<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 JUNE 30, 1997

                                       OR

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

                For the transition period from ______ to _______

                        COMMISSION FILE NUMBER 001-13803

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

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

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

        Registrant's telephone number, including area code (8L8) 703-4000

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

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

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

            TITLE OF EACH CLASS                OUTSTANDING AT AUGUST 13, 1997
            -------------------                ------------------------------
       Common Stock, $0.0l par value                  69,623,169 shares


<PAGE>   2
                         WELLPOINT HEALTH NETWORKS INC.
                          SECOND QUARTER 1997 FORM 10-Q
                                TABLE OF CONTENTS


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

    ITEM 1.       Financial Statements

                  Consolidated Balance Sheets as of June 30, 1997 and
                       December 31, 1996.................................................................. 1

                  Consolidated Income Statements for the Three and Six Months
                       Ended June 30, 1997 and 1996....................................................... 2


                  Consolidated Statement of Changes in Stockholders' Equity
                       for the Six Months Ended June 30, 1997............................................. 3


                  Consolidated Statements of Cash Flows for the
                       Six Months Ended June 30, 1997 and 1996............................................ 4


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

    ITEM 2.       Management's Discussion and Analysis of
                       Financial Condition and Results of Operations..................................... 11

PART II.  OTHER INFORMATION

    ITEM 2.       Changes in Securities.................................................................. 27

    ITEM 4.       Submission of Matters to a Vote of Securityholders..................................... 28

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

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

SIGNATURES............................................................................................... 40
</TABLE>


<PAGE>   3
ITEM 1.  Financial Statements

                         WELLPOINT HEALTH NETWORKS INC.
                           Consolidated Balance Sheets


<TABLE>
<CAPTION>
(In thousands, except share data)                                                     June 30,           December 31,
                                                                                        1997                1996
                                                                                    -------------       -------------
<S>                                                                                 <C>                 <C>          
ASSETS                                                                               (unaudited)
Current Assets:
     Cash and cash equivalents                                                      $     381,685       $     313,256
     Investment securities, at market value                                             2,180,456           1,728,305
     Receivables, net                                                                     548,774             401,300
     Deferred tax assets                                                                   68,227              67,147
     Other current assets                                                                  40,206              28,463
                                                                                    -------------       -------------
        Total Current Assets                                                            3,219,348           2,538,471
Property and equipment, net                                                                98,363              82,720
Intangible assets                                                                         692,071             552,279
Long-term investments                                                                     125,711             123,931
Deferred tax assets                                                                        73,364              57,830
Other non-current assets                                                                   50,191              50,311
                                                                                    -------------       -------------
                Total Assets                                                        $   4,259,048       $   3,405,542
                                                                                    =============       =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Medical claims payable                                                         $     731,165       $     667,540
     Loss and loss adjustment expense reserves                                            106,402             102,152
     Reserves for future policy benefits                                                   43,848              13,001
     Unearned premiums                                                                    181,908             160,036
     Accounts payable and accrued expenses                                                319,232             251,480
     Experience rated and other refunds                                                   237,687             146,882
     Income taxes payable                                                                  99,729              99,086
     Other current liabilities                                                            308,466             118,303
                                                                                    -------------       -------------
        Total Current Liabilities                                                       2,028,437           1,558,480
Accrued postretirement benefits                                                            62,800              61,086
Loss and loss adjustment expense reserves, non-current                                    137,642             131,079
Reserves for future policy benefits, non-current                                          405,402              91,507
Long-term debt                                                                            464,000             625,000
Other non-current liabilities                                                              75,096              67,931
                                                                                    -------------       -------------
        Total Liabilities                                                               3,173,377           2,535,083
Stockholders' Equity:
     Preferred Stock - $0.01 par value, 50,000,000 shares
        authorized, none issued and outstanding                                              --                  --
     Common Stock - $0.01 par value, 300,000,000 shares authorized, 69,622,953
        and 66,526,985 issued and outstanding at June 30, 1997 and
        December 31, 1996, respectively                                                       696                 665
     Additional paid-in capital                                                           875,973             761,879
     Unrealized valuation adjustment                                                       (8,925)             (9,994)
     Retained earnings                                                                    217,927             117,909
                                                                                    -------------       -------------
        Total Stockholders' Equity                                                      1,085,671             870,459
                                                                                    -------------       -------------
                Total Liabilities and Stockholders' Equity                          $   4,259,048       $   3,405,542
                                                                                    =============       =============
</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 June 30,     Six Months Ended June 30,
                                            --------------------------      --------------------------
                                               1997            1996            1997            1996
                                            ----------      ----------      ----------      ----------
<S>                                         <C>             <C>             <C>             <C>       
Revenues:
    Premium revenue                         $1,330,685      $  985,665      $2,499,523      $1,748,949
    Management services revenue                109,276          43,435         171,721          61,663
    Investment income                           45,648          36,359          85,997          72,429
                                            ----------      ----------      ----------      ----------
                                             1,485,609       1,065,459       2,757,241       1,883,041
Operating Expenses:
    Health care services and
      other benefits                         1,083,279         762,953       2,004,151       1,334,738
    Selling expense                             64,911          58,261         124,681         107,727
    General and administrative expense         231,533         143,491         412,100         235,765
    Nonrecurring costs                           8,028            --            14,535            --
                                            ----------      ----------      ----------      ----------
                                             1,387,751         964,705       2,555,467       1,678,230
                                            ----------      ----------      ----------      ----------
Operating Income                                97,858         100,754         201,774         204,811
    Interest expense                             9,845          10,923          20,613          10,923
    Other expense, net                           5,195           6,169          13,064           9,181
                                            ----------      ----------      ----------      ----------

Income before Provision for
    Income Taxes                                82,818          83,662         168,097         184,707
    Provision for income taxes                  33,555          33,890          68,079          74,822
                                            ----------      ----------      ----------      ----------
Net Income                                  $   49,263      $   49,772      $  100,018      $  109,885
                                            ==========      ==========      ==========      ==========

Earnings Per Share                          $     0.70      $     0.75      $     1.46            1.66
                                            ==========      ==========      ==========      ==========

Weighted Average Common
    Shares Outstanding                          70,007          66,396          68,276          66,381
</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)                                         Common Stock        Additional   Unrealized
                                     Preferred   -----------------------    Paid-in     Valuation      Retained
                                       Stock       Shares       Amount      Capital     Adjustment     Earnings        Total
                                    ----------   ----------   ----------   ----------   ----------    ----------    ----------
<S>                                 <C>          <C>          <C>          <C>          <C>           <C>           <C>       

Balance as of December 31, 1996     $      --        66,527   $      665   $  761,879   $   (9,994)   $  117,909    $  870,459

    Net income                                                                                           100,018       100,018

    Net proceeds from common
      stock offering                                  3,000           30      110,310                                  110,340

    Stock issued under Company's
      stock option / award plan                          96            1        3,784                                    3,785

    Change in unrealized valuation
       adjustment on investment
       securities, net of tax                                                                1,069                       1,069
                                    ----------   ----------   ----------   ----------   ----------    ----------    ----------

Balance as of June 30, 1997         $     --         69,623   $      696   $  875,973   $   (8,925)   $  217,927    $1,085,671
                                    ==========   ==========   ==========   ==========   ==========    ==========    ==========
</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)                                                                Six Months Ended June 30,
                                                                           -----------------------------
                                                                               1997              1996
                                                                           -----------       -----------
<S>                                                                        <C>               <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                               $   100,018       $   109,885
  Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization, net of accretion                            28,473            16,895
     Gains on sales of assets, net                                             (14,199)           (9,153)
     (Provision) benefit  for deferred income taxes                             (2,304)            3,008
     Amortization of deferred gain on sale of building                          (2,213)             (369)
     (Increase) decrease in certain assets, net of acquisitions:
        Receivables, net                                                       (28,204)           14,010
        Other current assets                                                    (5,068)           25,474
        Other non-current assets                                                   120           (52,860)
     Increase (decrease) in certain liabilities, net of acquisitions:
        Medical claims payable                                                 (20,765)            6,138
        Loss and loss adjustment expense reserves                               10,813            29,834
        Reserves for future policy benefits                                     66,435              --
        Unearned premiums                                                      (12,631)           14,459
        Accounts payable and accrued expenses                                   64,517            (1,334)
        Experience rated and other refunds                                       3,016            (8,756)
        Income taxes payable and other current liabilities                      24,815           (13,989)
        Accrued postretirement benefits                                          1,714             1,553
        Other non-current liabilities                                            9,378            17,905
                                                                           -----------       -----------
            Net cash provided by operating activities                          223,915           152,700
                                                                           -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments purchased                                                     (1,258,433)         (395,054)
  Proceeds from investments sold                                               767,251           308,750
  Proceeds from matured investments                                             55,445            33,714
  Property and equipment purchased, net                                        (17,267)          (15,673)
  Additional investment in subsidiaries                                        (17,584)             --
  Purchase of subsidiaries, net of cash acquired                               361,977          (412,314)
                                                                           -----------       -----------
            Net cash used in investing activities                             (108,611)         (480,577)
                                                                           -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                                150,000           775,000
   Repayment of long-term debt                                                (311,000)          (45,000)
   Net proceeds from common stock offering                                     110,340              --
   Proceeds from issuance of stock under option/award plan                       3,785             4,025
   Recapitalization (see Note 3)                                                  --            (995,000)
                                                                           -----------       -----------
            Net cash used in financing activities                              (46,875)         (260,975)
                                                                           -----------       -----------
Net increase (decrease) in cash and cash equivalents                            68,429          (588,852)
Cash and cash equivalents at beginning of period                               313,256         1,069,631
                                                                           -----------       -----------
Cash and cash equivalents at end of period                                 $   381,685       $   480,779
                                                                           ===========       ===========
</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 Delaware and holds the exclusive license for
     the right to use the Blue Cross name and related service marks in
     California. The Company has medical members in all 50 states and the
     District of Columbia.

     On August 4, 1997, the Company completed its plan to reincorporate in
     Delaware (the "Reincorporation") through the formation of a new holding
     company structure. The Reincorporation involved a merger among the Company,
     WellPoint Health Networks Inc., a California corporation ("WellPoint
     California") and WLP Acquisition Corp. (the "Merger Subsidiary"), a wholly
     owned subsidiary of the Company. Merger Subsidiary was merged with and into
     WellPoint California, and WellPoint California's shareholders became
     shareholders of the Company. As a result of such merger, WellPoint
     California became a wholly owned subsidiary of the Company.

     The Company offers a diversified mix of managed care products, including
     health maintenance organizations ("HMOs"), preferred provider organizations
     ("PPOs"), point-of-service ("POS") plans, other hybrid plans and
     traditional indemnity products to the large and small employer, the
     individual and senior markets. The Company's managed care plans incorporate
     a full range of financial incentives and cost controls for both members and
     providers. The Company also provides a broad array of specialty and other
     products, including pharmacy, dental, utilization management, life,
     integrated workers' compensation, preventive care, disability, behavioral
     health, COBRA and flexible benefits account administration. In addition,
     the Company provides underwriting, actuarial services, network access,
     medical cost management, claims processing and administrative services to
     self-funded employers. The Company serves the health care needs of
     approximately 6.1 million medical members in HMOs, PPOs, POS, indemnity
     plans, and management services plans, and has approximately 13.4 million
     pharmacy members, 3.1 million dental members, 2.8 million utilization
     management members, 1.6 million life members, 1.1 million disability
     members and 664,000 behavioral health members as of June 30, 1997.


                                       5
<PAGE>   8
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


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 June 30, 1997, the results of its operations for
     each of the three and six months ended June 30, 1997 and 1996, cash flows
     for each of the six months ended June 30, 1997 and 1996, and its statement
     of changes in stockholders' equity for the six months ended June 30, 1997.
     The results of operations for the interim periods presented are not
     necessarily indicative of the operating results for the full year.

     Reclassifications

     Certain amounts in the prior year consolidated financial statements have
     been reclassified to conform to the 1997 presentation.

3.   ACQUISITIONS AND RECAPITALIZATION

     Purchase of Group Benefits Operations of John Hancock Mutual Life Insurance
     Company and Life & Health Benefits Management Division of Massachusetts
     Mutual Life Insurance Company

     On March 1, 1997, the Company completed its acquisition of certain portions
     of the health and life related group benefits operations (the "GBO") of
     John Hancock Mutual Life Insurance Company for approximately $89.7 million
     in cash, subject to adjustment upon completion of a post-closing audit. The
     GBO focuses on the large employer segment (employers with 5,000 or more
     employees) and provides medical, life, dental as well as disability
     services to some of the largest employers in the nation.

     On March 31, 1996, the Company completed its acquisition of the Life and
     Health Benefits Management Division ("MMHD") of Massachusetts Mutual Life
     Insurance Company ("MassMutual"), which conducts business under the name
     UNICARE Life & Health Insurance Company, through the acquisition of its
     parent MassMutual Holding Company Two, Inc. The purchase price was $402.2
     million which was funded with $340.2 million in cash and a Series A term
     note for $62.0 million, of which $20.0 million was outstanding at June 30,
     1997. The acquired MMHD operations provide medical services to members in
     all 50 states, focusing on the mid-size employer market (groups of 251 to
     5,000). In addition, the acquired MMHD operations also provide dental,
     life, pharmacy and disability services.

     The purchase method of accounting has been used to account for both of the
     above acquisitions. The acquired operations are included in the Company's
     results of operations from their respective date of acquisition. The excess
     purchase price over net assets acquired was


                                       6
<PAGE>   9
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


3.   ACQUISITIONS AND RECAPITALIZATION, CONTINUED

     approximately $132.7 million for the GBO and $251.0 million for MMHD and is
     being amortized on a straight-line basis over 35 years for both the GBO and
     MMHD.

     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 (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 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 its commercial
     operations (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 (the "DOC"),
     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 BCC, substantially all agreements with health care
     providers that provided services to enrollees of BCC and all of the cash
     and securities of BCC on hand at the time of closing of the
     Recapitalization. The Company and the Foundation subsequently amended the
     terms of the Recapitalization to provide for the substitution by the
     Company of $7.0 million in cash for the capital stock of certain entities
     owning the real estate parcel surrounding the Company's headquarters
     building.

     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 $206.7 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

     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. On November 21, 1996 and April 10,
     1997 the Foundation sold approximately 15 million and 8.5 million shares,
     respectively, of the Company's Common Stock through public offerings. Upon
     completion of the April 1997 offering, the Foundation owned 29,910,000
     shares (or approximately 43.0%) of the outstanding shares.

     In accordance with the requirements of APB Opinion No. 16, Business
     Combinations, the following unaudited pro forma summary presents the
     results of operations of WellPoint as if the Recapitalization, and the
     acquisitions of the GBO, MMHD and the BCC Commercial Operations had
     occurred as of the beginning of each period presented. The pro forma
     adjustments made include the results of operations for the GBO, MMHD, and
     the BCC Commercial Operations for the period prior to their acquisition,
     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 acquisitions and a portion of the
     Recapitalization and the related income tax effect from the beginning of
     each period presented through the effective dates of the acquisitions and
     the Recapitalization. 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 WellPoint, the GBO, MMHD, and the BCC
     Commercial Operations had been a single entity during the three and six
     months ended June 30, 1997 and 1996, nor is it necessarily indicative of
     the results of operations which may occur in the future. Pro forma earnings
     per share for the three and six months ended June 30, 1997 is calculated
     based on 70.0 million and 68.3 million shares outstanding, respectively,
     and 66.4 million shares outstanding for the three and six months ended June
     30, 1996.

<TABLE>
<CAPTION>
                                          Three Months Ended                      Six Months Ended
                                          ------------------                      ----------------
     (In millions, except
     earnings per share)         June 30, 1997       June 30, 1996       June 30, 1997       June 30, 1996
                                 -------------       -------------       -------------       -------------
<S>                              <C>                 <C>                 <C>                 <C>       
     
     Revenues                         $1,485.6            $1,310.1            $2,884.0            $2,638.5  
     Net Income                          $49.3               $44.4               $96.3               $95.5
     Earnings Per Share                  $0.70               $0.67               $1.41               $1.44
</TABLE>


                                       8
<PAGE>   11
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


4.   LONG-TERM DEBT

     On March 17, 1997, the Company borrowed $150 million under its $200 million
     subordinated debt facility, bringing its total debt under this facility to
     $200 million as of such date. The Company in turn used these proceeds to
     pay down its revolving credit facility. The Company paid down $110 million
     on the subordinated debt facility in April 1997 from the proceeds of its
     April 1997 common stock offering (Note 5). The $90 million remaining
     outstanding under this facility at June 30, 1997 was repaid on July 1,
     1997 with borrowings under the revolving credit facility.

5.   COMMON STOCK

     On April 10, 1997, the Company completed a public offering for the sale of
     3 million shares of its common stock at $38.00 per share, for which the
     Company received net proceeds of $110.3 million. The Foundation sold 8.5
     million shares of WellPoint common stock in such offering, for which the
     Company received no proceeds. Under the terms of the Company's $200 million
     subordinated debt facility, the Company was required to use the proceeds of
     this offering to repay outstanding indebtedness under this facility.

6.   EARNINGS PER SHARE

     Earnings per share is determined by dividing net income by the weighted
     average number of shares outstanding during the period, and for the three
     and six months ended June 30, 1997 include common stock equivalents. For
     the three and six months ended June 30, 1996, common stock equivalents did
     not have a dilutive effect on the weighted average number of shares
     outstanding. Earnings per share for the three and six months ended June 30,
     1996 has been calculated using 66.4 million shares, the number of shares
     outstanding immediately following the Recapitalization, to give effect to
     the two-for-three share exchange that occurred as part of the
     Recapitalization, plus the weighted average number of shares issued since
     the Recapitalization.

7.   NEW PRONOUNCEMENTS

     The Financial Accounting Standards Board recently issued Statement of
     Financial Accounting Standards No. 128, "Earnings Per Share." This
     Statement is effective for financial statements issued for periods ending
     after December 15, 1997; earlier application is not permitted. SFAS No. 128
     requires the computation and presentation of basic and diluted earnings per
     share ("EPS"). Basic EPS will be computed by dividing income available to
     common stockholders by the weighted-average number of common shares
     outstanding. Common stock equivalents are not considered in the basic EPS.
     As the Company did not have any common stock equivalents until May 20,
     1996, and had no dilutive common stock equivalents from this


                                       9
<PAGE>   12
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


7.   NEW PRONOUNCEMENTS, CONTINUED

     date through March 31, 1997, the Company's basic and diluted EPS
     calculation for all periods through March 31, 1997 would be the same as the
     earnings per share amounts reflected in these and prior financial
     statements. Beginning with the second quarter 1997 and for the remainder of
     the fiscal year, the Company anticipates that common stock equivalents will
     have a dilutive impact on shares outstanding. As a result, the shares used
     to compute basic EPS under SFAS No. 128 will differ by the effect of common
     stock equivalents, and the impact for each of the three and six months
     ended June 30, 1997 would be an increase in basic EPS of $0.01. The diluted
     EPS under SFAS No. 128 would be the same as the EPS disclosed in these
     financial statements.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
     Income". The standard will require all companies to present all non-owner
     changes in equity, e.g. market value adjustments to investments and
     adjustments to the minimum pension liability, in a full set of financial
     statements. The new rules will be effective beginning first quarter of 1998
     and companies will only be required to report total comprehensive income
     for interim periods.

     Also in June 1997, the FASB issued SFAS No. 131, "Disclosures About
     Segments of an Enterprise and Related Information". The standard requires
     that companies disclose "operating segments" based on the way management
     disaggregates the company for making internal operating decisions. The new
     rules will be effective for the 1998 fiscal year. Abbreviated quarterly
     disclosure will be required beginning first quarter of 1999, with both 1999
     and 1998 information.

     At this time, the Company is assessing the effect of SFAS. No. 130 and 131
     on the financial statements of the Company.

8.   CONTINGENCIES

     From time to time, the Company and certain of its subsidiaries are parties
     to various legal proceedings, many of which involve claims for coverage
     encountered in the ordinary course of business. The Company, like HMOs and
     health insurers generally, excludes certain health care services from
     coverage under its HMO, PPO and other plans. The Company is, in its
     ordinary course of business, subject to the claims of its members arising
     out of decisions to restrict treatment or reimbursement for certain
     services.

     Certain of such legal proceedings are or may be covered under insurance
     policies or indemnification agreements. Based upon information presently
     available, management of the Company believes that the final outcome of all
     such proceedings should not have a material adverse effect on the Company's
     results of operations or financial condition.


                                       10
<PAGE>   13
                         WELLPOINT HEALTH NETWORKS INC.
                   


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

This discussion contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ materially from those
anticipated in these forward-looking statements as a result of certain factors
including, but not limited to, those set forth under "Factors That May Affect
Future Results or Operations."

GENERAL

WellPoint Health Networks Inc. (the "Company" or "WellPoint") is one of the
nation's largest publicly traded managed health care companies, with
approximately 6.1 million medical members, 13.4 million pharmacy members, 3.1
million dental members, 2.8 million utilization management members, 1.6 million
life members, 1.1 million disability members and 664,000 behavioral health
members as of June 30, 1997. The Company offers a diversified mix of managed
care products, including health maintenance organizations ("HMOs"), preferred
provider organizations ("PPOs"), point-of-service ("POS") plans, other hybrid
plans and traditional indemnity products. The Company also offers a broad array
of specialty products, including pharmacy, dental, utilization management, life,
integrated 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 other administrative services.

Delaware Reincorporation

On August 4, 1997, the Company completed its plan to reincorporate in Delaware
(the "Reincorporation") through the formation of a new holding company
structure. The Reincorporation involved a merger among the Company, WellPoint
Health Networks Inc., a California corporation ("WellPoint California") and WLP
Acquisition Corp. (the "Merger Subsidiary"), a wholly owned subsidiary of the
Company. Merger Subsidiary was merged with and into WellPoint California, and
WellPoint California's shareholders became stockholders of the Company. As a
result of such merger, WellPoint California became a wholly owned subsidiary of
the Company. The principal purpose of such reincorporation was to allow a
restructuring of the Company and its various subsidiaries in order to improve
the Company's capital as measured for BCBSA purposes.

Recent Acquisitions and May 1996 Recapitalization

On March 1, 1997, the Company completed its acquisition of certain portions of
the Group Benefits Operations (the "GBO") of John Hancock Mutual Life Insurance
Company. The purchase price was $89.7 million, subject to adjustment upon
completion of a post-closing audit. The purchase method of accounting has been
used to account for the acquisition of the GBO. The GBO targets large employers
with 5,000 or more employees and currently provides benefits to approximately
1.3 million medical members, of which most are in health plans that 


                                       11
<PAGE>   14
GENERAL, CONTINUED

are self-funded by employers. The GBO offers indemnity and PPO plans and also
provides life, dental, pharmacy, utilization management and disability coverage
to a variety of employer groups. The GBO has historically experienced a higher
administrative expense ratio due to its higher percentage of management services
business, which has contributed and may continue to contribute to an increase in
the Company's overall administrative expense ratio in the current and future
periods.

The Company expects to incur approximately $20.0 to $25.0 million of costs
relating to this acquisition during the remainder of 1997 and throughout 1998, 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 of up to 30% of the GBO members as it pursues its strategy of
motivating traditional indemnity health insurance members to select managed care
products.

On March 31, 1996, the Company acquired the Life and Health Benefits Management
Division ("MMHD") of Massachusetts Mutual Life Insurance Company (the "MMHD
Acquisition"). The acquired MMHD operations focus on employers with 250 to 5000
employees and provide administrative services, PPO and indemnity insurance
products. The Company has experienced some membership attrition and expects that
it will experience further membership attrition on a combined basis of 10% or
greater of its acquired MMHD members as it pursues its strategy of motivating
members to select managed care products.

On May 20, 1996, the Company completed the Recapitalization, including the
acquisition of the BCC Commercial Operations for $235.0 million in cash. The
Recapitalization included the payment of a $995.0 million special dividend
funded by $775.0 million in revolving debt and the remainder in cash (see Note 3
to the Quarterly Financial Statements for a description of the
Recapitalization).

As a result of the GBO and MMHD acquisitions, the Company has significantly
expanded its operations outside of California. In order to implement the
Company's regional expansion strategy, the Company will need to develop
satisfactory provider and sales networks and information systems, which will 
require additional expenditures by the Company. A portion of these 
expenditures will be reflected in the Company's results of operations.

Prior to their acquisitions by WellPoint, each of the GBO, MMHD, and the BCC
Commercial Operations experienced a higher overall loss ratio than the Company.
Due to the inclusion of these acquisitions, the Company's overall loss ratio
will increase. The Company intends to consider a variety of measures aimed at
controlling the respective loss ratios and reducing the financial risk of these
acquired businesses, including the imposition of premium increases and changes
in product design. There can be no assurances that the Company will be able to
take such measures or, if such actions are taken, that they will be successful.


                                       12
<PAGE>   15
GENERAL, CONTINUED

In recent periods, the Company has gained increased membership in its California
large group and Medicaid businesses. The Company's overall loss ratio may
increase as the Company expands these businesses, both of which have generally
higher loss ratios than the Company's individual and small group businesses.

A variety of health care reform measures are currently pending or 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 of increasing the Company's loss ratio. In May 1997, the Texas
Legislature adopted Senate Bill No. 386 ("SB 386"). Among other things, this
legislation purports to make managed care organizations ("MCOs") such as the
Company liable for the failure by the MCO, its employees or agents to exercise
ordinary care when making "health care treatment decisions" (as defined in SB
386). The legislation is effective as of September 1, 1997. It is too early to
determine what effect, if any, this legislation may have on the Company.
However, to the extent that the legislation (or similar legislation that may be
subsequently adopted in other states) effectively expands the scope of liability
of MCOs such as the Company, it may have a material adverse effect on the
Company's results of operations and financial condition.


                                       13
<PAGE>   16
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 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 months ended June
30, 1997 include a full quarter of earnings for its acquired operations, GBO,
MMHD and the BCC Commercial Operations. The Company's consolidated results of
operations for the six months ended June 30, 1997 include a full six months of
earnings for MMHD and BCC Commercial Operations, and four months of earnings for
the GBO. The results of operations for the three and six months ended June 30,
1996 include the results of MMHD for the period from April 1, 1996 to June 30,
1996 and BCC Commercial Operations for the period from May 20, 1996 to June 30,
1996.

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       Six Months Ended
                                                 June 30,                 June 30,
                                            -----------------       -----------------
                                             1997        1996        1997        1996
                                            -----       -----       -----       -----
<S>                                         <C>         <C>         <C>         <C>  
Operating Revenues:
   Premium revenue                           92.4%       95.8%       93.6%       96.6%
    Management services revenue               7.6         4.2         6.4         3.4
                                            -----       -----       -----       -----
                                            100.0       100.0       100.0       100.0
Operating Expenses:
   Health care services and other
        benefits (loss ratio)                81.4        77.4        80.2        76.3
   Selling expense                            4.5         5.7         4.7         6.0
  General and administrative expense         16.1        13.9        15.4        13.0
</TABLE>


                                       14
<PAGE>   17
MEMBERSHIP

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


<TABLE>
<CAPTION>
MEDICAL MEMBERSHIP:                               As of June 30,
                                            ------------------------
                                                                             Percent
GEOGRAPHY                                      1997           1996           Change
                                            ---------      ---------         ------ 
<S>                                         <C>            <C>              <C>  

CALIFORNIA
   Group Services:
      HMO                                     738,656        643,554         14.8%
      PPO and Other                         1,336,703      1,190,155         12.3%
                                            ---------      ---------

         Total                              2,075,359      1,833,709         13.2%
                                            ---------      ---------

   Individual, Small Group and Senior:
      HMO                                     290,694        246,384         18.0%
      PPO and Other                         1,234,549      1,192,525          3.5%
                                            ---------      ---------

         Total                              1,525,243      1,438,909          6.0%
                                            ---------      ---------

   Medi-Cal HMO Programs                      267,939         49,717        438.9%
                                            ---------      ---------

Total California Medical Membership         3,868,541      3,322,335         16.4%
                                            ---------      ---------

TEXAS
   Group Services                             164,802         74,063        122.5%
   Individual, Small Group and Senior          50,423         12,948        289.4%
                                            ---------      ---------
         Total                                215,225         87,011        147.4%
                                            ---------      ---------

GEORGIA
   Group Services                              92,960         51,724         79.7%
   Individual, Small Group and Senior           5,437           --        N/A
                                            ---------      ---------
         Total                                 98,397         51,724         90.2%
                                            ---------      ---------

OTHER STATES
   Group Services                           1,884,281        782,603        140.8%
   Individual, Small Group and Senior           1,522           --        N/A
                                            ---------      ---------

         Total                              1,885,803        782,603      141.0 %
                                            ---------      ---------

TOTAL MEDICAL MEMBERSHIP (a)(b)             6,067,966      4,243,673         43.0%
                                            =========      =========

NETWORKS (c)
   Proprietary Networks                     3,674,522      3,154,376         16.5%
   Other Networks                           1,315,147        664,841         97.8%
   Non-Network                              1,078,297        424,456        154.0%
                                            ---------      ---------

TOTAL MEDICAL MEMBERSHIP                    6,067,966      4,243,673         43.0%
                                            =========      =========
</TABLE>


(a) Medical membership includes 2,352,000 and 1,130,000 management services
    members as of June 30, 1997 and 1996, respectively, of which those
    management services members outside of California were 1,582,000 and
    566,000, as of June 30, 1997 and 1996, respectively.
(b) As of June 30, 1997, total GBO medical membership was 1,285,842, of which
    40,703 members were in California and 1,245,139 members were outside of
    California.
(c) Proprietary networks consist of California, Texas and other WellPoint
    developed networks. Other networks consist of third-party networks and
    networks owned by the company as a result of its recent acquisitions that
    incorporate provider discounts and some basic managed care elements.
    Non-network consists of fee for service and percentage-of-billed charges
    members.


                                       15
<PAGE>   18
MEMBERSHIP, CONTINUED

<TABLE>
<CAPTION>
                                  As of June 30,
                            --------------------------
                                                              Percent
                               1997             1996          Change
                            ----------      ----------        ------ 
<S>                         <C>             <C>               <C>  
SPECIALTY MEMBERSHIP:

Pharmacy                    13,418,747      11,942,099         12.4%
Dental                       3,083,854       1,466,640        110.3%
Utilization Management       2,839,228              --           N/A
Life                         1,629,087         735,378        121.5%
Disability                   1,147,704         111,015        933.8%
Behavioral Health              664,228         446,789         48.7%
</TABLE>


The specialty membership as of June 30, 1997 includes the acquired GBO
operations, which had approximately 297,000 pharmacy members, 1.4 million dental
members, 1.9 million utilization management members, 919,000 life members and
1.0 million disability members.

COMPARISON OF RESULTS FOR THE SECOND QUARTER 1997 TO THE SECOND QUARTER 1996

Premium revenue increased 35.0% or $345.0 million to $1,330.7 million for the
quarter ended June 30, 1997 from $985.7 million for the quarter ended June 30,
1996. The acquisitions of the GBO and the BCC Commercial Operations together
contributed 53.4% of the overall premium revenue increase and accounted for
$128.6 million and $55.5 million, respectively. Also contributing to increased
premium revenue in 1997 was an increase in insured member months of 13.4%, 
excluding the GBO and including the BCC Commercial Operations from May 20, in 
both periods. Additionally, there was an increase in the per member per month 
premiums associated with several of the Company's medical products.

Management services revenue increased 151.8% or $65.9 million to $109.3 million
for the quarter ended June 30, 1997 from $43.4 million for the quarter ended
June 30, 1996. The increase was primarily due to $59.3 million and $1.7 million
of management services revenue from the GBO and BCC Commercial Operations
acquisitions, respectively, representing 92.6% of the increase. Also,
contributing to the increase was a significant increase in the California large
group management services membership and increases in pharmacy clinical fees and
claims processing fees.

Investment income increased to $45.6 million for the quarter ended June 30, 1997
compared to $36.4 million for the quarter ended June 30, 1996. Net realized
gains from equity securities increased $4.4 million to $7.8 million for the
quarter ended June 30, 1997 in comparison to $3.4 million for the quarter ended
June 30, 1996. Net interest and dividend income increased $6.6 million to $38.8
million for the quarter ended June 30, 1997 in comparison to $32.2 million for
the quarter ended June 30, 1996, primarily due to increased interest income on
the portfolios of acquired businesses and slightly higher yields in 1997 over
1996, offset by the foregone interest from cash and investments used to finance
the GBO and BCC Commercial


                                       16
<PAGE>   19
COMPARISON OF RESULTS FOR THE SECOND QUARTER 1997 TO THE SECOND QUARTER 1996,
CONTINUED

Operations acquisitions, the Recapitalization, and cash used for repayment of
indebtedness under the Company's senior credit facility.

Health care services and other benefits expense increased 42.0% or $320.3
million to $1,083.3 million for the quarter ended June 30, 1997 from $763.0
million for the quarter ended June 30, 1996. The acquisitions of the GBO and the
BCC Commercial Operations contributed 53.3% of the increase and accounted for
$118.6 million and $52.2 million, respectively. Additionally, the aforementioned
increase in insured member months of 13.4% resulted in increased claims
expense.

The loss ratio for the quarter ended June 30, 1997 increased to 81.4% compared
to 77.4% for the quarter ended June 30, 1996, primarily due to the incremental
effect of the GBO acquisition and the BCC Commercial Operations on the Company's
overall results. The acquired GBO and the BCC Commercial Operations have
traditionally experienced a higher loss ratio than the Company's managed care
products. Additionally, the MMHD operations experienced an increase in loss
ratio in the second quarter of 1997 in comparison to the second quarter of 1996
due to higher actual claims incurred as a result of higher cost trends.
Excluding all of the acquired operations of the GBO, MMHD and the BCC Commercial
Operations for the quarters ended June 30, 1997 and 1996, the loss ratios would
have been 76.8% and 76.6%, respectively.

Selling expense for the quarter ended June 30, 1997 increased 11.3% to $64.9
million compared to $58.3 million for the quarter ended June 30, 1996,
corresponding with continued overall premium revenue growth. The selling expense
ratio for the quarter ended June 30, 1997 decreased to 4.5% from 5.7% for the
quarter ended June 30, 1996, largely due to the acquisition of the GBO, which
has a lower selling expense ratio than the Company's existing business due to
utilization of an internal sales force, and the BCC Commercial Operations, which
has no selling expense. Excluding all of the acquired operations of the GBO,
MMHD and the BCC Commercial Operations for the quarters ended June 30, 1997 and
1996, the selling expense ratio would have been 5.9% and 6.4%, respectively. The
Company experienced slight decreases in the current quarter's selling expense as
a percentage of revenue for certain medical products in comparison to the same 
quarter in the prior year. The Company's growth in Medi-Cal and large group 
medical products had a more significant impact on lowering the selling expense 
ratio as a result of its lower associated selling costs in comparison to 
individual and small group products.

General and administrative expense for the quarter ended June 30, 1997 increased
61.3% or $88.0 million to $231.5 million for the quarter ended June 30, 1997
from $143.5 million for the quarter ended June 30, 1996. The acquisitions of the
GBO and the BCC Commercial Operations accounted for 68.0% of the increase and
contributed $56.9 million and $2.9 million, respectively. Additional increases
resulted from costs associated with increased membership growth, primarily
related to medical products, including Medi-Cal business, and


                                       17
<PAGE>   20
COMPARISON OF RESULTS FOR THE SECOND QUARTER 1997 TO THE SECOND QUARTER 1996,
CONTINUED

the national expansion efforts. Corresponding with the national expansion
efforts, the Company also incurred additional information systems and service
costs which are anticipated to continue as the Company expands its national
business.

The administrative expense ratio increased to 16.1% for the quarter ended June
30, 1997, compared to 13.9% for the quarter ended June 30, 1996, primarily due
to the increased administrative expense associated with the GBO acquisition and
with the Company's continued investment in national expansion, including network
development costs. The GBO has historically had higher administrative expense
ratios than the Company's traditional California-based businesses, due to its
higher percentage of management services business. The above increases were
partially offset by the BCC Commercial Operations' lower administrative expense
ratio. The administrative expense ratio, excluding the GBO and including the BCC
Commercial Operations from May 20, in both periods, was 14.4% and 13.9% for the
quarters ended June 30, 1997 and 1996, respectively.

The $8.0 million nonrecurring costs for the quarter ended June 30, 1997 related
primarily to the write down of the Dental Service Organization practices and
discontinuance of The Company's Medical Services Organization in Santa Barbara
and San Luis Obispo.

Interest expense was $9.8 million for the quarter ended June 30, 1997 and $10.9
million for the quarter ended June 30, 1996. The interest expense in 1997 and
1996 related to the Company's long-term indebtedness, of which $464 million was
outstanding at June 30, 1997. The weighted average interest rate for all debt
for the quarter ended June 30, 1997, including the fees associated with the
borrowings and interest rate swaps, was 7.5%.

WellPoint's net income for the quarter ended June 30, 1997 was $49.3 million, or
$0.70 per share, compared to $49.8 million, or $0.75 per share, for the quarter
ended June 30, 1996. Earnings per share for the quarters ended June 30, 1997 and
1996 are based on 70.0 million shares and 66.4 million shares, respectively.
Earnings per share is determined by dividing net income by the weighted average
number of shares outstanding during the period, and for the three months ended
June 30, 1997 include common stock equivalents. For the three months ended June
30, 1996, common stock equivalents did not have a dilutive effect on the
weighted average number of shares outstanding. Earnings per share for the three
months ended June 30, 1996 have been calculated using 66.4 million shares, the
number of shares outstanding immediately following the Recapitalization, to give
effect to the two-for-three share exchange that occurred as part of the
Recapitalization, plus the weighted average number of shares issued since the
Recapitalization. Weighted average common shares outstanding increased for the
quarter ended June 30, 1997 due to the public offering in April 1997 of 3
million shares of the Company's common stock and the inclusion of 696,000 common
stock equivalents related to the Company's stock option plans.


                                       18
<PAGE>   21
COMPARISON OF RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 TO THE SIX MONTHS
ENDED JUNE 30, 1996

Premium revenue increased 42.9% or $750.6 million to $2,499.5 million for the
six months ended June 30, 1997 from $1,748.9 million for the six months ended
June 30, 1996. The acquisitions of the GBO, MMHD, and the BCC Commercial
Operations contributed 63.8% of the overall premium revenue increase and
accounted for $168.4 million, $163.0 million and $147.7 million, respectively.
Also, contributing to increased premium revenue in 1997 was an increase in
insured member months of 18.2%, excluding the GBO for both periods, MMHD for the
first quarter of 1997, and including the BCC Commercial Operations from May 20
(its date of acquisition) in both periods. Additionally, there was an increase
in the per member per month revenues associated with several of the Company's
medical products.

Management services revenue increased 178.3% or $110.0 million to $171.7 million
for the six months ended June 30, 1997 from $61.7 million for the six months
ended June 30, 1996. The increase was primarily due to $77.3 million, $18.9
million and $3.8 million of management services revenue related to the
acquisitions of the GBO, MMHD and the BCC Commercial Operations, respectively,
representing 90.9% of the increase. Also, contributing to the increase was an
increase in the California large group management services membership and
increases in pharmacy clinical fees and claims processing fees.

Investment income increased to $86.0 million for the six months ended June 30,
1997 compared to $72.4 million for the six months ended June 30, 1996. Net
realized gains from equity securities increased $6.7 million to $15.0 million
for the six months ended June 30, 1997 in comparison to $8.3 million for the six
months ended June 30, 1996. Net interest and dividend income increased $8.6
million to $72.5 million for the six months ended June 30, 1997 in comparison to
$63.9 million for the six months ended June 30, 1996, primarily due to increased
interest income on the portfolios of acquired businesses and slightly higher
yields in 1997 over 1996, partially offset by the foregone interest from cash
and investments used to finance the GBO, MMHD and BCC Commercial Operations
acquisitions, the Recapitalization, and cash used for repayment of indebtedness
under the Company's senior credit facility.

Health care services and other benefits expense increased 50.2% or $669.5
million to $2,004.2 million for the first six months of 1997 from $1,334.7
million for the six months ended June 30, 1996. The acquisitions of the GBO,
MMHD and the BCC Commercial Operations accounted for 64.6% of the increase and
totaled $159.5 million, $133.9 million and $139.1 million, respectively.
Additionally, the Company's health care benefits and other expenses in the six
months ended June 30, 1997 increased in comparison to the prior six month period
as a result of the aforementioned increase in insured member months of 18.2%.

The loss ratio for the first six months of 1997 increased to 80.2% compared to
76.3% in 1996. The acquired MMHD operations, the GBO and the BCC Commercial
Operations have traditionally experienced a higher loss ratio than the Company.
Excluding all of the acquired operations of MMHD, the GBO and the BCC Commercial
Operations for the six months ended June 30, 1997 and 1996, the loss ratios
would have been 76.2% and 75.8%, respectively.


                                       19
<PAGE>   22
COMPARISON OF RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 TO THE SIX MONTHS
ENDED JUNE 30, 1996, CONTINUED

Selling expense for the six months ended June 30, 1997 increased 15.8% to $124.7
million compared to $107.7 million for the six months ended June 30, 1996,
corresponding with continued overall premium revenue growth and an additional
$6.2 million in selling expense attributable to the MMHD operations and the GBO.
The selling expense ratio for the six months ended June 30, 1997 decreased to
4.7% from 6.0% for the six months ended June 30, 1996, largely due to the
acquisition of the GBO and MMHD, which have lower selling expense ratios than
the Company's existing business, and the BCC Commercial Operations, which has no
selling expense. Excluding the acquisitions for the six months ended June 30,
1997 and 1996, the selling expense ratio would have been 5.9% and 6.3%,
respectively. The Company experienced a slight decrease in selling expense in
1997 as a percentage of revenue for certain medical products in comparison to
the prior six months ended June 30, 1996. The Company's growth in Medi-Cal and
large group medical products had a more significant impact on lowering the
selling expense ratio as a result of its lower associated selling costs in
comparison to individual and small group products.

General and administrative expense for the six months ended June 30, 1997
increased 74.8% or $176.3 million to $412.1 million from $235.8 million for the
same period in 1996. The acquisitions of the GBO, MMHD, and the BCC Commercial
Operations accounted for 73.5% of the increase and contributed $76.8 million,
$46.0 million and $6.7 million, respectively. The administrative expense ratio
increased to 15.4% for the first six months of 1997 compared to 13.0% for the
comparable period in 1996, primarily due to the increased administrative expense
associated with the Company's continued investment in national expansion and the
acquisition of the GBO and MMHD. The GBO and MMHD have historically had higher
administrative expense ratios than the Company's traditional California-based
businesses due to its higher percentage of management services business. The
increase was partially offset by the BCC Commercial Operations' lower
administrative expense ratio. The administrative expense ratio, excluding the
GBO for both periods, MMHD for the first quarter of 1997, and including the BCC
Commercial Operations from May 20 in both periods, was 13.5% and 13.0% for the
six months ended June 30, 1997 and 1996, respectively.

The Company recorded $14.5 million of nonrecurring costs for the six months
ended June 30, 1997, of which $8.0 million recorded in the second quarter of
1997 related primarily to the write down of the Dental Service Organization
practices and discontinuance of our Medical Services Organization in Santa
Barbara and San Luis Obispo. In addition, $6.5 million incurred in the first
quarter of 1997 consisted of severance and stay bonuses associated with the GBO
acquisition.

Interest expense increased 89.0% to $20.6 million for the six months ended June
30, 1997 in comparison to $10.9 million for the comparable period in the prior
year. The increase is primarily due to interest on debt incurred as a result of
the MMHD acquisition in March 1996 and the Recapitalization in May 1996 being
included in the results of operations for the entire 


                                       20
<PAGE>   23
COMPARISON OF RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1997 TO THE SIX MONTHS
ENDED JUNE 30, 1996, CONTINUED

six months ended June 30, 1997 in comparison to a shorter period of time in the
six months ended June 30, 1996. The weighted average interest rate for all debt
for the six months ended June 30, 1997, including the fees associated with the
borrowings and interest rate swaps, was 7.4%.

WellPoint's net income for the six months ended June 30, 1997 was $100.0 million
or $1.46 per share compared to $109.9 million or $1.66 per share for the six
months ended June 30, 1996. Earnings per share for the six months ended June 30,
1997 and 1996 are based on 68.3 million shares and 66.4 million shares,
respectively. Earnings per share is determined by dividing net income by the
weighted average number of shares outstanding during the period, and for the six
months ended June 30, 1997 include common stock equivalents. For the six months
ended June 30, 1996, common stock equivalents did not have a dilutive effect on
the weighted average number of shares outstanding. Earnings per share for the
six months ended June 30, 1996 has been calculated using 66.4 million shares,
the number of shares outstanding immediately following the Recapitalization, to
give effect to the two-for-three share exchange that occurred as part of the
Recapitalization, plus the weighted average number of shares issued since the
Recapitalization. For the six months ended June 30, 1997 the increase in shares
outstanding primarily relates to the public offering of 3 million shares of the
Company's common stock in April 1997 and the inclusion of 348,000 common stock
equivalents related to the Company's stock option plans.

FINANCIAL CONDITION

The Company's consolidated assets increased by $853.5 million from $3,405.5
million as of December 31, 1996 to $4,259.0 million as of June 30, 1997. This
represents a 25.1% increase and resulted primarily from the GBO acquisition as
well as cash flows generated from operations. Cash and investments were $2.7
billion as of June 30, 1997, or 63.1% of total assets.

As of June 30, 1997, $464.0 million was outstanding under the Company's
long-term debt facilities, compared to $625.0 million at December 31 1996. The
decrease is primarily due to the repayments of $110.0 million of debt under the
Subordinated Credit Agreement from the proceeds of the Company's April 1997
public stock offering and from cash flows from operations.

Equity totaled $1,085.7 million as of June 30, 1997, an increase of $215.2
million from December 31, 1996. The increase resulted primarily from net income
of $100.0 million for the six months ended June 30, 1997, $110.3 million and
$3.8 million in additional capital from the Company's public offering of 3
million shares and stock issuances under the Company's stock option/award plan,
respectively, and $1.1 million in unrealized valuation adjustment on investment
securities, net of tax.


                                       21
<PAGE>   24
LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of cash are premium and management services
revenues received and investment income. The primary uses of cash include health
care claims and other benefits, capitation payments, income taxes, repayment of
long-term debt, interest expense, broker and agent commissions and
administrative expenses. In addition, to the foregoing, other uses of cash
include costs of provider network and systems development, costs associated with
the integration of acquired businesses and capital expenditures. 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 June 30, 1997, 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 $223.9 million for the six
months ended June 30, 1997, compared with $152.7 million for the six months
ended June 30, 1996. The positive cash flow from operations is due primarily to
net income of $100.0 million, adjusted for certain operating liabilities such as
increased reserves for future policy benefits of $66.4 million and accounts
payable and accrued expenses of $64.5 million.

Net cash used in investing activities for the six months ended June 30, 1997
totaled $108.6 million, compared with net cash used in investing activities of
$480.6 million for the six months ended June 30, 1996. The cash used in 1997 was
attributable primarily to the purchase of investments for $1,258.4 million
partially offset by the proceeds from investments sold and matured of $822.7
million and the net cash acquired from the GBO purchase of $362.0 million.

Net cash used in financing activities totaled $46.9 million for the six months
ended June 30, 1997, compared to net cash used in financing activities of $261.0
million for the six months ended June 30, 1996. Borrowings and repayments on
long-term debt totaled $150.0 million and $311.0 million, respectively, for the
six months ended June 30, 1997, compared to borrowings and repayments of
long-term debt of $775.0 million and $45.0 million, respectively, and dividend
payments associated with the Recapitalization of $995.0 million for the six
months ended June 30, 1996.

In connection with the Recapitalization, the Company entered into a $1.25
billion unsecured revolving credit facility. In April 1997, the Company amended
this facility to decrease the maximum amount which could be borrowed to $1.0
billion. Borrowings under the credit facility bear interest at rates determined
by reference to the bank's base rate or to the London Interbank Offered Rate
("LIBOR") plus a margin determined by reference to the Company's leverage ratio
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


                                       22
<PAGE>   25
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

or pursuant to an auction-bid process. The credit facility expires as of May 15,
2002, although it may be extended for an additional one-year period under
certain circumstances. The credit agreement requires the Company to maintain
certain financial ratios and contains restrictive covenants, including
restrictions on the occurrence of additional indebtedness and the granting of
certain liens, limitations on acquisitions and investments and limitations on
changes in control. The total amount outstanding under the credit facility was
$354.0 million as of June 30, 1997. The weighted average interest rate,
including the facility and other fees and excluding the swap agreements, for the
quarter and six months ended June 30, 1997 was 6.3% and 6.1%, respectively.

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 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.

Prior to the Company's Delaware reincorporation, the Company held a license as a
health care service plan under the California Knox-Keene Health Care Service
Plan Act of 1975 (the "Knox-Keene Act"). As such, the Company was required to
maintain minimum tangible net equity ("TNE") by the Company's primary regulator,
the California Department of Corporations (the "DOC"), in addition to meeting
minimum capital requirements prescribed by the Blue Cross Blue Shield
Association (the "BCBSA"). As a DOC licensee, the Company used TNE in measuring
capital for the BCBSA. The failure to meet a specified level (the "BCBSA
Minimum 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 the termination of the Company's license 
agreement with the BCBSA. As of June 30, 1997, the Company's TNE was in 
excess of the BCBSA's Minimum Capital requirement as well as the DOC TNE 
requirement. Upon completion of the Delaware reincorporation, the Company is
no longer licensed under the Knox-Keene Act (WellPoint California remains as a
DOC licensee) and, as a result, its capital for BCBSA purposes will be measured
as GAAP equity. The principal purpose of the Company's Delaware reincorporation
was to allow a restructuring of the Company and its various subsidiaries in
order to improve the Company's capital as measured for BCBSA purposes.

Certain of the Company's subsidiaries are required to maintain minimum capital
requirements prescribed by various regulatory agencies, including the California
Department of Corporations, and the Department of Insurance in various states.
As of June 30, 1997 the Company was in compliance with all minimum capital
requirements.


                                       23
<PAGE>   26
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

On March 17, 1997, the Company borrowed $150.0 million under its subordinated
debt agreement to ensure compliance with the Company's BCBSA capital
requirements. As of March 31, 1997 the Company's total debt under this facility
was $200 million. On April 10, 1997, the Company completed a public offering of
3 million shares of its common stock, receiving net proceeds of $110.3 million
which were used to pay down outstanding indebtedness under the Company's
subordinated debt agreement. Additionally, as part of this offering, the
Foundation (See Note 3 to the Quarterly Financial Statements) sold 8.5 million
shares of WellPoint common stock, for which the Company received no proceeds. On
July 1, 1997, the Company repaid its remaining $90.0 million outstanding under
the subordinated debt agreement with borrowings under the revolving credit
facility.

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
June 30, 1997, no indebtedness had been issued pursuant to this registration
statement.

The Company believes that cash flow generated by operations, its cash and
investment balances, supplemented by the Company's ability to borrow under its
existing revolving credit facility and its debt registration will be sufficient
to fund continuing operations and expected capital requirements for the
foreseeable future.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

Certain statements contained herein, such as statements concerning potential or
future loss ratios, expected membership attrition as the Company continues to
integrate its recently acquired operations and other statements regarding
matters that are not historical facts, are forward-looking statements (as such
term is defined in the Securities Exchange Act of 1934). Such statements involve
a number of risks and uncertainties that may cause actual results to differ from
those projected. Factors that can cause actual results to differ materially
include, but are not limited to, those discussed below and those discussed from
time to time in the Company's various filings with the Securities and Exchange
Commission, including the Company's Annual Report on Form 10-K.

As part of the Company's business strategy, the Company has recently acquired
substantial operations in new geographic markets. These businesses, which
include substantial indemnity- based insurance operations, have experienced
varying profitability or losses in recent periods. While the integration of
these businesses into the Company has begun, there can be no assurances
regarding the ultimate success of the Company's integration efforts or regarding
the ability of the Company to maintain or improve the results of operations of
these businesses as the Company pursues its strategy of motivating the acquired
members to select managed care products. In order to implement this strategy,
the Company will, among other things, need to incur considerable expenditures
for provider networks and information systems in addition to the costs
associated with the integration of these acquisitions. The Company's results of


                                       24
<PAGE>   27
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED

operations could be adversely affected in the event that the Company is unable
to implement fully its expansion strategy.

The Company's operations are subject to substantial regulation by Federal, state
and local agencies in all jurisdiction in which the Company now operates. Many
of these agencies have increased their scrutiny of managed health care companies
in recent periods. Future regulatory actions by any such agencies may have a
material adverse affect on the Company's business.

The Company's future results will depend in large part on accurately predicting
health care costs and upon the Company's ability to control future health care
costs through underwriting criteria, utilization management and negotiation of
favorable provider contracts. Changes in utilization rates, demographic
characteristics, health care practices, inflation, new technologies, clusters of
high-cost, the regulatory environment and numerous other factors are beyond the
control of any health plan and may adversely affect the Company's ability to
predict and control health care costs and claims, as well as the Company's
financial condition or results of operations. Additionally, the Company faces
competitive pressure to contain premium prices. Fiscal concerns regarding the
continued viability of government sponsored programs such as Medicare and
Medicaid may cause decreasing reimbursement rates for these programs. Any
limitation on the Company's ability to increase or maintain its premium levels
may adversely affect the Company's financial condition or results of operations.

Managed care organizations, both inside and outside California, operate in a
highly competitive environment that has undergone significant change in recent
periods as a result of business consolidations, new strategic alliances,
aggressive marketing practices by competitors and other market pressures.
Additional increases in competition could adversely affect the Company's
financial condition or results of operations.

The Company's two primary products ([a] managed care products and [b] management
services products, including specialty managed care services) are marketed in
California primarily under the name Blue Cross of California and outside of
California primarily under the name UNICARE. Further, the Company's individual
and small group businesses versus larger employers have 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 increased 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 underwriting risk
related to the capitated products and the non-risk nature of the management
services products.


                                       25
<PAGE>   28
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED

However, over the past three years, margin erosion has been greater in the
individual and small group business than in the large group business 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 7.2% and 7.7% for the six months ended June 30, 1997 and 1996,
respectively.


                                       26
<PAGE>   29
                           PART II. OTHER INFORMATION

ITEM 2.  Changes in Securities

On August 4, 1997, the Company completed its formation of a new Delaware holding
company structure (the "Reincorporation"). The Reincorporation was effected
through the merger (the "Merger") of WLP Acquisition Corp., a wholly owned
subsidiary of the Company, with and into WellPoint California. As of result of
the Merger, WellPoint California became a wholly owned subsidiary of the
Company. The outstanding shares of WellPoint California Common Stock were
automatically converted into an equivalent number of shares of WellPoint
Delaware Common Stock in the Merger. Pursuant to Rule 145(a)(2) under the
Securities Act of 1933, as amended (the "Act"), the issuance of WellPoint
Delaware Common Stock in connection with the Merger was exempt from registration
under the Act because the purpose of the Merger was to change the domicile of
the Company from California to Delaware.


                                       27
<PAGE>   30
                      PART II. OTHER INFORMATION, CONTINUED

ITEM 4.  Submission of Matters to a Vote of Securityholders

On June 10, 1997, the annual meeting of shareholders of the Company was held.
The agenda items for such meeting are shown below along with the vote of the
Company's Common Stock with respect to such agenda items.

1.   Election of three Class I Directors to serve until the 2000 Annual Meeting
     of Shareholders or the election of their successors.

           Nominee:      Roger E. Birk
                         Votes FOR: 64,289,564
                         Votes WITHHELD AUTHORITY: 712,490

           Nominee:      Elizabeth A. Sanders
                         Votes FOR: 63,801,283
                         Votes WITHHELD AUTHORITY: 1,200,771

           Nominee:      Sheila P. Burke
                         Votes FOR: 64,576,776
                         Votes WITHHELD AUTHORITY: 425,278

The terms of Leonard D. Schaeffer, David R. Banks, W. Toliver Besson, Stephen R.
Davenport and Julie A. Hill continued after the meeting.

2.   Proposal to approve a reincorporation in the State of Delaware pursuant to
     the formation of a Delaware holding company structure.

<TABLE>
<S>                                                   <C>       
             Votes FOR:                               50,317,128
             Votes AGAINST:                           12,991,243
             Votes ABSTAIN:                               30,733
             Broker non-votes:                         1,662,950
</TABLE>

3.   Proposal to approve an amendment to the Company's 1994 Stock Option/Award
     Plan.

<TABLE>
<S>                                                   <C>       
             Votes FOR:                               46,144,779
             Votes AGAINST:                           18,376,589
             Votes ABSTAIN:                               36,795
             Broker non-votes:                           443,891
</TABLE>


                                       28
<PAGE>   31
                      PART II. OTHER INFORMATION, CONTINUED

ITEM 4.  Submission of Matters to a Vote of Securityholders, Continued

4.   Ratification of the selection of Coopers & Lybrand LLP as the Company's
     independent public accountants for the fiscal year ending December 31,
     1997.


<TABLE>
<S>                                                   <C>       
             Votes FOR:                               64,802,893
             Votes AGAINST:                               11,169
             Votes ABSTAIN:                               11,251
             Broker non-votes:                           176,741
</TABLE>

ITEM 5. OTHER INFORMATION

        On August 13, 1997, the Company announced the appointment of David C.
Colby as Executive Vice President and Chief Financial Officer effective as of
September 2, 1997. The Company also announced that Howard G. Phanstiel,
Executive Vice President, Finance and Information Services, would be leaving
the Company in mid-September 1997.

                                       29
<PAGE>   32
ITEM 6.  Exhibits and Reports on Form 8-K

         (a) Exhibits

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         2.01     Amended and Restated Recapitalization Agreement dated as of
                  March 31, 1995 by and among the Registrant, Blue Cross of
                  California, Western Health 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 ("John Hancock"), incorporated by reference
                  to Exhibit 2.1 of Registrant's Current Report on Form 8-K
                  dated October 9, 1996

         2.04     Agreement and Plan of Reorganization dated as of July 22, 1997
                  by and among the Registrant, WellPoint Health Networks Inc., a
                  California corporation ("WellPoint California") and WLP
                  Acquisition Corp., incorporated by reference to Exhibit 99.1
                  of Registrant's Form 8-K filed on August 5, 1997

         3.01     Restated Certificate of Incorporation of the Registrant's
                  incorporated by reference to Exhibit 3.1 of Registrant's Form
                  8-K filed on August 5, 1997.

         3.02     Bylaws of the Registrant, incorporated by reference to
                  Appendix B to WellPoint California's Schedule 14A filed on May
                  8, 1997, File No. 333-03292-01

         3.03     Agreement of Merger dated as of July 22, 1997 by and among
                  WellPoint California and WLP Acquisition Corp., incorporated
                  by reference to Exhibit 3.3 Registrant's Form 8-K filed on
                  August 5, 1997.

         4.01     Specimen of common stock certificate of WellPoint Health
                  Networks Inc., incorporated by reference to Exhibit 4.4 of
                  Registrant's Registration Statement on Form S-3, Registration
                  No. 001-13083

         9.01     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
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         9.02     Amended and Restated Voting Trust Agreement dated as of August
                  4, 1997 by and among the California HealthCare Foundation (the
                  "Foundation") and Wilmington Trust Company, incorporated by
                  reference to Exhibit 99.2 of Registrant's Form 8-K filed on
                  August 5, 1997 (superseding Exhibit 9.01)

         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

         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 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

         10.06    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

         10.07    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

         10.08    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>                                                        
         10.09    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

         10.10    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

         10.11    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

         10.12    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

         10.13    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

         10.14    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

         10.15    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

         10.16    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

         10.17    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
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.18    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

         10.19    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

         10.20    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

         10.21    Form of Officer Severance Agreement of the Registrant,
                  incorporated by reference to Exhibit 10.32 of Registrant's
                  Form 10-K for the fiscal year ended December 31, 1994

         10.22    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

         10.23    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

         10.24    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

         10.25    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

         10.26    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
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.27    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

         10.28    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

         10.29    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

         10.30    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

         10.31    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

         10.32    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

         10.33    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

         10.34    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

         10.35    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
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.36    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

         10.37    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

         10.38    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

         10.39    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

         10.40    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

         10.41    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

         10.42    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

         10.43    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

         10.44    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
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.45    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

         10.46    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)

         10.47    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)

         10.48    Amendment No. 1 dated as of June 28, 1996 to the Registrant's
                  Credit Agreement dated as of May 15, 1996, incorporated by
                  reference to Exhibit 10.65 of Registrant's Form 10-Q for the
                  quarter ended September 30, 1996

         10.49    Subordinated Term Loan Agreement dated as of November 21,
                  1996, by and among the Registrant, Bank of America and the
                  other parties named therein, incorporated by reference to
                  Exhibit 99.1 to the Registrant's Current Report on Form 8-K
                  filed December 12, 1996

         10.50    Employment Agreement dated as of January 22, 1997, by and
                  between the Registrant and Leonard D. Schaeffer, incorporated
                  by reference to Exhibit 10.50 of Registrant's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1996

         10.51    Modification Agreement dated as of November 26, 1996 by and
                  between the Registrant California HealthCare Foundation,
                  incorporated by reference to Exhibit 10.51 of Registrant's
                  Annual Report on Form 10-K for the fiscal year ended December
                  31, 1996

         10.52    Coinsurance Agreement dated as of March 1, 1997 between John
                  Hancock and UNICARE Life & Health Insurance Company
                  ("UNICARE"), incorporated by reference to Exhibit 99.2 of
                  Registrant's Current Report on Form 8-K filed March 14, 1997

         10.53    Administration Agreement dated as of March 1, 1997 between
                  John Hancock and UNICARE, incorporated by reference to Exhibit
                  99.3 of Registrant's Current Report on Form 8-K filed March
                  14, 1997

         10.54    Amendment No. 1 dated as of February 11, 1997 to Registrant's
                  Subordinated Term Loan Agreement dated as of November 21,
                  1996, incorporated by reference to Exhibit 10.54 of
                  Registrant's Annual Report on Form 10-K for the fiscal year
                  ended December 31, 1996
                  
</TABLE>


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

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.55    Blue Cross Affiliate License Agreement by and between BC Life
                  & Health Insurance Company and the BCBSA, incorporated by
                  reference to Exhibit 10.55 of Registrant's Annual Report on
                  Form 10-K for the fiscal year ended December 31, 1996

         10.56    Blue Cross Affiliate License Agreement Applicable to Life
                  Insurance Companies by and between BC Life & Health Insurance
                  Company and the BCBSA, incorporated by reference to Exhibit
                  10.56 of Registrant's Annual Report on Form 10-K for the 
                  fiscal year ended December 31, 1996

         10.57    Second Agreement dated as of April 21, 1997 to Registrant's
                  Credit Agreement dated as of May 15, 1996, incorporated by
                  reference to Exhibit 10.55 of Registrant's Form 10-Q for the
                  Quarter ended March 31, 1997

         10.58    Third Amendment dated as of April 21, 1997 to Registrant's
                  Credit Agreement dated as of May 15, 1996, incorporated by
                  reference to Exhibit 10.56 of Registrant's Form 10-Q for the
                  Quarter ended March 31, 1997

         10.59    Second Amendment dated as of April 21, 1997 to Registrant's
                  Subordinated Term Loan Agreement dated as of November 21,
                  1996, incorporated by reference to Exhibit 10.57 of
                  Registrant's Form 10-Q for the Quarter ended March 31, 1997

         10.60    Amended and Restated Voting Agreement dated as of August 4,
                  1997 by and among the Registrant, WellPoint California and the
                  Foundation incorporated by reference to Exhibit 99.3 of
                  Registrant's Form 8-K filed on August 5, 1997 (superseding
                  Exhibit 10.38)

         10.61    Amended and Restated Share Escrow Agent Agreement dated as of
                  August 4, 1997 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 filed on August 5, 1997
                  (superseding Exhibit 10.39)

         10.62    Amended and Restated Registration Rights Agreement dated as of
                  August 4, 1997 by and among the Registrant, WellPoint
                  California and the Foundation incorporated by reference to
                  Exhibit 99.5 of Registrant's Form 8-K filed on August 5, 1997
                  (superseding Exhibit 10.40)

         10.63    Blue Cross License Agreement effective as of August 4, 1997 by
                  and among the Registrant and the Blue Cross Blue Shield
                  Association (the "BCBSA"), incorporated by reference to
                  Exhibit 99.6 of Registrant's Form 8-K filed on August 5, 1997
                  (superseding Exhibit 10.41)
</TABLE>


                                       37
<PAGE>   40
         (a)      Exhibits (continued)

<TABLE>
<CAPTION>
         Exhibit
         Number       Exhibit
         ------       -------

<S>               <C>                                                        
         10.64    California Blue Cross License Addendum effective as of August
                  4, 1997 by and between the Registrant, Blue Cross of
                  California and the BCBSA, incorporated by reference to Exhibit
                  99.7 of Registrant's Form 8-K filed on August 5, 1997
                  (superseding Exhibit 10.42)

         10.65    Blue Cross Controlled Affiliate License Agreement effective as
                  of August 4, 1997 by and between the BCBSA and Blue Cross of
                  California, incorporated by reference to Exhibit 99.8 of
                  Registrant's Form 8-K filed on August 5, 1997 (superseding
                  Exhibit 10.43)

         10.66    Blue Cross Affiliate License Agreement effective as of August
                  4, 1997 by and between the BCBSA and BC Life & Health
                  Insurance Company, incorporated by reference to Exhibit 99.9
                  of Registrant's Form 8-K filed on August 5, 1997 (superseding
                  Exhibit 10.55)

         10.67    Blue Cross Controlled Affiliate License Agreement Applicable
                  to Life Insurance Companies effective as of August 4, 1997 by
                  and between the BCBSA and BC Life & Health Insurance Company,
                  incorporated by reference to Exhibit 99.10 of Registrant's
                  Form 8-K filed on August 5, 1997 (superseding Exhibit 10.56)

         10.68    Fourth Amendment to Credit Agreement and Consent dated as of
                  July 21, 1997 by and among the Registrant, WellPoint
                  California, Bank of America National Trust and Savings
                  Association, as Administrative Agent, NationsBank of Texas,
                  N.A., as Syndication Agent, and Chase Manhattan Bank, as
                  Documentation Agent, and the other financial institutions
                  named therein, incorporated by reference to Exhibit 99.11 to
                  Registrant's Form 8-K filed on August 5, 1997

         10.69    Undertakings dated July 31, 1997 by the Registrant, WellPoint
                  California and WellPoint California Services, Inc. to the
                  California Department of Corporations, incorporated by
                  reference to Exhibit 99.12 to Registrant's Form 8-K filed on
                  August 5, 1997

         10.70    WellPoint Health Networks Inc. Stock Option/Award Plan, as
                  amended through January 15, 1997, (incorporated by reference
                  to Exhibit 99.1 to the Registrant's Registration Statement on
                  Form S-8), File No. 333-33013 (superseding Exhibit 10.31)

         10.71    WellPoint Health Networks Inc. Employee Stock Purchase Plan
                  (as amended and restated effective January 1, 1998)
                  (superseding Exhibit 10.47)

         11       Statement Re: Computation of Earnings Per Share

         27.1     Financial Data Schedule
</TABLE>


                                       38
<PAGE>   41
         (b)      Reports on Form 8-K

         A current report on Form 8-K was filed on March 31, 1997, which
         reported that the Company had completed the acquisition of the Group
         Benefits Operation of John Hancock Mutual Life Insurance Company on
         March 1, 1997.

         An Amendment No. 1 on Form 8-K/A was filed on May 14, 1997, which
         provided audited historical financial statements for the GBO as of and
         for the year ended December 31, 1996 and unaudited pro forma financial
         statements for the Company as of and for the year ended December 31,
         1996.

         A current report on Form 8-k was filed on August 5, 1997, which
         reported that the Company has completed the formation of a new Delaware
         holding company structure.


                                       39
<PAGE>   42
                                   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: August 13, 1997              By: /s/ LEONARD D. SCHAEFFER
                                       -----------------------------------
                                       Leonard D. Schaeffer
                                       Chairman of the Board of Directors
                                       and Chief Executive Officer



Date: August 13, 1997              By: /s/ HOWARD G. PHANSTIEL
                                       -----------------------------------
                                       Howard G. Phanstiel
                                       Executive Vice President
                                       Finance and Information Services



Date: August 13, 1997              By: /s/ S. LOUISE MCCRARY
                                       -----------------------------------
                                       S. Louise McCrary
                                       Vice President and
                                       Chief Accounting Officer
               

                                       40