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

                                   FORM 10-Q
(Mark One)
[x]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES EXCHANGE ACT OF 1934
 
        For the quarterly period ended September 30, 1997
                                      or
[ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        SECURITIES/EXCHANGE ACT OF 1934
 
                        COMMISSION FILE NUMBER: 0-26190
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
            (Exact name of registrant as specified in its charter)
 
                  DELAWARE                                  84-1213501
(State or other jurisdiction of incorporation or       (I.R.S. Employer
                organization)                              Identification No.)
 
                      16825 NORTHCHASE DRIVE, SUITE 1300
                                HOUSTON, TEXAS
                                     77060
                   (Address of principal executive offices)
                                  (Zip Code)
 
                                (281) 873-2674
             (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
                                             ---  --- 

   AS OF OCTOBER 31, 1997, 29,113,692 SHARES OF THE REGISTRANT'S COMMON STOCK
WERE OUTSTANDING.
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.

                                   FORM 10-Q

                               SEPTEMBER 30, 1997


                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
 
                                                                                         PAGE NO.
                                                                                         --------
<S>               <C>                                                                    <C>
 
PART I.  FINANCIAL INFORMATION
         ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                  CONDENSED CONSOLIDATED BALANCE SHEET                                       3
                  CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS                             4
                  CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY                   5
                  CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                             6
                  NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                       7
         ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS                             12
 
PART II. OTHER INFORMATION
         ITEM 2.  CHANGES IN SECURITIES                                                     16
         ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K                                          17
 
         SIGNATURES                                                                         18
 
</TABLE> 

                                      -2-
<PAGE>
 
PART I.  FINANCIAL INFORMATION

ITEM 1.   CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AMERICAN ONCOLOGY RESOURCES, INC.

                     CONDENSED CONSOLIDATED BALANCE SHEET

                     (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                 September 30,            December 31,
                                                                                      1997                    1996
                                                                                 -------------         ----------------
                                  ASSETS                                          (UNAUDITED)
<S>                                                                                <C>                   <C>
Current assets:
   Cash and equivalents.......................................................     $     4,289             $      3,429  
   Accounts receivable........................................................          80,091                   61,183  
  Prepaids and other current assets...........................................           6,881                    5,775  
   Due from affiliated physician groups.......................................           1,014                    5,356  
                                                                                      --------               ----------
       Total current assets...................................................          92,275                   75,743
 
Property and equipment, net...................................................          30,743                   18,943  
Management service agreements, net............................................         280,974                  240,034  
Other assets..................................................................           4,016                    4,680
                                                                                      --------               ----------
                                                                                   $   408,008              $   339,400
                                                                                      ========               ==========
                         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Current maturities of indebtedness.........................................     $     5,119              $     9,783  
   Accounts payable...........................................................          26,690                   15,148
   Due to affiliated physician groups.........................................           4,123                      616  
   Accrued compensation costs.................................................           2,179                    1,806
   Accrued interest payable...................................................           2,632                    2,325  
   Income taxes payable.......................................................             107                      641
   Other accrued liabilities..................................................           4,930                    2,452  
                                                                                      --------               ----------
   Total current liabilities..................................................          45,780                   32,771
 
Deferred income taxes.........................................................           7,279                    3,068
Long-term indebtedness........................................................         112,724                   81,707
                                                                                      --------               ----------
   Total liabilities..........................................................         165,783                  117,546
                                                                                      --------               ----------
 
Stockholders' equity:
   Preferred stock, $.01 par value, 500,000 shares authorized,
       none issued and outstanding............................................
  Series A Preferred Stock, $.01 par value, 500,000 shares authorized and
   reserved, none issued and outstanding......................................
  Common stock, $.01 par value, 80,000,000 shares authorized, 29,014,152 and
   28,369,482 shares issued and 29,014,152 and 27,371,422 shares outstanding..             290                      284
   Additional paid-in capital.................................................         134,374                  139,804
   Common stock to be issued, 16,815,126 and 17,462,782  shares...............          63,168                   61,225
   Treasury stock, 998,060 shares.............................................               -                   (8,530)
   Retained earnings..........................................................          44,393                   29,071
                                                                                      --------               ----------
   Total stockholders' equity.................................................         242,225                  221,854
                                                                                      --------               ----------
                                                                                   $   408,008              $   339,400
                                                                                      ========               ==========
</TABLE>

        The accompanying notes are an integral part of this statement.

                                      -3-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                      (in thousands except per share data)
                                  (unaudited)


<TABLE>
<CAPTION>
                                                                      Three Months                      Nine Months
                                                                   Ended September 30,               Ended September 30,
                                                                  1997              1996             1997           1996
                                                              -----------       -----------       ---------     ----------
<S>                                                       <C>               <C>               <C>             <C>
Revenue.................................................          $82,293           $53,701        $232,214     $  141,825
 
Operating expenses:
  Pharmaceuticals and supplies..........................           37,066            22,674         105,206         56,671
  Practice compensation and benefits....................           15,702            10,936          43,761         29,000
  Other practice costs..................................            8,604             6,114          24,928         16,577
  General and administrative............................            5,692             3,775          15,639         10,355
  Depreciation and amortization.........................            3,716             2,420          10,064          6,514
                                                                  -------           -------        --------     ----------
                                                                   70,780            45,919         199,598        119,117
                                                                  -------           -------        --------     ----------
Income from operations..................................           11,513             7,782          32,616         22,708
Other income (expense):
  Interest income.......................................               74               222             250            973
  Interest expense......................................           (2,232)           (1,064)         (5,965)        (3,020)
                                                                  -------           -------        --------     ----------
Income before income taxes..............................            9,355             6,940          26,901         20,661
Income taxes............................................            3,445             2,637          10,200          7,851
                                                                  -------           -------        --------     ----------
Net income..............................................          $ 5,910           $ 4,303        $ 16,701     $   12,810
                                                                  =======           =======        ========     ==========
Net income per share....................................            $0.12             $0.09           $0.35          $0.27
                                                                  =======           =======        ========     ==========
                                                                   48,275            47,448          48,032         47,447
Shares used in per share calculations...................          =======           =======        ========     ==========
 
</TABLE>

        The accompanying notes are an integral part of this statement.

                                      -4-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
            CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (in thousands)
                                  (unaudited)

<TABLE>
<CAPTION>
                                                      Additional     Common      Treasury
                                     Common Stock       paid-in     Stock to      Stock     Retained
                                  Shares   Par Value    capital    be issued       cost      earnings     Total
                                  -------  ---------  -----------  ----------  ------------  ---------  ----------
<S>                               <C>      <C>        <C>          <C>         <C>           <C>        <C>
Balance at December 31, 1996....   28,369   $   284    $  139,804   $  61,225   $    (8,530)  $ 29,071   $ 221,854

Medical practice transactions-
  value of 1,392,774 shares to 
  be issued.....................                                        8,221                                8,221
Purchase of 657,000 shares of
  Treasury stock................                                                     (6,418)                (6,418)
Delivery of 1,650,064 shares of
  Common Stock issued from
  treasury......................                           (7,976)     (5,545)       14,900     (1,379)
Delivery of 390,366 shares from                                         
  issuance of Common Stock......      390         3           730        (733)
Exercise of options to purchase     
  Common Stock..................      255         3           516                        48                    567         
Tax benefit from exercise of
 non-qualified stock options....                            1,300                                            1,300
Net Income......................                                                                16,701      16,701
                                   ------    ------      --------    --------       -------    -------    --------
Balance at September 30, 1997...   29,014   $   290    $  134,374   $  63,168   $         -   $ 44,393   $ 242,225
                                   ======    ======      ========    ========       =======    =======    ========
</TABLE>


        The accompanying notes are an integral part of this statement.
                                        

                                      -5-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
                 CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                                                        NINE MONTHS
                                                                                     ENDED SEPTEMBER 30,
                                                                                   1997              1996
                                                                              -------------      --------------
<S>                                                                           <C>                 <C>
Cash flows from operating activities:
   Net income...........................................................           $ 16,701            $ 12,810
   Noncash adjustments:
       Depreciation and amortization....................................             10,064               6,514
       Deferred income taxes............................................              4,121               1,764
       Imputed interest on medical practice transactions................                                    113
   Cash provided (used), net of effects of medical practice
       transactions, by changes in:
       Accounts receivable..............................................            (15,819)            (14,431)
       Prepaids and other current assets................................             (1,018)             (3,976)
       Income taxes receivable..........................................                                  2,203
       Other assets.....................................................                  9                (501)
       Accounts payable.................................................             10,493               4,047
       Due from/to affiliated physician groups..........................              8,361               1,914
       Income taxes payable.............................................                767              (2,298)
       Other accrued liabilities........................................               (518)              1,878
                                                                                   --------            --------
   Net cash provided by operating activities............................             33,161              10,037
                                                                                   --------            --------
Cash flows from investing activities:
   Net sales of short-term investments..................................                                 40,884
   Acquisition of property and equipment................................            (14,171)             (5,766)
   Net payments in medical practice transactions........................            (23,632)            (39,574)
                                                                                   --------            --------
   Net cash used in investing activities................................            (37,803)             (4,456)
                                                                                   --------            --------
Cash flows from financing activities:
   Proceeds from credit facility........................................             51,000
   Repayment of credit facility.........................................            (31,000)
   Repayment of other indebtedness......................................             (8,642)            (17,226)
   Debt financing.......................................................                                   (281)
   Purchase of Treasury Stock...........................................             (6,418)
   Net proceeds from issuance of Common Stock...........................                562               1,098
                                                                                   --------            --------
   Net cash provided  (used) by financing activities....................              5,502             (16,409)
                                                                                   --------            --------
Increase (decrease) in cash and equivalents.............................                860             (10,828)
Cash and equivalents:
   Beginning of period..................................................              3,429              14,816
                                                                                   --------            --------
   End of period........................................................           $  4,289            $  3,988
                                                                                   ========            ========
Interest paid...........................................................           $  5,652            $  2,497
Taxes paid..............................................................              5,340               6,210
Noncash transactions:
   Tax benefit from exercise of non-qualified stock options.............              1,300               6,577
   Value of Common Stock to be issued in medical practice transactions..              8,221              12,577
   Delivery of Common Stock to be issued in medical practice
           transactions.................................................              6,278
   Debt issued in medical practice transactions.........................             14,995              19,885
</TABLE>

        The accompanying notes are an integral part of this statement.

                                      -6-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

NOTE 1 - Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial reporting and in accordance with Form 10-Q and Rule 10.01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the unaudited condensed
consolidated financial statements contained in this report reflect all
adjustments, which are normal and recurring in nature, considered necessary for
a fair presentation of the financial position and the results of operations for
the interim periods presented. The preparation of the Company's financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets, liabilities, revenues and expenses, as well as disclosures on contingent
assets and liabilities.  Because of inherent uncertainties in this process,
actual future results could differ from those expected at the reporting date.
These unaudited condensed consolidated financial statements, footnote
disclosures and other information should be read in conjunction with the
financial statements and the notes thereto included in the Company's Form 10-K
filed with the Securities and Exchange Commission on March 25, 1997.

NOTE 2 - MEDICAL SERVICE REVENUE

Medical service revenue for services to patients by the medical groups
affiliated with the Company is recorded when services are rendered based on
established or negotiated charges reduced by contractual adjustments and
allowances for doubtful accounts.  Differences between estimated contractual
adjustments and final settlements are reported in the period when final
settlements are determined.  Medical service revenue of the affiliated medical
groups is reduced by the contractual amounts retained by the medical groups to
arrive at the Company's revenue.

The following presents the amounts included in the determination of the
Company's revenue (in thousands):

<TABLE>
<CAPTION>
                                                              Three Months                         Nine Months
                                                            Ended September 30,                Ended September 30,
                                                           1997             1996              1997            1996
                                                       ----------         --------         --------         --------
<S>                                                     <C>               <C>              <C>               <C>
Medical service revenue........................          $108,570          $70,417          $306,309         $186,319
Amounts retained by medical practices..........            26,277           16,716            74,095           44,494
                                                         --------          -------          --------         --------
Revenue........................................          $ 82,293          $53,701          $232,214         $141,825
                                                         ========          =======          ========         ========
Management service agreements
    at end of period...........................                35               31                35               31
</TABLE>

                                      -7-
<PAGE>
 
                      AMERICAN ONCOLOGY RESOURCES, INC. 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                  (unaudited)


NOTE 3 - Medical Practice Transactions

During the first nine months of 1997, the Company, through wholly-owned
subsidiaries, acquired certain non-medical assets of, and amended long-term
management agreements to affiliate with, eight medical oncology practices and
two radiation oncology practices.  During the first nine months of 1996, the
Company acquired certain non-medical assets of, and entered into long-term
management service agreements with, nine medical oncology practices.  The
transactions have been accounted for as asset purchases.  The following presents
the aggregate consideration required to complete those transactions (in
thousands):

<TABLE>
<CAPTION>
                                                         THREE MONTHS                     NINE MONTHS
                                                       ENDED SEPTEMBER 30,             ENDED SEPTEMBER 30,
                                                       1997           1996            1997            1996
                                                     --------      --------         --------         -------
<S>                                                  <C>            <C>            <C>             <C>
Cash and transaction costs....................         $  677        $ 9,598         $23,632         $39,574
Liabilities assumed...........................            398            857           3,202           2,656
Issuance of short-term and
      subordinated notes......................            602          8,807          14,995          19,885
Common Stock to be issued.....................            242          5,949           8,221          12,577
                                                       ------        -------         -------         -------
                                                       $1,919        $25,211         $50,050         $74,692
                                                       ======        =======         =======         =======
</TABLE>

In conjunction with the medical practice transactions occurring since inception,
the Company is contingently obligated to pay up to an additional $3.4 million in
future years depending on the achievement of certain financial objectives, of
which $.6 million related to medical practice transactions occurring in the
first nine months of 1997.  Such liability, if any, will be recorded in the
period in which the outcome of the contingency becomes known.  Any payment made
will be allocated to the long-term management services agreements and will not
immediately be charged to expense.

For transactions completed through September 30, 1997, the scheduled issuance of
the shares of Common Stock that the Company is committed to deliver over the
passage of the time are:  551,462 in 1997, 2,940,617 in 1998, 5,244,319 in 1999,
5,230,794 in 2000, 1,437,269 in 2001 and 1,410,665 thereafter.  Although such
shares are not yet issued or outstanding, such shares are considered as
outstanding for the purpose of per share calculations.

The accompanying unaudited condensed consolidated financial statements include
the results of operations derived from the management service agreements from
their respective effective dates.  The following unaudited pro forma information
presents the results of operations assuming all 1997 and 1996 transactions were
consummated on January 1, 1996.  Such pro forma information is based on the
historical financial information of the medical practices and does not include
operational or other changes which might have been effected pursuant to the
Company's management of the nonmedical aspects of such practices.

The pro forma information presented below is for illustrative information only
and is not necessarily indicative of results which would have been achieved or
results which may be achieved in the future (in thousands except per share
amounts):


                                   NINE MONTHS ENDED
                                      SEPTEMBER 30,
                                   1997           1996
                                 --------      ---------
Revenue...............           $235,687       $171,603
Net income............             17,053         15,145
Net income per share..           $   0.35       $   0.30
 

                                      -8-
<PAGE>
 
                      AMERICAN ONCOLOGY RESOURCES, INC. 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                  (unaudited)


NOTE 4- Capitalization

As part of entering into or amending long-term management agreements with
medical practices described in Note 3, the Company has nonforfeitable
commitments to issue shares of Common Stock at specified future dates for no
further consideration.  Common Stock to be issued is shown as a separate
component in stockholders' equity and the amounts, upon issuance of the shares,
will be reclassified to par value and additional paid-in capital.

During the first nine months of 1997, options to purchase 1,363,750 shares of
Common Stock at $8.13 to $15.71 per share were granted under the Company's
various stock option plans, of which 983,500 were granted to executive officers
and directors.  During the first nine months of 1997, options to purchase
259,300 shares of Common Stock at $1.34 to $6.13 per share were exercised, of
which 238,000 were exercised by executive officers and directors.  During the
first nine months of 1997, options to purchase 105,824 shares of Common Stock
were canceled.  At September 30, 1997, there were options to purchase 5,817,194
shares of Common Stock outstanding under the Company's various stock option
plans at exercise prices of $1.34 to $24.18 per share.

On May 16, 1997, the Board of Directors of the Company adopted a shareholder
rights plan and, in connection therewith, declared a dividend of one Series A
Preferred Share Purchase Right for each outstanding share of Common Stock.  For
a more detailed description of the shareholder rights plan, refer to the
Company's Form 8-A filed with the Securities and Exchange Commission on June 2,
1997.

Effective May 8, 1997, the Company's stockholders approved an increase in the
number of shares of Common Stock authorized to be issued to 80,000,000 shares.
In addition, the Company's Key Employee Stock Option Plan ("Plan") was amended
to increase the number of shares available for grants under the Plan to 7% from
5% of the Company's outstanding Common Stock (including shares to be issued at
future specified dates).

On August 13, 1996, the Board of Directors of the Company authorized the
repurchase of up to 3,000,000 shares of the Company's Common Stock in public or
private transactions. From November 1996 through January 1997, the Company
repurchased 1,767,500 shares of Common Stock at an average price of $8.96 to be
held as treasury stock.  During the first nine months of 1997, the Company
issued 1,650,064 shares from treasury stock to affiliated physicians in
connection with a 1994 medical practice transaction and two 1995 medical
practice transactions.  An additional 4,996 shares of treasury stock were issued
in conjunction with the exercise of stock options during the first nine months
of 1997.

On May 16, 1996, the Board of Directors of the Company declared a two-for-one
stock split of the Company's Common Stock which was paid on June 10, 1996 to
stockholders of record on May 31, 1996.  All references herein to the number of
shares and per share amounts have been adjusted to reflect the effect of the
split.

NOTE 5- INDEBTEDNESS

Indebtedness consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                             SEPTEMBER 30,         DECEMBER 31,
                                                                                  1997                 1996
                                                                              -----------           ----------
<S>                                                                            <C>                 <C>
Short-term notes payable..............................................                                 $ 4,219
Subordinated notes....................................................           $ 73,631               62,113
Credit facility.......................................................             43,000               23,000
Capital lease obligations and other...................................              1,212                2,158
                                                                                 --------              -------
                                                                                  117,843               91,490
Less current maturities...............................................             (5,119)              (9,783)
                                                                                 --------              -------
</TABLE>

                                      -9-
<PAGE>
 
                      AMERICAN ONCOLOGY RESOURCES, INC. 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                  (unaudited)

                                                                                
                                                        $112,724         $81,707
                                                         =======         =======
                                                                                
The Company has a loan agreement and revolving credit facility ("Credit
Facility") with First Union National Bank of North Carolina ("First Union")
individually and as Agent for seven additional lenders ("Lenders"), which was
amended as of October 30, 1996 to increase the amount available for borrowing
thereunder to $150 million, which commitment will be reduced by $37.5 million on
each of October 30, 1999 and October 30, 2000 and terminate on October 30, 2001.
Proceeds of loans may be used to finance medical group transactions, to provide
working capital or for other general corporate uses.  At September 30, 1997, the
Company had an outstanding balance of $43 million under the Credit Facility
which consisted of multiple draws with maturities up to 30 days.  The Company
has classified this facility as long-term indebtedness due to its ability and
intent to renew the obligations through 1998.

Borrowings under the Credit Facility are secured by capital stock and other
securities owned by the company and its subsidiaries, including the Company's
ownership interests in its subsidiaries and intercompany notes and all
management service agreements.  At the Company's option, funds may be borrowed
at the Base interest rate or the London Interbank Offer Rate plus a range from
 .5% to 1.5% (determined under a specific formula).  Interest on amounts
outstanding under Base rate loans is due quarterly while interest on London
Interbank Offer Rate related loans is due upon maturity.  The weighted average
interest rate outstanding on draws under the Credit Facility at September 30,
1997 was 6.7%.

The Company is subject to restrictive covenants under the facility, including
the maintenance of certain financial ratios.  The agreement limits certain
activities such as additional indebtedness, sales of assets, investments,
capital expenditures, mergers and consolidations and the payment of dividends.
Under certain circumstances, additional medical practice transactions may
require First Union's and the Lenders' consent.

The subordinated notes are issued in substantially the same form in different
series and are payable to the physicians with whom the Company has entered into
management agreements.  Substantially all of the notes outstanding at September
30, 1997 and 1996 bear interest at 7%, are due in installments through 2004 and
are subordinated to senior bank and certain other debt.  If the Company fails to
make payment under any of the notes, the respective physician group can
terminate the related management service agreement for cause.

NOTE 6- EARNINGS PER SHARE

The computation of earnings per share is based on the weighted average number of
Common Stock and Common Stock equivalent shares outstanding during the periods
in accordance with the requirements of the Securities and Exchange Commission
(SEC).  All options to purchase Common Stock, shares issued and commitments to
issue Common Stock at specified future dates are assumed to have been
outstanding Common Stock equivalents under the treasury stock method for each of
the periods presented.  Fully diluted earnings per share has not been presented
because it does not differ materially from the primary per share computations.

The table summarizes the determination of shares used in per share calculations
(in thousands):

<TABLE> 
<CAPTION> 
                                                                  THREE MONTHS               NINE MONTHS
                                                               ENDED SEPTEMBER 30,        ENDED SEPTEMBER 30,
                                                               1997           1996         1997        1996
                                                              -------       -------      --------     -------
<S>                                                           <C>           <C>           <C>           <C>
Outstanding at end of period:
  Common Stock.........................................        29,014        28,360        29,014      28,360
  Common Stock to be issued............................        16,815        16,999        16,815      16,999
                                                               ------        ------        ------      ------
                                                               45,829        45,359        45,829      45,359
Effect of weighting and assumed share equivalents for
 grants and issuances at less  
 than the weighted average price......................         2,446          2,089         2,203       2,088
                                                               ------        ------        ------      ------
</TABLE> 

                                      -10-
<PAGE>
 
                      AMERICAN ONCOLOGY RESOURCES, INC. 
             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
                                  (unaudited)
<TABLE> 
<CAPTION> 

<S>                                                            <C>           <C>           <C>         <C>            

Shares used in per share calculations..................        48,275        47,448        48,032      47,447
                                                               ======        ======        ======      ======
</TABLE>



NOTE 7 - SUBSEQUENT MEDICAL PRACTICE TRANSACTIONS

In October 1997, the Company completed the acquisition of the nonmedical assets
and amended long-term management agreements to include two additional oncology
practices.  Total consideration consisted of cash of  $7 million, contingent
notes of $0.5 million, promissory notes aggregating $2.9 million, and 553,343
shares of common stock to be delivered at specific future dates.


NOTE 8 - RECENT PRONOUNCEMENTS

In 1997, Financial Accounting Standards No. 128 ("FAS 128") Earnings Per Share
was issued.  FAS 128 is effective for earnings per share calculations for
periods ending after December 15, 1997.  At that time, the Company will be
required to change the method currently used to compute earrings per share and
to restate all prior periods.

                                      -11-
<PAGE>
 
ITEM 2.                AMERICAN ONCOLOGY RESOURCES, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


INTRODUCTION

American Oncology Resources, Inc. (the "Company") enters into management
agreements with, and purchases the nonmedical assets of, medical and radiation
oncology practices. Under the terms of the management agreements, the Company
provides comprehensive management services to its affiliated oncology practices,
including operational and administrative services, and furnishes personnel,
facilities, supplies and equipment. These practices provide a broad range of
medical services to cancer patients, integrating the specialties of medical
oncology, hematology and radiation oncology.  The Company's revenue consists of
management fees and includes all medical practice operating costs for which the
Company is contractually responsible.

In recent years, there has been a trend among oncologists to form larger group
practices that provide a broad range of services to cancer patients in
outpatient settings, rather than in hospitals or other inpatient settings.  The
Company believes that the coordinated delivery of comprehensive cancer care in
an outpatient setting offers high quality care that is more cost-effective than
traditional approaches and is increasingly preferred by patients, payors and
physicians.  The Company believes that many of these larger oncology practices
recognize the need for outside managerial, financial and business expertise to
more efficiently manage the increasingly complex, burdensome and time-consuming
nonmedical aspects of their practices and that such practices will increasingly
elect to enter into management relationships with entities such as the Company.

The Company's objective is to be the leading national physician practice
management company providing comprehensive services to an integrated network of
affiliated oncology practices.  The Company intends to achieve this objective by
(i) focusing exclusively on oncology, (ii) affiliating with leading oncology
practices throughout the United States, (iii) expanding each affiliated oncology
group's presence in its market, (iv) assisting affiliated oncology practices in
offering coordinated, comprehensive cancer care and (v) negotiating and
expanding managed care relationships.  Based on the Company's success in
expanding its business to date, the Company believes that it has effective
strategies for achieving its objective of becoming the leading national oncology
practice management company.

FORWARD LOOKING STATEMENTS

The statements contained in this report, in addition to historical information,
are forward looking statements based on the Company's current expectations, and
actual results may vary materially.  The Company's business and financial
results are subject to various risks and uncertainties, including the Company's
continued ability to enter into affiliations with new physician practices and to
successfully integrate such practices, the results of operations of groups
currently affiliated with the Company, competition, reductions in third party
reimbursement for services rendered by physician groups affiliated with the
Company, health care regulation and other risks generally affecting the health
care industry.  Please refer to the Company's Annual Report on Form 10-K for the
year ended December 31, 1996 for a more detailed discussion of such risks and
uncertainties.  These forward looking statements are provided as a framework for
the Company's results of operations.  The Company does not intend to provide
updated information other than as otherwise required by applicable law.

RESULTS OF OPERATIONS

Since the Company's incorporation in October 1992, it has grown rapidly from
managing six affiliated physicians in one state to 271 affiliated physicians and
35 oncology practices in sixteen states as of September 30, 1997. For the first
nine months of 1997, no affiliated physician groups contributed more than 10% of
the Company's revenue whereas in 1996, one of the Company's affiliated physician
contributed 11% of total revenue. For the first nine months of 1997, the payor
mix of the affiliated physician groups' medical practice revenue, expressed as a
percentage, was 33% for Medicare and Medicaid, 47% for managed care and 20% for
private insurance and other payors. For the first nine months of 1996, the payor
mix of the affiliated physician groups' medical practice revenue, expressed as a
percentage, was 34% for Medicare and Medicaid, 45% for managed care, and 21% for
private insurance and other payors.

                                      -12-
<PAGE>
 
ITEM 2.                AMERICAN ONCOLOGY RESOURCES, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table sets forth the percentages of revenue represented by certain
items reflected in the Company's Statement of Operations.  The information that
follows should be read in conjunction with the Company's unaudited condensed
consolidated financial statements and notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
                                                                     THREE MONTHS                   NINE MONTHS
                                                                   ENDED SEPTEMBER 30,           ENDED SEPTEMBER 30,
                                                                   1997           1996          1997            1996
                                                                 ------         ------         ------          ------  
 <S>                                                        <C>            <C>            <C>            <C>
Revenue..................................................         100.0%         100.0%         100.0%          100.0%
Operating expenses:
 Pharmaceuticals and supplies............................          45.0           42.2           45.3            40.0
 Practice compensation and benefits......................          19.1           20.4           18.8            20.4
 Other practice costs....................................          10.5           11.4           10.7            11.7
 General and administrative..............................           6.9            7.0            6.8             7.3
 Depreciation and amortization...........................           4.5            4.5            4.3             4.6
 Net interest expense....................................           2.6            1.6            2.5             1.5
                                                                  -----          -----          -----           -----
Income before income taxes...............................          11.4           12.9           11.6            14.5
Income taxes.............................................           4.2            4.9            4.4             5.5
                                                                  -----          -----          -----           -----
Net income (loss)........................................           7.2%           8.0%           7.2%            9.0%
                                                                  =====          =====          =====           =====
</TABLE>

1997 COMPARED TO 1996

  The Company amended management agreements to affiliate with ten oncology
practices in the first nine months of 1997 and entered into new management
agreements with nine oncology practices in the first nine months of 1996.  The
results of the new affiliated oncology practices are included in the Company's
operating results from the dates of affiliation.  Changes in results of
operations from the first nine months of 1996 to the first nine months of 1997
were caused, in part, by affiliations with these oncology practices.

  Revenue.  Revenue for the third quarter of 1997 increased $28.6 million or 53%
over the comparable period of the prior year.   Revenue for the first nine
months of 1997 increased by $90.4 million or 64% over the comparable prior year
period.  Of the increases in revenue for the third quarter and nine month period
ended September 30, 1996, $3.2 million and $9.1 million, respectively, were
attributable to the addition of four new oncology practices with whom the
Company entered into new management agreements after September 30, 1996.  The
remaining increases in revenue of $25.4 million and $81.3 million for the third
quarter and first nine months of 1997, respectively, were attributable to the
increase in medical practice revenue for affiliated physician practices with
whom the Company either entered into management agreements prior to September
30, 1996 or through new affiliations created by amendments to existing
management agreements.  Revenue for the third quarter and first nine months of
1997 for markets under management since September 30, 1996 increased 43% and
46%, respectively, over the same periods from the prior year.  The growth in
practice revenue resulted from the recruitment of new physicians, expansion of
services, affiliation with new physician groups, increases in patient volume
and, to a lesser extent, price adjustments for certain physician services.  The
Company changed the methodolgy of calculating the growth in practice revenue to
more accurately reflect the revenue growth for a market from period to period as
well as the changing structure of new physician transactions in 1997.  Under the
new method, revenue growth for all practices within a metropolitan service area
in which the Company has operations in both periods is treated as same market
growth, whereas the old methodology excluded affiliations with new physician
groups in existing markets. Excluding the transactions with new physicians in
those existing markets during the third quarter and first nine months of 1997
and the comparable period of 1996, revenue increased 27% and 29%, respectively.

                                      -13-
<PAGE>
 
ITEM 2.                AMERICAN ONCOLOGY RESOURCES, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

  Pharmaceuticals and Supplies.  Pharmaceuticals and supplies, which include
drugs, medications and other supplies used by the affiliated physician
practices, for the third quarter ended September 30, 1997 increased $14.4
million or 63% over the comparable prior year period.  Pharmaceuticals and
supplies increased $48.5 million or 86% for the first nine months of 1997 over
the comparable period of the prior year.  Of these increases for the third
quarter and nine months ended September 30, 1997, $1.7 million and $4.7 million,
respectively, were attributable to the addition of four new oncology practices
with which the Company entered into new management agreements after September
30, 1996.  The remaining increases are principally the result of the expansion
of services and increase in patient volume of practices with which the Company
entered into management agreements prior to September 30, 1996 as well as the
affiliation of new physician groups through amended management agreements. As a
percentage of revenue, pharmaceuticals and supplies increased to 45.0% and 45.3%
in the third quarter and first nine months of 1997, respectively, from 42.2% and
40.0% in the comparable periods of 1996.  This increase was primarily due to a
shift in the revenue mix to a higher percentage of drug revenue (resulting from
the introduction of a number of new chemotherapy agents and regimens) and, to a
lesser extent, lower reimbursement from payors.  The Company has adopted a
number of strategies to address this matter, including initiating preferred
pharmaceutical relationships.  Management expects that third-party payors will
continue to negotiate medical services, pharmaceuticals (including chemotherapy
drugs) and other supplies, with the goal of lowering reimbursement and
utilization rates, and that such lower reimbursement and utilization rates as
well as shifts in revenue mix may continue to reduce the Company's margins with
respect to such items.

  Practice Compensation and Benefits. Practice compensation and benefits, which
include the salaries, wages and benefits of the employees of the affiliated
physician practices (excluding affiliated oncologists) and the employees of the
Company who are located at the affiliated physician practice sites, for the
third quarter and first nine months of 1997 increased $4.8 million or 44% and
$14.8 million or 51%, respectively, over the comparable prior year periods.  Of
these increases for the third quarter and the first nine months of 1997, $0.6
million and $1.6 million, respectively, were attributable to the addition of
four affiliated oncology practices with which the Company entered into new
management agreements after September 30, 1996.  As a percentage of revenue,
practice compensation and benefits decreased to 19.1% and 18.8% in the third
quarter and first nine months of 1997, respectively, from 20.4% in both
comparable periods of 1996.  Decreases in practice compensation and benefit
costs as a percentage of revenue resulted from economies of scale.

  Other Practice Costs. Other practice costs, which consist of rent, utilities,
repairs and maintenance, insurance and other direct practice costs, for the
third quarter of 1997 increased $2.5 million or 41% over the comparable prior
year period.  For the nine months ended September 30, 1997, practice costs have
increased $8.4 million or 50%.   Of these increases for the third quarter and
first nine months of 1997, $0.3 million and $0.8 million, respectively, were
attributable to the addition of four affiliated oncology practices with which
the Company entered into new management agreements after September 30, 1996.  As
a percentage of revenue, other practice costs decreased to 10.5% and 10.7% in
the third quarter and first nine months of 1997, respectively, as compared to
11.4% and 11.7% in the comparable periods of 1996.  Decreases in other practice
costs as a percentage of revenue resulted from economies of scale.

  General and Administrative. General corporate expenses for the third quarter
ended September 30, 1997 increased $1.9 million or 51% over the comparable prior
year period.  General corporate expenses for the nine month period increased
$5.3 million or 51% over the same period in the prior year.  These increases
were primarily attributable to the addition of personnel and greater support
costs associated with the Company's rapid growth since September 30, 1996.  As a
percentage of revenue, general and administrative expenses decreased to 6.9% and
6.8% in the third quarter and first nine months of 1997, respectively, as
compared to 7.0% and 7.3% in the comparable periods in 1996.  Decreases in
general and administrative expenses as a percentage of revenue primarily
resulted from economies of scale.

  Depreciation and Amortization. Depreciation and amortization expenses for the
third quarter ended September 30, 1997 increased $1.3 million or 54% over the
comparable prior year period, while for the nine month period ended September
30, 1997 depreciation and amortization expenses increased $3.6 million or 

                                      -14-
<PAGE>
 
ITEM 2.                AMERICAN ONCOLOGY RESOURCES, INC.
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS



54%. This increase was primarily the result of amortization of intangible assets
associated with the Company's entering into new and amending existing management
agreements with physician groups.

  Interest.  Net interest expense increased to $2.2 million and $5.7 million
during the third quarter and first nine months of 1997 from $0.8 million and
$2.0 million in the same periods of 1996.  The increase was primarily
attributable to interest expense on borrowings used to fund cash consideration
and physician debt issued for fifteen medical practice transactions, including
both new management agreements and amendments to existing management agreements,
since September 30, 1996.  In the future, management expects that net interest
expense as a percentage of revenue will increase slightly due to anticipated
debt related to medical practice transactions.

  Income Taxes. For the first nine months of 1997 and 1996, the Company
recognized a tax provision of $10.2 million and $7.9 million, respectively, at
estimated annual effective rates of 37.9% and 38.0%, respectively.  The
effective annual tax rates represent management's best estimate of the tax
provision based on the existing  revenue mix by state.

LIQUIDITY AND CAPITAL RESOURCES

  The Company requires capital primarily to enter into new or amended management
agreements with, and to purchase the nonmedical assets of, medical and radiation
oncology practices.  During the first nine months of 1997, the Company paid
total consideration of $50 million for the affiliation of ten oncology practices
through amending existing management agreements including cash and transaction
costs of $24 million.  During the comparable period of the prior year, the
Company paid $75 million for management agreements with physician groups
including cash and transaction costs of $40 million.

  To fund this rapid growth and development, the Company has satisfied its
transaction and working capital needs through funds raised in its initial public
offering and borrowings under the Credit Facility.  The Company has relied
primarily on management fees received from its affiliated physician practices to
fund operations.  Cash derived from operations was $33.2 million for the first
nine months of 1997 and $10.0 million in the comparable period of 1996.  The
increase is due primarily to the operations of the oncology practices with whom
the Company has affiliated since September 30, 1996.

  During the first nine months of 1997, the Company borrowed $51 million under
the Credit Facility to fund medical practice transactions and the purchase of
treasury stock. Of the borrowings, $31 million was repaid during the first nine
months of 1997. Borrowings under the Credit Facility bear interest at a rate
equal to a rate based on prime rate or the London Interbank Offer Rate, based on
a defined formula. The Credit Facility contains affirmative and negative
covenants, including the maintenance of certain financial ratios, restrictions
on sales, leases or other dispositions of property, restrictions on other
indebtedness and prohibitions on the payment of dividends. The Company's
management service agreements, its equity ownership in its subsidiaries and all
other securities owned by the Company (other than treasury shares of the
Company) are pledged as security under the Credit Facility. The Company is
currently in compliance with the Credit Facility covenants.

  At September 30, 1997, the Company had net working capital of $46.5 million
and cash and cash equivalents of $4.3 million.  Included in net working capital
is $92.3 million of current assets and $45.8 million of current liabilities,
including approximately $5.1 million of short term notes payable and long-term
indebtedness maturing before September 30, 1998.  The Company currently expects
that its principal use of funds in the near future will be in connection with
anticipated transactions with affiliated physician groups and the purchase of
medical equipment.  The Company expects that the existing cash and investment
balances, cash generated from operations and amounts available under the Credit
Facility will be adequate to satisfy the Company's cash requirements for the
next 12 months.

                                      -15-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.

PART II.  OTHER INFORMATION


ITEM 2.    CHANGES IN SECURITIES

  In connection with each affiliation transaction between the Company and an
oncology group, the Company purchases the nonmedical assets of, and enters into
a long-term management agreement with, that oncology group.  In consideration
for that arrangement, the Company typically pays cash, issues subordinated
promissory notes (in general, payable in equal installments on the third through
seventh anniversaries of the closing date at an annual interest rate of seven
percent) and unconditionally agrees to delivery shares of Common Stock at future
specified dates (in general, on each of the third through fifth anniversaries of
the closing date).  The price per share is the lower of the average of the
closing price per share for the five days preceding the date of the letter of
intent or the closing date with respect to such affiliation transaction.

  The following table describes all unregistered sales by the Company of the
Company's securities during the first nine months of 1997.  Each sale was  a
private placement made in connection with a physician transaction, as described
in general in the preceding paragraph.  The overwhelming majority of the
affiliated oncologists are accredited investors.  No underwriter was involved in
any such sale, and no commission or similar fee was paid with respect thereto.
Each sale was not registered under the Securities Act of 1933 in reliance on
Section 4(2) of such Act and Rule 506 enacted thereunder.

<TABLE>
<CAPTION>
                                                          Number of Shares    Aggregate Principal 
   Date of Transaction         Number of Physicians       of Common Stock(1)     Amount of Notes
   -------------------         --------------------      -----------------    -------------------  
<S>                            <C>                          <C>                 <C>
        1/97                            2                       94,452              $1,620,000                 
        1/97                            2                       67,022              $  858,550                 
        3/97                            1                       25,134              $  470,000                 
        3/97                            8                      514,124              $6,006,000                 
        4/97                            4                      342,632              $4,223,100                 
        4/97                            4                      249,717                       -                 
        4/97                            1                       12,717              $  149,250                 
        4/97                            1                       30,088              $  646,000                 
        6/97                            2                       28,658              $  420,000                 
        9/97                            2                       28,230              $  602,000                 
</TABLE>

(1) In connection with each affiliation transaction, the Company unconditionally
agrees to deliver shares of Common Stock at specified future dates.

                                      -16-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.

PART II.  OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
(a)  Exhibits

  Exhibit
  Number    Description
  ------    -----------

   3.1      Articles of Incorporation, as amended (incorporated by reference
            from Form 10-Q for the period ended March 31, 1997)

   3.2      By-Laws, as amended (incorporated by reference from Form 10-Q for
            the period ended March 31, 1997)
 
   11       Statement Re - Computation of Per Share Earnings

   27       Financial Data Schedule


(b) Reports on Form 8-K

  During the third quarter of 1997, the Company did not file any Current Reports
  on Form  8-K.

                                      -17-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.


                                   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.



Date:  November 6, 1997       AMERICAN ONCOLOGY RESOURCES, INC.

 

                           By:  /s/   R. DALE ROSS
                              -----------------------------------
                              R. Dale Ross, Chairman of the Board
                              and Chief Executive Officer



 
                           By: /s/   L. FRED POUNDS
                              ------------------------------------
                              L. Fred Pounds, Vice President of Finance
                              and Chief Financial Officer

                                      -18-
<PAGE>
 
                       AMERICAN ONCOLOGY RESOURCES, INC.
                                 EXHIBIT INDEX

 

Exhibit Number         Description of Exhibits
--------------         -----------------------

     3.1               Articles of Incorporation, as amended (incorporated by
                       reference from Form 10-Q for the period ended March 31,
                       1997)

     3.2               By-Laws, as amended (incorporated by reference from Form
                       10-Q for the period ended March 31, 1997)

     4.1               Rights Agreement between the Company and American Stock
                       Transfer & Trust Company (incorporated by reference from
                       Form 8-A filed June 2, 1997 )

      11               Statement Re - Computation of Per Share Earnings

      27               Financial Data Schedule

                                     -19-