<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
       (Mark One)

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

                   FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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 NOVEMBER 7, 1997
      -------------------                    -------------------------------
  Common Stock, $0.0l par value                     69,716,241 shares


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


PART I.  FINANCIAL INFORMATION


<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                    ----
<S>                                                                                  <C>
    ITEM 1.    Financial Statements

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

               Consolidated Income Statements for the Three and Nine Months
                   Ended September 30, 1997 and 1996.................................. 2

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

               Consolidated Statements of Cash Flows for the
                   Nine Months Ended September 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..................... 12

PART II.  OTHER INFORMATION

    ITEM 6.    Exhibits and Reports on Form 8-K...................................... 28

SIGNATURES .......................................................................... 38
</TABLE>



<PAGE>   3
ITEM 1.           Financial Statements

                         WELLPOINT HEALTH NETWORKS INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
(In thousands, except share data)                                               September 30,  December 31,
                                                                                     1997         1996
                                                                                 -----------   -----------
<S>                                                                             <C>            <C>        
ASSETS                                                                           (unaudited)
Current Assets:
     Cash and cash equivalents                                                   $   284,397   $   313,256
     Investment securities, at market value                                        2,351,017     1,728,305
     Receivables, net                                                                602,495       401,300
     Deferred tax assets                                                              61,641        67,147
     Other current assets                                                             54,228        28,463
                                                                                 -----------   -----------
         Total Current Assets                                                      3,353,778     2,538,471
Property and equipment, net                                                          106,286        82,720
Intangible assets                                                                    687,256       552,279
Long-term investments                                                                124,937       123,931
Deferred tax assets                                                                   81,854        57,830
Other non-current assets                                                              49,855        50,311
                                                                                 -----------   -----------
                  Total Assets                                                   $ 4,403,966   $ 3,405,542
                                                                                 ===========   ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Medical claims payable                                                      $   859,193   $   667,540
     Loss and loss adjustment expense reserves                                       117,603       102,152
     Reserves for future policy benefits                                              47,524        13,001
     Unearned premiums                                                               197,743       160,036
     Accounts payable and accrued expenses                                           318,753       251,480
     Experience rated and other refunds                                              246,729       146,882
     Income taxes payable                                                            106,286        99,086
     Other current liabilities                                                       317,320       118,303
                                                                                 -----------   -----------
         Total Current Liabilities                                                 2,211,151     1,558,480
Accrued postretirement benefits                                                       63,525        61,086
Loss and loss adjustment expense reserves, non-current                               130,316       131,079
Reserves for future policy benefits, non-current                                     333,602        91,507
Long-term debt                                                                       429,000       625,000
Other non-current liabilities                                                         73,973        67,931
                                                                                 -----------   -----------
         Total Liabilities                                                         3,241,567     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, 69,706,478
         and 66,526,985 issued and outstanding at September 30, 1997 and
         December 31, 1996, respectively                                                 697           665
     Additional paid-in capital                                                      879,375       761,879
     Unrealized valuation adjustment                                                   8,832        (9,994)
     Retained earnings                                                               273,495       117,909
                                                                                 -----------   -----------
         Total Stockholders' Equity                                                1,162,399       870,459
                                                                                 -----------   -----------
                  Total Liabilities and Stockholders' Equity                     $ 4,403,966   $ 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 September 30,    Nine Months Ended September 30,
                                         -----------------------            -----------------------
                                            1997         1996                  1997         1996
                                         ----------   ----------            ----------   ----------
<S>                                      <C>          <C>                   <C>          <C>       
Revenues:                                                                 
    Premium revenue                      $1,350,405   $1,052,297            $3,849,928   $2,801,246
    Management services revenue             108,711       43,810               280,432      105,473
    Investment income                        52,464       34,579               138,461      107,008
                                         ----------   ----------            ----------   ----------
                                          1,511,580    1,130,686             4,268,821    3,013,727
Operating Expenses:                                                       
    Health care services and                                              
      other benefits                      1,116,509      824,324             3,120,660    2,159,062
    Selling expense                          67,271       59,078               191,952      166,805
    General and administrative expense      219,385      153,103               631,485      388,868
    Nonrecurring costs                         --           --                  14,535         --
                                         ----------   ----------            ----------   ----------
                                          1,403,165    1,036,505             3,958,632    2,714,735
                                         ----------   ----------            ----------   ----------
Operating Income                            108,415       94,181               310,189      298,992
    Interest expense                          8,144       12,396                28,757       23,319
    Other expense, net                        6,888        5,926                19,952       15,107
                                         ----------   ----------            ----------   ----------
                                                                          
Income before Provision for                                               
    Income Taxes                             93,383       75,859               261,480      260,566
    Provision for income taxes               37,815       30,758               105,894      105,580
                                         ----------   ----------            ----------   ----------
Net Income                               $   55,568   $   45,101            $  155,586   $  154,986
                                         ==========   ==========            ==========   ==========
                                                                          
                                                                          
Earnings Per Share                       $     0.79   $     0.68            $     2.25   $     2.33
                                         ==========   ==========            ==========   ==========
                                                                          
                                                                  

Weighted Average Common
    Shares Outstanding                       70,747       66,484                69,099       66,416
</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                                                                                            155,586      155,586

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

     Stock issued under Company's
       stock option / award plan                          179            2        7,186                                   7,188

     Change in unrealized valuation
        adjustment on investment
        securities, net of tax                                                                18,826                     18,826
                                      ----------   ----------   ----------   ----------   ----------    ----------   ----------

BALANCE AS OF SEPTEMBER 30, 1997      $     --         69,706   $      697   $  879,375   $    8,832    $  273,495   $1,162,399
                                      ==========   ==========   ==========   ==========   ==========    ==========   ==========
</TABLE>


      See the accompanying notes to the consolidated financial statements.


                                        3


<PAGE>   6
                         WELLPOINT HEALTH NETWORKS INC.
                      Consolidated Statements of Cash Flows
                                   (unaudited)


<TABLE>
<CAPTION>
(In thousands)                                                        Nine Months Ended September 30,
                                                                        --------------------------
                                                                            1997          1996
                                                                        -----------    -----------
<S>                                                                   <C>              <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                            $   155,586    $   154,986
  Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization, net of accretion                         40,817         27,340
     Gains on sales of assets, net                                          (22,116)       (10,144)
     Benefit for deferred income taxes                                      (10,111)       (43,922)
     Amortization of deferred gain on sale of building                       (3,319)        (1,475)
     (Increase) decrease in certain assets, net of acquisitions:
        Receivables, net                                                    (81,925)       (27,086)
        Other current assets                                                (19,090)        37,913
        Other non-current assets                                                456        (35,538)
     Increase (decrease) in certain liabilities, net of acquisitions:
        Medical claims payable                                              107,263        (27,266)
        Loss and loss adjustment expense reserves                            14,688         32,389
        Reserves for future policy benefits                                  (1,689)          --
        Unearned premiums                                                     3,204         20,809
        Accounts payable and accrued expenses                                63,307         76,118
        Experience rated and other refunds                                   12,058          6,869
        Income taxes payable and other current liabilities                   40,226         38,157
        Accrued postretirement benefits                                       2,439          2,544
        Other non-current liabilities                                         9,361         15,363
                                                                        -----------    -----------
            Net cash provided by operating activities                       311,155        267,057
                                                                        -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments purchased                                                  (2,070,258)      (755,110)
  Proceeds from investments sold and matured                              1,496,402        514,763
  Property and equipment purchased, net                                     (32,066)       (26,545)
  Additional investment in subsidiaries                                     (17,597)          --
  Purchase of subsidiaries, net of cash acquired                            361,977       (441,093)
                                                                        -----------    -----------
            Net cash used in investing activities                          (261,542)      (707,985)
                                                                        -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                             150,000        775,000
   Repayment of long-term debt                                             (346,000)       (90,000)
   Net proceeds from common stock offering                                  110,340           --
   Proceeds from issuance of stock under option/award plan                    7,188          4,082
   Recapitalization (see Note 3)                                               --         (995,000)
                                                                        -----------    -----------
            Net cash used in financing activities                           (78,472)      (305,918)
                                                                        -----------    -----------
Net decrease in cash and cash equivalents                                   (28,859)      (746,846)
Cash and cash equivalents at beginning of period                            313,256      1,069,631
                                                                        -----------    -----------
Cash and cash equivalents at end of period                              $   284,397    $   322,785
                                                                        ===========    ===========
</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.

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 under management services
contracts. The Company serves the health care needs of approximately 6.5 million
medical members in HMOs, PPOs, POS, indemnity plans, and management services
plans, and has approximately 12.2 million pharmacy members, 3.2 million dental
members, 2.7 million utilization management members, 1.7 million life members,
1.1 million disability members and 0.7 million behavioral health members as of
September 30, 1997.

On August 4, 1997, the Company completed its plan, which was approved by
shareholders, 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. A
principal purpose of the Reincorporation was to allow a restructuring of the
Company and its various subsidiaries in order to improve the Company's capital
as measured for Blue Cross Blue Shield Association ("BCBSA") purposes.


                                       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
position as of September 30, 1997, the results of its operations for each of the
three and nine months ended September 30, 1997 and 1996, cash flows for each of
the nine months ended September 30, 1997 and 1996, and its changes in
stockholders' equity for the nine months ended September 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, which
now conducts business under the name UNICARE Life & Health Insurance Company,
focuses on the large employer segment (employers with 5,000 or more employees)
and provides medical, life, dental and 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 now 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 September 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 employees). 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 $133.4 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 California 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 net 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 66.4 million shares of the Company's Common Stock outstanding, of which
53.4 million shares (or approximately 80.4%) were held beneficially by the
Foundation. As a result of the Recapitalization, the Foundation was granted
certain demand and piggyback registration rights with respect to its shares. On
November 21, 1996 and April 10, 1997 the Foundation sold approximately 15.0
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 29.9 million 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 nine months
ended September 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 nine months ended September 30, 1997 is calculated based
on 70.7 million and 69.1 million weighted average shares outstanding,
respectively, and 66.5 million and 66.4 million weighted average shares
outstanding for the three and nine months ended September 30, 1996,
respectively.


<TABLE>
<CAPTION>
                          Three Months Ended           Nine Months Ended
                            September 30,                 September 30,
                     --------------------------   ---------------------------
(In millions, except     1997           1996          1997          1996
earnings per share)
                     ------------  ------------   ------------   ------------
<S>                  <C>           <C>            <C>            <C>        
Revenues             $   1,511.6   $   1,314.8    $   4,395.6    $   3,952.5
Net Income           $      55.6   $      45.6    $     151.9    $     142.1
Earnings Per Share   $       0.79  $       0.69   $       2.20   $       2.14
</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 nine
months ended September 30, 1997 include common stock equivalents. For the three
and nine months ended September 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 nine months ended September 30, 1996 has been
calculated using 66.5 million and 66.4 million shares, respectively, the number
of shares outstanding immediately following the Recapitalization, plus the
weighted average number of shares issued since the Recapitalization.

7.  NEW PRONOUNCEMENTS

The Financial Accounting Standards Board (the "FASB") recently issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS No.
128"). 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.
Diluted EPS will further include the addition of common stock equivalents to
weighted average shares outstanding. As the Company did not have any common
stock equivalents until May 20, 1996, and had no dilutive common stock
equivalents from this date through March 31, 1997, the Company's basic and
diluted EPS calculation for all periods


                                       9


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

7.  NEW PRONOUNCEMENTS, CONTINUED

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 of 1997 and for the remainder of the fiscal year, the Company's common
stock equivalents are expected to 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 the three and nine
months ended September 30, 1997 would be an increase in basic EPS of $0.01 and
$0.02, respectively. The diluted EPS under SFAS No. 128 would be the same as the
EPS disclosed in these unaudited consolidated financial statements.

In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130 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 disclosures will be
effective beginning in the first quarter of 1998.

Also in June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information"
("SFAS No. 131"). SFAS No. 131 requires that companies disclose "operating
segments" based on the way management disaggregates the company for making
internal operating decisions. The new disclosures will be effective for the
Company's fiscal year ending on December 31, 1998. Abbreviated quarterly
disclosure will be required beginning with the period ending March 31, 1999,
with comparative information required for the corresponding period in the prior
fiscal year.

The Company is presently assessing the effect of SFAS Nos. 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. The loss of even one such claim, if it
results in a significant punitive damage award, could have a material adverse
effect on the Company. In addition, the risk of potential liability under
punitive damage theories may increase significantly the difficulty of obtaining
reasonable settlements of coverage claims. However, the financial and
operational impact that such evolving theories of recovery will have on the
managed care industry generally, or the Company in particular, is at present
unknown.


                                       10


<PAGE>   13
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

8.      CONTINGENCIES, CONTINUED

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.


                                       11


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

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

GENERAL

WellPoint Health Networks Inc. (the "Company" or "WellPoint") is one of the
nation's largest publicly traded managed health care companies, with
approximately 6.5 million medical members, 12.2 million pharmacy members, 3.2
million dental members, 2.7 million utilization management members, 1.7 million
life members, 1.1 million disability members and 0.7 million behavioral health
members as of September 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 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, WellPoint offers managed care services for self-funded employers under
management services contracts, including claims processing, actuarial services,
network access, medical cost management and other administrative services.

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 the Reincorporation was to allow a
restructuring of the Company and its various subsidiaries in order to improve
the Company's capital as measured for Blue Cross Blue Shield Association
("BCBSA") purposes.


                                       12


<PAGE>   15
GENERAL, CONTINUED

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, with an associated 1.3
million acquired members targets large employers with 5,000 or more employees
and a majority of the medical members it serves are in health plans that are
self funded by employers. The GBO offers indemnity and PPO plans and also
provides life, dental, pharmacy, utilization management and disability coverage
to a variety of employer groups. The GBO has historically experienced a higher
administrative expense ratio 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 to $25 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 implements price increases on certain accounts and
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 5,000
employees and provide administrative services, PPO and indemnity insurance
products. The Company has experienced membership attrition of approximately 17%
through September 30, 1997 on acquired membership, a portion of which is the
result of recently instituted premium increases with respect to certain
underpriced accounts. The Company expects that it will experience some level of
further membership attrition of its acquired MMHD members as it continues to
increase prices and 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 Notes to Consolidated Financial Statements (unaudited) in Item 1 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 successfully convert these books of
business to the Company's existing information systems, which will require
additional expenditures by the Company.


                                       13


<PAGE>   16
GENERAL, CONTINUED

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 has
increased. In order to control the respective loss ratios and reduce the
financial risk of these acquired businesses, the Company has undertaken a
variety of measures, including the imposition of significant premium increases
and changes in product design. The Company has also implemented a series of
price increases for certain of its California managed care businesses in
response to an increased loss ratio in the second and third quarters of 1997.
The Company will continue to evaluate the need for further price increases, plan
design changes and other appropriate actions in the future. There can be no
assurances, however, that the Company will be able to take subsequent pricing
or other actions or that any actions previously taken or implemented in the 
future will be successful.

A variety of health care reform measures are currently pending or have been
recently enacted at the Federal, state and local levels. Recent Federal
legislation seeks, among other things, to insure the portability of health
coverage and mandates minimum maternity hospital stays. These and other proposed
measures may have the effect of dramatically altering the regulation of health
care and of increasing the Company's loss ratio or decrease the affordability of
the Company's products. In May 1997, the Texas Legislature adopted Senate Bill
No. 386 ("SB 386"). Among other things, this legislation purports to make
managed care organizations ("MCOs") such as the Company liable for the failure
by the MCO, its employees or agents to exercise ordinary care when making
"health care treatment decisions" (as defined in SB 386). The legislation was
effective as of September 1, 1997. It is too early to determine what effect, if
any, this legislation may have on the Company. However, to the extent that this
legislation (or similar legislation that may be subsequently adopted at the
Federal or state level) effectively expands the scope of liability of MCOs such
as the Company, it may have a material adverse effect on the Company's results
of operations and financial condition.


                                       14


<PAGE>   17
RESULTS OF OPERATIONS

WellPoint's revenues are primarily generated from premiums earned for risk-based
health care and specialty services provided to its members, fees for
administrative services, including claims processing and access to provider
networks for self-insured employers, and investment income. 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;
depreciation and amortization expense; and income taxes.

The Company's consolidated results of operations for the three months ended
September 30, 1997 and 1996 include a full quarter of earnings for its acquired
operations, MMHD, BCC Commercial Operations and, for 1997 only, the GBO. The
Company's consolidated results of operations for the nine months ended September
30, 1997 include a full nine months of earnings for MMHD and BCC Commercial
Operations, and seven months of earnings for the GBO. The results of operations
for the nine months ended September 30, 1996 include the results of MMHD for the
period from April 1, 1996 (its date of acquisition) to September 30, 1996 and
BCC Commercial Operations for the period from May 20, 1996 (its date of
acquisition) to September 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      Nine Months Ended
                                          September 30,          September 30,
                                         --------------          --------------
                                         1997     1996           1997     1996
                                         -----    -----          -----    -----
<S>                                      <C>      <C>            <C>      <C>  
Operating Revenues:                                            
  Premium revenue                         92.6%    96.0%          93.2%    96.4%
  Management services revenue              7.4      4.0            6.8      3.6
                                         -----    -----          -----    -----
                                         100.0    100.0          100.0    100.0
Operating Expenses:                                            
  Health care services and other                               
        benefits (loss ratio)             82.7     78.3           81.1     77.1
  Selling expense                          4.6      5.4            4.6      5.7
  General and administrative expense      15.0     14.0           15.3     13.4
</TABLE>


                                       15


<PAGE>   18
MEMBERSHIP

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


<TABLE>
<CAPTION>
MEDICAL MEMBERSHIP:                      As of September 30,
                                         ---------------------     ------ 
                                                                   Percent
                                           1997        1996        Change
                                         ---------   ---------     ------ 
<S>                                      <C>         <C>           <C>  
CALIFORNIA
   Group Services:
      HMO                                  787,125     663,271      18.7%
      PPO and Other                      1,457,052   1,284,245      13.5%
                                         ---------   ---------

         Total                           2,244,177   1,947,516      15.2%
                                         ---------   ---------

   Individual, Small Group and Senior:
      HMO                                  302,867     258,582      17.1%
      PPO and Other                      1,269,714   1,198,677       5.9%
                                         ---------   ---------

         Total                           1,572,581   1,457,259       7.9%
                                         ---------   ---------

   Medi-Cal HMO Programs                   264,218      59,454     344.4%
                                         ---------   ---------

Total California Medical Membership      4,080,976   3,464,229      17.8%
                                         ---------   ---------

TEXAS
   Group Services                          170,727      78,955     116.2%
   Individual, Small Group and Senior       62,914      21,016     199.4%
                                         ---------   ---------
         Total                             233,641      99,971     133.7%
                                         ---------   ---------

GEORGIA
   Group Services                           92,651      52,683      75.9%
   Individual, Small Group and Senior        7,177        --         N/A 
                                         ---------   ---------
         Total                              99,828      52,683      89.5%
                                         ---------   ---------

OTHER STATES
   Group Services                        2,054,217     770,627     166.6%
   Individual, Small Group and Senior        4,805        --         N/A
                                         ---------   ---------

         Total                           2,059,022     770,627     167.2%
                                         ---------   ---------

Total National Medical Membership        2,392,491     923,281     159.1%
                                         ---------   ---------
TOTAL MEDICAL MEMBERSHIP (a)(b)          6,473,467   4,387,510      47.5%
                                         =========   =========

NETWORKS (b) (c)
   Proprietary Networks                  3,906,529   3,253,887      20.1%
   Other Networks                        1,444,966     735,291      96.5%
   Non-Network                           1,121,972     398,332     181.7%
                                         ---------   ---------

TOTAL MEDICAL MEMBERSHIP                 6,473,467   4,387,510      47.5%
                                         =========   =========
</TABLE>


(a)     Medical membership includes 2,675,337 and 1,215,883 management services
        members as of September 30, 1997 and 1996, respectively, of which those
        management services members outside of California were 1,781,303 and
        492,026, as of September 30, 1997 and 1996, respectively.

(b)     Includes 1.3 million acquired GBO medical members.

(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 contracts with providers.


                                       16


<PAGE>   19
MEMBERSHIP, CONTINUED


<TABLE>
<CAPTION>
                            As of September 30,
                          ----------------------     ----- 
                                                    Percent
                            1997          1996       Change
                          ---------      -------     ----- 
SPECIALTY MEMBERSHIP:
<S>                      <C>          <C>           <C>   
Pharmacy                 12,150,533   12,218,839      (0.5%)
Dental                    3,189,111    1,512,740     110.8%
Utilization Management    2,708,469         --         N/A
Life                      1,729,228      724,295     138.7%
Disability                1,140,422      108,231     953.7%
Behavioral Health           691,721      472,235      46.5%
</TABLE>


The specialty membership as of September 30, 1997 includes the acquired GBO
operations, which had approximately 0.3 million pharmacy members, 1.5 million
dental members, 2.7 million utilization management members, 0.9 million life
members and 1.0 million disability members at the date of acquisition.

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

Premium revenue increased 28.3%, or $298.1 million, to $1,350.4 million for the
quarter ended September 30, 1997 from $1,052.3 million for the quarter ended
September 30, 1996. The acquisition of the GBO contributed 42.0% of the overall
premium revenue increase and accounted for $125.1 million. Also contributing to
increased premium revenue in 1997 was an increase in insured member months of
14.5%, excluding the GBO. 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 148.2%, or $64.9 million, to $108.7
million for the quarter ended September 30, 1997 from $43.8 million for the
quarter ended September 30, 1996. The increase was primarily due to $57.8
million of management services revenue from the GBO acquisition, representing
89.1% of the increase and the addition of a management services contract with
the state of Illinois on July 1, 1997.

Investment income increased $17.8 million to $52.5 million for the quarter ended
September 30, 1997 compared to $34.6 million for the quarter ended September 30,
1996. Net realized gains from equity securities increased $11.3 million to $12.8
million for the quarter ended September 30, 1997 in comparison to $1.5 million
for the quarter ended September 30, 1996. Net interest and dividend income
increased $9.0 million to $40.1 million for the quarter ended September 30, 1997
in comparison to $31.4 million for the quarter ended September 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 and cash
used for repayment of indebtedness under the Company's senior credit facility.


                                       17


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

Health care services and other benefits expense increased 35.4% or $292.2
million to $1,116.5 million for the quarter ended September 30, 1997 from $824.3
million for the quarter ended September 30, 1996. The acquisition of the GBO
contributed 42.6% of the increase and accounted for $124.6 million.
Additionally, the aforementioned increase in insured member months of 14.5%
resulted in increased claims expense.

The loss ratio for the quarter ended September 30, 1997 increased to 82.7%
compared to 78.3% for the quarter ended September 30, 1996, due to the
incremental effect of the GBO acquisition on the Company's overall results. The
acquired GBO has 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 third quarter of 1997 in comparison to the
third 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 September 30, 1997 and 1996,
the loss ratios would have been 80.0% and 77.9%, respectively. The increase in
loss ratios excluding acquired operations is due to a loss ratio increase in the
Company's California businesses, primarily due to increased membership in lower
margin products, slightly higher medical utilization for certain managed care
products principally in the individual and small group markets, and increased
pharmacy costs.

Selling expense for the quarter ended September 30, 1997 increased 13.9% to
$67.3 million compared to $59.1 million for the quarter ended September 30,
1996, corresponding with continued overall premium revenue growth. The selling
expense ratio for the quarter ended September 30, 1997 decreased to 4.6% from
5.4% for the quarter ended September 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. Excluding all of the
acquired operations of the GBO, MMHD and the BCC Commercial Operations for the
quarters ended September 30, 1997 and 1996, the selling expense ratio would have
been 5.9% and 6.2%, respectively. The Company's growth in Medi-Cal and large
employer group medical products had a significant impact on lowering the selling
expense ratio as a result of the lower selling costs associated with these
products in comparison to the Company's other products. The Company also
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.

General and administrative expense for the quarter ended September 30, 1997
increased 43.3% or $66.3 million to $219.4 million for the quarter ended
September 30, 1997 from $153.1 million for the quarter ended September 30, 1996.
The acquisition of the GBO accounted for 87.9% of the increase and contributed
$58.3 million. Additional increases resulted from costs associated with
increased membership growth, primarily related to medical products, including
Medi-Cal business, and 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 15.0% for the quarter ended
September 30, 1997, compared to 14.0% for the quarter ended September 30, 1996,
primarily due to the increased 


                                       18


<PAGE>   21
COMPARISON OF RESULTS FOR THE THIRD QUARTER 1997 TO THE THIRD QUARTER 1996,
CONTINUED

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 California-based businesses, due to its higher
percentage of management services business. The administrative expense ratio,
excluding the GBO, was 12.7% and 14.0% for the quarters ended September 30, 1997
and 1996, respectively. The decline in the administrative expense ratio
excluding the GBO is primarily due to a reduction in personnel costs related to
the Company's integration of the MMHD acquisition.

Interest expense was $8.1 million for the quarter ended September 30, 1997 and
$12.4 million for the quarter ended September 30, 1996. The decrease in interest
expense related to debt paydowns as the effective interest rate paid by the
Company remained relatively stable. The Company's long-term indebtedness at
September 30, 1997 was $429.0 million compared to $747.0 million outstanding at
September 30, 1996. The weighted average interest rate for all debt for the
quarter ended September 30, 1997, including the fees associated with the
borrowings and interest rate swaps, was 7.4%.

WellPoint's net income for the quarter ended September 30, 1997 was $55.6
million, or $0.79 per share, compared to $45.1 million, or $0.68 per share, for
the quarter ended September 30, 1996. Earnings per share for the quarters ended
September 30, 1997 and 1996 is based on 70.7 million shares and 66.5 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 September 30, 1997, includes common stock equivalents. For
the three months ended September 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 September 30, 1996 has been calculated
using 66.5 million shares, the number of shares outstanding immediately
following the Recapitalization, plus the weighted average number of shares
issued since the Recapitalization. Weighted average common shares outstanding
increased for the quarter ended September 30, 1997, primarily due to the public
offering in April 1997 of three million shares of the Company's common stock and
the inclusion of 1.1 million common stock equivalents related to the Company's
stock option plans.


                                       19


<PAGE>   22
COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996

Premium revenue increased 37.4%, or $1,048.7 million, to $3,849.9 million for
the nine months ended September 30, 1997 from $2,801.2 million for the nine
months ended September 30, 1996. The acquisitions of the GBO, MMHD, and the BCC
Commercial Operations contributed 54.3% of the overall premium revenue increase
in 1997 and accounted for $293.4 million, $163.0 million and $112.7 million,
respectively. Also, contributing to increased premium revenue in 1997 was an
increase in insured member months of 14.2%, excluding the GBO from both periods,
MMHD from the first quarter of 1997, and excluding the BCC Commercial Operations
for the period prior to 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 165.8%, or $174.9 million, to $280.4
million for the nine months ended September 30, 1997 from $105.5 million for the
nine months ended September 30, 1996. The increase was primarily due to $135.1
million, $18.9 million and $1.1 million of management services revenue related
to the acquisitions of the GBO, MMHD and the BCC Commercial Operations,
respectively, representing 88.7% of the increase. Also contributing to the
increase was an increase in the California large group management services
membership and the addition of a management services contract with the state of
Illinois on July 1, 1997.

Investment income increased $31.4 million to $138.5 million for the nine months
ended September 30, 1997 compared to $107.0 million for the nine months ended
September 30, 1996. Net realized gains from equity securities increased $18.0
million to $27.8 million for the nine months ended September 30, 1997 in
comparison to $9.8 million for the nine months ended September 30, 1996. Net
interest and dividend income increased $17.6 million to $112.6 million for the
nine months ended September 30, 1997 in comparison to $95.3 million for the nine
months ended September 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 44.5% or $961.6
million to $3,120.7 million for the first nine months of 1997 from $2,159.1
million for the nine months ended September 30, 1996. The acquisitions of the
GBO, MMHD and the BCC Commercial Operations accounted for 54.3% of the increase
and totaled $284.1 million, $133.9 million and $104.0 million, respectively.
Additionally, the Company's health care benefits and other expenses in the nine
months ended September 30, 1997 increased in comparison to the prior nine month
period as a result of the aforementioned increase in insured member months of
14.2%.


                                       20


<PAGE>   23
COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996, CONTINUED

The loss ratio for the first nine months of 1997 increased to 81.1% compared to
77.1% in 1996. The acquired MMHD operations, the GBO and the BCC Commercial
Operations have traditionally experienced a higher loss ratio than the Company.
Additionally, the MMHD operations experienced an increase in loss ratio for the
nine months ending September 30, 1997 in comparison to the third quarter of 1996
due to higher actual claims incurred as a result of higher cost trends.
Excluding all of the acquired operations of MMHD, the GBO and the BCC Commercial
Operations for the nine months ended September 30, 1997 and 1996, the loss
ratios would have been 77.8% and 76.6%, respectively. The increase in loss
ratios excluding acquired operations is due to a loss ratio increase in the
Company's California businesses, primarily due to increased membership in lower
margin products, slightly higher medical utilization for certain managed care
products and increased pharmacy costs.

Selling expense for the nine months ended September 30, 1997 increased 15.1% to
$192.0 million compared to $166.8 million for the nine months ended September
30, 1996, corresponding with continued overall premium revenue growth and an
additional $7.0 million in selling expense attributable to the MMHD operations
and the GBO. The selling expense ratio for the nine months ended September 30,
1997 decreased to 4.6% from 5.7% for the nine months ended September 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
nine months ended September 30, 1997 and 1996, the selling expense ratio would
have been 5.9% and 6.3%, respectively. The Company's growth in Medi-Cal and
large employer group medical products had a significant impact on lowering the
selling expense ratio as a result of the lower selling costs associated with
these products in comparison to the Company's other products. The Company also
experienced a slight decrease in selling expense in 1997 as a percentage of
revenue for certain medical products in comparison to the prior nine months
ended September 30, 1996.

General and administrative expense for the nine months ended September 30, 1997
increased 62.4%, or $242.6 million, to $631.5 million from $388.9 million for
the same period in 1996. The acquisitions of the GBO, MMHD, and the BCC
Commercial Operations accounted for 77.3% of the increase and contributed $135.1
million, $46.0 million and $6.5 million, respectively. The administrative
expense ratio increased to 15.3% for the first nine months of 1997 compared to
13.4% 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 acquisitions 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 their 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 excluding the BCC Commercial Operations for the period 


                                       21


<PAGE>   24
COMPARISON OF RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 TO THE NINE
MONTHS ENDED SEPTEMBER 30, 1996, CONTINUED

prior to May 20 in both periods, was 13.0% and 13.4% for the nine months ended
September 30, 1997 and 1996, respectively.

The Company recorded $14.5 million of nonrecurring costs for the nine months
ended September 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
business based upon an impairment in its value and discontinuance of the
Company's 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 retention payments associated with the GBO acquisition.

Interest expense increased 23.6% to $28.8 million for the nine months ended
September 30, 1997 in comparison to $23.3 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 nine months
ended September 30, 1997 in comparison to a shorter period of time in the nine
months ended September 30, 1996. The weighted average interest rate for all debt
for the nine months ended September 30, 1997, including the fees associated with
the borrowings and interest rate swaps, was 7.4%.

WellPoint's net income for the nine months ended September 30, 1997 was $155.6
million, or $2.25 per share, compared to $155.0 million, or $2.33 per share, for
the nine months ended September 30, 1996. Earnings per share for the nine months
ended September 30, 1997 and 1996 is based on 69.1 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 nine months ended September 30, 1997, includes common stock
equivalents. For the nine months ended September 30, 1996, common stock
equivalents did not have a dilutive effect on the weighted average number of
shares outstanding. Earnings per share for the nine months ended September 30,
1996 has been calculated using 66.4 million shares, the number of shares
outstanding immediately following the Recapitalization, plus the weighted
average number of shares issued since the Recapitalization. For the nine months
ended September 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 592,000 common stock equivalents related to the
Company's stock option plans.


                                       22


<PAGE>   25
FINANCIAL CONDITION

The Company's consolidated assets increased by $998.5 million from $3,405.5
million as of December 31, 1996 to $4,404.0 million as of September 30, 1997.
This represents a 29.3% increase and resulted primarily from the GBO acquisition
as well as cash flows generated from operations. Cash and investments were $2.8
billion as of September 30, 1997, or 62.7% of total assets.

As of September 30, 1997, $429.0 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 $200.0 million of debt under the
Subordinated Credit Agreement partially from the proceeds of the Company's April
1997 public stock offering and from cash flows from operations.

Equity totaled $1,162.4 million as of September 30, 1997, an increase of $291.9
million from $870.5 million as of December 31, 1996. The increase resulted
primarily from net income of $155.6 million for the nine months ended September
30, 1997, $110.3 million and $7.2 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 $18.8 million change in net
unrealized valuation gain adjustments on investment securities, net of tax.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of cash are premium and management services
revenues received and investment income. The primary uses of cash include health
care claims and other benefits, capitation payments, income taxes, repayment of
long-term debt, interest expense, broker and agent commissions, administrative
expenses and capital expenditures. In addition, to the foregoing, other uses of
cash include costs of provider networks and systems development, and costs
associated with the integration of acquired businesses. The Company receives
premium revenue in advance of anticipated claims for related health care
services and other benefits. The Company's investment policies are designed to
provide liquidity, preserve capital and maximize yield. Cash and investment
balances maintained by the Company are sufficient to meet applicable regulatory
financial stability and net worth requirements. As of September 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 $311.2 million for the nine
months ended September 30, 1997, compared with $267.1 million for the nine
months ended September 30, 1996. The positive cash flow from operations is due
primarily to net income of $155.6 million, adjusted for certain operating
liabilities such as increased medical claims payable of $107.3 million and
accounts payable and accrued expenses of $63.3 million.

Net cash used in investing activities for the nine months ended September 30,
1997 totaled $261.5 million, compared with net cash used in investing activities
of $708.0 million for the 


                                       23


<PAGE>   26
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

nine months ended September 30, 1996. The cash used in 1997 was attributable
primarily to the purchase of investments for $2,070.2 million, partially offset
by the proceeds from investments sold and matured of $1,496.4 million and the
net cash acquired from the GBO purchase of $362.0 million.

Net cash used in financing activities totaled $78.5 million for the nine months
ended September 30, 1997, compared to net cash used in financing activities of
$305.9 million for the nine months ended September 30, 1996. Borrowings and
repayments on long-term debt totaled $150.0 million and $346.0 million,
respectively, for the nine months ended September 30, 1997, compared to
borrowings and repayments of long-term debt of $775.0 million and $90.0 million,
respectively, and dividend payments associated with the Recapitalization of
$995.0 million for the nine months ended September 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
(as defined in the credit agreement) or the then-current rating of the Company's
unsecured long-term debt by specified rating agencies. Borrowings under the
credit facility are made on a committed basis or pursuant to an auction-bid
process. The credit facility expires as of May 15, 2002, although it may be
extended for an additional one-year period under certain circumstances. The
credit agreement requires the Company to maintain certain financial ratios and
contains restrictive covenants, including restrictions on the occurrence of
additional indebtedness and the granting of certain liens, limitations on
acquisitions and investments and limitations on changes in control. The total
amount outstanding under the credit facility was $409.0 million as of September
30, 1997. The weighted average interest rate, including the facility and other
fees and including the swap agreements, for the quarter and nine months ended
September 30, 1997 was 7.4%.

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 


                                       24


<PAGE>   27
LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

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. 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
based on GAAP equity. As of September 30, 1997, the Company's GAAP equity was in
excess of the BCBSA's Minimum Capital requirement. A 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 Departments of Insurance in various states.
As of September 30, 1997, those subsidiaries of the Company were in compliance
with all minimum capital requirements.

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 Notes to Consolidated Financial Statements
(unaudited) in Item 1) 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
September 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 or to conduct a public offering under its
debt registration statement will be sufficient to fund continuing operations and
expected capital requirements for the foreseeable future.


                                       25


<PAGE>   28
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 is continuing, there can be no assurances
regarding the ultimate success of the Company's integration efforts or regarding
the ability of the Company to maintain or improve the results of operations of
these businesses as the Company pursues its strategy of motivating the acquired
members to select managed care products. In order to implement this strategy,
the Company has and will, among other things, need to continue to incur
considerable expenditures for provider networks and information systems in
addition to the costs associated with the integration of these acquisitions. The
Company's results of 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 jurisdictions 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, provider consolidation, inflation, new
technologies, clusters of high-cost, the regulatory environment and numerous
other factors are beyond the control of any health plan and may adversely affect
the Company's ability to predict and control health care costs and claims, as
well as the Company's financial condition or results of operations.
Additionally, the Company faces competitive pressure to contain premium prices.
Fiscal concerns regarding the continued viability of government sponsored
programs such as Medicare and Medicaid may cause decreasing reimbursement rates
for these programs. Any limitation on the Company's ability to increase or
maintain its premium levels, design products, or select underwriting criteria
may adversely affect the Company's financial condition or results of operations.


                                       26


<PAGE>   29
FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED

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

As a result of the Company's recent acquisitions, the Company now operates on a
national basis and offers a spectrum of health care and specialty products
through various risk sharing arrangements. The Company's health care products
include a variety of managed care offerings as well as traditional
fee-for-service coverage. With respect to product type, fee-for-service products
are generally less profitable than managed care products. A critical component
of the Company's expansion strategy is to transition over time the traditional
insurance members of the Company's acquired businesses to more managed care
products. With respect to the risk-sharing nature of products, managed care
products that involve greater potential risk to the Company generally tend to be
more profitable than those managed care and management services products where
the Company is able to shift risks to employer groups. Over the past few years,
the Company has experienced greater margin erosion in the higher risk managed
care products more typical in its individual and small group market than in its
lower-risk managed care and non-risk management services products offered in the
large employer group market. This margin erosion is attributable to product mix
change, competitive pressure and greater regulatory restrictions applicable to
the small employer group market. The spread between the profitability of the
individual and small group business and the large group business in California
was 4.9% and 6.8% for the nine months ended September 30, 1997 and 1996,
respectively. The Company has implemented price increases in certain of its
managed care businesses. While these price increases are intended to improve
profitability, there can be no assurance that this will occur. Subsequent
unfavorable changes in the relative profitability between the Company's various
products could have a material adverse effect on the Company's results of
operations and on the continued feasibility of the Company's geographic
expansion strategy.


                                       27


<PAGE>   30
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 of 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 8-B, 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>


                                       28


<PAGE>   31
        (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, incorporate 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>


                                       29


<PAGE>   32
        (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>


                                       30


<PAGE>   33
        (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>


                                       31


<PAGE>   34
        (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>


                                       32


<PAGE>   35
        (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>


                                       33


<PAGE>   36
        (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
</TABLE>


                                       34


<PAGE>   37
        (a)    Exhibits (continued)

<TABLE>
<CAPTION>
        Exhibit
        Number       Exhibit
        ------       -------
<S>               <C>
        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 for the fiscal year ended December
                  31, 1996

        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 Amendment 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)
</TABLE>


                                       35


<PAGE>   38
        (a)    Exhibits (continued)

<TABLE>
<CAPTION>
        Exhibit
        Number       Exhibit
        ------       -------
<S>               <C>
        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)

        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)

</TABLE>


                                       36


<PAGE>   39
        (a)    Exhibits (continued)

<TABLE>
<CAPTION>
        Exhibit
        Number       Exhibit
        ------       -------
<S>               <C>
        10.71     WellPoint Health Networks Inc. Employee Stock Purchase Plan
                  (as amended and restated effective January 1, 1998)
                  (incorporated by reference to Exhibit 10.71 of Registrant's
                  Form 10-Q for the Quarter ended June 30, 1997) (superseding
                  Exhibit 10.47)

        10.72     Amendment No. 1 to Employment Agreement by and between the
                  Registrant and Leonard D. Schaffer.

        10.73     Amendment and Restated Special Executive Retirement Plan
                  effective as of September 1, 1997 by and between the
                  Registrant and Leonard D. Schaffer (superseding Exhibit 10.15)

        10.74     Salary Deferral Savings Program of WellPoint Health Networks
                  Inc., as amended through October 1, 1997.

        11        Statement Re: Computation of Earnings Per Share

        27.1      Financial Data Schedule
</TABLE>

        (b)    Reports on Form 8-K

        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.

        A current report on Form 8-K was filed on September 19, 1997, regarding
        recent changes to BCBSA ownership guidelines.


                                       37


<PAGE>   40
                                   SIGNATURES

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


                                           WELLPOINT HEALTH NETWORKS INC.
                                           Registrant


Date: November 14, 1997                    By: /s/ LEONARD D. SCHAEFFER
                                              -----------------------------
                                              Leonard D. Schaeffer
                                              Chairman of the Board of Directors
                                              and Chief Executive Officer



Date: November 14, 1997                    By: /s/ DAVID C. COLBY
                                              -----------------------------
                                              David C. Colby
                                              Executive Vice President
                                              and Chief Financial Officer



Date: November 14, 1997                    By: /s/ S. LOUISE McCRARY
                                              -----------------------------
                                              S. Louise McCrary
                                              Senior Vice President and
                                              Chief Accounting Officer


                                       38