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

                                  FORM 10-Q

         [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
               FOR THE QUARTERLY PERIOD ENDED FEBRUARY 29, 2000
                                      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 NUMBER 0-19393


                             LIFEMARK CORPORATION
            (Exact name of registrant as specified in its charter)


            DELAWARE                                        36-3338328
 (State or other jurisdiction of incorporation or organization)(I.R.S. Employer
Identification No.)


                            7600 NORTH 16TH STREET
                                  SUITE 150
                            PHOENIX, ARIZONA 85020
                   (Address of principal executive offices)
                                  (Zip Code)

                                 602-331-5100
             (Registrant's telephone number, including area code)

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  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No ______

There were 5,084,673 shares of common stock outstanding as of April 10, 2000.

<PAGE>

                              TABLE OF CONTENTS

                                                                            PAGE

Part I      Financial Information


     Item 1.Financial Statements


            Consolidated Balance Sheets......................................3


            Consolidated Statements of Income................................4


            Consolidated Statements of Cash Flows............................5


            Notes to Unaudited Consolidated Financial Statements..........6-10


     Item 2.Management's Discussion and Analysis of Financial Condition
            and Results of Operations....................................11-14


     Item 3.Quantitative and Qualitative Disclosures About Market Risk......14


Part II     OTHER INFORMATION

     Item 1.Legal Proceedings...............................................15


     Item 6.Exhibits and Reports on Form 8-K................................15


                                        2

<PAGE>

      PART I - FINANCIAL INFORMATION

      ITEM 1.  FINANCIAL STATEMENTS

                                            LIFEMARK CORPORATION
                                         CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                 FEBRUARY 29,     MAY 31,
                                                                                     2000          1999
                                                                                -------------- -------------
<S>                                                                             <C>            <C>
                                                                                (UNAUDITED)
      ASSETS
      ------
      Current Assets:
       Cash and cash equivalents, including restricted cash of $11,163,000
         and $9,713,000, respectively                                           $ 15,924,000   $ 13,792,000
       Short-term investments, including restricted investments of $2,878,000
         and none, respectively                                                    2,878,000        501,000
       Accounts and notes receivable and unbilled services, net                   19,480,000      5,886,000
       Deferred income taxes, net                                                  1,054,000      1,213,000
       Prepaid expenses and other current assets                                   1,394,000        882,000
                                                                                ------------   ------------
         Total current assets                                                   $ 40,730,000   $ 22,274,000

      Related party notes receivable                                                       -        568,000
      Property and equipment, net                                                  5,532,000      4,205,000
      Performance bonds                                                            6,823,000      4,203,000
      Goodwill, net                                                                2,188,000      2,462,000
      Other assets                                                                   321,000      1,108,000
                                                                                ------------   ------------
         Total assets                                                           $ 55,594,000   $ 34,820,000
                                                                                ============   ============

      LIABILITIES AND STOCKHOLDERS' EQUITY
      ------------------------------------
      Current Liabilities:
       Accounts payable                                                         $    659,000   $    659,000
       Accrued medical claims                                                     25,832,000      8,662,000
       Risk pool payable                                                             654,000        691,000
       Related party risk pool payable                                               164,000        152,000
       Accrued compensation                                                        2,261,000      2,464,000
       Other accrued expenses                                                      4,070,000      1,750,000
       Current portion of related party interest payable                                   -        710,000
       Current portion of long-term debt                                           1,308,000         23,000
                                                                                ------------   ------------
          Total current liabilities                                               34,948,000     15,111,000

      Long-term debt                                                               2,581,000        211,000
      Related party long-term debt                                                   300,000      3,440,000
      Deferred income taxes, net                                                     210,000        155,000
                                                                                ------------   ------------
          Total liabilities                                                       38,039,000     18,917,000
                                                                                ------------   ------------
      Commitments and Contingencies                                                        -              -

      Stockholders' Equity:
       Common stock, $0.01 par value
       Authorized - 10,000,000 shares
       Issued and outstanding 5,085,000 shares
          and 4,808,000 shares, respectively                                          51,000         48,000
       Capital in excess of par value                                             16,955,000     16,148,000
       Stockholder notes receivable                                                 (696,000)             -
       Retained earnings (accumulated deficit)                                     1,245,000       (293,000)
                                                                                ------------   ------------
          Total stockholders' equity                                              17,555,000     15,903,000
                                                                                ------------   ------------
                                                                                $ 55,594,000   $ 34,820,000
                                                                                ============   ============
</TABLE>
               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                                            3
<PAGE>

                                         LIFEMARK CORPORATION
                                  CONSOLIDATED STATEMENTS OF INCOME
                                             (UNAUDITED)
<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED               NINE MONTHS ENDED
                                          -----------------------------   ------------------------------
                                           FEBRUARY 29,    FEBRUARY 28,    FEBRUARY 29,     FEBRUARY 28,
                                               2000           1999             2000           1999
                                          --------------  -------------   --------------  --------------
<S>                                       <C>             <C>             <C>             <C>

Revenues                                  $   49,650,000  $  21,573,000   $   97,832,000  $   61,456,000

Direct cost of operations                     43,418,000     16,064,000       79,226,000      45,675,000
Marketing, sales and administrative            5,108,000      5,145,000       16,522,000      14,260,000
                                          --------------  -------------   --------------  --------------

  Total costs and expenses                    48,526,000     21,209,000       95,748,000      59,935,000
                                          --------------  -------------   --------------  --------------

Operating income                               1,124,000        364,000        2,084,000       1,521,000
                                          --------------  -------------   --------------  --------------

Interest income                                  614,000        234,000        1,137,000         720,000
Interest expense                                 (99,000)       (91,000)        (292,000)       (271,000)
                                          --------------  -------------   --------------  --------------

  Net interest income                            515,000        143,000          845,000         449,000
                                          --------------  -------------   --------------  --------------

Income before income taxes                     1,639,000        507,000        2,929,000       1,970,000

Provision for income taxes                       830,000       (111,000)       1,391,000         438,000
                                          --------------  -------------   --------------  --------------

Net income                                $      809,000  $     618,000   $    1,538,000  $    1,532,000
                                          ==============  =============   ==============  ==============

Net income per share--basic               $         0.17  $        0.13   $         0.32  $         0.32
                                          ==============  =============   ==============  ==============

Weighted average common
  shares outstanding--basic                    4,850,000      4,767,000        4,822,000       4,727,000
                                          ==============  =============   ==============  ==============

Net income per share--assuming dilution   $         0.16  $        0.11   $         0.30  $         0.28
                                          ==============  =============   ==============  ==============

Weighted average common shares
  outstanding--assuming dilution               4,984,000      5,882,000        5,454,000       5,891,000
                                          ==============  =============   ==============  ==============


               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
</TABLE>
                                                       4
<PAGE>


                             LIFEMARK CORPORATION
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (UNAUDITED)
<TABLE>
<CAPTION>

                                                                NINE MONTHS ENDED
                                                         -------------------------------
                                                           FEBRUARY 29,    FEBRUARY 28,
                                                              2000            1999
                                                         --------------  ---------------
<S>                                                      <C>             <C>

Cash flows from operating activities:
  Net income                                             $    1,538,000  $     1,532,000
  Adjustments to reconcile net income to net cash
   provided by operating activities:
   Bad debt expense                                             (11,000)          (2,000)
   Depreciation and amortization                              1,615,000        1,685,000
   Loss on sale of property and equipment                         6,000            5,000
   Deferred income taxes                                        214,000         (332,000)
   Interest on long-term debt                                   163,000          165,000
   Changes in assets and liabilities:
     Accounts receivable and unbilled services              (13,583,000)      (1,410,000)
     Prepaid expenses and other current assets                 (512,000)         (93,000)
     Other assets                                               787,000         (195,000)
     Accounts payable                                                 -          913,000
     Accrued medical claims                                  17,170,000        1,273,000
     Risk pool payable                                          (37,000)        (136,000)
     Related party risk pool payable                             12,000          (35,000)
     Accrued compensation                                      (203,000)         453,000
     Accrued expenses                                         2,320,000         (379,000)
     Interest paid on long-term debt                           (844,000)               -
                                                         --------------  ---------------
Net cash provided by operating activities                     8,635,000        3,444,000
                                                         --------------  ---------------

Cash flows from investing activities:
  Purchase of property and equipment                         (2,966,000)      (1,003,000)
  Proceeds from sale of property and equipment                  290,000           55,000
  Purchase of short-term investments                         (2,878,000)      (1,645,000)
  Proceeds from maturity/sale of short-term investments         501,000          999,000
  Proceeds from related party notes receivable                  568,000          121,000
  Proceeds from maturity of assets securing performance bond          -        1,241,000
  Purchases of assets securing performance bond              (2,620,000)               -
                                                         --------------  ---------------
Net cash used in investing activities                        (7,105,000)        (232,000)
                                                         --------------  ---------------
Cash flows from financing activities:
  Proceeds from long-term debt                                3,698,000                -
  Payments on long-term debt                                 (3,210,000)        (155,000)
  Proceeds from common stock issuance                           114,000          198,000
                                                         --------------  ---------------
Net cash provided by (used in) financing activities            (602,000)          43,000
                                                         --------------  ---------------

Net increase (decrease) in cash and cash equivalents          2,132,000        3,255,000
Cash and cash equivalents, beginning of period               13,792,000       12,764,000
                                                         --------------  ---------------
Cash and cash equivalents, end of period                 $   15,924,000  $    16,019,000
                                                         ==============  ===============
</TABLE>

               THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.

                                                 5
<PAGE>
                              LIFEMARK CORPORATION
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - FINANCIAL STATEMENTS

In management's  opinion,  the  accompanying  unaudited  consolidated  financial
statements  contain  all  adjustments   (consisting  of  only  normal  recurring
adjustments)  considered  necessary for a fair  statement of the results for the
interim  periods  presented.  The  results of  operations  for the period  ended
February 29, 2000 are not  necessarily  indicative of the results to be expected
for the full year. The interim consolidated  financial statements should be read
in  conjunction  with  the  Lifemark   Corporation   ("Lifemark"  or  "Company")
consolidated  financial  statements and notes thereto  included in the Company's
Form 10-K for the year ended May 31, 1999.

NOTE 2 - NET INCOME PER SHARE

Basic net income per share is computed by  dividing  net income by the  weighted
average number of common shares  outstanding  during each period. Net income per
share  assuming  dilution is computed  by  dividing  net income by the  weighted
average  number of common  shares  outstanding  during the period  after  giving
effect to dilutive  stock options and warrants and adjusted for dilutive  common
shares assumed to be issued on conversion of the Company's convertible loans.

The following is the  computation  of the  reconciliation  of the numerators and
denominators  of net income  per common  share - basic and net income per common
share - assuming  dilution in accordance with Statement of Financial  Accounting
Standards No. 128, "Earnings Per Share".

<TABLE>
<CAPTION>
                                                                            THREE MONTHS ENDED
                                            ---------------------------------------------------------------------------
                                                      FEBRUARY 29, 2000                        FEBRUARY 28, 1999
                                            -------------------------------------    ----------------------------------
                                               Income       Shares      Per Share     Income       Shares     Per Share
                                            (NUMERATOR)  (DENOMINATOR)    Amount    (NUMERATOR) (DENOMINATOR)  Amount
                                            ----------   ------------   ---------    ---------   -----------  ---------
<S>                                         <C>          <C>            <C>         <C>         <C>           <C>
Net income per common share:
  Income available to common stockholders   $  809,000   5,085,000                  $  618,000     4,767,000
  Reduction in shares outstanding in
    connection with stockholder notes
    receivable                                  (6,000)   (235,000)                          -             -
                                            ----------   ---------                  ----------   -----------
  Adjusted income available to common
    stockholders                               803,000   4,850,000      $    0.17      618,000     4,767,000  $    0.13

Effect of dilutive securities:
  Stock options and warrants                         -      56,000                           -       258,000
  Convertible notes                              3,000      78,000                      40,000       857,000
                                            ----------   ---------                  ----------   -----------
Net income per common share,
  assuming dilution:
  Income available to common
    stockholders and assumed conversions    $  806,000   4,984,000      $    0.16   $  658,000     5,882,000  $    0.11
                                            ==========   =========      =========   ==========   ===========  =========

</TABLE>
                                                                 6

<PAGE>
<TABLE>

                                                                          NINE MONTHS ENDED
                                            ---------------------------------------------------------------------------
                                                      FEBRUARY 29, 2000                        FEBRUARY 28, 1999
                                            --------------------------------------   ----------------------------------
                                               Income       Shares      Per Share      Income        Shares     Per Share
                                            (NUMERATOR)  (DENOMINATOR)    Amount     (NUMERATOR)  (DENOMINATOR)  Amount
                                            -----------  -------------  ----------   -----------  ------------  ---------
<S>                                         <C>          <C>            <C>          <C>          <C>           <C>
Net income per common share:
  Income available to common stockholders   $ 1,538,000      4,939,000               $ 1,532,000    4,727,000
  Reduction in shares outstanding in
    connection with stockholder notes
    receivable                                  (10,000)      (117,000)                        -            -
                                            -----------  -------------               -----------  -----------
  Adjusted income available to common
    shareholders                              1,528,000      4,822,000  $     0.32     1,532,000    4,727,000   $    0.32

Effect of dilutive securities:
  Stock options and warrants                          -         42,000                         -      307,000
  Convertible notes                              83,000        590,000                   119,000      857,000
                                            -----------  -------------               -----------  -----------
Net income per common share,
  assuming dilution:
  Income available to common
    stockholders and assumed conversions    $ 1,611,000      5,454,000  $     0.30   $ 1,651,000    5,891,000   $    0.28
                                            ===========  =============  ==========   ===========  ===========   =========
</TABLE>


NOTE 3 - ACCOUNTS AND NOTES RECEIVABLE

Third party accounts and notes  receivable and unbilled  services consist of the
following:

                                         February 29, 2000    May 31, 1999
                                         -----------------    ------------

Due from Rio Grande HMO, Inc.            $  14,216,000        $           -
Contract management receivables              3,170,000            3,869,000
Due from AHCCCSA                             1,697,000            1,810,000
Interest receivable                            170,000              147,000
Other                                          262,000               95,000
                                         -------------        -------------
                                            19,515,000            5,921,000
Less allowance for doubtful accounts            35,000               35,000
                                         -------------        -------------
Net current portion of accounts and
  notes receivables                     $   19,480,000        $   5,886,000
                                        ==============        =============

The amount due from Rio Grande HMO, Inc. primarily  represents revenue earned by
Lifemark  of Texas,  Inc.  ("LMTX"),  a  subsidiary  of the  Company,  which has
contracted  with Rio Grande HMO,  Inc.  ("RGHMO"),  a subsidiary  of Health Care
Services  Corporation  ("HCSC") as  successor to Blue Cross Blue Shield of Texas
("BCBSTX").

The amounts due from AHCCCSA primarily include billed and unbilled  reinsurance,
SOBRA and capitation receivables.

The current portion of related party notes  receivable  are $213,000 and none at
February  29,  2000  and  May  31,  1999  respectively.   The related party note
receivable at February 29, 2000 is due from a Director of the Company.  The note
bears an interest rate of 8% and matures on December 31, 2000.

                                        7

<PAGE>

NOTE 4 - RESTRICTIONS ON FUND TRANSFERS

Certain of the Company's operating subsidiaries are subject to state regulations
which  require   compliance   with  certain  net  worth,   reserve  and  deposit
requirements.  To the extent the operating  subsidiaries  must comply with these
regulations,  they may not have the financial  flexibility  to transfer funds to
the  parent   organization,   Lifemark.   Net  assets  of  subsidiaries   (after
inter-company  eliminations) which, at February 29, 2000, may not be transferred
to Lifemark by  subsidiaries  in the form of loans,  advances or cash  dividends
without the consent of a third party are referred to as "Restricted Net Assets".
Total Restricted Net Assets of these operating  subsidiaries were $12,429,000 at
February 29, 2000, with deposit and reserve requirements representing $6,923,000
of the  Restricted Net Assets and net worth  requirements,  in excess of deposit
and reserve requirements, representing the remaining $5,506,000.

NOTE 5 - BUSINESS SEGMENTS

The Company's business segments consist of management  services,  long-term care
health services and acute care health services.  The management services segment
is engaged in the business of  administering  risk-based  managed care plans and
programs in seven states. Long-term care health services is comprised of Ventana
Health Systems, Inc. ("Ventana"), which is a long-term care Medicaid health plan
operating in seven counties in Arizona;  Lifemark of Texas,  Inc. ("LMTX") which
has  contracted  with  RGHMO  to share  financial  risk in the  state of  Texas'
STAR+PLUS  program  contract in Harris County,  Texas.  Lifemark At Home,  Inc.,
which provides in-home personal, respite,  companionship and homemaking services
to  qualified  recipients  in Arizona.  Acute care health  services  consists of
Arizona  Health  Concepts,  Inc.  ("AHC"),  an acute care  Medicaid  health plan
currently operating in two counties in Arizona.

                                       8
<PAGE>

Information concerning operations by business segment follows:
<TABLE>
<CAPTION>
                                                 For the Three Months Ended February 29, 2000
                                          -----------------------------------------------------------
                                           Management    Long-Term Care      Acute Care
                                            SERVICES     HEALTH SERVICES   HEALTH SERVICES     TOTALS
                                          ------------   ---------------  ----------------     ------
<S>                                       <C>            <C>              <C>                  <C>
Total revenues from reportable segments   $ 13,142,000   $  36,149,000      $  5,399,000   $  54,690,000
Intersegment revenues                       (4,650,000)       (390,000)                -      (5,040,000)
                                          ------------   -------------      ------------   -------------
   Total consolidated revenues            $  8,492,000   $  35,759,000      $  5,399,000   $  49,650,000
                                          ============   =============      ============   =============

Interest income                           $     84,000   $     446,000      $     84,000   $     614,000
Intersegment interest income                         -               -                 -               -
Interest expense                               (99,000)              -                 -         (99,000)
Intersegment interest expense                        -               -                 -               -
                                          ------------   -------------      ------------   -------------
   Net interest income (expense)          $    (15,000)  $     446,000      $     84,000   $     515,000
                                          ============   =============      ============   =============

Depreciation and amortization             $    541,000   $           -      $          -   $     541,000
                                          ============   =============      ============   =============

Segment income (loss) before taxes        $  1,667,000   $     (58,000)     $     30,000   $   1,639,000
                                          ============   =============      ============   =============

Expenditures for capital assets           $  1,111,000   $           -      $          -   $   1,111,000
                                          ============   =============      ============   =============


                                                   For the Three Months Ended February 28, 1999
                                          --------------------------------------------------------------
                                           Management    Long-Term Care      Acute Care
                                            SERVICES     HEALTH SERVICES   HEALTH SERVICES     TOTALS
                                          ------------   ---------------  ----------------     ------
<S>                                       <C>            <C>              <C>                  <C>
Total revenues from reportable segments   $ 11,084,000   $   7,713,000      $  4,381,000   $  23,178,000
Intersegment revenues                       (1,302,000)       (303,000)                -      (1,605,000)
                                          ------------   -------------      ------------   -------------
   Total consolidated revenues            $  9,782,000   $   7,410,000      $  4,381,000   $  21,573,000
                                          ============   =============      ============   =============
Interest income                           $     47,000   $     118,000      $     75,000   $     240,000
Intersegment interest income                         -          (6,000)                -          (6,000)
Interest expense                               (97,000)              -           (97,000)              -
Intersegment interest expense                    6,000               -                 -           6,000
                                          ------------   -------------      ------------   -------------
   Net interest income (expense)          $    (44,000)  $     112,000      $     75,000   $     143,000
                                          ============   =============      ============   =============

Depreciation and amortization             $    543,000   $           -      $          -   $     543,000
                                          ============   =============      ============   =============

Segment income (loss) before taxes        $    103,000   $     547,000      $   (143,000)  $     507,000
                                          ============   =============      ============   =============

Expenditures for capital assets           $    378,000   $           -      $          -   $     378,000
                                          ============   =============      ============   =============
</TABLE>
                                                       9

<PAGE>

<TABLE>
<CAPTION>
                                                 For the Nine Months Ended February 29, 2000
                                          -----------------------------------------------------------
                                           Management    Long-Term Care      Acute Care
                                            SERVICES     HEALTH SERVICES   HEALTH SERVICES     TOTALS
                                          ------------   ---------------  ----------------     ------
<S>                                       <C>            <C>              <C>                  <C>

Total revenues from reportable segments   $ 38,589,000   $  52,780,000      $ 15,058,000   $ 106,427,000
Intersegment revenues                       (7,493,000)     (1,102,000)                -      (8,595,000)
                                          ------------   -------------      ------------   -------------
   Total consolidated revenues            $ 31,096,000   $  51,678,000      $ 15,058,000   $  97,832,000
                                          ============   =============      ============   =============

Interest income                           $    213,000   $     709,000      $    219,000   $   1,141,000
Intersegment interest income                         -          (4,000)                -          (4,000)
Interest expense                              (296,000)              -                 -        (296,000)
Intersegment interest expense                    4,000               -                 -           4,000
                                          ------------   -------------      ------------   -------------

   Net interest income                    $    (79,000)  $     705,000      $    219,000   $     845,000
                                          ============   =============      ============   =============

Depreciation and amortization             $  1,615,000   $           -      $          -   $   1,615,000
                                          ============   =============      ============   =============

Segment income (loss) before taxes        $  3,370,000   $     244,000      $   (685,000)  $   2,929,000
                                          ============   =============      ============   =============

Expenditures for capital assets           $  2,966,000   $           -      $          -   $   2,966,000
                                          ============   =============      ============   =============

Segment total assets                      $ 28,105,000   $  29,663,000      $  7,359,000   $  65,127,000
Intersegment assets                         (8,915,000)       (204,000)         (414,000)     (9,533,000)
                                          ------------   -------------      ------------   -------------
   Total assets                           $ 19,190,000   $  29,459,000      $  6,945,000   $  55,594,000
                                          ============   =============      ============   =============


                                                  For the Nine Months Ended February 28, 1999
                                          -----------------------------------------------------------
                                           Management    Long-Term Care      Acute Care
                                            SERVICES     HEALTH SERVICES   HEALTH SERVICES     TOTALS
                                          ------------   ---------------  ----------------     ------
<S>                                       <C>            <C>              <C>                  <C>
Total revenues from reportable segments   $ 31,573,000   $  22,029,000      $ 12,369,000   $  65,971,000
Intersegment revenues                       (3,678,000)       (837,000)                -      (4,515,000)
                                          ------------   -------------      ------------   -------------
   Total consolidated revenues            $ 27,895,000   $  21,192,000      $ 12,369,000   $  61,456,000
                                          ============   =============      ============   =============

Interest income                           $    132,000   $     357,000      $    255,000   $     744,000
Intersegment interest income                         -         (24,000)                -         (24,000)
Interest expense                              (295,000)              -                 -        (295,000)
Intersegment interest expense                   24,000               -                 -          24,000
                                          ------------   -------------      ------------   -------------
Net interest income (expense)             $   (139,000)  $     333,000      $    255,000   $     449,000
                                          ============   =============      ============   =============

Depreciation and amortization             $  1,685,000   $           -      $          -   $   1,685,000
                                          ============   =============      ============   =============

Segment income (loss) before taxes        $    440,000   $   1,744,000      $   (214,000)  $   1,970,000
                                          ============   =============      ============   =============

Expenditures for capital assets           $  1,003,000               -                 -   $   1,003,000
                                          ============   =============      ============   =============

Segment total assets                      $ 24,388,000   $  11,665,000      $  8,314,000   $  44,367,000
Intersegment assets                         (8,337,000)       (402,000)         (105,000)     (8,844,000)
                                          ------------   -------------      ------------   -------------
   Total assets                           $ 16,051,000   $  11,263,000      $  8,209,000   $  35,523,000
                                          ============   =============      ============   =============

</TABLE>

                                                       10

<PAGE>


ITEM 2. MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL  CONDITION  AND
        RESULTS OF OPERATIONS

INTRODUCTION

Lifemark  Corporation  ("Lifemark"  or the  "Company"),  formerly  Managed  Care
Solutions, Inc., is involved in a variety of health care programs, many of which
serve high risk and chronic populations  including those covered by Medicaid and
Medicare.  Two  subsidiaries  of  the  Company,  Ventana  Health  Systems,  Inc.
("Ventana") and Arizona Health Concepts,  Inc. ("AHC"), derive substantially all
of  their  revenues  through   contracts  with  the  Arizona  Health  Care  Cost
Containment System Administration ("AHCCCSA") to provide specified long-term and
acute care health services,  respectively,  to qualified  members.  The contract
periods  expire  September  30, 2001 and September 30, 2002 for Ventana and AHC,
respectively.  Each  contract  provides  for fixed  monthly  premiums,  based on
negotiated per capita enrollee rates.  Ventana and AHC subcontract  with nursing
homes, hospitals, physicians, and other medical providers within Arizona to care
for members.

Effective December 1, 1999, Lifemark of Texas, Inc. ("LMTX"), another subsidiary
of the Company,  contracted with Rio Grande HMO, Inc. ("RGHMO"), a subsidiary of
Health Care  Service  Corporation  ("HCSC")  formerly  Blue Cross Blue Shield of
Texas  ("BCBSTX"),  to share  financial  risk in the State of  Texas'  STAR+PLUS
program  contract in Harris County,  Texas.  The contract  expires on August 31,
2001, with the option to extend the contract for two additional one-year periods
upon mutual  agreement.  The  STAR+PLUS  program is the State of Texas'  managed
long-term care demonstration  project designed to provide  comprehensive managed
health  care  services  to aged,  blind  and  disabled  Medicaid  beneficiaries,
including  those  needing  long-term  care  services.  Lifemark has administered
RGHMO's   STAR+PLUS   program   ("HMO")   operations  since   its  inception  in
January  1998.  The  current  annualized  RGHMO  revenue  from  this  program is
approximately $100 million, and enrollment is approximately 20,000 members.

The  Company  also  provides  contract  management  services to county and state
governmental units and other health care organizations.  The Company's contracts
typically have multi-year terms, with its existing contracts expiring at various
dates through the year 2002.

RESULTS OF OPERATIONS

Consolidated  revenues for the three and  nine-month  periods ended February 29,
2000 increased 130% and 59%,  respectively,  over the comparable  periods of the
previous  fiscal year. For the three and  nine-month  periods ended February 29,
2000, direct costs of operations increased 182% and 73%, respectively,  over the
same periods of the  previous  fiscal  year.  The increase in both  revenues and
expenses is  primarily a result of the  financial  risk sharing  agreement  with
RGHMO and growth in enrollment in the RGHMO and Community Choice Michigan plans,
along with an increase in membership for both Ventana and AHC.

MANAGEMENT  SERVICES.  For the  three-month  period  ended  February  29,  2000,
revenues generated from fees for management services decreased 13% to $8,492,000
from $9,782,000 for the equivalent period of the prior fiscal year. The decrease
primarily represents the change in a contractual  relationship with RGHMO from a
management  services  agreement  to a financial  risk  sharing  agreement  which
resulted in a reclassification  of $2,684,000 as long-term care service revenues
effective  December  1, 1999.  Excluding  the  impact of this  reclassification,
revenues from management  services  increased  $1,394,000,  which represents 14%
growth during the current quarter as compared with the same quarter of the prior
fiscal  year.  For the  nine-month  period ended  February  29,  2000,  revenues
generated from fees for management  services  increased 11% to $31,096,000  from
$27,895,000 for the corresponding  period of the prior fiscal year. The increase
during both the three and nine-month periods ended February 29, 2000,  excluding
the impact of the  reclassification,  is attributable to the growth in Community
Choice Michigan enrollment,  the acquisition of Advinet, Inc. in March 1999, and
the renegotiated administrative services agreement with AlohaCare.

Direct costs of operations for the three and  nine-month  periods ended February
29, 2000  included  $3,851,000  and  $15,593,000  respectively,  related to fees
generated from management services of health plans and programs. The direct cost
of operations  for management  services as a percentage of related  revenues for
the three and  nine-month  periods ended  February 29, 2000 decreased 7% and 3%,
respectively, from the comparable periods of the previous fiscal year to 45% and
50%, due in part to  initiatives  to strengthen  Lifemark's  infrastructure  and
technology and increased profitability from the Company's renegotiated agreement
with AlohaCare, which was effective August 1, 1999 and expires July 31, 2000.

                                   11
<PAGE>

LONG-TERM CARE HEALTH  SERVICES.  Long-term  care health and personal  services,
which consists of the operations of Ventana,  Lifemark at Home,  Inc., and LMTX,
generated  revenues of $35,759,000  and $51,678,000 for the three and nine-month
periods ended  February 29, 2000,  respectively,  as compared to $7,410,000  and
$21,192,000  for  the  corresponding  periods  of the  prior  fiscal  year.  The
increases  during the three month period ended  February 29, 2000 are  primarily
due to LMTX revenues of  $23,549,000  described  above under the  `Introduction'
caption,  growth in Ventana  membership  with the  addition of two new  counties
which generated revenues of $3,868,000, and the purchase of Valleywide Attendant
Care in January 2000, which contributed revenues of $108,000.

Ventana was awarded  contracts  covering two additional rural Arizona  counties,
effective  December  1, 1999.  These  additional  counties  added 550 members to
Ventana's  membership and accounted for $3,868,000 in additional revenues during
the quarter ended February 29, 2000.

In January 2000, the Company  acquired  Valleywide  Attendant Care, who performs
non-medical  home and community based services in Maricopa and Pinal counties in
Arizona.   The  Company  paid  $143,000  for   Valleywide   Attendant  Care  and
incorporated its operations into its existing Lifemark at Home, Inc. subsidiary.

Direct costs of  operations  related to long-term  care health  services for the
three and  nine-month  periods  ended  February  29, 2000 were  $34,359,000  and
$48,373,000,  respectively,  versus  $6,451,000  and  $18,337,000  for the  same
periods of last fiscal year. As a percentage of related revenues, direct cost of
operations  related to long-term care health  services  increased to 96% and 94%
for the three and  nine-month  periods  ended  February 29, 2000,  respectively,
versus 87% for both  periods of the  previous  fiscal year.  The  increases  are
primarily due to the addition of LMTX, which  experienced  higher direct cost of
operations  as a  percentage  of  related  revenues  than other  long-term  care
services segment operations.

ACUTE CARE HEALTH SERVICES.  Acute care health  services,  which consists of the
operations of AHC,  generated  revenues of $5,399,000  and  $15,058,000  for the
three and nine-month periods ended February 29, 2000, respectively, representing
a 23% and 22%  increase  over the  comparable  periods of the prior fiscal year,
respectively. The change was caused by the recognition of the final prior period
coverage  settlement  for  September 30, 1999,  an  increase  in  membership  of
AHC and  approximately  6%  increase in the capitation rate received by AHC from
AHCCCSA.

Direct costs of operations  related to acute care health  services for the three
and nine-month  periods ended February 29, 2000 were $5,208,000 and $15,258,000,
respectively,  versus  $4,470,000  and  $12,479,000  for the same periods of the
previous  fiscal year.  Direct costs of  operations  as a percentage  of related
revenues  decreased to 96% for the three month  period  ended  February 29, 2000
versus 102% for the comparable  period of the prior fiscal year,  while the nine
month  period  ended  February  29, 2000  remained at 101% when  compared to the
comparable  period  from the prior  fiscal  year.  The change  relates to higher
revenues  generated by AHC due to a reconciliation  of capitation  reimbursement
from AHCCCSA.

MARKETING,  SALES  AND  ADMINISTRATIVE.   Marketing,  sales  and  administrative
expenses  decreased  $37,000 to  $5,108,000  for the  three-month  period  ended
February 29,  2000,  when  compared to the same period for the  previous  fiscal
year.  Marketing,   sales  and  administrative   expenses  as  a  percentage  of
consolidated  revenue  were  10%  and  17%,  respectively,  for  the  three  and
nine-month periods ended February 29, 2000 versus 24% and 23%, respectively, for
the corresponding periods of the previous year. The decrease in marketing, sales
and  administrative  expenses  for the three  months  ended  February  29,  2000
compared with the same quarter of the prior fiscal year is primarily a result of
LMTX entering into the financial  risk sharing  agreement  with RGHMO  effective
December  1, 1999.  LMTX,  similar to other  health plan  operations,  typically
experiences significantly less marketing, sales and administrative expenses as a
percentage  of related  revenue when compared  with an  administrative  services
contract structure. An increase in profitability due to membership growth in the
RGHMO and Community  Choice Michigan plans has also contributed to the reduction
in  marketing,  sales and  administrative  expenses as a  percentage  of related
revenue during the current fiscal year. In addition, prior year marketing, sales
and  administrative  expenses  included  consulting  fees related to  management
reorganization  and process redesign  intended to improve the Company's  service
delivery system.  The Company did not incur significant  consulting fees related
to this initiative in the current fiscal year.

                                       12
<PAGE>

INTEREST  INCOME.  Interest  income for the three and  nine-month  periods ended
February 29, 2000 was $614,000 and $1,137,000  versus  $234,000 and $720,000 for
the same periods of the prior  fiscal year.  The  additional  income  during the
current fiscal year is primarily  attributable  to LMTX's share of income earned
on investments  attributable to RGHMO's STAR+PLUS operations of $256,000 as well
as the growth of the Company's interest bearing cash and cash equivalents.

INTEREST  EXPENSE.  Interest  expense was $99,000 and $292,000 for the three and
the  nine-month  periods ended February 29, 2000,  respectively,  as compared to
$91,000 and $271,000  for the same  periods of the last fiscal year.  During the
current  quarter,  Lifemark  repaid  its  $3,000,000  convertible  loan to HCSC,
replacing  it with a  four-year  term note with a bank.  The warrant to purchase
100,000  shares of the  Company's  common stock held by HCSC as part of the loan
transaction  was also  terminated.  The loans  mentioned  above  coupled with an
interim  funding  agreement  obtained  from a bank during the fourth  quarter of
fiscal year 1999 were the  primary  reasons for the  interest  expense  incurred
during both the three and  nine-months  periods  ended  February 29,  2000.  The
Company   has   borrowed   $841,000   under   this   funding   agreement  as  of
February 29, 2000.

INCOME TAXES. Income tax expense was $830,000 and $1,391,000 for the three-month
and nine-month periods ended February 29, 2000, respectively.  The effective tax
rates were 51% and 47%, respectively. These rates were higher than the statutory
rates  for  the  respective   periods  primarily  due  to  the  amortization  of
non-deductible  goodwill expense.  During the three-month and nine-month periods
ended  February 28, 1999,  the  effective  tax rate was 22%.  These rates were a
result of the  reduction  in the deferred  tax  valuation  allowance of $366,000
based on the Company's  assessment of the  realizeability of deferred tax assets
partially offset by amortization of non-deductible goodwill expense.

NET INCOME.  Net income for the three and nine-month  periods ended February 29,
2000 was $809,000 and  $1,538,000 as compared to $618,000 and $1,532,000 for the
comparable  periods of the previous  fiscal year. The increase in  profitability
for the three and nine-month periods ended February 29, 2000 is primarily due to
the enhanced profitability in the management services segment with the growth in
enrollment in the Community  Choice Michigan and RGHMO plans.  The  renegotiated
administrative  service  agreement  with AlohaCare effective August 1, 1999 also
contributed to the increase  in  net income.  Additional  income  generated from
the  management  services  segment was partially  offset by  increases in direct
expenses as a percentage of related revenue in the long-term care and acute care
health service segments.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents increased to $15,924,000 at February 29,
2000 from $13,792,000 at May 31, 1999. Operating activities generated $8,635,000
for the nine-month  period ended February 29, 2000 versus  $3,444,000 during the
same period of the previous fiscal year. The primary reasons for the increase in
cash are earnings  before  non-cash  charges,  a refundable  deposit of $650,000
obtained from AlohaCare pursuant to the terms of the renegotiated administrative
services agreement,  receipt of a $600,000 incentive fee payment pursuant to the
administrative  services  agreement  with RGHMO,  an increase in accrued  income
taxes and an increase in accrued medical expenses. The growth in accrued medical
expenses  was related to LMTX  operations,  and for both  Ventana  and AHC,  the
annual  increases  in  fee-for-service  rates  paid to  providers  coupled  with
enrollment  growth.  The growth in cash was  partially  offset by an increase in
accounts receivable caused by the  financial risk  sharing  agreement with RGHMO
and  a  payment  of  $844,000  in  interest  to  HCSC relating to the $3,000,000
convertible debt.

Investing  activities used  $7,105,000 for the nine-month  period ended February
29, 2000 as compared to $232,000  during the  corresponding  period of the prior
fiscal year.  Cash of  $2,966,000  was used to purchase  fixed assets during the
nine-month period ended February 29, 2000. Other uses of cash for the nine-month
period ended February 29, 2000 included the purchase of a certificate of deposit
for  $2,878,000.  The  Company  pledged the  certificate  of deposit to RGHMO to
secure its  obligations  under the financial  risk sharing  agreement with RGHMO
effective  December 1999. In addition,  Ventana and AHC invested  $2,398,000 and
$222,000 in assets securing performance bonds during the nine-month period ended
February 29, 2000, due to increased enrollment.  During the same period, sources
of cash included the sale of fixed assets to AlohaCare for $285,000 pursuant  to
the terms of the  renegotiated  administrative  services  agreement and maturity
of Ventana's short-term investments of $501,000.  During  the  nine-month period
ended February  28, 1999, cash was used to purchase  $1,003,000  of fixed assets
and $1,645,000 was used to purchase additional short-term investments.

                                       13
<PAGE>

Financing  activities generated $602,000 and $43,000 for the nine-month  periods
ended February 29, 2000 and 1999, respectively.  Issuance  of common stock under
the employee stock purchase plan  provided  $198,000  for the nine-month  period
ended  February 29, 2000  while  principal  payments  on long-term debt utilized
$155,000.  During  the  current  quarter,  the  Company  repaid  its  $3,000,000
convertible loan to HCSC,  replacing it with a four-year  term note with a bank.
The warrant held by HCSC to  purchase  100,000  shares  of the  Company's common
stock was also terminated as part of the transaction.

Certain of the Company's operating subsidiaries are subject to state regulations
which require compliance with net worth,  reserve and deposit  requirements.  To
the extent the operating  subsidiaries must comply with these regulations,  they
may not have the financial flexibility to transfer funds to Lifemark. Net assets
of subsidiaries (after inter-company  eliminations) which, at February 29, 2000,
may not be  transferred  to  Lifemark  by  subsidiaries  in the  form of  loans,
advances or cash dividends  without the consent of a third party are referred to
as  "Restricted  Net Assets".  Total  Restricted  Net Assets of these  operating
subsidiaries  was  $12,429,000  at February 29,  2000,  with deposit and reserve
requirements  (performance bonds) representing  $6,923,000 of the Restricted Net
Assets  and  net  worth   requirements,   in  excess  of  deposit   and  reserve
requirements,  representing  the  remaining  $5,506,000.  There  were  no  funds
provided by Ventana to Lifemark under loan agreements at February 29, 2000.

The Company believes that its existing capital resources and cash flow generated
from  future  operations  will  enable  it to  maintain  its  current  level  of
operations and its planned operations, including capital expenditures, in fiscal
year 2000.

FORWARD-LOOKING INFORMATION

This  report   contains  both   historical  and   forward-looking   information.
Forward-looking  statements  include,  but are not limited to, discussion of the
Company's strategic goals, new contracts,  possible expansion of existing plans,
expected increase in certain expenses,  and cash flow. These statements speak of
the  Company's  plans,  goals  or  expectations  and  refer  to  estimates.  The
forward-looking   statements  may  be   significantly   impacted  by  risks  and
uncertainties,  and are made  pursuant  to the  safe  harbor  provisions  of the
Private  Securities  Litigation Reform Act of 1995 (the "Reform Act"). There can
be no assurance that anticipated  future results will be achieved because actual
results  may differ  materially  from  those  projected  in the  forward-looking
statements.  Readers are cautioned that a number of factors, which are described
herein and in the  Company's  Form 10-K for the year ended May 31,  1999,  could
adversely  affect the Company's  ability to obtain these results.  These include
the effects of either federal or state health care reform or other  legislation;
changes in reimbursement system trends, the ability of care providers (including
physician practice management groups) to comply with current contract terms; and
renewal of the Company's  contracts  with various  state and other  governmental
entities.  Such  factors  also  include  the effects of other  general  business
conditions, including but not limited to, government regulation, competition and
general  economic  conditions.  The cautionary  statements  made pursuant to the
Reform  Act herein and  elsewhere  by the  Company  should not be  construed  as
exhaustive or as any admission regarding the adequacy of disclosures made by the
Company prior to the effective date of the Reform Act. The Company cannot always
predict what factors would cause actual results to differ  materially from those
indicated by the forward-looking  statements. In addition,  readers are urged to
consider  statements  that include the terms  "believes",  "belief",  "expects",
"plans", "objectives",  "anticipates", "intends" or the like to be uncertain and
forward-looking.

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company is subject to the risk of fluctuating interest rates in the ordinary
course of business on certain  assets and  liabilities  including  cash and cash
equivalents,  short-term  investments  and long-term  debt. The Company does not
expect changes in interest  rates to have a significant  effect on the Company's
operations, cash flow or financial position.

                                   14
<PAGE>


PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company is a party to an administrative  services  agreement with Rio Grande
HMO, Inc. ("RGHMO"), a wholly owned subsidiary of HCSC. Under the agreement, the
Company  administers  RGHMO's STAR+PLUS  operations in Texas and is responsible,
among other things, for developing and maintaining  RGHMO's provider network and
for  administering  the claims  adjudication and payment  functions.  On July 5,
1997,   RGHMO  entered  into  agreement  for  medical  services  with  Universal
Healthplan,  Inc. ("Universal"),  a Texas health maintenance  organization.  The
agreement  provided for Universal to provide  hospitalization  services to RGHMO
members through Universal's  contract with Tenet Health Care Ltd.  ("Tenet"),  a
hospital chain.  Tenet asserts that RGHMO owes it  approximately  $6,500,000 for
claims allegedly  improperly denied or paid at incorrect rates. On July 1, 1999,
Tenet filed a demand for arbitration  against RGHMO to recover such amounts.  On
March 23, 2000, RGHMO filed a demand for arbitration  against the Company in the
same  arbitration  alleging  that because the Company is  responsible  for claim
adjudication, the Company should be responsible for any amount determined by the
arbitrators  to be due to Tenet.  The  Company  believes  that there is no valid
basis for its inclusion in the arbitration action. The Company also believes its
adjudication of the Tenet claims on RGHMO's behalf was appropriate and Tenet was
paid what it was owed. Accordingly, the Company intends to vigorously assert its
position in this matter.

The  Company  is also a party to  various  claims  and legal  proceedings  which
management  believes  are in the normal  course of business and will not involve
any material loss.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits

              10.1  Health  Services  Agreement between Rio Grande HMO, Inc. and
                    Lifemark of Texas, Inc. *
              10.2  Amended  and   Restated  Administrative  Services  Agreement
                    between Rio Grande HMO, Inc. and the Registrant *
              27    Financial data schedule

(b)   Reports on Form 8-K

              None





* Confidential treatment requested

                                   15

<PAGE>




SIGNATURES

Pursuant  to the  requirements  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.

                        LIFEMARK CORPORATION

                        By:   /S/ RHONDA E. BREDE
                              ----------------------------------------------
                              Rhonda E. Brede, President and Chief Executive
                              Officer (Principal Executive Officer)

                        By:   /S/ MICHAEL J. KENNEDY
                              ----------------------------------------------
                              Michael J. Kennedy, Vice President and Chief
                              Financial Officer (Principal Financial and
                              Accounting Officer)

                        Dated:      April 14, 2000


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