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                     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, 1998

                                       OR

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

                         Commission file number 0-21373

                           ProMedCo Management Company
             (Exact name of Registrant as specified in its charter)


            Delaware                                     75-2529809
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                   Identification Number)


  801 Cherry Street, Suite 1450
       Fort Worth, Texas                                   76102
(Address of principal executive offices)                (Zip Code)

                                 (817) 335-5035
              (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 (    )

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.

                                                             Outstanding at
      Class of Common Stock                                 October 31, 1998
         $.01 par value                                     21,139,889 shares


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<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES

                                      INDEX
<TABLE>
<CAPTION>


                                                                                                           Page
                                                                                                            No.
<S>                                                                                                      <C>
Part I. Financial Information

         Item 1. Financial Statements

                  Condensed Consolidated Balance Sheets
                      September 30, 1998 and December 31, 1997                                               2

                  Condensed Consolidated Statements of Operations
                      Three Months and Nine Months Ended September 30, 1998 and 1997                         3

                  Condensed Consolidated Statements of Cash Flows
                      Nine Months Ended September 30, 1998 and 1997                                          4

                  Notes to Condensed Consolidated Financial Statements                                       5

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

Part II. Other Information

         Item 2. Changes in Securities and Use of Proceeds                                                  18

         Item 6. Exhibits and Reports on Form 8-K                                                           18

Signatures                                                                                                  19

</TABLE>



<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                           September 30, 1998       December 31,
                                                                               (Unaudited)              1997       
                                     ASSETS
<S>                                                                        <C>                   <C>
Current assets:
         Cash and cash equivalents                                         $       12,831,532    $       15,760,920
         Accounts receivable, net                                                  42,552,847            22,463,689
         Management fees receivable                                                 9,281,616             1,938,464
         Due from affiliated physician groups                                       2,408,138             2,870,607
         Deferred income tax asset                                                    370,200                -
         Prepaid expenses and other current assets                                 10,195,339             6,917,675
                                                                           ------------------    ------------------
                  Total current assets                                             77,639,672            49,951,355
                                                                           ------------------    ------------------
Property and equipment, net                                                        15,023,426            10,590,561
Intangible assets, net                                                            127,351,385            77,195,351
Long-term receivables                                                              25,188,639            23,915,884
Long-term receivable from related party                                             2,000,000                -
Other assets                                                                        1,672,526             1,312,999
                                                                           ------------------    ------------------
                  Total assets                                             $      248,875,648    $      162,966,150
                                                                           ==================    ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                                                  $        5,660,944    $        3,185,208
         Payable to affiliated physician groups                                     6,799,285             6,562,903
         Accrued salaries, wages and benefits                                       4,326,368             2,895,023
         Accrued expenses and other current liabilities                             9,674,991             6,014,729
         Deferred income tax liability                                                 -                    174,101
         Current maturities of notes payable                                        3,275,951             3,676,365
         Current portion of obligations under capital leases                          561,060               609,591
         Current portion of deferred purchase price                                 5,837,891             5,265,713
         Income taxes payable                                                       1,139,999             1,051,050
                                                                           ------------------    ------------------
                  Total current liabilities                                        37,276,489            29,434,683
                                                                           ------------------    ------------------

Notes payable, net of current maturities                                           23,976,767            39,688,325
Obligations under capital leases, net of current portion                              847,460             1,073,886
Deferred purchase price, net of current portion                                     7,504,226             7,318,526
Convertible subordinated notes payable                                              8,702,075             1,765,058
Deferred income tax liability                                                         762,687             1,103,876
Other long-term liabilities                                                           211,613             1,963,059
                                                                           ------------------    ------------------
                  Total liabilities                                                79,281,317            82,347,413
                                                                           ------------------    ------------------

Stockholders' equity:
         Common stock                                                                 208,950               106,868
         Additional paid-in capital                                               151,562,469            58,946,838
         Common stock to be issued                                                  7,238,360            20,121,059
         Stockholder notes receivable                                                (369,665)             (369,665)
         Retained earnings                                                         10,954,217             1,813,637
                                                                           ------------------    ------------------
                  Total stockholders' equity                                      169,594,331            80,618,737
                                                                           ------------------    ------------------
                  Total liabilities and stockholders' equity               $      248,875,648    $      162,966,150
                                                                           ==================    ==================
</TABLE>

    The accompanying notes are an integral part of these financial statements.

<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                         Three Months Ended                 Nine Months Ended
                                                            September 30,                     September 30,         
                                                         1998            1997             1998             1997     
<S>                                                <C>             <C>              <C>              <C>
Physician groups revenue, net                      $   81,253,975  $    29,302,573  $   215,495,583  $    75,760,198
Less: amounts retained by physician groups             20,157,298       11,496,972       61,792,641       31,037,320
                                                   --------------  ---------------  ---------------  ---------------
Management fee revenue                                 61,096,677       17,805,601      153,702,942       44,722,878
                                                   --------------  ---------------  ---------------  ---------------

Operating expenses:
         Clinic salaries and benefits                  19,333,680        6,795,818       50,388,950       17,362,170
         Clinic rent and lease expense                  4,528,776        1,620,677       11,589,789        4,129,602
         Clinic supplies                                6,598,383        2,034,422       17,792,959        5,510,504
         Purchased medical services                    14,813,087          725,486       33,601,088        2,191,535
         Other clinic costs                             6,649,411        2,100,817       16,607,802        6,033,783
         General corporate expenses                     1,232,954        1,113,978        3,607,592        2,756,283
         Depreciation and amortization                  2,074,654          923,093        5,117,919        1,961,520
         Interest (income) expense                        (47,912)         110,468          253,998          227,565
                                                   --------------- ---------------  ---------------  ---------------
                                                       55,183,033       15,424,759      138,960,097       40,172,962
                                                   --------------  ---------------  ---------------  ---------------

Income before provision for income taxes                5,913,644        2,380,842       14,742,845        4,549,916

Provision for income taxes                              2,247,168          778,494        5,602,265        1,385,835
                                                   --------------  ---------------  ---------------  ---------------

Net income                                         $    3,666,476  $     1,602,348  $     9,140,580  $     3,164,081
                                                   ==============  ===============  ===============  ===============
Net earnings per share:
         Basic                                     $         0.17  $          0.13  $          0.52  $          0.29
                                                   ==============  ===============  ===============  ===============
         Diluted                                   $         0.16  $          0.11  $          0.45  $          0.23
                                                   ==============  ===============  ===============  ===============

Weighted average number of common shares outstanding:
         Basic                                         21,450,466       12,042,769       17,661,950       10,914,613
                                                   ==============  ===============  ===============  ===============
         Diluted                                       23,539,875       15,260,449       20,445,620       13,927,376
                                                   ==============  ===============  ===============  ===============
</TABLE>











    The accompanying notes are an integral part of these financial statements.


<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                       Nine Months Ended
                                                                                         September 30,             
                                                                                  1998                  1997       
<S>                                                                        <C>                   <C>
Cash flows from operating activities:
     Net income                                                            $        9,140,580    $        3,164,081
     Adjustments  to  reconcile  net  income to net cash  provided  by (used in)
         operating activities (net of effects of purchase transactions):
         Depreciation and amortization                                              5,117,919             1,961,520
         Provision for deferred income taxes                                        1,115,510               109,046
         Changes in assets and liabilities:
              Accounts receivable                                                 (11,360,149)           (2,105,236)
              Management fees receivable                                           (5,994,131)             (726,767)
              Due from affiliated physician groups                                    462,469            (1,570,472)
              Other assets                                                         (2,351,653)           (2,919,524)
              Accounts payable                                                     (2,475,080)             (231,608)
              Payable to physician groups                                             236,382             2,254,912
              Accrued expenses and other liabilities                               (1,372,498)            1,182,926
                                                                           -------------------   ------------------
Net cash provided by (used in) operating activities                                (7,480,651)            1,118,878
                                                                           -------------------   ------------------

Cash flows from investing activities:
     Purchases of property and equipment                                           (2,987,379)           (1,451,354)
     Purchases of clinic assets, net of cash                                      (46,122,584)          (14,010,972)
     Issuance of long term receivables                                             (2,792,324)             (600,000)
                                                                           -------------------   ------------------
Net cash used in investing activities                                             (51,902,287)          (16,062,326)
                                                                           -------------------   -------------------

Cash flows from financing activities:
     Borrowings under long-term debt                                               47,320,236             2,076,242
     Payments on long-term debt                                                   (63,470,182)           (2,640,048)
     Payments on capital lease obligations                                           (336,785)             (736,015)
     Proceeds from issuance of common stock, net                                   72,940,281            32,308,489
     Purchase and retirement of treasury stock                                         -                   (382,082)
     Issuance of stockholder notes receivable                                          -                   (218,359)
                                                                           ------------------    -------------------
Net cash provided by financing activities                                          56,453,550            30,408,227
                                                                           ------------------    ------------------

(Decrease) Increase in cash and cash equivalents                                   (2,929,388)           15,464,779

Cash and cash equivalents, beginning of period                                     15,760,920             1,633,534
                                                                           ------------------    ------------------

Cash and cash equivalents, end of period                                   $       12,831,532    $       17,098,313
                                                                           ==================    ==================
Supplemental disclosure of cash flow information
     Cash paid during the period for -
         Interest expense                                                  $        2,007,963    $          528,436
         Income taxes                                                      $        3,940,971    $          551,440
</TABLE>

  The accompanying notes are an integral part of these financial statements.


<PAGE>



                                                                   5
                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.       SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation/Principles of Consolidation

The  condensed  consolidated  financial  statements  included  herein  have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"). Certain information and footnote
disclosures  normally  included in financial  statements  prepared in accordance
with generally  accepted  accounting  principles  have been condensed or omitted
pursuant  to such  SEC  rules  and  regulations.  Management  believes  that the
disclosures herein are adequate to prevent the information  presented from being
misleading.  The foregoing  financial  information,  not audited by  independent
public  accountants,  reflects,  in the opinion of the Company,  all adjustments
(which  included  only  normal  recurring  adjustments)  necessary  for  a  fair
presentation  of the financial  position and the results of  operations  for the
interim periods presented.  The results of operations for any interim period are
not necessarily indicative of the results of the operations for the entire year.
It is suggested that these condensed  consolidated  financial statements be read
in conjunction  with the financial  statements and notes thereto included in the
Company's  Annual  Report on Form 10-K for the year  ended  December  31,  1997.
Certain  prior period  amounts have been  reclassified  to conform with the 1998
presentation.

In March 1997, the Company completed its merger with Western Medical  Management
Corp., Inc. ("Reno"), a physician management company.  This transaction has been
accounted  for as a pooling of  interests,  as defined by APB No. 16,  "Business
Combinations." The accompanying financial statements are based on the assumption
that the  companies  were  combined  for the full  periods  presented  and prior
financial statements have been restated to give effect to the combination.

Earnings Per Share

Basic earnings per share ("EPS") is calculated by dividing  income  available to
common  stockholders by the weighted average number of common shares outstanding
during the  period.  Common  stock to be issued is  assumed  to be common  stock
outstanding  and is included in the  weighted  average  number of common  shares
outstanding  for the basic EPS  calculation.  Diluted EPS  includes the options,
warrants, and other potentially dilutive securities that are excluded from basic
EPS using the  treasury  method to the  extent  that  these  securities  are not
anti-dilutive.

Management Fee Revenue

Management fee revenue represents physician groups revenue less amounts retained
by physician  groups.  The amounts  retained by physician  groups (80-85% of the
physician groups' operating  income)  represents  amounts paid to the physicians
pursuant to the service agreements between the Company and the physician groups.
Under the service agreements, the Company provides each physician group with the
facilities and equipment used in its medical  practice,  assumes  responsibility
for the management of the operations of the practice,  and employs substantially
all of the non-physician personnel utilized by the group.



<PAGE>


The Company's management fee revenues are dependent upon the operating income of
the physician  groups.  As discussed  previously,  the physician groups retain a
fixed  percentage  (typically  80-85%)  of  physician  group  operating  income.
Physician  group  operating  income is defined in the service  agreements as the
physician  group's net medical  revenue less certain  contractually  agreed-upon
clinic expenses,  including  non-physician  clinic salaries and benefits,  rent,
insurance,  interest  and  other  direct  clinic  expenses.  The  amount  of the
physician  groups  revenue  retained and paid to the physician  group  primarily
consists of the cost of the  affiliated  services.  The remaining  amount of the
physician groups operating income (typically 15-20%) and an amount equal to 100%
of the clinic  expenses are  reflected as management  fee revenue  earned by the
Company. Other revenue represents fees from management consulting,  supplemental
implementation services and other miscellaneous revenues:

<TABLE>
<CAPTION>

                                                        Three Months Ended                 Nine Months Ended
                                                           September 30,                     September 30,         
                                                        1998            1997              1998            1997     
<S>                                               <C>             <C>              <C>              <C>
         Component based upon physician 
           groups operating income                $    7,150,341  $     2,028,877  $    17,805,087  $     5,477,174
         Reimbursement of clinic expenses             52,921,336       13,736,724      131,847,855       36,405,704
         Other revenue                                 1,025,000        2,040,000        4,050,000        2,840,000
                                                  --------------  ---------------  ---------------  ---------------
         Management fee revenue                   $   61,096,677  $    17,805,601  $   153,702,942  $    44,722,878
                                                  ==============  ===============  ===============  ===============
</TABLE>


2.       ACQUISITIONS:

Through  September  30, 1998 and during 1997,  the  Company,  through its wholly
owned  subsidiaries,  acquired certain operating assets of the following medical
clinics:

<TABLE>
<CAPTION>

                    Physician Group                     Effective Date                      Location
<S>      <C>                                         <C>                                <C>
1998:    Berkshire Physicians & Surgeons             April 1, 1998 (a)                  Pittsfield, MA
         Primary Medical Clinics                     May 1, 1998                        Midland, TX
         Prime Medical Associates                    June 1, 1998                       Hudson, NY
         Physicians' Primary Care                    July 1, 1998                       Ft. Myers, FL
         Medical Associates of Pinellas              November 1, 1998 (b)               Clearwater, FL

1997:    Naples Medical Center                       March 1, 1997                      Naples, FL
         Abilene Diagnostic Clinic                   June 1, 1997 (c)                   Abilene, TX
         Intercoastal Medical Group                  August 1, 1997                     Sarasota, FL
         Beacon Medical Group                        October 1, 1997 (d)                Harrisburg, PA
         Cowley Medical Associates (e)               November 1, 1997                   Harrisburg, PA
         Thomas-Spann Clinic                         December 1, 1997                   Corpus Christi, TX
         HealthStar, Inc.                            December 1, 1997                   Knoxville, TN
</TABLE>

(a)  Berkshire  Physicians  and Surgeons  was  operated by the Company  under an
     interim service agreement effective February 1, 1998. The Company completed
     its  acquisition  in April  1998,  and  entered  into a  long-term  service
     agreement with the physician group effective April 1, 1998.

<PAGE>


(b)  Medical Associates of Pinellas was operated by the Company under an interim
     service  agreement  effective  May  1,  1998.  The  Company  completed  its
     acquisition in October 1998 and entered into a long-term  service agreement
     with the physician group effective November 1, 1998.

(c)  Abilene  Diagnostic  Clinic was  operated by the  Company  under an interim
     service  agreement  effective  December 1, 1995. The Company  completed its
     acquisition of certain operating assets on June 5, 1997, and entered into a
     long-term  service  agreement  with the physician  group  effective June 1,
     1997.

(d)  Beacon  Medical Group was operated by the Company under an interim  service
     agreement effective April 1, 1997. The Company completed its acquisition of
     certain  operating  assets on October 1, 1997, and entered into a long-term
     service agreement with the physician group effective on that date.

(e)  The physicians of Cowley Medical Associates joined the Beacon Medical Group
     in December 1997.

These  acquisitions  were  accounted  for as  purchases,  and  the  accompanying
condensed  consolidated  financial  statements  include  the  results  of  their
operations  from the  dates of their  respective  acquisitions.  Purchase  price
allocations to tangible assets acquired and liabilities assumed are based on the
estimated  fair  values at the dates of  acquisitions  and are  subject to final
revisions.  Simultaneous  with each  acquisition,  the  Company  entered  into a
long-term  service  agreement  with the  related  physician  group.  The service
agreements are 40 years in length.

In  addition  to  the  medical  clinics  acquired,  the  Company  completed  its
acquisition  of Health Plans,  Inc. in December 1997 and renamed the company PMC
Medical  Management,  Inc.  ("PMC").  PMC  provides a full range of managed care
services  to  capitated   providers,   including  clinical  quality  assessment,
credentialing,   claims   processing  and  payment,   referral  and  utilization
management, and case management.


<PAGE>


The  following   unaudited  pro  forma   information   reflects  the  effect  of
acquisitions  of  medical  clinics  and  PMC  on  the  consolidated  results  of
operations of the Company assuming that the acquisitions  occurred at January 1,
1997. In addition,  the following  unaudited pro forma information also includes
an adjustment  to reflect the  Company's  change in its estimate with respect to
the estimated life of its service  agreement rights intangible assets from 30 to
25 years (see Note 8). Future  results may differ  substantially  from pro forma
results and cannot be considered indicative of future results.
<TABLE>
<CAPTION>

                                                       Three Months Ended                 Nine Months Ended
                                                          September 30,                     September 30,           
<S>                                              <C>             <C>              <C>              <C>
                                                      1998             1997            1998              1997       
         Physician groups revenue, net           $   84,216,863  $    55,457,865  $   234,127,086  $  164,254,983
         Less: amounts retained by 
             physician groups                        21,727,296       16,848,460       67,263,156      52,505,750
                                                 --------------  ---------------  ---------------  --------------
         Management fee revenue                  $   62,489,566  $    38,609,405  $   166,863,930  $  111,749,233
                                                 ==============  ===============  ===============  ==============
         Net income                              $    3,664,486  $     1,569,045  $     9,126,354  $    3,651,986
                                                 ==============  ===============  ===============  ==============

         Net earnings per share
              Basic                              $         0.17  $          0.13  $          0.51  $         0.32
                                                 ==============  ===============  ===============  ==============
              Diluted                            $         0.16  $          0.10  $          0.45   $        0.26
                                                 ==============  ===============  ===============  ==============

         Weighted average number of common 
             shares outstanding
              Basic                                  21,450,466       12,460,751       17,832,049      11,332,595
                                                 ==============  ===============  ===============  ==============
              Diluted                                23,539,875       15,283,994       20,462,300      13,950,921
                                                 ==============  ===============  ===============  ==============
</TABLE>


3.       LONG-TERM RECEIVABLES:

During 1997,  the Company  entered into an agreement to lend up to $42.7 million
to an affiliated  physician  group.  The purpose of this loan was to provide the
physician group with liquidity to meet certain obligations,  general association
purposes and to strengthen the physician-association  relationships. The loan is
secured by certain assets of the association,  including the notes receivable by
the  association  from the  individual  physicians.  In  addition,  the  Company
maintains a first lien on distributions to the physician group under its service
agreement with the  association.  Four  remaining  advances of $5.8 million each
will be made annually on December 1,  beginning in 1998.  Interest is payable to
the  Company  monthly  at an  annual  rate of 8.0%.  The loan  will be repaid in
fifteen  annual  payments  beginning on November 30, 2008.  As of September  30,
1998, the outstanding loan totaled $19.4 million.

In August  1998,  the Company  signed a  promissory  note to loan an  affiliated
physician group up to $1.9 million.  The principal plus accrued interest of 8.5%
is due on May 30,  1999.  As of September  30, 1998,  the Company had loaned the
physician  group  $790,380 under this agreement.  The Company maintains a  first
lien  on distributions  to the physician group under its service agreement  with
the association.



<PAGE>



4.       LONG-TERM RECEIVABLE FROM RELATED PARTY:

In August  1998,  the  Company  loaned an  officer  of the  Company  $2,000,000.
Beginning  in August  2003,  the loan will be repaid in annual  installments  of
$200,000 plus accrued interest of 7.0% with the remaining  balance due in August
2008.  This loan is secured by a pledge of warrants for shares of the  Company's
common stock.


5.       LONG-TERM DEBT:

Long-term debt is summarized as follows:
<TABLE>
<CAPTION>

                                                                              September 30,         December 31,
                                                                                  1998                  1997       
<S>                                                                        <C>                   <C>
         Borrowings under bank credit facility                             $       20,175,984    $       32,968,000
         Notes payable issued to physician groups                                   6,958,870            10,220,775
         Other long-term debt                                                         117,864               175,915
                                                                           ------------------    ------------------
                                                                                   27,252,718            43,364,690
         Less current maturities                                                   (3,275,951)           (3,676,365)
                                                                           -------------------   -------------------
         Long-term debt, net of current maturities                         $       23,976,767    $       39,688,325
                                                                           ==================    ==================
</TABLE>

In  connection  with the  affiliation  with  Berkshire  Physicians & Surgeons in
Pittsfield,  MA, the Company issued convertible subordinated notes totaling $7.6
million.  The notes accrue  interest at the rate of 4.75% paid annually on March
31 and can be converted into shares of the Company's common stock any time after
April 17,  1999 and prior to March 31,  2005 at a  conversion  price of  $15.35,
subject to adjustment under the note agreements.


6.       SUPPLEMENTAL CASH FLOW INFORMATION:

In March 1998,  an officer of the Company  surrendered  43,693  warrants in full
payment of a $600,000  outstanding  note balance and $30,875 of accrued interest
receivable.

In March  and April  1998,  the  Company  converted  $359,991  and  $324,774  of
convertible  subordinated  notes  payable to a  physician  group into 39,999 and
36,094 shares of the Company's common stock, respectively.





<PAGE>



7.       SUPPLEMENTAL NET EARNINGS PER SHARE DATA:

In May 1998,  the Company  completed a public  offering of  6,900,000  shares of
common stock at a price of $11.00 per share,  and in March 1997 the Company sold
4,000,000  shares  of  common  stock at a price  of  $9.00 in a public  offering
(collectively the "Offerings").  The unaudited  supplemental  earnings per share
data has been calculated  assuming the Offerings occurred as of the beginning of
each respective period.
<TABLE>
<CAPTION>

                                                          Three Months Ended              Nine Months Ended
                                                             September 30,                  September 30,       
                                                          1998           1997           1998            1997    
<S>                                                  <C>             <C>            <C>            <C>
         Supplemental net earnings per share
              Basic                                  $        0.17   $        0.08  $        0.44  $        0.17
                                                     =============   =============  =============  =============
              Diluted                                $        0.16   $        0.07  $        0.38  $        0.14
                                                     =============   =============  =============  =============

         Supplemental weighted average number of common shares
              outstanding
              Basic                                     21,450,466      18,942,769     21,005,906     18,869,558
                                                     =============   =============  =============  =============
              Diluted                                   23,539,875      22,160,449     23,789,576     21,882,321
                                                     =============   =============  =============  =============
</TABLE>


8.       CHANGE IN ACCOUNTING ESTIMATE:

Effective  July 1, 1998,  the Company  changed its estimate  with respect to the
estimated life of its service agreement rights intangible  assets.  All existing
and future service  agreement rights  intangible assets will be amortized over a
period  not to exceed 25 years  from the  inception  of the  respective  service
agreements.  Had the  Company  adopted  this  policy at the  beginning  of 1997,
amortization  expense would have increased and diluted  earnings per share would
have decreased by  approximately  $187,000 and $0.01,  respectively in the third
quarter of 1997 and $404,000 and $0.02, respectively in the first nine months of
1997. On the same basis,  amortization expense for the first nine months of 1998
would have  increased  by  approximately  $480,000  resulting  in a decrease  in
diluted earning per share of $0.02.

<PAGE>




                                                                  11
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview

ProMedCo   Management   Company,   ("ProMedCo"  or  the  "Company")  a  Delaware
corporation,  is a physician  practice  management company that consolidates its
affiliated physician groups into primary-care-driven  multi-specialty  networks.
ProMedCo  commenced  operations in December 1994 and affiliated with its initial
physician  group in June 1995.  The  Company's  rapid growth since June 1995 has
resulted  primarily from its affiliation with additional  physician groups.  The
Company  currently is affiliated  with  multi-specialty  physician  groups in 13
states,  comprised of 606  physicians  and 130  mid-level  providers  (primarily
physician  assistants  and  nurse  practitioners),  and is  associated  with 580
physicians in independent  practice  association  ("IPA") networks.  The Company
also  provides a full range of managed  care  services to  capitated  providers,
including  clinical quality  assessment,  credentialing,  claims  processing and
payment, referral and utilization management,  and case management.  The Company
is currently  providing  such services to the Company's  associated  IPAs and to
those of its affiliated  groups that have entered into capitation  arrangements,
together covering approximately 100,000 managed care capitated lives.

When affiliating with a physician group, the Company generally  acquires at fair
market  value the group's  non-real  estate  operating  assets and enters into a
40-year service agreement with the group in exchange for a combination of common
stock,  cash, other securities of the Company,  and/or the assumption of certain
liabilities.   Under  the  service  agreement,  the  Company  receives  a  fixed
percentage  (typically  15-20%) of the physician  groups'  operating  income (as
defined) and shares between 25% and 50% of the group's  surplus or deficit under
risk-sharing arrangements pursuant to capitated managed care contracts. Although
the  group's  physicians  retain full  control  over the  practice of  medicine,
ProMedCo  manages all day-to-day  operations other than the provision of medical
services.  The Company is continually  seeking additional  physician groups with
which to affiliate and is currently  engaged in  negotiations  with several such
groups.

ProMedCo  focuses on pre-managed  care  secondary  markets  located  principally
outside of or  adjacent to large  metropolitan  areas.  The key  elements of the
Company's  strategy are to (i) continue to penetrate  pre-managed-care  markets;
(ii) affiliate with  primary-care-oriented  multi-specialty groups; (iii) expand
its affiliated  groups' market  presence  through the addition of physicians and
selected  ancillary  services;  (iv) optimize managed care opportunities for its
groups;  and (v)  align  the  Company's  economic  interests  with  those of its
physician partners.

Results of Operations

The Company commenced  operations in December 1994 and affiliated with its first
physician  group in June 1995 and its second group in December 1995. The Company
entered into  affiliations with five additional groups in 1996, seven additional
groups during 1997, and six additional  groups in the first nine months of 1998.
Changes in results of  operations  were caused  primarily by  affiliations  with
these additional physician groups.


<PAGE>


The  following  table sets forth the  percentages  of physician  groups  revenue
represented by certain items reflected in the Company's  condensed  consolidated
statements of operations.
<TABLE>
<CAPTION>


                                                          Three Months Ended               Nine Months Ended
                                                             September 30,                   September 30,         
                                                          1998           1997             1998            1997     
<S>                                                    <C>            <C>            <C>               <C>
Physician groups revenue, net                            100.0%         100.0%         100.0%            100.0%
Less: amounts retained by physician groups                24.8           39.2           28.7              41.0
                                                       -------         ------         ------            ------
Management fee revenue                                    75.2           60.8           71.3              59.0
                                                       -------         ------         ------            ------
Operating expenses:
         Clinic salaries and benefits                     23.8           23.2           23.3              22.8
         Clinic rent and lease expense                     5.6            5.5            5.4               5.5
         Clinic supplies                                   8.1            6.9            8.3               7.3
         Purchased medical services                       18.2            2.5           15.6               2.9
         Other clinic costs                                8.2            7.1            7.7               8.0
         General corporate expenses                        1.5            3.8            1.7               3.6
         Depreciation and amortization                     2.6            3.2            2.4               2.6
         Interest expense (income)                        (0.1)           0.4            0.1               0.3
                                                       -------         ------         ------            ------
                                                          67.9           52.6           64.5              53.0
                                                       -------         ------         ------            ------
Income before provision for income taxes                   7.3            8.1            6.8               6.0
Provision for income taxes                                 2.8            2.6            2.6               1.8
                                                       -------         ------         ------            ------
Net income                                                 4.5%           5.5%           4.2%              4.2%
                                                       =======         ======         ======            ======
</TABLE>

Physician  groups  revenue  increased  by 177% to $81.3  million for the quarter
ended September 30, 1998, from $29.3 million for the quarter ended September 30,
1997.  For the nine months ended  September 30, 1998,  physician  groups revenue
increase by 184% to $215.5  million from $75.8 million for the nine months ended
September 30, 1997.  Approximately 76% of the growth in physician groups revenue
for the nine months ended September 30, 1998 is attributable to new affiliations
since  September 30, 1997,  with the balance  coming from  increases in revenues
from affiliated physician groups in place prior to September 30, 1997.

One of the  more  significant  impacts  to the  Company's  business  has been an
increase  in revenues  from  capitation  contracts  with HMOs.  While  virtually
non-existent in early 1997, these revenues account for  approximately 20% of the
Company's physician groups revenue.  This increase in capitation affects certain
other income statement items quite significantly. Purchased medical services has
increased to 18.2% of physician  groups revenue for the quarter ended  September
30, 1998 from 2.5% for the same period a year ago. This is directly attributable
to the  increase  in  capitation,  which  requires  the  procurement  of medical
services not provided by the local affiliated  physician group.  Offsetting this
increase  is  a  related  decrease  in  amount  retained  by  physicians.  Since
capitation  generates more aggregate dollars to affiliated physician groups, but
less as a  percentage  of  physician  groups  revenue,  the amount  retained  by
physicians will be lower as a percentage of physician  groups revenue than under
the ordinary fee-for-service model.



<PAGE>



General corporate  expenses as a percentage of physician groups revenue declined
to 1.5% for the  quarter  ended  September  30,  1998,  compared to 3.8% for the
quarter ended  September 30, 1997. For the nine months ended September 30, 1998,
general corporate  expenses as a percentage of physician groups revenue declined
to 1.7%  compared to 3.6% for the nine months ended  September  30, 1997.  While
these costs declined as a percentage of physician groups revenue,  the amount of
general  corporate  expenses  increased  to $1.2  million for the quarter  ended
September 30, 1998 from $1.1 million for the quarter  ended  September 30, 1997,
and increased to $3.6 million for the nine months ended  September 30, 1998 from
$2.8 million for the nine months ended  September  30,  1997.  This  increase in
expenses was expected as the Company  continues to add management and technology
infrastructure.

Depreciation  and  amortization,  as a percentage of physician  groups  revenue,
decreased to 2.6% for the quarter ended September 30, 1998, compared to 3.2% for
the quarter ended  September 30, 1997.  For the nine months ended  September 30,
1998,  depreciation and amortization as a percentage of physician groups revenue
decreased to 2.4% compared to 2.6% for the nine months ended September 30, 1997.
This decrease is  attributable  to differences in the mix of assets  acquired in
the various  affiliations that have occurred over the past year.  Effective July
1, 1998, the Company  changed its estimate with respect to the estimated life of
its service agreement rights intangible  assets. All existing and future service
agreement rights intangible assets will be amortized over a period not to exceed
25 years from the inception of the respective service agreements.

Net interest  expense  (income) as a  percentage  of  physician  groups  revenue
decreased to (0.1)% for the quarter ended  September 30, 1998,  compared to 0.4%
for the quarter ended  September 30, 1997.  For the nine months ended  September
30, 1998,  net  interest  expense as a percentage  of physician  groups  revenue
decreased to 0.1% from 0.3% for the nine months ended  September 30, 1997.  This
decrease is related to interest income from a loan receivable from an affiliated
physician group and the investment of unused proceeds from the Company's  public
offering  of its  common  stock (the  "Offering"),  effective  May 8, 1998.  The
increase in interest  income was offset by an increase in long-term  debt during
the period prior to the Offering  relating to the  affiliation  with  additional
physician groups.

Provision  for income  taxes  reflects an effective  rate of 38%, the  Company's
estimated effective rate for all of 1998.




<PAGE>



Year 2000

The Company is aware of issues  associated with the programming code in existing
computer  systems  as the year 2000  approaches.  The  "Year  2000"  problem  is
pervasive and complex, as virtually every computer operation will be affected in
the same way by the  rollover  of the two digit  year  value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the  year  changes  to  2000.  Systems  that  do  not  properly  recognize  such
information could generate erroneous data or cause a system to fall.

The  Company  continues  to assess  the  impact  of the Year  2000  issue on its
information  systems and operations using both internal and external  resources.
The  Company  divides  the  software  into  three  broad  categories:  financial
(including  general  ledger,  accounts  payable,  fixed assets,  purchasing  and
inventory  control),   practice  management   (including  billing  and  accounts
receivable) and managed care. The Company is in the process of installing a new,
common  financial  software package at all locations that is certified Year 2000
compliant.  Since the  implementation  of the financial  software is part of the
Company's  ongoing  development of its technology  infrastructure,  there are no
incremental  costs resulting from the Year 2000 issue. The Company's  philosophy
with respect to practice  management  systems is to utilize the legacy system in
place as long as it can capably  serve the  physicians'  needs.  With  disparate
practice management systems in place at the Company's various affiliated groups,
the Year 2000 assessment process continues with each new affiliation. Inadequate
or  noncompliant  practice  management  systems  could  be  acquired  in  a  new
affiliation,  which would require system remediation or replacement. Given these
issues, the Company is currently unable to estimate the costs of the remediation
or  replacements  that may be required.  With its current  strategy of replacing
inadequate practice management  systems,  however,  the Company does not believe
that Year 2000 issues  will cause a  conversion  of one or more of its  practice
management  systems  to  be  more  or  less  difficult  than  a  typical  system
conversion.  The Company's  primary managed care technology  resides at its risk
management  subsidiary,   PMC  Medical  Management  ("PMC").  PMC  is  currently
upgrading its systems to be Year 2000 compliant.  This process is expected to be
completed in the first quarter of 1999 and the costs are not currently estimated
to be material.

The Company is also in the process of gathering  information about the year 2000
compliance  status of its  significant  suppliers and vendors.  The inability of
suppliers and vendors to complete their Year 2000 resolution process in a timely
fashion could materially impact the Company. The potential effect on the Company
of non-compliance by suppliers and vendors has not yet been determined

Management  of the  Company  believes  it has an  effective  program in place to
resolve  the Year 2000 issue in a timely  manner.  In the event that the Company
does not complete any additional phases, the Company's ability to record revenue
or process  collections  in a timely  fashion would be adversely  impacted after
January 1, 2000. In addition, disruptions in the general economy due to the Year
2000 problem could also materially adversely affect the Company.

The Company currently has no contingency plans in place in the event it does not
complete all phases of its Year 2000 program.  The Company plans to evaluate the
status  of its  efforts  in  June  1999  to  determine  whether  such a plan  is
necessary.



<PAGE>


Liquidity and Capital Resources

At  September  30,  1998,  the  Company had  working  capital of $40.4  million,
compared to $20.5 million at December 31, 1997.  Cash used in operations for the
nine  months  ended  September  30,  1998 was $7.5  million.  This is  primarily
attributable to an overall increase in accounts receivable  resulting,  in part,
from the Company's growth in revenues,  but more  significantly from a "ramp up"
in accounts  receivable of approximately  $6.3 million at the Company's  largest
affiliate.  The structure of this  transaction,  which was completed in November
1997,  did not include  acquisition  of the  group's  accounts  receivable.  Net
accounts  receivable  of $42.6 million at September 30, 1998 amounted to 48 days
of net physician groups revenue (excluding other revenues) for the third quarter
of 1998, compared to 47 days for the second quarter of 1998. This slight rise in
days outstanding can be attributed to upgrading the practice  management systems
at certain locations during the third quarter.  During the implementation phase,
accounts  receivable  will  temporarily  increase  and then return to normal the
following  quarter.  During the third  quarter the Company  made a $1.5  million
retirement plan contribution relating to a 1998 affiliation.  This liability was
assumed as part of the transaction and was recorded in purchase accounting.  Net
income combined with depreciation and  amortization,  deferred taxes, a decrease
in due from affiliated  physician groups and an increase in payable to physician
groups to provide $16.1  million in cash flows.  This was offset by uses of cash
of $23.6 million  resulting  from increases in accounts  receivable,  management
fees  receivable,  other assets and  decreases  in accounts  payable and accrued
expenses and other liabilities.

The Company had aggregate  cash  expenditures  for purchases of clinic assets of
$46.1  million  for  the  nine  months  ended   September  30,  1998.  Of  this,
approximately $18.4 million relates to the Berkshire  affiliation in Pittsfield,
MA,  $18.2  million  relates  to new  affiliations  completed  in 1998,  and the
remaining  amounts  relate  primarily  to  deferred  payments   associated  with
previously  completed  acquisitions.   The  Company  has  commitments  to  spend
approximately $35.3 million in total consideration for new affiliations that are
currently under letters of intent. Capital expenditures amounted to $3.0 million
for the nine months ended  September  30, 1998.

In  November  1998,  the  Company  authorized  the  adoption  of a common  stock
repurchase  program  whereby the Company may repurchase up to $10 million of its
common stock, from time to time, in the open market and in privately  negotiated
transactions on terms and conditions acceptable to the Company.



<PAGE>


In April 1998,  the Company  completed an expansion of its Credit  Facility from
$50 million to $70 million. The Credit Facility provides for working capital and
acquisition financing, subject to certain restrictions. The interest rate is, at
the Company's  option,  either the adjusted  30-day  commercial  paper rate, one
month LIBOR plus 2.31% to 3.25%,  or the bank's  prime rate plus 0.25% to 1.13%,
depending on certain debt levels. The Credit Facility,  which expires January 2,
2004, contains certain restrictive  covenants,  including prohibitions on paying
dividends,  limitations on capital  expenditures  and maintenance of minimum net
worth  and  certain  financial  ratios.  At  September  30,  1998,   outstanding
borrowings  against  the Credit  Facility  were $20.2  million  and the  current
effective interest rate was 7.90%.

The Company is in the final stages of establishing a new, subsequently expanded,
senior  credit  facility.  This new facility,  will replace the existing  senior
credit facility and will be used to refinance  existing senior debt, finance new
physician group  affiliations,  expand existing physician groups and for general
corporate purposes.

In  connection  with the  affiliation  with  Berkshire  Physicians & Surgeons in
Pittsfield,  MA, the Company issued convertible subordinated notes totaling $7.6
million.  The notes accrue  interest at the rate of 4.75% paid annually on March
31 and can be converted into shares of the Company's common stock any time after
April 17,  1999 and prior to March 31,  2005 at a  conversion  price of  $15.35,
subject to adjustment under the note agreements.  In addition to the convertible
subordinated  notes,  the Company signed a promissory note to loan the physician
group up to $1.9 million in August 1998. The principal on this  promissory  note
plus accrued  interest of 8.5% is due on May 30, 1999. As of September 30, 1998,
the Company had loaned the physician group $790,380 under this agreement.

In May 1998, the Company  completed a public offering of 6,900,000 shares of its
common stock at a price of $11.00 per share.  Proceeds of $71.9 million,  net of
underwriters'  discount and expenses of the offering were used  primarily to pay
down outstanding borrowings under the Credit Facility.

The Company had cash and cash  equivalents  of $12.8  million at  September  30,
1998.  In addition to this,  the  Company's  principal  sources of liquidity are
accounts  receivable  of $42.6  million at September  30, 1998 and  availability
under the working capital portion of the bank line of credit of $10 million. The
Company  believes  that the  combination  of these sources will be sufficient to
meet the  Company's  working  capital  needs  for the next  twelve  months.  The
Company's future acquisition,  expansion and capital  expenditure  programs will
require substantial  amounts of capital resources.  To meet the capital needs of
these  programs,  the Company will continue to evaluate  alternative  sources of
financing,  including short- and long-term bank indebtedness,  additional equity
and other forms of financing,  the  availability  and terms of which will depend
upon market and other  conditions.  There can be no  assurance  that  additional
financing will be available on terms acceptable to the Company.



<PAGE>



Forward-Looking Statements

This  report  includes  certain  forward-looking  statements  about  anticipated
results,  including  statements as to operating  results,  liquidity and capital
resources,  and  negotiations  with and  acquisitions  of  additional  physician
groups. Such forward-looking  statements are based upon internal estimates which
are  subject  to  change  because  they  reflect  preliminary   information  and
management  assumptions,  and a variety of  factors  could  cause the  Company's
actual results and experience to differ materially from the anticipated  results
or other expectations expressed in the forward-looking  statements.  The factors
which could cause  actual  results or outcomes to differ from such  expectations
include the extent of the  Company's  success in (i)  consummating  affiliations
with additional  physician groups;  (ii) negotiating  managed care contracts and
managing  the  medical  risk  assumed  thereunder,  (iii)  obtaining  additional
financing upon terms acceptable to the Company,  and (iv) negotiating  favorable
reimbursement  rates with third-party  payors,  along with the uncertainties and
other factors described herein and in the Company's public filings and reports.




<PAGE>



Item 2.  Changes in Securities and Use of Proceeds

In July and August 1998, the Company issued 57,098 shares of Common Stock to two
physician groups in connection with their  affiliations with the Company.  As of
September 30, 1998, the Company had commitments to issue an aggregate of 627,780
shares of Common Stock to physician groups and their  stockholders in connection
with its  affiliations  with five  physician  groups  between  November 1997 and
August  1998.  Of the 627,780  shares of Common  Stock to be issued to physician
groups,  the Company  expects to issue 233,343  shares in the fourth  quarter of
1998 and 394,437 shares in the first quarter of 1999. Each of such issuances was
or will be exempt  from  registration  under the  Securities  Act,  pursuant  to
section 4(2) of the Act as they did not involve any public offering.


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

         (a)      Exhibits:
                  11  Computation of Per Share Earnings
                  27  Financial Data Schedule

         (b)      Reports on Form 8-K
                  On May 1,  1998,  the  Company  filed a  report  on  Form  8-K
                  reporting an affiliation  with a physician group in Berkshire,
                  Massachusetts, pursuant to Item 2. of Form 8-K.


<PAGE>



                                 SIGNATURES


Pursuant to the  requirements  of the Securities Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned  thereunto
duly authorized.
<TABLE>
<CAPTION>

Signature                                                 Title                                  Date
<S>                                             <C>                                         <C>
/s/ H. WAYNE POSEY                    
H. Wayne Posey                                  President, Chief Executive                  November 16, 1998
                                                Officer, and Director
                                                (Chief Executive Officer)

/s/ ROBERT D. SMITH                   
Robert D. Smith                                 Senior Vice President and                   November 16, 1998
                                                Chief Financial Officer
                                                (Chief Accounting Officer)
</TABLE>