HMO ON BUYING SPREE.

Byline: Evan Pondel and Gregory J. Wilcox Staff Writers

THOUSAND OAKS - WellPoint Health Networks Inc. made its second billion-dollar acquisition in little more than a month Tuesday, a deal that expands its reach to the mid-Atlantic and bolsters its standing as one of the nation's biggest health care companies.

The complicated purchase of CareFirst BlueCross BlueShield, which serves Maryland, Delaware and the District of Columbia, could take about 18 months to complete the required regulatory approvals, WellPoint said.

CareFirst, based in Owings Mills, Md., is a nonprofit company. One of the terms of the transaction mandates its conversion to for-profit status.

The $1.3 billion deal comes barely a month after WellPoint announced it was buying St. Louis-based RightChoice Managed Care also for $1.3 billion, expanding the insurer's reach into the Midwest.

Thousand Oaks-based WellPoint will absorb 2.8 million members in that deal and gets 3.1 million through the CareFirst purchase.

When all the acquisitions are completed, WellPoint will have 15.9 million members and revenues of $13 billion, according to the company.

``This transaction also strengthens WellPoint's presence in a core strategic market and further diversifies our business,'' Leonard D. Schaeffer, WellPoint chairman and chief executive officer, said in a statement.

Schaeffer boosted WellPoint's membership by 7.5 million in March following the acquisition of Cerulean Cos. Inc., the parent of Blue Cross Blue Shield of Georgia.

WellPoint's $1.3 billion payout for CareFirst, a combination of $450 million in cash and $850 million in common stock, will go to the three states, ostensibly for various charitable purposes and unmet health care need.

As a nonprofit company, CareFirst received tax breaks from the states and that money must be repaid when it converts to for-profit status.

However, the states could do whatever they want with the money, said WellPoint spokesman Ken Ferber.

The company does expect the states to use the money for charitable purposes, he said.

The conversion to for-profit status requires the approval of insurance regulators in each of the areas where CareFirst Blue affiliates operates.

Additionally, the company's Washington, D.C., unit, Group Hospitalization and Medical Services Inc., must have its federal charter amended or repealed by the United States Congress and obtain approval from the Washington corporation counsel.

William L. Jews, CareFirst's president and chief executive officer, said the companies are a good strategic fit.

``The scale and strength of the combined company will provide resources to invest in initiatives and infrastructure that will help meet the current and future health care needs of our members,'' he said in a statement.

WellPoint shares gained more than 3 percent, or $3.62, to close at $119.36, near its 52-week high of $120.50. The price was unchanged in after- hours trading.

WELLPOINT HEALTH NETWORKS INC.

HEADQUARTERS: Thousand Oaks

3Q REVENUE: $3.24 billion

3Q NET INCOME: $198.4 million

CAREFIRST BLUECROSS BLUESHIELD

HEADQUARTERS: Owings Mills, Md.

3Q REVENUE: $1.5 billion

3Q NET INCOME: $24.3 million

Source: Company Reports

CAPTION(S):

2 boxes

Box:

(1) WELLPOINT HEALTH NETWORKS INC. (see text)

(2) CAREFIRST BLUECROSS BLUESHIELD (see text)