Blue Cross Unit Stock Offering Nets $517 Million

Blue Cross of California, the state’s largest health insurer, has raised $517 million in net proceeds from the public sale of nearly 20% of the Class A common stock in its new for-profit subsidiary, WellPoint Health Networks.

WellPoint, which like Blue Cross is based in Woodland Hills, originally planned to sell 15 million shares at a maximum price of $24. But strong demand for the fast-growing company led its underwriters to expand the offering to 17 million shares at $28 each. The underwriters, led by Merrill Lynch & Co., also took an over-allotment option and purchased an additional 2.5 million shares.

WellPoint was formed recently from nonprofit Blue Cross’ managed-cared operations, which account for most of Blue Cross’ business. WellPoint includes CaliforniaCare--a 423,000-member health maintenance organization--and a preferred-provider network with 1.5 million members as well as other plans covering pharmacy and dental health services. In the first nine months of 1992, WellPoint earned $142.8 million on revenue of $1.6 billion.

While Blue Cross will retain 80% of the Class A stock, it also owns restricted Class B shares that give it 98% voting control in WellPoint.