<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION

                            WASHINGTON, D.C. 20549

                                  FORM 10-QSB


(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, 2000.

____ 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: 0-21145


                             COVALENT GROUP, INC.
                (Name of small business issuer in its charter)


         Nevada                                        56-1668867

(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

              One Glenhardie Corporate Center, 1275 Drummers Lane
                           Wayne, Pennsylvania 19087
                   (address of principal executive offices)


Issuer's telephone number: 610-975-9533

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ___
                                                               --

State the number of shares outstanding of each of the issuer's classes of common
equity as of March 31, 2000.

Common Stock, Par Value $.001                            12,165,227
-----------------------------                            ----------
         (Class)                                         Outstanding

Transitional Small Business Disclosure Format (check one): Yes ___  No  X
                                                                       ---

                                       1
<PAGE>

     FORM 10-QSB


                             COVALENT GROUP, INC.


                                     INDEX

<TABLE>
<CAPTION>
                                                                     Page
                                                                     ----
<S>                                                                  <C>
PART I.  Financial Information

     Item 1.   Financial Statements

          Balance Sheet - March 31, 2000 (Unaudited)                    3

          Statements of Operations - Three Months Ended
           March 31, 2000 and 1999 (Unaudited)                          5

          Statements of Cash Flows - Three Months
           Ended March 31, 2000 and 1999 (Unaudited)                    6

          Notes to Financial Statements (Unaudited)                     7

       Item 2. Management's Discussion and Analysis of
               Financial Condition and Results of Operations            9

PART II. Other Information                                             12

Signature Page                                                         13
</TABLE>

                                       2
<PAGE>

Part I.   Financial Information
          Item 1.  Financial Statements



                             Covalent Group, Inc.
                                 Balance Sheet
                                March 31, 2000
                                  (Unaudited)



Assets

Current Assets
   Cash and cash equivalents                                     $ 1,056,074
   Restricted cash                                                   541,504
   Accounts receivable                                               939,160
   Prepaid expenses and other                                        329,394
   Costs and estimated earnings in excess of
     related billings on uncompleted contracts                     5,253,543
                                                              --------------
            Total Current Assets                                   8,119,675
                                                              --------------



Property and Equipment
   Equipment                                                       1,644,547
   Furniture and fixtures                                            281,462
   Leasehold improvements                                            120,862
                                                              --------------
                                                                   2,046,871
     Less - Accumulated depreciation                              (1,065,576)
                                                              --------------
            Net Property and Equipment                               981,295
                                                              --------------


Other Assets                                                          40,507
                                                              --------------


Total Assets                                                     $ 9,141,477
                                                              ==============


                See accompanying notes to financial statements

                                       3
<PAGE>

                             Covalent Group, Inc.
                                 Balance Sheet
                                March 31, 2000
                                  (Unaudited)



Liabilities and Stockholders' Equity


Current Liabilities
Accounts payable                                            $ 1,530,811
Accrued expenses                                                439,073
Billings in excess of related costs and
    estimated earnings on uncompleted contracts                 451,405
Customer advances                                             1,056,042
                                                          -------------
              Total Current Liabilities                       3,477,331
                                                          -------------

Stockholders' Equity
Common stock, $.001 par value,
    25,000,000 shares authorized,
    12,177,727 shares issued                                     12,178
Additional paid-in-capital                                    9,749,525
Accumulated deficit                                          (4,047,241)
                                                          -------------
                                                              5,714,462
Less:
    Treasury stock at cost, 12,500 shares                       (50,316)
                                                          -------------
              Total Stockholders' Equity                      5,664,146
                                                          -------------

Total Liabilities and Stockholders' Equity                  $ 9,141,477
                                                          =============

                See accompanying notes to financial statements

                                       4
<PAGE>

                             Covalent Group, Inc.
                           Statements Of Operations
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                  March 31
                                                                  --------
                                                         2000                   1999
                                                         ----                   ----
<S>                                            <C>                    <C>
Revenues                                             $ 3,673,672            $ 3,264,976

Operating Expenses
  Direct                                               1,964,421              1,892,503
  Selling, general and administrative                    788,648                839,490
                                               -----------------      -----------------

Total Operating Expenses                               2,753,069              2,731,993
                                               -----------------      -----------------

Income from Operations                                   920,603                532,983

Interest Income                                           15,197                 14,317
                                               -----------------      -----------------

Income before Income Taxes                               935,800                547,300

Income Tax Provision                                     346,246                202,505
                                               -----------------      -----------------

Net Income                                           $   589,554            $   344,795
                                               =================      =================

Net Income per Common Share
  Net Income - Basic                                 $       .05            $       .03
  Net Income - Diluted                               $       .05            $       .03

Weighted Average Common and Common
  Equivalent Shares Outstanding
   Basic                                              12,124,516             12,058,683
   Diluted                                            13,010,582             12,519,140
</TABLE>

                See accompanying notes to financial statements.

                                       5
<PAGE>

                             Covalent Group, Inc.
                           Statements of Cash Flows
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                         Three Months Ended
                                                                              March 31,
                                                                              ---------
                                                                    2000                   1999
                                                                -----------             ----------
<S>                                                             <C>                     <C>
Cash Flows From Operating Activities:

Net income                                                      $   589,554             $  344,795
Adjustments to reconcile net income  to
   net cash provided by operating activities
     Amortization and depreciation                                  104,673                 67,317
     Decrease deferred income taxes                                       -                199,668
     Changes in assets and liabilities
     (Increase) decrease in -
      Accounts receivable                                         1,887,159               (169,980)
      Restricted cash                                               155,546                 (1,525)
      Prepaid expenses and other                                   (197,683)                17,393
      Costs and estimated earnings in excess
       of related billings on uncompleted contracts              (1,838,613)               (26,179)
      Other assets                                                        -                 (1,000)
     Increase (decrease) in -
      Accounts payable                                             (511,608)               476,496
      Accrued expenses                                               65,188               (221,464)
      Billings in excess of related costs and
       estimated earnings on uncompleted contracts                  128,834               (480,495)
      Customer advances                                            (189,654)               744,557
                                                             --------------       ----------------

Net Cash Provided By  Operating Activities                          193,396                949,583
                                                             --------------       ----------------

Investing Activities:

Purchases of property and equipment                                 (12,841)              (352,608)
                                                             --------------       ----------------

Net Cash Used In Investing Activities                               (12,841)              (352,608)
                                                             --------------       ----------------

Cash Flows Provided By Financing Activities

Proceeds from exercise of stock options                             238,597                      -
Tax benefit from exercise of stock options                           78,394                      -
                                                             --------------       ----------------

Net Cash Provided By Financing Activities                           316,991                      -
                                                             --------------       ----------------

Net Increase (Decrease) In Cash and Cash Equivalents                497,546                596,975

Cash and Cash Equivalents, Beginning of Period                      558,528              1,208,956
                                                             --------------       ----------------

Cash and Cash Equivalents, End of Period                        $ 1,056,074             $1,805,931
                                                             ==============       ================
</TABLE>

                 See accompanying notes to financial statements

                                       6
<PAGE>

FORM 10-QSB

                             Covalent Group, Inc.
                         Notes To Financial Statements
                                  (Unaudited)


1.   DESCRIPTION OF BUSINESS
     -----------------------

     Covalent Group, Inc. (the "Company"), is a contractual research
     organization, providing clinical research and development services to
     pharmaceutical, biotechnology, medical services and managed care
     organizations.  The Company initiates, designs and monitors clinical
     trials, manages and analyzes clinical data and offers other related
     services and products.

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     ------------------------------------------

     Use of Estimates
     ----------------

     The preparation of financial statements in conformity with generally
     accepted accounting principles requires management to make estimates and
     assumptions that affect the reported amounts of assets and liabilities and
     disclosure of contingent assets and liabilities at the date of the
     financial statements and the reported amounts of revenues and expenses
     during the period.  Actual results could differ from those estimates.

     Basis of Presentation
     ---------------------

     The financial statements for the three months ended March 31, 2000 and 1999
     have been prepared without audit and, in the opinion of management, reflect
     all adjustments necessary (consisting only of normal recurring adjustments)
     to present fairly the Company's financial position at March 31, 2000 and
     the results of its operations and its cash flows for the interim periods
     presented.  Such financial statements do not include all of the information
     and footnotes required by generally accepted accounting principles for
     complete financial statements.  For further information, refer to the
     financial statements and footnotes thereto included in the Company's annual
     report on Form 10-KSB, for the year ended December 31, 1999.

     Operating results for the three months ended March 31, 2000 may not
     necessarily be indicative of the results for the year ending December 31,
     2000.

     Revenue Recognition
     -------------------

     Fixed price contract revenue is recognized based on the status of the work
     completed under the contract as of a given time using the percentage of
     completion method.  Revenue from other contracts is recognized as services
     are provided.  Revenue related to contract modifications is recognized when
     realization is assured and the amounts are reasonably determinable.
     Adjustments to contract cost estimates are made in the periods in which the


                                       7
<PAGE>

     facts which require the revisions become known.  When the revised estimate
     indicates a loss, such loss is provided for currently in its entirety.
     Costs and estimated earnings in excess of related billings on uncompleted
     contracts represent revenue recognized in excess of amounts billed.
     Billings in excess of related costs and estimated earnings on uncompleted
     contracts represent amounts billed in excess of revenue recognized.

     Restricted Cash
     ---------------

     The Company received an advance payment from one of its customers as part
     of a long term contract, which includes a separate restricted cash account
     to be utilized for payment of investigator fees.  As of March 31, 2000,
     this restricted cash amount was $541,504 and this amount is also included
     in customer advances.

     Net Income Per Common and Common Equivalent Share
     -------------------------------------------------

     Basic net income per common share was computed by dividing net income  by
     the weighted average number of shares of common stock outstanding during
     the period.  Diluted net income per common share reflects the potential
     dilution from the exercise of outstanding stock options and warrants into
     common stock.

     The net income and weighted average common and common equivalent shares
     outstanding for purposes of calculating net income per common share are
     computed as follows:

<TABLE>
<CAPTION>
                                                                                     Three Months Ended
                                                                                         March 31,
                                                                                         ---------
                                                                                  2000                      1999
                                                                               -----------               -----------
     <S>                                                                   <C>                       <C>
     Net income used for basic and diluted
          net income per common share                                          $   589,554               $   344,795
                                                                           ===============           ===============

      Weighted average common shares outstanding
      used for basic net income per common share                                12,124,516                12,058,693

     Dilutive effect of common stock
      options and warrants outstanding                                             886,066                   460,447
                                                                           ---------------           ---------------

      Weighted average common and common
      equivalent shares outstanding used for
      diluted net income per common share                                       13,010,582                12,519,140
                                                                           ===============           ===============
</TABLE>

     Comprehensive Income
     ---------------------

     A reconciliation of comprehensive income in accordance with Statement of
     Financial Accounting Standards No. 130 "Reporting Comprehensive Income" is
     as follows:

<TABLE>
<CAPTION>
                                                                      Three Months Ended
                                                                           March 31,
                                                                           ---------
<S>                                                         <C>                   <C>
                                                                     2000                 1999
                                                                   --------             --------
           Net Income                                              $589,554             $344,795

           Unrealized Loss on Investment                                  -               (9,375)
                                                            ---------------       --------------

           Comprehensive Income                                    $589,554             $335,420
                                                            ===============       ==============
</TABLE>

                                       8
<PAGE>

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

When used in this Report on Form 10-QSB and in other public statements, both
oral and written, by Covalent Group, Inc. (the "Company") and Company officers,
the words "estimate," "project," "intend," "believe," "anticipate" and similar
expressions are intended to identify forward-looking statements regarding events
and financial trends that may affect the Company's future operating results and
financial position. Such statements are subject to risks and uncertainties that
could cause the Company's actual results and financial position to differ
materially. Such factors include, among others: (i) the Company's success in
attracting new business; (ii) the size, duration and timing of clinical trials;
(iii) the termination, delay or cancellation of clinical trials; (iv) the
intense competition in the industry in which the Company competes; (v) the
Company's ability to obtain financing on satisfactory terms; (vi) the
sensitivity of the Company's business to general economic conditions; and (vii)
other economic, competitive, governmental and technological factors affecting
the Company's operations, markets, products, services and prices. The Company
undertakes no obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after the date
they are made or to reflect the occurrence of unanticipated events.

The information set forth and discussed below for the three months ended March
31, 2000 and 1999 is derived from the Financial Statements included elsewhere
herein.  The financial information set forth and discussed below is unaudited
but, in the opinion of management, reflects all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation of such
information.  The results of operations of the Company for a particular quarter
may not be indicative of results expected during the other quarters or for the
entire year.

General
-------

The Company, is a research management organization that designs, coordinates and
monitors clinical trials in drug development for some of the world's leading
pharmaceutical firms.  In addition, using advanced technologies, the Company
works extensively in managed care, medical outcomes research and health
management programs that focus on compliance and provider/patient behavior
modification.  Revenue is derived principally from the identification,
placement, monitoring and management of clinical development studies in the
traditional pharmaceutical, as well as managed care environment.

The Company's quarterly results can fluctuate as a result of a number of
factors, including the Company's success in attracting new business, the size
and duration of the clinical trials, the timing of client decisions to conduct
new clinical trials or possible cancellation or delays of ongoing trials, and
other factors, many of which are beyond the Company's control.  Clinical
research service contracts generally have terms ranging from several months to
several years.  A portion of the contract fee is generally payable upon
execution of the contract, with the balance payable in installments over the
life of the contract.  Revenue and related cost of revenue are recognized as
specific contract terms are fulfilled under the percentage of completion method.

                                       9
<PAGE>

Contracts generally may be terminated by clients with or without cause.
Clinical trials may be terminated or delayed for several reasons, including
unexpected results or adverse patient reactions to the drug, inadequate patient
enrollment or investigator recruitment, manufacturing problems resulting in
shortages of the drug or decisions by the client to de-emphasize or terminate a
particular trial or development efforts on a particular drug.  Depending on the
size of the trial in question, a client's decision to terminate or delay a trial
in which the Company participates could have a materially adverse effect on the
Company's backlog, future revenue and profitability.

The Company's backlog, which consists of anticipated revenues from signed
contracts, is $28 million at March 31, 2000.  The Company believes that its
backlog as of any date is not necessarily a meaningful predictor of future
results.

Three Months Ended March 31, 2000 Compared To Three Months Ended March 31, 1999
-------------------------------------------------------------------------------

Revenues for the three months ended March 31, 2000 increased 13% to $3,674,000
as compared to $3,265,000 for the three month period ended March 31, 1999.  The
increase of $409,000 results from the increase in the number of clinical
development projects being worked on in the most recent quarter as compared to
the same quarter last year.

Direct expenses include compensation and other expenses directly related to
conducting clinical studies.  These expenses increased by $71,000 from
$1,893,000 to $1,964,000 for the three months ended March 31, 1999 and 2000,
respectively.  The increase in expenses results principally from increases in
employee benefit costs.  Direct expenses as a percentage of revenues were 53%
for the three months ended March 31, 2000 as compared to 58% for the same period
last year.  The decrease in relative percent is due to the different cost
structures of the clinical studies being conducted and is based on different
types of services requested by the Company's clients.

Selling, general and administrative expenses include all administrative and
business development personnel, and all other support expenses.  Selling,
general and administrative expenses for the three months ended March 31, 2000
amounted to $789,000 or 21% of revenues, as compared to $839,000 or 26% of
revenues for the same period last year.  The net decrease of $50,000 or 6%
reflects increased efficiencies resulting from consolidation within the
Company's operating structure, offset by an increase in depreciation expense of
$38,000 attributable to an additional data management system acquired in the
second quarter of 1999.

Interest income increased $1,000 from $14,000 for the three months ended March
31, 1999, to $15,000 for the three months ended March 31, 2000.

The effective income tax rate for the three months ended March 31, 2000 and 1999
was consistent at 37%.

Liquidity and Capital Resources
-------------------------------

The Company's contracts usually require a portion of the contract amount to be
paid at the time the contract is initiated.  Additional payments are generally
made upon completion of negotiated performance requirements throughout the life
of the contract.  Cash receipts do not necessarily

                                       10
<PAGE>

correspond to costs incurred and revenue recognized (revenue recognition is
based on the percentage of completion accounting method). The Company typically
receives a low volume of large-dollar receipts. As a result, the number of days
outstanding in accounts receivable will fluctuate due to the timing and size of
cash receipts. Compared to December 31, 1999, accounts receivable decreased
$1,887,000 to $939,000 at March 31, 2000 primarily due to the timing of progress
payments for clinical trials. Costs and estimated earnings in excess of related
billings on uncompleted contracts increased $1,839,000 to $5,254,000 at March
31, 2000. This increase was attributable to seven clinical trials, for which
revenues have been recognized in excess of progress billings made to date on
those contracts.

The Company's cash and cash equivalents balance at March 31, 2000 was $1,056,000
as compared to $559,000 at December 31, 1999.  The increase in cash was
primarily due to operating results for the three months ended March 31, 2000 and
the proceeds from exercise of stock options.

The Company purchased $13,000 of equipment in the three months ended March 31,
2000.  The Company anticipates the need for capital expenditures during the
remainder of 2000 for computer equipment will be $150,000.

The Company has a line of credit with a commercial bank providing a maximum
credit facility of $1 million which bears interest at a rate not to exceed 1
percentage point above the bank's prime rate.  Borrowings outstanding under the
credit line are secured by substantially all of the assets of the Company.  No
borrowings were outstanding under the credit line at March 31, 2000.

The Company's principal cash needs on both a short and long-term basis are for
the funding of its operations, and capital expenditure requirements.  The
Company expects to continue expanding its operations through internal growth,
expansion of its existing services, and the development of new service products
for clinical research and the healthcare industry.  The Company expects such
activities to be funded from existing cash and cash equivalents and cash flow
from operations.

Management believes that the Company's operations and financial results are not
materially affected by inflation.

                                       11
<PAGE>

                             COVALENT GROUP, INC.

PART II. Other Information

     ITEM 1.   Legal Proceedings

               None.

     ITEM 2.   Changes in Securities

               None.

     ITEM 3.   Defaults Upon Senior Securities

               None.

     ITEM 4.   Submission of Matters to a Vote of Security Holders

               None.

     ITEM 5.   Other Information

               None.

     ITEM 6.   Exhibits and Reports on Form 8-K

               (a)  Exhibits

                    27 Financial Data Schedule (in electronic format only)

               (b)  Reports on Form 8-K

                    The Company filed a Form 8-K on January 26, 2000 announcing
                    that Covalent Partners, LLC completed the purchase of the
                    remaining 4,765,500 shares of common stock of Covalent
                    Group, Inc. held by Bruce LaMont, subject to an Option
                    Agreement dated November 1, 1999.

                                       12
<PAGE>

                                  SIGNATURES



     In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                   COVALENT GROUP, INC.


Dated:  May 12, 2000               By:  /s/Kenneth M. Borow, M.D.
      ------------------               -----------------------------------
                                           Kenneth M. Borow, M.D.
                                           Chief Executive Officer

Dated   May 12, 2000               By:   /s/William K. Robinson
      ------------------                ----------------------------------
                                           William K. Robinson
                                           Chief Financial Officer

                                       13