, 1995, from the Registrant to
                 Ronald A. Williams regarding severance benefits, together
                 with underlying Officer Severance Agreement, incorporated
                 by reference to Exhibit 10.47 of Registrant's Form 10-K for
                 the fiscal year ended December 31, 1995
</TABLE>





                                       35
<PAGE>   38
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>     <C>
         10.50   Letter, dated November 13, 1995 from the Registrant to D.
                 Mark Weinberg regarding severance benefits, together with
                 underlying Officer Severance Agreement, incorporated by
                 reference to Exhibit 10.48 of Registrant's Form 10-K for
                 the fiscal year ended December 31, 1995

         10.51   Letter, dated November 13, 1995, from the Registrant to
                 Thomas C. Geiser regarding severance benefits, incorporated
                 by reference to Exhibit 10.49 of Registrant's Form 10-K for
                 the fiscal year ended December 31, 1995

         10.52   Amended and Restated Undertakings dated March 5, 1996 by
                 BCC, the Registrant and the Registrant's Subsidiaries to
                 the California Department of Corporations, incorporated by
                 reference to Exhibit 99.1 of the Registrant's Current
                 Report on Form 8-K dated March 5, 1996

         10.53   Senior Series A Term Note dated March 31, 1996 between the
                 Registrant and Massachusetts Mutual Life Insurance Company,
                 incorporated by reference to Exhibit 10.53 of the
                 Registrant's Form 10-Q for the Quarter ended March 31, 1996

         10.54   Voting Trust Agreement dated as of May 20, 1996 by and
                 between the Registrant, Western Health Partnerships and
                 Wilmington Trust Company, incorporated by reference to
                 Exhibit 99.2 of Registrant's Form 8-K dated May 20, 1996

         10.55   Voting Agreement dated as of May 8, 1996 by and among the
                 Registrant and Western Health Partnerships, incorporated by
                 reference to Exhibit 99.3 of Registrant's Form 8-K dated
                 May 20, 1996

         10.56   Share Escrow Agent Agreement dated as of May 20, 1996 by
                 and between the Registrant and U.S. Trust Company of
                 California, N.A., incorporated by reference to Exhibit 99.4
                 of Registrant's Form 8-K dated May 20, 1996

         10.57   Registration Rights Agreement dated as of May 20, 1996 by
                 and between the Registrant and Western Health Partnerships,
                 incorporated by reference to Exhibit 99.5 of Registrant's
                 Form 8-K dated May 20, 1996

         10.58   Blue Cross License Agreement effective as of May 20, 1996
                 by and among the Blue Cross and Blue Shield Association and
                 the Registrant (supersedes Exhibit 10.09), incorporated by
                 reference to Exhibit 99.6 of Registrant's Form 8-K dated
                 May 20, 1996

         10.59   California Blue Cross License Addendum effective as of May
                 20, 1996 by and between the Blue Cross and Blue Shield
                 Association and the Registrant, incorporated by reference
                 to Exhibit 99.7 of Registrant's Form 8-K dated May 20, 1996
</TABLE>





                                       36
<PAGE>   39
         (a)     Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number      Exhibit
         ------      -------
         <S>     <C>
         10.60   Blue Cross Affiliated License Agreement effective as of May
                 20, 1996 by and between the Blue Cross and Blue Shield
                 Association and CaliforniaCare Health Plans, incorporated
                 by reference to Exhibit 99.8 of Registrant's Form 8-K dated
                 May 20, 1996

         10.61   Indemnification Agreement dated as of May 17, 1996 by and
                 among the Registrant, WellPoint Health Networks Inc., a
                 Delaware corporation, and Western Health Partnerships,
                 incorporated by reference to Exhibit 99.9 of Registrant's
                 Form 8-K dated May 20, 1996

         10.62   Credit Agreement dated as of May 15, 1996 by and among the
                 Registrant, Bank of America National Trust and Savings
                 Association, as Administrative Agent, NationsBank of Texas,
                 N.A., as Syndication Agent, Chemical Bank, as Documentation
                 Agent, and the Other Financial Institutions named therein,
                 incorporated by reference to Exhibit 99.10 of Registrant's
                 Form 8-K dated May 20, 1996

         10.63   WellPoint Health Networks Inc. Employee Stock Option Plan,
                 incorporated by reference to the Registrant's Registration
                 Statement on Form S-8 (Registration No. 333-05111)

         10.64   WellPoint Health Networks Inc. Employee Stock Purchase
                 Plan, incorporated by reference to the Registrant's
                 Registration Statement on Form S-8 (Registration No. 333-
                 05111)

         10.65   Amendment No. 1 dated as of June 28, 1996 to the
                 Registrant's Credit Agreement dated as of May 15, 1996.

         27.1    Financial Data Schedule
</TABLE>

         (b) Reports on Form 8-K
                 No reports on Form 8-K were filed during the quarter ended
                 September 30, 1996.





                                       37
<PAGE>   40


                                   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: November 12, 1996                By: \s\ LEONARD D. SCHAEFFER
                                          --------------------------------
                                          Leonard D. Schaeffer
                                          Chairman of the Board of Directors
                                          and Chief Executive Officer



Date: November 12, 1996                By: \s\ HOWARD G. PHANSTIEL
                                          --------------------------------
                                          Howard G. Phanstiel
                                          Executive Vice President
                                          Finance and Information Services



Date: November 12, 1996                By: \s\ YON Y. JORDEN
                                          --------------------------------
                                          Yon Y. Jorden
                                          Senior Vice President and
                                          Chief Financial Officer





                                       38