<PAGE>


================================================================================


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q

               QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

                       THE SECURITIES EXCHANGE ACT OF 1934



                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999

                         COMMISSION FILE NUMBER 0-19600


                                   CORE, INC.
             (Exact name of registrant as specified in its charter)

           MASSACHUSETTS                         04-2828817
  (State or other jurisdiction of             (I.R.S. Employer
   incorporation or organization)             Identification No.)


         18881 VON KARMAN AVENUE, SUITE 1750, IRVINE, CALIFORNIA 92612
              (Address of principal executive offices) (zip code)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 442-2100

       Indicate by check "X" 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 ___


            On August 9, 1999 there were 7,916,777 shares of the Registrant's
Common Stock outstanding.

<PAGE>

                                   CORE, INC.
                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 1999

                                TABLE OF CONTENTS

<TABLE>
<S>              <C>                                                                                          <C>
PART I           FINANCIAL INFORMATION                                                                        Page

Item 1.          Financial Statements

                 Consolidated Condensed Balance Sheets                                                          3

                 Consolidated Condensed Statements of Operations                                                5

                 Consolidated Condensed Statements of Cash Flows                                                6

                 Notes to Consolidated Condensed Financial Statements                                           7

Item 2.          Management's Discussion and Analysis of Financial Condition and Results of Operations         10

Item 3.          Quantitative and Qualitative Disclosures About Market Risk                                    16


PART II          OTHER INFORMATION

Item 1.          Legal Proceedings                                                                             N/A

Item 2.          Changes in Securities and Use of Proceeds                                                     N/A

Item 3.          Defaults Upon Senior Securities                                                               N/A

Item 4.          Submission of Matters to a Vote of Security Holders                                           N/A

Item 5.          Other Information                                                                             N/A

Item 6.          Exhibits and Reports on Form 8-K                                                              16

Signatures                                                                                                     17
</TABLE>


                                       2


<PAGE>

                                   CORE, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                              JUNE 30,                DECEMBER 31,
                                                                                1999                     1998
                                                                            (UNAUDITED)                (NOTE 1)
                                                                            -------------------------------------
<S>                                                                         <C>                      <C>
ASSETS
Current assets:
Cash and cash equivalents                                                  $     629,105             $  2,226,020
Accounts receivable, net of allowance for doubtful accounts of
  $495,447 at June 30, 1999 and $405,013 at December 31, 1998                 12,506,970                8,280,630
Unbilled receivables                                                           1,984,825                1,395,500
Notes receivable from officers                                                    80,062                   90,462
Prepaid expenses and other current assets                                        915,714                1,080,993
                                                                            -------------------------------------
Total current assets                                                          16,116,676               13,073,605

Property and equipment, net                                                    9,116,805                7,931,150
Deposits and other assets                                                      1,814,353                  618,487
Goodwill and intangibles, net of accumulated
  amortization of $1,595,971 at June 30, 1999
  and $863,077 at December 31, 1998                                           26,375,404               27,108,298
                                                                            -------------------------------------
Total assets                                                                $ 53,423,238             $ 48,731,540
                                                                            =====================================

</TABLE>


                                       3

<PAGE>

                                   CORE, INC.
                CONSOLIDATED CONDENSED BALANCE SHEETS - CONTINUED

<TABLE>
<CAPTION>
                                                                               JUNE 30,           DECEMBER 31,
                                                                                 1999                 1998
                                                                             (UNAUDITED)            (NOTE 1)
                                                                            -----------------------------------
<S>                                                                         <C>                   <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
   Accounts payable                                                         $   2,305,370         $   1,363,785
   Accrued expenses                                                             2,089,359             2,076,933
   Advances under revolving credit agreement                                      150,000             2,750,000
   Accrued payroll                                                                918,429               807,124
   Accrued vacation                                                               847,740               717,500
   Notes payable                                                                  169,269               259,510
   Capital lease obligations                                                       62,868                 6,015
                                                                            -----------------------------------
Total current liabilities                                                       6,543,035             7,980,867

Advances under revolving credit agreement, net of current portion              16,750,000            13,750,000
Notes payable, net of current portion                                              81,236               123,633
Deferred rent, net of current portion                                              62,898                50,410
Capital lease obligations, net of current portion                                 235,760                    --


Stockholders' equity:
 Preferred  stock, no par value, authorized 500,000 shares;
   no shares outstanding                                                               --                    --
 Common  stock, $0.10 par value per share; authorized
   30,000,000  shares; issued and outstanding 7,915,407 at
   June 30, 1999 and 7,824,512 at December 31, 1998                               791,541               782,451
Additional paid-in capital                                                     38,549,729            37,778,640
Deferred compensation                                                              (6,697)               (6,697)
Accumulated deficit                                                            (9,584,264)          (11,727,764)
                                                                            -----------------------------------
Total stockholders' equity                                                     29,750,309            26,826,630
                                                                            -----------------------------------
Total liabilities and stockholders' equity                                  $  53,423,238         $  48,731,540
                                                                            ===================================
</TABLE>


See accompanying notes.


                                       4



<PAGE>

                                   CORE, INC.
           CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED JUNE 30,            SIX MONTHS ENDED JUNE 30,
                                                ------------------------------------------------------------------
                                                    1999              1998              1999              1998
                                                ------------------------------------------------------------------
<S>                                             <C>               <C>               <C>               <C>
Revenues                                        $ 16,706,465      $ 10,760,251      $ 31,402,096      $ 20,930,741
Cost of services                                   9,808,111         6,822,535        18,327,696        13,442,573
                                                ------------------------------------------------------------------
Gross profit                                       6,898,354        3,937,716         13,074,400         7,488,168

Operating expenses:
    General and administrative                     2,986,906         2,247,152         5,872,416         4,478,289
    Sales and marketing                            1,091,534           899,770         2,106,502         1,717,516
    Depreciation and amortization                    973,739           495,206         1,839,174         1,011,052
    Provision for doubtful accounts                  215,000            15,000           215,000            15,000
    Write-off of goodwill and intangibles               --           4,085,449              --           4,085,449
    Arbitration costs                                   --             736,006              --             736,009
    Other non-recurring charges                         --             114,277              --             114,277
                                                ------------------------------------------------------------------
       Total operating expenses                    5,267,179         8,592,860        10,033,092        12,157,592
                                                ------------------------------------------------------------------

Income (loss) from operations                      1,631,175        (4,655,144)        3,041,308        (4,669,424)

Other income (expense):
    Gain on sale of subsidiary assets, net           331,567              --             331,567               --
    Interest income                                    2,121            94,885             4,442           247,899
    Interest expense                                (388,066)           (5,558)         (750,497)           (8,436)
                                                ------------------------------------------------------------------
       Total other income (expense)                  (54,378)           89,327          (414,488)          239,463
                                                ------------------------------------------------------------------

Income (loss) before income taxes                  1,576,797        (4,565,817)        2,626,820        (4,429,961)
    Income tax benefit (provision)                  (315,359)           60,000          (483,320)          135,000
                                                ------------------------------------------------------------------

Net income (loss)                               $  1,261,438      $ (4,505,817)     $  2,143,500      $ (4,294,961)
                                                ==================================================================

Net income (loss) per common share:
    Basic                                       $       0.16      $      (0.61)     $       0.27      $      (0.59)
                                                ==================================================================
    Diluted                                     $       0.15      $      (0.61)     $       0.26      $      (0.59)
                                                ==================================================================
Weighted average number of common
 shares and equivalents outstanding:
    Basic                                          7,904,000         7,327,000         7,879,000         7,319,000
                                                ==================================================================
    Diluted                                        8,497,000         7,327,000         8,399,000         7,319,000
                                                ==================================================================
</TABLE>


See accompanying notes.


                                       5

<PAGE>

                                   CORE, INC.
           CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)


<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED JUNE 30,
                                                                          --------------------------------
                                                                              1999                1998
                                                                          --------------------------------
<S>                                                                       <C>                 <C>
Net cash provided by (used in) operating activities                       $    166,085        $   (445,574)

Investing activities:
   Additions to property and equipment                                      (2,203,539)         (1,740,461)
   Additions to goodwill and intangible assets                                 --                 (235,394)
   Proceeds from sale of subsidiary assets                                      50,000             --
   Decrease (increase) in deposits and other assets                            (23,994)            330,670
   Purchases of investments available-for-sale                                 --              (16,579,100)
   Sales of investments available-for-sale                                     --               15,527,913
                                                                          --------------------------------
Net cash used in investing activities                                       (2,177,533)         (2,696,372)

Financing activities:
   Borrowings under credit agreement                                         4,300,000             --
   Repayments under credit agreement                                        (3,900,000)            --
   Payments for origination and other fees pursuant to credit agreement       (347,276)            --
   Payments on obligation from acquisition                                       --             (1,125,000)
   Payments on notes payable                                                  (132,638)            (26,543)
   Payments on capital lease obligations                                       (21,732)            (16,651)
   Issuance of common stock upon exercise of stock options                     516,179             156,756
                                                                          --------------------------------
Net cash provided by (used in) financing activities                            414,533          (1,011,438)
                                                                          --------------------------------
Net decrease in cash and cash equivalents                                   (1,596,915)         (4,153,384)
Cash and cash equivalents at beginning of period                             2,226,020           7,944,595
                                                                          --------------------------------
Cash and cash equivalents at end of period                                $    629,105        $  3,791,211
                                                                          ================================
</TABLE>


See accompanying notes.


                                       6

<PAGE>

                                   CORE, INC.
        NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
                                  JUNE 30, 1999

NOTE 1 - BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission, but do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The balance sheet at December 31, 1998 has been derived
from the audited financial statements of CORE, INC. ("CORE") at that date.

In the opinion of management, all adjustments (consisting of only normal
recurring adjustments) considered necessary for a fair presentation have been
included. Operating results for the six-month period ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999. For further information, refer to the consolidated financial
statements for the year ended December 31, 1998 contained in CORE's annual
report on Form 10-K filed April 1, 1999, as amended by CORE's Form 10-K/A filed
with the Securities and Exchange Commission on April 29, 1999.

NOTE 2 - BUSINESS ACQUISITIONS

On September 1, 1998, CORE acquired all shares of stock of Disability
Reinsurance Management Services, Inc. ("DRMS"), a Delaware corporation, pursuant
to a Capital Stock Purchase Agreement dated as of August 31, 1998 (the "Stock
Purchase Agreement") in a transaction accounted for as a purchase. Pursuant to
the Stock Purchase Agreement, all shares of stock of DRMS were acquired in
exchange for a $20,000,000 cash payment, the issuance of 480,000 shares of
CORE's common stock and the future issuance of up to an additional $7,000,000 of
CORE's common stock after September 30, 2001, based upon the future performance
of DRMS. The purchase price is subject to certain adjustments as set forth in
the Stock Purchase Agreement. The excess of the purchase price over the
estimated fair market value of the net assets acquired, representing goodwill
and certain identifiable intangibles amounting to approximately $22,762,000, is
being amortized on a straight-line basis over periods of three to thirty-five
years. DRMS is a full service reinsurance intermediary manager providing
marketing, underwriting advice, claims, actuarial and compliance services to its
insurance company clients and risk management expertise for reinsurers in a
reinsurance facility.

On March 17, 1998, a wholly-owned subsidiary of CORE, TCM Services, Inc. ("TCM")
purchased the operating assets and certain liabilities of Transcend Case
Management, Inc. ("Transcend") pursuant to an Asset Purchase Agreement (the
"Asset Purchase Agreement") in a transaction accounted for as a purchase.
Transcend is a provider of workers' compensation case management services.
Pursuant to the Asset Purchase Agreement, the assets of Transcend were acquired
in exchange for the assumption of certain liabilities and a contingent issuance
of shares of common stock of CORE, the number of which was to be equal to a
valuation based upon the future performance of the acquired operations. On
December 23, 1998, TCM transferred substantially all its assets and certain
liabilities to Transcend following the exercise by Transcend of its option to
reacquire the assets, as described in the Asset Purchase Agreement.

The unaudited consolidated condensed financial statements include the operating
results of DRMS and TCM from the dates of acquisition. The following unaudited
pro forma results of operations for the six months ended June 30, 1999 and 1998
has been prepared as if the acquisition of DRMS had occurred on January 1, 1998
and the TCM acquisition and subsequent disposition had not occurred at all. The
pro forma financial information also includes adjustments related to the DRMS
acquisition for amortization of intangibles arising from the transaction,
interest expense incurred on funds borrowed to finance the transaction,
reductions in interest income from the use of short-term investments to fund the
transaction and for additional shares of common stock and stock options issued
in the transaction.


                                       7

<PAGE>

                                   CORE, INC.
  NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED


NOTE 2 - BUSINESS ACQUISITIONS (CONTINUED)

<TABLE>
<CAPTION>
                                                      Six months ended June 30,
                                                      1999                1998
                                                   ------------------------------
      <S>                                          <C>                <C>
      Revenues                                     $31,402,000        $23,113,000
                                                   ==============================
      Net income (loss)                            $ 2,144,000        $(4,735,000)
                                                   ==============================
      Net income (loss) per common share:
            Basic                                  $      0.27        $     (0.61)
                                                   ==============================
            Diluted                                $      0.26        $     (0.61)
                                                   ==============================
</TABLE>

The pro forma financial information is presented for informational purposes only
and is not necessarily indicative of what the actual consolidated results of
operations might have been had the transactions occurred on January 1, 1998.


NOTE 3 - SALE OF SUBSIDIARY ASSETS

On June 21, 1999, CORE sold the assets of one of its' operating subsidiaries,
Integrated Behavioral Health, a California corporation ("IBH"), to a
non-affiliated party for $50,000 in cash and a $462,500 promissory note. A net
gain of $332,000 was realized from the sale of assets. IBH provided mental
health case management services.


NOTE 4 - CREDIT AGREEMENT

On August 31, 1998, CORE entered into a revolving line of credit agreement (the
"Credit Agreement") with Fleet National Bank ("Fleet"). Under the terms of the
Third Amendment to the Credit Agreement dated April 28, 1999 (the "Third
Amendment"), CORE may borrow up to specified amounts at either (i) the prime
base rate plus 0.50%, or (ii) the London Interbank Offered Rate ("LIBOR") plus
3.50%. The maximum credit availability under the Third Amendment of $18,500,000
is subject to mandatory commitment reductions each quarter (beginning on March
31, 2000) in amounts ranging from $875,000 to $1,250,000. The Third Amendment
extended the credit facility through June 30, 2004.

At June 30, 1999 and December 31, 1998, CORE had outstanding borrowings of
$16,900,000 and $16,500,000, respectively, under the Credit Agreement which were
all tied to the prime base lending rate (7.75%) plus the applicable margin. The
Credit Agreement is secured by substantially all of CORE's assets and requires
CORE to meet certain financial covenants, including minimum ratios for interest,
debt service and fixed charge coverage along with minimum net worth levels.
Additionally, the Credit Agreement prohibits the payment of dividends by CORE
without the Bank's written consent. CORE was in compliance with the financial
covenants contained in the Credit Agreement at June 30, 1999.

CORE has entered into an interest rate protection arrangement with Fleet that
limits CORE's exposure to significant increases in the base lending rate. The
arrangement places an effective cap on the prime base lending rate at 9.75% (or
LIBOR at 6.75%) for a substantial portion of the outstanding borrowings over the
life of the Credit Agreement.

In connection with the Credit Agreement and related amendments, CORE has issued
two Warrants to purchase shares of its Common Stock to Fleet. The original
Warrant granted on August 31, 1998 entitles the holder to purchase up to 156,322
shares of CORE's Common Stock (subject to certain adjustments), at an exercise
price of $6.92 per share. The original Warrant is exercisable beginning August
31, 1999 and expires August 31, 2003. The second Warrant granted in connection
with the Third Amendment to the Credit Agreement, entitles the holder to
purchase up to 187,000 shares of CORE's Common Stock (subject to certain
adjustments), at an exercise price of $12.00 per share. The second Warrant was
exercisable upon the April 1999 execution of the Third Amendment and expires
June 30, 2004.


                                       8

<PAGE>

                                   CORE, INC.
  NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED

NOTE 5 - EARNINGS PER COMMON SHARE

The following table sets forth the computation of basic and diluted earnings
(loss) per share for the periods indicated:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED JUNE 30,      SIX MONTHS ENDED JUNE 30,
                                                                  1999            1998            1999            1998
                                                              -----------------------------------------------------------
<S>                                                           <C>             <C>             <C>             <C>
   Numerator:
      Net income (loss)                                       $ 1,261,000     $(4,506,000)    $ 2,144,000     $(4,295,000)
                                                              ===========================================================
   Denominator:
      Denominator for basic earnings (loss) per
         share: weighted-average shares                         7,904,000       7,327,000       7,879,000       7,319,000
      Effect of dilutive stock options and warrants               593,000          --             520,000          --
                                                              -----------------------------------------------------------
      Denominator for diluted earnings (loss) per share:
           adjusted weighted-average shares                     8,497,000       7,327,000       8,399,000       7,319,000
           and assumed conversions
                                                              ===========================================================
   Basic earnings (loss) per share                            $      0.16     $     (0.61)    $      0.27    $      (0.59)
                                                              ===========================================================
   Diluted earnings (loss) per share                          $      0.15     $     (0.61)    $      0.26    $      (0.59)
                                                              ===========================================================
</TABLE>


NOTE 6 - SEGMENT REPORTING

CORE reports segment information in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 131 "Disclosures about Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way that public companies report information about operating segments and
related disclosures about products and services, geographic areas and major
customers. CORE operates in a single industry segment: employee absence
management services.


NOTE 7 - COMPREHENSIVE INCOME

Total comprehensive income (loss) was $1,261,000 and $2,144,000 for the three
and six months ended June 30, 1999 and $(4,506,000) and $(4,295,000) for the
three and six months ended June 30, 1998, respectively.


NOTE 8 - ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." CORE expects to
adopt the new Statement effective January 1, 2000. SFAS No. 133 will require
CORE to recognize all derivatives on the balance sheet at fair value. CORE does
not anticipate that the adoption of SFAS No. 133 will have a significant effect
on its results of operations or financial position.


                                       9

<PAGE>

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

OVERVIEW

CORE, INC. ("CORE") is a national provider of employee absence management
services to Fortune 500 companies and other self-insured employers, third-party
administrators and insurance carriers. CORE's services include Integrated
Disability Management (which consist of CORE's proprietary WorkAbility(R)
Absence Management program, turnkey disability reinsurance management services,
social security disability benefits advocacy, analytic consulting services,
onsite job profiling and analysis and workplace risk management services, and
licensing), Peer Review Analysis (which consist of specialty physician and
behavioral health review services), and other services including Medicare
coordination of benefits, health care benefits utilization review and case
management services. CORE's services are designed to prevent absence, promote
early return to work, improve productivity, and manage disabilities from "day
one" through return to work or retirement, without compromising the quality of
health care services provided to patients.

CORE is typically compensated for these services either on a per employee per
month, per case, hourly, percentage of risk premium (for full service
reinsurance management services) or percentage of cost recovery (for social
security advocacy and Medicare benefits services) basis. The integrated
disability management services line also includes a limited amount of revenue
(1% for the six months ended June 30, 1999) from licensing fees attributable to
license grants by CORE of the medical protocol portion of the WorkAbility
software program.

This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995 and CORE's
actual results could differ materially from those contemplated by such
statements. Such statements reflect management's current views, are based on
many assumptions and are subject to risks and uncertainties. Some important
factors CORE believes could cause such results to differ include CORE's reliance
on its WorkAbility program, CORE's dependence on key clients, risks associated
with CORE's growth strategy, increases or changes in government regulation and
competition. The foregoing list of factors is not intended to represent a
complete list of the general or specific risks that may affect CORE. It should
be recognized that other risks might be significant, presently or in the future.

CURRENT DEVELOPMENTS

On June 21, 1999, CORE sold the assets of one of its' operating subsidiaries,
Integrated Behavioral Health, a California corporation ("IBH"), to a
non-affiliated party for $50,000 in cash and a $462,500 promissory note. A net
gain of $332,000 was realized from the sale of assets. IBH provided mental
health case management services.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data for the
periods indicated expressed as a percentage of revenues:

<TABLE>
<CAPTION>
                                            THREE MONTHS ENDED           SIX MONTHS ENDED
                                                 JUNE 30,                    JUNE 30,
                                         ------------------------------------------------------
                                             1999          1998         1999          1998
                                         ------------------------------------------------------
<S>                                      <C>            <C>          <C>          <C>
Revenue                                      100.0%       100.0%       100.0%        100.0%
Cost of services                               58.7         63.4         58.4          64.2
Gross profit                                   41.3         36.6         41.6          35.8
General and administrative expense             17.9         20.9         18.7          21.4
Sales and marketing expense                     6.5          8.4          6.7           8.2
</TABLE>


                                      10

<PAGE>

The following table sets forth the contribution to total revenues of each of
CORE's principal service lines for the periods indicated:

<TABLE>
<CAPTION>
                                   THREE MONTHS ENDED JUNE 30,                   SIX MONTHS ENDED JUNE 30,
                                    1999                 1998                   1999                   1998
                              -----------------------------------------------------------------------------------
                               Amount   Percent     Amount   Percent       Amount   Percent     Amount    Percent
                              -----------------------------------------------------------------------------------
                                     (Dollars in thousands)                         (Dollars in thousands)
<S>                           <C>       <C>         <C>      <C>          <C>       <C>         <C>       <C>
Integrated Disability
   Management                 $12,131        73%    $ 6,115       57%     $22,508        72%    $11,370        54%
Peer Review Analysis            2,242        13       1,909       18        4,471        14       3,949        19
Exiting/exited services           452         3         998        9        1,008         3       1,784         9
Other service lines             1,881        11       1,738       16        3,415        11       3,828        18
                              ===================================================================================
                              $16,706       100%    $10,760      100%     $31,402       100%    $20,931       100%
                              ===================================================================================
</TABLE>



THREE AND SIX MONTHS ENDED JUNE 30, 1999 AND 1998

Revenues increased by $5,946,000 (55%) to $16,706,000 for the three months ended
June 30, 1999 from $10,760,000 for the second quarter of 1998. For the six
months ended June 30, 1999 revenues increased $10,471,000 (50%) to $31,402,000
in 1999 from $20,931,000 in 1998. Growth in Integrated Disability Management
contributed $6,016,000 (101%) and $11,138,000 (106%) of CORE's overall net
increase in revenues for the three and six-month periods ended June 30, 1999,
respectively, as compared to the same periods in 1998. CORE's WorkAbility
Absence Management program contributed 64% of the increase in Integrated
Disability Management for the six-month period ended in 1999 as compared to the
same period in 1998 due to the addition of new clients and expansion of services
to existing clients over the course of 1998 and into the first six months of
1999. Revenues for the Integrated Disability Management service line now include
revenues from Disability Reinsurance Management Services, Inc. ("DRMS") acquired
in September 1998 which expanded CORE's programs to include turnkey disability
reinsurance management services. Revenues from DRMS contributed 35% of the
increase in Integrated Disability Management revenues for the six month period
ended in 1999 as compared to the same period in 1998.

Revenues from the Peer Review Analysis service line increased $333,000 (17%) and
$522,000 (13%) for the three and six-month periods ended June 30, 1999 as
compared to the same periods in the prior year mostly due to an increase in the
volume of referrals for specialty physician review services.

Revenues from services that CORE exited or expected to exit decreased $546,000
(55%) and $776,000 (43%) for the three and six-month periods ended June 30, 1999
as compared to the same periods in the prior year. During 1998, these service
lines consisted of regional workers' compensation case management services of
both Cost Review Services, Inc. ("CRS") and TCM Services, Inc. ("TCM"), regional
bill audit activities of CRS, and the behavioral health programs of Integrated
Behavioral Health ("IBH"). The CRS operations, which contributed $161,000 to our
revenues in the second quarter of 1998 was closed as of October 31, 1998. The
operations of TCM, which was acquired on March 17, 1998 and contributed $411,000
of the second quarter 1998 revenues, was exited in December 1998. IBH
contributed all of the revenue in our exiting/exited services, amounting to
$452,000 for the three months ended June 30, 1999, an increase of $26,000 as
compared to revenue for the same period in 1998. As a result of the sale of
IBH's assets on June 21, 1999, operations within the exiting/exited services
line ceased.

Revenues from other service lines (which includes utilization review, Medicare
coordination of benefits and other case management services), increased 8%
overall for the second quarter ended in 1999, as compared to the same period in
1998. For the six months ended June 30, 1999, revenues from these service lines
decreased 11% compared to the same period in 1998. The decrease for the
six-month period ended June 30, 1999 as compared to prior year is primarily due
to an overall decline in enrollment in our clients' indemnity plan based group
health business under CORE's utilization review program. This overall decline
was offset in the second quarter of 1999 with an expansion of Medicare
coordination of benefits services to an existing client.


                                      11

<PAGE>

CORE's top five clients represented 43% of revenues for the six-month period
ended June 30, 1999 as compared to 48% for the same period in 1998. Bell
Atlantic accounted for approximately 18% and 23% of revenues for the six-month
periods ended June 30, 1999 and 1998, respectively. SBC Communications
represented 11% of revenues for the six-month period ended June 30, 1999.
Motorola represented 10% of the Company's revenues for the six-month period
ended June 30, 1998. No other single client represented more than 10% of total
revenues for the six-month periods ended June 30, 1999 or 1998.

Cost of services for CORE include direct expenses associated with the delivery
of our review and managed care services, including salaries for professional,
clerical and license support staff, the cost of physician reviewer consultants
and telephone expense. Cost of services increased $2,985,000 (44%) to $9,808,000
for the three months ended June 30, 1999 from $6,823,000 for the second quarter
of 1998. For the six months ended June 30, 1999, cost of services increased
$4,885,000 (36%) as compared to the same period in 1998, rising to $18,328,000
from $13,443,000. The increase is primarily the result of increased staffing
levels required to service new and growing WorkAbility Absence Management
program clients in addition to the added cost of services associated with DRMS.

CORE's gross profit performance for the six months ended June 30, 1999 increased
to 42% from 36% in 1998. Gross profit performance for each of CORE's principal
service lines for the six months ended June 30, 1999 and 1998, respectively,
are: 42% and 35% for Integrated Disability Management, 38% and 36% for Peer
Review Analysis, 23% and 15% for exiting/exited services and 49% and 48% for
other service lines. The gross profit performance realized under Integrated
Disability Management was significantly enhanced by the growth in CORE's
WorkAbility Absence Management program which provided for greater efficiencies
in providing services to a larger client base. The addition of disability
reinsurance management services now provided by CORE pursuant to the DRMS
acquisition also increased the gross profit performance within Integrated
Disability Management for the first six months of 1999, as compared to the same
period in the prior year.

General and administrative expenses include the cost of executive,
administrative and information services personnel, rent and other overhead
items. General and administrative expenses increased $740,000 (33%) to
$2,987,000 for the three months ended June 30, 1999 from $2,247,000 for the
second quarter of 1998. For the six months ended June 30, 1999, general and
administrative expenses increased $1,394,000 (31%) as compared to the same
period in 1998, rising to $5,872,000 from $4,478,000. Higher personnel and other
costs associated with supporting CORE's expanded growth in operations primarily
contributed to the increase in general and administrative expenses. CORE has
also incurred additional costs associated with the maintenance of our computer
network hardware and software as capacity has been expanded to accommodate
growth. General and administrative expenses, as a percentage of revenues,
decreased to 19% for the first six months of 1999 from 21% for the first six
months of 1998. This improvement is generally due to greater economies of scale
related to higher revenues.

Sales and marketing expenses include, but are not limited to, salaries for sales
and account management personnel and travel expenses. Sales and marketing
expenses also include costs designed to increase revenues, such as our
participation in and attendance at industry trade shows and conferences. Sales
and marketing expenses increased $192,000 (21%) to $1,092,000 for the three
months ended June 30, 1999 from $900,000 for the second quarter of 1998. For the
six months ended June 30, 1999, sales and marketing expenses increased $389,000
(23%) as compared to the same period in 1998, rising to $2,107,000 from
$1,718,000. This increase is primarily due to expanded staffing to support the
sales and product development departments as well as additional travel costs and
costs incurred for participation in tradeshows. Sales and marketing expenses, as
a percentage of revenues, decreased to 7% for the first six months of 1999 from
8% for the first six months of 1998. CORE expects to continue to invest an
increased amount of resources in sales and marketing in future periods.

Depreciation and amortization expenses increased $479,000 (97%) to $974,000 for
the three months ended June 30, 1999 from $495,000 for the second quarter of
1998. For the six months ended June 30, 1999, depreciation and amortization
expenses increased $828,000 (82%) as compared to the same period in 1998, rising
to $1,839,000 from $1,011,000. The increase is primarily related to the
amortization of goodwill and intangibles acquired in the purchase of DRMS in
September 1998 which amounted to $586,000 for the six months ended June 30,
1999.

A provision for doubtful accounts was recorded for the six months ended June 30,
1999 in the amount of $215,000 as compared to $15,000 for the same period in
1998. The 1999 provision primarily relates to termination of an uncompleted
project within the onsite job profiling and analysis and workplace risk
management service's unit.


                                      12

<PAGE>

During the second quarter of 1998, CORE recorded write-offs of goodwill and
intangibles totaling $4,085,000 pursuant to its review of long-lived assets.
During June 1998, CRS was informed that its principal client (representing
nearly 70% of CRS revenues) would not be renewing its contract in October 1998.
This information combined with CRS's then present operating losses indicated
that the net book value of the goodwill and intangibles related to the CRS
operations, amounting to $1,935,000, was not recoverable and thus, written-off
effective as of June 30, 1998. CORE also determined during the second quarter of
1998 that an impairment loss existed related to certain identifiable intangibles
acquired from SSDC in June 1997. The impairment loss primarily resulted from a
significant decline in revenues realized under SSDC's Medicare coordination of
benefits program. As it appeared that the decline in revenues would continue,
intangibles in the amount of $2,150,000 were written off as of June 30, 1998.

On June 2, 1998, CORE entered into a settlement agreement with the former
shareholders of CRS. The settlement agreement related to an arbitration dispute
and included the immediate payment by CORE of $425,000 and CORE's issuance of
promissory notes in the amount of $190,000 payable in twelve monthly
installments beginning January 1999. In addition, CORE incurred approximately
$121,000 in other costs related to the arbitration (primarily legal and travel
expenses).

CORE recorded non-recurring charges during the quarter ended June 30, 1998 for
relocation costs in the amount of $64,000 and restructuring charges in the
amount of $50,000. The relocation costs related to CORE's relocation of our
accounting department from Boston, Massachusetts to our corporate offices in
Irvine, California and the restructuring charges related to the restructuring of
CRS operations.

Other income and expense, net, consists primarily of interest expense as offset
by interest income. For the three and six months ended June 30, 1999, total
other expense also includes as an offset, a gain of $332,000 recognized on the
June 21, 1999 sale of IBH assets, net of transaction costs. Interest expense
represents amounts incurred related to outstanding borrowings under CORE's
August 1998 Credit Agreement, as amended, with Fleet National Bank. Interest
income represents amounts earned by CORE's investments. Interest income
decreased to $4,000 for the six months ended June 30, 1999 from $248,000 in the
same period in 1998 and interest expense increased to $750,000 for the six
months ended June 30, 1999 from $8,000 in the same period in 1998. The decrease
in interest income and the concurrent rise in interest expense during the first
two quarters of 1999 as compared to the similar period in 1998 is primarily due
to a decrease in funds available for investment and an increase in outstanding
borrowings pursuant to the acquisition of DRMS.


                                      13

<PAGE>

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

On August 31, 1998, CORE entered into a revolving line of credit agreement (the
"Credit Agreement") with Fleet National Bank ("Fleet"). Under the terms of the
Third Amendment to the Credit Agreement dated April 28, 1999 (the "Third
Amendment"), CORE may borrow up to specified amounts at either (i) the prime
base rate plus 0.50%, or (ii) the London Interbank Offered Rate ("LIBOR") plus
3.50%. The maximum credit availability under the Third Amendment of $18,500,000
is subject to mandatory commitment reductions each quarter (beginning on March
31, 2000) in amounts ranging from $875,000 to $1,250,000. The Third Amendment
extended the credit facility through June 30, 2004.

At June 30, 1999 and December 31, 1998, CORE had outstanding borrowings of
$16,900,000 and $16,500,000, respectively, under the Credit Agreement which were
all tied to the prime base lending rate (7.75%) plus the applicable margin. The
Credit Agreement is secured by substantially all of CORE's assets and requires
CORE to meet certain financial covenants, including minimum ratios for interest,
debt service and fixed charge coverage along with minimum net worth levels.
Additionally, the Credit Agreement prohibits the payment of dividends by CORE
without the Bank's written consent. CORE was in compliance with the financial
covenants contained in the Credit Agreement at June 30, 1999.

CORE has entered into an interest rate protection arrangement with Fleet that
limits CORE's exposure to significant increases in the base lending rate. The
arrangement places an effective cap on the prime base lending rate at 9.75% (or
LIBOR at 6.75%) for a substantial portion of the outstanding borrowings over the
life of the Credit Agreement.

In connection with the Credit Agreement and related amendments, CORE has issued
two Warrants to purchase shares of its Common Stock to Fleet. The original
Warrant granted on August 31, 1998 entitles the holder to purchase up to 156,322
shares of CORE's Common Stock (subject to certain adjustments), at an exercise
price of $6.92 per share. The original Warrant is exercisable beginning August
31, 1999 and expires August 31, 2003. The second Warrant granted in connection
with the Third Amendment to the Credit Agreement, entitles the holder to
purchase up to 187,000 shares of CORE's Common Stock (subject to certain
adjustments), at an exercise price of $12.00 per share. The second Warrant was
exercisable upon the April 1999 execution of the Third Amendment and expires
June 30, 2004.

For the six months ended June 30, 1999, CORE's cash and cash equivalents
decreased by $1,597,000. For this period, cash provided by operating activities
was $166,000. Although net income for the period amounted to $2,144,000, an
increase in accounts and unbilled receivables of $4,906,000 significantly
reduced the amount of cash provided by operating activities. The increase in
receivables was due to the timing of cash collections on recurring services
provided to certain major customers (for which significant payments were
received in July), the increase in revenues during the six months ended June 30,
1999 and the contractual timing of certain client billings. CORE's investing
activities used $2,178,000 of cash mostly to fund additions to property and
equipment (including software development) of $2,204,000. CORE's financing
activities provided $415,000 of cash for this period due primarily to net
borrowings of $400,000 under the Credit Agreement.

CORE leases its facilities and certain computer and office equipment. Future
lease commitments as of June 30, 1999, which relate substantially to space
rental, for the six months ended December 31, 1999 and the year ended December
31, 2000 are approximately $1.6 million and $2.7 million, respectively. All
obligations held by CORE under lease commitments expire on various dates through
February 2004 and total approximately $7.4 million as of June 30, 1999.

CORE has net operating loss carry-forwards for income tax purposes of
approximately $4.7 million as of June 30, 1999, which can be used to reduce
future obligations for federal and state income taxes. The amount of net
operating loss carry-forwards that can be utilized in any future year are
limited due to "equity structure shifts" in 1995 involving "5% shareholders" (as
these terms are defined in Section 382 of the Internal Revenue Code), which
resulted in a more than 50 percentage point change in ownership. The utilization
of the net operating loss carry-forwards may be subject to further limitation
provided by the Internal Revenue Code of 1986 and similar state provisions.

CORE plans to finance its operations and working capital requirements primarily
with future earnings from operations. As of August 9, 1999, outstanding
borrowings under the Credit Agreement were $15,900,000. To the extent that
working capital needs exceed currently available working capital, CORE has the
flexibility to borrow additional funds up to the maximum commitment available
under the Credit Agreement. CORE believes that this available financing, along
with future earnings from operations and other sources of available funds will
be sufficient to meet its liquidity and funding requirements through at least
the year 2000.


                                      14

<PAGE>

YEAR 2000 SYSTEM COMPLIANCE

The Year 2000 issue is the result of computer programs being written using two
digits rather than four to define the applicable year. As a result, CORE's
computer programs or hardware that have date-sensitive software or embedded
chips may not properly recognize a year that begins with "20" instead of "19."
If not corrected, CORE is at risk of a system failure or miscalculations causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in similar normal business
activities.

CORE's primary computer application platforms were essentially designed to
process and store dates in a four-character format. CORE believes this
substantially reduces the magnitude of the effort required to address the Year
2000 issue. CORE has completed an assessment of internal applications and
licensed operating systems, software tools and utilities. Additionally, CORE has
evaluated third party data feeds, primarily to and from client information
systems and will have to modify or replace portions of its software so that its
computer systems will function properly with respect to dates in the year 2000
and thereafter. CORE presently believes that with modifications and replacement
of existing software, the Year 2000 issue can be mitigated. However, if such
modifications and replacements are not made, or are not completed timely, the
Year 2000 issue could have an impact on the operations of CORE.

CORE's plan to resolve the Year 2000 issue involves the following five phases:
assessment, remediation, testing, implementation, and certification. To date
CORE has fully completed its assessment of all systems that could be
significantly affected by the Year 2000 issue. The completed assessment
indicated that most of CORE's major systems are effectively Year 2000 compliant
and will require only minor modifications. CORE believes that with modifications
to existing software and conversions to new software, the Year 2000 issue will
not pose significant operational problems for its computer systems. CORE has
initiated formal communications with all of its significant vendors and large
customers to determine the extent to which CORE's interface systems are
vulnerable to those third parties' failure to remediate their own Year 2000
issues. There is no guarantee that the systems of other companies on which
CORE's systems rely will be timely converted and would not have an adverse
effect on CORE's systems.

For its internal applications and licensed operating systems, software tools and
utilities exposures, to date CORE is approximately 95% complete on the
remediation phase and expects to complete the software reprogramming and
replacement no later than the third quarter of 1999. Once software is
reprogrammed and replaced for a system, CORE begins testing and implementation.
These phases run concurrently for different systems. To date, CORE has completed
approximately 90% of its testing and has implemented approximately 90% of its
remediated systems. The testing and certification phases for all significant
systems is expected to be completed in the third quarter of 1999, which is prior
to any anticipated impact on its operating systems. Also, during the third
quarter of 1999, CORE plans to carry out a certification process to validate its
information technology environment, once again, to ensure Year 2000 compliance.

Because the results to date of the completed assessment have indicated that most
of CORE's major systems are effectively Year 2000 compliant and will require
only minor modifications, no contingency plans have been developed at this time.
CORE will develop contingency plans as deemed necessary if a significant risk
related to our Year 2000 compliance or a delay in the anticipated timeline for
compliance occurs. These contingency plans may involve, among other actions,
manual workarounds.

CORE has queried its material clients that do not share information systems with
CORE. To date, CORE is not aware of any external agent Year 2000 issue that
would materially impact CORE's results of operations, liquidity, or capital
resources. However, CORE has no means of ensuring that external agents will be
Year 2000 issue compliant. The inability of external agents to resolve their
Year 2000 issues in a timely manner could materially impact CORE. The effect of
non-compliance by external agents is not determinable.

CORE plans to continue utilizing both internal and external resources to
reprogram, or replace, test, and implement software for Year 2000 modifications.
The dates on which CORE believes it will complete the Year 2000 modifications
are based on management's best estimates, which were derived utilizing numerous
assumptions of future events, including the continued availability of certain
resources, and other factors. However, there can be no guarantee that these
estimates will be achieved and actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.


                                      15


<PAGE>

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK.

CORE entered into a Credit Agreement with Fleet National Bank on August 31,
1998. The Credit Agreement was entered into for purposes other than trading.
Under the terms of the Credit Agreement, as amended, outstanding borrowings bear
interest at variable rates which reset as prevailing market conditions change.
On January 15, 1999, CORE entered into an interest rate protection arrangement
with Fleet that limits CORE's exposure to significant increases in the base
lending rate. The arrangement places an effective cap on the prime base lending
rate at 9.75% (or LIBOR at 6.75%) for a substantial portion of the outstanding
borrowings over the life of the amended Credit Agreement.



                                     PART II



ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

(a)       Exhibits.  The following exhibits are included:

EXHIBIT
NUMBER    DESCRIPTION

  2.1*   Asset Purchase Agreement, dated as of June 21, 1999, by and amongst
         Integrated Behavioral Health, Tom H. Yankoff and TD Ventures, Inc.
         (excluding Exhibits and Schedules).

  4.1    Warrant Agreement, dated as of April 27, 1999, between CORE, INC. and
         Fleet National Bank (excluding Exhibits). Filed as exhibit 4.1 to
         registrant's Quarterly Report on 10-Q, filed May 14, 1999, and
         incorporated herein by reference.

 10.1    Third Amendment to Credit Agreement, dated as of April 27, 1999,
         between CORE, INC. and Fleet National Bank (excluding Exhibits and
         Schedules). Filed as exhibit 10.1 to registrant's Quarterly Report on
         10-Q, filed May 14, 1999, and incorporated herein by reference.

 10.2    Registration Rights Agreement, dated as of April 27, 1999, between
         CORE, INC. and Fleet National Bank. Filed as exhibit 10.2 to
         registrant's Quarterly Report on 10-Q, filed May 14, 1999, and
         incorporated herein by reference.

 27.1*   Financial Data Schedule.
------------------------------------
* Filed herewith

(b)       REPORTS ON FORM 8-K.

CORE did not file any reports on Form 8-K during the three months ended June 30,
1999.


                                      16

<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.

                                      CORE, INC.



Dated:  August 12, 1999               By: /s/ William E. Nixon
                                          --------------------------------------
                                          William E. Nixon
                                          Chief Financial Officer, Executive
                                          Vice President and Treasurer
                                          (Duly authorized officer and Principal
                                          Financial Officer)


                                      17