<PAGE>



                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q



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

For the quarterly period ended September 30, 1997

or

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

For the Transition Period From                       to
                               ----------------------   ----------------------
Commission File Number: 0-27260



                            COMPLETE MANAGEMENT, INC.
             (Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S>                                                               <C>
                  New York                                                           11-3149119
----------------------------------------------                    --------------------------------------------------
       (State or other Jurisdiction of                                  (I.R.S. Employer Identification No.)
       incorporation or organization)


     254 West 31st Street, New York, NY                                              10001-2813
----------------------------------------------                    --------------------------------------------------
  (Address of principal executive offices)                                           (Zip Code)

</TABLE>

                                 (212) 273-0600
                                 -------------- 
              (Registrant's telephone number, including area code)


                                 Not applicable
                                 --------------
      (Former name, former address and former fiscal year, if changed since
                                  last report)


    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---   ---
    As of November 12, 1997 the registrant had a total of 11,347,276 shares of
Common Stock outstanding. There was no Preferred Stock outstanding.


<PAGE>


                            COMPLETE MANAGEMENT, INC.

                               Index to Form 10-Q

                               September 30, 1997

<TABLE>
<CAPTION>

PART I.  FINANCIAL INFORMATION                                                                   Page
                                                                                                 ----
<S>                                                                                            <C>
   Item 1. Condensed Consolidated Financial Statements:

           Condensed Consolidated Balance Sheets at December 31, 1996 and September 30, 1997      3

           Condensed Consolidated Statements of Income for the three and nine
              months ended September 30, 1996 and 1997                                            4

           Condensed Consolidated Statements of Cash Flows for the nine months
              ended September 30, 1996 and 1997                                                   5

           Notes to Condensed Consolidated Financial Statements                                   6

   Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations  9

   Item 4. Submission of Matters to a Vote of Security Holders                                   14


PART II. OTHER INFORMATION

   Item 6. Exhibits and Reports on Form 8-K                                                      15


SIGNATURES                                                                                       16
</TABLE>

                                       2

<PAGE>

                         Part I. Financial Information

Item 1. Condensed Consolidated Financial Statements

                           COMPLETE MANAGEMENT, INC.
                     Condensed Consolidated Balance Sheets

<TABLE>
<CAPTION>

                                                                                 December 31,               September 30,
                    Assets                                                           1996                       1997      
                                                                                -------------               ------------- 
                                                                                                           (in thousands)
<S>                                                                             <C>                   <C>             
Current assets:
     Cash and cash equivalents                                                        $ 40,138                   $ 6,245   
     Marketable securities                                                              32,467                    10,830   
     Notes receivable from a related party                                               1,987                     1,728   
     Accounts receivable, net of $489,000 and $4,826,000, respectively                  26,182                    62,738   
     Short term investments                                                              1,811                     1,911   
     Prepaid expenses and other current assets                                             974                     2,361   
                                                                                ---------------           ---------------  
        Total current assets                                                           103,559                    85,813   
Long-term portion of notes receivable from a related party                                 171                       196   
Long-term portion of accounts receivable from a related party, net                                               
     of  $1,605,000 and $1,399,000, respectively                                        26,327                    28,284   
Property and equipment, net of $2,936,000 and $4,929,000, respectively                   7,093                    18,013   
Intangible assets, net of $567,000 and $1,738,000, respectively                         21,610                    57,873   
Debt issuance cost                                                                       7,219                     6,651   
Other assets                                                                               370                     2,986   
                                                                                ---------------           ---------------  
           Total assets                                                              $ 166,349                 $ 199,816   
                                                                                ===============           ===============  

                    Liabilities and Shareholders' Equity

Current liabilities:
     Accounts payable and accrued expenses                                             $ 4,256                   $ 5,840   
     Income taxes payable                                                                3,804                     3,536   
     Deferred income taxes -- current                                                    1,165                     1,132   
     Current portion of capital lease obligations                                          672                       880   
     Current portion of long-term debt                                                     535                    10,191   
                                                                                ---------------           ---------------  
        Total current liabilities                                                       10,432                    21,579   
Deferred income taxes                                                                    9,292                     9,292   
Deferred rent                                                                              149                       138   
Capital leases                                                                           1,717                     1,227   
Long-term debt                                                                             255                       150   
Convertible subordinated debentures                                                     74,000                    74,000   
Minority interest                                                                            -                     4,129   
Shareholders' equity:                                                                                             
     Preferred shares, $.001 par value:                                                                            
        Authorized 2,000,000 shares, issued and outstanding, none                            -                         -   
     Common stock $.001 par value:                                                                               
        Authorized, 20,000,000 shares, issued and outstanding,                                                   
             10,031,471 and 10,826,972, respectively                                        10                        11   
     Paid-in capital                                                                    58,270                    70,337   
     Retained earnings                                                                  12,491                    19,033   
     Unrealized loss on marketable securities available for sale                          (267)                      (80)  
                                                                                ---------------           ---------------  
        Total shareholders' equity                                                      70,504                    89,301   
                                                                                ---------------           ---------------  
            Total liabilities and shareholders' equity                               $ 166,349                 $ 199,816   
                                                                                ===============           ===============  
  </TABLE>
          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                       3

<PAGE>


                            COMPLETE MANAGEMENT, INC.

                   Condensed Consolidated Statements of Income
<TABLE>
<CAPTION>

                                               Nine months ended September 30,         Three months ended September 30,
                                               -------------------------------        ----------------------------------
                                                   1996              1997                 1996                 1997
                                               -------------     -------------        --------------     ---------------
                                                                (in thousands, except per share data)
<S>                                           <C>                <C>                 <C>                 <C>    
Revenues:
    Non-related parties                             $ 2,010          $ 36,339               $ 1,666            $ 15,692
    Related party                                    18,020            17,019                 7,101               4,523
                                               -------------     -------------        --------------     ---------------
         Total                                       20,030            53,358                 8,767              20,215

Interest discount                                    (1,748)           (2,196)                 (692)               (647)
                                               -------------     -------------        --------------     ---------------
Net revenues                                         18,282            51,162                 8,075              19,568

Cost of revenues                                      6,598            26,893                 2,873              11,691
General and administrative expenses                   4,869            14,162                 2,138               3,818
                                               -------------     -------------        --------------     ---------------
                                                     11,467            41,055                 5,011              15,509

Income from operations                                6,815            10,107                 3,064               4,059

Other income (expense):
    Interest discount included in income              1,855             1,671                   619                 542
    Interest expense                                 (1,829)           (4,876)               (1,234)             (1,683)
    Interest, dividend and other income                 687             2,820                   449                 584
    Gain on partial equity disposition                    -               850                     -                 850
                                               -------------     -------------        --------------     ---------------
Total other income (expense)                            713               465                  (166)                293

Income before provision for taxes                     7,528            10,572                 2,898               4,352
Provision for income taxes                            3,613             4,030                 1,422               1,614
                                               -------------     -------------        --------------     ---------------
Net income                                          $ 3,915           $ 6,542               $ 1,476             $ 2,738
                                               =============     =============        ==============     ===============

Primary net income per share                         $ 0.50            $ 0.61                $ 0.18              $ 0.24
Weighted average number of
    shares outstanding                                7,840            10,647                 8,085              11,304

Fully diluted net income per share                   $ 0.42            $ 0.57                $ 0.13              $ 0.22
Weighted average number of
    shares outstanding                                9,264            16,218                11,483              16,755


 </TABLE>
          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                       4

<PAGE>

 
                            COMPLETE MANAGEMENT, INC.

                 Condensed Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                        Nine months ended September 30,
                                                                       --------------------------------
                                                                            1996              1997              
                                                                       --------------    --------------        
Operating activities                                                             (in thousands)
<S>                                                                      <C>                <C>             
Net income                                                               $ 3,915            $ 6,542         
Adjustments to reconcile net income to net cash                                                             
  provided by (used in) operating activities:
     Depreciation and amortization                                         1,304              3,641                  
     Provision for deferred income taxes                                   3,572                  -
     Gain on sale of marketable securities                                     -               (608)           
     Gain on partial equity disposition                                        -               (850)        
     Write-off of original issue discount                                    238                  -         
     Changes in operating assets and liabilities:
        Notes receivable from a related party                             (1,171)                63        
        Accounts receivable                                              (15,781)           (32,748)        
        Prepaid expenses and other current assets                           (926)            (1,276)        
        Accounts payable and accrued expenses                             (3,207)             1,039         
        Other assets                                                         281             (2,648)        
        Income taxes payable                                                (115)               819        
                                                                   --------------    ---------------        
Net cash used in operating activities                                    (11,890)           (26,026)        
Investing activities                                                           -                  -
Purchase of property and equipment                                        (1,540)           (10,873)        
Businesses acquired                                                       (1,538)           (40,018)
Increase in Minority Interest                                                  -              5,198        
Proceeds from short-term investments                                        (801)              (100)        
Purchase of marketable securities                                        (99,462)           (52,168)        
Proceeds from sale of marketable securities                               73,720             74,415         
                                                                   --------------    ---------------        
Net cash used in investing activities                                    (29,621)           (23,546)        
Financing activities                                                           -                  -
Proceeds from issuance of common shares, net of
     underwriters' commission and expenses                                16,380                  -         
Proceeds from exercise of options and warrants                                 -                969
Proceeds from partial equity disposition                                       -              5,000
Payments of registration costs of common shares                           (2,223)                 -         
Proceeds from issuance of subordinated debentures and
     notes, net of underwriters' commission and expenses                  41,144                  -         
Deferred note issuance costs                                                (793)              (275)        
Payments of long-term debt, net                                              (83)                 -        
Payments of capital lease obligations                                       (322)              (660)        
Proceeds from bank line of credit                                              -             10,000         
Cash acquired in merger                                                      200                652         
Repayment of notes payable                                                (1,000)                (7)        
                                                                   --------------    ---------------        
Net cash provided by financing activities                                 53,303             15,679         
                                                                   --------------    ---------------        
Net increase (decrease) in cash and cash equivalents                      11,792            (33,893)        
Cash and cash equivalents, beginning of period                                 -             40,138         
                                                                   --------------    ---------------        
Cash and cash equivalents, end of period                                $ 11,792            $ 6,245         
                                                                   ==============    ===============        
Supplemental disclosures of cash flow information
  Cash paid during the period for:
     Interest                                                            $ 1,104            $ 5,023         
     Taxes                                                                   146              4,364         
  Non-cash financing activities:
     Capital stock issued for acquisitions                              $ 17,556            $ 8,485         

</TABLE>

          The accompanying notes are an integral part of the condensed
                       consolidated financial statements.

                                       5



<PAGE>
                            COMPLETE MANAGEMENT, INC.

              Notes to Condensed Consolidated Financial Statements

                               September 30, 1997


BASIS OF PRESENTATION AND OPERATIONS

    The accompanying consolidated financial statements are unaudited and in the
opinion of management, reflect all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation. Operating results for
the nine-month period ended September 30, 1997 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1997. For
further information, refer to the financial statements and footnotes thereto
included in the Complete Management, Inc. (the "Company") audited financial
statements for the year ended December 31, 1996.

Overview

    The Company provides physician practice management services to medical
practices and hospitals. These services range from managing all non-medical
aspects of its full service clients' businesses to providing limited non-medical
services to its partial service clients, such as billing and collection,
transcription and temporary staffing. Additionally, the Company owns and
provides administrative support for magnetic resonance imaging ("MRI") and other
diagnostic imaging equipment to hospitals and certain medical practices. The
Company also owns Consumer Health Network, a preferred provider organization.

Relationship to Full Service Clients

    The Company earns fees from its full service clients by managing the
non-medical aspects of their medical practices, generally under 30 year
management agreements. Since the Company does not have an ownership interest in
such clients, however, the Company's consolidated financial statements do not
include the financial statements of its full service clients. See Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Full Service Clients.

    The activities of the Company's full service clients' consist primarily of
rendering medical services to patients through physicians and other medical
personnel employed by them. Their income statements include (a) fees generated
from rendering medical services, (b) compensation to physicians and other
medical personnel, (c) other expenses related to rendering medical services and
(d) management fees due to the Company. Their principal asset is the accounts
receivable due from third party payors and/or patients for the provision of
medical services (minimal services are paid for by the patient at the time
service is rendered). Their principal liabilities are the amounts due to
physicians and other medical personnel for the performance of medical services
and the management fees due to the Company under its management agreements.

    One of the Company's full service clients is Greater Metropolitan Medical
Services ("GMMS"), a multi-specialty medical practice that specializes in the
evaluation, diagnosis and treatment of injured patients. GMMS is 95% owned by
Lawrence Shields, a neurologist who is also a co-founder and principal
shareholder of the Company. Accordingly, GMMS has been classified as a related
party to the Company. All of the Company's revenues in 1994 and 1995 and 65%,
45%, 32% and 22% of its revenues in 1996 and the three month periods ended March
31, June 30 and September 30, 1997, respectively, were generated under
management agreements with GMMS.


                                       6

<PAGE>

                            COMPLETE MANAGEMENT, INC.

        Notes to Condensed Consolidated Financial Statements (Continued)

                               September 30, 1997

ACCOUNTS AND NOTES RECEIVABLE

    The Company's accounts receivable are primarily generated from full service
clients under management agreements pursuant to which the Company is entitled to
management fees for practice management services performed on behalf of its
clients. As collateral for its management fees, the Company has a security
interest in all its full service client's patient receivables.

    GMMS's primary focus is treating patients with injury-related conditions who
carry insurance with various insurance carriers under the workers' compensation
and automobile no-fault regulations. The Company has determined, based on actual
results and industry factors, that its management fees from GMMS have a
collection cycle averaging approximately four years. Accordingly, an interest
discount has been taken on the Company's revenues generated by its management
fees from GMMS utilizing the Company's current incremental borrowing rate of
7.25% per annum over this collection cycle. The Company recaptures this interest
discount in income over a four year period to reflect the presumed collection of
these revenues. Actual collection results may differ from the Company's
estimate, however, because numerous factors affect the timing and the manner in
which receivables are collected (i.e., government regulations). It is the
Company's policy to periodically assess the collection of its receivables from
clients. As a result, the Company's estimate of its incremental borrowing rate
and collection cycle may change.

    Notes receivable from a related party included in the accompanying balance
sheets represent working capital advances made to GMMS that are due on demand.


SALE OF AN INTEREST IN CMI CAPITAL CORPORATION

    During September 1997, CMI Capital Corporation, a then wholly owned
subsidiary of the Company that purchases patient service receivables from
unrelated medical practices, sold a 40% equity interest for $5,000,000 and the
Company recorded an $850,000 gain on the transaction, which is included in other
income (expense).


NET INCOME PER SHARE

    Net income per common share has been computed by dividing net income by the
weighted average number of common shares outstanding during the periods.

    In February 1997, the FASB issued SFAS No. 128, "Earnings per Share". Under
SFAS No. 128, the presentation of Primary and Fully Diluted Earnings Per Share
will be replaced by Basic and Diluted Earnings Per Share. Adoption of SFAS No.
128 is required for periods ending after December 15, 1997, at which time
restatement for prior periods will be necessary. Early adoption of SFAS No. 128
is prohibited. Had the provisions of SFAS No. 128 been in effect as of September
30, 1997, the Company would have reported the following earnings per share
information:
<TABLE>
<CAPTION>
                                                                      September 30,
                                                                      -------------
                                                  Nine Months Ended              Three Months Ended
                                                  -----------------              ------------------
                                                  1996         1997              1996         1997
                                                  ----         ----              ----         ----
<S>                                              <C>          <C>             <C>            <C>    
      Net income per share
          Basic                                  $ 0.52       $ 0.64           $ 0.19        $ 0.25
          Fully diluted                            0.42         0.57             0.13          0.22
</TABLE>

                                       7
<PAGE>
                            COMPLETE MANAGEMENT, INC.

        Notes to Condensed Consolidated Financial Statements (Continued)

                               September 30, 1997

SUBSEQUENT EVENTS

    In October 1997, the Company purchased a physician practice management
company for $4,250,000, of which $500,000 was paid in cash at closing and
$500,000 will be paid, subject to certain conditions, in January 1998. The
balance of the purchase price was paid in common shares.

    In October 1997, the Company sold $5,000,000 principal amount of 8% Notes
due April 30, 1998 in a private placement. As additional consideration, holders
of the 8% Notes received an aggregate of 15,000 common shares. If the 8% Notes
are not repaid at maturity, they will immediately become convertible into common
shares at a conversion price of $9.00 per share and the maturity date will be
extended to March 20, 2001. The proceeds of the 8% Notes provided funds for
working capital and acquisitions.

                                       8


<PAGE>

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

    The following discussion of the results of the operations and financial
condition of the Company should be read in conjunction with the Company's
unaudited condensed consolidated financial statements and notes thereto included
elsewhere in this Quarterly Report.

Overview

    The Company provides physician practice management services to medical
practices and hospitals. These services range from managing all non-medical
aspects of its full service clients' businesses to providing limited non-medical
services to its partial service clients, such as billing and collection,
transcription and temporary staffing. Additionally, the Company owns and
provides administrative support for MRI and other diagnostic imaging equipment.
The Company also owns Consumer Health Network, a preferred provider
organization.

Full Service Clients

    The Company earns fees from its full service clients by managing the
non-medical aspects of their medical practices, generally under 30 year
management agreements. The Company's fees are based on its direct costs plus
either a fixed fee or a percentage of such costs. The Company may also receive
hourly consulting charges, per use fees when MRI and other diagnostic imaging
services are provided and, in the case of GMMS, reimbursement of a portion of
the Company's corporate overhead expenses.

    To the extent permitted by applicable law, management fees due to the
Company from its full service clients are collateralized through the assignment,
on a full-recourse basis, of such clients' patient service receivables. The
clients' ability to pay these fees is dependent on the Company's ability to
collect, on behalf of its full service clients, these receivables.

    The following unaudited table sets forth the operating results of the
Company's full service clients for the three and nine month periods ended
September 30, 1996 and 1997. Since the Company does not have an ownership
interest in its full service clients, the amounts set forth below are not
included in the Company's financial results, except for the management fees
earned by the Company.
<TABLE>
<CAPTION>

                                         Nine months ended                  Three months ended
(In thousands)                            September 30,                        September 30,
                                      ----------------------             -------------------------
                                        1996           1997                1996             1997
                                      -------         ------             --------          -------
<S>                                 <C>             <C>                <C>              <C>    
Gross physician billings             $ 22,500       $ 78,834            $  8,642          $ 33,829
Contractual allowances                 (1,455)       (14,982)               (492)           (6,757)
                                     --------       --------            --------          --------
Net physician billings                 21,045         63,952               8,150            27,072

Management fees                        18,020         37,084               7,101            12,219
Medical personnel payroll               2,694         15,068                 958             6,673
Other expenses and reserves               593         11,161                 100             7,242
                                     --------       --------            --------          --------
    Total expenses                     21,307         63,313               8,159            26,134

                                     --------       --------            --------          --------
Net income                           $   (262)      $    539            $     (9)         $    938
                                     ========       ========            ========          ========
Management fees:
    GMMS                             $ 18,020       $ 17,019            $  7,101          $  4,523
    Other full service clients             -          20,065                -                7,696
                                     --------       --------            --------          --------
      Total                          $ 18,020       $ 37,084            $  7,101          $ 12,219
                                     ========       ========            ========          ========
</TABLE>
                                       9

<PAGE>

    All of the Company's revenues in 1994 and 1995 and 65%, 45%, 32% and 22% of
its revenues in 1996 and the three month periods ended March 31, June 30 and
September 30, 1997, respectively, were generated under management agreements
with GMMS.

Partial Service Clients

    The Company earns its fees from partial service clients primarily by
providing billing and collection services for a fee based on a percentage of
collections.

Preferred Provider Organization

    Consumer Health Network, a wholly owned subsidiary of the Company, earns its
fees from self-insured employer groups, union groups, insurance companies and
other third party payors based on a percentage of the savings generated through
the use of its network.

Management of Diagnostic Imaging Services

    The Company's fees for owning and providing administrative support for
diagnostic imaging equipment are earned on the basis of a charge for each use of
the equipment.

Results of Operations

    The following table sets forth, as a percentage of revenues, certain items
in the Company's statements of operations for the three and nine month periods
ended September 30, 1996 and 1997.
<TABLE>
<CAPTION>

                                                                           September 30,
                                                                           -------------
                                                    Nine Months Ended                   Three Months Ended
                                               --------------------------------   ----------------------------
                                                  1996              1997             1996              1997
                                               --------------    --------------   --------------    ----------

<S>                                               <C>              <C>              <C>               <C>   
Revenues                                          100.0%           100.0%           100.0%            100.0%
Interest discount                                  (8.7)            (4.1)            (7.9)             (3.2)
                                               --------          -------         --------           -------
Net revenues                                       91.3             95.9             92.1              96.8

Cost of revenues                                   33.0             50.4             32.8              57.8
General and administrative expenses                24.3             26.5             24.4              18.9
                                               --------          -------         --------           -------
Income from operations                             34.0             19.0             34.9              20.1

Interest discount included in income                9.3              3.1              7.1               2.7
Other income (expense)                             (5.7)            (2.2)            (9.0)             (1.2)
                                               --------          -------         --------           -------
Income before provision for taxes                  37.6             19.9             33.0              21.6
Provision for income taxes                         18.0              7.6             16.2               8.0
                                               --------          -------         --------           -------
Net income                                         19.6%            12.3%            16.8%             13.6%
                                               ========          =======         ========           =======
</TABLE>
Comparisons of the Nine Month Ended September 30, 1997 and 1996

    Revenues for the first nine months of 1997 were $53,358,000 as compared to
$20,030,000 for the same period in 1996, an increase of $33,328,000. The primary
reasons for the increase were the acquisition of a physician practice management
company and the expansion of medical practices under management, which added
$22,844,000 of additional revenues, the acquisitions of two medical billing
companies, which added $5,185,000 in revenues, and the acquisition of Consumer
Health Network in June 1997, which added $2,457,000 in revenues. Finally, the
provision of diagnostic imaging equipment and other services to third parties
added $2,842,000 of additional revenues for the period.

                                       10
<PAGE>

    Cost of revenues for the first nine months increased to $26,893,000 from
$6,598,000 for the same period in 1996, an increase of $20,295,000. Cost of
revenues includes the non-medical costs of physician practices and other costs
directly related to the recognition of the Company's revenues, including the
costs incurred by the Company to collect patient service receivables. The
increase in cost of revenues was primarily attributable to the acquisition of a
physician practice management company and the expansion of medical practices
under management, which added $15,111,000 of such costs, the acquisitions of two
medical billing companies, which added $2,665,000 of additional costs, and the
acquisition of Consumer Health Network, which added $816,000 of additional
costs. Additionally, cost of revenues also increased $1,703,000 over the same
period last year due to the reclassification of certain general and
administrative expenses to cost of revenues and increased expenses relating to
the provision of MRI equipment and other services to third parties.

    As a percentage of revenues, cost of revenues for the nine-month period
increased to 50.4% from 33.0% for the prior year. This decrease in profit margin
resulted primarily from a decline in the percentage of the Company's revenues
generated by GMMS, a practice with historically high profit margins, and, to a
lesser extent, the reclassification of certain general and administrative
expenses noted above.

    General and administrative expenses increased to $14,162,000 for the first
nine months of 1997 as compared to $4,869,000 for the same period in 1996, an
increase of $9,293,000. General and administrative expenses represent overhead
and administrative expenses excluding costs directly related to operations and
the recognition of revenues. The increase was primarily due to the various
acquisitions and medical practice expansions noted above, which added $4,151,000
of such costs over the same period in the prior year. The Company also added an
additional $5,142,000 of costs over the same period in the prior year by
incurring increased personnel and professional costs of $1,426,000, depreciation
and amortization expenses of $1,537,000 and rental and other general office
costs $2,179,000.

    Interest expense increased to $4,876,000 for the first nine months from
$1,829,000 for the same period in 1996 principally due to interest on (a)
$2,000,000 principal amount of Convertible Subordinated Notes issued on March
20, 1996, (b) $40,250,000 principal amount of First Series Debentures issued on
June 5, 1996, (c) $3,000,000 principal amount of Convertible Subordinated Notes
issued on July 5, 1996, (d) $28,750,000 principal amount of Second Series
Debentures issued on December 5, 1996 and (e) $10,000,000 of borrowings incurred
under a line of credit, $5,000,000 in February 1997 and $5,000,000 in May 1997.

    Interest, dividend and other income for the first nine months of 1997
increased to $2,820,000 from $687,000 for the same period in the prior year. The
primary reasons were the increased earnings on higher cash balances and
marketable securities which resulted from various debt and equity issuances, as
well as increased gains on the sale of marketable securities.

    Gain on partial equity disposition represents a gain of $850,000 on the sale
of a 40% equity interest in CMI Capital Corporation, a then wholly owned
subsidiary of the Company, for $5,000,000.

Comparisons of the Three Months Ended September 30, 1997 and 1996

    Revenues in the current quarter were $20,215,000 as compared to $8,767,000
for the same period in 1996, an increase of $11,448,000. The primary reasons for
the increase were the acquisition of a physician practice management company and
the expansion of medical practices under management, which added $6,531,000 of
additional revenues, the acquisitions of two medical billing companies, which
added $1,998,000 in revenues, and the acquisition of Consumer Health Network in
June 1997, which added $1,904,000 in revenues. Finally, the provision of MRI
equipment and other services to third parties added $1,015,000 of additional
revenues for the period. The Company's revenues generated from GMMS for the
third quarter, however, decreased primarily due to the Company's analysis of the
value of GMMS's patient service receivables, which collateralize the Company's
management fees.

                                       11
<PAGE>

    Cost of revenues for the third quarter increased to $11,691,000 from
$2,873,000 in 1996, an increase of $8,818,000. The increase in cost of revenues
was primarily attributable to the acquisition of a physician practice management
company and the expansion of medical practices under management, which added
$6,589,000 of such costs, the acquisitions of two medical billing companies,
which added $651,000 of additional costs, and the acquisition of Consumer Health
Network, which added $730,000 of such costs. Additionally, cost of revenues also
increased $848,000 over the same period last year due to increased expenses
relating to the provision of MRI equipment and other services to third parties.

    As a percentage of revenues, cost of revenues for the third quarter of 1997
increased to 57.8% from 32.8% for the same period in the prior year. This
decrease in profit margin resulted primarily from a decline in the management
fees charged to GMMS during the period notwithstanding an increase in the cost
of revenues attributable to GMMS, as well as the lower profit margins generated
by the Company's services provided to certain new and rapidly expanding full
service clients.

    General and administrative expenses for the third quarter increased to
$3,818,000 in 1997 from $2,138,000 for the same period in 1996, an increase of
$1,680,000 or 78.6%. The increase was primarily due to the various acquisitions
and medical practice expansions noted above, which added $985,000 of such costs
over the same period in the prior year. The Company also added an additional
$695,000 of costs over the same period in the prior year by incurring increased
personnel and professional costs, depreciation and amortization expenses and
rental and other general office costs.

    Interest expense increased to $1,683,000 from $1,234,000 in 1996 principally
due to interest on $28,750,000 principal amount of Second Series Debentures
issued on December 5, 1996 and $10,000,000 of borrowings incurred under a line
of credit, $5,000,000 in February 1997 and $5,000,000 in May 1997.

    Interest, dividend and other income for the third quarter increased to
$584,000 from $449,000 for the same period in the prior year, increasing at a
substantially lower rate than for the first nine months of the year. The primary
reason for this lower rate was the decline in cash balances and marketable
securities.

    Gain on partial equity disposition represents a gain of $850,000 on the sale
of a 40% equity interest in CMI Capital Corporation, a then wholly owned
subsidiary of the Company, for $5,000,000.

Liquidity and Capital Resources

    To date, the Company has primarily used its cash to support operating
activities, including higher levels of receivables generated by increased
management fees, to fund acquisitions and for capital expenditures. The
Company's primary sources of cash have been from the proceeds of its initial
public offering, its sales of Convertible Subordinated Notes, First Series
Debentures, Second Series Debentures, common shares and a line of credit. At
September 30, 1997, the Company had working capital of $64,234,000. In October
1997, the Company received $5,000,000 from the sale of its 8% Notes.

    The Company's full service clients are liable to the Company for management
fees regardless of whether the client receives payment for the medical services
rendered. However, the Company has historically deferred collecting amounts owed
to it when full service clients have experienced delays in collecting payments
for medical services. A substantial majority of the accounts receivable
generated by the Company's full service clients, particularly GMMS, remain
outstanding for extended periods. The average days outstanding for the Company's
full service clients' receivables at September 30, 1997 was 350 days. For this
reason, at the beginning of 1997, the Company embarked on a program to
accelerate collections of receivables owed to its full service clients. This
program includes increased manpower and other resources devoted to collection
efforts, consolidation of most billing and collection efforts at a centralized
facility, and the earlier use of legal counsel for collection of workers'
compensation and no-fault automobile receivables.

                                       12
<PAGE>

    Net cash used for operating activities in the first nine months of 1997 was
$26,026,000, principally due to an increase in accounts receivable of
$32,748,000. Accounts receivable increased primarily due to acquisitions and
expansion of medical practices under management. During the first three quarters
of 1997, the Company used $40,018,000 of cash and issued $8,485,000 of its
common shares to complete acquisitions. During the period, the Company also made
capital expenditures of $10,873,000 (compared to $1,540,000 in the first nine
months of 1996), primarily for the acquisition of MRI and other diagnostic
equipment and the refurbishment and expansion of the offices provided to its
full service clients.

    During the first nine months of 1997, the Company funded its operating cash
flow deficit, acquisitions and capital expenditures primarily through (a) a
reduction in the Company's cash and cash equivalents, (b) a net reduction in
marketable securities and (c) $10,000,000 of borrowings incurred under a line of
credit.

    At September 30, 1997, $54,166,000, or 59.5%, of the Company's accounts
receivable were due from GMMS. These receivables are collateralized by patient
services receivables due to GMMS with a face amount of $72,932,000 at such date.
GMMS's ability to pay the Company is dependent upon the Company's ability to
collect the patient service receivables on behalf of GMMS. On a quarterly basis,
the Company reviews, based on estimated rates of collection for each class of
patient service and estimated allowances for uncollectible balances, the
adequacy of GMMS's collateral. From January 1, 1992 through September 30, 1997,
GMMS billed its patients and third-party payors an aggregate of $121,050,000, of
which $45,821,000, or 37.9%, had been collected by September 30, 1997. In order
for GMMS's patient receivables outstanding at September 30, 1997 to cover the
Company's management fees owed by GMMS at that date, 74.3% of such patient
receivables must be collected, representing an overall collection rate of 82.6%
on GMMS's billings through September 30, 1997.

    More specifically, at September 30, 1997, $24,735,000, or 33.9%, of GMMS's
total patient service receivables were generated through the performance of
medical services for which GMMS will be paid only upon the successful resolution
of negligence claims by the patients against third parties, either through a
judicial determination or settlement. From January 1, 1992 to September 30,
1997, GMMS billed approximately $30,024,000 of such receivables, of which
$4,428,000, or 14.7%, had been collected by September 30, 1997. In measuring the
adequacy of such receivables as collateral for the Company's management fees to
GMMS, the Company has estimated that it will collect, on behalf of GMMS,
approximately 55% of these outstanding receivable balances. The Company
estimates, based upon industry factors and GMMS's historical collection
experience prior to its association with the Company, that the entire collection
process for these contingent claims generally ranges from one to seven years.
Since 1994, however, the percentage of cases resolved within two years of
providing service has declined, which may result in an even longer collection
cycle or a lower rate of collection. The Company believes that this decline is
the result of payors more consistently deferring settlement of these matters
until just prior to trial.


    In evaluating the adequacy of its collateral from GMMS, the Company
considers historical collection patterns important. The Company, however, also
believes that the ultimate collection of receivables is dependent on its ability
to improve its billing and collection process and its relations with third-party
payors. The Company believes that it can achieve the higher collection rate
necessary to assure that the Company's management fees to GMMS are paid in full
for several reasons: (i) the collection cycle for an important portion of these
receivables, particularly for the contingent receivables described above, can be
as long as seven years and thus payments will continue to be received in future
periods, (ii) since the beginning of 1997, as discussed above, the Company has
committed substantial resources to consolidate and increase its collection
efforts and (iii) a recent New York Court of Appeals decision may expedite the
collection of patient receivables from third-party payors under automobile
no-fault insurance policies and perhaps improve the rate of collection.
Accordingly, the Company's estimate of future collections reflects not only
historical results, but also the impact of the improved collection processes and
the increased resources being applied to this effort. There can be no assurance,
however, that the Company will be able to achieve a collection rate necessary to
assure that the Company's management fees to GMMS are paid in full. The
inability of the Company to collect a significant portion of its management fees
owed by GMMS could have a material adverse effect on the Company.

                                       13
<PAGE>

    In October 1997, the Company purchased a physician practice management
company for $4,250,000 of which $500,000 was paid in cash at closing and
$500,000 will be paid, subject to certain conditions, in January 1998. The
balance of the purchase price was paid in common shares.

    In November 1997, the maturity of the Company's $10,000,000 line of credit
was extended from November 12, 1997 to January 12, 1998. If not repaid on or
before the maturity date, the Company would seek to renegotiate the line of
credit.

    The Company expects its cash, cash equivalents and marketable securities and
the proceeds from the issuance of debt and equity securities to be sufficient to
meet its current working capital requirements through at least the end of 1998.


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

    The Company held its Annual Meeting of Shareholders on July 16, 1997 at
which shareholders of the Company voted as follows:

Appointment of Arthur Andersen, LLP as independent auditors for the Company.

         For              Against            Abstain
         ---              -------            -------  
         9,193,211        401                46,481

Approval of amendment to the Company's 1995 Stock Option Plan increasing the
number of options available for issuance from 700,000 to 1,700,000.

         For              Against            Abstain              Not Voted
         ---              -------            -------              ---------
         7,671,169        372,446            28,882               1,167,596

    The Company held a Special Meeting of Shareholders on September 30, 1997 at
which shareholders of the Company voted as follows:

Approval of an amendment to the Company's Certificate of Incorporation
increasing the number of common shares authorized for issuance from 20,000,000
to 40,000,000.

         For              Against            Abstain
         ---              -------            -------
         8,524,991        101,719            9,992

                                       14

<PAGE>




                           Part II. Other Information

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

    (a)  Exhibits

         Exhibit No.                Description
         -----------                -----------

             3.1                    Certificate of Incorporation (incorporated
                                    by reference to Exhibit 3.1 of Registration
                                    Statement No. 33-97894)

             3.2                    Certificate of Amendment to Certificate of
                                    Incorporation (incorporated by reference to
                                    Exhibit 3.2 of Registration Statement No. 
                                    33-97894)

             3.3                    Certificate of Amendment to Certificate of
                                    Incorporation

            11                      Computation of Earnings per Share

            27                      Financial Data Schedule

    (b)  Reports on Form 8-K

    The Company filed the following reports on Form 8-K/A during the quarter
ended September 30, 1997.

         Date                       Item Reported
         ----                       -------------

         September 2, 1997 Item 2.  Acquisition or Disposition of Assets









                                       15
<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.



                                         COMPLETE MANAGEMENT, INC.
                                 ----------------------------------------------
                                               (Registrant)



Date:    November 14, 1997                 /s/ STEVEN RABINOVICI
         -----------------       ----------------------------------------------
                                             Steven Rabinovici
                                     Chief Executive Officer and Chairman



Date:    November 14, 1997                 /s/ ARTHUR GOLDBERG
         -----------------       ----------------------------------------------
                                             Arthur Goldberg
                                Senior Executive Vice President, Chief Financial
                                               Officer and Director


Date:    November 14, 1997                 /s/ ALAN GOLDSTEIN
         -----------------       ----------------------------------------------
                                             Alan Goldstein
                                 Chief Accounting Officer and Vice President -
                                                Finance




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