<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 MARCH 31, 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 1-14340

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

                   CALIFORNIA                             95-3760980
          (State or other jurisdiction of      (IRS Employer Identification No.)
          incorporation or organization)

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

       Registrant's telephone number, including area code (818) 703-4000


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


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

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

<TABLE>
<CAPTION>
                   TITLE OF EACH CLASS                                    OUTSTANDING AT MAY 15, 1997
                   -------------------                                    ---------------------------
<S>                                                                           <C>              
              Common Stock, $0.0l par value                                    69,609,709 shares
</TABLE>
<PAGE>   2
                         WELLPOINT HEALTH NETWORKS INC.
                          FIRST QUARTER 1997 FORM 10-Q
                                TABLE OF CONTENTS



<TABLE>
<CAPTION>
PART I.  FINANCIAL INFORMATION                                                                           PAGE
                                                                                                         ----
<S>                                                                                                      <C>
    ITEM 1.       Financial Statements

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

                  Consolidated Income Statements for the Three Months
                       Ended March 31, 1997 and 1996...................................................... 2

                  Consolidated Statement of Changes in Stockholders' Equity
                       for the Three Months Ended March 31, 1997.......................................... 3

                  Consolidated Statements of Cash Flows for the
                       Three Months Ended March 31, 1997 and 1996......................................... 4

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

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

PART II.  OTHER INFORMATION

    ITEM 1.       Legal Proceedings...................................................................... 23

    ITEM 5.       Other Information...................................................................... 23

    ITEM 6.       Exhibits and Reports on Form 8-K....................................................... 24

SIGNATURES ...............................................................................................33
</TABLE>
<PAGE>   3
ITEM 1. Financial Statements

                         WELLPOINT HEALTH NETWORKS INC.
                           Consolidated Balance Sheets

<TABLE>
<CAPTION>
(In thousands, except share data)                                                     March 31,        December 31,
                                                                                        1997               1996
                                                                                     -----------        -----------
                                                                                     (unaudited)
<S>                                                                                  <C>                <C>
ASSETS
Current Assets:
     Cash and cash equivalents                                                       $   577,284        $   313,256
     Investment securities, at market value                                            1,953,531          1,728,305
     Receivables, net                                                                    536,642            401,300
     Deferred tax assets                                                                  75,033             67,147
     Other current assets                                                                 38,185             28,463
                                                                                     -----------        -----------
         Total Current Assets                                                          3,180,675          2,538,471
Property and equipment, net                                                               96,377             82,720
Intangible assets                                                                        694,145            552,279
Long-term investments                                                                    124,482            123,931
Deferred tax assets                                                                       57,651             57,830
Other non-current assets                                                                  50,526             50,311
                                                                                     -----------        -----------
                 Total Assets                                                        $ 4,203,856        $ 3,405,542
                                                                                     ===========        ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
     Medical claims payable                                                          $   775,578        $   667,540
     Loss and loss adjustment expense reserves                                           102,940            102,152
     Unearned premiums                                                                   201,852            160,036
     Accounts payable and accrued expenses                                               323,313            251,480
     Experience rated and other refunds                                                  232,653            146,882
     Income taxes payable                                                                132,380             99,086
     Other current liabilities                                                           316,935            118,303
                                                                                     -----------        -----------
         Total Current Liabilities                                                     2,085,651          1,545,479
Accrued postretirement benefits                                                           62,189             61,086
Loss and loss adjustment expense reserves, non-current                                   140,067            131,079
Reserves for future policy benefits                                                      337,443            104,508
Long-term debt                                                                           594,000            625,000
Other non-current liabilities                                                             75,870             67,931
                                                                                     -----------        -----------
         Total Liabilities                                                             3,295,220          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, 66,604,255
         and 66,526,985 issued and outstanding at March 31, 1997 and
         December 31, 1996, respectively                                                     666                665
     Additional paid-in capital                                                          764,943            761,879
     Unrealized valuation adjustment                                                     (25,637)            (9,994)
     Retained earnings                                                                   168,664            117,909
                                                                                     -----------        -----------
         Total Stockholders' Equity                                                      908,636            870,459
                                                                                     -----------        -----------
                 Total Liabilities and Stockholders' Equity                          $ 4,203,856        $ 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 March 31,
                                                 ----------------------------
                                                     1997            1996
                                                  ----------       --------
<S>                                               <C>              <C>     
Revenues:
    Premium revenue                               $1,168,838       $763,284
    Management services revenue                       62,445         18,228
    Investment income                                 40,349         36,070
                                                  ----------       --------
                                                   1,271,632        817,582
Operating Expenses:
    Health care services and other benefits          920,872        571,785
    Selling expense                                   59,770         49,466
    General and administrative expense               180,567         92,274
    Nonrecurring costs                                 6,507              -
                                                  ----------       --------
                                                   1,167,716        713,525
                                                  ----------       --------
Operating Income                                     103,916        104,057
    Interest expense                                  10,768              -
    Other expense, net                                 7,869          3,012
                                                  ----------       --------

Income before Provision for Income Taxes              85,279        101,045
    Provision for income taxes                        34,524         40,932
                                                  ----------       --------
Net Income                                        $   50,755       $ 60,113
                                                  ==========       ========


Earnings Per Share                                $     0.76       $   0.91
                                                  ==========       ========

Weighted Average Number of
   Shares Outstanding                                 66,544         66,367
                                                  ==========       ========
</TABLE>



      See the accompanying notes to the consolidated financial statements.


                                       2
<PAGE>   5
                         WELLPOINT HEALTH NETWORKS INC.
            Consolidated Statement of Changes in Stockholders' Equity
                                   (unaudited)

<TABLE>
<CAPTION>
(In thousands)
                                                            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                                                                                               50,755       50,755

     Stock issued under the 
       Company's stock option/award plan                      77            1       3,064                                   3,065

     Change in unrealized valuation 
        adjustment on investment 
        securities, net of tax                                                                 (15,643)                   (15,643)
                                           --------      -------      ------     --------     --------      --------     --------
Balance as of March 31, 1997               $      -       66,604      $  666     $764,943     $(25,637)     $168,664     $908,636
                                           ========      =======      ======     ========     ========      ========     ========
</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)                                                            Three Months Ended March 31,
                                                                          ----------------------------
                                                                             1997             1996
                                                                          -----------      -----------
<S>                                                                       <C>              <C>        
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                              $    50,755      $    60,113
  Adjustments to reconcile net income to net cash
    provided by operating activities:
     Depreciation and amortization, net of accretion                           12,805            6,287
     Gains on sales of assets, net                                             (6,289)          (5,778)
     (Benefit) expense for deferred income taxes                                 (566)           5,950
     Amortization of deferred gain on sale of building                         (1,106)               -
     (Increase) decrease in certain assets, net of acquisitions:
        Receivables, net                                                      (16,072)          (8,230)
        Other current assets                                                    1,007           (4,289)
        Other non-current assets                                                 (215)         (23,689)
     Increase (decrease) in certain liabilities, net of acquisitions:
        Medical claims payable                                                 23,603          (10,670)
        Loss and loss adjustment expense reserves                               9,776           15,380
        Reserves for future policy benefits                                   (12,106)               -
        Unearned premiums                                                       7,313            4,023
        Accounts payable and accrued expenses                                  17,039           (6,192)
        Experience rated and other refunds                                     (2,018)          (6,842)
        Due to parent                                                               -            8,334
        Income taxes payable and other current liabilities                    108,303           53,808
        Accrued postretirement benefits                                         1,103            1,055
        Other non-current liabilities                                           9,045              813
                                                                          -----------      -----------
            Net cash provided by operating activities                         202,377           90,073
                                                                          -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Investments purchased                                                    (1,295,324)         (83,419)
  Proceeds from investments sold                                            1,026,402          137,200
  Proceeds from matured investments                                            25,510            3,357
  Property and equipment purchased, net                                       (10,296)          (4,333)
  Additional investment in subsidiaries                                       (18,683)               -
  Purchase of subsidiaries, net of cash acquired                              361,977         (297,735)
                                                                          -----------      -----------
            Net cash provided by (used in) investing activities                89,586         (244,930)
                                                                          -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from long-term debt                                               150,000                -
   Repayment of long-term debt                                               (181,000)               -
   Proceeds from issuance of stock                                              3,065                -
                                                                          -----------      -----------
            Net cash used in financing activities                             (27,935)               -
                                                                          -----------      -----------
Net increase (decrease) in cash and cash equivalents                          264,028         (154,857)
Cash and cash equivalents at beginning of period                              313,256        1,069,631
                                                                          -----------      -----------
Cash and cash equivalents at end of period                                $   577,284      $   914,774
                                                                          ===========      ===========
</TABLE>


      See the accompanying notes to the consolidated financial statements.


                                       4
<PAGE>   7
                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.   ORGANIZATION

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

     The Company offers a comprehensive array of managed care health plans to
     the large employer markets and the individual, small group and senior
     markets. These plans are marketed through health maintenance organizations
     ("HMOs"), preferred provider organizations ("PPOs"), point-of-service
     ("POS"), other hybrid plans and traditional indemnity products. 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 products, including pharmacy,
     dental, life, integrated workers' compensation, preventive care,
     disability, behavioral health, COBRA and flexible benefits account
     administration. In addition, the Company provides underwriting, actuarial
     service, network access, medical cost management, claims processing and
     administrative services to self-funded employers. The Company serves the
     health care needs of approximately 5.9 million medical members in HMOs,
     PPOs, POS and management services plans and approximately 12.9 million
     pharmacy members, 3.0 million dental members, 1.6 million life members and
     1.1 million disability members as of March 31, 1997.

2.   BASIS OF PRESENTATION

     The accompanying unaudited consolidated financial statements of WellPoint,
     in the opinion of management, reflect all material adjustments (which are
     of a normal recurring nature) necessary for the fair presentation of its
     financial condition as of March 31, 1997, the results of its operations for
     each of the three months ended March 31, 1997 and 1996, cash flows for each
     of the three months ended March 31, 1997 and 1996, and the statement of
     changes in stockholders' equity for the three months ended March 31, 1997.
     The results of operations for the interim periods presented are not
     necessarily indicative of the operating results for the full year.


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

3.   ACQUISITIONS AND RECAPITALIZATION

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

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

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

     The purchase method of accounting has been used to account for both of the
     above acquisitions. The acquired operations are included in the Company's
     results of operations from their respective date of acquisition. The excess
     purchase price over net assets acquired was approximately $111.9 million
     for the GBO and $251.0 million for MMHD and is being amortized on a
     straight-line basis over 30 years for the GBO and 35 years for MMHD.

     Recapitalization and Purchase of BCC Commercial Operations

     On May 20, 1996, the Company concluded a series of transactions
     (collectively, the "Recapitalization") to recapitalize its publicly traded,
     majority-owned subsidiary, WellPoint Health Networks Inc., a Delaware
     corporation ("Old WellPoint"), pursuant to the Amended and Restated
     Recapitalization Agreement dated as of March 31, 1995 (the "Amended
     Recapitalization Agreement"), by and among Old WellPoint, the company
     formerly known as Blue Cross of California ("BCC"), the California


                                       6
<PAGE>   9

                         WELLPOINT HEALTH NETWORKS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

3.   ACQUISITIONS AND RECAPITALIZATION, CONTINUED

     Recapitalization and Purchase of BCC Commercial Operations, Continued

     HealthCare Foundation (the "Foundation") and the California Endowment (the
     "Endowment"). In connection with the Recapitalization, (a) Old WellPoint
     distributed an aggregate of $995.0 million by means of a special dividend
     of $10.00 per share to the record holders of its Class A and Class B Common
     Stock as of May 15, 1996, (b) BCC, the sole shareholder of Old WellPoint's
     Class B Common Stock, donated its portion of such dividend ($800.0 million)
     to the Endowment, (c) BCC donated its assets, other than the shares of the
     Old WellPoint Class B Common Stock held by BCC and its commercial
     operations (the "BCC Commercial Operations"), to the Foundation, (d) BCC
     changed its status from a California nonprofit public benefit corporation
     to a California for-profit business corporation, in conformity with the
     terms and orders of the California Department of Corporations (the "DOC"),
     immediately following which BCC issued to the Foundation 53,360,000 shares
     of its common stock and (e) Old WellPoint merged with and into BCC (the
     "Merger"), with the resulting entity changing its name to WellPoint Health
     Networks Inc. In connection with the Merger, (i) each outstanding share of
     Old WellPoint's Class A Common Stock was converted into 0.667 shares of the
     Company's Common Stock, (ii) the outstanding shares of the Company's common
     stock issued to the Foundation prior to the Merger were converted into
     53,360,000 shares of the post-merger Company's Common Stock and a cash
     payment of $235.0 million was made to the Foundation to reflect the value
     of the BCC Commercial Operations and (iii) the outstanding shares of Old
     WellPoint's Class B Common Stock were canceled. The BCC Commercial
     Operations consisted of, among other things, the health care lines of
     business conducted by BCC, substantially all agreements with health care
     providers that provided services to enrollees of BCC and all of the cash
     and securities of BCC on hand at the time of closing of the
     Recapitalization. The Company and the Foundation subsequently amended the
     terms of the Recapitalization to provide for the substitution by the
     Company of $7.0 million in cash for the capital stock of certain entities
     owning the real estate parcel surrounding the Company's headquarters
     building.

     The purchase method of accounting has been used to account for the
     acquisition of the BCC Commercial Operations. The excess purchase price
     over assets acquired was approximately $206.7 million and is being
     amortized on a straight-line basis over 40 years.

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


                                       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

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

     In accordance with the requirements of APB Opinion No. 16, Business
     Combinations, the following unaudited pro forma summary presents the
     results of operations of WellPoint as if the acquisition of the BCC
     Commercial Operations and the Recapitalization and the acquisitions of MMHD
     and GBO had occurred as of the beginning of each period presented. The pro
     forma adjustments include the results of operations for MMHD and GBO for
     the period prior to their acquisitions, the BCC Commercial Operations for
     the period prior to the Recapitalization, 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. 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, MMHD, GBO and
     the BCC Commercial Operations had been a single entity during the three
     months ended March 31, 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 months ended March 31, 1997 and 1996 is calculated
     based on 66.5 million and 66.4 million shares outstanding, respectively.


<TABLE>
<CAPTION>
                                                                 Pro Forma - Three Months Ended
       (In millions, except earnings per share)            March 31, 1997              March 31, 1996
                                                         ------------------------------------------------
<S>                                                        <C>                           <C>
       Revenues                                            $1,398,364                   $1,337,112
       Net Income                                              47,077                       46,787
       Earnings Per Share                                         .71                          .71
</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 $150.0 million under its $200
     million subordinated debt facility. The Company used these proceeds
     to pay down its revolving credit facility in March 1997, in addition to
     other paydowns on its revolving credit facility during the first quarter of
     1997. As of March 31, 1997, $200 million was outstanding under the
     Company's subordinated debt facility.

5.   EARNINGS PER SHARE

     Earnings per share is determined by dividing net income by the weighted
     average number of shares outstanding during the period. The average number
     of shares outstanding for the period ended March 31, 1996 has been
     calculated based on the number of shares outstanding immediately following
     the Recapitalization, to give effect to the two-for-three share exchange
     that occurred as part of the Recapitalization. The weighted average number
     of shares outstanding for the three months ended March 31, 1997 and 1996 is
     66.5 million and 66.4 million shares, respectively. For the three months
     ended March 31, 1997, common stock equivalents did not have a dilutive
     effect on the weighted average number of shares outstanding. There were no
     common stock equivalents for the three months ended March 31, 1996.

     New Pronouncements

     The Financial Accounting Standards Board recently issued Statement of
     Financial Accounting Standards No. 128, "Earnings Per Share." This
     Statement is effective for financial statements issued for the period
     ending after December 15, 1997; earlier application is not permitted. This
     statement requires the computation and presentation of basic and diluted
     earnings per share ("EPS"). Basic EPS will be computed by dividing income
     available to common stockholders by the weighted-average number of common
     shares outstanding. Common stock equivalents are not considered in the
     basic EPS. As the Company did not have any common stock equivalents until
     May 20, 1996, and had no dilutive common stock equivalents from this date
     through and including the first quarter ended March 1997, the Company's 
     basic and diluted EPS calculation for all periods through March 31, 1997 
     would be the same as the earnings per share amounts reflected in these 
     financial statements.


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

6.   CONTINGENCIES

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

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

 7.  SUBSEQUENT EVENTS

     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 $110.1 million. As part of such public
     offering, the Foundation sold 8.5 million shares of WellPoint common
     stock, 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.


                                       10
<PAGE>   13
ITEM 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations

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

GENERAL

WellPoint Health Networks Inc. (the "Company" or "WellPoint") is one of the
nation's largest publicly traded managed health care companies, with
approximately 5.9 million medical members, 12.9 million pharmacy members, 3.0
million dental members, 1.1 million disability members, 642,000 behavioral
health members and 1.6 million life members as of March 31, 1997. The Company
offers a diversified mix of managed care products, including health maintenance
organizations ("HMOs"), preferred provider organizations ("PPOs"), point-of
service ("POSs") plans, other hybrid plans and traditional indemnity products.
The Company also offers a broad array of specialty products, including pharmacy,
dental, life, workers' compensation, preventive care, disability, behavioral
health, COBRA and flexible benefits account administration. In addition,
WellPoint offers managed care services for self-funded employers, including
claims processing, actuarial services, network access, medical cost management
and other administrative services.

On March 1, 1997, the Company completed its acquisition of certain portions of
the Group Benefits Operations (the "GBO") of John Hancock Mutual Life Insurance
Company. The purchase price was $89.7 million, subject to adjustment upon
completion of a post-closing audit. The purchase method of accounting has been
used to account for the acquisition of the GBO. The GBO targets large employers
with 5,000 or more employees and currently provides benefits to approximately
1.3 million medical members, of which most are in health plans that are
self-funded by employers. The GBO offers indemnity and PPO plans and also
provides life, dental, pharmacy and disability coverage to a variety of employer
groups. Although most of the GBO business involves the provision of
administrative services to self-funded employers plans, the indemnity-based
portions of the GBO have experienced a higher overall loss ratio than the
Company's core business. The GBO has historically experienced a higher
administrative expense ratio than the Company due to its higher percentage of
management services business, which will contribute to an increase in the
Company's overall administrative expense ratio in future periods. The Company
expects to incur approximately $35.0 million of costs relating to this
acquisition during the remainder of 1997 and 1998, a portion of which is
expected to be reflected in the Company's results of operations. The Company
expects that it will experience material membership attrition of up to 30% of
the GBO members as it pursues its strategy of motivating traditional indemnity
health insurance members to select managed care products.


                                       11
<PAGE>   14

GENERAL, CONTINUED

On March 31, 1996, the Company acquired the Life and Health Benefits Management
Division ("MMHD") of Massachusetts Mutual Life Insurance Company (the "MMHD
Acquisition"). The acquired MMHD operations focus on employers with 250 to 5000
employees and provide administrative services, PPO and indemnity insurance
products. During the remainder of 1997 and 1998, the Company expects to incur
approximately $10 million of additional costs related to the MMHD acquisition.
The Company expects that it will experience membership attrition of 10% or
greater of its acquired MMHD members as it pursues its strategy of motivating
members to select managed care products.

As a result of above 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
network and information systems, which will require additional expenditures by
the Company. A portion of these expenditures will be reflected in the Company's
results of operations. During the first quarter of 1997, the Company's results
of operations include $6.5 million in non-recurring costs reflecting severance
and stay bonuses associated with the above acquisitions.

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

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

WellPoint's revenues are generated from premiums earned for health care and
specialty services provided to its members, fees for administrative services,
including claims processing and access to provider networks for self-insured
employers, and investment income. WellPoint's operating expenses include health
care services and other benefits expenses, consisting primarily of payments for
physicians, hospitals and other providers for health care and specialty products
claims; selling expenses for broker and agent commissions; general and
administrative expenses; interest expense; and income taxes.


                                       12
<PAGE>   15

RESULTS OF OPERATIONS, CONTINUED

The Company's consolidated results of operations for the quarter ended March 31,
1997 include the results of MMHD and the BCC Commercial Operations for the
entire period and the GBO results from March 1, 1997, the effective date of
acquisition. For the three months ended March 31, 1996, the results of
operations do not include any of the above acquisitions as their acquisition
dates were as of March 31, 1996 or later.

The following table sets forth selected operating ratios. The loss ratio for
health care services and other benefits is shown as a percentage of premium
revenue. All other ratios are shown as a percentage of premium revenue and
management services revenue combined.

<TABLE>
<CAPTION>
                                            Three Months Ended March 31,
                                            ----------------------------
                                                   1997      1996
                                                  -----      -----
<S>                                                <C>        <C>  
Operating Revenues:
   Premium revenue ratio                           94.9%      97.7%
   Management services revenue ratio                5.1        2.3
                                                  -----      -----
                                                  100.0      100.0
Operating Expenses:
   Health care services and other
        benefits loss ratio                        78.8       74.9
   Selling expense ratio                            4.9        6.3
   General and administrative expense ratio        14.7       11.8
</TABLE>


                                       13
<PAGE>   16

MEMBERSHIP

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

<TABLE>
<CAPTION>
MEDICAL MEMBERSHIP:                             As of March 31,
                                            ----------------------
                                                                          Percent
GEOGRAPHY                                     1997(a)      1996(a)         Change
                                            ---------     ---------       ---------
<S>                                        <C>           <C>            <C>  
CALIFORNIA
   Group Services:
      HMO                                     722,137       627,385        15.1%
      PPO and Other                         1,330,542       941,830        41.3%
                                            ---------     ---------

         Total                              2,052,679     1,569,215        30.8%
                                            ---------     ---------

   Individual, Small Group and Senior:
      HMO                                     280,528       228,726        22.6%
      PPO and Other                         1,204,322     1,166,920         3.2%
                                            ---------     ---------

         Total                              1,484,850     1,395,646         6.3%
                                            ---------     ---------

   Medi-Cal HMO Programs                      180,112        44,695       302.9%
                                            ---------     ---------

Total California Medical Membership(b)      3,717,641     3,009,556        23.5%
                                            ---------     ---------

TEXAS
   Group Services                             207,650        72,380       186.9%
   Individual, Small Group and Senior          37,610         2,506       358.9%
                                            ---------     ---------
         Total                                245,260        80,575       204.4%
                                            ---------     ---------

OTHER STATES
   Group Services                           1,949,076       835,508       133.3%
   Individual, Small Group and Senior           2,749         1,181       132.8%
                                            ---------     ---------

         Total                              1,951,825       836,689       133.3%
                                            ---------     ---------

TOTAL MEDICAL MEMBERSHIP(c)(d)              5,914,726     3,926,820        50.6%
                                            =========     =========

NETWORKS(e)
   Proprietary Networks                     3,551,467     2,833,620        25.3%
   Other Networks                           1,281,056       708,674        80.8%
   Non-Network                              1,082,203       384,526       181.4%
                                            ---------     ---------

TOTAL MEDICAL MEMBERSHIP                    5,914,726     3,926,820        50.6%
                                            =========     =========
</TABLE>


(a) As the MMHD Acquisition was completed as of March 31, 1996, membership data
    for MMHD is reflected in both 1997 and 1996. 
(b) As of March 31, 1997, total BCC Commercial Operations medical membership was
    approximately 269,000, all of which were California members. The majority of
    these members are included in Group services. 
(c) Medical membership includes 2.3 million and 1.1 million management services
    members as of March 31, 1997 and 1996, respectively, of which those
    management services members outside of California were 1.6 million and
    495,000, respectively, as of March 31, 1997 and 1996. 
(d) As of March 31, 1997, total GBO medical membership was approximately
    1,300,000, of which approximately 43,000 were California members and
    approximately 1,257,000 were outside of California members. 
(e) Proprietary networks consist of California, Texas and other WellPoint
    developed networks. Other networks consist of third-party networks and
    networks owned by the Company as a result of its recent acquisitions that
    incorporate provider discounts and some basic managed care elements.
    Non-network consists of fee-for-service and percentage-of-billed-charges
    members.


                                       14
<PAGE>   17
MEMBERSHIP, CONTINUED
<TABLE>
<CAPTION>
                                               As of March 31,
                                            -----------------------
                                                                          Percent
                                              1997         1996            Change
                                            ---------     ---------       ---------
<S>                                        <C>           <C>            <C>  
SPECIALTY MEMBERSHIP:

   Pharmacy                                 12,891,280    11,445,589        12.6%
   Dental                                    3,040,748     1,488,106       104.3%
   Life                                      1,633,586     1,215,490        34.4%
   Disability                                1,135,231       208,250       445.1%
   Behavioral Health                           642,467       437,428        46.9%
</TABLE>


The specialty membership as of March 31, 1997 includes the acquired GBO
operations, which had approximately 0.3 million pharmacy members, 1.5 million
dental members, 0.9 million life members and 1.0 million disability members as
of March 31, 1997.

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

Premium revenue increased 53.1% to $1,168.8 million for the quarter ended March
31, 1997 from $763.3 million for the quarter ended March 31, 1996. Premium
revenue of $162.8 million, $39.8 million and $92.2 million was attributable to
MMHD, GBO and the BCC Commercial Operations, respectively. Also contributing to
increased premium revenue in 1997 was an 11% increase in medical membership,
excluding management services members and the acquired members of MMHD, GBO and
the BCC Commercial Operations. In addition, an increase in premium revenue
resulted from modest increases in the premiums per member in the individual and
senior markets.

Management services revenue increased $44.2 million to $62.4 million for the
quarter ended March 31, 1997 from $18.2 million for the quarter ended March 31,
1996. The increase was primarily due to $20.1 million, $18.0 million and $2.1
million of management services revenue from MMHD, GBO and the BCC Commercial
Operations, respectively. Also contributing to the increase was a significant
increase in the California large group market management services membership 
and increases in pharmacy clinical fees and claims processing fees.

Investment income increased to $40.3 million for the quarter ended March 31,
1997 compared to $36.1 million for the quarter ended March 31, 1996. The
increase in interest and dividend income was primarily due to increased interest
income on the portfolios of acquired businesses and slightly higher yields in
1997 over 1996, offset by the foregone interest from cash and investments used
to finance the MMHD, GBO and BCC Commercial Operations acquisitions, the
Recapitalization, and cash used for repayment of indebtedness under the
Company's senior credit facility.


                                       15
<PAGE>   18

COMPARISON OF RESULTS FOR THE QUARTER ENDED MARCH 31, 1997 TO THE QUARTER ENDED
MARCH 31, 1996, CONTINUED

Health care services and other benefits expense increased 61.1% to $920.9
million for the quarter ended March 31, 1997 from $571.8 million for the quarter
ended March 31, 1996. Of the $349.1 million increase, $133.9 million, $40.9
million and $86.8 million were attributable to MMHD, GBO and the BCC Commercial
Operations, respectively. Excluding MMHD, GBO and the BCC Commercial Operations,
increased health care services expense also resulted from medical membership
growth.

The loss ratio for the quarter ended March 31, 1997 increased to 78.8% compared
to 74.9% for the quarter ended March 31, 1996, primarily due to the incremental
effect of the MMHD and the GBO acquisitions and the BCC Commercial Operations on
the Company's overall results. The acquired MMHD and GBO operations and the BCC
Commercial Operations have traditionally experienced a higher loss ratio than
the Company. Excluding the acquisitions of the MMHD and GBO operations and the
BCC Commercial Operations, the loss ratio would have been 75.5% for the quarter
ended March 31, 1997. Also contributing to the increase in loss ratio was an
increase in the loss and loss adjustment expense reserves related to the
Company's workers compensation business.

Selling expense consists of commissions paid to outside brokers and agents
representing the Company. Selling expense for the quarter ended March 31, 1997
increased 20.8% to $59.8 million compared to $49.5 million for the quarter ended
March 31, 1996, corresponding with continued overall premium revenue growth and
an additional $5.7 million in selling expense attributable to MMHD and the GBO
operations. The selling expense ratio for the quarter ended March 31, 1997
decreased to 4.9% from 6.3% for the quarter ended March 31, 1996, largely due to
the acquisition of MMHD and GBO, each of which has a lower selling expense ratio
than the Company's existing business, and the BCC Commercial Operations, which
has no selling expense. Excluding the acquisitions, the selling expense ratio
would have been 5.9% for the quarter ended March 31, 1997, as a result of a
significant increase in Medicaid revenues which had no associated selling
expense.

General and administrative expense for the quarter ended March 31, 1997
increased 95.6% to $180.6 million for the quarter ended March 31, 1997 from
$92.3 million for the quarter ended March 31, 1996. Of the $88.2 million
increase, $37.6 million, $20.7 million and $3.8 million resulted from the MMHD
and the GBO acquisition and the BCC Commercial Operations, respectively. The
administrative expense ratio increased to 14.7% for the quarter ended March 31,
1997 compared to 11.8% for the quarter ended March 31, 1996, primarily due to
the increased administrative expense associated with the Company's continued
investment in national expansion, including network development costs, Medicaid
business and the MMHD and GBO acquisitions. MMHD and GBO 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 above increases were partially offset by the BCC
Commercial Operations' lower administrative expense ratio. Excluding the MMHD,
GBO and the BCC Commercial Operations acquisitions, the administrative expense
ratio would have been 13.2% for the quarter ended March 31, 1997.


                                       16
<PAGE>   19

COMPARISON OF RESULTS FOR THE QUARTER ENDED MARCH 31, 1997 TO THE QUARTER ENDED
MARCH 31, 1996, CONTINUED

Interest expense was $10.8 million for the quarter ended March 31, 1997. The
Company had no interest expense for the quarter ended March 31, 1996. The
interest expense in 1997 related to the Company's long-term indebtedness, of
which $594.0 million was outstanding at March 31, 1997. The weighted average
interest rate for all debt for the quarter ended March 31, 1997 was 7.2%.

WellPoint's net income for the quarter ended March 31, 1997 was $50.8 million,
or $0.76 per share, compared to $60.1 million, or $0.91 per share, for the
quarter ended March 31, 1996. Earnings per share for the quarters ended March
31, 1997 and 1996 are based on 66.5 million shares and 66.4 million shares,
respectively. For the quarter ended March 31, 1996, the number of shares used
for the earnings per share computation represents the number of shares
outstanding immediately following the Recapitalization. The number of shares
outstanding prior to the Recapitalization were adjusted to reflect the
two-for-three share exchange that occurred in connection with the
Recapitalization. Earnings per share is determined by dividing net income by the
weighted average number of common shares outstanding.

FINANCIAL CONDITION

The Company's consolidated assets increased by $798.3 million to $4,203.9
million as of March 31, 1997. This represents a 23.4% increase from $3,405.5
million as of December 31, 1996 and resulted primarily from the GBO acquisition
as well as cash flows generated from operations. Cash and investments were $2.5
billion as of March 31, 1997, or 63.2% of total assets.

As of March 31, 1997, $594.0 million was outstanding under the Company's
long-term debt facilities, incurred primarily for payment of a special dividend
to the stockholders of Old WellPoint in connection with the Recapitalization and
the MMHD Acquisition. The Company had no long-term borrowings outstanding as of
March 31, 1996, other than the Series A term note and other amounts due to Mass
Mutual incurred in connection with the MMHD Acquisition on March 31, 1996.

Equity totaled $908.6 million as of March 31, 1997, an increase of $38.2 million
from December 31, 1996. The increase resulted primarily from net income of $50.8
million for the first quarter of 1997 and $3.0 million in additional capital
from stock issuances under the Company's stock option/award plan, offset by the
change of $15.6 million in unrealized valuation adjustment on investment
securities, net of tax.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of cash are premiums and management services
revenues received and investment income. The primary uses of cash include health
care claims and other benefits, capitation payments, income taxes, repayment of
long-term debt, interest expense, broker and agent commissions and
administrative expenses. In addition, to the foregoing, prospective uses of cash
will include costs of provider network and systems development, costs associated
with the integration of acquired businesses and capital expenditures. The
Company receives


                                       17
<PAGE>   20

LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

premium revenue in advance of anticipated claims for related health care
services and other benefits. The Company's investment policies are designed to
provide liquidity, preserve capital and maximize yield. Cash and investment
balances maintained by the Company are sufficient to meet applicable regulatory
financial stability and net worth requirements. As of March 31, 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 $188.9 million for the first
quarter of 1997, compared with $90.1 million for the first quarter of 1996. The
1997 increase in positive cash flow from operations primarily resulted from a
$56.7 million increase in income taxes payable and increases in liabilities 
associated with the MMHD acquired business.

Net cash flow provided by investing activities for the first quarter of 1997
totaled $103.0 million, compared with net cash flow used by investing activities
of $244.9 million for the first quarter of 1996. The cash provided in 1997 was
attributable primarily to the proceeds from investments sold and matured of
$1,051.9 million offset by the purchase of investments for $1,295.3 million.
The Company also acquired net cash of $362.0 million in connection with the GBO
acquisition. 

Net cash used by financing activities totaled $27.9 million for the first
quarter of 1997. There were no financing activities for the first quarter of
1996. Borrowings and repayments on long-term debt totaled $150.0 million and
$181.0 million, respectively, for the first quarter of 1997.

In connection with the Recapitalization, the Company entered into a $1.25
billion unsecured revolving credit facility. In April 1997, the Company amended
its credit facility to decrease the maximum amount which could be borrowed to
$1.0 billion. Borrowings under the credit facility bear interest at rates
determined by reference to the bank's base rate or to the London Interbank
Offered Rate ("LIBOR") plus a margin determined by reference to the Company's
leverage ratio or the then-current rating of the Company's unsecured long-term
debt by specified rating agencies. Borrowings under the credit facility are made
on a committed basis 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 $374 million as of March 31, 1997. The weighted average interest
rate for the quarter ended March 31, 1997 was 7.2%.

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.


                                       18
<PAGE>   21

LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

The Company is required to maintain minimum tangible net equity ("TNE") by the
Company's primary regulator, the California Department of Corporations (the
"DOC"), and is required to meet minimum capital requirements prescribed by the
BlueCross BlueShield Association (the "BCBSA"). In measuring capital for the
BCBSA, the Company is required to compute its capital using the same method
prescribed by the DOC. The failure to meet a specified level (the "Minimum BCBSA
Capital") of the BCBSA's base capital requirement can subject the Company to
certain corrective actions, while the failure to meet a lower specified level
can result in termination of the Company's license agreement with the BCBSA. The
Minimum BCBSA Capital requirement, which is more restrictive than the DOC
requirement, increased as of December 31, 1996. As of March 31, 1997, the
Company's TNE (which is also its capital for BCBSA purposes) was approximately
$436.0 million and its Minimum BCBSA Capital was approximately $363.5 million.
As of such date, its required TNE for DOC purposes was approximately $19.3
million.

In order to address an anticipated shortfall in the Company's capital as a
result of the increased BCBSA capital requirement, in November 1996, the Company
entered into a subordinated term loan agreement with a bank for a two-year
unsecured subordinated term loan facility (the "Subordinated Credit Agreement")
of $200.0 million, which could only be drawn down through March 17, 1997. On
December 30, 1996, the Company borrowed $50.0 million, of which approximately
$24.0 million was required in order to meet the increased BCBSA capital
requirements. The DOC regulations permit the Company to include in TNE (and thus
in computing capital for BCBSA purposes) any indebtedness subordinated to the
Company's obligation to maintain the DOC's required minimum TNE. In March 1997,
the Company incurred $150 million in additional indebtedness under the
Subordinated Credit Agreement to comply with the capital requirements as a
result of the GBO acquisition. The Company repaid outstanding indebtedness under
its revolving credit facility with such borrowing. Borrowings under the
Subordinated Credit Agreement bear interest at interest rates determined by
reference to the bank's base rate or to LIBOR plus a margin determined by
reference to the Company's leverage ratio or the then-current rating of the
Company's unsecured long-term debt by specified rating agencies. The applicable
margin will increase with respect to any borrowings outstanding as of July 1,
1997. Interest is paid quarterly. Quarterly principal amortization payments will
be due beginning March 31, 1998, and all remaining outstanding borrowings under
the Subordinated Credit Agreement will become due on March 31, 1998. The
Subordinated Credit Agreement requires compliance with certain financial ratio
and other requirements similar to those in the Company's revolving credit
facility; however, the repayment of borrowings has been subordinated to the
Company's requirements to maintain the required minimum TNE under DOC
regulations. The Subordinated Credit Agreement also requires that the proceeds
of certain sales of capital stock or subordinated debt issued by the Company be
used to repay outstanding amounts under the Subordinated Credit Agreement.

On April 10, 1997, the Company completed a public offering of 3 million shares
of its common stock, receiving net proceeds of $110.1 million which were used to
pay down outstanding indebtedness under the Subordinated Credit Agreement.
Additionally, as part of this offering, the


                                       19
<PAGE>   22

LIQUIDITY AND CAPITAL RESOURCES, CONTINUED

Foundation (See Note 3 to the Quarterly Financial Statements) sold 8.5 million
shares of WellPoint common stock for which the Company received no proceeds.

In July 1996, the Company filed a registration statement relating to the
issuance of $1.0 billion of senior or subordinated unsecured indebtedness. As of
March 31, 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, its existing revolving credit facility and its debt
registration statement will be sufficient to fund continuing operations and
expected capital requirements for the foreseeable future.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

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

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

The Company's operations are subject to substantial regulation by Federal, state
and local agencies in all jurisdiction in which the Company now operates. Many
of these agencies have increased their scrutiny of managed health care companies
in recent periods. Future regulatory actions by any such agencies may have a
material adverse affect on the Company's business. In addition, numerous
proposals related to health care reform are being considered at the Federal and
state levels. Many of these proposals relate to mandated coverage or benefits 
with respect to specified illnesses or procedures. There can be no assurance 
that compliance with recently enacted or future legislation will not have a 
material adverse affect on WellPoint's claims expense, its financial condition 
or results of operations.


                                       20
<PAGE>   23

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS, CONTINUED

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

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

The Company's two primary products ([a] managed care products and [b] management
services products, including specialty managed care services) are marketed
through two internal business units which are organized on a geographic basis,
Blue Cross of California and UNICARE. The geographic business units are divided
further into individual and small group businesses versus larger employers
because of the distinctive differences in the focus needed in targeting each of
these markets. The combined cost ratios (medical costs and expenses) for the
small group and individual businesses and the large group business vary due
primarily to differing product mix between the managed care and management
services products and different distribution costs. A greater percentage of
small group and individual membership is comprised of higher risk managed care
products, which tend to be more profitable than the lower risk managed care and
management services products as a result of higher deductibles and co-payments
and increased profit margins generally associated with increased underwriting
risks. The group services membership is comprised primarily of capitated managed
care products and management services products which result in lower margins as
a result of the lower level underwriting risk related to the capitated products
and the non-risk nature of the management services products. However, over the
past three years, margin erosion has been greater in the individual and small
group business than in the large group business primarily as a result of slower
growth in membership, product mix change and greater competitive pressure on
premium increases. The spread between the profitability of the individual and
small group business and large group business in California was 8.4% and 10.4%
for the quarter ended March 31, 1997 and 1996, respectively.


                                       21
<PAGE>   24

                           PART II. OTHER INFORMATION




ITEM 5.   Other Information

          See Note 3 - Acquisitions and Recapitalization.




                                       22
<PAGE>   25

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 Improvements, 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

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

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

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

          4.01         Specimen of common stock certificate of WellPoint Health
                       Networks Inc., incorporated by reference to Exhibit 4.4
                       of Registrant's Registration Statement on Form S-3,
                       Registration No. 33-14885

          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

          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
</TABLE>


                                       23
<PAGE>   26

         (a)      Exhibits (continued)

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

          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
</TABLE>


                                       24
<PAGE>   27

         (a)      Exhibits (continued)

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

          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
</TABLE>




                                       25
<PAGE>   28
         (a)      Exhibits (continued)

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

          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
</TABLE>


                                       26
<PAGE>   29
         (a)      Exhibits (continued)

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

          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
</TABLE>


                                       27
<PAGE>   30
         (a)      Exhibits (continued)

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

          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
</TABLE>


                                       28
<PAGE>   31
         (a)      Exhibits (continued)
<TABLE>
<CAPTION>
         Exhibit
         Number        Exhibit
         ------        -------
<S>                    <C>
          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

          10.51        Modification Agreement dated as of November 26, 1996 by
                       and between the Registrant California HealthCare
                       Foundation

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

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

          10.54        Amendment No. 1 dated as of February 11, 1997 to
                       Registrant's Subordinated Term Loan Agreement dated as of
                       November 21, 1996

          10.55        Blue Cross Affiliate License Agreement by and between BC
                       Life & Health Insurance Company and the BCBSA

          10.54        Blue Cross Affiliate License Agreement Applicable to Life
                       Insurance Companies by and between BC Life & Health
                       Insurance Company and the BCBSA

          10.55        Second Amendment dated as of April 21, 1997 to
                       Registrant's Credit Agreement dated as of May 15, 1996

          10.56        Third Amendment dated as of April 21, 1997 to 
                       Registrant's Credit Agreement dated as of May 15, 1996

          10.57        Second Amendment dated as of April 21, 1997 to
                       Registrant's Subordinated Term Loan Agreement dated as
                       of November 21, 1996

          27.1         Financial Data Schedule
</TABLE>


         (b)      Reports on Form 8-K

         On January 2, 1997, the Company filed a Current Report on Form 8-K
         dated December 19, 1996 which reported that CaliforniaCare had been
         awarded a one-year accreditation by the National Committee of Quality
         Assurance ("NCQA"). The Company also


                                       29
<PAGE>   32
         (b)      Reports on Form 8-K (continued)

         reported that, on December 30, 1996, CaliforniaCare had agreed to a
         dismissal of its lawsuit previously filed in the United States District
         Court for the District of Columbia against NCQA.

         A current report on Form 8-K was filed on March 14, 1997, which
         reported that the Company had completed the acquisition of the Group
         Benefits Operations (the "GBO") of John Hancock Mutual Life Insurance 
         Company on March 1, 1997.

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


                                       30
<PAGE>   33
                                   SIGNATURES

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


                                     WELLPOINT HEALTH NETWORKS INC.
                                     Registrant


Date: May 15, 1997                   By: \s\   LEONARD D. SCHAEFFER
                                        ---------------------------------------
                                         Leonard D. Schaeffer
                                         Chairman of the Board of Directors
                                         and Chief Executive Officer



Date: May 15, 1997                   By: \s\   HOWARD G. PHANSTIEL
                                        ---------------------------------------
                                         Howard G. Phanstiel
                                         Executive Vice President
                                         Finance and Information Services



Date: May 15, 1997                   By: \s\  S. LOUISE MCCRARY
                                        ---------------------------------------
                                         S. Louise McCrary
                                         Vice President and
                                         Chief Accounting Officer



                                       31