WellPoint Inc., the largest U.S. health insurer by members, is pursuing a strategy to diversify its business, including seeking new acquisitions, among other changes to cope with the impact of the federal health-care overhaul.

As they reported an 80% drop in fourth-quarter profit Wednesday, WellPoint executives said they have created a new plan to better position the company to thrive long-term. That involves exiting some areas that have become a “distraction” and moving into new markets that are “nothing like what we do today,” said chief financial officer Wayne DeVeydt in an interview on the topic.

“It is very difficult to transform an insurance company,” said Mr. DeVeydt. “Health reform has allowed and forced that transformation.”

Mr. DeVeydt said the company has spent the past year listening to experts on culture change and transformation to formulate its new plan. That culminated in December, when chief executive Angela Braly reorganized members of her top team.

WellPoint is more exposed that most other health insurers to the challenges posed by the new law. It relies more than other plans do on selling insurance to individuals, the part of the insurance market that is most drastically changed by the law. Insurers selling to individuals have to pay out 80% of premiums on medical expenses this year, which will affect the profitability of many companies.

In addition, WellPoint has tangled with regulators who focused on rising premiums in the individual market over the past year. The company received negative attention for a plan to raise rates by up to 39% in California. Later in 2010, Connecticut’s insurance commissioner refused to allow the company a 20% increase.

Investors have been pressing WellPoint to detail how it plans to move past these issues, said Mr. DeVeydt. He said that the emerging strategy involves two separate pushes.

The first is to identify areas for growth in its traditional benefits businesses—the selling of insurance to individuals, businesses and government programs. The company hopes to accelerate investment in some areas, maintain its position in others, and consider whether to jettison still more.

The company will also look to expand into areas where it doesn’t currently operate, which Mr. DeVeydt characterizes as the pursuit of opportunities to work with the healthy in addition to the unhealthy and reach consumers directly. The company is likely to step up acquisitions to get there, he said.

“There is a lot of new space that is out there,” he said. “We don’t see the health-insurance market going away … but at the same time here’s how we’re going to diversify out of our core, focus on the healthy, health [information technology] and a better consumer experience.” He was circumspect about further details of the strategy ahead of a Feb. 23 investor meeting in Indianapolis.

The hint at a new direction came as WellPoint posted an 80% decline in fourth-quarter profit absent a prior-year $3.8 billion gain from the sale of its in-house pharmacy benefits management unit. It forecast profits of at least $6.30 this year.

Like other health insurers, WellPoint benefited last year from a trend of lighter-than-usual use of medical services, and expects its medical-cost growth rate to increase to more typical levels in 2011.

The company also expects the percentage of premium revenue it uses for patient care to increase this year as new U.S. health-coverage requirements for minimum medical spending levels kick in. WellPoint, though, expects to “significantly mitigate” the effects through revenue growth and reductions in overhead, said Ms. Braly on a conference call.

WellPoint reported a profit of $548.8 million, or $1.40 a share, down from $2.74 billion, or $5.95 a share, a year earlier. The prior year included a $4.79 a share gain from WellPoint’s $4.7 billion sale of its in-house NextRx pharmacy benefits management unit to Express Scripts Inc. Excluding such items, earnings rose to $1.33 a share from $1.16.