<PAGE>   1
                       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 March 31, 1999.

                                       OR

[ ]    Transition report pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934. For the transition
       period__________________to_________________________.



                         COMMISSION FILE NUMBER: 0-21209

                           ADVANCED HEALTH CORPORATION
             (Exact name of registrant as specified in its charter)

             DELAWARE                                      13-3893841
 (State or other jurisdiction or                         (IRS Employer
  incorporation or organization)                       Identification No.)

                              555 WHITE PLAINS ROAD
                            TARRYTOWN, NEW YORK 10591
          (Address of principal executive offices, including zip code)

                                 (914) 524-4200
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 Yes /X/ No / /



As of May 5, 1999, there were 10,659,139 shares outstanding of the registrant's
Common Stock, $.01 par value.
<PAGE>   2
                           ADVANCED HEALTH CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                       PAGE NO.
---------------------------------------------------------------------------------------------
<S>                                                                                  <C>
ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS
                  Consolidated Balance Sheets -
                  March 31, 1999 (unaudited) and December 31, 1998........................1

                  Consolidated Statement of Operations-
                  Three months ended March 31, 1999 and 1998 (unaudited)..................2

                  Consolidated Statements of Cash Flows-
                  Three months ended March 31, 1999 and 1998 (unaudited)..................3

                  Notes to Consolidated Financial Statements..............................4

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS...............................................6

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.....................10

PART II - OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS..............................................................10

SIGNATURES................................................................................13
</TABLE>
<PAGE>   3
PART I -- FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                                        As Of
                                                                                          March 31,                December 31,
                                                                                            1999                      1998
                                                                                            ----                      ----
                                                                                         (unaudited)
<S>                                                                                      <C>                       <C>
        ASSETS
CURRENT ASSETS:
        Cash and cash equivalents                                                         $  4,284                   $  9,269
        Certificates of deposit                                                              2,580                      2,580
        Investments in marketable securities                                                 8,732                      6,972
        Accounts receivable, net                                                               239                        320
        Other current assets                                                                   474                        362
        Net current assets from discontinued operation                                       1,097                      2,065
                                                                                          ------------------------------------
              Total current assets                                                          17,406                     21,568
PROPERTY AND EQUIPMENT, net                                                                  2,417                      2,565
INTANGIBLE ASSETS, net                                                                       1,851                      1,861
INVESTMENTS IN AFFILIATES                                                                   14,000                     14,000
OTHER ASSETS                                                                                 1,940                      2,001
OTHER ASSETS FROM DISCONTINUED OPERATION                                                     2,739                      2,639
                                                                                          ------------------------------------
              Total assets                                                                $ 40,353                   $ 44,634
                                                                                          ====================================


        LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
        Accounts payable and accrued expenses                                             $  2,680                   $  3,610
        Other current liabilities                                                            1,006                        875
        Other current liabilities from discontinued operation                                7,873                      9,304
                                                                                          ------------------------------------
              Total current liabilities                                                     11,559                     13,789
DEFERRED REVENUE                                                                               523                        250
NET LIABILITIES FROM DISCONTINUED OPERATION                                                    221                        705
                                                                                          ------------------------------------
              Total liabilities                                                             12,303                     14,744
                                                                                          ------------------------------------
COMMITMENTS
SHAREHOLDERS' EQUITY
        Preferred stock, $.01 par value, 5,000,000 shares authorized; 0 shares
              issued and outstanding
        Common stock, $.01 par value; 15,000,000 shares authorized;
              10,480,029 and 10,424,127 shares issued and
              outstanding, respectively                                                        104                        103
        Additional paid-in capital                                                         108,600                    108,450
        Accumulated deficit                                                                (80,267)                   (78,277)
        Unrealized gain on marketable securities, net of deferred income taxes                   2                          3
        Less: Treasury stock, at cost (153,937 shares)                                        (389)                      (389)
                                                                                          ------------------------------------
              Total shareholders' equity                                                    28,050                     29,890
                                                                                          ------------------------------------
              Total liabilities and shareholders' equity                                  $ 40,353                   $ 44,634
                                                                                          ====================================
</TABLE>

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

                                       (1)
<PAGE>   4
                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except per share and per share data)



<TABLE>
<CAPTION>
                                                                                        For the Three Months Ended
                                                                                   -----------------------------------
                                                                                   March 31,                  March 31,
                                                                                     1999                       1998
                                                                                     ----                       ----
<S>                                                                             <C>                         <C>
REVENUE                                                                            $    240                    $ 3,089
COST OF REVENUES                                                                        220                        618
                                                                                   ------------------------------------
              Gross profit                                                               20                      2,471
OPERATING EXPENSES                                                                    2,512                        946
                                                                                   ------------------------------------
              Operating income/(loss)                                                (2,492)                     1,525
OTHER INCOME, Net                                                                       275                        812
                                                                                   ------------------------------------
              Net income/(loss) before taxes                                         (2,217)                     2,337
INCOME TAX PROVISION                                                                     24                      1,283
                                                                                   ------------------------------------
              Net income/(loss) from continuing operations                           (2,241)                     1,054
DISCONTINUED OPERATION:
              Income from discontinued operation, net                                   251                      1,315
                                                                                   ------------------------------------
              Net income/(loss)                                                    $ (1,990)                   $ 2,369
                                                                                   ====================================


PER SHARE
        INFORMATION
        Basic net income/(loss) per share:
              Income/(loss) from continuing operations                               ($0.21)                     $0.10
              Income from discontinued operation                                      $0.02                      $0.13
                                                                                   ------------------------------------
                    Basic net income/(loss) per share                                ($0.19)                     $0.23
                                                                                   ====================================

        Diluted net income/(loss) per share:
              Income/(loss) from continuing operations                               ($0.21)                     $0.10
              Income from discontinued operation                                      $0.02                      $0.12
                                                                                   ------------------------------------
                    Diluted net income/(loss) per share                              ($0.19)                     $0.21
                                                                                   ====================================

Common shares used in computing per share amounts:
        Basic                                                                        10,452                     10,082
        Diluted                                                                      10,452                     11,041
</TABLE>

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

                                       (2)
<PAGE>   5
                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                                For the Three Months Ended
                                                                                           ------------------------------------
                                                                                           March 31,                   March 31,
                                                                                             1999                        1998
                                                                                             ----                        ----
<S>                                                                                      <C>                       <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
        Net income/(loss)                                                                  $ (2,241)                   $ 1,054
        Adjustments to reconcile net income to net cash
              used in operating activities
              Depreciation and amortization                                                     287                        572
              Deferred income taxes                                                               -                        852
              Changes in operating assets and liabilities
                    Accounts receivable                                                          81                     (2,173)
                    Other current assets                                                       (112)                      (235)
                    Accounts payable, accrued expenses and other current
                      liabilities                                                              (930)                       569
                    Other current liabilities                                                   131                        (72)
                    Deferred revenue                                                            273                        150
                                                                                           ------------------------------------
                          Net cash (used in) provided by operating activities                (2,511)                       717
                                                                                           ------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
        Other assets                                                                              -                     (3,910)
        Minority investment in affiliated entities                                                -                      2,500
        Investment in certificates of deposit, net                                                -                     (5,572)
        Investment in marketable securities, net                                             (1,760)                    17,297
        Intangible assets                                                                         -                       (510)
        Purchases of property and equipment, net                                                (68)                       (37)
                                                                                           ------------------------------------
                          Net cash provided by (used in) investing activities                (1,828)                     9,768
                                                                                           ------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
        Net proceeds from exercise of stock options                                             150                        532
                                                                                           ------------------------------------
                          Net cash provided by financing activities                             150                        532
                                                                                           ------------------------------------
                          Net cash flows from discontinued operations                          (796)                    (3,008)
                                                                                           ------------------------------------
                          Net change in cash and cash equivalents                            (4,985)                     8,009
CASH AND CASH EQUIVALENTS, beginning of period                                                9,269                      7,534
                                                                                           ------------------------------------
CASH AND CASH EQUIVALENTS, end of period                                                   $  4,284                    $15,543
                                                                                           ====================================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
        Cash Paid for:
              Interest                                                                     $     38                    $     2
                                                                                           ====================================
              Income Taxes                                                                 $      5                    $ 1,301
                                                                                           ====================================
</TABLE>

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

                                       (3)
<PAGE>   6
                 ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 MARCH 31, 1999
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

1.            Reference is made to the Notes to Consolidated Financial
              Statements contained in the Company's December 31, 1998 audited
              consolidated financial statements as filed with the Securities and
              Exchange Commission on Form 10-K. In the opinion of Management,
              the interim unaudited financial statements included herein reflect
              all adjustments necessary, consisting of normal recurring
              adjustments, for a fair presentation of such data on a basis
              consistent with that of the audited data presented therein.
              Certain prior period expenses which are now part of discontinued
              operations have been reclassified to conform to the 1999
              presentation. The Company believes that its historical results of
              operations from period to period are not comparable and that such
              results are not necessarily indicative of results for any future
              periods.

2.            Effective December 31, 1997, the Company adopted SFAS No. 128,
              "Earnings Per Share." Basic net income per common share ("Basic
              EPS") is computed by dividing net income by the weighted average
              number of common shares outstanding. Diluted net income per common
              share ("Diluted EPS") is computed by dividing net income by the
              weighted average number of common shares and dilutive potential
              common shares then outstanding. SFAS No. 128 requires the
              presentation of both Basic EPS and Diluted EPS on the face of the
              consolidated statements of operations. The impact of the adoption
              of this statement was not material to all previously reported EPS
              amounts.

                                       (4)
<PAGE>   7
              A reconciliation between the numerator and denominator of Basic
              EPS and Diluted EPS is as follows:

<TABLE>
<CAPTION>
                                                                                                                  Net
                                                                                                             Income (Loss)
                                                                           Net Income          Common          Per Common
                                                                             (Loss)            Shares             Share
                                                                             ------            ------             -----
<S>                                                                        <C>             <C>               <C>
              For the Three Months Ended March 31, 1998
               Basic EPS
                     Net income attributable to common stock                 $2,369          10,081,782          $ 0.23
                     Effect of dilutive securities:
                         Stock options and warrants                               0             959,247          $(0.02)
                                                                             ------          ----------          -------

               Diluted EPS
                     Net income attributable to common stock
                          and assumed options exercises                      $2,369          11,041,029          $ 0.21
                                                                             ======          ==========          =======

               For the Three Months Ended March 31, 1999
               Basic EPS
                     Net (loss) attributable to common stock                ($1,990)         10,452,078          ($0.19)
                     Effect of dilutive securities:
                         Stock options and warrants                               0                   0          $(0.00)
                                                                            --------         ----------          -------

               Diluted EPS
                     Net income attributable to common stock
                          and assumed options exercises                    ($1,990)          10,452,078          ($0.19)
                                                                           ========          ==========          =======
</TABLE>

         3.   During 1998, the Company adopted SFAS No. 130 "Reporting
              Comprehensive Income", which established standards for reporting
              and displaying comprehensive income and its components in a
              financial statement that is displayed with the same prominence as
              other financial statements. The components of comprehensive income
              are as follows:

<TABLE>
<CAPTION>
                                                                 For the Three Months Ended March 31,
                                                                 ------------------------------------
                                                                         1999           1998
                                                                         ----           ----
<S>                                                              <C>                  <C>
                           Net income/(loss)                           ($1,990)        $2,369
                           Unrealized gains on marketable
                           securities, net of $0 and $0
                           income tax                                        2            178
                                                                       -------         ------
                           Comprehensive Income                        ($1,988)        $2,547
                                                                       =======         ======
</TABLE>

         4.   In April 1998, the American Institute of Certified Public
              Accountants issued Statement of Position 98-1, "Accounting for
              the Costs of Computer Software Developed or Obtained for Internal
              Use" ("SOP 98-1"), which provides guidance for determining whether
              computer software is internal-use software and on accounting for
              the proceeds of computer software originally developed or obtained
              for internal use and 

                                      (5)
<PAGE>   8
               then subsequently sold to the public. It also provides guidance
               on capitalization of the costs incurred for computer software
               developed or obtained for internal use. The Company adopted
               SOP-98-1 in the first quarter of 1999 and it did not have a
               material effect on its financial statements.

               In June 1998, the FASB issued SFAS No. 133, "Accounting for
               Derivatives Instruments and Hedging Activities," which
               establishes accounting and reporting standards for derivative
               instruments, including derivative instruments embedded in other
               contracts, and for hedging activities. SFAS No. 133 is effective
               for all fiscal Quarters of fiscal years beginning after June 15,
               1999. This statement is not expected to affect the Company since
               it does not currently engage in derivative instruments or hedging
               activities.

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

OVERVIEW
 Advanced Health Corporation d/b/a AHT Corporation (the "Company")
develops and provides clinical information systems and health care information
technology solutions for use by integrated delivery systems, hospitals and other
health care organizations. The Company generates revenues from fees for use and
support of its clinical information systems, including license, software
installation, software integration, training and data conversion fees.

The Company believes that its historical results of operations from period to
period are not comparable and that such results are not necessarily indicative
of results for any future periods because the Company has restructured its
continuing business operations, acquired new technology to develop and market
and has discontinued the development and marketing of certain products from its
product line, while marketing its products to different customers.

The Company announced plans to divest its practice management services unit in
order to enable the Company to devote its full resources to expanding its
Internet-based laboratory and prescription transaction management business. The
restructuring action described below contains forward-looking statements that
may be significantly impacted by certain risks and uncertainties, including
failure to meet operating objectives or to execute the operating plan and
failure to successfully restructure the Company's business.

The Company's restructuring of its information technology unit includes placing
increased emphasis on product development and sales in areas such as electronic
laboratory and prescription management. The Company intends to limit product
development efforts that do not benefit its work on electronic laboratory and
prescription management. Further, the Company will be redirecting its sales
efforts to develop distribution channels including Internet portals and increase
sales for its products lines that offer laboratory and prescription
functionality. Sales efforts will be focused on strategic sales initiatives that
emphasize long-term, recurring revenue streams rather than large, one-time
revenue events so as to better position the Company to benefit from what it
believes is the rapidly gaining importance of clinical e-commerce. Currently,
the Company has a contract backlog of approximately $2.0 million of revenue
that it expects to recognize in 1999 and $.5 million of deferred revenue that
represents cash received from customers who are in the process of installing
our software based on milestones achieved.                                

                                       (6)
<PAGE>   9
RESULTS FROM CONTINUING OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998

Net revenue from continuing operations for the three months ended March 31, 1999
decreased to $.2 million from $3.1 million in the comparable period ended March
31, 1998, primarily as a result of a change in the Company's strategy to market
and support only its core product offerings of laboratory and prescription
software and services rather than seeking large, one-time software sales or
licensing from other system offerings. The Company earned these fees for the use
and support of its clinical information systems, including the recognition of
license revenues and software and training revenues.

Cost of revenues for the three months ended March 31, 1999 decreased to $.2
million from $.6 million for the comparable period ended March 31, 1998. The
decrease in cost of revenues was due to restructuring actions in the second half
of 1998, relating to the change in the Company's business strategy. These
restructuring actions reduced expenses to better align costs with the Company's
core product offerings. Cost of revenues includes direct costs associated with
product installation efforts incurred and amortization expense relating to
previously capitalized software development costs.   

Operating expenses for the three months ended March 31, 1999 increased to $2.5
million from $.9 million for the comparable period ended March 31, 1998 and
included non-capitalized software development costs of approximately $.2 million
and depreciation and amortization expense of approximately $.2 million. The
Company is not capitalizing any software development costs and has not
capitalized any such costs since the quarter ended March 31, 1998. These costs
are being treated as period costs which are included in operating expenses in
the Company's consolidated financial statements.

Other income net, for the three months ended March 31, 1999 was $.3 million as
compared to $.8 million for the comparable period ending March 31, 1998 and
related primarily to interest earned from investments in marketable securities
as a result of the investment of proceeds from the Company's 1997 follow-on
offering and operating cash.

Provision for income taxes for the three months ended March 31, 1999 includes
payments made for state and local income taxes based on amounts other than
taxable income. The provision for income taxes for the three months ended March
31, 1998 represents the net effect of a forty percent effective income tax rate
on the Company's pre-tax income for the quarter, largely offset by a reduction
in the Company's reserve on previously generated, fully-reserved deferred income
tax assets due to the Company's expectations with regard to future taxable
income.

Net (loss) for the three months ended March 31, 1999 was ($2.0) million compared
to net income of $2.4 million for the three months ended March 31, 1998 due to
the factors described above.

RESULTS OF DISCONTINUED OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998

In January 1999, the Company's Board of Directors approved a plan to divest its
practice management services unit. Prior to this action, the Company had
restructured this unit into an outsourcing services company designed to provide
professional services to the healthcare industry that would selectively contract
with customers that would potentially generate increased

                                       (7)
<PAGE>   10
profitability. For the three months March 31, 1999, the Company reported net
income from discontinued operations net of income taxes of $.3 million compared
to $1.3 million for the comparable period ending March 31, 1998. The Company's
historical financial information has been restated to report results of the
discontinued operation on a consistent basis for the three months ended March
31, 1999 and 1998.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 1999 the Company had aggregate cash, cash equivalents, certificates
of deposit and marketable securities of $15.6 million, compared to $18.8 million
at December 31, 1998.

For the three months ended March 31, 1999, the Company had negative cash flow
from its operating activities of $2.5 million, compared with a positive $.7
million for the comparable period ended March 31, 1998. Net cash (used in)
investing activities was ($1.8) million for the three months ended March 31,
1999, principally as a result of the investment of excess cash in marketable
securities. Net cash provided by investing activities was $9.8 million for the
comparable period ended March 31, 1998, relating primarily to proceeds received
from investment in marketable securities reduced by an increase in capitalized
software development costs. Net cash provided by financing activities was $.2
million and $.5 million for the three months ended March 31, 1999 and 1998
respectively and attributable to net proceeds from the exercise of incentive
stock options.

The Company's operating plan for the remainder of 1999 includes divesting the
practice management services unit and the continued development of the Company's
electronic laboratory and prescription management products described above. The
principal categories of expenditures include research and development of the
Company's electronic laboratory and prescription management products as well as
ongoing business development and marketing. The Company believes that its cash
and investments on hand, interest income and revenues from operations will be
sufficient to fund planned operations of the Company through the end of 2000.
The Company has no other planned material capital expenditures or capital
commitments.

From time to time in the ordinary course of its business, the Company evaluates
possible acquisitions of businesses, products and technologies that are
complementary to those of the Company.

YEAR 2000

Many currently installed computer systems and software products are coded to
accept only two digit dates. Such systems may not be able to distinguish 20th
century dates. To address these and other Year 2000 operational issues which may
affect the Company and its customers, the Company has designated a Year 2000
project manager who is primarily responsible for implementing the Company's Year
2000 project plan.

The Company's Year 2000 project plan consists of four phases: assessment,
remediation, validation, and distribution. The primary purpose of the assessment
phase is to list and analyze the

                                       (8)
<PAGE>   11
inventory of our products sold and supported. Major issues encountered during
this phase are the identification of programming languages used, source code,
and third-party libraries used in a product. The remediation phase calls for
code modification. The validation phase is where the remediated products are
tested and submitted for independent verification and validation. The Company's
remediated products are provided to our customers during the distribution phase.

Products and Services: For the Company's products and services, the assessment
phase is complete and remediation is in progress. During the remediation
process, third party vendors whose proprietary tools and library products are
incorporated into the Company's products are being contacted in order for the
Company to determine third party Year 2000 compliance status. The Company has
taken action where required in accordance with instructions provided by the
third party vendors. The Company expects that all of its software products will
be Year 2000 compliant by July 1, 1999.

Internal Systems, Vendors and Suppliers: The Company is engaged in the
assessment phase for its internal administrative systems. Its project plan calls
for completion of Year 2000 compliance for administrative systems by the end of
the third quarter of 1999. A group has been designated and assigned the task of
notifying all of the clinical transaction processing partners by the end of the
second quarter of 1999 in order to assess their Year 2000 readiness.

Costs: The Company estimates that the final remediation and testing phase for
the Company's products will cost approximately $.3 million. The Company does not
have a current estimate for the cost of remediation of administrative systems.
The Company believes that the bulk of any costs will be borne by the suppliers
of such systems.

Contingency Plan: The Company is assessing the "worst case scenarios" that it
believes are within its control, excluding power and communications. With
internal date formatting, storage, and calculation being the key issues to the
Company and its customers, the Company's focus is concentrated on strict date
format and storage enforcement with the portions of our products that require
data entry and data storage. Although the Company will recommend the use of its
"YYYY" (four digit year format) at all times, the Company plans to retain a
feature that allows a customer the option to configure the data entry system to
accept "YY" (two digit year format) to be interpreted as "19YY" to speed data
entry. This option has no impact on how dates are stored in the internal system
or on how math is performed against dates. All dates are stored and all date
math is done with a four digit year.

Although there is no assurance that third party systems owned and used by the
customer are Year 2000 compliant, it is important to state that by design, the
Company's lab order and resulting products interface with legacy hospital and
lab information systems. The Company's backend systems act as a conduit - moving
data from one third party system to another - therefore relying totally on the
accuracy and Year 2000 compliance of the legacy data which the Company "moves".

During the second quarter of 1999, the Company will be formulating and
documenting scenarios for its customer service representatives to utilize in
preparation for potential hardware and software issues relating to Year 2000.
The Company plans to have a documented business continuity plan to cover
conceivable concerns including our products and services, alternative

                                       (9)
<PAGE>   12
vendors and suppliers, and staffing issues to assure coverage immediately before
and after the millennium. However, due to the general uncertainty inherent in
the Year 2000 concern, there can be no assurance that all Year 2000 problems
will be foreseen and corrected on a timely basis.

Forward-Looking Statements: The foregoing Year 2000 discussion and the
information contained herein are provided as a "Year 2000 Readiness Disclosure"
as defined in the Year 2000 Information and Readiness Act of 1998 (Public Law
105-271, 112 Stat. 2386) enacted on October 19, 1998 and contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements, including without limitation,
anticipated costs and the dates by which the Company expects to complete certain
actions, are based on management's best current estimates, which were derived
utilizing numerous assumptions about future events, including the continued
availability of certain resources, representations received from third parties
and other factors. However, there can be no guarantee that these estimates will
be achieved, and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the ability to identify and remediate all relevant systems, results
of Year 2000 testing, adequate resolution of Year 2000 issues by governmental
agencies, businesses and other third parties who are outsourcing service
providers, suppliers and vendors of the Company, unanticipated system costs, the
adequacy of and the ability to implement contingency plans and uncertainties.

ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
             RISK.

             Not applicable.

PART II - OTHER INFORMATION

ITEM 1.      LEGAL PROCEEDINGS

                  On September 23, 1997, the Company commenced an action in the
                  Supreme Court of the State of New York against Synetic, Inc.
                  ("Synetic") entitled Advanced Health Med-E-Systems Corporation
                  v. Synetic, Inc. to collect $1 million owing by Synetic to the
                  Company pursuant to a software license agreement dated as of
                  March 31, 1997, as amended (the "License Agreement"). On
                  October 1, 1997, Synetic filed an answer to this lawsuit and
                  asserted various counterclaims against the Company, in which
                  Synetic alleged that the subject software and documentation
                  was not timely delivered and installed in accordance with the
                  License Agreement. As previously announced, the parties
                  settled their dispute in January 1999, and all claims have
                  been dismissed with prejudice.

                  From July 1 through August 17, 1998, eleven putative class
                  actions were filed in the United States District Court for the
                  Southern District of New York, all of which have been
                  consolidated under the caption In re Advanced Health
                  Corporation Securities Litigation. The consolidated complaint,
                  filed in February 1999, seeks, among other remedies,
                  certification as a class action and unspecified damages
                  resulting from defendants' alleged violations of federal
                  securities laws.

                                      (10)
<PAGE>   13
                  The consolidated complaint alleges that the Company and its
                  current or former officers or directors, Jonathan Edelson,
                  M.D., Steven Hochberg, Alan B. Masarek, Robert Alger and
                  Michael Rogers are liable for certain misrepresentations and
                  omissions regarding, among other matters, the Company's
                  operations, performance, and financial condition. The
                  litigation is still in the preliminary stages, and the Company
                  believes that the plaintiffs' claims are without merit and
                  intends to defend against the action vigorously.

                  On September 16, 1998, Bukstel & Halfpenny, Inc. ("B&H")
                  commenced an action in the Supremet Court of the State of New
                  York entitled Bukstel & Halfpenny, Inc. v. Advanced Health
                  Corporation. In addition to the Company, the complaint names
                  as defendants Advanced Health Med-E-Systems Corporation,
                  Advanced Health Bukstel & Halfpenny Corporation, Jonathan
                  Edelson, M.D., Alan Masarek, and Michael W. Rogers. The
                  Complaint asserts violations of the federal securities laws,
                  common law fraud and other common law claims in connections
                  with the Company's' September 17, 1997 purchase of certain
                  assets from B&H, and seeks rescission of the asset purchase
                  agreement or unspecified damages. On October 20, 1998, B&H
                  obtained an order to show cause and temporary restraining
                  order, which temporarily prevents the Company from
                  transferring certain software source code to Mayo Medical
                  Laboratories and from including certain "software escrow"
                  provisions in certain software licensing agreements for the
                  Dr. Chart(R), Clinical Data Repository(TM), Clinical Data
                  Exchange(TM) and Application Interface Engine(TM) products
                  (the "TRO"). On November 17, 1998, the Court held a hearing on
                  the Company's motion to dismiss the complaint and for
                  sanctions on plaintiff's motion for expedited discovery and a
                  preliminary injunction. No decision has been rendered to date.
                  The Company believes that the plaintiffs' claims are without
                  merit and intends to defend against the action vigorously.

                  On December 12, 1998, the Company commenced an action in the
                  Supreme Court of the State of New York against Madison Medical
                  - The Private Practice Group of New York, L.L.P. ("Madison")
                  entitled Advanced Health Corporation v. Madison Medical - The
                  Private Practice Group of New York, L.L.P. The Company seeks
                  to collect $2 million plus interest owing by Madison to the
                  Company pursuant to a Promissory Note executed by Madison in
                  favor of the Company. On January 5, 1999, the Company, through
                  its majority owned subsidiary, Uptown Physician Management,
                  Inc. ("Uptown") commenced an American Arbitration Association
                  arbitration proceeding against Madison entitled Uptown
                  Physician Management, Inc. v. Madison Medical - The Private
                  Practice Group of New York, L.L.P. to collect $2.1 million in
                  fees owed pursuant to a management services agreement between
                  the parties. Madison has asserted a defense in the action and
                  a counterclaim in the arbitration seeking $2.4 million in
                  damages based on the Company's and Uptown's alleged breaches
                  of the management services agreement. On March 31, 1999, the
                  Company announced a settlement with Madison of both disputes
                  for an aggregate payment to the Company of approximately $2.5
                  million, $700,000 of which has been paid and the remaining
                  $1.8 million plus interest to be paid in installments over
                  time.

                                      (11)
<PAGE>   14
                  From time to time, the Company is involved in litigation.
                  Although the actual amount of any liability that could arise
                  with respect to any such litigation cannot be accurately
                  predicted, in the opinion of management, the resolution of
                  these matters is not expected to have material adverse effect
                  on the Company's business, results of operations or financial
                  condition.

                                      (12)
<PAGE>   15
                                   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 therewith duly authorized.

May 15, 1999                                ADVANCED HEALTH CORPORATION


                                            By: /s/ Jonathan Edelson, M.D.
                                                --------------------------
                                                Jonathan Edelson, M.D.
                                                Chairman of the Board and
                                                Chief Executive Officer
                                                (Principal Executive Officer)


                                            By: /s/ Jeffrey M. Sauerhoff
                                                ------------------------
                                                Jeffrey M. Sauerhoff
                                                Chief Financial Officer
                                                (Principal Financial and 
                                                 Accounting Officer)

                                      (13)