LOS ANGELES -- Investors reacted positively Thursday to a $476 million initial public offering for WellPoint Health Networks Inc., the managed-care unit of Blue Cross of California.
Shares of WellPoint closed at $33.50 on the New York Stock Exchange -- $5.50 above the initial public offering on 17 million shares of Class A common stock.
Wellpoint was the most actively traded issue on the Big Board.
WellPoint originally planned to sell 15 million shares at a price between $22 and $24 a share, but expanded the offering because of investor demand.
Merrill Lynch & Co., Morgan Stanley & Co. Inc. and Dean Witter Reynolds Inc. were the managing underwriters for the offering, which represents 17.5 percent of Blue Cross's holding in WellPoint.
Blue Cross set up WellPoint in 1986 to focus on managed health care.
The operation currently has more than 2 million members, including a health-maintenance organization with 423,000 members, a preferred- provider network with 1.5 million members and a variety of special health plans.
WellPoint earned $142.8 million, or $1.50 a share, in the first nine months of last year -- a gain of 38 percent from the prior-year period. Revenues rose 20 percent to $1.7 billion.
WellPoint went public at a time when the California HMO market is becoming more competitive. Price increases have slowed from 17 percent annually in the late 1980s to as little as 7 percent this year.