<PAGE>

                                    UNITED STATES
                          SECURITIES AND EXCHANGE COMMISSION
                                           
                               Washington, D.C.  20549
                                           
                                           
                                      FORM 10-Q


                 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934

                     For the Quarterly Period Ended June 30, 1997

                                          OR

               (  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
                        OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the transition period from         to 
                                                 -------    --------

                            Commission File Number 0-21447

                                           
                                ADVANCE PARADIGM, INC.
                (Exact name of registrant as specified in its charter)
                                           
                                           
                                           
    Delaware                                             75-2493381
(State of Incorporation)                    (IRS Employer Identification Number)

545 E. John Carpenter Freeway, Suite 1900, Irving, Texas     75062
(Address of principal executive offices)                   (ZIP Code)

                                    (972) 830-6199
                 (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 
                                           ----     ----
                                           
                       Common stock, $.01 par value:  7,803,067
                          outstanding as of August 13, 1997
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                                ADVANCE PARADIGM, INC.
                                           
                                           
                         INDEX TO QUARTERLY REPORT FORM 10-Q
                                           


PART I.  FINANCIAL INFORMATION                                            PAGE

    Item 1.   Financial Statements

         A.   Condensed Consolidated Balance Sheets as of
              June 30, 1997 and March 31, 1997                               2

         B.   Condensed Consolidated Statements of Operations
              for the Three Months Ended June 30, 1997 and 1996              3

         C.   Condensed Consolidated Statements of Cash
              Flows for the Three Months Ended June 30,
              1997 and 1996                                                  4

         D.   Notes to Condensed Consolidated Financial Statements           5

    Item 2.   Management's Discussion and Analysis of Financial
         Condition and Results of Operations                                 7


PART II. OTHER INFORMATION                                                  10


SIGNATURES                                                                  11

<PAGE>


                              ADVANCE PARADIGM, INC. AND SUBSIDIARIES
                               CONDENSED CONSOLIDATED BALANCE SHEETS
                                           (UNAUDITED)
<TABLE>
<CAPTION>


                           ASSETS
                                                            March 31, 1997  June 30, 1997
                                                            --------------  -------------
<S>                                                         <C>             <C>
CURRENT ASSETS: 
    Cash and cash equivalents                                 $ 51,086,000   $ 51,696,000
    Accounts receivable, net of allowance for doubtful 
      accounts of $142,000 and $148,000, respectively           35,343,000     33,602,000
    Inventories                                                  1,859,000      3,636,000
    Prepaid expenses and other                                     426,000        529,000 
                                                              ------------   ------------
    Total current assets                                        88,714,000     89,463,000
PROPERTY AND EQUIPMENT, net of accumulated depreciation
    and amortization of $3,292,000 and $3,683,000, 
    respectively                                                 5,576,000      6,754,000
INTANGIBLE ASSETS, net of accumulated amortization of 
    $1,154,000 and $1,241,000, respectively                     12,699,000     12,612,000
OTHER ASSETS                                                       484,000        479,000 
                                                              ------------   ------------
      Total assets                                            $107,473,000   $109,308,000
                                                              ------------   ------------

                              LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
    Accounts payable                                           $59,782,000    $60,600,000
    Accrued salaries and benefits                                1,991,000      2,195,000
    Income taxes payable                                           712,000        262,000
    Other accrued expenses                                       1,365,000      1,214,000
                                                              ------------   ------------
      Total current liabilities                                 63,850,000     64,271,000 
NONCURRENT LIABILITIES:
    Deferred income taxes                                          755,000        843,000
    Other noncurrent liabilities                                   340,000        341,000
                                                              ------------   ------------
      Total liabilities                                         64,945,000     65,455,000
                                                              ------------   ------------

COMMITMENTS AND CONTINGENCIES


STOCKHOLDERS' EQUITY:
    Series B preferred stock, $.01 par value; 5,000 shares
     authorized, 4,444 shares issued and
     outstanding                                                      --             --
    Common stock, $.01 par value; 25,000,000
     shares authorized; 7,800,817 and 7,803,067
     shares issued and outstanding, respectively                    78,000         78,000
    Additional paid-in capital                                  42,891,000     42,898,000
    Retained earnings (accumulated deficit)                       (441,000)       877,000
                                                              ------------   ------------
      Total stockholders' equity                                42,528,000     43,853,000
                                                              ------------   ------------
      Total liabilities and stockholders' equity              $107,473,000   $109,308,000
                                                              ------------   ------------

</TABLE>

                   See accompanying notes to financial statements.

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                          ADVANCE PARADIGM, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (UNAUDITED)
<TABLE>
<CAPTION>


                                                                   Three Months Ended June 30,
                                                                  -----------------------------
                                                                      1996           1997
                                                                  -------------  -------------- 
<S>                                                               <C>            <C>
Revenues                                                          $  49,809,000  $   77,710,000
                                                                  -------------  -------------- 

Cost of operations:
Cost of revenues                                                     47,454,000      74,064,000
Selling, general and
 administrative expenses                                              1,714,000       2,112,000
                                                                  -------------  -------------- 
    Total cost of operations                                         49,168,000      76,176,000
                                                                  -------------  -------------- 
Operating income                                                        641,000       1,534,000
Interest income                                                         205,000         672,000
Interest expense                                                       (177,000)         --     
                                                                  -------------  -------------- 
  
Income before income taxes                                              669,000       2,206,000 
Provision for income taxes                                                --            838,000
                                                                  -------------  -------------- 
Net income                                                        $     669,000  $    1,368,000
                                                                  -------------  -------------- 

Net income per share                                              $        0.11  $         0.14
                                                                  -------------  -------------- 

Weighted average
 shares outstanding                                                   6,200,187      10,110,116
                                                                  -------------  -------------- 
 
</TABLE>

                   See accompanying notes to financial statements.

                                        - 3 -
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                       ADVANCE PARADIGM, INC. AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (UNAUDITED)
<TABLE>
<CAPTION>


                                                                      
                                                                Three Months Ended June 30,  
                                                               ----------------------------
                                                                    1996           1997
                                                               -----------     ------------
<S>                                                            <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net income                                                 $   669,000     $  1,368,000
    Adjustments to reconcile net income to
     net cash provided by operating activities -
     Depreciation and amortization                                 388,000          477,000
     Provision for doubtful accounts                                  --              6,000
     Change in certain assets and liabilities -
      Accounts receivable                                       (3,392,000)       1,735,000
      Inventories                                                  114,000       (1,777,000)
      Prepaid expenses
        and other assets                                          (182,000)         (98,000)
      Accounts payable, accrued expenses
        and other noncurrent liabilities                         2,530,000          460,000
                                                               -----------     ------------
      Net cash provided by operating activities                    127,000        2,171,000
                                                               -----------     ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property and equipment                           (935,000)      (1,568,000)
                                                               -----------     ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Net proceeds from sale of preferred stock                   10,000,000              --     
    Net proceeds from issuance of Common Stock                       --               7,000 
    Net payments on long-term obligations                          (12,000)             --
                                                               -----------     ------------
        Net cash provided by financing activities                9,988,000            7,000
                                                               -----------     ------------

INCREASE IN CASH                                                 9,180,000          610,000 

CASH AND CASH EQUIVALENTS, beginning of period                  16,457,000       51,086,000
                                                               -----------     ------------
CASH AND CASH EQUIVALENTS, end of period                       $25,637,000     $ 51,696,000
                                                               -----------     ------------

</TABLE>


                   See accompanying notes to financial statements.
                                           
                                           
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                       ADVANCE PARADIGM, INC. AND SUBSIDIARIES
                                           
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                           



1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The accompanying unaudited condensed consolidated financial statements have
been prepared by the Company in accordance with generally accepted accounting
principles for interim financial information and substantially in the form
prescribed by the Securities and Exchange Commission (the "Commission") in
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of the
Company's management, the June 30, 1997 and 1996 unaudited interim financial
statements include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of results for this interim period. In the
opinion of the Company's management, the disclosures contained in this Form 10-Q
are adequate to make the information presented not misleading when read in
conjunction with the Notes to Consolidated Financial Statements included in the
Company's Form 10-K for the year ended March 31, 1997. The results of operations
for the three month period ended June 30, 1997 are not necessarily indicative of
the results to be expected for the full year or for any future period.


2.  NET INCOME PER SHARE

    Net income per share is computed using the weighted average number of
common and common equivalent shares outstanding during the period which include
stock options and warrants. The primary and fully diluted per share amounts were
the same.

    In February 1997, the Financial Accounting Standards Board issued Statement
128, "Earnings Per Share" (SFAS 128).  SFAS 128 is effective for financial
statements for both interim and annual periods ending after December 31, 1997,
with early application prohibited.  SFAS 128 requires the calculation of "Basic"
earnings per share which is computed by dividing net income by the weighted
average number of shares of Common Stock outstanding during the period.  In
addition, SFAS 128 requires the calculation of "Diluted" earnings per common
share which is computed using the weighted average 


                                        - 5 -
<PAGE>

number of shares of Common Stock and common stock equivalents.  Pro forma
"Basic" earnings per share for the three months ended June 30, 1996 and 1997
would have been $0.21 and $0.18, respectively.  Pro forma "Diluted" earnings per
share for the three months ended June 30, 1996 and 1997, would have been $0.11
and $0.14, respectively.

3.  INCOME TAXES

    In the three months ended June 30, 1997, the Company recorded a provision
for income taxes of $838,000.  The company has recorded its tax provision based
upon an estimated, effective tax rate of 38%.





















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<PAGE>

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

    The following table sets forth certain consolidated financial data of the
Company, for the periods indicated, as a percentage of revenues.

                                             Three Months   
                                            Ended June 30,  
                                            --------------
                                            1996       1997
                                            ----       ----
Revenues                                    100.0%     100.0%
Cost of operations:
    Cost of revenues                         95.3       95.3
    Selling, general and administrative
     expenses                                 3.5        2.7
                                             ----       ----
    Total cost of operations                 98.8       98.0
                                             ----       ----
Operating income                              1.2        2.0
Interest income, net of expense                .1         .8
                                             ----       ----
Net income before taxes                       1.3%       2.8%
                                             ----       ----



                                        - 7 -
<PAGE>

THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996

    REVENUES.  Revenues for the three months ended June 30, 1997 increased
$27.9 million, or 56%, compared to revenues for the three months ended June 30,
1996. Approximately 81% of the increase in revenues was attributable to a 59%
increase in the number of pharmacy claims processed during the period.
Approximately 13% of the increase was attributable to additional sales of the
Company's mail pharmacy services, resulting from a 16% increase in the number of
mail prescriptions dispensed. Approximately 6% of the increase in revenues
resulted from an increase in clinical services revenues derived from formulary
and disease management services.

    COST OF REVENUES.  Cost of revenues for the three months ended June 30,
1997 increased by $26.6 million, or 56%, compared to the same period in 1996.
This increase was attributable primarily to the expanded volume in the Company's
mail pharmacy and the additional costs associated with the Company's claims
processing growth. As a percentage of revenues, cost of revenues was 95.3% in
the three months ended June 30, 1996 and 1997.

    SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.  Selling, general and
administrative expense for the three months ended June 30, 1997 increased by
$398,000, or 23%, compared to the same period in 1996. This increase was the
result of the Company's expansion of its administrative and support staff levels
and salaries and benefits in response to volume growth in all services. In spite
of the increase, selling, general and administrative expenses as a percentage of
revenues decreased from 3.5% for the three months ended June 30, 1996 to 2.7% in
the same period in 1997 as the result of greater economies of scale and due to
the increase in revenues associated with the Company's claims processing
services. Additional revenues generated by clients utilizing the Company's
network pharmacy providers  do not result in an increase in selling, general and
administrative expenses.

    INTEREST INCOME AND INTEREST EXPENSE.  Interest income, net of interest
expense, for the three months ended June 30, 1997 increased $644,000 compared to
the same period in 1996. The increase resulted from cash management programs
which utilized the Company's short-term excess cash to generate interest income
through investment in money market funds and high-grade commercial paper. In
addition, the Company's cash balance throughout the three months ended June 30,
1997 included the $10.0 million proceeds from the June 1996 issuance of its
Series B Preferred Stock and the $19.3 million proceeds from its October 1996
initial public offering. A portion of the proceeds were used to retire the
Whitney Note and as a result interest expense decreased $177,000.

    INCOME TAXES.  The Company had income tax loss carryforwards available to
offset income generated for the three months ended June 30, 1996, and as a
result, recorded no federal income tax expense. For the three months ended June
30, 1997 the Company recorded income tax expense of $838,000 based upon an
estimated, effective tax rate of 38%.  

                                        - 8 -
<PAGE>


    NET INCOME PER SHARE.  The Company reported net income per share of $.14
per share for the three months ended June 30, 1997 compared to $.11 per share
for the same period in 1996.  The weighted average shares outstanding were 6.2
million and 10.1 million for the three months ended June 30, 1996 and 1997,
respectively.  The increase in the weighted average shares resulted primarily
from the issuance of 2.4 million shares in connection with the Company's initial
public offering in October 1996 and the issuance of Series B preferred stock in
June 1996.  The Series B preferred stock is convertible into 1.1 million shares
of Common Stock.


LIQUIDITY AND CAPITAL RESOURCES

    As of June 30, 1997, the Company had working capital of $25.2 million. 
The Company's net cash provided by operating activities was $2.2 million for 
the three months ended June 30, 1997 resulting primarily from the Company's 
net income of $1.4 million for the period.  During the three months ended 
June 30, 1997 the Company used cash of $1.6 million for purchases of 
property, plant and equipment associated with the growth and expansion of the 
Company's systems and facilities. In particular, $1.3 million was used to 
expand the automation and capacity of the Company's mail pharmacy facility.  
The Company anticipates that cash from operations, combined with the proceeds 
remaining from its initial public offering will be sufficient to meet the 
Company's internal operating requirements and expansion programs, including 
capital expenditures, for at least the next 18 months.

FORWARD-LOOKING STATEMENTS

    This report contains or may contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934 including
statements of the Company's and management's expectations, intentions, plans and
beliefs, including those contained in or implied by "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Notes to
Condensed Consolidated Financial Statements.  These forward-looking statements,
as defined in Section 21E of the Securities Exchange Act of 1934, are dependent
on certain events, risks and uncertainties that may be outside the Company's
control. These forward-looking statements may include statements of management's
plans and objectives for the Company's future operations and statements of
future economic performance; the Company's capital budget and future capital
requirements, and the Company's meeting its future capital needs; and the
assumptions described in this report underlying such forward-looking statements.
Actual results and developments could differ materially from those expressed in
or implied by such statements due to a number  of factors, including, without
limitation, those described in the context of such forward-looking statements,
and the factors set forth in the Company's Form 10-K under the caption "Risk
Factors."



                                        - 9 -
<PAGE>

                             PART II.  OTHER INFORMATION


Items 1-5 are not applicable.

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

No reports on Form 8-K were filed during the quarter ended June 30, 1997.

Exhibits required by Item 601 of S-K:

Exhibit No.     Exhibits
-----------     --------

3.1*       ---  Amended and Restated Certificate of Incorporation of the Company

3.2*       ---  Amended and Restated Bylaws of the Company

4.1**      ---  1997 Nonstatutory Stock Option Plan

27**       ---  Financial Data Schedule









* Previously filed in connection with the Company's Registration Statement on
Form S-1 filed October 8, 1996 (No. 333-06931).

**Filed herewith.


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<PAGE>


                                      SIGNATURES
                                           

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized. 



                                       ADVANCE PARADIGM, INC.
                                       (Registrant)



Date: August 13, 1997           By:  /s/ David D. Halbert
                                   --------------------------------
                                    David D. Halbert, Chief Executive  Officer,
                                    Chairman of the Board and President



Date: August 13, 1997          By:   /s/ Danny Phillips
                                   --------------------------------
                                    Danny Phillips, Chief Financial Officer,
                                    Senior Vice President, Secretary and
                                    Treasurer (Principal Financial and 
                                    Accounting Officer)




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