UNITED STATES
           SECURITIES AND EXCHANGE COMMISSION
                Washington, D.C.  20549

                       FORM 10-K

[X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934
     For the fiscal year ended December 31, 1996

                           OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
     THE SECURITIES EXCHANGE ACT OF 1934
     For the transition period from        to       

              Commission File No. 0-21684

          THE WELLCARE MANAGEMENT GROUP, INC.
 (Exact name of Registrant as specified in its charter)

     NEW YORK                      14-1647239
(State of other jurisdiction of    (I.R.S. Employer
 incorporation or organization)     Identification Number)

PARK WEST/HURLEY AVENUE EXTENSION, KINGSTON, NEW YORK 12401
(Address of principal executive offices)               (Zip Code)

                     (914) 338-4110
 (Registrant's telephone number, including area code) 

Securities registered pursuant to Section 12(b) of the Act:
                          NONE

Securities registered pursuant to Section 12(g) of the Act:
              COMMON STOCK, $.01 PAR VALUE
                    (Title of Class)

     Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
requirements for the past 90 days. YES X     NO

     Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of this Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.       [  ]

     The aggregate market value of the voting stock (Common
Stock, $.01 par value) held by non-affiliates of the Registrant on
March 3, 1997 was $31,452,774 based on the closing sales price of
the Common Stock on such date.

     The aggregate number of Registrant's shares outstanding on
March 3, 1997 was 4,947,334 of Common Stock, $.01 par value and
1,364,908 shares of Class A Common Stock, $.01 par value.

          DOCUMENTS INCORPORATED BY REFERENCE
                          NONE

                  Page 1 of 255 Pages
                Exhibit Index on Page 91<PAGE>
                        
PART I

ITEM 1.   BUSINESS

     Certain statements in the Form 10-K are forward-looking
statements and are not based on historical facts but are
management's projections or best estimates.  Actual results may
differ from these projections due to risks and uncertainties. 
These risks and uncertainties include a variety of factors.  The
Company's results of operations depend in large part on accurately
predicting and effectively managing medical costs and other
operating expenses.  A variety of factors, including competition,
changes in health care practices, changes in federal or state laws
and regulations or the interpretations thereof, inflation,
provider contract changes, new technologies, government-imposed
surcharges, taxes or assessments, reductions in provider payments
by governmental payors (including Medicare, whereby such
reductions may cause providers to seek high payments from private
payor), major epidemics, disasters and numerous other factors
affecting the delivery and cost of health care, may in the future
affect the Company's ability to control its medical costs and
other operating expenses.  Governmental action (including downward
adjustments to premium rates requested by the Company, which could
result in adjusted rates lower than premium rates then in effect)
or business conditions (including intensification of competition
and the other factors described above) could result in premium
revenues not increasing to offset increases in medical costs and
other operating expenses.  Once set, premiums are generally fixed
for one year periods and, accordingly, unanticipated costs during
such periods cannot be recovered through higher premiums.  The
expiration, suspension or termination of contracts to provide
health coverage for governmental entities or other significant
customers would also negatively impact the Company.  Due to these
factors and risks, no assurance can be given with respect to the
Company's premium levels or its ability to control its medical
costs.

GENERAL

     The WellCare Management Group, Inc. ("WellCare" or the
"Company") is a managed health care company whose wholly-owned
subsidiaries, WellCare of New York, Inc. ("WCNY") and WellCare of
Connecticut, Inc. ("WCCT"), are health maintenance organizations
("HMOs").  Through another wholly-owned subsidiary, Agente Benefit
Consultants, Inc. ("ABC"), WellCare also provides specialty
benefit programs and related administrative services to employer
and other groups which utilize health care services.  WCNY is the
dominant HMO in the Hudson River Valley region.  WCCT is modeled
on WCNY and received licensure to operate an HMO in the State of
Connecticut in March 1995.  WellCare provides management services
to each of its subsidiaries. 

     WCNY and WCCT (the "WellCare HMOs"), licensed to operate
HMOs in the States of New York and Connecticut, respectively,
provide comprehensive health care services to members in their
respective service areas.  WCNY's service area extends from New
York City north through the Hudson River Valley to the Capital
Region and Southern Adirondacks and west into the Mohawk River
Valley and Southern Tier.  WCCT is licensed to operate statewide
in Connecticut.  WCNY and WCCT are independent practice
association/direct contract ("IPA/Network") mixed model HMOs. 
Members of the WellCare HMOs are serviced through a provider
network consisting of approximately 1,600 primary care physicians,
5,100 specialists and 80 hospitals.  At December 31, 1996,
enrollment in plans owned, managed or administered by WellCare was
approximately 93,500 members from approximately 2,600 employer
groups, compared to approximately 100,000 members enrolled from
approximately 2,500 employer groups at December 31, 1995.  At
December 31, 1996, no employer group accounted for more than 4% of
the WellCare HMOs' membership.  The decline in commercial
membership is substantially attributable to WellCare's more
stringent application of its credit standards, pursuant to which
contracts for non-paying or slow-paying groups were canceled or
not renewed, as well as to customers' adverse reaction to the
negative publicity received by the Company related to the
restatement of its 1994 financial results.  The decline in
Medicaid membership is attributable to the ban on direct
enrollment of Medicaid eligibles by any managed care plans from
August 1, 1995 through August 1, 1996 in New York City, thereby
not offsetting normal Medicaid disenrollments or permitting growth
in enrollment during that period, as well as a statewide decrease
in the number of individuals eligible for Medicaid which has
caused a decrease in the total number of Medicaid eligibles in all
managed care organizations.

THE MANAGED CARE INDUSTRY

     Health care costs in the United States have escalated
dramatically from $324 billion in 1982 to an estimated $988.5 
billion in 1995, or approximately 13.6% of the gross national
product.  As a result, employers, insurers, governmental entities
and health care providers have sought effective cost containment
measures, contributing to the development of the managed care
industry.  Further, the inability of a significant portion of the
population to obtain health care coverage has resulted in health
care reform measures proposed both at the federal and state
levels, many of which focus on managed care as a means for
providing quality health care services on a cost-effective basis.

     An HMO provides or arranges for the provision of
comprehensive health care services, including physician and
hospital care, to a voluntarily enrolled population for a fixed,
prepaid premium.  Except in cases of medical emergency, the member
receives care from participating primary care physicians who, in
turn, refer the members to participating specialists and hospitals
as required.  HMOs provide management controls designed to
encourage efficient and economic utilization of health care
services.  These controls include monitoring physician services,
the level of hospital admissions and the lengths of hospital stay,
and promoting the use of non-hospital based medical services.

     Initially, managed care was provided primarily through HMOs,
but has expanded to the provision of an increasing variety of
products and services, including preferred provider organizations
("PPO"), utilization review services, third-party claims
administrators and specialty benefit programs, which are marketed
to self-insured employer plans, unions, indemnity insurers and
other groups.

     A number of government-sponsored health care programs have
begun to encourage the enrollment of their beneficiaries into
managed care plans, particularly HMOs, as a means of controlling
escalating health care costs.  The largest of these programs are
Medicaid and Medicare, which service the poor and the elderly,
respectively.

     MEDICAID.  The Medicaid program, sponsored by individual
state governments, provides health care services to low income
individuals in the United States, receiving significant financial
support from the federal government.  In 1991, approximately $14
billion was spent on Medicaid programs in New York State, which
increased by approximately 43% to approximately $20 billion in
1996.  Due to significant medical costs inflation, state
governments are increasingly contracting with managed care
companies, including HMOs, to provide health care services to
their Medicaid recipients.  In contracting with private managed
care companies, Medicaid shifts most of the financial risk of
health care services delivery to the HMO and allows the Medicaid
program to benefit from the cost-efficiency practices of the
managed care industry.  Several states, including Connecticut,
currently require and others, including New York (subject to
federal approval), will mandate that all Medicaid beneficiaries
enroll with managed care companies to receive medical services. 
Currently, only approximately 28% of the approximately 2.3 million
eligible Medicaid recipients in New York State are enrolled in HMO
plans.

     MEDICARE.  Medicare is a federal government-sponsored
entitlement program administered by the Health Care Financing
Administration ("HCFA"), providing health care coverage to
approximately 37.5 million individuals, primarily over 65 years of
age.  In 1996, Medicare accounted for approximately $193 billion
in health benefits for eligible people.  Total Medicare benefit
outlays for fiscal 1997 are estimated at $206 billion.  This
represents an amount which is 6.6% higher than fiscal year 1996
and reflects growth in beneficiary enrollment, service utilization
and medical inflation.

     The federal government, through HCFA, has contracted with
HMOs since 1985 and, currently, approximately 4.9 million Medicare
beneficiaries are enrolled in managed care.  Of that number, 4.3
million are covered under plans that assume risk in the delivery
of health care services to Medicare beneficiaries ("Medicare Risk
Contracts").  In contracting with HMOs pursuant to Medicare Risk
Contracts, HCFA bases payment rates on 95 percent of the average
Medicare medical costs determined by age, sex, county and
institutional status.  In addition to the five percent cost
savings, the financial risk and most of the administrative burdens
of health care service delivery are shifted to the HMO, and the
administrative efficiency practices of managed care are integrated
into the Medicare program.  At December 31, 1996 there were 258
Medicare Risk Plans nationwide (including multiple plans by single
HMOs).  At December 31, 1996, there were approximately 70
applications for Medicare Risk Contracts pending.  Approximately
70,000 Medicare beneficiaries each month choose managed care.

BUSINESS STRATEGY

     WellCare's strategy has been to provide high quality,
competitively priced HMO products and other managed care products
and services. Wellcare's membership, which has grown by
approximately 83% since 1992, experienced a reduction of
approximately 7% from 1995 to 1996 year end.  This decrease
occurred toward the end of the year, in commercial and Medicaid
accounts, and was partially offset by an increase in Medicare
business.  The decline in commercial membership is substantially
attributable to WellCare's more stringent application of its
credit standards, pursuant to which contracts for non-paying or
slow-paying groups were canceled or not renewed, as well as to
customers' adverse reaction to the negative publicity received by
the Company related to the restatement of its 1994 financial
results.  The decline in Medicaid membership is attributable to
the ban on direct enrollment of Medicaid eligibles by any managed
care plans from August 1, 1995 through August 1, 1996 in New York
City, thereby not offsetting normal Medicaid disenrollments or
permitting growth in enrollment during that period, as well as a
statewide decrease in the number of individuals eligible for
Medicaid which has caused a decrease in the total number of
Medicaid eligibles in all managed care organizations.  WellCare
believes it can continue to expand its HMO membership and deliver
effective managed care by continuing to focus on the following
strategies:

     MAINTAINING COMPETITIVELY PRICED PREMIUMS THROUGH
CONTAINMENT OF HEALTH CARE COSTS.  The Company's success depends
to a significant degree upon its ability to control health care
costs.  Primary care physicians are integral to health care cost
containment as they control to a significant degree member
utilization of hospitals, specialists and other health care
providers. WellCare has worked to develop a network in which
virtually all primary care physicians are paid on a capitation
basis.  WCNY directly capitates regional health care alliances
(the "Alliances") and non-Alliance primary care physicians with a
fixed monthly payment for each HMO member selecting an Alliance
primary care physician or non-Alliance primary care physician,
designed to cover the costs of substantially all health care
services provided to the member, notwithstanding the amount of
medical care rendered.  WellCare assists the primary care
physicians in efficiently managing their practices by providing
them with outcome studies, utilization and other statistical data,
quality assurance reviews, and managed care educational programs. 
WellCare is committed to continuously improving its capitation and
other fee arrangements and to facilitating optimal health care
utilization in order to ensure high-quality, low-cost service.  As
part of this commitment, WCNY began capitating certain specialty
services in 1994.  During 1996, the following specialties were
capitated by the WellCare HMOs: mental health, chiropractic,
physical therapy, podiatry, vision and certain diagnostic
services.

     EXPANDING SERVICE AREAS.  WellCare traditionally has
concentrated on expanding in secondary markets where price
competition is less intense than in major metropolitan areas and
where widespread name recognition is easier to achieve.  The
Company's ability to work closely with physicians and hospitals,
which it believes leads to more effective cost containment, is
well suited to secondary markets.  Accordingly, WellCare will
continue to focus on such contiguous markets as well as other
growth areas, including certain primary markets.  WCNY is
currently approved to operate in 24 counties in New York State,
including four of the five counties of New York City. 
Additionally, effective January 1, 1997, WCNY received approval
for expansion into Westchester County.  In 1995, WellCare expanded
its HMO operations into Connecticut through WCCT, and is currently
approved to operate statewide in Connecticut.

     PROVIDING MEMBERS ACCESS TO A BROAD RANGE OF QUALITY
PHYSICIANS.  WellCare recognizes that expansion and retention of
its HMO membership is dependent to a significant degree upon
providing access to a broad range of quality health care providers
and intends to continue expanding as well as improving its health
care provider network in its core service area and proposed areas
for expansion.  At December 31, 1996, the provider network of the
WellCare HMOs consists of approximately 1,600 primary care
physicians and 5,100 specialists.  Over 92% of the provider
network is board-certified.  WellCare's widespread name
recognition in its core service area facilitates recruitment of
participating physicians and, during 1996, approximately 960
additional primary care physicians and 2,100 specialists joined
WellCare's network.

     ADDING NEW BENEFIT PROGRAMS AND INITIATING NEW PRODUCTS AND
SERVICES.  In 1996, WCNY received approval from HCFA to expand its
Senior Health product into four additional counties of WCNY's
service area.  Additionally, WCNY's Medicaid coverage program
received regulatory approvals to expand into an additional three 
counties, including Broome, Delaware and Schoharie.  To meet the
needs of employer groups and exploit new opportunities in managed
care, WellCare is continuing to expand and initiate complementary
managed care products and services.  WellCare offers a broad PPO
network to provide vision care, mental health, pharmacy and
primary care benefit programs as stand-alone products.  The
WellCare HMOs offer third-party administrator services.  WellCare
also offers a point-of-service product for its HMO members.
     
     INVESTMENTS IN TECHNOLOGY AND INFRASTRUCTURE.  WellCare
believes that investments in technology and infrastructure are
critical for future HMO membership growth.  In 1996, WellCare
implemented a new electronic imaging and work flow distribution
system which enhances both enrollment and claims adjudication
processing.

THE WELLCARE HMOS

     The WellCare HMOs provide comprehensive health care services
to their members for a fixed monthly premium, plus a co-payment by
the member to the physician for each office visit generally, and a
dispensing fee to the pharmacy for each prescription filled.  The
basic benefits a member receives consist of primary and specialty
physician care, inpatient and outpatient hospital services,
emergency and preventive health care, laboratory and radiology
services, ambulance services, eye care, physical and
rehabilitative therapy services, mental health care, and alcohol
and substance abuse counseling.  For an increased monthly premium,
members have the option to receive prescription drugs and extended
dental and vision care.

     The WellCare HMOs arrange for the provision of other health
care services by contracting with hospitals which through December
31, 1996, were paid primarily on a diagnostic related group
("DRG") basis under New York State law rather than by length of
hospital stay (although New York HMOs were permitted to negotiate
lower DRG or per diem rates with regulatory approval).  As a
result of recent New York State legislation, effective January 1,
1997, WellCare has been contracting and intends to contract with
most hospitals on a negotiated per diem rate basis (See "Business
- Government Regulations - Recent New York State Legislation").

     The WellCare HMOs also arrange for the provision of health
care services in the case of primary care and certain specialty
services, on a capitated fee basis, and with other health care
providers, generally on a discounted fee-for-service basis.

     Members are allowed to select any primary care physician or
practice participating in the WellCare HMO network and are allowed
to switch from one primary care physician or practice to another
within the network.  All medical care received by the member,
including specialist and hospital care, is coordinated by the
primary care physician.  Hospitalization for members requiring
non-emergency treatment generally takes place in hospitals, which
either are under contract or have arrangements with the WellCare
HMOs; emergency treatment may be obtained in any hospital.

     Premiums are generally fixed for a twelve-month period under
contracts with each subscriber group.  WellCare considers a
variety of factors in determining HMO premiums, including
anticipated health care utilization rates, projected medical
expenses, community rating requirements (applicable in both New
York and Connecticut) and competitive conditions.  Premiums are
subject to state regulation (See "Business - Government
Regulation").

MEMBERSHIP

WELLCARE HMOS

     At December 31, 1996, the WellCare HMOs provided managed
care services to approximately 93,500 members enrolled from
approximately 2,600 employer groups.  The five largest employer
groups accounted for approximately 11% of total membership, with
no one group accounting for more than 4% of such membership.

     The membership of the WellCare HMOs is comprised of the
following:

*    Members enrolled through subscribing private or public
     sector employers or unions, and members unaffiliated with
     subscriber groups enrolling individually (collectively,
     "commercial members");

*    Recipients of public aid whose eligibility is determined by
     the New York State Department of Social Services ("Medicaid
     members");

*    Medicare beneficiaries covered under Full Risk program
     ("Medicare beneficiaries"); and

*    Medicare beneficiaries receiving HMO supplemental coverage
     for medical services not covered by Medicare ("Medicare
     supplement members").

     Presently, WCCT has received approval to offer coverage only
to commercial members.

     When a subscriber group agrees to offer the WellCare HMOs to
its employees, enrollment is voluntary by the individual, who must
be accepted for enrollment regardless of health status.  Employers
generally pay all or part of the monthly health care premiums for
their employees, deducting the portion not so paid from the
employee's salary.  Upon leaving a subscriber group, an individual
may elect to continue as an HMO member by paying a monthly
premium.

     Individuals may be enrolled as Medicaid members in WCNY
through its Healthy Choice product ("Healthy Choice") only if they
are eligible recipients of public aid.  Medicaid members are
enrolled on an individual basis pursuant to agreements with county
social services departments and approval by the New York State
Department of Social Services (the "DSS") and must be enrolled
regardless of health status.  Twenty-five percent of the premiums
for Medicaid members is funded by the applicable county, 25% by
the State of New York and the balance by the federal government. 
The agreements contain extensive provisions for termination by the
county departments for cause or upon 90 days' notice in the event
of unavailability of state funds to pay for continued services to
Medicaid members.  In the event the contracts are terminated or
not renewed, the Company's operating results would be adversely
affected.  Medicaid Managed Care legislation was enacted in 1996
authorizing New York State, pursuant to federal waiver, to require
most Medicaid recipients to enroll in managed care plans.  The
Company believes it is well positioned in the marketplace to
service these individuals upon New York State's receipt of the
federal approval of the mandatory waiver.

     Effective September 1, 1995, HCFA awarded a Medicare Risk
Contract to WCNY in designated counties.  Medicare beneficiaries
are enrolled pursuant to annual contracts with the federal
government under which WCNY provides health care services.  These
contracts provide for the federal government to pay WCNY a fixed
monthly premium per member equal to approximately 95% of the
average medical costs by age, sex, county and institutional
status.  Premiums are subject to periodic unilateral revision by
the federal government.  The Medicare beneficiaries pay no monthly
premiums or deductibles, although there are co-payments for office
visits or prescriptions and there is an annual limit of $500 on
prescription charges per member.  Medicare members are able to
disenroll for any reason at any time.  Effective January 1, 1997,
WellCare's Medicare Risk Program ("Senior Health") expanded from
eight counties (Albany, Columbia, Dutchess, Greene, Orange,
Rennselaer, Rockland and Ulster) with approximately 240,000
eligible individuals to twelve counties (now including Broome,
Delaware, Otsego and Sullivan) with a total of over 300,000
eligible individuals.

     Medicare supplement members may enroll in WCNY on a group
basis through their present or past employers to supplement
medical coverage received from Medicare.  Under the supplemental
coverage, in return for a fixed monthly premium, WCNY pays the
cost of most medical services not covered by Medicare, provided
the Medicare beneficiary uses the HMO provider network for such
services, other than for emergency care.

PLANS MANAGED BY WELLCARE

     The following table reflects membership and employer groups
for plans owned, managed or administered by WellCare during the
five years ended December 31, 1996:

                              At December 31,

                            1996    1995    1994    1993    1992

Commercial Members (1)      69,653  78,910  71,119  60,112  44,456
Medicaid Members            18,270  19,112  10,010   8,941   5,660
Medicare Members (2)         5,530   2,032   1,365   1,147     801

Total Members               93,453 100,054  82,494  70,200  50,917

Number of Employer Groups    2,600   2,500   1,900   1,500   1,300

(1)  Includes HMO commercial members and members enrolled under non-HMO
     specialty programs.
(2)  Includes Medicare beneficiaries and Medicare supplement members.

MEDICAL COST CONTROL

     The Company's success depends to a significant degree upon
its ability to control health care costs.  WellCare controls such
costs through (i) capitation arrangements with the Alliances and
with non-Alliance primary care physicians, (ii) discounted fee-for-service 
arrangements with specialists and other health care
providers (other than hospitals which, through December 31, 1996, 
in New York State were paid primarily on a DRG basis, although
HMOs could  negotiate lower DRG or per diem rates), (iii)
capitation arrangements with providers of certain specialty
services, (iv) health care utilization review programs, and (v)
co-payments by members for office visits and other services. 
Notwithstanding such cost control measures, health care costs in
any given period may be greater than expected due to unexpected
incidence of major cases, natural disasters, epidemics, changes in
physician practices and new technologies; and that major health
care providers will be unable to maintain their operations and
reduce or eliminate their accumulated deficits.  These factors
which impact health care costs are beyond the Company's control
and may adversely affect its operations. 

PHYSICIAN ARRANGEMENTS

     Effective October 1, 1994, WCNY entered into contracted 
arrangements with a majority of its primary care physicians and
specialists through contracts with regional health care delivery
networks (the "Alliances") for the provision of health care
services to the Plan's commercial and Medicaid members. 
Initially, each Alliance was a professional corporation that then 
contracted with individual primary care physicians and specialists
to provide health care services.  At inception, there were four
Alliances with different equity owners; by December 31, 1995, the
four Alliances were combined into two Alliances, with the same
equity owner, which the Company has been advised are in the
process of converting to IPAs.  WCNY's  initial agreement with
each of the Alliances for the period October 1, 1994 through
September 30, 1995, required payment to the Alliances based on a
percentage of premium revenue for effected members. Effective
October 1, 1995, WCNY entered into three year agreements with each
of the Alliances to capitate them at specified per member per
month ("PMPM") rates designated to cover the costs of all health
care services provided to the HMO members.  These agreements
originally provided for increases of approximately 1% for the
period October 1, 1995 through December 31, 1995; approximately 6%
effective January 1, 1996; approximately 1% effective January 1,
1997; and an additional 3% effective January 1, 1998. 

     In an effort to improve the profitability of WCNY and the
Alliances, WCNY entered into a letter of understanding with the
Alliances in September 1996 to restructure its capitation
arrangement.  Pursuant to the terms of the restructured
arrangement, WCNY reassumed the risk for certain previously
capitated services, as well as reduced the capitation rate paid
for certain services which continued to be provided by the
Alliances.  At December 31, 1996, WCNY capitated the Alliances for
all physician services, both primary care and specialty services,
on a PMPM basis for each HMO member except for physician services
in the areas of certain diagnostics and mental health, which
WellCare  capitated through contracts with certain other regional
integrated delivery systems.  Additionally, if certain conditions
are met, these contracts will be extended to ten-year terms.

     Each Alliance, in turn, capitates each Alliance primary care
physician from the monthly payments received from WCNY with a
fixed monthly payment for each HMO member designating the Alliance
physician as their primary care provider, retaining and allocating
the balance to a group risk pool for payment to specialists. 
Specialists are compensated on a fee-for-service basis by each 
Alliance which disburses payments to these specialists.  To the
extent the risk pools are insufficient to cover the specialists'
fees, the amounts paid to the specialists as a group can be
proportionately reduced, up to a maximum of 30%.  To the extent
the risk pools are still insufficient to cover the specialists'
fee after a maximum reduction, a portion of the capitation
payments to primary care physicians can be withheld to cover the
specialists' fees after the reduction.  Primary care physicians
and specialists are furnished with periodic utilization reports
and the Alliances' accounts are reconciled on a quarterly basis.

     WCNY is ultimately responsible for all medical care provided
to its members notwithstanding its Alliance arrangements, and
intends to remain integrally involved in assisting primary care
physicians to efficiently manage their practices by providing them
with outcome studies and other statistical data, quality assurance
reviews, utilization and other managed care educational programs.

     During 1996, Alliance primary care physicians provided
medical care to approximately 76% of WCNY's members; the balance
of WCNY's members were provided services by primary care
physicians who are directly capitated by WCNY.  WCNY also has
individual contracts with substantially all physicians in the
Alliances.  However, there can be no assurance that physicians
that join an existing or new Alliance will contract directly with
WCNY.  WCNY has three year contracts with the Alliances.  If
certain conditions are met, these contracts will be extended to
ten year terms.  There is no assurance that WCNY will be able to
renew the Alliance contracts on terms it deems satisfactory.

     WCNY also contracts directly with primary care physicians
and specialists, with substantially all primary care physicians
being capitated with a fixed monthly payment for each HMO member
selecting the physician.  A portion of the monthly capitation fee
is paid directly to the primary care physician, with the balance
allocated to risk sharing accounts covering (i) payment to
specialists and supplemental providers to whom the HMO members are
referred by the primary care physician, (ii) outpatient referrals
in excess of certain minimum amounts, inpatient hospital expenses,
certain high risk medical conditions and pharmaceutical expenses,
and (iii) catastrophic events, in which WCNY shares the risk. 
Specialists are generally paid on a discounted fee-for-service
basis.  WCNY believes its capitation arrangements hold the primary
care physicians individually accountable for all deficits in their
respective risk-sharing accounts, although for financial reporting
purposes, all deficits incurred are expensed until such deficits
are reimbursed to WCNY.

     WCCT contracts directly with some of its physician network. 
A significant number of all primary care physicians and
specialists are contracted through an IPA or a physician hospital
organization ("PHO") that contracts directly with WCCT.

HOSPITAL AND OTHER PROVIDER ARRANGEMENTS

     Third-party reimbursement for most inpatient hospital care
in New York State through December 31, 1996 was required to be
paid on a Diagnostic Related Group ("DRG") basis, pursuant to
which hospital charges as established by the State were based on
the diagnosis of the patient's condition, generally
notwithstanding the length of hospitalization.  New York HMOs have
been permitted, subject to regulatory approval, to negotiate lower
DRG or per diem rates with hospitals.  To the extent DRG rates
apply, a member's length of hospital stay does not affect the
WellCare HMOs' costs and hospital costs can best be controlled
through managing hospital admissions and utilizing the most
effective treatment methods.  When a per diem contract is in
effect, utilization management monitored by the case management
function reduces medical costs to the WellCare HMOs by minimizing
length of hospital stay as well as maximizing the utilization of
the most effective treatment methods.

     As of January 1, 1997, the New York State regulated rate
setting system expired and was replaced by a largely unregulated
free market system whereby payors and hospitals are free to
negotiate the best rates possible.  Another significant  change is
in the area of funding for various public goods and Graduate
Medical Education.  Under the state-run DRG system, these add-on
costs were built directly into the rates set by the state, and
were not subject to negotiation.  However, as of January 1, 1997,
the responsibility for public goods and Graduate Medical Education
has shifted from hospitals to the payors.  To account for this new
cost, payors have been renegotiating their hospital contracts in
order to remain on a cost-neutral basis.

     The WellCare HMOs currently contract with 79 hospitals and
have arrangements with 2 additional hospitals.  Pursuant to its 
contract, the hospital is paid for all authorized inpatient and
outpatient services and all emergency room services provided to 
members.  In addition, the WellCare HMOs require the hospitals to
participate in utilization review and quality assurance programs. 
The WellCare HMOs' contracts with hospitals are terminable upon
90-120 days' prior notice by either party.

     In order to obtain high quality services at cost-effective
rates, the WellCare HMOs have contracted with other providers for,
among other things, mental health, diagnostic services, physical
therapy, outpatient surgery, laboratory services and home health
care, on either a capitated or negotiated fee basis.  The Company
also has an agreement with Diversified Pharmaceutical Services,
Inc. ("DPS") which covers all of the service areas of the WellCare
HMOs, including a network of approximately 2,000 pharmacies.

UTILIZATION REVIEW

     Utilization of health care services by members and
physicians is monitored under WellCare's health care utilization
review programs.  In cases of excessive utilization, WellCare
counsels the provider with respect to possible unnecessary or
duplicate services or medications.  In addition, under the
direction of local physicians and the WCNY medical director,
health care service utilization data are analyzed and, through
periodic meetings with physicians, the Company identifies areas in
which the physician's utilization rates differ significantly from
the rates of other physicians and suggests methods for
improvements.

EDUCATIONAL PROGRAMS

     The WellCare HMOs believe that educating their members and
health care providers with respect to health care is a critical
component in health care cost containment and periodically sponsor 
programs on health care.  In addition, WellCare maintains a
videotape library that it makes available to its primary care
physicians for viewing by HMO members to acquaint them with
treatment protocols and other medical information.  The Company's
bimonthly newsletter to its members contains, among other items,
information on preventive health care.

     WellCare University, a division of WellCare, conducts 
seminars and other educational programs for physicians
constituting part of its network.  WellCare University also
conducts a number of ongoing studies related to the managed care
industry.  WellCare also publishes newsletters which it
distributes to its physicians and supplemental health care
providers, and sponsors and arranges conferences, lectures and
symposiums for physicians on different aspects of physician
treatment as well as the conduct and benefits of managed care
programs.

QUALITY OF CARE PROGRAMS

     WellCare's quality of care programs, consisting of quality
of care audits, periodic peer reviews and outcome studies, assist
the Company in controlling costs by identifying cost-effective
treatment procedures (See "Business - Quality Improvement"). 
Effective November 27, 1996, WCNY received a certificate of one
year accreditation from the National Committee for Quality
Assurance.
  
CO-PAYMENTS

     To promote member participation in controlling health care
costs, the WellCare HMOs require co-payments by its members for
office visits and other services.  These co-payments for WCNY are
made by the member directly to the physician or other provider and
range from $3 to $15 for office visits, and $25 or $50 for
emergency room treatment.  WCCT is approved for a $3 to $20 co-payment for 
office visits and a $25 to $50 co-payment for
emergency room treatment.  Certain plans also require members to
pay deductibles for inpatient hospital services.

OTHER PRODUCTS AND SERVICES

     The Company has initiated services both independent of and
supplemental to its HMO benefit programs.

SPECIALTY CARE BENEFIT PROGRAMS

     WellCare offers prescription drug, dental and expanded
vision and other specialty care benefit programs as stand-alone
products to self-insured employer and other groups through its
third-party claims administrator ("TPA") services.

     The Company provides TPA services independently and as part
of its specialty care benefit programs offered to employer and
other groups.  In addition, WellCare has established a "PPO"
network, using principally its HMO provider network, to provide
vision care and pharmacy benefit programs as stand-alone products
for self-insured employer and other groups.

POINT-OF-SERVICE PRODUCT

     The WellCare HMOs offer a point-of-service ("POS") product
to its commercial members, allowing them to select providers
outside of WCNY's provider network.  When a member uses a POS
product, the member is required to make a higher co-payment and is
subject to pay a higher deductible.

<PAGE>
PHYSICIAN PRACTICE MANAGEMENT

     Through June 30, 1995, WellCare, through its wholly-owned
subsidiary WellCare Medical Management, Inc. ("WCMM"), performed
management and administrative services for physician practices. 
In June 1995, WellCare sold the assets of WCMM.

MARKETING

     WellCare's internal marketing staff consists of 53 sales
representatives, 23 of whom market WellCare's benefit plans and 
specialty benefits plans and other products and services to
commercial groups, 22 to Medicaid recipients, 8 to Medicare
beneficiaries.  The Company also utilizes independent brokers for
referrals.

     Marketing to commercial groups is generally a two-step
process in which presentations are made to the employer and then
to the individual employees if the Company's benefit plan is
selected.  During a designated period (usually one month
annually), employees select their desired health coverage. New
employees, however, make their choice when employment commences.

     Medicaid managed care marketing has become a highly
regulated and supervised activity.  All Healthy Choice marketing
must be conducted consistent with a pre-approved marketing plan
and, all Healthy Choice marketing materials must receive approval
prior to their use, from both the County Departments of Social
Services and the State Department of Health.  Additionally,
surveillance of Plan marketing staff is conducted to insure that
all marketing is performed consistent with applicable rules and
guidelines.

     Healthy Choice utilizes a variety of marketing approaches
including: direct marketing at County Social Services offices,
direct mail when approved and supervised by the Counties;
provider-assisted outreach; community-based organization
partnerships; and advertising in targeted community publications.

     Marketing of WCNY's Full Risk Medicare program involves a
labor intensive one-on-one process.  Marketing efforts focus on
informational presentations/seminars, community outreach programs
and telemarketing activities.

     WCNY also offers a supplemental coverage plan for Medicare
beneficiaries through existing employer groups who provide
contributed benefit programs to retirees.  Marketing takes place
through on-site meetings and direct mailings to such retirees.

QUALITY IMPROVEMENT

     All physicians in the WellCare HMOs' provider network are
required to participate in quality improvement and utilization
review programs.  In 1996, WCNY received one-year accreditation
from the National Committee of Quality Assurance.  The quality
improvement program is designed not only to maintain but to
continually improve the delivery of proper medical care and
includes:

*    Quality of care audits, which identify issues affecting HMO
     members, including physician availability, physician
     treatment patterns and the structure and content of medical
     records;

*    Periodic peer reviews, which evaluate the quality and
     appropriateness of medical care provided by a particular
     physician and review, among other things, diagnoses, tests,
     prescription drug usage and the utilization level of the
     physician by the HMO members;

*    Utilization reviews and outcome studies, which evaluate
     statistical information with respect to services used by
     members and prescribed by participating physicians and
     include such topics as preventive care services,
     prescription drugs, physician visits, emergency room use,
     hospital admissions and referrals made by primary care
     physicians to specialists; and

*    A physician committee infrastructure to oversee medical
     policy and the quality improvement program.

     The quality improvement program utilizes computerized claims
information and medical records which are maintained by the
physicians and to which WCNY has access.  In addition,
participating hospitals maintain quality improvement programs. As
required by state law, WCNY has an established complaints
procedure for HMO members and providers to formally register
concerns with the HMO.  These concerns are then investigated and
resolved pursuant to the procedures established by the HMO.

COMPETITION

     The managed care industry is highly competitive principally
on the basis of price, the size and quality of the provider
network, benefits provided and quality of service.  Although WCNY
is the dominant HMO in the Hudson River Valley region of its
service area, it also has expanded its operations in new
geographic areas, including New York City, Westchester County and
Connecticut, where there are other HMOs which have more members
and greater financial resources than the Company.  The Company
also competes with commercial health insurance companies and not-for-profit 
health service plans, including Blue Cross and Blue
Shield, and may compete with provider integrated delivery systems.

MANAGEMENT INFORMATION SYSTEM

     Information is key to success for any company, especially
those in the health care industry.  WellCare has made information
systems a priority over the past several years and has created a
high quality, information driven network.  At the core is the
AMISYS Health Care Management Information System.  AMISYS is
widely used in the HMO industry and provides detailed tracking of
employer group, provider, hospital and member data.

     WellCare implemented relational database technology to
enhance utilization reporting and analysis.  This technology 
allows the entire company to have quality and timely information
readily available.

     The option for electronic submission of claims began in 1994
and currently over 50% of all claims are submitted by providers to
the WellCare HMOs electronically.

     In 1996, WellCare significantly enhanced enrollment and
claims processing with the implementation of MACESS, an electronic
document imaging and workflow distribution system.  MACESS allows
documents such as claim and enrollment forms to be scanned and the
image filed in a computer rather than a file drawer.  The workflow
distribution portion of the system allows claim adjudicators to
process claims from electronic "queues" rather than from a stack
of claim forms.

     WellCare continues its commitment to technology and believes
it is in an excellent position to accommodate its anticipated
growth for the foreseeable future.

GOVERNMENT REGULATION

STATE REGULATION

     The WellCare HMOs are subject to extensive state regulation. 
Applicable state statutes and regulations require the WellCare 
HMOs to file periodic reports with the relevant state agencies,
and contain requirements relating to the operation of their HMOs,
the rates and benefits applicable to their products and their
financial condition and practices.  In addition, state regulations
require the WellCare HMOs to maintain restricted cash or available
cash reserves, net worth positions and restrict their abilities to
make dividend payments, loans or other transfers of cash to the
Company.  State regulatory authorities exercise oversight
regarding the provider networks, medical care delivery and quality
assurance programs, contract forms and financial condition of the
WellCare HMOs.  The WellCare HMOs are also subject to periodic
examination by the relevant state regulatory authorities.

     On January 29, 1997, WCNY received the report on its
biennial statutory examination for the years ended December 31,
1994 and 1995 from the New York State Insurance Department
("NYSID").  The examination resulted in the Company recording two
one-time medical charges (See Note 2c of "Notes to Consolidated
Financial Statements).  Additionally, the examiners reviewed
WCNY's underwriting and rating procedures with respect to
compliance with New York State regulations.  This review resulted
in NYSID determining that WCNY was not in compliance with all
pertinent regulation sections and as such referred the matter to
NYSID's Office of General Counsel for disciplinary action.  The
Company does not believe that the disciplinary action, if any,
will have a material adverse affect on operations.

      As a result of the examination, WCNY's statutory net worth
was impaired approximately $1.1 million.  Subsequently, WCNY
received a $3 million contribution of capital from WellCare.  In
addition, in October 1996, WCNY received a $3 million surplus note
from WellCare.  These two cash infusions more than offset the
examination's adjustment to WCNY's net worth.
 
     Applicable New York statutes and regulations require the
prior approval of the New York Commissioner of Health and the New
York Superintendent of Insurance for any change of control of WCNY
or the Company.  A similar law in Connecticut requires the
approval of the Insurance Commissioner of Connecticut for any
change in control of the Company or WCCT.  Prior approval would be
required for any person to acquire the power to vote 10% or more
of the combined voting power of the Class A Common Stock and
Common Stock of the Company.  Under New York law, transactions
between a holding company and a controlled HMO must be fair and
equitable.  Any transaction that involves five percent or more of
WCNY's assets requires prior approval.

     Hospital charges in Connecticut are based on a per diem per
patient system rather than a DRG system.  Eligible HMOs are
permitted to directly negotiate for a different rate and method of
reimbursement with a Connecticut hospital.

     WellCare's TPA services and PPO (in New York State)
currently are not subject to state regulation, but there can be no
assurance that this status will continue.  Connecticut regulations
require PPOs to make certain notification filings.

RECENT NEW YORK STATE LEGISLATION

     New York enacted the Health Care Reform Act of 1996 (the
"Act").  Effective January 1, 1997, the Act, for the first time,
allows all private health care payors to negotiate payment rates
for inpatient hospital services.  Previously, only HMOs could
negotiate rates for these services.  While non-HMO payors who
compete with WCNY may pay negotiated hospital rates beginning in
1997, WCNY expects to have competitive arrangements with hospitals
in its network.  Also, effective January 1, 1997, WCNY will begin
making payments to state-administered funding pools to finance
hospital bad debt and charity care, graduate medical education and
other state programs under the Act.  Previously, bad debt and
charity care and graduate medical education were financed by
surcharges on payments to hospitals for inpatient services. 
Pursuant to the Act, WCNY is in the process of negotiating
adjustments to rates paid to network hospitals in New York to
reflect elimination of these surcharges.  There can be no
assurance that WCNY will reach agreement on these adjustments with
all contracted hospitals in New York.

     The New York legislature also recently passed legislation
related to the operation of managed care plans, which contains
provisions relating to, among other things, utilization review,
consumer disclosure and right of hearing on termination of
physicians from health plan networks.

     Medicaid Managed Care legislation was also enacted in 1996
authorizing New York State, pursuant to federal waiver, to require
most Medicaid recipients to enroll in managed care plans to
receive medical services.  The measure also provides these
recipients enrollment safeguards, a grievance resolution process
and a quality assurance program.  The legislation, in addition,
includes provisions regarding providing care to individuals with
special needs.

     Early in 1996, a minimum hospital stay for mothers and
babies (48 hours for uncomplicated vaginal deliveries and 96 hours
for cesarean deliveries) was enacted in New York State followed by
enactment of similar legislation on the federal level.

     In 1996, legislation enabling fully-licensed HMOs to appoint
insurance agents to directly solicit their products to consumers
was enacted.

     Legislation is pending which would require insurance
coverage for a length of hospital care to be determined by an
attending physician and patient following a mastectomy, a second
medical opinion for all cancers and complete breast reconstructive
surgery following a mastectomy.  The measure is likely to be
enacted in New York State early in 1997.  A similar bill is being
proposed on the federal level.

RECENT CONNECTICUT STATE LEGISLATION

     There is current legislation in Connecticut to treat mental
illness and addiction in the same way as physical illnesses are
treated, allow patients to appeal to an independent panel of
doctors if care they or their physician thinks they need is denied
by the health plan, hold health plans legally responsible for
injuries suffered because of hospital admission or a longer
hospital stay is denied by the plan, and require each health plan
to spend at least 85 cents of every premium dollar on patient
care.

FEDERAL REGULATION

     The WellCare HMOs are not federally qualified and neither
they nor WellCare's managed health care operations currently are
subject to federal regulation other than those operations relating
to Medicaid and Medicare products and as otherwise described
below.

     WCNY's Full Risk Medicare product is subject to regulation
by HCFA, a branch of the United States Department of Health and
Human Services.  A qualification for a Full Risk Medicare contract
is that not more than 50% of the HMO's enrollees be Medicare
beneficiaries or Medicaid recipients (as of March 1997, there is a
federal proposal to eliminate this regulatory requirement). 
Regulations also cover, among other things, quality of care,
limitations on enrollment and compliance with requirements
established by peer review organizations contracting with HCFA.

     WCNY's Medicaid contracts are subject to both federal and
state regulation regarding services to be provided to Medicaid
enrollees, payment for those services and other aspects of the
Medicaid program.

     In 1997, there are a number of proposals under consideration
by both state and federal officials to reduce payments for
Medicaid and Medicare enrollees in managed care, which may have a
material effect on the Company's expansion program.

RECENT FEDERAL LEGISLATION

     The recently enacted Federal Health Insurance Portability
and Accountability Act of 1996 (the "Act"), (i) insures
portability of health insurance to individuals changing jobs or
moving to individual coverage by limiting application of
preexisting condition exclusions, (ii) guarantees available health
insurance to employees in the small group market, and (iii)
prevents exclusion of individuals from coverage under group plans
based on health status.  The provisions are effective beginning
July 1, 1997.  The Company is currently subject to similar state
law provisions in New York limiting preexisting condition
exclusions for new group and individual enrollees who had
continued prior coverage and requiring issuance of group coverage
to small group employers.  The Act also permits offering Medical
Savings Account plans on a pilot basis and includes programs
targeting fraud and abuse.  Recently enacted federal legislation
mandates coverage for minimum hospital stays after childbirth
(consistent with many new state law requirements) and parity in
applying lifetime limits to mental health benefits.

ITEM 2.   PROPERTIES

     WellCare's executive offices are located in two adjacent
buildings, at Hurley Avenue Extension, Kingston, New York, which
provide approximately 38,600 square feet of office space.  The
Company also owns four other buildings that were purchased through
its wholly-owned subsidiary, WellCare Development, Inc. in 1994. 
Three of the buildings are located in Kingston and provide
approximately 40,200 square feet of office space utilized by the
Company's communication, information and member service divisions. 
The fourth building is located in Saugerties, New York and
provides approximately 10,000 square feet of office suites that
are leased to two health care providers and a laboratory at annual
rental incomes of approximately $111,500, $31,600 and $9,200,
respectively.

     In addition to the buildings owned, the Company leases
approximately 14,100 square feet in Newburgh, New York, 3,100
square feet in Albany, New York, 750 square feet in Nyack, New
York, 1,250 square feet in Binghamton, New York, 2,100 square 
feet in Kingston, New York and 10,000 square feet in New York, New
York, at an annual expenses of approximately $380,000, $50,000,
$43,500, $15,200, $32,600 and $183,800, respectively.  In turn,
the Company subleases roughly 4,100 square feet in Newburgh, New
York and the 2,100 square feet in Kingston, New York, to health
care providers at annual rental incomes of approximately $109,900
and $32,600, respectively.

     In 1996, the Company leased 5,000 square feet of office
space in North Haven, Connecticut, at an annual rental expense of
approximately $67,200 for WellCare of Connecticut, Inc., a wholly-owned
subsidiary.  In addition, between April and September of
1996, the Company leased additional space in New York City at a
cost of $104,300.

ITEM 3.   LEGAL PROCEEDINGS

CLASS ACTION LITIGATION

     Between April 1, 1996 and June 6, 1996, the Company, its
Vice President of Finance and Chief Financial Officer and the
Company's former President and Chief Executive Officer, were named
as defendants in twelve separate actions filed in Federal Court
(the "Securities Litigations").  An additional three directors
were also named in one of these actions.  Plaintiffs sought to
recover damages allegedly caused by the Company's defendants'
violations of federal securities laws with regard to the
preparation and dissemination to the investing public of false and
misleading information concerning the Company's financial
condition.

     On July 3, 1996, the Securities Litigations were
consolidated in the United States District Court for the Northern
District of New York, and an amended consolidated complaint was
served on August 21, 1996, which complaint did not name the three
additional directors.  The Company's auditor, however, was named
as an additional defendant.  On October 23, 1996, the Company
filed a motion to dismiss the consolidated amended complaint
against the Company as well as the individual defendants.  The
Company's auditor has likewise filed its own motion to dismiss. 
Prior to the filing of the motion, discovery had not yet begun and
pursuant to the Private Securities Litigation Reform Act, all
discovery is necessarily stayed pending the disposition of the
motion.  Although management is unable to predict the likelihood
of success on the merits of the consolidated class action, it has
instructed its counsel to vigorously defend its interests.  The
Company has insurance in effect which may, at least in part,
offset any costs to be incurred in these litigations.  A decision
on the motion to dismiss is expected sometime during 1997.

<PAGE>
SECURITIES AND EXCHANGE COMMISSION INVESTIGATION

     On August 2, 1996, the Company announced that the Securities
and Exchange Commission ("SEC") had issued a Formal Order of
Private Investigation of the Company.  The Formal Order enables
the SEC to utilize its subpoena powers to obtain relevant
information from third parties as well as the Company.  In its
letter to the Company, the SEC stated that this investigation is
confidential and should not be construed as an indication by the
Commission or its staff that any violations of the federal
securities laws have occurred.  The Company has been, and intends
to continue, complying and cooperating fully with all requests
from the SEC.  The Company is not aware of any unlawful conduct
with respect to these matters.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

<PAGE>
                        PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND
          RELATED STOCKHOLDER MATTERS

     The Company's Common Stock is traded on The Nasdaq Stock
Market, Inc. ("Nasdaq") under the symbol "WELL".  The following
table sets forth the closing high and low sale prices for the
Common Stock for each quarter of the last two calendar years. 
There is no trading market for the Company's Class A Common Stock.

                              HIGH      LOW

1996

First Quarter                 $ 29      $ 15

Second Quarter                  18 3/4     7 3/4

Third Quarter                   12 1/4     7 1/2

Fourth Quarter                  11 3/4     7 1/4 

1995

First Quarter                   38        24

Second Quarter                  37        19 7/8

Third Quarter                   24 3/4    19

Fourth Quarter                  26        20 1/4

     On March 3, 1997, there were approximately 221 and 23 
holders of record of the Company's Common Stock and Class A Common
Stock, respectively, which did not include beneficial owners of
shares registered in nominee or street name.

     On February 8, 1996, the Company issued 200 shares of the
Company's Common Stock valued at $5,300, as a bonus to an employee
of the Company.

     WellCare has not paid cash dividends on its capital stock
and does not anticipate paying any cash dividends on its Common
Stock or Class A Common Stock in the foreseeable future (See
"Business - Government Regulation" for restrictions on the payment
of dividends by the WellCare HMOs, wholly-owned subsidiaries of
the Company).

ITEM 6.   SELECTED CONSOLIDATED FINANCIAL DATA

     The following selected financial data have been derived from
the Company's audited consolidated financial statements and should
be read in conjunction with the consolidated financial statements, 
related notes and other financial information included elsewhere 
herein.

<PAGE>
Statement of Operations Data:
(in thousands, except per share data)

<TABLE>
<CAPTION>
                                  Years Ended December 31,
                                                                     
                            1996       1995      1994      1993(1)     1992
                                                              
<S>                         <C>        <C>       <C>       <C>         <C>
Revenue:
 Premiums earned          $157,156     $144,518  $120,411  $72,905   $38,692
 Interest and other income   4,095        8,349     2,171    3,417     2,880
                                                                             

Total revenue             $161,251     $152,867  $122,582  $76,322   $41,572
                                                                             
Expenses:
 Medical expenses          135,957      115,560    98,411   58,471    31,587
 General and administrative
   expenses                 39,334       30,279    15,599    9,641     6,168
 Depreciation and
   amortization expenses     3,254        2,292     1,611      761       549
 Interest and other expenses 2,526        1,947     1,099    1,331       906
                                                                             

Total expenses             181,071      150,078   116,720   70,204    39,210
                                                                             

(Loss)/income before
 income taxes, extraordinary
 credit and cumulative
 effect of a change in
 accounting principle      (19,820)       2,789     5,862    6,118     2,362
(Benefit)/provision for
 income taxes               (8,038)       1,116     2,403    2,533     1,010
                                                                             

(Loss)/income before
 extraordinary credit and
 cumulative effect of a
 change in accounting
 principle                 (11,782)       1,673     3,459    3,585     1,352
Extraordinary credit:
 Utilization of tax loss
 carry forward                   -            -        -        -        863
Cumulative effect of a change
 in accounting principle:
 Accounting for income taxes     -            -        -     1,063         -
                                                                             

Net (Loss)/income         $(11,782)    $  1,673   $ 3,459  $ 4,648   $ 2,215

                                                                             
<PAGE>
                                   Years Ended December 31,
                                                                     
                            1996        1995       1994     1993(1)   1992
                                                              

(Loss)/earnings per share:
 (Loss)/income before
   extraordinary credit and
   cumulative effect of a
   change in accounting
   principle              $(1.87)      $0.27       $0.56    $0.72    $0.32
 Extraordinary credit          -          -            -       -      0.20
 Cumulative effect of a
   change in accounting
   principle                   -          -            -     0.21       -
                                                               

Net (Loss)/income         $(1.87)      $0.27       $0.56    $0.93    $0.52
                                                               

Weighted average shares
 outstanding               6,296       6,250       6,226    5,022     4,257

                        

Balance Sheet Data:
(in thousands)                          December 31,
                                       
                                 1996 1995 1994 1993 1992
                                                              

Working capital/(deficiency)$11,172 $12,733 $ 4,776  $ 9,582 $(4,873)
Total assets                 71,340   72,011  57,793  49,947  16,299
Long-term debt               26,467   19,209   6,336   5,982   5,152
Total liabilities            51,066   40,207  28,486  23,850  15,862
Shareholders' equity(2)      20,274   31,804  29,307  26,097     400
                        
(1) During 1993, the Company acquired Mid-Hudson Health Plan, Inc.
(2) In 1992, after deducting minority interest in subsidiary.

</TABLE>


ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
          CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis should be read in
conjunction with the Consolidated Financial Statements and Notes
thereto included elsewhere herein.

GENERAL OVERVIEW

     WellCare's principal source of revenue is premiums earned
from the WellCare HMOs, while interest and other income consists
of management and administrative fees, interest and investment
income, reimbursements from certain third-party insurers,
contributions, rental income and miscellaneous service income. 
Premium revenues represent in excess of 94% of the Company's total
revenue for each of the years ended December 31, 1996, 1995 and
1994, and have grown substantially since the Company's inception
as a result of increases in both HMO membership and premium rates.

     Medical expenses consist of the hospital charges, physician
fees and related health care costs for its members.  Medical
expenses also include estimates of medical expenses incurred but
not yet reported ("IBNR") to the Company, based on a number of
factors, including hospital admission data and prior claims
experience; adjustments, if necessary, are made to medical
expenses in the period the actual claims costs are ultimately
determined.  The Company believe the IBNR estimates in the
Consolidated Financial Statements are adequate; however, there can
be no assurance that actual health care claims costs will not
exceed such estimates.

     The Company seeks to control medical expenses through
capitation arrangements with the Alliances and with non-Alliance
primary care physicians, capitation arrangements with certain
specialty providers, and through its quality improvement programs,
utilization management and review of hospital inpatient and
outpatient services, and educational programs on effective managed
care for its providers.

     Effective October 1, 1994, WCNY changed its capitation
arrangements with the majority of its providers from capitating
primary care physicians with attendant risk-sharing to capitating
the Alliances comprised of the specialists and previously-capitated primary
care physicians.  The Alliances have operated at
a deficit since inception but have recently instituted measures
designed to reduce these deficits and achieve profitability.  The
Alliance could request additional funding beyond the contractual
increases described in Notes 1a and 17a of "Notes to Consolidated
Financial Statements", from the Company, which management does not
believe should be required and, if requested by the Alliances,
does not intend to provide.  (On March 13, 1997, the Alliances
received a $1.0 million cash infusion and a commitment for up to
an additional $3.0 million cash infusion from an unrelated third-party.)  

     In an effort to improve profitability of the Company and the
Alliances, effective September 1, 1996, WCNY entered into a letter
of understanding with the Alliances to restructure the capitation
arrangements.  WCNY reassumed risk for certain previously
capitated services, with a corresponding reduction in rates.  At
December 31, 1996, WCNY capitated the Alliances for all physician
services, both primary care and specialty services, on a PMPM
basis for each HMO member associated with an Alliance except for
physician services for certain diagnostics and mental health,
which are capitated through regional integrated delivery systems. 
This restructuring had a minimal impact on medical expenses in
1996, but is expected to result in savings for the Company in
future periods.  (See Note 1a and 17a of "Notes to Consolidated
Financial Statements").

     Certain statements in the Form 10-K are forward-looking
statements and are not based on historical facts but are
management's projections or best estimates.  Actual results may
differ from these projections due to risks and uncertainties. 
These risks and uncertainties include a variety of factors.  The
Company's results of operations depend in large part on accurately
predicting and effectively managing medical costs and other
operating expenses.  A variety of factors, including competition,
changes in health care practices, changes in federal or state laws
and regulations or the interpretations thereof, inflation,
provider contract changes, new technologies, government-imposed
surcharges, taxes or assessments, reductions in provider payments
by governmental payors (including Medicare, whereby such
reductions may cause providers to seek high payments from private
payor), major epidemics, disasters and numerous other factors
affecting the delivery and cost of health care, such as major
health care providers' inability to maintain their operations and
reduce or eliminate their accumulated deficits, may in the future
affect the Company's ability to control its medical costs and
other operating expenses.  Governmental action (including downward
adjustments to premium rates requested by the Company, which could
result in adjusted rates lower than premium rates then in effect)
or business conditions (including intensification of competition
and the other factors described above) could result in premium
revenues not increasing to thus offset any increases in medical
costs and other operating expenses.  Once set, premiums are
generally fixed for one year periods and, accordingly,
unanticipated costs during such periods cannot be recovered
through higher premiums.  The expiration, suspension or
termination of contracts to provide health coverage for
governmental entities or other significant customers would also
negatively impact the Company.  Due to these factors and risks, no
assurance can be given with respect to the Company's premium
levels or its ability to control its medical costs.

     Legislative and regulatory proposals have been made at the
federal and state government levels related to the health care
system, including but not limited to limitations on managed care
organizations (including benefit mandates) and reform of the
Medicare and Medicaid programs.  Such legislative or regulatory
action could have the effect of reducing the premiums paid to the
Company by governmental programs or increasing the Company's
medical costs.  Specifically, pending federal budgetary action
could reduce the premiums payable to the Company under the
Medicare program as compared to previously announced levels; other
pending legislation could have the result of reducing the premiums
payable to the Company under state Medicaid programs.  The Company
is unable to predict the specific content of any legislation,
action or regulation that may be enacted or when any such
legislation or regulation will be adopted.  Therefore, the Company
cannot predict the effect of such legislation, action or
regulation on the Company's business.

<PAGE>
RESULTS OF OPERATIONS

     The following table provides certain statement of operations
data expressed as a percentage of total revenue and other
statistical data for the years indicated:

                                YEAR ENDED DECEMBER 31, 
                               1996    1995     1994
                                                     
Statement of Operations Data:

Revenue:
  Premiums earned              97.5%   94.5%    98.2%
  Interest and other income     2.5     5.5      1.8 
                                                     
     Total revenue            100.0   100.0    100.0

Expenses:
  Hospital services            23.1    20.0     19.2
  Physician services           59.5    51.1     53.6
  Other medical services        1.7     4.5      7.5 
                                                     
     Total medical expenses    84.3    75.6     80.3
  General and administrative   24.4    19.8     12.7
  Depreciation and amortization         2.0      1.5     1.3
  Interest and other expenses   1.6     1.3      0.9 
                                                       
     Total expenses           112.3    98.2     95.2

(Loss)/income before income taxes   (12.3)       1.8     4.8
(Benefit)/provision for
  income taxes                 (5.0)    0.7      2.0 
                                                     

Net (loss)/income              (7.3)%   1.1%     2.8%
                                                    
Statistical Data:
 HMO member months enrollment   1,077,774  1,046,559   918,542
 Medical loss ratio(1)         86.5%   80.0%    81.7%
 General and administrative
  ratio(2)                     24.4%   19.8%    12.7%
                                 
(1)  Medical expenses as a percentage of premiums earned; reflects the
     combined rates for commercial, Medicaid, Full Risk Medicare and Medicare
     supplemental members.

(2)  General and administrative expenses as a percentage of total revenue.


YEAR ENDED DECEMBER 31, 1996
COMPARED TO YEAR ENDED DECEMBER 31, 1995

     Premiums earned in 1996 increased 8.7%, or $12.7 million, to
$157.2 million from $144.5 million in 1995. This increase was 
attributable to premiums generated from WCNY's Medicare Risk
contract, a new product line started in October 1, 1995, of $12.0
million; a net increase in Medicaid premiums of $6.0 million
(principally due to an increase in member months); offset by a
$5.3 million reduction in commercial premiums reflecting reduced
membership.  The decline in commercial membership is substantially
attributable to WellCare's more stringent application of its
credit standards, pursuant to which contracts for non-paying or
slow-paying groups were canceled or not renewed, as well as to
customers' adverse reaction to the negative publicity received by
the Company related to the restatement of its 1994 financial
results.  Although Medicaid members months increased, there was a
decrease in actual Medicaid membership at December 31, 1996 from
December 31, 1995.  The decline in Medicaid membership is
attributable to the ban on direct enrollment of Medicaid eligibles
by any managed care plans from August 1, 1995 through August 1,
1996 in New York City, thereby not offsetting normal Medicaid
disenrollments or permitting growth in enrollment during that
period, as well as a statewide decrease in the number of
individuals eligible for Medicaid which has caused a decrease in
the total number of Medicaid eligibles in all managed care
organizations.  Total member months increased 3% in 1996 to
1,077,774.

     Interest and other income decreased 51.0%, or $8.3 million,
to $4.1 million in 1996 due to decreases in WellCare University
revenues, management fees, third-party and insurance
reimbursements.

     Medical expenses increased 17.7%, or $20.4 million, to
$136.0 million in 1996 representing a 14.2% increase on a per
member per month basis, and increased as a percentage of premiums
earned (the "medical loss ratio") from 80.0% in 1995 to 86.5% in
1996.  The increase in the medical loss ratio is due, in large
part, to the Company agreeing to record a one-time additional
liability in the second quarter of 1996 of approximately $3.7
million resulting from assuming the cost of hospital inpatient
care for members, the cost of which had previously been assumed by
the Alliances and to the recording of medical expenses of
approximately $2.9 million relating to unpaid claims for the
period prior to October 1, 1994 (classified as physician
services).  Both of the aforementioned medical expenses were
recorded by WCNY at the instruction of the New York State
Insurance Department ("NYSID").  Both of these changes represent
obligations which had previously been assumed by the Alliances and
for which the Company had no contractual obligation to pay.  A
percentage of the increase in medical expenses is also due to a
restructuring of the contractual capitation arrangements with the
Alliances.  As a result of a prior period restatements, medical
expenses in 1996 were reduced approximately $2,423,000 (See Note
2a of "Notes to Consolidated Financial Statements).

     In the absence of the aforementioned changes, medical
expenses would have been $129.4 million and the medical loss ratio
would have been 82.3%.

     General and administrative ("G&A") expenses increased 29.9%,
or $9.1 million, to $39.3 million in 1996, and increased as a
percentage of total revenue from 19.8% in 1995 to 24.4% in 1996. 
The increase in G&A expenses resulted primarily from increased
salaries and benefits of approximately $2.5 million for severance
payments, addition of senior management at higher annual
compensation levels, and service and product line expansion, an
increase of approximately $2.4 million in reserves established for
trade accounts receivables and notes and other receivables
(including valuation reserves relating to obligations of the buyer
of the assets of WellCare Medical Management, Inc. (See Note 4 of
"Notes to Consolidated Financial Statements")), an increase of
approximately $2.3 million in unusual legal costs and other
professional and outside services specifically relating to the
class action litigation, and an increase of $1.5 million related
to marketing and consulting costs.

     Depreciation and amortization increased by approximately
$962,000 to $3.3 million in 1996 as a result of amortization of
preoperational costs associated with service area and product line
expansions.


YEAR ENDED DECEMBER 31, 1995 
COMPARED TO YEAR ENDED DECEMBER 31, 1994        

     Premiums earned in 1995 increased 20.0%, or $24.1 million,
to $144.5 million from $120.4 million in 1994, attributable to
increases in HMO membership and in premium rates.  Total member
months increased 13.9% in 1995 to 1,046,559, accounting for $16.9
million of the increase in premiums earned.  Premium rates
increased 6.4% and .7% for commercial and Medicaid members,
respectively, and including the premium rates earned for Full Risk
Medicare members, resulted in a 5.4% total weighted average
increase and accounted for the $7.2 million balance of the
increase in premiums earned.

     Interest and other income increased 284.6%, or $6.2 million,
to $8.3 million in 1995 due to increases in WellCare University
revenues, management fees, insurance reimbursements and rental
income.

     Medical expenses increased 17.4%, or $17.1 million, to
$115.6 million in 1995 representing a 3.1% increase on a per
member per month basis, but decreased as a percentage of premiums
earned (the "medical loss ratio") from 81.7% in 1994 to 80.0% in
1995.  The decrease in the medical loss ratio resulted, in part,
from a 5.4% weighted average increase in premium rates.  As a
result of a prior period restatement, medical expenses in 1994
were increased $4.7 million with a corresponding reduction to
medical expenses in 1995 in the amount of $1.7 million.

     General and administrative ("G&A") expenses increased 94.1%,
or $14.7 million, to $30.3 million in 1995, and increased as a
percentage of total revenue from 12.7% in 1994 to 19.8% in 1995. 
The increase in G&A expenses resulted primarily from the reserve
established for the note and other receivables due from the buyer
of WellCare Medical Management, Inc. (See Note 4 of "Notes to
Consolidated Financial Statements"), increased staffing related to
service area and product line expansion, non-payroll (contracted)
services, marketing and tele-communications related activities,
and an increase in the doubtful account reserve for trade accounts
receivable.

     Depreciation and amortization increased by approximately
$700,000 to $2.3 million in 1995 as a result of amortization of
preoperational costs associated with service area and product line
expansion.

LIQUIDITY AND CAPITAL RESOURCES

     On January 19, 1996, the Company completed a private
placement of a subordinated convertible note in the principal
amount of $20,000,000 (the "Note") due December 31, 2002, with The
1818 Fund II, L.P., a private equity fund managed by Brown
Brothers Harriman & Co.  The Company had utilized a part of the
net proceeds of this private placement to retire a portion of its 
debt. The Note, which was amended on February 28, 1997, is
convertible into shares of WellCare Common Stock.  Prior to the
amendment, the Note accrued interest at 6.0% per annum, and
currently, the Note accrues interest at 5.5% per annum.  The
conversion price is equal to 115% of the average of the market
price of WellCare Common Stock during the period from August 4,
1996 through February 28, 1997, subject to adjustment for certain
dilutive events with a floor of $9 per share and a ceiling of $15
per share.  Mr. Walter W. Grist, a Senior Manager of Brown
Brothers Harriman & Co. has been added to The WellCare Management
Group, Inc. Board of Directors (See Note 11 of "Notes to
Consolidated Financial Statements" and See "Certain Relationships
and Related Transactions").

     The Company's requirements for working capital are
principally for funding geographic and product expansion for HMO
operations, maintaining necessary regulatory reserves, potential
acquisitions and strategic partnerships and marketing and product
expansion of other managed care operations.

     Net cash used by operating activities was approximately $4.1
million in 1996 compared to $9.3 million in 1995.  The use of cash
in 1996 is principally to fund the cash operating loss of $10.3
million, reduced by the cash provided from the $3.5 million
increase in medical costs and accounts payable, and the $5.2
million decrease in accounts receivable less the $5 million
increase in taxes receivable.  The decrease in accounts receivable
is the result of WellCare's focus on collecting premiums timely. 
Medical costs payable increased principally because the Company
reassumed in 1996 the responsibility of certain medical services
previously contracted to the Alliances (See Notes 1a and 17a of
"Notes to Consolidated Financial Statements").  The increase in
tax  receivables reflects the income tax refund which will result
from  carrying back the current year's tax operating loss against
prior years' income.  Cash used for capital expenditures in 1996
was approximately $.5 million used primarily for expanding and
upgrading the Company's information systems.

     New York State certified HMOs are required to maintain a
cash reserve equal to the greater of 5% of expected annual medical
costs or $100,000.  Additionally, WCNY is required to maintain a
contingent reserve which must be increased annually by an amount
equal to at least 1% of premiums earned limited, in total, to a
maximum of 5% of premiums earned for the most recent calendar year
and which may be offset by the cash reserve.  The cash reserve is
calculated at December 31 of each year and is maintained
throughout the following calendar year.  At December 31, 1996,
WellCare had required cash reserves of $6.7 million and a
contingent reserve of $5.9 million which was fully offset by the
cash reserve.  In the event the contingent reserve exceeds the
required cash reserve, the excess of the contingent reserve over
the required cash reserve would be required to be maintained.

     At December 31, 1996, the Company had working capital of
$11.2 million, excluding the $6.7 million cash reserve required by
New York State which is classified as a non-current asset,
compared to working capital of $12.7 million, excluding the $8.2 
million cash reserve, at December 31, 1995; the decrease in
working capital was attributable primarily to the increase in
medical costs payable resulting from WellCare reassuming the risk
for certain services previously contracted (through capitation) to
the Alliances.  The Company believes that cash on hand, cash
generated from operations and available borrowing will be
sufficient to meet the Company's capital requirements for in
excess of twelve months.

     On January 31, 1997, the Company executed a renegotiated
$6.0 million line-of-credit with Key Bank of New York. The line
expires on May 31, 1998.  The Company repaid the outstanding
amount ($3.1 million) on the previous line-of-credit in December
1996.  At December 31, 1996, the Company was in technical default
of certain financial covenants.  Key Bank has granted the Company
a waiver of these financial covenants for the period ended
December 31, 1996 and as of that date, there were no borrowings
outstanding on the line-of-credit (See Note 10 of "Notes to
Consolidated Financial Statements").   

     At December 31, 1996, the Company has total mortgage
indebtedness of $6.2 million outstanding on four of its office
buildings, of which approximately $780,000 is due February 1,
1999, approximately $4.3 million is due on January 1, 2000,
approximately $795,000 is due on March 1, 2000 and approximately
$325,000 is due on March 1, 2001.

     Between April 1, 1996 and June 6, 1996, the Company, its
Vice President of Finance and Chief Financial Officer and the
Company's former President and Chief Executive Officer, were named
as defendants in twelve separate actions filed in Federal Court
(the "Securities Litigations").  An additional three directors
were also named in one of these actions.  Plaintiffs sought to
recover damages allegedly caused by the Company's defendants'
violations of federal securities laws with regard to the
preparation and dissemination to the investing public of false and
misleading information concerning the Company's financial
condition.

     On July 3, 1996, the Securities Litigations were
consolidated in the United States District Court for the Northern
District of New York, and an amended consolidated complaint was
served on August 21, 1996, which complaint did not name the three
additional directors.  The Company's auditor, however, was named
as an additional defendant.  On October 23, 1996, the Company
filed a motion to dismiss the consolidated amended complaint
against the Company as well as the individual defendants.  The
Company's auditor has likewise filed its own motion to dismiss. 
Prior to the filing of the motion, discovery had not yet begun and
pursuant to the Private Securities Litigation Reform Act, all
discovery is necessarily stayed pending the disposition of the
motion.  Although management is unable to predict the likelihood
of success on the merits of the consolidated class action, it has
instructed its counsel to vigorously defend its interests.  The
Company has insurance in effect which may, at least in part,
offset any costs to be incurred in these litigations.  A decision
on the motion to dismiss is expected sometime during 1997.

SALE OF WELLCARE MEDICAL MANAGEMENT, INC.

     In June 1995, the Company contributed approximately $5.1
million to its then wholly-owned subsidiary, WellCare Medical
Management, Inc. ("WCMM") which was engaged in managing physician
practices, and then sold the assets of WCMM for cash of $.6
million and a note receivable of $5.1 million.  The Buyer was
newly formed to acquire WCMM and, as of March 1, 1997,
approximately 11% of the Buyer's equity was directly or indirectly
held by current or former directors, officers or employees of
WellCare.  The Buyer is in the business of managing medical
practices and providing related consultative services.  The Buyer
has entered into agreements to manage the Alliances (See Notes 1a
and 17a of "Notes to Consolidated Financial Statements"). The
Company also had received a five-year option to acquire the buyer
(the "Buyer") at any time on a formula price based on the Buyer's
results of operations.  This option was canceled in 1996.  A gain
of approximately $144,000 was not recognized in 1995, pending the
repayment of the note.  The note receivable bears interest at a
rate equal to prime plus 2% (10.25% at December 31, 1996) with
interest payable monthly through July 31, 1996 and, thereafter,
principal and interest monthly through July 31, 2000.  The Buyer
is in default on the note and has not paid accrued interest of $.5
million at December 31, 1996.

     Subsequently, the Company advanced $2.8 million to the Buyer
($2.1 million in 1996 and $.7 million in 1995) for operating
expenses, which obligation is documented at December 31, 1996, by
a note of $215,000, receivables of $2.1 million and interest
receivable of $.5 million.  The note for $215,000 bears interest
at a rate equal to prime plus 2% (10.25% at December 31, 1996) and
matured December 31, 1996.  No payments have been made against
this note.

     In view of the Buyer's operating losses and advances to the
Alliances, the Company has obtained from certain of the Buyer's
equity holders personal guarantees of the original note and
pledges of collateral to secure these guarantees.  Nevertheless,
in view of the Buyer's financial condition and difficulties
inherent in the collection of personal guarantees and realization
of collateral, and the Buyer's default on the payments of the
notes, the Company fully reserved in 1995 the original $5.1
million note receivable, plus the $.7 million advanced in 1995. 
In 1996, the Company established a net reserve of $1.9 million for
the additional note, interest accrued on the notes, and advances
receivable, net of the deferred gain on the original sale.

     On February 19, 1997, the Buyer executed a promissory note
in the amount of $2.1 million, evidencing the $2.1 million payable
to WellCare.  The note bears interest at the rate of prime plus 2%
(10.25% at December 31, 1996), with repayment of the principal
over 36 months, starting upon the occurrence of certain events
explained below.  Subsequently, on February 26, 1997, the Buyer
entered into an Option Agreement with a potential investor (the
"Investor"), whereby the Investor agreed to lend the Buyer
$4,000,000 and received an option to merge with the Buyer,
exercisable during the period from March 15, 1998 through March
15, 1999.  Concurrently, WellCare entered into an agreement with
the Buyer whereby WellCare agreed to forbear on the collection of
principal and interest on the note for $5.1 million, and on the
collection of principal of the $2.1 million note, in exchange for
the right to convert the $5.1 million note into 43% of the Common
Stock of the company resulting from the merger of the Investor and
the Buyer.  In the event the Investor merges with the Buyer, the
$2.1 million note would be payable immediately.  At the earlier of 
the Buyer relinquishing its option to merge, or March 14, 1999,
the forbearance will be rescinded and the  original payment terms
of the $5.1 million note reinstated.  The Buyer would continue to
pay monthly interest on the $2.1 million note, with principal
payments over a thirty-six month period to commence upon
rescission of the forbearance.  The notes are subordinated to the
Investor's and Key Bank's security interests.

INFLATION

     Medical costs have been rising at a higher rate than that
for consumer goods as a whole.  The Company believes its premium
increases, capitation arrangements and other cost control measures
mitigate, but do not wholly offset, the effects of medical cost
inflation on its operations and its inability to increase premiums
could negatively impact the Company's future earnings.

<PAGE>
ACCOUNTING CHANGES

     The Company adopted Statements of Financial Accounting
Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") and SFAS No. 121 "Accounting for
Impairment of Long-Lived Assets to be Disposed Of ("SFAS 121"),
which became effective for fiscal years beginning after December
15, 1995.  The adoption of SFAS 123 and SFAS 121 did not have an
impact on the Company's consolidated financial position or results
of operations.

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

     See Index to Financial Statements and Schedules elsewhere
herein.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
          ON ACCOUNTING AND FINANCIAL DISCLOSURE

     Not Applicable.


<PAGE>
                        PART III


ITEM 10.  EXECUTIVE OFFICERS AND DIRECTORS

     The executive officers and directors of the Company are as
follows:


Name                     Age  Position

Robert W. Morey, Jr.     60   Chairman of the Board and
                              Chief Executive Officer (1)
Mark D. Dean, D.D.S.     56   Vice Chairman of the Board(2)(3)   
Joseph R. Papa           53   President and Chief Operating
                              Officer   
G. William Strein        53   President of Agente Benefit
                              Consultants, Inc. and Director
Marystephanie Corsones   47   Vice President of Finance,
                              Chief Financial Officer, 
                              Treasurer and Director 
                             (through April 1, 1997)         
Howard Lorch             45   Vice President of Finance
                              (effective April 2, 1997)
John E. Ott, M.D.        60   Executive Vice President 
                              and Director (1)
Douglas A. Hayward       46   Executive Vice President;
                              President and Chief Executive Officer of
                              WellCare of Connecticut, Inc.
Charles E. Crew, Jr.     44   Director (2)(3)
Walter W. Grist          56   Director
Lawrence C. Tucker       54   Director (2)(3)
Edward A. Ullmann        45   Director
Eileen H. Wilson         51   Director    
Daniel M. Zeichner, M.D. 49   Director

(1) Member, Executive Committee
(2) Member, Audit Committee
(3) Member, Compensation Committee                                 

     ROBERT W. MOREY, JR., has been Chairman of the Board and
Chief Executive Officer of the Company since April 30, 1996. 
Since 1972, Mr. Morey has served as President and Chairman of R.W.
Morey, Inc., a management firm founded by Mr. Morey which is
engaged in, among other things, financial counseling and
reinsurance underwriting of catastrophic health coverage for the
managed care industry.  Mr. Morey was engaged in corporate
banking, investment banking and the institutional brokerage
business from 1962 to 1972.  Mr. Morey received a B.A. in
Economics from Yale University in 1958 and an M.B.A. from Harvard
Graduate School of Business in 1962.

     MARK D. DEAN, D.D.S., has been a director of the Company and
Vice Chairman of the Board since May 1984.  Dr. Dean has been a
dentist in private practice since 1966.

     JOSEPH R. PAPA, has been President and Chief Operating
Officer of the Company since September 1996.  Formerly, Mr. Papa
was President of Healthcare Resources International, Inc., a
managed care consulting company he founded.  From 1986 to 1989,
Mr. Papa was President and Chief Operating Officer of Healthways,
Inc., an individual practice association model health maintenance
organization licensed in the State of New Jersey and then a
wholly-owned subsidiary of Healthways Systems, Inc., a publicly-traded 
company that was sold to Aetna Life Insurance Company, a
wholly-owned subsidiary of Aetna Life and Casualty Company.  Mr.
Papa earned his C.P.A. after receiving a B.S. in Accounting at St.
Joseph's University in 1965.

     G. WILLIAM STREIN, joined the Company in 1985 as Vice
President of Planning and Development, and since 1989 has served
as President and Chief Executive Officer of Agente Benefit
Consultants, Inc. (formerly WellCare Administration, Inc.), a
wholly-owned subsidiary of the Company responsible for WellCare's
specialty benefit programs, new product development and quality
assurance.  Mr. Strein has been a director of the Company since
January 1989.  Mr. Strein received a B.S. in Pharmacy from the
University of Illinois in 1968, an M.S. in Pharmacy from the
University of Illinois in 1972, and an M.S.P.H. in Health
Administration from the University of North Carolina in 1979.

     MARYSTEPHANIE CORSONES, joined the Company as Finance
Director in July 1993, was appointed its Chief Financial Officer,
Vice President of Finance in May 1994 and was elected to the Board
in November 1994.  Effective April 1, 1997, Ms. Corsones will
resign from the Board and as an officer of the Company.  From
April 2, 1997 through May 23, 1997, Ms. Corsones will be employed
by the Company as Senior Advisor for Strategic Planning and for
one year thereafter act as a consultant to the Company on
strategic planning.  Ms. Corsones has more than ten years of
experience in international finance and taxation.  Prior to
joining WellCare, Ms. Corsones was senior director of U.S.
International Operations at Coopers & Lybrand in Paris, France.  
Ms. Corsones received an M.B.A. from the University of Washington.

     HOWARD LORCH, has been employed as Vice President since
February 24, 1997, and will become Chief Financial Officer of the
Company effective April 2, 1997.  For 22 years prior to joining
WellCare, Mr. Lorch was employed by Deloitte & Touche, LLP, having
served as a partner in taxation for the past 11 years, primarily
serving insurance company clients.  Mr. Lorch received a B.A. in
Economics from Yeshiva University in 1973 and an M.B.A. in Finance
and Accounting from Columbia University in 1975, and is a CPA.

     JOHN E. OTT, M.D., has been Executive Vice President of the
Company since June 1996 and a director since October 1995.  Dr.
Ott is the former Chief Executive Officer of The George Washington
University Health Plan, and from 1977 to 1996 was a Professor in
Health Care Sciences, Health Services Management and Policy and
Pediatrics at George Washington University, having retired in 1996
as Emeritus Professor.  He is a board certified in Pediatrics and
Medical Toxicology.  Dr. Ott received his B.S. and M.D. degrees at
the University of Pittsburgh, and completed a pediatric residency
and fellowship in clinical genetics and biophysics at the
University of Colorado Medical Center.

     DOUGLAS HAYWARD, joined the Company in May 1996 as Executive
Vice President and as President and Chief Executive Officer of
WellCare of Connecticut, Inc., the Company's wholly-owned
Connecticut HMO.  From 1987 to 1995, Mr. Hayward was the Chief
Executive Officer and President of M.D. Health Plan, , a
Connecticut HMO.  From 1982 to 1987, Mr. Hayward was the Executive
Vice President and Director of Finance and Administration of IPM
Health Plan, a California HMO.  Mr. Hayward received a B.A. degree
from the University of Michigan in 1973 and an M.S. degree in
Health Services Administration from the University of Michigan in
1976.  Mr. Hayward is a 1981 graduate of the National HMO
Management Fellowship Program, Georgetown University.

     CHARLES E. CREW, JR., has been a director of the Company
since September 1987.  Mr. Crew has been employed with General
Electric since 1977, having served in a number of sales and
marketing positions until 1987, when he was made General Manager
of Western Region Sales, and in 1990 he became Regional General
Manager of the Midwest Region.  In 1993, he served as General
Manager of Field Operations and in April of 1994 was made Vice
President of Commercial Operations for the Plastics Business.

     WALTER W. GRIST, has been a Director of the Company since
February 28, 1997.  For more than the past five years, Mr. Grist
has been a Senior Manager of Brown Brothers Harriman & Co., a
company engaged in providing financial advisory and merger and
acquisition related services, which is the general partner of The
1818 Fund II, L.P., a New York limited partnership which is the
holder of the 6% subordinated convertible note due December 21,
2002 in the principal amount of $20 million issued by the Company
(See "Item 13 - Certain Relationships and Related Transactions"). 
Mr. Grist serves on the Board of Directors of Government Property
Investors Inc. and Steri-Oss, Inc.  Mr. Grist graduated with a
B.S. degree in Business Administration from New York University in
1965.

     LAWRENCE C. TUCKER, has been a director of the Company since
January 1996.  For more than the past 25 years, Mr. Tucker as been
employed by Brown Brothers Harriman & Co., a company engaged in
providing financial advisory and merger and acquisition related
services, having served as general partner of that firm since
1979.  Brown Brothers Harriman & Co. is the general partner of The
1818 Fund II, L.P., a New York limited partnership which is the
holder of the 6% subordinated convertible note due December 31,
2002 in the principal amount of $20 million issued by the Company. 
(See "Item 13 - Certain Relationships and Related Transactions.")
Mr. Tucker also serves as director of WorldCom, Inc. and Riverwood
International Corporation.  Mr. Tucker received a B.S. degree in
Engineering from Georgia Institute of Technology in 1964 and an
M.B.A. from the Wharton School of the University of Pennsylvania
in 1966.

     EDWARD A. ULLMANN, the founder of the Company, had served on
the Board of Directors since inception in August 1983 and as its
Chairman and Chief Executive Officer from WellCare's inception
until April 30, 1996, and as President from WellCare's inception
until September 1996.  Since September 1996, Mr. Ullmann has been 
Chairman and Chief Executive Officer of Bienestar, Inc., a company
providing administrative services relating to preventative health
care to managed care organizations, including WellCare of New
York, Inc.  Mr. Ullmann acquired a 70% equity interest in
Bienestar from the Company, which had held such interest since
July 1996.  Mr. Ullmann received a B.S. from Albany College of
Pharmacy, Union University in 1973, an M.P.A. from the Maxwell
School at Syracuse University in 1979, and is a 1981 graduate of
the National HMO Management Fellowship Program, Georgetown
University.

     EILEEN H. WILSON, became a director of the Company in
September 1993.  For more than the past five years, Ms. Wilson has
been President of Eileen Wilson Associates, a Rochester, New York
consulting firm specializing in the managed care industry.  She
possesses a combined health insurance and managed care experience
of twenty-seven years, including having been employed as Vice
President of Marketing for several HMOs, including PruCare in
Memphis, Tennessee, Matthew Thornton Health Plan in New Hampshire, 
and Preferred Care, Rochester, New York.

     DANIEL M. ZEICHNER, M.D., has been a director of the Company
since May 1984.  Dr. Zeichner is a board certified plastic and
reconstructive surgeon and has been in private practice since
1982.

     All directors hold office until their successors are elected
and qualified.  The Board is divided into three classes.  As a
result of this classification of directors, one class of directors
is elected each year for a three-year term.  The terms of Messrs.
Dean and Zeichner and Ms. Wilson as Class I Directors expire at
the 1997 Annual Meeting of Shareholders.  The terms of Dr. Ott,
Mr. Tucker and Mr. Strein as Class II Directors expire at the 1998
Annual Meeting of Shareholders.  Mr. Grist, who filled a vacancy
created by the increase in the size of the Board to 11 members,
currently serves as an unclassified member.  At the 1997 Annual
Meeting of Shareholders, Mr. Grist is expected to be nominated to
be a member of the Class III Directors, serving a term to expire
at the 1999 Annual Meeting of Shareholders.

     On January 19, 1996, the Company entered into a Note
Purchase Agreement (the "Agreement") for the private placement of
a 6% subordinated convertible note in the principal amount of
$20,000,000 due December 31, 2002 (the "Note") with The 1818 Fund
II, L.P. (the "Fund"), a private equity fund managed by BBH & Co. 
Pursuant to the terms of the Agreement, as of such date, the
Company caused one (1) vacancy to be created on its Board of
Directors and appointed Lawrence C. Tucker, as a designee of the
Fund, as a director without classification.  At the 1996 Annual
Meeting of Shareholders, Mr. Tucker was elected by the
shareholders as a Class II Director for a term to expire at the
1998 Annual Meeting of Shareholders.

     On February 28, 1997, the Company entered into an amendment
to the Agreement and Note.  Pursuant to the terms of the
Agreement, as of such date, the Company caused one (1) vacancy to
be created on its Board of Directors and appointed Walter Grist,
as a designee of the Fund, as a director without classification.  

     As part of the February 1997 amendment to the Agreement and
the Note, the Company agreed to cause two additional directors to
be elected to the Board.  Each such person shall (i) be neither an
officer, director or employee of the Company or any subsidiary of
the Company nor any affiliate of the Company, and (ii) have
experience as a director of a public company or other relevant
experience.  The Company expects to nominate two individuals
meeting these qualifications for election at the 1997 Annual
Meeting of Shareholders (See Note 11 of "Notes to Consolidated
Financial Statements" and See "Item 13 - Certain Relationships and
Related Transactions").

     Officers are elected annually and serve at the pleasure of
the Board of Directors, subject to rights, if any, under contracts
of employment.

SCHEDULE 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Joseph R. Papa filed his Form 3 on November 11, 1996.  This
form was due on September 16, 1996.

     Edward A. Ullmann filed his Form 5 on March 10, 1997, to
report sales of stock in September and October 1996.  These sales
were due to be reported on Forms 4 on October 10, 1996 and
November 10, 1996, respectively.

ITEM 11.  EXECUTIVE COMPENSATION

The following table sets forth a summary of the compensation for
1996, 1995 and 1994 earned by (i) the Company's Chief Executive
Officer during 1996; (ii) each of the three most highly
compensated executive officers other than the Chief Executive
Officer serving as an executive officer whose compensation during
1996 exceeded $100,000; (iii) the most highly compensated
executive officer not serving in such capacity at the end of 1996
whose compensation exceeded $100,000; and (iv) the Company's
President and Chief Operating Officer, who commenced employment on
September 6, 1996, whose compensation on an annual basis would
have required disclosure in the table below:
<TABLE>
<CAPTION>
                    SUMMARY COMPENSATION TABLE
                                           Long-Term
                                           Compensation
                                                       
                       Annual Compensation Awards
                                                              

Name and                        Other Annual         Common Stock     All Other
Principal    Year Salary Bonus  Compensation         Underlying       Compensation
Position            ($)    ($)       ($)             Options (#)       ($)
<S>          <C>   <C>   <S>    <C>                  <C>

ROBERT W. MOREY(1)       1996         -         -             -  600,000(7)            -
Chief Executive   1995         -                -             -        -          -
 Officer     1994       -            -              -         -         -

EDWARD A. ULLMANN(2) 1996       $166,739   $177,871           -   10,000     $369,181(9)(10)(11)
President, Chief  1995    187,061           103,902(4)        -   10,000   8,605(10)(11)
Executive Officer 1994    180,000           124,764           -   25,000(8)     6,007(10)(11)
and Chief Operating
Officer

JOSEPH R. PAPA    1996   $ 92,308                -            -  200,000        $ 195(13)
President and Chief      1995         -          -            -        -          -
Operating Officer 1994         -                 -            -        -          -

MARYSTEPHANIE
CORSONES     1996 $117,366      $ 50,167   $14,000(5)     2,000      $     4,356(11)(12)
Vice President and       1995     76,696      1,402   14,000(5)    2,000   3,189(11)(12)
Chief Financial   1994     69,717            31,191   14,000(5)    8,000(8)            -
Officer

JOHN E OTT, M.D.  1996   $111,538                -   $11,500(6)   40,000          -
Executive Vice    1995         -                 -            -    2,740          -
President and     1994         -                 -            -        -          -
Director

DOUGLAS A. HAYWARD       1996   $108,154         -            -   40,000        $ 200(12)
Executive Vice    1995         -                 -            -        -          -
President; Chief  1994         -                 -            -        -          -
Executive Officer of
WellCare of
Connecticut, Inc.

ROBERT E. GOFF(3) 1996   $100,148          $ 11,833           -        -      $60,088(9)(11)(12)
Executive Director       1995    114,315     23,513(4)        -    1,000   3,580(11)(12)
and Executive Vice       1994    110,000     40,331           -        -   3,000(11)(12)
President

</TABLE>

--------------

(1)  Mr. Morey became Chief Executive Officer effective April 30, 1996.
(2)  Mr. Ullmann resigned his position as Chief Executive Officer on April 30,
     1996 and resigned as Chief Operating Officer effective September 6, 1996.
(3)  Mr. Goff resigned his position as Executive Director and Executive Vice
     President on October 24, 1996.
(4)  Represents the fair market value of Treasury Stock issued as bonuses in
     lieu of cash.  Also, included bonus of $30,921 for Mr. Ullmann.
(5)  Represents the amount WellCare had agreed to pay per annum from 1994
     through 2001, for a tax deferred annuity having a retirement benefit of
     $500,000 at age 65.
(6)  Represents the amount WellCare paid in 1996 for a condominium rental.
(7)  Represents the options granted on December 23, 1996 under the 1996 
     Non-Incentive Executive Stock Option Plan (subject to approval by issuer's
     shareholders).
(8)  Represents Mr. Ullmann's options to purchase 10,000 shares of Common Stock
     and 15,000 phantom shares of Common Stock and Ms. Corsones' options to
     purchase 3,000 shares of Common Stock and 5,000 phantom shares of Common
     Stock.  Phantom shares vest, subject to the executive's continued
     employment with the Company, 25% per annum on December 31st of each year,
     commencing December 31, 1994, and are payable in cash only in January 1996
     in an amount equal to the product of (A) and (B), where (A) equals the
     total number of phantom shares vested in the executive, and (B) equals the
     sum of (i), (ii), (iii) and (iv) equal to the following:
             Difference between the closing sales price of the Common
             Stock, as reported by The Nasdaq Stock Market (National
             Market) on December 31,
             (i)  1994 and 1993
             (ii) 1995 and 1994
             (iii)       1996 and 1995
             (iv) 1997 and 1996.
(9)  Includes severance benefits of $361,125 and $57,108 for payments issued and
     accrued for Mr. Ullmann and Mr. Goff, respectively.
(10) Includes $3,306, $3,985 and $3,007 paid by WellCare in 1996, 1995 and 1994,
     respectively, for a $1,000,000 life insurance policy on Mr. Ullmann's life,
     50% of which is payable to WellCare and the balance to Mr. Ullmann's wife.
(11) Includes pension plan contributions as follows: $3,660 and $2,495 in 1996
     and 1995, respectively, for Ms. Corsones; $4,750, $4,620 and $3,000 in
     1996, 1995 and 1994, respectively, for Mr. Ullmann; $2,572, $3,580 and
     $3,000, respectively, for Mr. Goff.
(12) Includes Group Life Insurance paid by WellCare as follows: $195 in 1996 for
     Mr. Papa; $696 and $694 in 1996 and 1995, respectively, for Ms. Corsones;
     $200 in 1996 for Mr. Hayward; and $408 in 1996 for Mr. Goff.

<PAGE>
The following table sets forth certain information concerning
options granted in 1996 to the individuals named in the Summary
Compensation Table:

<TABLE>
<CAPTION>
                      OPTION GRANTS IN 1996
                        Individual Grants
                                                             Potential
                                                            Realizable Value
               Number of % of    Total                         at Assumed Annual
               Securities        Options Exercise           Rates of Stock Price
               Underlying        Granted to  or Base             Appreciation for
               Options Employees Price       Expiration     Option Term    
Name           Granted (#)        In 1995         ($/Share)     Date  5% ($          10%($)
                                                                                                 
<S>     <C>            <C>               <C>      <C>     <C>            <S><C>   <S><C>

ROBERT W. MOREY        450,000(1)        48.0%    $10.000 23-Dec-01      -(6)     -(6)
                       150,000(2)        16.0%   $15.000  23-Dec-01    -(6)        -(6)

EDWARD A. ULLMANN       10,000(3)         1.1%    $21.500 06-Sep-96(7)        -(7)     -(7)

JOSEPH R. PAPA 200,000(4)        21.3%   $10.125  01-Sep-01    -(8)    $435,000(8)

MARYSTEPHANIE
 CORSONES                2,000(3)         0.2%   $21.500  01-Jan-01      -(8)     -(8)

JOHN E. OTT, M.D.       40,000(5)         4.3%    $12.625 01-Jun-01      -(8)     -(8)

DOUGLAS A. HAYWARD      40,000(5)         4.3%    $12.870 29-May-01      -(8)     -(8)

(1)  Exercisable if the closing sale price of the Company's Common 
     Stock for thirty consecutive trading days is equal to or greater than 
     $20.00 per share.  In the event that a change of control in the 
     Company occurs, the options are exercisable if (i) on the date of such a
     change of control, the fair market value of the Company's Common Stock is
     equal to or greater than $17.50 per share, or (ii) shares of Common Stock 
     are purchased as a price equal to or greater than $17.50 per share in the 
     transaction implementing such change of control.  If neither (i) nor
     (ii) above occurs upon change of control of the Company, the options 
     shall immediately terminate, lapse and expire.

(2)  Same as above except the closing prices are equal to or greater than 
     $25.00, $22.50 and $22.50 per share, respectively.

(3)  Exercisable at the cumulative annual rate of 25% of the total number for 
     shares underlying the option commencing one year from the date of grant.

(4)  One third of the aggregate number of underlying shares are exercisable 
     commencing on the date of grant, an additional one third commencing one 
     year from the date of grant, and the balance commencing two years from
     date of grant.

(5)  One half of the aggregate number of underlying shares are exercisable
     commencing one year from the date of grant and the balance commencing two
     years from the date of grant.

(6)  The potential five-year realizable value of assumed annual rates of stock 
     price appreciation is less than $20.00 per share.  Therefore, the
     options have no value.

(7)  Mr. Ullmann's employment with WellCare terminated on September 6, 1996, and
     the option was canceled on such date.

(8)  The potential realizable value of the stock options is equal to
     or less than zero.
</TABLE>

<PAGE>
The following table presents certain information concerning
options exercised during 1996 and the value of unexercised options
held at December 31, 1996 by the individuals named in the
compensation table:
<TABLE>
<CAPTION>

 OPTION EXERCISES IN 1996 AND OPTION VALUES AT DECEMBER 31, 1996
                                                                               Value
                                                            Number of              of Unexercised
                                                            Unexercised Options    In-the-Money Options
                         Shares                             at December 31,1996(#) at December 31,1996($)
                         Acquired            Value          Exercisable(E)/        Exercisable(E)/
Name                     on Exercise (#)     Realized ($)   Unexercisable(U)       Unexercisable(U)
-------------------      ---------------     ------------   ----------------    -----------------
<S>                          <C>              <C>           <C>       <C>          <C> <C>

ROBERT W. MOREY               -                -             600,000   (U)          -   (2)

EDWARD A. ULLMANN             -                -                  -    (1)          -    (2)

JOSEPH R. PAPA                -                -              66,666   (E)          -    (2)
                                                             133,334   (U)

MARYSTEPHANIE
 CORSONES                     -                -               3,750   (E)          -    (2)
                                                               4,250   (U)

JOHN E. OTT, M.D.             -                -                 913   (E)          -    (2)
                                                              41,827   (U)

DOUGLAS A. HAYWARD            -                -              40,000   (U)          -    (2)

ROBERT E. GOFF                -                -                   -   (1)          -    (2)

(1)       In accordance with the 1993 Incentive and Non-Incentive Stock Option 
          Plan, both Mr.Ullmann's and Mr. Goff's options were terminated upon 
          their separation from the Company.

(2)       All values are less than or equal to zero and were calculated by 
          subtracting the exercise or base price from the closing sales price of
          $7.88 per share which was the closing sale price of the Common
          Stock on The Nasdaq Stock Market (National Market) on December 31,
          1996.

</TABLE>

EMPLOYMENT AGREEMENTS

  MR. ULLMANN had been employed under an agreement with the
Company effective January 1, 1994, with a term expiring December
31, 1997, unless terminated prior to the expiration of the term. 
The agreement provided for a base salary of $225,000 for 1996,
plus an annual bonus equal to two percent (2%) of the Company's
net (after tax) profit up to a maximum of $200,000 per annum, and
such additional bonus as the Board of Directors may determine.  In
January 1996, the Board of Directors granted an additional bonus
to Mr. Ullmann in the amount of $164,850 (or $100,000 after the
application of appropriate payroll withholdings).  Under the
agreement, Mr. Ullmann was entitled to receive incentive or non-incentive
options to purchase 10,000 shares of the Company's
Common Stock on January 1st of each year during his term of
employment at an exercise price (a) with respect to an incentive
option, not less than 110% of the fair market value of the Common
Stock on the date of grant, and (b) with respect to a non-incentive option, 
not less than 75% of the fair market value of
the Common Stock on the date of grant.  The options were
exercisable cumulatively at the rate of 25% of the underlying
shares each year commencing one year from the date of grant.  The
agreement further provided for a grant of 15,000 phantom shares,
under the terms of which are described in the "Executive
Compensation" table under Note 8 of "Notes to Consolidated
Financial Statements".

  On September 6, 1996, Mr. Ullmann's employment agreement was
superseded by a voluntary separation agreement.  Under the
agreement, Mr. Ullmann was engaged as a consultant to the Company
from September 6, 1996 through March 6, 1997, during which the
Company paid Mr. Ullmann $112,500.  The Company also agreed to pay
Mr. Ullmann severance in the amount of $225,000 plus continued
health, executive life and long-term disability insurance from
March 6, 1997 through March 5, 1998.  Additionally, the Company
will provide Mr. Ullmann with the use of an automobile through
March 5, 1998.

  MR. PAPA is employed under a three-year agreement with the
Company effective September 1, 1996, which provides for an annual
base salary of $300,000.  Additionally, under the agreement, the
Company provides Mr. Papa with an automobile allowance in the
amount of $550 per month, as well as makes available the use of an
apartment leased by the Company.  On September 6, 1996, Mr. Papa
was granted five-year incentive options to purchase 29,628 shares
of Common Stock of the Company at $10.125 per share and five-year 
non-incentive options to purchase 170,372 shares of Common Stock
of the Company at $10.125 per share.  Additionally, Mr. Papa is
entitled to receive options to purchase 30,000 shares of the
Company's Common Stock on September 1st of each year during his
term of employment at an exercise price equal to the greater of
the fair market value or (i) $15 per share with respect to the
option granted on September 1, 1997, (ii) $20 per share with
respect to the option granted on September 1, 1998, and (iii) $25
per share with respect to the option granted on September 1, 1999.

  Under the agreement, in the event of termination by the Company
for any reason without cause, the Company shall pay Mr. Papa a
lump sum payment in an amount equal to, if the date of termination
is on or prior to August 31, 1997, two years' base salary and
benefits; if the date of termination is subsequent to August 31,
1997 but on or prior to August 31, 1998, one year's base salary
and benefits; and if the termination is subsequent to August 31,
1998 but on or prior to August 31, 1999, one-half year's base
salary and benefits.

  DR. OTT is employed under a five-year agreement with the
Company effective June 1, 1996, which provides for an annual base
salary of $200,000.  Additionally, under the agreement, Dr. Ott is
entitled to receive annually an incentive bonus equal to ten
percent (10%) of the earnings before income taxes of the greater
New York City division of WCNY.  Under the agreement, on June 1,
1996, Dr. Ott was granted non-incentive options to purchase 35,000
shares of the Company's Common Stock at an exercise price equal to
$12.625; the fair market value of the Common Stock on June 1,
1996.  The options are exercisable at an annual cumulative rate of
fifty percent (50%) of the underlying shares commencing one year
from the date of grant; such options become fully exercisable upon
a change in ownership of the Company or upon termination of
employment by the Company without cause.  Additionally, Dr. Ott is
entitled to receive non-incentive options to purchase 5,000 shares
of the Company's Common Stock on June 1st of each year during his
term of employment at an exercise price equal to the fair market
value on the date of grant.  These options will be exercisable at
the same annual cumulative rate as outlined above.

  Under the agreement, in the event of termination for any reason
without cause, Dr. Ott is entitled to the greater of continued
salary for one year or salary payable to him through the
expiration date of the agreement.  The agreement also provides for
a one-time lump sum severance payment in the amount of the lesser
of two years' salary of the salary payable to him through the
expiration date of the agreement, as a result of a termination of
employment by the Company without cause within ninety (90) days of
a change in ownership of the Company.

  MR. HAYWARD is employed under a five-year agreement with the
Company effective May 29, 1996, which provides for an annual base
salary of $190,000.  Additionally, under the agreement, Mr.
Hayward is entitled to receive annually an incentive bonus equal
to ten percent (10%) of the earnings before income taxes of
WellCare of Connecticut, Inc.  Under the agreement, Mr. Hayward
was granted non-incentive options to purchase 35,000 shares of the
Company's Common Stock at an exercise price equal to $12.87, the
fair market value of the Common Stock on May 29, 1996, the date of
grant.  The options are exercisable at an annual cumulative rate
of 50% of the underlying shares commencing one year from the date
of grant; such options will become fully exercisable upon a change
in ownership of the Company.  Additionally, Mr. Hayward is
entitled to receive non-incentive options to purchase 5,000 shares
of the Company's Common Stock on May 29th of each year during his
term of employment at an exercise price equal to the fair market
value on the date of grant.  These options will be exercisable at
the same annual cumulative rate as outlined above.

  Under the agreement, in the event of termination for any reason
without cause, Mr. Hayward is entitled to the greater of continued
salary for one year or salary payable to him through the
expiration date of this agreement.  The agreement also provides
for a one-time lump sum severance payment in the amount of the
lesser of two years' salary or the salary payable to him through
the Expiration Date of the agreement, as a result of a termination
of employment by the Company without cause within ninety (90) days
of a change in ownership of the Company.

  MR. STREIN is employed under an agreement with the Company
effective July 1, 1993 which expires June 30, 1997, and provides
for an annualized base salary of $92,610 for 1996, with annual
increases of five percent (5%), and such additional bonus as the
Board of Directors or the Company's President may determine. 
Under the agreement, WellCare provides Mr. Strein with an
automobile allowance in the amount of $600 per month.  In the
event of termination for any reason, Mr. Strein is entitled to
continued salary and insurance benefits for ninety (90) days and a
severance payment equal to two weeks' salary for every year of
service with the Company in excess of six years.

  MS. CORSONES is employed under an agreement with the Company
effective May 23, 1994 which expires May 22, 1998, and which was
subsequently amended as of January 1, 1996.  The agreement
provides for a base salary of $125,000 for 1996, with annual
increases of four percent (4%) on January 1st of each of the
remaining contract years, plus an annual bonus equal to one
percent (1%) of the annual net (after tax) profit of the Company
up to $100,000 and such additional bonus as the Board of Directors
or the Company's President may determine.  In January 1996, the
Board of Directors granted an additional bonus to Ms. Corsones in
the amount of $50,000.  Under the agreement, Ms. Corsones is
entitled to receive incentive or non-incentive options to purchase
2,000 shares of Common Stock on January 1st of each year during
her term of employment at an exercise price (a) with respect to an
incentive option, at the fair market value of the Common Stock on
the date of grant, and (b) with respect to a non-incentive option,
not less than 75% of the fair market value of the Common Stock on
the date of grant.  The options will be exercisable at the rate of
25% of the underlying shares each year commencing one year from
the date of grant.  The agreement further provides for the grant
of 5,000 phantom shares, the terms of which are described above in
the "Executive Compensation" table under Note 8.

  Under the agreement, WellCare provides Ms. Corsones with a
Company automobile.  Additionally, the Company is required to make
contributions in the amounts of $14,000 per annum for a period of
seven years into a tax deferred annuity with a retirement benefit
of $500,000 at age 65.  In the event of termination for any
reason, Ms. Corsones is entitled to continued salary and insurance
benefits for one year.  However, in the event of termination
prompted by the Company, and as a result of a change of ownership
or Board composition of over twenty-five percent (25%), Ms.
Corsones is entitled to a one-time lump sum severance payment in
the amount of $250,000.

  Effective April 1, 1997, Ms. Corsones will resign as Vice
President of Finance and Chief Financial Officer.  From April 2,
1997 through May 23, 1997, Ms. Corsones will be employed by the
Company as Senior Advisor for Strategic Planning and for one year
thereafter act as a consultant to the Company on strategic
planning under terms substantially similar to the agreement
outlined above.

DIRECTOR COMPENSATION

  All directors, who are not employees of the Company, receive a
fee of $500 for each meeting of the Board of Directors attended,
plus reimbursement of their expenses, and an additional $300 for
each meeting of the Compensation Committee or Audit Committee.

  Immediately following the election, re-election or appointment
of an outside director, the Stock Option Committee grants to each
outside director a non-incentive option to purchase 3,000 shares
of Common Stock (pro-rated in the case of an appointment as a
director) at an exercise price equal to 75% of the fair market
value of the Common Stock on the date of grant.  Each option is
for a term of five years from the date of grant, provided,
however, that all options terminate three months after each
outside director ceases to serve as a director of the Company. 
Each option is generally exercisable at the annual rate of 1,000
shares commencing one year from the date of grant.

  In July 1996, the Company granted Mr. Tucker an option to
purchase 2,000 shares of the Company's Common Stock at $7.22 per
share as a result of his election as a Class II Director at the
1996 Annual Meeting of Shareholders to serve the balance of the
Class II Directors term which expires at the 1998 Annual Meeting
of Shareholder.

  In July 1996, the Company granted Mr. Crew an option to
purchase 3,000 shares of the Company's Common Stock at $7.22 per
share as a result of his election as a Class III Director at the
1996 Annual Meeting.

<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT

     The following table sets forth as of March 1, 1997 certain
information with regard to the beneficial ownership of the Common
Stock of the Company as of the date hereof by (1) each stockholder
who is known by the Company to beneficially own in excess of 5% of
the outstanding shares of Common Stock or Class A Common Stock,
(2) each director, (3) each of the executive officers named in the
Summary Compensation Table, and (4) all executive officers and
directors as a group:
<TABLE>
<CAPTION>
                                                                    Percent of Total
                                                                  ------------------      Percent
                                             Class A         of Total
     Name                                 Common      Common(13)    Common      Common      Vote
     ----                                 ------      ----------    ------      ------      ----
<S>     <C>      <S><C>         <C>       <C>        <C>     <C>      <C>

Robert W. Morey, Jr.(1)(2)      281,956   505,201    20.7%   10.2%    17.9%
Mark D. Dean(3)(4)              121,534   172,031     8.9     3.5      7.5
Joseph R. Papa                      -      66,666     -       1.3      *
G. William Strein(5)                   14,585    45,427       1.1      *    1.0
Marystephanie Corsones              -       3,818     -       *   *
John E. Ott (6)                     -       1,913     -       *   *
Douglas Hayward                     -       4,630     -       *   *
Charles E. Crew, Jr.                   43,752    50,194       3.2      1.0  2.6
Robert E. Goff(7)                29,168    49,251     2.1     *   1.8
Walter W. Grist                     -       -  -      -       -
Lawrence C. Tucker(8)(9)            -   1,929,116     -      28.1      9.4
Edward A. Ullmann(10)(11)       686,500    76,655    50.3     1.5     37.3 
Eileen H. Wilson                    -         610     -       *   *
Daniel M. Zeichner(12)           38,891    58,859     2.8     1.2      2.4
The 1818 Fund II, L.P.(8)(9)            -     1,929,116       -  28.1  9.4
Brown Brothers Harriman & Co.(8)(9)     -     1,929,116       -  28.1  9.4
T. Michael Long(8)(9)                   -     1,929,116       -  28.1  9.4
All current executive officers and
 directors as a group (13 persons)
 (2)(4)(5)(6)(9)(11)(12)      1,187,218 2,915,120    87.0    46.8     78.1
</TABLE>
* Less than 1%

(1) Address is 55 Main Street, Tiburon, California 94920.
(2) Includes 2,000 shares of Common Stock owned by RWM Management Co. Defined 
    Benefit Pension Plan for which the reporting person is trustee;
    beneficial ownership is disclaimed.
(3) Address is 62 Riverview, Port Ewen, New York 12466.
(4) Includes 68,059 shares of Class A Common Stock and 116,672 shares of Common 
    Stock owned by Pine Street Dental Associates, P.C., a retirement plan in
    which Dr. Dean has a 48% interest, 4,862 shares of Class A Common Stock
    and 14,584 shares of Common Stock owned by
    Dr. Dean's wife, 4,862 shares of Common Stock owned by Dr. Dean's son, and 
    500 shares of Common Stock owned by Dr. Dean's trust.  Dr. Dean disclaims
    beneficial ownership of the shares owned by his wife, son and trust.
(5) Includes 15,000 shares of Common Stock owned by Mr. Strein's wife.
    Mr. Strein disclaims beneficial ownership of the shares owned by his wife.
(6) Includes 800 shares of Common Stock owned by Dr. Ott's family trust.  
    Dr. Ott disclaims beneficial ownership.
(7) Mr. Goff resigned his position as Executive Director and Executive Vice 
    President on October 24, 1996.
(8) Address is 59 Wall Street, New York, New York 10005.
(9) On February 28, 1997, the Company renegotiated with The 1818 Fund II, L.P.
    (the "Fund"), the 6.0% Subordinated Convertible Note in the principal amount
    of $20,000,000 due December 31, 2002 (the "Note"), entitling the holder 
    thereof to convert such Note into 689,655 shares of the Company's Common
    Stock.  The revised agreement sets the conversion price at
    a floor of $10.37 and adjusts the floor price quarterly based on the number
    of outstanding options from July 1, 1996 to the present date.  Brown 
    Brothers Harriman & Co., ("BBH & Co."), a general partner of the Fund, have 
    designated Messrs. T. Michael Long and Lawrence C. Tucker, either
    individually or jointly, as the sole and exclusive partners of BBH & Co.
    having voting and investment power with respect to the Note, and the Common
    Stock issuable upon conversion of the Note.  Giving effect to the conversion
    of the Note on March 3, 1997, the Fund beneficially owns 1,929,116 shares of
    Common Stock.  By virtue of BBH & Co.'s relationship with the Fund, BBH & 
    Co. may be deemed to beneficially own 1,929,116 shares of Common Stock.  
    By virtue of the resolution adopted by BBH & Co. designating
    Messrs. Long and Tucker, either individually or jointly, as the sole and 
    exclusive partners of BBH & Co. having voting and investment power with 
    respect to the Note, and the Common Stock issuable upon conversion of the
    Notes, Messrs. Long and Tucker may each be deemed to beneficially 
    own 1,929,116 shares of Common Stock.  The numbers of shares listed
    does not include the dilutive effect (if any), due to the outstanding 
    options issued after June 30, 1996.
(10)      Address is P.O. Box 133, Miller Road, Mount Tremper, New York 12457.
(11)      Includes 11,045 shares of Common Stock owned by a not-for-profit 
          corporation of which Mr.Ullmann is President.  Mr. Ullmann disclaims 
          beneficial ownership of the shares owned by the not-for-profit 
          corporation.
(12)      Includes 4,862 shares of Common Stock in Dr. Zeichner's Defined 
          Contribution Pension Plan and 400 shares of Common Stock owned by 
          Dr. Zeichner's wife.  Dr. Zeichner disclaims
          beneficial ownership of the shares owned by his wife.
(13)      Includes shares of Common Stock from stock options exercisable on or
          before May 3, 1997, as follows:

          NAME                NUMBER OF SHARES
                                              

    Joseph R. Papa                 66,666
    Marystephanie Corsones          3,750
    G. William Strein               6,000
    John E. Ott                       913


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Pursuant to the terms of the Note Purchase Agreement dated
January 19, 1996, (the "Agreement") entered into between the
Company and The 1818 Fund II, L.P., (the "Fund"), a private equity
fund managed by Brown Brothers Harriman & Co. ("BBH & Co."), the
Company issued a Note dated January 19, 1996, in the principal
amount of $20,000,000 payable to the order of the Fund or its
registered assignees.  On February 28, 1997, the Fund and the
Company amended the Agreement and the Note (such amendments
together with the concurrent amendment to the related registration
rights agreement between the parties, the "Amendment").  The Note
accrued interest at an interest rate of six percent (6%) per annum
prior to the Amendment and then accrues interest at an interest
rate of five and one-half percent (5.5%) per annum, which interest
is payable quarterly by the Company.  The principal amount of the
Note is payable in one amount on December 31, 2002.  The Note is
subject to certain mandatory redemption at the option of the
holder of the Note upon certain changes of control of the Company. 
In addition, subject to certain conditions, the Note is subject to
certain optional redemptions at the option of the Company after
the fourth anniversary of the date of the Note.  By its terms, the
Notes is subordinated to all senior indebtedness of the Company. 
The holder of the Note has the right to convert the then
outstanding principal amount of the Note into that number of
shares of Common Stock of the Company at a conversion price equal
to one hundred fifteen percent (115%) of the average of the market
price of WellCare Common Stock during the period August 4, 1996
through February 28, 1997, subject to adjustment for certain
dilutive events with a floor of $9 per share and a ceiling of $15
per share.  Prior to the Amendment, the Note had been convertible
at a conversion price of $29.00 per share.  Under the Note, the
conversion price is granted to the holder of the Note is adjusted,
inter alia, if the Company issues shares of its Common Stock or
options, warrants or other rights to acquire shares of Common
Stock of the Company at a price per share less than the current
market price or, pursuant to the Amendment, the conversion price
at the time.  The holder of the Note also has the right to require
redemption of the Note following a change of control (as that term
is defined in the Note) of the Company at a redemption price equal
to 130% (previously 115% under the original Note) of the principal
amount of the Note together with all accrued by unpaid interest
thereon.  Under the Amendment, if a change of control occurs
within 24 months of a redemption of the Note, the Company may also
be required to pay the holder of the Note an amount equal to 30%
of the principal amount of the redeemed Note.

     Pursuant to the terms of the Agreement, as of January 19,
1996, the Company caused one (1) vacancy to be created on its
Board of Directors and caused Lawrence C. Tucker, as a designee of
the Fund, to be appointed to the Board.  At such time, Mr.
Tucker's directorship did not have any classification.  In
addition, under the terms of the Agreement, at the 1996 Annual
Meeting of the Shareholders of the Company, Mr. Tucker was elected
by the shareholders as a Class II Director for a term expiring at
the 1998 Annual Meeting of Shareholders.  Under the Amendment, as
of February 28, 1997, the Company caused one (1) vacancy to be
created on its Board of Directors and appointed Walter Grist, as a
designee of the Fund, as a director without classification.  The
persons elected to the Board who are designated by the Fund are
referred to herein as the "Fund Designees."

     As part of the Amendment, the Company agreed to cause two
additional directors (the "Outside Directors") to be elected to
the Board.  Each such person shall (i) be neither an officer,
director or employee of the Company or any subsidiary of the
Company nor any affiliate of the Company, and (ii) have experience
as a director of a public company or other relevant experience. 
The Company expects to nominate two individuals meeting these
qualifications for election at the 1997 Annual Meeting of
Shareholders.

     At the next annual meeting and at each subsequent annual
meeting of the shareholders of the Company at which the term of
any Fund Designee or Outside Director shall expire, provided the
Fund owns at least two percent (2%) of the common stock
outstanding of the Company (after giving affect to the issuance of
the shares, issuable upon conversion of the Note), the Fund has
the contractual right to nominate such number of Fund Designees
equal to the number of Fund Designees whose terms are expiring at
such meeting and the Company shall use its reasonable efforts to
nominate such number of persons that meet the criteria of Outside
Directors equal to the number of Outside Directors whose terms are
expiring at such meeting.  The two (2) principal shareholders of
the Company, Edward A. Ullmann and Robert W. Morey, Jr., have
agreed to vote their shares of the Company in favor of the Fund
Designees and the Outside Directors.  Pursuant to the Agreement,
the Fund may purchase shares of common stock of the Company (in
addition to the shares, issuable upon conversion of the Note),
provided that such purchases do not, in total, exceed Ten Million
Dollars ($10,000,000).  Finally, provided the Fund holds at least
fifty percent (50%) of the shares issued or issuable upon
conversion of the Note, the Fund, under certain conditions, may
sell shares issuable upon conversion of the Note in certain
private placement of common stock by the Company.

     Pursuant to the terms of the Registration Rights Agreement
dated January 19, 1996, between the Company and the Fund, as
amended, the holder of the Note and the holder of the shares
issued upon conversion of Note have been granted three (3) demand
registration rights and unlimited incidental registration rights. 
The Company is also required, on or prior to August 14, 1997, to
file with the Securities and Exchange Commission, an "evergreen"
shelf registration statement with respect to the Note and any
shares issued upon conversion of the Note.

     Pursuant to the Amendment, the Company agreed to reimburse
the Fund for fees and expenses incurred by the Fund in connection
with the Company's restatement of its financial statements and
related activities, investigations and other matters and the
preparation, negotiation and execution of the Amendment up to a
maximum of $100,000.

     Until December 27, 1996, WellCare had an Agreement with Park
West Entertainment, Inc. ("PWE"), a corporation wholly-owned by
Mr. Ullmann, whereby PWE provided catering, conferencing and
related administrative services in return for a fixed monthly fee. 
In 1994, 1995 and 1996, PWE received annual fees of $276,000 from
WellCare.  At December 31, 1994, PWE was obligated to WellCare for
$198,000, representing advances to PWE, evidenced by promissory
notes.  During 1995, WellCare advanced approximately $60,000 for
operating expenses.  At December 31, 1995, those advances were
combined with the outstanding balance of the December 31, 1994
notes, and refinanced.  New promissory notes were issued in the
amount of approximately $223,000, with interest at 7.5% per annum,
payable in monthly installments and due by December 31, 1999. 
During 1996, PWE defaulted on its notes, was unable to continue
financing its activities, and discontinued operations.  WellCare
canceled its agreement with PWE and charged to expense
approximately $216,000, representing the unpaid balance of the
notes and the additional advances made in 1996.

     Effective July 1, 1996, WCNY entered into an Agreement with 
Bienestar, Inc. ("Bienestar"), an unconsolidated affiliate,
whereby Bienestar provides  consulting and educational services
related to wellness and integrated health services.  Fees paid to
Bienestar in 1996 were approximately $484,000.  In 1996, the
Company acquired 70% of Bienestar.  On December 17, 1996, WellCare
sold its interest in Bienestar to Edward A. Ullmann, the Company's
former Chief Executive Officer and President, for $84,000, which
is payable to WellCare in three equal annual installments
commencing November 8, 1997, with interest at the rate of 8% per
annum.

     In June 1995, the Company sold the assets of WCMM, its then
wholly-owned subsidiary, to a newly formed corporation for cash of
$.6 million and a note receivable of $5.1 million (See Note 4 of
"Notes to Consolidated Financial Statements").  The buyer ("Buyer")
was newly formed to acquire WCMM and, as of March 1, 1997,
approximately 11% of the Buyer's equity was directly or indirectly
held by current or former directors, officers or employees of
WellCare.  The buyer is in the business of managing medical
practices and providing related consultative services.  The Buyer
has entered into agreements to manage the Alliances referred to in
Notes 1a and 17a.  In view of the Buyer's operating losses, in
1996, the Company obtained from certain of the Buyer's equity
holders personal guarantees of the notes and pledges of collateral
to service these guarantees.  As of March 1, 1997, Dr. Dean, a
director of the Company, guaranteed $1.0 million of the $5.1
million note receivable.  Dr. Dean also owns (directly and
indirectly) 4.3% of Buyer's equity.  Mr. Strein, President of
Agente Benefit Consultants, Inc. and a director of the Company,
guaranteed $.25 million of the $5.1 million note receivable.  Mr.
Douglas Hayward, President of WellCare of Connecticut, Inc.,
guaranteed $.5 million of the $5.1 million note receivable.  Mr.
Robert Goff, a former officer and director of the Company,
guaranteed $.5 million of the $5.1  million note receivable and
other former officers of the Company collectively guaranteed $1.1
million of the $5.1 million note receivable.


     On February 19, 1997, the Buyer executed a promissory note
in the amount of $2.1 million, evidencing the $2.1 million payable
to WellCare.  The note bears interest at the rate of prime plus 2%
(10.25% at December 31, 1996), with repayment of the principal
over 36 months, starting upon the occurrence of certain events
explained below.  Subsequently, on February 26, 1997, the Buyer
entered into an Option Agreement with a potential investor (the
"Investor"), whereby the Investor agreed to lend the Buyer
$4,000,000 and received an option to merge with the Buyer,
exercisable during the period from March 15, 1998 through March
15, 1999.  Concurrently, WellCare entered into an agreement with
the Buyer whereby WellCare agreed to forbear on the collection of
principal and interest on the note for $5.1 million, and on the
collection of principal of the $2.1 million note, in exchange for
the right to convert the $5.1 million note into 43% of the Common
Stock of the company resulting from the merger of the Investor and
the Buyer.  In the event the Investor merges with the Buyer, the
$2.1 million note would be payable immediately.  At the earlier of 
the Buyer relinquishing its option to merge, or March 14, 1999,
the forbearance will be rescinded and the  original payment terms
of the $5.1 million note reinstated.  The Buyer would continue to
pay monthly interest on the $2.1 million note, with principal
payments over a thirty-six month period to commence upon
rescission of the forbearance.  The notes are subordinated to the
Investor's and Key Bank's security interests (See Note 11 of
"Notes to Consolidated Financial Statements").

     WCNY has agreements with Alliances to provide medical care
to its members (See Notes 1a and 17a of "Notes to Consolidated
Financial Statement").  In 1994, Mr. Ullmann had guaranteed in his
individual capacity loans to two (2) entities which were
predecessors to the Alliances (See Note 2a of "Notes to
Consolidated Financial Statements").  Each loan was in the amount
of $2.7 million, and the proceeds were used to fund the aggregate
payments of $4,712,000 referred to in Note 2a of "Notes to
Consolidated Financial Statements".  Approximately $4,161,000 of
these loans have been repaid as of December 31, 1996.

     During 1996, the Alliances, with whom WCNY contracts to
arrange for medical services, paid to Dr. Zeichner, a director of
the Company, $96,417 in his capacity as a specialist provider with
the Alliances.

     On December 4, 1995, WellCare entered into a Note Agreement
with Cost Management Technologies, Inc. ("CMT"), whereby WellCare
agreed to loan CMT $320,000, at a fixed interest rate of six
percent (6%) per annum.  The loan was originally due on March 2,
1996, and was ultimately extended to October 30, 1996.  On October
10, 1996, CMT informed the Company that CMT would default on the
payment of the loan.  CMT subsequently went into receivership. 
The Company has taken legal recourse, and has fully reserved this
amount in 1996. The Company's CEO and Chairman of the Board owns
60.9% of the equity of CMT.

     In 1996, Allianz Life Insurance Company of North America and
subsidiaries ("Allianz") ceded 45% of its risk to R.W. Morey
Management, Inc., a company wholly-owned by Mr. Robert Morey, the
Company's Chief Executive Officer and Chairman of the Board.  The
Company reinsures the risk of its commercial and Medicare Risk
members with Allianz.<PAGE>
                        PART IV


ITEM 14.  EXHIBITS, CONSOLIDATED FINANCIAL STATEMENT SCHEDULES
          AND REPORTS ON FORM 8-K

I.   LIST OF DOCUMENTS FILED AS PART OF THIS REPORT.

A.   Financial Statements
     Independent Auditors' Report
     Consolidated Balance Sheets as of December 31, 1996 and 1995
     Consolidated Statements of Operations for the years ended
       December 31, 1996, 1995 and 1994
     Consolidated Statements of Shareholders' Equity for the
       years ended December 31, 1996, 1995 and 1994
     Consolidated Statements of Cash Flows for the years ended
       December 31, 1996, 1995 and 1994
     Notes to Consolidated Financial Statements

B.   Schedules
     Schedule I - Condensed Financial Information of Registrant
     Schedule II - Valuation and Qualifying Accounts

C.   Exhibits Required by Item 601 of Regulation S-K
     See Index to Exhibits

II.  Reports of Form 8-K.
     None

III. Exhibits
     See Index to Exhibits

<PAGE>
                       SIGNATURES

     Pursuant to the requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned,
thereunto duly authorized, on the 28th day of March, 1997.

                         The WellCare Management Group, Inc.

                         By:  /s/ Robert W. Morey
                         Robert W. Morey, Chairman of the
                         Board and Chief Executive Officer

     Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed by the following persons on
behalf of the Registrant and, in the capacities indicated on March
28, 1997.

Signature                Title

/s/ Robert W. Morey      Chairman of the Board and 
Robert W. Morey               Chief Executive Officer
                         (Principal Executive Officer)

/s/ Marystephanie Corsones    Chief Financial Officer and
Marystephanie Corsones        Director (Principal Financial and
                              Accounting Officer)

/s/ Charles E. Crew           Director
Charles E. Crew, Jr.

/s/ Mark D. Dean, D.D.S.      Director
Mark D. Dean, D.D.S.

/s/ John E. Ott, M.D.         Director
John E. Ott, M.D.

/s/ Walter W. Grist           Director
Walter W. Grist

/s/ G. William Strein         Director
G. William Strein

/s/ Lawrence C. Tucker        Director
Lawrence C. Tucker

/s/ Edward A. Ullmann         Director
Edward A. Ullmann

/s/ Eileen Wilson             Director
Eileen H. Wilson

/s/ Daniel M. Zeichner, M.D.  Director
Daniel M. Zeichner, M.D.

<PAGE>
       INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


CONSOLIDATED FINANCIAL STATEMENTS
 OF THE COMPANY:                                            PAGE

Report of Deloitte & Touche LLP, Independent Auditors        51

Consolidated Balance Sheets as of December 31, 1996
 and 1995                                                    52

Consolidated Statements of Operations for the years
 ended December 31, 1996, 1995 and 1994                      54

Consolidated Statements of Shareholders' Equity for
 the years ended December 31, 1996, 1995 and 1994            55

Consolidated Statements of Cash Flows for the years
 ended December 31, 1996, 1995 and 1994                      59

Notes to Consolidated Financial Statements                   61

<PAGE>
INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders of
The WellCare Management Group, Inc.
Kingston, New York


We have audited the accompanying consolidated balance sheets of
The WellCare Management Group, Inc. and subsidiaries (the
"Company") as of December 31, 1996 and 1995, and the related
consolidated statements of operations, shareholders' equity and
cash flows for each of the three years in the period ended
December 31, 1996.  Our audits also included the financial
statement schedules listed in the Index at Item 14.  These
consolidated financial statements and financial statement
schedules are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these consolidated
financial statements and financial statement schedules based on
our audits.

We conducted our audits in accordance with generally accepted
auditing standards.  Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material
misstatement.  An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the
consolidated financial statements.  An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation.  We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of the
Company as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the
period ended December 31, 1996 in conformity with generally
accepted accounting principles.  Also, in our opinion, such
financial statement schedules, when considered in relation to the
basic consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth therein.






Deloitte & Touche LLP
New York, New York
February 28, 1997<PAGE>
       THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES
                   CONSOLIDATED BALANCE SHEETS
                (in thousands, except share data)

                                     December 31,    December 31,
                                         1996            1995   
                                                        
ASSETS
CURRENT ASSETS:
 Cash and cash equivalents            $  7,869     $  5,456
 Short-term investments - 
  available for sale                       919        1,261
 Accounts receivable (net of
  allowance for doubtful
  accounts of $1,902 in 1996
  and $1,166 in 1995)                    8,133       13,941
 Notes receivable (net of
  allowance for doubtful
  accounts of $2,032 in 1996
  and $534 in 1995)                        351          678
 Due from affiliate                          -           50
 Advances to participating providers     2,320        3,078
 Other receivables (net of allowance
  for doubtful accounts of $4,995 in
   1996 and $744 in 1995)                4,874        4,645
 Taxes receivable                        6,969        1,948
 Deferred tax asset                      3,932        2,056
 Prepaid expenses and other
  current assets                           400          427 
                                                      

 TOTAL CURRENT ASSETS                   35,767       33,540 

PROPERTY AND EQUIPMENT (net of
 accumulated depreciation and
 amortization of $5,157 in 1996
 and $3,711 in 1995)                    12,261       12,993 

OTHER ASSETS:
 Restricted cash                         6,667        8,241
 Notes receivable (net of
  allowance for doubtful accounts
  of $3,313 in 1996 and $4,596 in
  1995)                                  1,104        1,389
 Preoperational costs (net of
  accumulated amortization of
  $1,237 in 1996 and $349 in 1995)       2,764        3,232
 Other non-current assets (net of
  allowance for doubtful accounts
  of $1,516 in 1996 and $348 in 1995
  and accumulated amortization of
  $650 in 1996 and $301 in 1995)        4,749        3,817
 Due from affiliate                         -          173
 Goodwill (net of accumulated
  amortization of $1,702 in 1996
  and $1,066 in 1995)                   8,028        8,626 
                                                      

 TOTAL                               $ 71,340     $ 72,011 
                                                         
<PAGE>
                                  December 31,     December 31,
                                      1996             1995   
                                                         
LIABILITIES AND SHAREHOLDERS'
 EQUITY
CURRENT LIABILITIES:
 Current portion of long-term debt  $    702     $  1,547
 Medical costs payable                15,965       14,030
 Accounts payable                      1,002          702
 Accrued expenses                      2,466        1,453
 Other current liabilities               212           15
 Unearned income                       4,248        3,060 
                                                      

 TOTAL CURRENT LIABILITIES            24,595       20,807

LONG-TERM LIABILITIES:
 Long-term debt                       26,467       19,209
 Other liabilities                         4          191 
                                                      

 TOTAL LIABILITIES                    51,066       40,207 
                                                      

COMMITMENTS AND CONTINGENCIES              -            -

SHAREHOLDERS' EQUITY:
 Class A Common Stock ($.01 par
  value; 1,484,482 and 1,599,109
  shares authorized; 1,369,492
  and 1,484,119 shares issued and
  outstanding at December 31,
  1996 and 1995, respectively)            14           15
 Common Stock ($.01 par value;
  20,000,000 shares authorized,
  4,942,750 and 4,807,725 shares
  issued at December 31, 1996 and
  1995, respectively)                     49           48
 Additional paid-in capital           26,624       26,371
 (Accumulated deficit)/retained
  earnings                           (12,121)       1,233
 Statutory reserve                     5,932        4,360 
                                                     

                                      20,498       32,027
 Unrealized (loss)/gain on
  short-term investments                 (11)           5
 Less:
  Notes receivable from shareholders       6           17
  Treasury stock (at cost; 14,066
   and 14,266 shares of Common Stock
   at December 31, 1996 and 1995,
   respectively)                         207          211
                                                      

 TOTAL SHAREHOLDERS' EQUITY           20,274       31,804 
                                                      

 TOTAL                              $ 71,340     $ 72,011
                                                      



   See accompanying notes to consolidated financial statements.

    THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF OPERATIONS
          (in thousands, except per share amounts)

                                 Years Ended December 31, 
                                                          

                                1996      1995      1994
                                                          
REVENUE:
  Premiums earned             $157,156  $144,518  $120,411
  Administrative fee income      1,592     2,792       710
  Income from affiliates           235       239       199
  Interest and investment 
  income                         1,338       999       812
  Other income                     930     4,319       450 
                                                           

     TOTAL REVENUE             161,251   152,867   122,582 
                                                           
EXPENSES:
  Medical expenses             135,957   115,560    98,411
  General and
    administrative expenses     39,334    30,279    15,599
  Depreciation and
    amortization expense         3,254     2,292     1,611
  Interest expense               2,185     1,447       666
  Expenses paid to affiliates      411       421       379
  Other expenses - net             (70)       79        54 
                                                           

     TOTAL EXPENSES            181,071   150,078   116,720 
                                                           

(LOSS)/INCOME BEFORE 
  INCOME TAXES                 (19,820)    2,789     5,862
(BENEFIT)/PROVISION FOR
   INCOME TAXES                 (8,038)    1,116     2,403 
                                                           

NET (LOSS)/INCOME             $(11,782)  $ 1,673  $  3,459 
                                                           

NET (LOSS)/EARNINGS 
  PER SHARE                   $  (1.87)  $  0.27  $   0.56 
                                                           
Weighted average shares of common
  and common stock equivalents
  outstanding                    6,296     6,250     6,226
                                                           


See accompanying notes to consolidated financial statements.
<PAGE>
    THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES
       CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
        Years Ended December 31, 1996, 1995 and 1994
                       (in thousands)

                                         (Accumulated
               Class A        Additional Deficit)/
               Common Common  Paid-in    Retained     Statutory
               Stock  Stock   Capital    Earnings     Reserve
                                                                     

BALANCE,
DEC 31, 1993   $17    $45    $25,612  $ (1,207) $ 1,668
Purchase of
 treasury stock         -      -            -          -          -
Conversion of
 Class A Common
 shares to
 Common shares  (1)     1          -         -        -
Exercise of
 stock options   -      1        249         -        -
Valuation allow-
 ance on short-
 term investments       -      -            -          -          -
Transfer to
 statutory reserve  -   -          -    (1,235)   1,235
Net income       -      -          -     3,459        -
                                                                   

BALANCE,
DEC 31, 1994    16     47     25,861     1,017    2,903
Issuance of
 treasury stock         -      -           60          -          -
Conversion of
 Class A Common
 shares to
 Common shares  (1)     1          -         -        -
Exercise of
 stock options   -      -        450         -        -
Repayments/re-
 classification
 of shareholders'
 notes - net     -      -          -         -        -
Net change of
 valuation allow-
 ance on short-
 term investments       -      -            -          -          -
Transfer to
 statutory reserve  -   -          -    (1,457)   1,457
Net income       -      -          -     1,673        -
                                                                   

<PAGE>
                                      (Accumulated
               Class A        Additional  Deficit)/
               Common Common  Paid-in    Retained      Statutory
               Stock  Stock   Capital    Earnings     Reserve
                                                                     

BALANCE,
DEC 31, 1995    15     48    26,371      1,233    4,360
Issuance of
 treasury stock         -     -             1          -          -
Conversion of
 Class A Common
 shares to
 Common shares  (1)     1         -          -        -
Exercise of
 stock options   -      -       252          -        -
Repayments/re-
 classification
 of shareholders'
 notes - net     -      -         -          -        -
Net change of
 valuation allow-
 ance on short-
 term investments       -     -             -          -          -
Transfer to
 statutory reserve  -   -         -     (1,572)   1,572
Net (loss)       -      -         -    (11,782)       -
                                                                   

BALANCE,
DEC 31, 1996   $14    $49   $26,624   $(12,121) $ 5,932
                                                                   

<PAGE>
                 Unrealized
                 (Loss)/Gain                     
                    On       Notes                      Total
                 Short-term  Receivable-    Treasury    Shareholders'
                 Investments Shareholders   Stock       Equity

BALANCE,
DEC 31, 1993     $     -    $   (38)        $    -       $ 26,097
Purchase of
 treasury stock        -          -           (395)          (395)
Conversion of
 Class A Common
 shares to
 Common shares         -          -              -             -
Exercise of
 stock options         -          -              -           250
Valuation allow-
 ance on short-
 term investments   (104)         -              -          (104)
Transfer to
 statutory reserve     -          -              -             -
Net income             -          -              -         3,459    

BALANCE,
DEC 31, 1994        (104)       (38)          (395)       29,307
Issuance of
 treasury stock        -         -             184           244
Conversion of
 Class A Common
 shares to
 Common shares         -         -               -             -
Exercise of
 stock options         -         -               -           450
Repayments/re-
 classification
 of shareholders'
 notes - net           -        21               -            21
Net change of
 valuation allow-
 ance on short-
 term investments    109         -               -           109
Transfer to
 statutory reserv      -         -               -             -
Net income             -         -               -         1,673


<PAGE>
                 Unrealized
                 (Loss)/Gain                     
                    On        Notes                      Total
                 Short-term   Receivable-  Treasury      Shareholders'
                 Investments  Shareholders   Stock       Equity

BALANCE,
DEC 31, 1995           5       (17)       (211)   31,804
Issuance of
 treasury stock        -         -           4         5
Conversion of
 Class A Common
 shares to
 Common shares         -         -           -         -
Exercise of
 stock options         -         -           -       252
Repayments/re-
 classification
 of shareholders'
 notes - net           -        11           -        11
Net change of
 valuation allow-
 ance on short-
 term investments               (16)         -       -                (16)
Transfer to
 statutory reserve                -          -       -                  -
Net (loss)             -         -           -   (11,782)


BALANCE,
DEC 31, 1996     $   (11)   $  (6)      $ (207) $ 20,274
    


   See accompanying notes to consolidated financial statements.<PAGE>
   
   THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES
            CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (in thousands)

                                 YEARS ENDED DECEMBER 31,
                                                          

                                 1996      1995      1994
                                                           

CASH FLOWS FROM OPERATING
  ACTIVITIES:

Net (loss)/income             $(11,782) $ 1,673   $ 3,459
Adjustments to reconcile
 net income to net cash
 provided by operating
 activities:
  Depreciation and
     amortization                3,254    2,292     1,611
  Increase in deferred taxes    (1,711)  (1,788)   (1,612)
  (Gain)/loss on sale of
   assets and others               (71)      57        23
Changes in assets and 
 liabilities - net of effects of
 acquisition:
  Decrease/(increase) in accounts
   receivable - net              5,808   (6,545)   (1,422)
  Increase in medical
   costs payable                 1,935      522     2,858
  Decrease/(increase) in due
   from affiliates - net           223      (27)       (4)
  (Increase)/decrease in accounts
   receivable - 
   non-current - net              (644)       -       610
  Increase in other
   receivables - net              (148)  (3,554)     (972)
  Increase/(decrease) in accounts
   payable, accrued expenses and
   other current liabilities     1,531      (97)      591
  (Increase)/decrease in taxes
   receivable/payable           (5,021)  (2,186)       63
  Decrease in prepaid expenses
   and other                        19       55       440
  Increase in unearned income    1,187    1,048       196
  Decrease/(increase) in
   restricted cash               1,574   (1,657)   (1,713)
  Decrease/(increase) in advances
   to participating providers      757    1,032    (3,040)
  (Increase)/decrease in other
   non-current assets - excluding
   preoperational costs and accounts
   and other receivables          (584)      41       (95)
  Other - net                     (399)    (166)       (3) 
                                                          
  NET CASH (USED IN)/PROVIDED
     BY OPERATING ACTIVITIES    (4,072)  (9,300)      990
                                                          

<PAGE>
                                 YEARS ENDED DECEMBER 31,
                                                          

                                 1996      1995      1994
                                                                      

CASH FLOWS FROM INVESTING
  ACTIVITIES:

Purchase of equipment             (538)  (1,608)   (5,816)
Decrease/(increase) in
 notes receivable                  613      466      (162)
Sale of investments              6,841   12,702     6,954
Purchase of investments         (6,500)  (6,367)  (12,463)
Increase in
  preoperational costs            (420)  (1,589)   (1,863)
Payments to acquire MCA, net of
 cash acquired                       -     (215)        -
Payments to acquire MHP, net of
 cash acquired                       -        -    (1,126)
Escrow deposit in connection
 with MHP acquisition                -        -     1,000
Other investing activities         (16)     109      (104) 
                                                          
  NET CASH (USED IN)/PROVIDED
     BY INVESTING ACTIVITIES       (20)   3,498   (13,580)
                                                               
   
CASH FLOWS FROM FINANCING
  ACTIVITIES:

Proceeds from issuance of stock
 and treasury stock - net            3      244         -
Cost of treasury stock purchased     -        -      (395)
Proceeds from exercise of
 stock options                     254      450       250
Proceeds from notes payable and
 long-term debt                 21,239   16,545     7,630
Repayment of notes payable and
 long-term debt                (15,002)  (8,295)   (7,153)
Other financing activities          11       21         - 
                                                          
  NET CASH PROVIDED BY
     FINANCING ACTIVITIES        6,505    8,965       332 
                                                          
NET INCREASE/(DECREASE) IN CASH
  AND CASH EQUIVALENTS           2,413    3,163   (12,258)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF PERIOD            5,456    2,293    14,551 
                                                          
CASH AND CASH EQUIVALENTS,
  END OF PERIOD               $  7,869  $ 5,456   $ 2,293
                                                          

See accompanying notes to consolidated financial statements.
<PAGE>
  THE WELLCARE MANAGEMENT GROUP, INC. AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
      YEARS ENDED DECEMBER 31, 1996, 1995 and 1994

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a.  Description of Operations - The WellCare Management Group,
Inc. ("WellCare" or the "Company") was incorporated in New York
State in 1983 to provide management and supervise all or part of
any health service facility, including, but not limited to, health
maintenance organizations ("HMOs").  An HMO is an organization
that accepts contractual responsibility for the delivery of a
stated range of health care services to its enrollees for a
predetermined, prepaid fee.

WellCare of New York, Inc. ("WCNY"), a wholly-owned subsidiary,
was incorporated in 1985 to develop and operate as an HMO in New
York State.   WCNY obtained a certificate of authority from the
New York State Department of Health and commenced operations in
March 1987.  WCNY operates in 24 counties in the Hudson River
Valley, Mohawk River Valley, Albany and Leatherstocking regions of
New York State as a direct mixed IPA/Direct Contract model Article
44 HMO.  Under this type of arrangement, agreements are entered
into with physician alliances, individual primary care physicians
or physician groups for the provision of all medical care to
WCNY's enrollees for a specified monthly payment ("capitation
fee").

In July 1995, WCNY received approval from the New York State
Department of Health to expand its service area into the New York
City Boroughs of Manhattan, Queens, Brooklyn and the Bronx and in
August 1995, received regulatory approvals to offer Healthy
Choice, WCNY's managed-care program for Medicaid recipients, in
such boroughs.

Historically, WCNY has provided incentives to its primary care
physicians to control health care expenses through the use of
capitation arrangements.  Under these capitation arrangements,
primary care physicians are entitled to the surplus to the extent
health care costs incurred are less than the negotiated capitation
payments.  Surpluses paid to the primary care physicians are
recorded as medical expenses in the period in which the related
health care costs are incurred.  Effective October 1, 1994, WCNY
entered into contracted arrangements with a majority of its
primary care physicians and specialists through contracts with
regional health care delivery networks (the "Alliances") to
provide health care services to WCNY's commercial and Medicaid
members.  Initially, each Alliance was a professional corporation
that then contracted with individual primary care physicians and
specialists to provide health care services.  At inception, there
were four Alliances with different equity owners; by December 31,
1995 the four Alliances were combined into two Alliances with the
same equity owner, which the Company has been advised are in the
process of converting to IPAs.  WCNY's initial agreement with each
of the Alliances for the period October 1, 1994 through September
30, 1995 required payment to the Alliances based on a percentage
of premium revenue for effected members.  Effective October 1,
1995, the Company entered into a three year agreement with each of
the Alliances at specified per member per month ("PMPM") rates,
providing for increases of approximately 1% for the period October
1, 1995 through December 31, 1995, approximately 6% effective
January 1, 1996, approximately 1% effective January 1, 1997, and
an additional 3% effective January 1, 1998.  Such rates were
established through arms-length negotiation with the Alliances. 
As part of this change in capitation arrangements, the risk-sharing
accounts of Alliance primary care physicians who formerly
had been capitated by WCNY were settled and outstanding deficits
paid to WCNY in the fourth quarter of 1994, thereby reducing
WCNY's medical expenses during such quarter.

In an effort to improve the profitability of WCNY and the
Alliances, WCNY entered into a letter of understanding with the
Alliances in September 1996 to restructure its capitation
arrangement.  Pursuant to the terms of the restructured
arrangement, WCNY reassumed the risk for certain previously
capitated services, as well as reduced the capitation rate paid
for the services which continued to be provided by the Alliances. 
At December 31, 1996, WCNY capitated the Alliances for all
physician services, both primary care and specialty services, on a
PMPM basis for each HMO member except for physician services in
the areas of certain diagnostics and mental health, which WellCare
capitated through contracts with certain other regional integrated
delivery systems.  Additionally, if certain conditions are met,
these contracts will be extended to ten-year terms.

Each Alliance, in turn, capitates each Alliance primary care
physician from the monthly payments received from WCNY with a
fixed monthly payment for each HMO member designating the Alliance
physician as their primary care provider, retaining and allocating
the balance to a group risk pool for payment to specialists. 
Specialists are compensated on a fee-for-service basis by each
Alliance which disburses payments to these specialists.  To the
extent the risk pools are insufficient to cover the specialists'
fees, the amounts paid to the specialists as a group can be
proportionately reduced, up to a maximum of 30%.  To the extent
the risk pools are still insufficient to cover the specialists'
fee after a maximum reduction, a portion of the capitation
payments to primary care physicians can be withheld to cover the
specialists' fees after the reduction.  Primary care physicians
and specialists are furnished with periodic utilization reports
and the Alliances' accounts are reconciled on a quarterly basis.

WellCare Administration, Inc.("WCA") is a wholly-owned subsidiary
incorporated in 1988 to administer the Company's pharmacy, vision
care, dental care and other specialty care benefit programs as
stand-alone products to self-insured employer and other groups.  A
certificate of amendment of the certificate of incorporation was
approved by the State of New York Insurance Department on March 1,
1996 to change the name of the corporation to Agente Benefit
Consultants, Inc. ("ABC").

WellCare of Connecticut, Inc. ("WCCT"), a wholly-owned subsidiary,
was incorporated in 1994 in the State of Connecticut to develop
and operate as an HMO, formed under the General Statute of the
Connecticut Healthcare Center Act Section 38A-175 in the State of
Connecticut.  WCCT was licensed on March 1, 1995 and operated as
an IPA model HMO.  WCCT is approved to operate State-wide in all
eight (8) counties of Connecticut.  Under this type of
arrangement, agreements are entered into with IPAs and PHOs and
individual physicians for the provision of all medical care to
WCCT's enrollees for a specified fee for services rendered.

WellCare Development, Inc. ("WCD") is a wholly-owned subsidiary
formed in 1992 to acquire, own and develop real estate.  As of
December 31, 1992, WellCare contributed to WCD the Park West
Office Complex, which was the principal asset of UCI Enterprises,
a New York State general partnership in which WellCare had
acquired a 95 percent interest and in which it acquired the
remaining 5 percent interest prior to such contribution.

WellCare Medical Management, Inc. ("WCMM"), formerly a wholly-owned 
subsidiary formed in 1990 to provide managerial,
administrative and financial services to physicians, was sold in
June 1995 (see Note 4).

WellCare University ("WCU"), a division of WellCare, was formed
during 1994.  WCU is dedicated to: strategic planning for WellCare
and other within the managed care/health care arena, training for
WellCare employees and others within the managed care/health care
arena, research and development of many aspects of providing
medical services and health care management consulting.

Park West Entertainment, Inc. ("PWE"), an affiliated entity,
provided certain conferencing and administrative services through
December 27, 1996.  Amounts due from PWE at December 31, 1995 are
included in "Due from Affiliate" in the consolidated balance
sheet.

Bienestar, Inc. ("Bienestar"), was an unconsolidated affiliate
that entered into an agreement in July 1996 with WCNY to provide
consulting and educational services regarding wellness and
integrated health services.  In 1996, the Company acquired 70% of
Bienestar.  On December 17, 1996, WellCare sold its interest in
Bienestar to the Company's former Chief Executive Officer and
President.

b.  Principles of Consolidation - The consolidated financial
statements include the accounts of the Company and all majority
owned subsidiaries.  All significant intercompany accounts and
transactions have been eliminated.

c.  Advances to Participating Providers - Advances to
participating medical providers consist of amounts advanced to
providers, principally hospitals, which are under contract with
the Company to provide medical services to plan members.  Such
advances help provide funding to these providers for claims
incurred but not reported or claims in the process of
adjudication.

d.  Property and Equipment - Property and equipment is stated at
cost, less accumulated depreciation.  Depreciation is computed by
the straight-line method based upon the estimated useful lives of
the assets which range from 5 to 39 years.

e.  Preoperational Costs - Preoperational costs, which include
service area and product line expansion costs, consist of certain
incremental separately identifiable costs directly associated with
building a provider base of network physicians in service areas in
which the Company is applying for licensure and expanding the
Company's Medicare managed care program.  Such costs are deferred
until the related licensure approval is received at which time the
costs are amortized on a straight-line basis over a 36-month
period.  Preoperational costs are reported net of accumulated
amortization.  At December 31, 1996 and 1995, accumulated
amortization approximated $1,237,000 and $349,000, respectively.

f.  Revenue Recognition - Administrative and management fees
received in advance are deferred and recognized as income over the
period in which services are rendered.  Premiums from subscribers
are recorded as income in the period that subscribers are entitled
to service.  Premiums received in advance are deferred.  WCNY
subscriber premiums are determined on an annual basis using
community rating principles, required by the New York State
Insurance Department.  Although the rate filing request and
approval process is performed on an annual basis, under New York
State insurance law, WCNY is allowed to contract with subscribers
throughout the year based upon a "guaranteed" rate which
incorporates an estimated community rate.  WCNY is required to
remit or collect any difference between the community rate
ultimately approved and the guaranteed rate in the subsequent
twelve month contract period.  WCCT subscriber premiums are
determined on an annual basis using community rating principles
required by the Connecticut Insurance Department.  Although the
rate filing request and approval process is performed on an annual
basis, under Connecticut insurance law WCCT is allowed to contract
with subscribers throughout the year based on a "guaranteed" rate
which incorporates an estimated community rate.  WCCT is required
to remit or collect any difference between the community rate
ultimately approved and the guaranteed rate in the subsequent
twelve month period.  Accounts receivable include approximately
$1,763,000 and $1,741,000 at December 31, 1996 and 1995,
respectively, which represented the excess of subscriber premiums
accrued based on approved community rates over amounts actually
billed under guaranteed rates.  Approximately $754,000 of the
$1,763,000 and $110,000 of the $1,741,000 outstanding at December
31, 1996 and 1995, respectively, have been classified as non-current.

Accounts receivable, other receivables, notes receivable and other
non-current assets are reported net of reserves for doubtful
accounts of approximately $13,758,000 and $7,388,000 at December
31, 1996 and 1995, respectively.

g.  Reinsurance - WCNY and WCCT (the "WellCare HMOs") insure
excess loss for commercial health care claims under policies with
a reinsurance company.  Effective September 1, 1995, WCNY
reinsured a portion of its Medicare Full Risk program with a
reinsurance company under a quota share agreement.  Effective
November 1, 1996, WCNY supplemented this agreement with a separate
excess loss reinsurance policy.  Effective August 1, 1996, WCNY's
Medicaid claims are also covered under an excess loss reinsurance
policy.  Premiums for these policies are reported as medical
expense and insurance recoveries, if any, are recorded as a
reduction of medical expenses.  Under the excess loss reinsurance
policies, recoveries are made for claims of each enrollee or each
covered dependent of each enrollee, on an annual basis, in excess
of the deductible established in the policy subject to certain
limitations.  For the period from November 1, 1994, through
October 31, 1995, the deductible under the policy for commercial
health care claims was $100,000, which increased to $115,000 on
November 1, 1995, and decreased to $85,000 on November 1, 1996. 
The deductibles for the Medicaid and Medicare Full Risk products
are $115,000 and $200,000, respectively.

Reinsurance premiums charged to medical expenses in the
accompanying consolidated financial statements amounted to
approximately $552,000, $520,000 and $359,000 in 1996, 1995 and
1994, respectively.  Reinsurance recoveries of approximately
$524,000, $577,000 and $359,000 in 1996, 1995 and 1994,
respectively, have been recognized as a reduction in medical
expenses.

Included in other receivables at December 31, 1996 and 1995, were
amounts recoverable from the reinsurers of approximately
$1,155,000 and $633,000, respectively.

h.  Medical Costs Payable and Medical Expenses - Medical
expenses for primary care, hospital inpatient services, outpatient
specialty care and pharmacy services, including those for which
advances have been made to providers are recorded, as expenses in
the period in which they are incurred.  The liability for medical
costs payable is based upon an estimate of the total reported and
unreported claims attributable to medical services rendered by the
WellCare HMOs during the year.  Such estimates are based upon a
comprehensive accounting of all reported claims as well as an
actuarially determined reserve for claims incurred but not
reported.

i.  Use of Estimates - The preparation of consolidated 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
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting period.  The amounts of
incurred but not reported medical expenses, the reserve for
uncollectible receivables, recoveries from third parties for
coordination of benefits, final determinations of medical cost
adjustment pools by New York State, and medical premiums subject
to retrospective adjustment, require the significant use of
estimates.  Actual results could differ from those estimates used
by management in the preparation of these consolidated financial
statements.

j.  Advertising Costs - Advertising costs, which include costs
for certain marketing materials and development/implementation of
public relations and marketing campaigns, are expensed as
incurred.  The advertising costs expensed in 1996, 1995 and 1994,
were approximately $2,046,000, $1,723,000 and $1,573,000,
respectively.

k.  Cash Flows Statements - For purposes of the statements of
cash flows, the Company considers all highly liquid debt
instruments purchased with a maturity of three months or less to
be cash equivalents.  The Company considers all other instruments
to be short-term investments.  Cash equivalents are carried at
cost which approximates market value.

l.  Short-term Investments - Effective January 1, 1994, the
Company adopted Statement of Financial Accounting Standards No.
115, "Accounting for Certain Investments in Debt and Equity
Securities" ("FAS 115").  The Company has determined that the
securities included in short-term investments, consisting
primarily of state and municipal obligations might be sold prior
to maturity to support its investment strategies.  Such
investments have, therefore, been classified as available for
sale.  The basis for available for sale securities is market
value.

m.  Goodwill - Goodwill represents the excess of the purchase
price over the fair value of the net assets of acquired entities
and is amortized on the straight-line method over a 15-year
period.  At December 31, 1996 and 1995, accumulated amortization
approximated $1,702,000 and $1,066,000, respectively.

The Company evaluated the recoverability of goodwill by monitoring
reenrollment trends of membership acquired as well as the inherent
profitability of such membership as determined in connection with
annual rate filings.  The Company has determined that no
impairment exists at December 31, 1996.

n.  Income Taxes - In 1993, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 109 "Accounting for
Income Taxes" ("SFAS 109"), which requires recognition of deferred
tax liabilities and assets for the expected future tax
consequences of events that have been included in the consolidated
financial statements or tax returns.  Under this method, deferred
tax liabilities and assets are determined based on the difference
between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the year in
which the differences are expected to reverse and the benefits of
operating loss carryforwards.  A valuation allowance is required
to reduce net deferred tax assets unless management believes it is
more likely than not that such deferred tax assets will be
realized.

o.  Long-Lived Assets - In March 1995, the Financial Accounting
Standard's Board ("FASB") issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of", effective for fiscal years beginning after December
15, 1995.  There was no effect on the consolidated financial
statements from the adoption of this statement.

p.  Stock-Based Compensation - In October 1995, the FASB issued
SFAS No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"), which requires adoption of the disclosure provisions no
later than fiscal years beginning after December 15, 1995 and
adoption of the measurement and recognition provisions for non-employees 
transactions no later than December 15, 1995.  The new
standard defines a fair value method of accounting for the
issuance of stock options and other equity instruments.  Under the
fair value method, compensation cost is measured at the grant date
based on the fair value of the award and is recognized over the
service period, which is usually the vesting period.  Pursuant to
SFAS 123, companies are encouraged, but not required, to adopt the
fair value method of accounting for employee stock-based
transactions.  Companies are also permitted to continue to account
for such transactions under Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees", but
would be required to disclose in a note to the consolidated
financial statements pro forma net incomes, and per share amounts
as if the company has applied the new method of accounting.  SFAS 
123 also requires increased disclosures for stock-based
arrangements regardless of the method chosen to measure and
recognize compensation for employee stock-based arrangements.  The
Company has elected to continue to account for such transactions
under APB No. 25 and disclose per SFAS 123 the pro-forma effects
(See Note 14 - "Stock Options").

q.  Reclassifications - Certain amounts in the 1995 and 1994
consolidated financial statements have been reclassified to
conform to the 1996 presentation.

2.  MEDICAL EXPENSE

a.  In 1994, two entities which were predecessors to the
Alliances referred to in Notes 1a and 17a, made payments of
approximately $2,879,000 to providers in connection with the close
out of the 1993 group risk accounts and to resolve certain
disputed amounts between the Company and certain providers, which
payments might otherwise have been made by the Company. 
Additionally, these entities paid approximately $1,833,000
directly to the Company in payment of 1993 provider deficits which
would otherwise have been due to the Company directly from the
providers.  As originally reported in its 1994 consolidated
financial statements, the Company recorded the $1,833,000 received
as a reduction of medical expense, and the Company did not record
as medical expense, the $2,879,000 paid directly to the providers
by these entities.

Subsequently, in 1996, the Company's accounting personnel were
informed that Edward A. Ullmann, the then Chairman of the Board,
Chief Executive Officer and President of the Company (Mr. Ullmann
resigned as Chairman and Chief Executive Officer on April 30,
1996, and as President on September 6, 1996), had guaranteed, in
his individual capacity, two loans each in the amount of
$2,700,000, made by banks to these two entities, the proceeds of
which were used to fund the aggregate payments of $4,712,000
referred to above.

The Company subsequently restated its 1994 consolidated financial
statements to reflect the higher medical expenses, and established
a medical expense accrual.  As there were no specific accounts
payable by the Company, this accrual is being reduced concurrently
with the pay down of the bank loans, with a simultaneous reduction
in medical expense.  A reduction of medical expense of
approximately $2,423,000 and $1,738,000, was recorded in 1996 and
1995, respectively.  The loans have been paid in accordance with
their contractual amortization schedules and are scheduled to be
fully paid in 1997.
  
b.  The Alliances described in Notes 1a and 17a commenced
operations in the fourth quarter of 1994.  Based on information
provided to the Company by the Alliances, the Alliances have
operated at a deficit since inception (the deficit is
approximately $17,000,000 at December 31, 1996 based on unaudited
information).  The deficit is the result of medical expense
obligations assumed from WellCare upon the formation of the
Alliances, actual and estimated but not incurred medical losses in
excess of the amounts initially estimated, and operating losses. 
The Alliances have financed the deficits through a combination of
borrowings from the Buyer and the investor referred to in Note 4;
lags inherent in the receipt, adjudication and payment of claims;
and the deferral of claim payments to providers.  In addition, a
$3,000,000 bank line-of-credit was entered into by the Buyer on
December 28, 1995, which was guaranteed by Mr. Ullmann in his
personal capacity.

On August 1, 1996, the Alliances implemented a fee withhold
program, as permitted under the contracts with its physicians, to
withhold payments otherwise payable to referral physicians by
approximately 15% to 22% depending on the geographic location of
the physician.  Management of the Alliances and WellCare believe
that this withhold program, together with general changes in the
management of the Alliances, and the introduction of new provider
reimbursement schedules should enable the Alliances to maintain
their operations and reduce their accumulated deficits in 1997 and
substantially eliminate them in 1998.

The Company has been advised by counsel that it would have no
financial liability to providers with whom the Alliances had
contracted for services rendered in the event the Alliances were
unable to maintain their operations.  Further, the Company has
direct contracts with providers which would require the providers
to continue medical care to members on the financial terms similar
to those in the Alliances' agreement with providers, in the event
that the Alliances were unable to maintain their operations. 
Nevertheless, in the event of continuing losses or increasing
deficits by the Alliances, the Alliances could request increased
capitation rates from the Company.

Management of the Company does not believe that such additional
financial or increased contractual capitation rates should be
required by the Alliances and has no intention to agree to such
terms if requested by the Alliances beyond the contractual
increases described in Note 1a.  However, as outlined below, the
Company agreed to record charges to medical expense based on the
instructions of The New York State Insurance Department ("NYSID"). 
Effective September 1, 1996, the Company entered into a letter of
understanding with the Alliances to restructure its capitation
arrangement.  Under this understanding, the Company reassumed risk
for certain previously capitated services with a corresponding
reduction in rates.

c.  In connection with a comprehensive review of its
arrangements with the Alliances, NYSID accelerated its normal
statutory audit of WCNY.  In letters dated August 12, 1996, and
September 25, 1996, NYSID instructed the Company to assume certain
medical expenses of prior periods.  In the August 12, 1996 letter,
NYSID instructed the Company to assume responsibility for unpaid
inpatient hospital claims at June 30, 1996, which had been
contractually assumed by the Alliances.  This resulted in
additional medical expense in 1996 of approximately $3.7 million. 
In the September 25, 1996 letter, NYSID instructed the Company to
record additional medical expense for medical claims for the
period prior to October 1, 1994, which had been contractually
assumed by the Alliances.  This resulted in additional medical
expense of $2.9 million in 1996.  Both of these changes represent
obligations which had previously been assumed by the Alliances.

d.  WCNY has an arrangement with several medical practices owned
by the principal shareholder of the Buyer for the promotion of
WCNY's access to primary care medical services at these sites. 
Payments of $1,764,696 in 1996 and $3,691,878 in 1995 and
$2,396,033 in 1994 have been charged to medical expense.  In
addition, WCNY advanced additional payments to the sites
($2,388,763 in 1996 and $710,000 in 1995), and at December 31,
1996, has included in "Other Receivable" approximately $2.5
million representing outstanding 1996 advances.  As a result of
operating losses at the sites and the uncertainty of their ability
to repay these advances, WellCare has fully reserved this
receivable in 1996.  In 1997, WellCare made additional advances of
$150,000.  In October 1995, WCU entered into a similar arrangement
with these medical practices for access to these sites as training
facilities and made payments of $600,000 in 1996 and $150,000 in
1995, which amounts have been charged to consulting expense in the
respective years.

3.  ACQUISITION OF MANAGED CARE ADMINISTRATORS, INC.

In March 1995, the Company acquired the assets and assumed certain
liabilities of Managed Care Administrators, Inc. ("MCA"), a
company engaged in managing a network of primary care physicians
who provide health care services to Medicaid recipients in New
York City.  As part of the purchase price, MCA is to be paid each
calendar year an amount equal to twenty percent (20%) of the pre-interest, 
pre-tax income generated by the acquired assets.  There
was no earn out in 1996 and 1995.

4.  SALE OF WELLCARE MEDICAL MANAGEMENT, INC. 

In June 1995, the Company contributed approximately $5.1 million
to its then wholly-owned subsidiary, WellCare Medical Management,
Inc. ("WCMM") which was engaged in managing physician practices,
and then sold the assets of WCMM for cash of $.6 million and a
note receivable of $5.1 million.  The buyer ("Buyer") was newly
formed to acquire WCMM and, as of March 1, 1997, approximately 11%
of the Buyer's equity was directly or indirectly held by current
or former directors, officers or employees of WellCare.  The Buyer
is in the business of managing medical practices and providing
related consultative services.  The Buyer has entered into
agreements to manage the Alliances referred to in Notes 1a and
17a.  The Company also received a five-year option to acquire the
Buyer at any time at a formula price based on the Buyer's results
of operations.  This option was canceled in 1996.  A gain of
approximately $144,000 was not recognized in 1995, pending the
repayment of the note.  The note receivable bears interest at a
rate equal to prime plus 2% (10.25% at December 31, 1996) with
interest payable monthly through July 31, 1996 and, thereafter,
principal and interest monthly through July 31, 2000.  The Buyer
is in default on the note and has not paid accrued interest of $.5
million at December 31, 1996.

Subsequently, the Company advanced $2.8 million to the Buyer ($2.1
million in 1996 and $.7 million in 1995) for operating expenses,
which obligation is documented, at December 31, 1996, by a note of
$215,000, receivables of $2.1 million and interest receivable of
$.5 million.  The note for $215,000 bears interest at a rate equal
to prime plus 2% (10.25% at December 31, 1996) and matured
December 31, 1996.  No payments have been made against this note.

In view of the Buyer's operating losses and advances to the
Alliances, the Company has obtained from certain of the Buyer's
equity holders personal guarantees of the original note and
pledges of collateral to secure these guarantees.  Nevertheless,
in view of the Buyer's financial condition and difficulties
inherent in the collection of personal guarantees and realization
of collateral, and the Buyer's default on the payments of the
notes, the Company fully reserved in 1995 the original $5.1
million note receivable, plus the $.7 million advanced in 1995. 
In 1996, the Company established a net reserve of $1.9 million for
the additional note, interest accrued on the notes, and advances
receivable, net of the deferred gain on the original 
sale.

On February 19, 1997, the Buyer executed a promissory note in the
amount of $2.1 million, evidencing the $2.1 million payable to
WellCare.  The note bears interest at the rate of prime plus 2%
(10.25% at December 31, 1996), with repayment of the principal
over 36 months, starting upon the occurrence of certain events
explained below.  Subsequently, on February 26, 1997, the Buyer
entered into an Option Agreement with a potential investor (the
"Investor"), whereby the Investor agreed to lend the Buyer
$4,000,000 and received an option to merge with the Buyer,
exercisable during the period from March 15, 1998 through March
15, 1999.  Concurrently, WellCare entered into an agreement with
the Buyer whereby WellCare agreed to forbear on the collection of
principal and interest on the note for $5.1 million, and on the
collection of principal of the $2.1 million note, in exchange for
the right to convert the $5.1 million note into 43% of the Common
Stock of the company resulting from the merger of the Investor and
the Buyer.  In the event the Investor merges with the Buyer, the
$2.1 million note would be payable immediately.  At the earlier of 
the Buyer relinquishing its option to merge, or March 14, 1999,
the forbearance will be rescinded and the  original payment terms
of the $5.1 million note reinstated.  The Buyer would continue to
pay monthly interest on the $2.1 million note, with principal
payments over a thirty-six month period to commence upon
rescission of the forbearance.  The notes are subordinated to the
Investor's and Key Bank's security interests.

5.  SHORT-TERM INVESTMENTS

The value of short-term investments is as follows:

                                       Gross
                                                    

                              Unrealized     Unrealized     Market
                      Cost        Gains        Losses       Value
                                                                       

At December 31, 1996:

Fixed income securities -

  States and 
   municipalities        $928,011  $  3,500  $(18,345) $913,166
               
Equity securities           1,858     4,399         0     6,257
                                                          

TOTAL               $929,869  $  7,899  $(18,345) $919,423
                                                          

<PAGE>
                                       Gross
                                                    

                              Unrealized     Unrealized       Market
                       Cost           Gains         Losses         Value
                                                                           

At December 31, 1995:

Fixed income securities -

  States and
   municipalities        $1,254,176     $   5,778 $ (4,629) $1,255,325

Equity securities             1,858         4,211        -       6,069
                                                                 

TOTAL               $1,256,034     $   9,989 $ (4,629) $1,261,394
                                                                 


The contractual maturities of fixed income securities at December 31,
1996, are as follows:

                                              Market
                                 Cost         Value
                                                     

Due in one year or less            $826,424       $813,635
Due after one year through
 five years                         101,587         99,531
                                                     

Fixed income securities            $928,011       $913,166
                                                     


6.  OTHER RECEIVABLES

Other receivables at December 31, 1996 and 1995 consist of the
following:

                                 1996           1995
                                                            

Current portion of:
  Contributions receivable - WCU   $1,348,484          $1,238,642
  Receivable from third-party
    insurers                     171,025             545,454
Reinsurance receivable              1,154,547             633,608
New York State Pools receivable     1,019,567              796,521
Pharmacy rebate receivable          1,004,914             649,846
Others                           175,294             780,542
                                                             

TOTAL                         $4,873,831          $4,644,613
                                                             

<PAGE>
7.  PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1996 and 1995 consists of the
following:

                                 1996            1995
                                                              

Land                               $   887,638         $   855,310
Land improvements                      438,799             434,699
Construction in progress          105,530             202,300
Buildings and building improvements       9,119,288           8,915,769
Leasehold improvements                 434,068             375,100
Computer equipment              4,942,445           4,492,722
Furniture, fixtures and equipment    1,490,459           1,428,406  
                                                              

                               17,418,227          16,704,306

Less accumulated depreciation        5,157,387           3,710,823
                                                         

TOTAL                         $12,260,840         $12,993,483
                                                         

Included in computer equipment and furniture, fixtures and equipment is
equipment financed through capital leases aggregating approximately
$2,574,000 and $2,398,000 at December 31, 1996 and 1995, respectively. 
Accumulated amortization relating to assets financed through capital
leases was approximately $1,705,000 and $1,303,000 at December 31, 1996
and 1995.

8.  NOTES RECEIVABLE

Notes receivable consist primarily of advances made to six medical
practices totaling $1,337,316 relating to enhancing WCNY's provider
network.  Such notes are collateralized by first liens on all cash,
accounts receivable, inventory, and all office and medical equipment
owned by each of the practices.  The notes require monthly principal and
interest payments, at a rate of 7.5% per annum and mature on January 1,
2001.

<PAGE>
9.  OTHER NON-CURRENT ASSETS

Other non-current assets at December 31, 1996 and 1995 consist of the
following:

                                 1996           1995
                                                            
Long term portion of:

  Deferred taxes - net             $1,509,328          $1,673,511
  Accounts receivable                 754,427             110,051
  Receivables from third-party
    insurers                     606,363                  -
  Contributions receivable - WCU      573,813           1,311,740

Capitalized costs incurred in
  connection with private placement
  of subordinated convertible
  note                           820,816                  -

Deposits and others              484,216             721,241
                                                            

TOTAL                         $4,748,963          $3,816,543
                                                            

10. LONG-TERM DEBT

Long-term debt consists of the following:
                                         1996              1995 

Subordinated Convertible Note -
 The 1818 Fund II, L.P. (the
 "Note"); $20,000,000 due
 December 31, 2002; interest at
 6% per annum, payable quarterly
 by the Company (see Note 11 For
 Subordinated Convertible Note).        $  20,000,000             -

Line-of-Credit - Key Bank;
 $8,000,000 expiring May 31, 1998;
 interest at prime (7.22% as of
 December 31, 1996) (see Note
 11).                                        -    $ 11,850,000

Mortgage Payable - Key Bank of
 New York; $4,610,000; interest
 at LIBOR plus 175 basis points
 (8.25% at December 31, 1996) with
 a balloon payment of $3,562,488
 due January 1, 2000.  Secured by
 real estate, buildings, fixtures
 and assignment of all leases.              4,271,845     4,466,052

Mortgage Payable - First Hudson
 Valley; first mortgage of $820,000;
 interest at 7.25% with a balloon
 payment of $727,000 due February
 1, 1999                                776,799        797,758

<PAGE>
Mortgage Payable - Key Bank of
 New York; first mortgage of
 $862,500; interest at base rate
 (8.25% at December 31, 1996);
 monthly with a balloon payment
 of $642,250 due March 1, 2000.
 Secured by property located
 in Saugerties.                              793,984        836,508

Mortgage Payable - First Hudson
 Valley; first mortgage of
 $335,000; interest at prime rate
 with a balloon payment of
 $264,525 due March 1, 2001.                 326,240              -

Note Payable - Lincoln National
 Administrative Services Corporation
 ("LNASC"); payable monthly with
 interest at 6% on the initial
 $1,000,000 and prime plus 1% on
 the balance in excess of $1,000,000
 through January 1997.  A portion of 
 the interest on this note is deferred
 until January 1, 1997.  The amount of
 deferred interest is $207,430 and is
 included in other current liabilities.       35,800        451,757

Note Payable - First Hudson Valley;
 due date April 1, 1998; initial
 amount of $1,500,000, monthly
 payments include principal of
 of $41,667 and interest at Chase
 Manhattan Bank prime rate plus 1%
 (early payoff made on January 29, 1996).              -       1,143,808

Capitalized Lease Obligations;
 due through 2001; monthly payments
 ranging from $423 to $9,103 including
 interest ranging from 6.5% to 21.8%;
 secured by equipment                        963,861      1,209,174
                                                              

Total Debt                                 27,168,529    20,755,057

Less current portion                          701,719     1,546,510
                                                              

Long-term portion                         $26,466,810   $19,208,547
                                                               

On November 7, 1996, the Key Bank line-of-credit was renegotiated
reducing the aggregate limit from $15,000,000 to $8,000,000, and
the sublimits were changed.  WCMG and WCNY's sublimits were
reduced from $8,000,000 to $3,000,000, and from $10,000,000 to
$6,000,000, respectively.  In addition, a $2,000,000 sublimit was
established for WCCT.

On January 31, 1997, the Company executed a renegotiated $6.0
million line-of-credit with Key Bank of New York. The line expires
on May 31, 1998.  The Company repaid the outstanding amount ($3.1
million) on the previous line-of-credit in December 1996.  At
December 31, 1996, the Company was in technical default of certain
financial covenants.  Key Bank has granted the Company a waiver of
these financial covenants for the period ended December 31, 1996
and as of that date, there were no borrowings outstanding on the
line-of-credit.

Maturities of long-term debt, excluding capital lease obligations,
and future minimum lease payments under capital leases as of
December 31, 1996, for each of the next five years are as follows:

                                         Future
                                        Minimum
                         Long-term       Lease
                            Debt             Payments
                                                     
Year:

 1997                    $   333,800         $  431,363     
 1998                        313,200            330,268
 1999                      1,038,199            227,511
 2000                      4,248,429             67,250
 2001                        271,040             19,760
 Thereafter               20,000,000            - 
                                                   

                          26,204,668          1,076,152
Less amount
 representing interest                 -        112,291
                                                   

                         $26,204,668         $  963,861
                                                   


11. SUBORDINATED CONVERTIBLE NOTE

On January 19, 1996, the Company completed a private placement of
a subordinated convertible note in the principal amount of
$20,000,000 (the "Note") due December 31, 2002 with The 1818 Fund
II, L.P. (the "Fund"), a private equity fund managed by Brown
Brothers Harriman & Co. ("BBH & Co.").

Pursuant to the terms of the Note Purchase Agreement dated January
19, 1996 (the "Agreement"), entered into between the Company and
the Fund, the Company issued a Note dated January 19, 1996, in the
principal amount of $20,000,000 payable to the order of the Fund
or its registered assignees.  On February 28, 1997, the Fund and
the Company amended the Agreement and the Note (such amendments
together with the concurrent amendment to the related registration
rights agreement between the parties, the "Amendment").  The Note
accrued interest at an interest rate of six percent (6%) per annum
prior to the Amendment and then  accrues interest at an interest
rate of five and one-half percent (5.5%) per annum, which interest
is payable quarterly by the Company.  The principal amount of the
Note is payable in one amount on December 31, 2002.  The Note is
subject to certain mandatory redemptions at the option of the
holder of the Note upon certain changes of control of the Company. 
In addition, subject to certain conditions, the Note is subject to
certain optional redemptions at the option of the Company after
the fourth anniversary of the date of the Note.  By its terms, the
Note is subordinated to all senior indebtedness of the Company. 
The holder of the Note has the right to convert the then
outstanding principal amount of the Note into that number of
shares of Common Stock of the Company at a conversion price equal
to one hundred fifteen percent (115%) of the average of the market
price of WellCare Common Stock during the period August 4, 1996
through February 28, 1997, subject to adjustment for certain
dilutive events with a floor of $9 per share and a ceiling of $15
per share.  Prior to the Amendment, the Note had been convertible
at a conversion price of $29.00 per share.  Under the Note, the
conversion price is granted to the holder of the Note is adjusted,
inter alia, if the Company issues shares of its Common Stock or
options, warrants or other rights to acquire shares of Common
Stock of the Company at a price per share less than the current
market price or, pursuant to the Amendment, the conversion price
at the time.  The holder of the Note also has the right to require
redemption of the Note following a change of control (as that term
is defined in the Note) of the Company at a redemption price equal
to 130% (previously 115% under the original Note) of the principal
amount of the Note together with all accrued and unpaid interest
thereon.  Under the Amendment, if a change of control occurs
within 24 months of a redemption of the Note, the Company may also
be required to pay the holder of the Note an amount equal to 30%
of the principal amount of the redeemed Note.

Pursuant to the terms of the Agreement, as of January 19, 1996,
the Company caused one (1) vacancy to be created on its Board of
Directors and caused Lawrence C. Tucker, as a designee of the
Fund, to be appointed to the Board.  At such time, Mr. Tucker's
directorship did not have any classification.  In addition, under
the terms of the Agreement, at the 1996 Annual Meeting of the
Shareholders of the Company, Mr. Tucker was elected by the
shareholders as a Class II Director for a term expiring at the
1998 Annual Meeting of Shareholders.  Under the Amendment, as of
February 28, 1997, the Company caused one (1) vacancy to be
created on its Board of Directors and appointed Walter Grist, as a
designee of the Fund, as a director without classification.  The
persons elected to the Board who are designated by the Fund are
referred to herein as the "Fund Designees."

As part of the Amendment, the Company agreed to cause two
additional directors (the "Outside Directors") to be elected to
the Board.  Each such person shall (i) be neither an officer,
director or employee of the Company or any subsidiary of the
Company nor any affiliate of the Company, and (ii) have experience
as a director of a public company or other relevant experience. 
The Company expects to nominate two individuals meeting these
qualifications for election at the 1997 Annual Meeting of
Shareholders.

<PAGE>
12. INCOME TAXES

The (benefit)/provision for income taxes consists of the
following:

                         YEAR ENDED DECEMBER 31,
                                                          

                     1996          1995      1994
                                                         
Current:
 Federal         $(6,388,304) $ 2,180,308 $3,058,334
 State                61,864      723,597    956,919
                                                         

                  (6,326,440)   2,903,905  4,015,253
                                                         

Deferred:
 Federal          (  350,516)  (1,342,359)   (1,228,053)
 State            (1,360,674)    (445,546)     (384,200)
                                                         

                 $(1,711,190) $(1,787,905)   $(1,612,253)
                                                         

A reconciliation of the Federal statutory rate to the Company's
effective income tax rate is as follows:

                         YEAR ENDED DECEMBER 31,
                                                      

                       1996      1995      1994
                                                            

Federal statutory rate        34.0%          34.0%          34.0%
State income taxes -
 Net of federal benefit        6.6       6.0       7.0
                                                            

Effective rate           40.6%          40.0%          41.0%
                                                            


As a result of the operating losses incurred in the year ended
December 31, 1996, the Company has recorded a deferred tax asset
giving recognition to the future tax benefit of net operating
losses ("NOLS") whose realization was determined to be more likely
than not.  The amounts of these NOLS, related to state tax
benefits, are approximately $897,000 and $129,000 for New York and
Connecticut, respectively.  Additionally, the maximum utilization
period for these NOLS is fifteen (15) and five (5) years for New
York and Connecticut, respectively.

Deferred income taxes reflect the net tax effects of (a) temporary
differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes, and (b) operating loss and tax credit carryforwards. 
The tax effects of significant items comprising the Company's
deferred tax balance as of December 31, 1996 and 1995 are as
follows:
<PAGE>
                                   December 31,
                                                    

                                 1996      1995
                                                       

Deferred tax assets:
 Accounts and other 
    receivables - 
    bad debt reserves              $5,579,228     $2,996,011
 Other                           935,517      1,205,778
 Net operating loss
   carry forward - State       1,026,021              -
                                                       

  Total                        7,540,766      4,201,789
                                                       

Deferred tax liabilities:
 Depreciable assets              424,249        190,154
 Capitalized pre-
   operational costs                1,675,540              -
 Other                                -    281,848
                                                       

  Total                        2,099,789        472,002
                                                       

Net deferred tax asset             $5,440,977     $3,729,787
                                                       

Management has not provided a valuation allowance for the deferred
tax assets in the belief that it is more likely than not that the
deferred tax assets will be realized as a result of reductions in
the cost of medical services, improved medical utilization
controls, reductions in administrative expenses and increases in
enrollment.

The Company's effective tax rate during 1996, 1995 and 1994 was
40.6%, 40.0% and 41.0%, respectively. The fluctuation in the
effective rate is primarily attributable to the amount of
nondeductible expenses and tax exempt income.

13. COMMON STOCK

The Company amended the 1993 Incentive and Non-Incentive Stock
Option Plan to increase the number of shares reserved for issuance
under the plan from 450,000 to 900,000 shares of Common Stock. 

The Class A Common Stock and the Common Stock are identical in all
respects except for voting rights, conversion rights and the 
non-transferability of the Class A Common Stock.  Holders of Class A
Common Stock are entitled to ten (10) votes per share and holders
of Common Stock to one (1) vote per share.  Class A Common Stock
is not transferable and must be converted to Common Stock to be
sold.  Holders of Class A Common Stock may, at their option,
convert their shares to Common Stock on a share-for-share basis.

The Company has 1,000,000 shares of preferred stock authorized, no
shares issued.

Earnings per share calculations are based on a weighted average
number of shares outstanding for the year.  Earnings per share for
the years ended 1996, 1995 and 1994 were calculated giving effect
to all outstanding options.  The weighted average number of common
and common equivalent shares outstanding for the years ended 1996,
1995 and 1994 were 6,295,900 shares, 6,249,712 shares and
6,225,538 shares, respectively.

14. STOCK OPTIONS

During 1996, 1995 and 1994, the Company issued stock options to
certain individuals to purchase Common Stock.  Options granted in
1996, 1995 and 1994 were issued at the fair market value of the
stock on the date of the grant.  Following is a summary of the
transactions:

                              SHARES UNDER OPTION
                                                          

                           1996      1995      1994
                                                     
 
Outstanding,
 beginning of year       388,012   335,785   281,500

Exercised during the year     (20,398)  (37,408)  (21,290)

Terminated during the year   (148,159)  (25,213)  (16,875)

Granted during the year       337,000   114,848    92,450
                                                     

Outstanding, end of year 556,455   388,012   335,785
                                                     

Eligible, end of year, for
 exercise currently      175,938    91,778    45,335
                                                     

Option price per share     $7.22-$24.50 $11.75-$17.25 $11.75-$14.00

On December 23, 1996, the Company created the 1996 Non-Incentive
Executive Stock Option Plan ("Plan") to acknowledge exceptional
services to the Company by senior executives and to provide an
added incentive for such senior executives to continue to provide
such services and to promote the best interests of the Company. 
The executive plan subjects an aggregate of 650,000 shares of the
Company's Common Stock, par value $0.01 per share ("Common
Stock"), to this plan with options to purchase granted to any one
senior executive limited to 600,000 shares or less.  All options
have a term of five years from the date of grant but shall
terminate, lapse and expire at such earlier time or times as
provided in the Option Agreement governing such option.  Options
granted are not subject to review and are conclusive, although in
no event shall such purchase price be less than the fair market
value (as defined in the Agreement).  The plan is subject to
approval by the issuer's shareholders.  The following is a summary
of the transactions:

<PAGE>
Executive Stock Option Plan:
                                1996
                                      

Outstanding, beginning of year          -

Exercised during the year               -

Terminated during the year              -

Granted during the year            600,000
                                      

Outstanding, end of year      600,000
                                      

Eligible, end of year, for
 exercise currently                -
                                      

Option price per share             $10.00-$15.00

The Company has adopted the disclosure-only provisions of SFAS 123
(See Note 1p).  Accordingly, no compensation cost has been
recognized for grants of stock options.  Had compensation cost for
grants made under the Company's two stock option plans been
determined based on the fair market value at the grant dates in a
manner consistent with the provisions of SFAS 123, the Company's
net (loss)/earnings and net (loss)/earnings per share for the
years ended December 31, 1996 and 1995 would have been adjusted to
the pro forma amounts below:

                           YEAR ENDED DECEMBER 31,
                                                   

                          1996          1995
                                                

Net (loss)/income:

 As reported           $(11,782,430) $ 1,673,350
 Pro forma                    $(12,586,561)  $ 1,439,798

Net (loss)/earnings
 per share:

 As reported           $      (1.87) $      0.27
 Pro forma                    $      (2.00)  $      0.23

<PAGE>
The fair value of options at the date of grant was estimated using
the Black-Scholes option-pricing model with the following
weighted-average assumptions:

                           YEAR ENDED DECEMBER 31,
                                                   

                          1996          1995
                                                


Dividend yield             0.0%          0.0%
Expected volatility       47.0%         47.0%
Risk-free interest rate
 (per annum)               6.2%          6.4%
Expected lives (in years)             4.3          3.9

In connection with their employment contracts, the Company's
former President and its Chief Financial Officer were granted
15,000 and 5,000 phantom shares, respectively, payable in cash
only.  These phantom shares vest, subject to the executive's
continued employment with the Company, 25% per year on December
31st of each year, commencing December 31, 1994, and are payable
in January 1998 in an amount equal to the product of the number of
phantom shares vested in the executive, and the difference between
the closing sales prices of the Company's Common Stock as reported
by The Nasdaq Stock Market (National Market) at various points in
time, as specified in their employment contracts.  Through
December 31, 1996, no expenses have been accrued.

15.  RETIREMENT SAVINGS PLAN

The Company sponsors a retirement plan designed to qualify under
Section 401(k) of the Internal Revenue Code of 1986, as amended. 
All employees over age twenty-one (21) who have been employed by
the Company for at least one year with one thousand (1,000) hours
of service are eligible to participate in the plan.  Employees may
contribute to the plan on a tax deferred basis generally up to 18%
of their total annual salary, but in no event more than $9,500 in
1996.  Under the plan, the Company makes matching contributions at
the rate of 50% of the amount contributed by the employees up to a
maximum of 2% of the employee's total annual compensation.

The employer contributions vest to the employee after five (5)
years of an employee's service with the Company.  At December 31,
1996, 128 employees were enrolled in the plan.  For the year ended
December 31, 1996, the Company intends to contribute approximately
$85,000.  For the years ended December 31, 1995 and 1994, the
Company contributed approximately $86,000 and $52,000,
respectively.

16.  CONCENTRATIONS OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentration of credit risk consist primarily of investments in
short-term investments in obligations of certain state and
municipal entities and premiums receivable.  Short-term
investments are managed by professional investment managers within
the guidelines established by the Board of Directors, which, as a
matter of policy, limit the amounts which may be invested in any
one issuer.  Concentrations of credit risk with respect to
premiums receivable are limited due to the large number of
employer groups comprising the Company's customer base.  As of
December 31, 1996, management believes that the Company has no
significant concentrations of credit risk.

17.  COMMITMENTS AND CONTINGENCIES

a.   Effective October 1, 1994, WCNY changed its capitation
arrangements with the majority of its providers from capitating
primary care physicians with attendant risk-sharing to capitating
the Alliances comprised of the specialists and previously-capitated primary 
care physicians.  The Alliances have operated at deficit since inception but
have recently instituted measures designed to reduce these deficits and achieve
profitability.  The Alliance could request additional funding beyond the
contractual increases described in Note 1a of "Notes to Consolidated
Financial Statements", from the Company, which management does not believe
should be required and, if requested, by the Alliances does not
intend to provide.  (On March 13, 1997, the Alliances received a
$1.0 million cash infusion and a commitment for up to an
additional $3.0 million cash infusion from an unrelated third-party.)  

In an effort to improve profitability of the Company and the
Alliances, effective September 1, 1996, WCNY entered into a letter
of understanding with the Alliances to restructure the capitation
arrangements.  WCNY reassumed risk for certain previously
capitated services, with a corresponding reduction in rates.  At
December 31, 1996, WCNY capitated the Alliances for all physician
services, both primary care and specialty services, on a PMPM
basis for each HMO member associated with an Alliance except for
physician services for certain diagnostics and mental health,
which are capitated through regional integrated delivery systems. 
This restructuring had a minimal impact on medical expenses in
1996, but is expected to result in savings for the Company in
future periods (See Note 1a).  Management of the Alliances and
WCNY believe that the recently instituted measures will enable the
Alliances to maintain their operations and reduce their
accumulated deficits.


b.   Between April 1, 1996 and May 14, 1996, the Company as well
as two of its officers who also are directors were named as
defendants in eight separate purported class actions filed in the
United States District Courts for the Northern and Southern
Districts of New York.  The complaints in these actions are
virtually the same, alleging the defendants violated the federal
securities laws by making alleged materially false and misleading
statements, or withholding information, which artificially
inflated the market price of the Company's common stock and caused
investors to act to  their detriment.  A ninth suit filed during
the same period names as defendants the same parties; as well as
three additional directors, two of whom also are officers. 
Because these actions have only recently been filed, discovery has
not yet begun.  Most early litigation activity will involve
plaintiffs' counsel's attempts to achieve consolidation and
support the existence and viability of a class.  Accordingly,
management is unable to predict the likelihood of its success on
the merits of these cases but has instructed counsel to defend
vigorously.  The Company has insurance in effect which may, at
least in part, offset any costs to be incurred in these
litigations.

Between April 1, 1996 and June 6, 1996, the Company, its Vice
President of Finance and Chief Financial Officer and the Company's
former President and Chief Executive Officer, were named as
defendants in twelve separate actions filed in Federal Court (the
"Securities Litigations").  An additional three directors were
also named in one of these actions.  Plaintiffs sought to recover
damages allegedly caused by the Company's defendants' violations
of federal securities laws with regard to the preparation and
dissemination to the investing public of false and misleading
information concerning the Company's financial condition.

On July 3, 1996, the Securities Litigations were consolidated and
an amended consolidated complaint was served on August 21, 1996,
which complaint did not name the three additional directors.  The
Company's auditor, however, was named as an additional defendant. 
On October 23, 1996, the Company filed a motion to dismiss the
consolidated amended complaint against the Company as well as the
individual defendants.  The Company's auditor has likewise filed
its own motion to dismiss.  Prior to the filing of the motion,
discovery had not yet begun and pursuant to the Private Securities
Litigation Reform Act, all discovery is necessarily stayed pending
the disposition of the motion.  Although management is unable to
predict the likelihood of success on the merits of the
consolidated class action, it has instructed its counsel to
vigorously defend its interests.  The Company has insurance in
effect which may, at least in part, offset any costs to be
incurred in these litigations.  A decision on the motion to
dismiss is expected sometime during 1997.

c.   Other - The Company is involved in litigation and claims
which are considered normal to the Company's business.  In the
opinion of management, the amount of loss that might be sustained,
if any, would not have a material effect on the Company's
consolidated financial statements.

d.   Lease - Future minimum rental payments required under
operating leases that have initial or remaining noncancellable
lease terms in excess of one year as of December 31, 1996, are
approximately as follows:

       Year                 Amount
                                     

     1997                $ 1,247,000
     1998                    981,000
     1999                    775,000
     2000                    627,000
     2001                     70,000
     Thereafter                         0
                                     

     TOTAL                    $ 3,700,000
                                     

18.  STATUTORY REQUIREMENTS AND DIVIDEND RESTRICTIONS

The New York State Department of Health requires that WCNY
maintain cash balances equal to the greater of five percent (5%)
of expected annual medical costs or $100,000.  At December 31,
1996 and 1995, WCNY had required cash reserves of approximately
$6,667,000 and $8,241,000, respectively, included in Other Assets. 
Additionally, WCNY is required to maintain a statutory reserve for
the protection of subscribers in the event WCNY is unable to meet
its obligations.  The reserve must be increased annually by an
amount equal to at least one percent (1%) of the premiums earned
limited, in total, to a maximum of five percent (5%) of premiums
earned for the most recent calendar year.  At December 31, 1996
and 1995, WCNY had a required statutory reserve of approximately
$5,932,000 and $4,360,000, respectively.  WCCT is subject to
similar regulatory requirements with respect to its HMO operations
in Connecticut.

As a holding company, WellCare's ability to declare and pay
dividends is dependent upon cash distributions from its
subsidiaries which, with respect to WCNY, are limited by state
regulations.  Although such regulations do not specifically
restrict WCNY from paying dividends, they require WCNY to be
financially sound as determined by the New York State Departments
of Health and Insurance, and thereby may preclude WCNY from paying
dividends.  Any transaction that involves five percent (5%) or
more of WCNY's assets requires notice to the Commissioner and
Superintendent of the Departments of Health and Insurance,
respectively, and any transaction that involves ten percent (10%)
or more of WCNY's assets requires prior approval.  Any decision to
pay dividends in the future will be made by WellCare's Board of
Directors and will depend upon the Company's earnings, capital
requirements, financial condition and such other factors as the
Board of Directors may deem relevant.

In October 1996, the Company loaned $3,000,000 to WCNY at the
request of NYSID.  The principal and interest are repayable out of
free and divisible surplus and subject to the prior approval of
the Superintendent of Insurance of the State of New York.

19.  SUPPLEMENTAL CASH FLOW DISCLOSURES    

Cash paid during the year for:

                       1996      1995      1994
                                                            

Income taxes        $1,792,492     $5,140,000     $3,952,226

Interest            $1,950,559     $1,387,298     $  667,061

During 1996, 1995 and 1994, WellCare entered into capital leases
for equipment in the amounts of approximately $176,000, $605,000
and $321,000, respectively.

20.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments including cash and
cash equivalents, short-term investments, due from affiliates -
net, advances to participating providers, other receivables - net,
restricted cash, other non-current assets - net, due from
affiliates, accounts payable and accrued expenses approximate
their fair values.

The fair value of notes receivable consisting primarily of
advances to medical practices, is not materially different from
the carrying value for financial statement purposes.  In making
this determination, the Company used interest rates based on an
estimate of the credit worthiness of each medical practice.


The Subordinated Convertible was issued in a private placement on
January 19, 1996, and amended with the holder on February 28,
1997, as described in Note 11.  There is no public market for this
instrument or other debt of the Company and management believe it
is not practicable to estimate its fair value at this time.  The
carrying amount of other long-term debt, the majority of which
bears interest at floating rates, are assumed to approximate their
fair value.

21.  SUBSEQUENT EVENT

The Company has received a notice from the New York State
Insurance Department ("NYSID") relating to the NYSID's audit of
the New York State market stabilization pools receivable (See Note
6 - Other Investments). The notice indicated that the NYSID may
adjust this amount based on information that the Company needs to
provide with respect to the audit years 1993, 1994 and 1995. 
Although no adjustment amount (either a range or specific amount)
has been indicated at this time by the NYSID, the issues raised
imply that the NYSID is seeking to reduce the receivable due to
the Company and may be seeking additional payments.  The Company
intends to challenge any of the NYSID auditors' findings and is
currently meeting with the NYSID to discuss those findings.  There
is no certainty that the Company will prevail.

22.  QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)

Selected unaudited data reflecting the Company's consolidated
results of operations for each of the last eight quarters are
shown in the following table (in thousands, except per share
amounts):

                                        1996
                                                            

                           1st            2nd       3rd       4th
                                                                   
    
Total revenue            $41,567        $41,193   $39,587   $38,904

Total expenses            41,521         46,082(1) 50,622(2) 42,846

Income/(loss) from operations        46  (4,889)  (11,035)   (3,942)

Net income/(loss)                    28  (2,934)   (6,621)   (2,255)

Net income/(loss) per share        0.00   (0.47)    (1.05)    (0.35)
                                

                                        1995
                                                           

                           1st            2nd       3rd       4th
                                                                   

Total revenue            $34,875        $36,902   $40,112   $40,978

Total expenses            32,036         33,304    36,176   
48,562(3)

Income/(loss) from
 operations                       2,839   3,598     3,936    (7,584)

Net income/(loss)                 1,675   2,123     2,333    (4,458)

Net income/(loss) per share        0.27    0.34      0.37     (0.71)


The sum of the above quarterly amounts may not equal reported year
to date amounts due to rounding.
                              

(1) Includes a one-time $3.7 millions charge for the cost of hospital inpatient
    care for members, as assumed by the Company based on an August 2, 1996
    letter from NYSID (See Note 2c of "Notes to Consolidated Financial
    Statements").
(2) Includes a one-time $2.9 million charge to medical expenses for medical
    claims prior to October 1, 1994, which had previously been assumed by the
    Alliances, as per a September 25, 1996 letter from NYSID (See Note 2c of
    "Notes to Consolidated Financial Statements").
(3) The following unusual charges occurred in the fourth calendar quarter of
    1995: $5,130,000 reserve on the note receivable referred to in Note 1, and
    approximately $744,000 in related advances; approximately $2,000,000 in
    increases to reserves for other notes and accounts receivable;
    approximately $600,000 in reserves for medical cost adjustment pools by New
    York State; approximately $500,000 relating to premiums; and approximately
    $700,000 relating to various adjustments to medical costs payable.

<PAGE>
          THE WELLCARE MANAGEMENT GROUP, INC.
                       Schedule I
     Condensed Financial Information of Registrant
                Condensed Balance Sheets
            As of December 31, 1996 and 1995
                     (in thousands)
                                       1996      1995
                                                       
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents          $ 4,518   $   279
  Short-term investments                 920     1,262
  Accounts and other receivables - net           1,864   1,614
  Prepaid expenses and other
    current assets - net               8,994     2,699
                                                       

  TOTAL CURRENT ASSETS                16,296     5,854

INVESTMENT IN SUBSIDIARIES            18,642    22,661
PROPERTY AND EQUIPMENT - net             288       185
NOTES RECEIVABLE - LONG-TERM - net    10,893     5,470
OTHER ASSETS - net                     4,159     5,009
                                                       

  TOTAL                              $50,278   $39,179
                                                       

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Account and notes payable          $   327   $    45
  Current portion of long-term debt       69       910
  Accrued expenses and other           9,480     3,278
                                                       

  TOTAL CURRENT LIABILITIES            9,876     4,233

LONG-TERM DEBT                        20,128     2,953
OTHER LIABILITIES                          -       189
                                                       

  TOTAL LIABILITIES                   30,004     7,375
                                                       
SHAREHOLDERS' EQUITY:
  Common Stock                            63        63
  Additional paid-in capital          26,624    26,371
  Accumulated/(deficit) surplus      (12,121)    1,233
  Statutory reserve                    5,932     4,360
                                                       

                                      20,498    32,027
  Unrealized (loss)/gain on
     short-term investments              (11)        5
Less:
  Notes receivable from shareholders       6        17
  Treasury stock - at cost               207       211
                                                       

  TOTAL SHAREHOLDERS' EQUITY          20,274    31,804
                                                       

  TOTAL                              $50,278   $39,179
                                                       

          THE WELLCARE MANAGEMENT GROUP, INC.
                       Schedule I
   Condensed Financial Information of the Registrant
           Condensed Statement of Operations
  For the years ended December 31, 1996, 1995 and 1994
                     (in thousands)


                              1996     1995      1994
                                                       
REVENUE:
  Fee income               $ 16,248  $14,569   $10,409
  Interest income             1,588    1,306       510
  Other income                  151    2,673          96
                                                       

       TOTAL REVENUE                 17,987     18,548         11,015
                                                       

EXPENSES:
  General and administrative
    expenses                 22,642   21,730    10,803
  Interest expense            1,223      323       128
  Other expense - net           270       79        31
                                                       

       TOTAL EXPENSES        24,135   22,132    10,962
                                                       

(LOSS)/INCOME FROM OPERATIONS          (6,148)  (3,584)       53
(BENEFIT)/PROVISION FOR
   INCOME TAXES                        (2,485)  (1,762)       19
                                                       

  NET (LOSS)/INCOME BEFORE
    EQUITY IN (LOSS)/INCOME
    OF SUBSIDIARIES          (3,663)  (1,822)       34

EQUITY IN (LOSS)/INCOME OF
  SUBSIDIARIES NET OF TAXES            (8,119)   3,495     3,425
                                                       

  NET (LOSS)/INCOME        $(11,782)  $1,673    $3,459
                                                       

<PAGE>
          THE WELLCARE MANAGEMENT GROUP, INC.
                       Schedule I
   Condensed Financial Information of the Registrant
           Condensed Statement of Cash Flows
  For the years ended December 31, 1996, 1995 and 1994
                     (in thousands)

                             1996      1995      1994
                                                       
CASH FLOWS FROM OPERATING
  ACTIVITIES:
  Net (loss)/income        $(3,663)  $(1,822)  $    34
  Depreciation and 
    amortization                         341       163        58
  (Gain)/loss on sale of assets          (71)       53        31
  Increase in accounts
    receivable                (300)     (347)     (400)
  Other - net                  109      (725)   (2,494)
                                                       
  NET CASH USED IN 
    OPERATING ACTIVITIES    (3,584)   (2,678)   (2,771)
                                                       
CASH FLOWS FROM INVESTING
  ACTIVITIES:
  Purchase of equipment         (8)     (121)      (30)
  Increase in notes receivable        (5,103)   (2,355)   (3,036)
  Capital contributions to
    subsidiaries - net      (4,100)   (2,750)        - 
  Sale/(purchase) of
    investments - net          342     4,804    (3,917)
                                                       

  NET CASH USED IN
    INVESTING ACTIVITIES    (8,869)     (422)   (6,983)
                                                       
CASH FLOWS FROM FINANCING
  ACTIVITIES:
  Increase/(decrease) in
    long-term debt          16,158     3,026      (430)
  Increase/(decrease) in
    accounts and notes payable           282    (1,855)    1,500
  Proceeds from issuance of
    stock and treasury
    stock - net                            3       244         -
  Cost of treasury stock
    purchased                    -         -      (395)
  Proceeds from exercise of
    stock options              254       450       249
  Other - net                   (5)       21       (10)
                                                       
  NET CASH PROVIDED BY
    FINANCING ACTIVITIES    16,692     1,886       914
                                                       
NET INCREASE/(DECREASE) IN
  CASH AND CASH EQUIVALENTS            4,239    (1,214)   (8,840)

CASH AND CASH EQUIVALENTS,
  BEGINNING OF YEAR            279     1,493    10,333
                                                       
CASH AND CASH EQUIVALENTS,
  END OF YEAR              $ 4,518   $   279   $ 1,493
                                                      <PAGE>
          
          THE WELLCARE MANAGEMENT GROUP, INC.
                      Schedule II
           Valuation and Qualifying Accounts
  For the years ended December 31, 1996, 1995 and 1994
                     (in thousands)


                    Balance at                         Balance at
                    Beginning           Less:       End of
                    of Period Additions Deductions    Period
                                                                             

YEAR ENDED
DECEMBER 31, 1996

Allowance for
 doubtful accounts -
  Trade receivables $1,514    $3,937    $2,086    $ 3,365

Allowance for
 doubtful accounts -
  Due from affiliates              -       216       216            -

Allowance for
 doubtful accounts -
  Other receivables    744     4,321        17      5,048

Allowance for
 doubtful accounts -
  Notes receivable   5,130       535       320      5,345
                                                          

Total               $7,388    $9,009    $2,639    $13,758
                                                         

YEAR ENDED
DECEMBER 31, 1995

Allowance for
 doubtful accounts -
  Trade receivables $  682    $  832    $    -    $ 1,514

Allowance for
 doubtful accounts -
  Other receivables      -       744         -        744

Allowance for
 doubtful accounts -
  Notes receivable       -     5,130         -      5,130
                                                          

Total               $  682    $6,706    $    -    $ 7,388
                                                         

YEAR ENDED
DECEMBER 31, 1994

Allowance for
 doubtful accounts -
  Trade receivables $  359    $   323   $     -   $   682
                                                         

<PAGE>
                        INDEX TO EXHIBITS

EXHIBIT NO.


3.1       Copy of Registrant's Restated
          Certificate of Incorporation            (1)

3.1a      Copy of Certificate of Amendment to
          Restated Certificate of Incorporation        (4)

3.2b      Copy of Registrant's Amended By-Laws         (7)

10.1      Copy of Registrant's Amended and
          Restated 1993 Incentive and Non-
          Incentive Stock Option Plan,
          including Form of Option*               (4)

10.1a     Copy of Registrant's Amended and
          Restated 1993 Incentive and Non-
          Incentive Stock Option Plan, including
          Form of Option (As of September 1, 1996
          and subject to shareholder approval)*        (8)

10.2a     Copy of Employment Contract dated
          January 1, 1994, between Registrant
          and Edward A. Ullmann*                  (3)

10.2b     Copy of Amendment to Employment Contract
          dated January 1, 1996, between Registrant
          and Edward A. Ullmann*                  (6)

10.2c     Copy of Amendment to Employment Contract
          dated January 1, 1996, between Registrant
          and Edward A. Ullmann*                  (6)

10.2d     Copy of Voluntary Separation and Release
          dated October 16, 1996, between Registrant
          and Edward A. Ullmann*                  (8)

10.4a     Copy of Employment Contract dated
          January 1, 1994, between Registrant and
          Robert E. Goff*                         (2)

10.4b     Copy of Voluntary Separation and Release
          dated October 24, 1996, between Registrant
          and Robert E. Goff*                     (8)

10.6a     Copy of Employment Contract dated
          January 1, 1995, between Registrant and
          G. William Strein*                      (3)

10.6b     Copy of Amendment to Employment Contract
          dated July 1, 1996, between Registrant
          and G. William Strein*

10.8a     Copy of Employment Contract dated
          January 1, 1995, between Registrant and
          Peter G. Kraft*                         (3)



                        INDEX TO EXHIBITS

EXHIBIT NO.    


10.8b     Copy of Separation from Employment
          Agreement dated September 19, 1996,
          between Registrant and Peter G. Kraft*       (8)

10.14     Form of Medicaid Contract between
          WellCare of New York, Inc. and various
          counties of the New York State Department
          of Social Services                      (1)

10.15a    Copy of Restated Agreement dated March 1,
          1994, between WellCare Administration, Inc.
          and Diversified Pharmaceuticals, Inc.        (3)

10.16a    Copy of Reinsurance Agreement effective
          November 1, 1993, between Registrant and
          Preferred Life Insurance Company of
          New York                                (3)

10.20a    Copy of Agreements dated January 1, 1993 and
          July 1, 1993, respectively, between Park West
          Entertainment, Inc. ("PWE") and Registrant   (1)

10.20b    Copy of Agreement dated January 1, 1992, with
          Addendum dated January 1, 1993, between PWE
          and WellCare of New York, Inc.          (1)

10.20c    Copy of Agreements dated January 1, 1992, 
          with Addendum dated January 1, 1993, and
          July 1, 1992, respectively, between PWE
          and Mid-Hudson Health Plan, Inc.        (1)

10.20d    Copy of Promissory Note dated September 1,
          1992, issued by PWE to Registrant       (1)

10.20e    Copy of Letter dated November 25, 1996,
          terminating the Agreement between WellCare
          of New York, Inc. and Park West Entertainment,
          Inc.

10.22     Copy of Lease dated February 1, 1993, between
          WellCare of New York, Inc., as Tenant, and
          Huntington Associates, as Landlord, relating
          to lease of office space in Albany, New York (1)

10.24     Copy of Full Risk Capitation Agreement between
          AMB Medical Services, P.C. and WellCare of New
          York, Inc.                              (3)

10.25     Copy of Full Risk Capitation Agreement between
          Dutchess Family Medicine, P.C. and WellCare
          of New York, Inc.                       (3)

10.26     Copy of Full Risk Capitation Agreement between
          Hudson Valley Family Health, P.C. and WellCare
          of New York, Inc.                       (3)



                        INDEX TO EXHIBITS
                                                  
EXHIBIT NO.


10.26a    Copy of Full Risk Capitation Agreement between
          Hudson Valley Family Health, P.C. and WellCare
          of New York, Inc. dated October 1, 1995 (super-
          cedes Exhibit 10.26)                    (6)

10.27     Copy of Full Risk Capitation Agreement between
          Valley Medical Services, P.C. and WellCare of
          New York, Inc.                          (3)

10.27a    Copy of Full Risk Capitation Agreement between
          Valley Medical Services, P.C. and WellCare of
          New York, Inc. dated October 1, 1995 (super-
          cedes Exhibit 10.27)                    (6)

10.27b    Copy of Letter of Understanding between
          WellCare of New York, Inc. and the contracted
          Alliances (Valley Medical Services, P.C. and
          Hudson Valley Family Medical Health, P.C.)
          dated September 23, 1996

10.27c    Copy of Letter of Intent between Registrant,
          WellCare of New York, Inc., Primergy, Inc.,
          Valley Medical Services, P.C., and Hudson
          Valley Family Health, P.C. dated January 7,
          1997

10.33     Copy of Employment Contract dated May 24, 1994,
          between Registrant and Marystephanie Corsones*    (3)

10.33a    Copy of Amendment to Employment Contract
          dated January 1, 1996, between Registrant
          and Marystephanie Corsones*             (6)

10.33b    Copy of Employment and Consulting Agreement
          dated March 3, 1997, between Registrant and
          Registrant and Marystephanie Corsones*

10.34     Copy of Employment Contract dated January 1,
          1994, between Registrant and Patrick Arlantico*   (3)

10.34a    Copy of Acceptance of Resignation dated March
          1, 1996, between Registrant and Patrick
          Arlantico*                              (6)

10.35     Copies of Stock Purchase Warrants issued by
          Registrant to J.J. Farrell Associates, Inc.  (3)

10.36     Copy of Lease Agreement dated November 7,
          1994, between Catskill Medical Associates, P.C.
          and WellCare Development, Inc.          (3)

10.37     Copy of Lease Agreement dated October 14, 1994,
          between Richard Bulger and WellCare Development,
          Inc.                                    (3)


<PAGE>
                        INDEX TO EXHIBITS

EXHIBIT NO.
 

10.38     Copy of Management Agreement dated July 1,
          1994, between Registrant and its Wholly-Owned
          Subsidiary, WellCare of Connecticut, Inc.         (3)

10.39e    Copy of $6,000,000 Loan Agreement among
          Registrant and Subsidiaries and KeyBank
          National Association dated January 31, 1997

10.39f    Copy of Line-of-Credit Note in the amount
          of $3,000,000 dated January 31, 1997, between
          Registrant and KeyBank National Association

10.39g    Copy of Line-of-Credit Note in the amount of
          $2,000,000 dated January 31, 1997, between
          WellCare of Connecticut, Inc. and KeyBank
          National Association

10.39h    Copy of Line-of-Credit Note in the amount of
          $6,000,000 dated January 31, 1997, between
          WellCare of New York, Inc. and KeyBank
          National Association

10.39i    Copy of Guaranty of Payment and Performance
          dated January 31, 1997, between WellCare
          Development, Inc. and Agente Benefit 
          Consultants, Inc. and KeyBank National
          Association

10.39j    Copy of Guaranty of Payment and Performance
          dated January 31, 1997, between Registrant
          and KeyBank National Association

10.39k    Copy of Letter from KeyBank dated March 25,
          1997 waiving certain financial covenants
          in the Loan Agreement

10.40     Copy of Note Purchase Agreement by and 
          between Registrant and The 1818 Fund II, L.P.     (5)

10.40a    Copy of Letter Agreement dated February 28,
          1997, between Registrant and The 1818 Fund
          II, L.P.

10.41     Copy of 6% Subordinated Convertible Note
          Due December 31, 2002, between Registrant
          and The 1818 Fund II, L.P.              (5)

10.42     Copy of Registration Rights Agreement
          between Registrant and The 1818 Fund II, L.P.     (5)

10.43     Copy of Asset Purchase Agreement between
          WellCare Medical Management, Inc. and
          Primergy, Inc. dated June 30, 1995      (6)


<PAGE>
                        INDEX TO EXHIBITS

EXHIBIT NO.
 

10.44     Copy of Bill of Sale between WellCare Medical
          Management, Inc. and Primergy, Inc. dated
          June 30, 1995                           (6)

10.45     Copy of Promissory Note in the amount of
          $5,130,000 between WellCare Medical Management,
          Inc. and Primergy, Inc. dated June 30, 1995  (6)

10.45a    Copy of Forbearance Agreement on the terms and
          conditions of a Promissory Note in the amount
          of $5,130,000 between Registrant and Primergy,
          Inc. dated February 26, 1997

10.46     Copy of Note Agreement between WellCare
          Medical Management, Inc. and Primergy, Inc.
          dated                              June 30, 1995       (6)

10.47     Form of Guaranty and Guarantor Pledge Agreement
          between an individual and WellCare Medical
          Management, Inc.                        (6)

10.49     Copy of Quota Share Reinsurance Agreement
          between Registrant and Allianz Life Insurance
          Company of North America dated September 1,
          1995                                    (6)

10.50     Copy of Employment Contract dated May 29, 1996,
          and Stock Option Agreements between Registrant
          and Douglas A. Hayward*                 (7)

10.51     Copy of Employment Contract dated June 1, 1996,
          and Stock Option Agreements between Registrant
          and John E. Ott, M.D.*                  (7)

10.52     Copy of Employment Agreement dated September 1,
          1996, between Registrant and Joseph R. Papa* (8)

10.53     Copy of Registrant's 1996 Non-Incentive
          Executive Stock Option Plan*

10.54     Copy of Stock Option Agreement dated 
          December 23, 1996, between Registrant
          and Robert W. Morey, Jr.*

10.55     Copy of Promissory Note in the amount of
          $2,099,083 between Primergy, Inc. and
          Registrant dated February 19, 1997

10.56     Copy of Loan and Security Agreement made
          by Primergy, Inc. in favor of Registrant
          and WellCare Medical Management, Inc.
          dated as of February 19, 1997

<PAGE>
                        INDEX TO EXHIBITS

EXHIBIT NO.


10.57     Copy of Wellness Administrative Services
          Agreement dated July 1, 1996, and Amendment
          to Administrative Services Agreement dated
          October 10, 1996, between WellCare of New
          York, Inc. and Bienestar, Inc.

10.58     Copy of Lease Agreement dated July 1, 1996,
          between Candid Associates, as Lessor, and
          WellCare Development, Inc., as Lessee,
          relating to lease of office space in North
          Haven, Connecticut

11        Computation of Per Share Earnings

21        List of Subsidiaries

23        Consent of Independent Auditors

27        Financial Data Schedule



(1)       Incorporated by reference to the same exhibit in Registrant's
          Registration Statement on Form S-1 (File No. 33-61012)

(2)       Incorporated by reference to the same exhibit in Registrant's
          Annual Report on Form 10-K for the year ended December 31,
          1993.

(3)       Incorporated by reference to the same exhibit in Registrant's
          Annual Report on Form 10-K for the year ended December 31,
          1994.

(4)       Incorporated by reference to the same exhibit in Registrant's
          Report on Form 10-Q for the period ended June 30, 1995.

(5)       Incorporated by reference to the same exhibit in Registrant's
          Report on Form 8-K dated January 19, 1996.

(6)       Incorporated by reference to the same exhibit in
   Registrant's Report on Form 10-K for the year ended
   December 31, 1995.

(7)       Incorporated by reference to the same exhibit in
   Registrant's Report on Form 10-Q for the period ended
   June 30, 1996.

(8)       Incorporated by reference to the same exhibit in
   Registrant's Report on Form 10-Q for the period ended
   September 30, 1996.

*  Denotes Management Contract or compensatory plan or
   arrangement required to be filed as an exhibit to this Annual
   Report on Form 10-K.

<PAGE>