--------------------------------------------------------------------------------
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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 June 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                          July 31, 1998
      $.01 par value                              20,837,949 shares


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


<PAGE>



                PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES

                                    INDEX

                                                                           Page
                                                                            No.

Part I. Financial Information

  Item 1. Financial Statements

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

           Condensed Consolidated Statements of Operations
               Three Months and Six Months Ended June 30, 1998 and 1997     3

           Condensed Consolidated Statements of Cash Flows
               Six Months Ended June 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                                           10

Part II. Other Information

  Item 2. Changes in Securities and Use of Proceeds                        16

  Item 4. Submission of Matters to a Vote of Security Holders              16

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

Signatures                                                                 17




<PAGE>



                  PROMEDCO MANAGEMENT COMPANY AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                              June 30, 1998         December 31,
                                                                               (Unaudited)              1997
                                    ASSETS
<S>                                                                        <C>                   <C>
Current assets:
         Cash and cash equivalents                                         $       18,472,624    $       15,760,920
         Accounts receivable, net                                                  37,273,636            22,463,689
         Management fees receivable                                                 8,511,624             1,938,464
         Due from affiliated physician groups                                       1,521,289             2,870,607
         Deferred income tax asset                                                    370,200                -
         Prepaid expenses and other current assets                                  9,214,029             6,917,675
                                                                           ------------------    ------------------
                  Total current assets                                             75,363,402            49,951,355
                                                                           ------------------    ------------------

Property and equipment, net                                                        13,775,155            10,590,561
Intangible assets, net                                                            112,010,237            77,195,351
Long-term receivables                                                              23,546,548            23,915,884
Other assets                                                                        2,517,765             1,312,999
                                                                           ------------------    ------------------
                  Total assets                                             $      227,213,107    $      162,966,150
                                                                           ==================    ==================

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
         Accounts payable                                                  $        6,916,218    $        3,185,208
         Payable to affiliated physician groups                                     6,332,253             6,562,903
         Accrued salaries, wages and benefits                                       4,724,176             2,895,023
         Accrued expenses and other current liabilities                            10,387,514             6,014,729
         Deferred income tax liability                                                 -                    174,101
         Current maturities of notes payable                                        3,252,154             3,676,365
         Current portion of obligations under capital leases                          574,416               609,591
         Current portion of deferred purchase price                                 3,872,544             5,265,713
         Income taxes payable                                                         732,108             1,051,050
                                                                           ------------------    ------------------
                  Total current liabilities                                        36,791,383            29,434,683
                                                                           ------------------    ------------------

Notes payable, net of current maturities                                            8,835,242            39,688,325
Obligations under capital leases, net of current portion                              923,560             1,073,886
Deferred purchase price, net of current portion                                     5,073,924             7,318,526
Convertible subordinated notes payable                                              8,801,741             1,765,058
Deferred income tax liability                                                         229,373             1,103,876
Other long-term liabilities                                                         1,433,412             1,963,059
                                                                           ------------------    ------------------
                  Total liabilities                                                62,088,635            82,347,413
                                                                           ------------------    ------------------

Stockholders' equity:
         Common stock                                                                 206,339               106,868
         Additional paid-in capital                                               150,891,996            58,946,838
         Common stock to be issued                                                  7,108,060            20,121,059
         Stockholder notes receivable                                                (369,665)             (369,665)
         Retained earnings                                                          7,287,742             1,813,637
                                                                           ------------------    ------------------
                  Total stockholders' equity                                      165,124,472            80,618,737
                                                                           ------------------    ------------------
                  Total liabilities and stockholders' equity               $      227,213,107    $      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                 Six Months Ended
                                                              June 30,                          June 30,
                                                   -------------------------------  --------------------------------
                                                         1998            1997             1998             1997
                                                   --------------  ---------------  ---------------  ---------------
<S>                                                <C>             <C>              <C>              <C>
Physician groups revenue, net                      $   73,061,817  $    25,732,048  $   134,241,608  $    46,457,625
Less: amounts retained by physician groups             21,068,005       10,532,177       41,635,343       19,540,348
                                                   --------------  ---------------  ---------------  ---------------
Management fee revenue                                 51,993,812       15,199,871       92,606,265       26,917,277
                                                   --------------  ---------------  ---------------  ---------------

Operating expenses:
         Clinic salaries and benefits                  17,715,045        5,926,457       31,055,270       10,566,352
         Clinic rent and lease expense                  3,861,977        1,429,063        7,061,013        2,508,925
         Clinic supplies                                6,337,031        1,962,366       11,194,576        3,476,082
         Purchased medical services                    10,656,091          780,510       18,788,001        1,465,668
         Other clinic costs                             5,636,433        2,154,875        9,958,391        3,933,347
         General corporate expenses                     1,291,480          823,533        2,374,638        1,642,305
         Depreciation and amortization                  1,749,005          602,552        3,043,265        1,038,427
         Interest (income) expense                       (170,309)           1,148          301,910          117,097
                                                   --------------- ---------------  ---------------  ---------------
                                                       47,076,753       13,680,504       83,777,064       24,748,203
                                                   --------------  ---------------  ---------------  ---------------

Income before provision for income taxes                4,917,059        1,519,367        8,829,201        2,169,074

Provision for income taxes                              1,868,482          412,429        3,355,096          607,341
                                                   --------------  ---------------  ---------------  ---------------

Net income                                         $    3,048,577  $     1,106,938  $     5,474,105  $     1,561,733
                                                   ==============  ===============  ===============  ===============

Net earnings per share:
         Basic                                     $         0.17  $          0.09  $          0.35  $          0.15
                                                   ==============  ===============  ===============  ===============
         Diluted                                   $         0.15  $          0.08  $          0.30  $          0.12
                                                   ==============  ===============  ===============  ===============

Weighted average number of common shares outstanding:
         Basic                                         17,841,121       12,031,726       15,783,673       10,440,151
                                                   ==============  ===============  ===============  ===============
         Diluted                                       20,554,789       14,704,421       18,510,677       13,133,900
                                                   ==============  ===============  ===============  ===============

</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>

                                                                                        Six Months Ended
                                                                                            June 30,
                                                                           ----------------------------------------
                                                                                     1998                  1997
                                                                           ------------------    ------------------
<S>                                                                        <C>                   <C>
Cash flows from operating activities:
     Net income                                                            $        5,474,105    $        1,561,733
     Adjustments to reconcile net income to net cash provided by
         (used in) operating activities (net of effects of
         purchase transactions):
         Depreciation and amortization                                              3,043,265             1,014,788
         Provision for deferred income taxes                                          582,196               390,058
         Changes in assets and liabilities:
              Accounts receivable                                                  (9,923,001)              615,343
              Management fees receivable                                           (5,283,073)           (1,087,407)
              Due from affiliated physician groups                                  1,349,318            (2,358,986)
              Other assets                                                         (1,883,265)             (941,353)
              Accounts payable                                                     (1,209,762)             (205,356)
              Payable to physician groups                                            (230,650)            1,914,563
              Accrued expenses and other liabilities                                1,251,487              (122,430)
                                                                           ------------------    -------------------
Net cash provided by (used in) operating activities                                (6,829,380)              780,953
                                                                           -------------------   ------------------

Cash flows from investing activities:
     Purchases of property and equipment                                           (2,136,100)           (1,111,146)
     Purchases of clinic assets, net of cash                                      (29,648,066)          (13,166,514)
                                                                           -------------------   -------------------
Net cash used in investing activities                                             (31,784,166)          (14,277,660)
                                                                           -------------------   -------------------

Cash flows from financing activities:
     Borrowings under long-term debt                                               32,020,236             2,076,242
     Payments on long-term debt                                                   (63,235,838)           (2,857,590)
     Payments on capital lease obligations                                           (247,329)             (206,997)
     Proceeds from issuance of common stock, net                                   72,788,181            32,913,035
     Purchase and retirement of treasury stock                                         -                   (348,363)
                                                                           ------------------    -------------------
Net cash provided by financing activities                                          41,325,250            31,576,327
                                                                           ------------------    ------------------

Increase in cash and cash equivalents                                               2,711,704            18,079,620

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

Cash and cash equivalents, end of period                                   $       18,472,624    $       19,713,154
                                                                           ==================    ==================

Supplemental disclosure of cash flow information
     Cash paid (received) during the period for -
         Interest expense                                                  $        1,780,970    $          404,571
         Income taxes                                                      $        2,639,742    $          (60,434)
</TABLE>

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


<PAGE>



                   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                Six Months Ended
                                                              June 30,                         June 30,
                                                   -------------------------------  -------------------------------
                                                         1998            1997             1998            1997
                                                   --------------  ---------------  -------------   ---------------
<S>                                                <C>             <C>              <C>             <C>
         Component based upon physician groups
              operating income                     $    5,668,581  $     1,858,620  $   10,654,746  $     3,448,297
         Reimbursement of clinic expenses              44,800,231       12,741,251      78,926,519       22,668,980
         Other revenue                                  1,525,000          600,000       3,025,000          800,000
                                                   --------------  ---------------  --------------  ---------------
         Management fee revenue                    $   51,993,812  $    15,199,871  $   92,606,265  $    26,917,277
</TABLE>


2.       ACQUISITIONS:

Through  June 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 Physicians                  May 1, 1998                        Midland, TX
         Shah Associates                             May 1, 1998 (b)                    Hollywood, MD
         Medical Associates of Pinellas              May 1, 1998 (b)                    Clearwater, FL
         Prime Medical Associates (c)                June 1, 1998                       Hudson, NY

1997:    Naples Medical Center                       March 1, 1997                      Naples, FL
         Abilene Diagnostic Clinic                   June 1, 1997 (d)                   Abilene, TX
         Intercoastal Medical Group                  August 1, 1997                     Sarasota, FL
         Beacon Medical Group                        October 1, 1997 (e)                Harrisburg, PA
         Cowley Medical Associates (f)               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.

(b)  Shah Associates and Medical  Associates of Pinellas are currently  operated
     under  interim  service  agreements.  The Company  expects to complete  the
     acquisitions  and  enter  into a  long-term  service  agreement  with  each
     physician group in the third quarter of 1998.


<PAGE>




(c)  Prime Medical  Associates  merged with  Berkshire  Physicians & Surgeons in
     July 1998.

(d)  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.

(e)  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.

(f)  Cowley  Medical  Associates  merged with 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. Future results may differ  substantially from pro forma results and cannot
be considered indicative of future results.
<TABLE>
<CAPTION>

                                                       Three Months Ended                 Six Months Ended
                                                            June 30,                          June 30,
                                                 -----------------------------   -----------------------------------
                                                      1998             1997            1998              1997
                                                 --------------  ---------------  ---------------  -----------------
<S>                                              <C>             <C>              <C>              <C>
         Physician groups revenue, net           $   74,547,741  $    48,504,703  $   139,171,572  $      96,572,542
         Less: amounts retained by physician
              groups                                 21,648,972       16,360,089       42,905,207         32,119,830
                                                 --------------  ---------------  ---------------  -----------------
         Management fee revenue                  $   52,898,769  $    32,144,614  $    96,266,365  $      64,452,712
                                                 ==============  ===============  ===============  =================
         Net income                              $    3,139,138  $     1,461,765  $     5,476,225  $       2,336,368
                                                 ==============  ===============  ===============  =================
         Net earnings per share
              Basic                              $         0.18  $          0.12  $          0.34  $            0.22
                                                 ==============  ===============  ===============  =================
              Diluted                            $         0.15  $          0.10  $          0.29  $            0.17
                                                 ==============  ===============  ===============  =================

         Weighted average number of common
              shares outstanding
              Basic                                  17,841,121       12,426,163       15,980,892         10,834,588
                                                 ==============  ===============  ===============  =================
              Diluted                                20,554,789       15,098,858       18,707,896         13,528,337
                                                 ==============  ===============  ===============  =================
</TABLE>


3.       LONG-TERM DEBT:

Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
                                                                                June 30,            December 31,
                                                                                  1998                  1997
<S>                                                                        <C>                   <C>
         Borrowings under bank credit facility                             $        4,988,236    $       32,968,000
         Notes payable issued to physician groups                                   6,910,964            10,220,775
         Other long-term debt                                                         188,196               175,915
                                                                           ------------------    ------------------
                                                                                   12,087,396            43,364,690
         Less current maturities                                                   (3,252,154)           (3,676,365)
                                                                           -------------------   -------------------
         Long-term debt, net of current maturities                         $        8,835,242    $       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 3/4% 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.




<PAGE>




4.       SUPPLEMENTAL CASH FLOW INFORMATION:

In March 1998,  an officer of the Company  surrendered  43,693  warrants in full
payment of the $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.


5.       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              Six Months Ended
                                                               June 30,                       June 30,
                                                     -----------------------------  ----------------------------
                                                          1998           1997           1998            1997
                                                     -------------   -------------  -------------  -------------
<S>                                                  <C>             <C>            <C>            <C>
         Supplemental net earnings per share
              Basic                                  $        0.14   $        0.06  $        0.26  $        0.08
                                                     =============   =============  =============  =============
              Diluted                                $        0.13   $        0.05  $        0.23  $        0.07
                                                     =============   =============  =============  =============

         Supplemental weighted average number of
              common shares outstanding
              Basic                                     21,048,814      18,931,726     20,827,319     18,931,311
                                                     =============   =============  =============  =============
              Diluted                                   23,762,482      21,604,421     23,554,323     21,625,060
                                                     =============   =============  =============  =============
</TABLE>





<PAGE>





                    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 590  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 five additional  groups in the first six 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               Six Months Ended
                                                               June 30,                        June 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                28.8           40.9           31.0              42.1
                                                       -------         ------         ------            ------
Management fee revenue                                    71.2           59.1           69.0              57.9
                                                       -------         ------         ------            ------
Operating expenses:
         Clinic salaries and benefits                     24.2           23.1           23.1              22.7
         Clinic rent and lease expense                     5.3            5.6            5.3               5.4
         Clinic supplies                                   8.7            7.6            8.3               7.5
         Purchased medical services                       14.6            3.0           14.0               3.1
         Other clinic costs                                7.7            8.4            7.4               8.5
         General corporate expenses                        1.8            3.2            1.8               3.5
         Depreciation and amortization                     2.4            2.3            2.3               2.2
         Interest expense (income)                        (0.2)           0.0            0.2               0.3
                                                       -------         ------         ------            ------
                                                          64.5           53.2           62.4              53.2
                                                       -------         ------         ------            ------
Income before provision for income taxes                   6.7            5.9            6.6               4.7
Provision for income taxes                                 2.5            1.6            2.5               1.3
                                                       -------         ------         ------            ------
Net income                                                 4.2%           4.3%           4.1%              3.4%
                                                       =======         ======         ======            ======
</TABLE>

Physician  groups  revenue  increased  by 184% to $73.1  million for the quarter
ended June 30, 1998, from $25.7 million for the quarter ended June 30, 1997. For
the six months ended June 30, 1998, physician groups revenue increase by 189% to
$134.2  million  from  $46.5  million  for the six months  ended June 30,  1997.
Approximately  82% of the growth in physician  groups revenue is attributable to
new affiliations  since June 30, 1997, with the balance coming from increases in
revenues from affiliated physician groups in place prior to June 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  nearly  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 14.6% of physician  groups  revenue for the quarter  ended June 30,
1998 from 3.0% 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 1.8% for the quarter  ended June 30,  1998,  compared to 3.2% for the quarter
ended June 30, 1997. For the six months ended June 30, 1998,  general  corporate
expenses as a percentage of physician  groups revenue  declined to 1.8% compared
to 3.5% for the six months ended June 30, 1997.  While these costs declined as a
percentage of physician groups revenue, the amount of general corporate expenses
increased to $1.3  million for the quarter  ended June 30, 1998 from $.8 million
for the quarter  ended June 30, 1997,  and increased to $2.4 million for the six
months  ended June 30, 1998 from $1.6  million for the six months ended June 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,
increased to 2.4% for the quarter ended June 30, 1998,  compared to 2.3% for the
quarter  ended  June  30,  1997.  For  the  six  months  ended  June  30,  1998,
depreciation  and  amortization  as a  percentage  of physician  groups  revenue
increased to 2.3% compared to 2.2% for the six months ended June 30, 1997.  This
slight  increase is attributable to differences in the mix of assets acquired in
the various affiliations that have occurred over the past year.

Net interest  expense  (income) as a  percentage  of  physician  groups  revenue
decreased to (0.2)% for the quarter ended June 30, 1998, compared to nil for the
quarter  ended June 30,  1997.  For the six  months  ended  June 30,  1998,  net
interest expense as a percentage of physician  groups revenue  decreased to 0.2%
from 0.3% for the six months  ended June 30, 1997.  This  decrease is related to
increased  interest  income  from the  investment  of unused  proceeds  from the
Company's public offering of its common stock (the "Offering"), effective May 8,
1998  which  was  offset  by an  increase  in  long-term  debt  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 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 enormous 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.
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.  If the  issues  prove  more  significant  than  anticipated,  or if
noncompliant  third-party  systems  "reinfect" the Company's Year 2000 compliant
systems,  there could be a material  adverse  impact on the Company's  financial
position,  results of operations or cash flows.  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.





<PAGE>



Liquidity and Capital Resources

At June 30, 1998, the Company had working capital of $38.6 million,  compared to
$20.5 million at December 31, 1997.  Cash used in operations  for the six months
ended June 30,  1998 was $6.8  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 an  increase  in  accounts
receivable  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,  thus resulting in a "ramp up" in accounts
receivable  of  approximately  $6.3  million.  Net accounts  receivable of $37.3
million at June 30, 1998  amounted to 47 days of net  physician  groups  revenue
(excluding  other revenues) for the second quarter of 1998,  compared to 42 days
for the first  quarter  of 1998.  Net  income  combined  with  depreciation  and
amortization, deferred taxes, a decrease in due from affiliated physician groups
and an increase  in accrued  expenses  and other  liabilities  to provide  $11.7
million  in cash  flows.  This  was  offset  by uses  of cash of  $18.5  million
resulting from increases in accounts  receivable,  management  fees  receivable,
other assets and decreases in accounts payable and payable to physician groups.

The Company had aggregate  cash  expenditures  for purchases of clinic assets of
$29.6  million for the six months  ended June 30, 1998.  Of this,  approximately
$18.4 million  relates to the Berkshire  affiliation in Pittsfield,  MA, and the
remaining  amounts  relate  primarily  to  deferred  payments   associated  with
previously  completed  acquisitions.   The  Company  has  commitments  to  spend
approximately $36.8 million in total consideration for new affiliations that are
currently under letters of intent. Capital expenditures amounted to $2.1 million
for the six months ended June 30, 1998.  Although each of the Company's  service
agreements with its affiliated  physician groups requires the Company to provide
capital  for  equipment,   expansion,  additional  physicians  and  other  major
expenditures,  no  specific  amount  has  been  committed  in  advance.  Capital
expenditures  are made  based  partially  upon the  availability  of funds,  the
sources of funds, alternative projects and an acceptable repayment period.

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 June 30, 1998,  outstanding  borrowings
against the Credit Facility were $5.0 million and the current effective interest
rate was 8.31%.

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 3/4% 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.



<PAGE>



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 $18.5 million at June 30, 1998. In
addition to this,  the  Company's  principal  sources of liquidity  are accounts
receivable of $37.3 million at June 30, 1998 and availability  under the working
capital portion of the bank line of credit of $7.3 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.

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  May  1998,  the  Company  issued  144,536  shares  of  Common  Stock  to the
stockholders  of a provider of capitation  management  services as  post-closing
adjustments to the  consideration  payable by the Company in connection with its
acquisition  by the Company in December  1997. In June 1998,  the Company issued
27,583  shares  of Common  Stock to two  physicians  in  connection  with  their
affiliations with the Company.  As of June 30, 1998, the Company had commitments
to issue an aggregate of 531,979 shares of Common Stock to physician  groups and
their  stockholders  in connection  with its  affiliations  with three physician
groups between  November 1997 and April 1998. 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 4.  Submission of Matters to a Vote of Security Holders

The Company held its annual  meeting of  stockholders  on May 20,  1998.  At the
meeting,  the  stockholders  elected James F. Herd,  M.D. and Charles J. Buysse,
M.D. as Class I members of the Board of Directors  with terms  expiring in 2001.
Other members of the Board of Directors  whose terms  continue after the meeting
include David T. Bailey,  M.D. and Jack W. McCaslin,  who are Class II directors
with terms expiring in 1999, and Richard E. Ragsdale,  E. Thomas Chaney,  and H.
Wayne Posey, who are Class III directors with terms expiring in 2000.

The voting results of the election of directors are as follows:

                                                 Votes              Withheld
           Nominee:                               For               Authority
     James F. Herd, M.D.                        10,382,639            82,922
     Charles J. Buysse, M.D.                    10,382,639            82,922

No other matters were voted upon at the meeting.


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.

Signature                                 Title                    Date
/s/ H. WAYNE POSEY
H. Wayne Posey                 President, Chief Executive       August 14, 1998
                                  Officer, and Director
                              (Chief Executive Officer)

/s/ ROBERT D. SMITH
Robert D. Smith                Vice President - Finance         August 14, 1998
                              (Chief Accounting Officer)