<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 JUNE 30, 1997

                                       OR

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

FOR THE TRANSITION PERIOD FROM _____________TO____________

                         COMMISSION FILE NUMBER: 0-27276

                                MEDPARTNERS, INC
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

              DELAWARE                                          63-1151076
    (State or Other Jurisdiction of                          (I.R.S. Employer
     Incorporation or Organization)                          Identification No.)

                         3000 GALLERIA TOWER, SUITE 1000
                            BIRMINGHAM, ALABAMA 35244
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

                                  (205)733-8996
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---    ---

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

                    Class                 Outstanding at August 6, 1997
                    -----                 -----------------------------

             COMMON STOCK, PAR VALUE                194,665,107*
                     $.001 PER SHARE

* Includes 9,317,000 shares held in trust to be utilized in employee benefit
  plans.


                                        1

<PAGE>   2


      FORWARD LOOKING STATEMENTS AND FACTORS THAT MAY AFFECT FUTURE RESULTS

         FORWARD LOOKING STATEMENTS. Statements in this document that are not
historical facts are hereby identified as "forward looking statements" for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934 (the "Exchange Act") and section 27A of the Securities Act of 1933 (
the "Securities Act"). MedPartners, Inc. (the "Company") cautions readers that
such "forward looking statements", including without limitation, those relating
to the Company's future business prospects, revenue, working capital, liquidity,
capital needs, interest costs and income, wherever they occur in this document
or in other statements attributable to the Company are necessarily estimates
reflecting the best judgment of the Company's senior management and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those suggested by the "forward looking statements". Such
"forward looking statements" should therefore, be considered in light of various
important factors, including those set forth below and others set forth from
time to time in the Company's reports and registration statements filed with the
Securities and Exchange Commission (the "SEC").

         These "forward looking statements" are found at various places
throughout this document. Additionally, the discussion herein under Item 1,
"Legal Proceedings," and in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" are susceptible to the risks and
uncertainties discussed below. Moreover, the Company, through its senior
management, may from time to time make "forward looking statements" about
matters described herein or other matters concerning the Company.

         The Company disclaims any intent or obligation to update "forward
looking statements".

         FACTORS THAT MAY AFFECT FUTURE RESULTS. The healthcare industry in
general and the physician practice management business in particular are in a
state of significant flux. This, together with the circumstance that the Company
has a relatively short operating history and is the largest physician practice
management ("PPM") consolidator in the United States, makes the Company
particularly susceptible to various factors that may affect future results such
as the following:

         risks relating to the Company's growth strategy; risks relating to
integration in connection with acquisitions; risks relating to capital
requirements; identification of growth opportunities; dependence on HMO enrollee
growth; risks related to the capitated nature of revenue; control of healthcare
costs; risks relating to certain legal matters; risks relating to exposure to
professional liability; risks relating to government regulation; risks relating
to pharmacy licensing operations; risks relating to healthcare reform and
proposed legislation; and possible volatility of stock price.

         For a more detailed discussion of these factors and their potential
impact on future results, see the applicable discussions herein.


                                        2

<PAGE>   3




                                MEDPARTNERS, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX
<TABLE>
<CAPTION>
                                                                              Page
                                                                              ----
<S>                                                                           <C>
PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements

         Consolidated Balance Sheets -
         December 31, 1996 (Audited) and June 30, 1997 (Unaudited)............ 4
                                                                               
                                                                               
         Consolidated Statements of Operations (Unaudited)-                    
         Three Months Ended June 30, 1996 and 1997 ........................... 5
                                                                               
         Consolidated Statements of Operations (Unaudited)-                    
         Six Months Ended June 30, 1996 and 1997 ............................. 6
                                                                               
         Consolidated  Statements of Cash Flows (Unaudited) -                  
         Six Months Ended June 30, 1996 and 1997 ............................. 7
                                                                               
         Notes to Consolidated Financial Statements (Unaudited)............... 8

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations ........................10

PART II - OTHER INFORMATION

Item 1.           Legal Proceedings ..........................................17

Item 2.           Changes in Securities.......................................17

Item 4.           Submission of Matters to a Vote of Security Holders ........17

Item 6.           Exhibits and Reports on Form 8-K ...........................18
</TABLE>

                                        3

<PAGE>   4


PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                MEDPARTNERS, INC.
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,     JUNE 30,
                                                                                            1996            1997
                                                                                        -----------    -----------
                                                                                         (AUDITED)     (UNAUDITED)
                                                                                               (IN THOUSANDS)
                                     ASSETS
<S>                                                                                     <C>            <C>        
  Current assets:
    Cash and cash equivalents .......................................................   $   127,397    $   134,162
    Accounts receivable, less allowances for bad debts of $143,449 and $152,419 .....       660,150        726,248
    Inventories .....................................................................       150,586        123,056
    Income tax receivable ...........................................................         2,496            902
    Deferred  tax assets, net .......................................................        52,261         71,560
    Prepaid expenses and other current assets .......................................        69,225         70,495
                                                                                        -----------    -----------
           Total current assets .....................................................     1,062,115      1,126,423
  Property and equipment, net .......................................................       516,769        541,116
  Intangible assets, net ............................................................       686,975        844,531
  Deferred tax asset ................................................................        18,333          3,328
  Other assets ......................................................................       138,928        146,111
                                                                                        ===========    ===========
           Total assets .............................................................   $ 2,423,120    $ 2,661,509
                                                                                        ===========    ===========
                      LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable ................................................................   $   288,023    $   294,480
    Accrued medical claims payable ..................................................       114,753        123,891
    Other accrued expenses and liabilities ..........................................       404,334        405,333
    Current portion of long-term debt ...............................................        28,596         24,953
                                                                                        -----------    -----------
           Total current liabilities ................................................       835,706        848,657

  Long-term debt, net of current portion ............................................       715,996        926,524
  Other long-term liabilities .......................................................        34,010         33,267

  Stockholders' equity:
    Common stock, $.001 par value; 400,000 shares authorized; issued--183,950 in 1996
      and 192,309 in 1997 ...........................................................           184            192
    Additional paid-in capital ......................................................       855,162        904,030
    Notes receivable from stockholders ..............................................        (1,665)        (1,505)
    Shares held in trust, 9,317 shares in 1996 and 1997 .............................      (150,200)      (150,200)
    Retained earnings ...............................................................       133,927        100,544
                                                                                        -----------    -----------
           Total stockholders' equity ...............................................       837,408        853,061
                                                                                        ===========    ===========
           Total liabilities and stockholders' equity ...............................   $ 2,423,120    $ 2,661,509
                                                                                        ===========    ===========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                        4

<PAGE>   5


                                MEDPARTNERS, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                            THREE MONTHS ENDED
                                                                                                 JUNE 30,
                                                                                        --------------------------
                                                                                            1996          1997
                                                                                        -----------    -----------
                                                                                        (IN THOUSANDS, EXCEPT PER 
                                                                                               SHARE AMOUNTS)

<S>                                                                                     <C>            <C>        
  Net revenue .......................................................................   $ 1,286,692    $ 1,560,600
  Operating expenses:
    Clinic expenses .................................................................       655,781        832,448
    Non-clinic goods and services ...................................................       508,267        565,720
    General and administrative expenses .............................................        39,555         41,014
    Depreciation and amortization ...................................................        23,368         27,847
    Net interest expense ............................................................         4,158         12,549
    Merger expenses .................................................................           250         59,434
    Other, net ......................................................................            51           --
                                                                                        -----------    -----------
  Income from continuing operations before income taxes .............................        55,262         21,588
  Income tax expense ................................................................        19,271         19,540
                                                                                        -----------    -----------
  Income from continuing operations .................................................        35,991          2,048
  Loss from discontinued operations .................................................          --          (75,434)
                                                                                        -----------    -----------

  Net income (loss) .................................................................   $    35,991    $   (73,386)
                                                                                        ===========    ===========

  Earnings per common and common equivalent share:
     Income from continuing operations ..............................................   $      0.21    $      0.01
     Loss from discontinued operations ..............................................          --            (0.40)
                                                                                        -----------    -----------
     Net income (loss) ..............................................................   $      0.21    $     (0.39)
                                                                                        ===========    ===========

  Weighted average common and common equivalent shares outstanding ..................       174,397        187,427
                                                                                        ===========    ===========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                        5
<PAGE>   6


                                MEDPARTNERS, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                             SIX MONTHS ENDED
                                                                                                JUNE 30,
                                                                                        --------------------------
                                                                                            1996          1997
                                                                                        -----------    -----------
                                                                                           (IN THOUSANDS, EXCEPT
                                                                                               PER SHARE AMOUNTS)
<S>                                                                                     <C>            <C>        
  Net revenue .......................................................................   $ 2,524,407    $ 3,028,533
  Operating expenses:
    Clinic expenses .................................................................     1,292,898      1,591,774
    Non-clinic goods and services ...................................................       985,531      1,121,538
    General and administrative expenses .............................................        85,587         85,561
    Depreciation and amortization ...................................................        44,019         54,457
    Net interest expense ............................................................        11,188         22,330
    Merger expenses .................................................................        34,698         59,434
    Other, net ......................................................................           (56)          --
                                                                                        -----------    -----------
  Income from continuing operations before income taxes .............................        70,542         93,439
  Income tax expense ................................................................        28,149         46,994
                                                                                        -----------    -----------
  Income from continuing operations .................................................        42,393         46,445
  Discontinued operations:
    Loss from discontinued operations ...............................................       (71,221)       (75,434)
    Net gains on sales of discontinued operations ...................................         2,523           --
                                                                                        -----------    -----------
  Loss from discontinued operations .................................................       (68,698)       (75,434)
                                                                                        -----------    -----------
  Net loss ..........................................................................   $   (26,305)   $   (28,989)
                                                                                        ===========    ===========

  Earnings per common and common equivalent share:
     Income from continuing operations ..............................................   $      0.25    $      0.25
     Loss from discontinued operations ..............................................         (0.40)         (0.40)
                                                                                        -----------    -----------
     Net loss .......................................................................   $     (0.15)   $     (0.15)
                                                                                        ===========    ===========

  Weighted average common and common equivalent shares outstanding ..................       171,889        187,192
                                                                                        ===========    ===========
</TABLE>

See accompanying notes to unaudited consolidated financial statements.

                                        6
<PAGE>   7


                                MEDPARTNERS, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                             SIX MONTHS ENDED
                                                                                                 JUNE 30,
                                                                                        --------------------------
                                                                                            1996           1997
                                                                                        -----------    -----------
                                                                                              (IN THOUSANDS)
<S>                                                                                     <C>            <C>        
Operating activities:
Income from continuing operations ...................................................   $    42,393    $    46,445
Adjustments for non-cash items:
  Depreciation and amortization .....................................................        44,019         54,457
  Provision for deferred taxes ......................................................        32,152         30,171
  Merger expenses ...................................................................        34,698         59,434
  Other .............................................................................          --              612
Changes in operating assets and liabilities, net of effects of acquisitions .........       (60,058)       (89,946)
                                                                                        -----------    -----------
         Net cash and cash equivalents provided by continuing operations ............        93,204        101,173
Investing activities:
  Net cash used to fund acquisitions ................................................      (104,290)      (150,493)
  Cash paid for merger charges ......................................................       (25,932)       (61,252)
  Purchase of property and equipment ................................................       (72,120)       (37,373)
  Additions to intangibles, net of acquisitions .....................................        (4,478)        (9,226)
  Net proceeds from marketable securities ...........................................        27,482           --
  Other .............................................................................         1,209         (3,928)
                                                                                        -----------    -----------
         Net cash and cash equivalents used in investing activities .................      (178,129)      (262,272)
Financing activities:
  Common stock issued and capital contributions .....................................       235,643         39,498
  Proceeds from debt ................................................................        38,200        311,254
  Repayment of debt .................................................................      (177,818)      (161,871)
  Other .............................................................................           105           (799)
                                                                                        -----------    -----------
         Net cash and cash equivalents provided by financing activities .............        96,130        188,082
Cash provided by (used in) discontinued operations ..................................        22,100        (20,719)
                                                                                        -----------    -----------
Net increase in cash and cash equivalents ...........................................        33,305          6,264
Cash and cash equivalents at beginning of period ....................................        88,386        127,397
Beginning  cash and cash  equivalents  of immaterial  pooling of interests entities .         1,162            501
                                                                                        -----------    -----------
Cash and cash equivalents at end of period ..........................................   $   122,853    $   134,162
                                                                                        ===========    ===========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.

                                        7
<PAGE>   8


                                MEDPARTNERS, INC.

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  BASIS OF PRESENTATION

         The consolidated financial statements include the accounts of the
Company and its wholly owned subsidiaries and have been prepared in accordance
with generally accepted accounting principles for interim financial reporting
and in accordance with Rule 10-01 of Regulation S-X. Accordingly, they do not
include all of the information and notes required by generally accepted
accounting principles for complete financial statements.

         In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of normal recurring
items) necessary for a fair presentation of results for the interim periods
presented. The results of operations for any interim period are not necessarily
indicative of results for the full year. These financial statements and footnote
disclosures should be read in conjunction with the December 31, 1996 audited
consolidated financials statements and the notes thereto.

         The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the accompanying
consolidated financial statements and notes. Actual results could differ from
those estimates.

         RESTATEMENT OF FINANCIAL STATEMENTS

         On June 26, 1997 the Company combined with InPhyNet Medical Management
Inc. ("InPhyNet") in a business combination that was accounted for as a pooling
of interests. Accordingly, the financial statements for periods prior to the
effective dates of the merger have been restated to include the results of
InPhyNet and additional entities accounted for as immaterial poolings of
interests.

NOTE 2.  ACQUISITIONS

         During the six months ended June 30, 1997, the Company, through its
wholly-owned subsidiaries, acquired certain operating assets of various medical
practices. Simultaneously with each medical practice acquisition, the Company
entered into a practice management agreement which generally has a 20 to 40 year
term. The acquisitions have been accounted for by the purchase method of
accounting and, accordingly, the purchase price has been allocated to the net
assets based on the estimated fair values at the date of acquisition. The
estimated fair value of assets acquired is $157.5 million. A total of $150.5
million in cash and approximately 0.3 million shares of stock valued at
approximately $7.0 million were given in exchange for these assets during the
six months ended June 30, 1997. Included in these amounts is the acquisition of
Aetna U.S. Healthcare's physician practice management business.

NOTE 3.  INCOME TAXES

         Significant variations exist in the customary relationship between
income tax expense and pretax income. These variations exist primarily because
certain merger expenses are non-deductible for income tax purposes.

NOTE 4.  DISCONTINUED OPERATIONS

         Effective February 29, 1996, the Company sold its Nephrology Services
business to Total Renal Care, Inc. for $49.0 million in cash, subject to certain
post-closing adjustments. The after-tax gain on disposition of this business,
net of disposal costs, was $2.5 million. In March 1996, the Company agreed to
settle all disputes with a number of private payors. The settlements resulted in
an after-tax charge of $43.8 million. These disputes related to businesses that
were covered by the Company's settlement with federal and state agencies in June
1995. In addition, the Company agreed to pay $24.1 million after-tax to cover
the private payors' pre-settlement and settlement-related expenses. An after-tax
charge for the above amounts is included in discontinued operations for the six
month period ended June 30, 1996. Included in

                                        8
<PAGE>   9


MEDPARTNERS, INC.

         NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 4. DISCONTINUED OPERATIONS - (CONTINUED)

discontinued operations for the three months ended June 30, 1997 is an after-tax
charge of $75.4 million related to the settlement of a dispute arising from the
Company's sale of its home infusion therapy business to Coram Health Corporation
("Coram") in April 1995. Under the settlement agreement the Company will return
for cancellation all securities issued by Coram in connection with the sale and
will pay Coram $45 million in cash on or before September 1, 1997.

NOTE 5. MERGERS

         In June 1997, the Company merged with InPhyNet in a transaction that
was accounted for as a pooling of interests. The Company exchanged approximately
19.3 million shares of its common stock for all of the outstanding common stock
of InPhyNet. InPhyNet's net revenue for the three months ended June 30, 1997 and
1996 was $131.6 million and $90.5 million, respectively. InPhyNet's net income,
excluding merger charges, for the corresponding periods was $3.9 million and
$6.2 million, respectively.

         Included in pre-tax loss for the six months ended June 30, 1997, are
merger costs totaling $59.4 million with approximately $50.0 million related to
the business combination with InPhyNet and $9.4 million to various immaterial
business combinations. The components of this cost are as follows (in
thousands):
<TABLE>
                   <S>                                                               <C>         
                   Operational restructuring                                         $     21,300
                   Brokerage fees, professional fees, filing fees and other
                         transaction costs                                                 20,000
                   Conforming of accounting policies                                        7,500
                   Severance and related benefits                                           6,000
                   Transition costs                                                         2,334
                   Debt restructuring                                                         900
                   Abandonment of facilities                                                  900
                   Noncompatible technology                                                   500
                                                                                     ------------
                   Total                                                              $    59,434
                                                                                     ============
</TABLE>


NOTE 6. SUBSEQUENT EVENTS

         The Company plans during the third quarter of 1997 to raise an
additional $350 million in capital through a hybrid convertible offering of $350
million in Threshold Appreciation Price Securities (TAPS) plus $350 million of
senior subordinated notes, both due in three years. The TAPS require that the
investor purchase the Company's common stock in three years at a price at or
above the Company's current stock price. The $350 million in proceeds from the
TAPS offering will be used to purchase Treasury Notes, which will pay the TAPS
investor interest plus an interest premium and be pledged to a collateral agent
to secure the investor's obligation to purchase stock. Proceeds from the
maturation of the Treasury Notes will be used to purchase the $350 million in
common stock from the Company.

         On August 14, 1997, the Company announced it has entered into a
definitive agreement to acquire Talbert Medical Management Holdings Corporation
of Costa Mesa, California, pursuant to a tender offer followed by a merger, for
$63 per share in cash, or about $200 million.  Talbert Medical Management is a
physician practice management company representing 282 primary and specialty
care physicians and operating 52 clinics in five Southwestern states.  The
acquisition will be accounted for as a purchase transaction with the Company
assuming all asset and liabilities of Talbert.  The transaction is contingent
on receiving approval from the Federal Trade Commission under the provision of
the Hart-Scott-Rodino Anti-Trust Improvments Act of 1976.



                                        9
<PAGE>   10


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

         The purpose of the following discussion is to facilitate the
understanding and assessment of significant changes and trends related to the
results of operations and financial condition of the Company, including changes
arising from recent acquisitions by the Company, the timing and nature of which
have significantly affected the Company's results of operations. This discussion
should be read in conjunction with the consolidated financial statements and the
notes thereto included elsewhere in this document. Unless the context otherwise
requires, as used herein, the term "MedPartners" or the "Company" refers
collectively to MedPartners, Inc. and its subsidiaries and affiliates.

GENERAL

         MedPartners is the largest physician practice management ("PPM")
company in the United States, based on revenues. The Company develops,
consolidates and manages integrated healthcare delivery systems, consisting of
primary care and specialty physicians, as well as the nation's largest group of
physicians engaged in the delivery of emergency medicine and other
hospital-based services. Through its network of affiliated group and IPA
physicians, the Company provides healthcare services to prepaid managed care
enrollees and fee-for-service patients. As an integral part of its PPM business,
the Company operates one of the largest independent pharmacy benefit management
("PBM") programs in the United States and provides disease management services
and therapies for patients with certain chronic conditions.

         The Company affiliates with physicians who are seeking the resources
necessary to function effectively in healthcare markets that are evolving from
fee-for-service to managed care payor systems. The Company enhances clinic
operations by centralizing administrative functions and introducing management
tools, such as clinical guidelines, utilization review and outcome measurement.
The Company provides affiliated physicians with access to capital and advanced
management information systems. MedPartners' PPM revenue is derived primarily
from the contracts with HMOs that compensate MedPartners and its affiliated
physicians on a prepaid basis. In the prepaid arrangements, MedPartners
typically is paid by the HMO a fixed amount per member ("enrollee") per month
("professional capitation") or a percentage of the premium per member per month
("percent of premium") paid by employer groups and other purchasers of
healthcare coverage to the HMOs. In return, MedPartners is responsible for
substantially all of the medical services required by enrollees. In many
instances, MedPartners and its affiliated physicians accept financial
responsibility for hospital and ancillary healthcare services in return for
payment from HMOs on a capitated or percent of premium basis ("institutional
capitation"). In exchange for these payments (collectively, "global
capitation"), MedPartners, through its affiliated physicians, provides the
majority of covered healthcare services to enrollees and contracts with
hospitals and other healthcare providers for the balance of the covered
services. These relationships provide physicians with the opportunity to operate
under a variety of payor arrangements and increase their patient flow.

         The Company offers medical group practices and independent physicians a
range of affiliation models. These affiliations are carried out by the
acquisition of PPM entities or practice assets, either for cash or through
equity exchange, or by affiliation on a contractual basis. In all instances, the
Company enters into long-term practice management agreements with the affiliated
physicians that provide for the management of their practices by the Company
while at the same time providing for the clinical independence of the
physicians.

         The Company also organizes and manages physicians and other healthcare
professionals engaged in the delivery of emergency, radiology and teleradiology
services, hospital-based primary care and temporary staffing and support
services to hospitals, clinics, managed care organizations and physician groups.
Under contracts with hospitals and other clients, the Company identifies and
recruits physicians and other healthcare professionals for admission to a
client's medical staff, monitors the quality of care and proper utilization of
services and coordinates the ongoing scheduling of staff physicians who provide
clinical coverage in designated areas of care.

         In June 1997, the Company combined with InPhyNet Medical Management
Inc. ("InPhyNet") in a transaction that was accounted for as a pooling of
interests. The financial information referred to in this discussion reflects the
combined operations of this entity and several additional entities accounted for
as additional poolings of interests.

                                       10
<PAGE>   11


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS - (CONTINUED)

         The Company also manages outpatient prescription drug benefit programs
for clients throughout the United States, including corporations, insurance
companies, unions, government employee groups and managed care organizations.
The Company dispenses prescriptions daily through four mail service pharmacies
and manages patients' immediate prescription needs through a network of national
retail pharmacies. The Company is in the process of integrating its PBM program
with the PPM business by providing PBM services to the affiliated physicians,
clinics and HMOs. The Company's disease management services are intended to meet
the healthcare needs of individuals with chronic diseases or conditions. These
services include the design, development and management of comprehensive
programs that comprise drug therapies, physician support and patient education.
The Company currently provides therapies and services for individuals with such
conditions as hemophilia, growth disorders, immune deficiencies, genetic
emphysema, cystic fibrosis and multiple sclerosis.

RESULTS OF OPERATIONS

         Through the Company's network of affiliated group and IPA physicians,
MedPartners provides primary and specialty healthcare services to prepaid
managed care enrollees and fee-for-service patients. The Company also fills in
excess of 50 million prescriptions on an annual basis and provides services and
therapies to patients with certain chronic conditions, primarily hemophilia and
growth disorders. The following table sets forth the earnings summary by service
area for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                      SIX MONTHS ENDED
                                                      JUNE 30,                               JUNE 30,
                                             1996                1997                1996                 1997
                                         --------------     ---------------     ----------------    -----------------
<S>                                      <C>                <C>                 <C>                 <C>           
    Physician Services
        Net revenue                        $   722,386        $    932,872          $ 1,424,343       $    1,783,634
        Operating income                        35,940              62,603               71,480              118,377
        Margin                                     5.0 %               6.7 %                5.0 %                6.6 %
                                                                                                                      
    Pharmaceutical Services                                                                                           
        Net revenue                        $   442,463        $    500,624          $   865,154       $    1,001,463  
        Operating income                        17,049              21,953               33,514               41,249  
        Margin                                     3.9 %               4.4 %                3.9 %                4.1 %
                                                                                                                      
    Specialty Services                                                                                                
        Net revenue                        $   121,843        $    127,104         $    234,910       $      243,436  
        Operating income                        15,689              15,079               29,626               28,314  
        Margin                                    12.9 %              11.9 %               12.6 %               11.6 %
                                                                                                                      
    Corporate Services                                                                                                
        Operating (loss)                   $    (8,957)       $     (6,064)        $    (18,248)      $      (12,737)
        Percentage of total net revenue           (0.7)%              (0.4)%               (0.7)%               (0.4)%
</TABLE>


                                       11

<PAGE>   12



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS -(CONTINUED)

Physician Practice Management Services

         The Company's PPM revenue has increased primarily due to growth in
prepaid enrollment, existing practice growth and new practice affiliations. The
Company's PPM operations in the western region of the country function in a
predominantly prepaid environment. The Company's PPM operations in the other
regions of the country are in predominantly fee-for-service environments with
limited but increasing managed care penetration. The following table sets forth
the breakdown of net revenue for the PPM services area for the periods indicated
(in thousands):

<TABLE>
<CAPTION>
                                                   THREE MONTHS ENDED             SIX MONTHS ENDED
                                                        JUNE 30,                       JUNE 30,
                                               ------------------------      -------------------------
                                                 1996            1997            1996          1997
                                               --------     -----------      ------------   ----------
                   <S>                         <C>          <C>              <C>            <C>
                   Prepaid health care ....... $393,263     $   445,737      $    649,449   $  928,089
                   Fee-for-service ...........  325,381         481,274           766,239      845,894
                   Other .....................    3,742           5,861             8,655        9,651
                                               --------     -----------      ------------   ----------
                   NetRevenue ................ $722,386     $   932,872      $  1,424,343   $1,783,634
                                               ========     ===========      ============   ==========
</TABLE>

         The Company's prepaid healthcare revenue reflects the number of HMO 
enrollees for whom it receives monthly capitation payments. The Company receives
professional capitation to provide physician services and institutional
capitation to provide hospital care and other non-professional services. The
table below sets forth the changes in enrollment for professional and global
capitation:

<TABLE>
<CAPTION>
                                                    AT JUNE 30,
                                              ------------------------
                                                 1996          1997
                                              ----------    ----------
                   <S>                         <C>           <C>    
                   Professional only enrollees   867,753       998,380
                   Global enrollees .........    647,452       959,135
                                               =========     =========
                     Total enrollees ........  1,515,205     1,957,515
                                               =========     =========
</TABLE>


         The Company has consolidated the majority of its acquisitions into its
management infrastructure, eliminating substantial overhead expenses and
improving integration of medical, administrative, and operation management. This
integration has been a significant factor in increasing operating margins in the
PPM service area from 5.0% in the first six months of 1996 to 6.6% in the first
six months of 1997.

         The Company has developed strong relationships with many of the
national and regional managed care organizations and has demonstrated its
ability to deliver high-quality, cost-effective care. The Company is
strategically positioned to capitalize on the industry's continued evolution
toward a prepaid environment, specifically by increasing the number of prepaid
enrollees and converting existing enrollees from professional to global
capitation. During the first six months of 1997, for example, the Company
converted approximately 225,000 lives from professional to global capitation.
These changes are expected to result in material internal growth.

         The Company operates the largest hospital-based group in the country
with over 2,200 physicians providing services at over 320 sites, primarily
hospitals, nationwide. The Company provides emergency medicine, radiology,
anesthesiology, primary care and other hospital-based physician services. The
Company also provides comprehensive medical services to inmates in various state
and local correctional institutions. As of June 30, 1997, the Company had
contracts with 45 correctional institutions. The Company provides physicians,
nurses and clerical support services for active duty and retired military
personnel and their dependents in emergency departments, ambulatory care centers
and primary care clinics operated by the Department of Defense. At June 30,
1997, the Company's military medical services were provided under 15 contracts
with the Department of Defense.

                                       12
<PAGE>   13


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS -(CONTINUED)

         In addition to the increased revenue and operational efficiencies
realized through acquisition and consolidation, the Company is profiting from
synergies produced by the exchange of ideas among physicians and managers across
geographical boundaries and varied areas of specialization. The PPM service
area, for example, has established medical management committees that meet
monthly to discuss implementation of the best medical management techniques to
assist the Company's affiliated physicians in delivering the highest quality of
care at lower costs in a consistent fashion. The Company is capitalizing on the
knowledge of its western groups, which have significant experience operating in
a prepaid environment, to transfer the best practices to other groups in markets
with increasing managed care penetration. Through interaction between physicians
and managers from various medical groups, significant cost savings continue to
be identified at several of the Company's larger affiliated groups.

         The PPM service area has also created a national medical advisory
committee, which is developing procedures for the identification, packaging and
dissemination of the best clinical practices within the Company's medical
groups. The committee also provides the Company's affiliated physicians a forum
to discuss innovative ways to improve the delivery of healthcare.

         The Company has also initiated integration efforts between the PPM, PBM
and disease management areas. A project is in process to integrate patient care
data from several of the Company's affiliated clinics with the PBM's healthcare
information system. Through this database, which combines medical and claims
data with the prescription information tracked by the PBM area, the Company will
have access to the industry's most complete and detailed collection of
information on successful treatment patterns. Another synergy arising from
integration is the opportunity which the existing PBM infrastructure affords to
affiliated physician groups to further expand services by providing pharmacy
services ranging from fee-for-service retail claims processing to full drug
capitation programs. The Company is also beginning to integrate the disease
management area's expertise in an effort to formulate and implement disease
management programs for the Company.

Pharmacy Benefit Management Services

         Pharmaceutical Services revenue continues to exhibit sustained growth
reflecting increases in both mail and retail related services. Revenue for the
six months ended June 30, 1997 is 15.8% above the same period of 1996. This
growth is due to increased pharmacy transaction volume (6.1%); and drug cost
inflation, product mix and pricing (9.7%). Key factors contributing to this
growth include high strategic customer retention, additional penetration of
retained customers, and new customer contracts such as the National Association
of Letter Carriers which became effective January 1, 1997. The majority of
Pharmaceutical Services revenue is earned on a fee-for-service basis through
contracts covering one to three year periods. Revenue for selected types of
services is earned on a percentage of savings achieved or on a per-enrollee or
per-member basis; however, this revenue is not material to total revenue.

         Operating income experienced growth of 23.1% in the first six months of
1997 over the same period of 1996. Operating margins increased from 3.9% to 4.1%
for the six months ended June 30, 1996 and 1997, respectively. Lower margin
retail service revenue continues to grow at a faster rate than mail related
revenue. However, reductions in operating expenses along with the strategic
termination of accounts with unacceptable levels of profitability have offset
any impact on operating margins and have contributed to the overall growth in
operating income.

                                       13
<PAGE>   14



ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS -(CONTINUED)

Specialty Services

         Specialty services concentrates on providing high quality products and
services in the home. Domestically, these services focus on low incidence
chronic diseases. Internationally, the Company has established home care
businesses in Canada, Germany, the Netherlands, and the United Kingdom. Revenue
growth is due primarily to sales of the Company's new multiple sclerosis drug,
Copaxone, and other products. Margins for specialty services had been declining
slightly as a result of managed care pricing pressures, restructuring of benefit
plans by payors and reduced reimbursement for Medicaid and other state agency
payors. However, margins have increased slightly from the first quarter of 1997
to the second quarter of 1997. This increase can be attributed to the reduction
in operating expenses through increased efficiencies. Cost of service expenses
rose due to programs targeted at launching the Company's new multiple sclerosis
drug Copaxone.

RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 AND 1996

         For the three months ended June 30, 1997, net revenue was $1,560.6
million, compared to $1,286.7 million for the same period in 1996, an increase
of 21.3%. The increase in net revenue primarily resulted from affiliations with
new physician practices and the increase in pharmaceutical services net revenue,
which accounted for $82.1 million and $58.2 million of the increase in net
revenue, respectively. The acquisition of Aetna U.S. Healthcare's physician
practice management business was approximately $15.4 million of the $82.1
million increase in net revenue from acquisitions. Additional increases resulted
from the shift of enrollees from professional only capitation to global
capitation; (approximately 158,000 enrollees shifted in the three months ended 
June 30, 1997.) The majority of the remainder of the increase in PPM net 
revenue can be attributed to growth in existing physician practices. The 
increase in pharmaceutical services net revenue is attributable to 
pharmaceutical price increases, the addition of new customers, further 
penetration of existing customers and the sale of new products, offset by the 
strategic termination of accounts with unacceptable levels of profitability.

         Income from continuing operations, excluding merger expenses, grew for
the physician services and pharmaceutical services areas in the second quarter
of 1997, as compared to the same period of 1996, by 74.2% and 28.8%,
respectively. The increase in the physician services area is the result of
higher net revenue and increases in operating margins resulting from the
spreading of fixed overhead expenses over a larger revenue base and continued
integration of operations. The pharmaceutical services area's increase in
operating income was primarily due to reductions in operating expenses, more
efficient use of systems resources, and higher net revenue. Operating income and
margins declined in the corresponding periods for the specialty services area as
a result of continued pricing pressures for certain products; however, operating
income has increased in the second quarter of 1997 over the first quarter of
1997. This increase can be attributed to the reduction in operating expenses
through increased efficiencies.

         Net loss for the second quarter of 1997 was $(73.4) million, as
compared to net income of $36.0 million for the same period of 1996. Net loss
for the second quarter of 1997 included merger charges totaling $59.4 million,
$50.0 million of which relates to the business combination with InPhyNet, and
other non-recurring charges from discontinued operations of $75.4 million. The
major components of the merger charges are detailed in Note 5 of the
accompanying unaudited consolidated financial statements. The non-recurring
charges related to discontinued operations are discussed in Note 4 of the
accompanying unaudited consolidated financial statements. .

RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 AND 1996

         For the six months ended June 30, 1997, net revenue was $3,028.5
million, compared to $2,524.4 million for the same period in 1996, an increase
of 20.0%. The increase in net revenue primarily resulted from affiliations with
new physician practices and the increase in pharmaceutical services net revenue,
which accounted for $109.0 million and $136.3 million of the increase in net
revenue, respectively. Additional increases resulted from the shift of enrollees
from professional only to global capitation; (approximately 225,000 enrollees
shifted in the six months ended June 30, 1997.) The majority of the remainder 
of the increase in PPM net revenue can be attributed to growth in existing 
physician practices.

                                       14
<PAGE>   15


ITEM2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS -(CONTINUED)

         Income from continuing operations, excluding merger expenses, for the
physician services and pharmaceutical services areas grew for the six months
ended June 30, 1997, as compared to the same period of 1996, 65.6% and 23.1%,
respectively. The increase in the physician services area is the result of
higher net revenue and increases in operating margins resulting from the
spreading of fixed overhead expenses over a larger revenue base and continued
integration of operations. The pharmaceutical services area's increase in
operating income was primarily due to reductions in operating expenses, more
efficient use of system resources and higher net revenue. Operating income and
margins declined in the corresponding periods for the specialty services area as
a result of continued pricing pressures for certain products.

         Included in pre-tax loss for the six months ended June 30, 1997 and
1996 were merger expenses totaling $59.4 and $34.7 million. The major components
of the $59.4 million, $50 million of which relates to the business combination
with InPhyNet, are listed in Note 5 of the unaudited consolidated financial
statements. The $34.7 million relates primarily to the business combination with
Pacific Physician Services, Inc. in 1996. Also included in the pre-tax loss for
the six months ended June 30, 1997 were other non-recurring charges from
discontinued operations of $75.4 million, which are discussed in Note 4 of the
accompanying unaudited consolidated financial statements.

DISCONTINUED OPERATIONS

         During the first quarter of 1996, Caremark divested its Nephrology
Services business, in addition to settling disputes with private payors, both
discussed in Note 4 of the accompanying unaudited consolidated financial
statements. During the second quarter of 1997, the Company settled a dispute
with Coram Health Corporation arising from Caremark's sale of its home infusion
therapy business to Coram, also discussed in Note 4 of the accompanying
unaudited financial statements. In accordance with APB 30, which addresses the
reporting for disposition of business segments, the Company's consolidated
financial statements present the operating income of these discontinued
operations separately from continuing operations.

FACTORS THAT MAY AFFECT FUTURE RESULTS

         The future operating results and financial condition of the Company are
dependent on the Company's ability to market its services profitably,
successfully increase market share and manage expense growth relative to revenue
growth. The future operating results and financial condition of the Company may
be affected by a number of additional factors, including: the Company's growth
strategy, which involves the ability to raise the capital required to support
growth, competition for expansion opportunities, integration risks and
dependence on HMO enrollee growth; efforts to control healthcare costs; exposure
to professional liability; and pharmacy licensing, healthcare reform and
government regulation. Changes in one or more of these factors could have a
material adverse effect on the future operating results and financial condition
of the Company.

         The Company completed the Caremark acquisition in September 1996. There
are various Caremark legal matters which, if materially adversely determined,
could have a material adverse effect on the Company's operating results and
financial condition. See Part II, Item 1 of this Quarterly report on Form 10-Q
for further discussion.

LIQUIDITY AND CAPITAL RESOURCES

         As of June 30, 1997, the Company had working capital of $277.8 million,
including cash and cash equivalents of $134.2 million. For the first six months
of 1997, cash flow from operations was $101.2 million compared to $93.2 million
for the same period of 1996.

         For the six months ended June 30, 1997 and 1996, the Company invested
cash of $150.5 million and $104.3 million, respectively, in acquisitions of the
assets of physician practices, and $37.4 million and $72.1 million,
respectively, in property and equipment. During the six months ended June 30,
1997 and 1996, the Company paid $61.3 and $25.9 million, respectively, in cash
for merger costs. These expenditures were funded by approximately $39.5 million
derived primarily from stock option exercises and net incremental borrowings of
$149.4 million for the six months ending June 30,

                                       15

<PAGE>   16


ITEM2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS -(CONTINUED)

1997 and $224.1 million derived from a secondary stock offering for the same
period of 1996. Investments in acquisitions and property and equipment are
anticipated to continue to be substantial uses of funds in future periods.

         The Company entered into a $1 billion Revolving Credit and
Reimbursement Facility, which became effective simultaneously with the closing
of the Caremark acquisition on September 5, 1996, replacing its then existing
credit facility. No principal is due on the facility until its maturity date of
September 2001. As of June 30, 1997, there was $383.0 million outstanding under
the facility.

         The Company's growth strategy requires substantial capital for the
acquisition of PPM businesses and assets of physician practices, and for their
effective integration, operation, and expansion. Affiliated physician practices
may also require capital for renovation, expansion, and additional medical
equipment and technology. The Company believes that its existing cash resources,
the use of the Company's common stock for selected practice and other
acquisitions, the issuance of the TAPS discussed in Note 6 of the accompanying
unaudited consolidated financial statements, and available borrowings under the
$1.0 billion credit facility or any successor credit facility, will be
sufficient to meet the Company's anticipated acquisition, expansion, and working
capital needs for the next twelve months. The Company expects from time to time
to raise additional capital through the issuance of long-term or short-term
indebtedness or the issuance of additional equity securities in private or
public transactions, at such times as management deems appropriate and the
market allows in order to meet the capital needs of the Company. There can be no
assurance that acceptable financing for future acquisitions or for the
integration and expansion of existing networks can be obtained. Any of such
financings could result in increased interest and amortization expense,
decreased income to fund future expansion and dilution of existing equity
positions.

                                       16
<PAGE>   17


PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         In September 1995, Coram Healthcare Corporation ("Coram") filed a
complaint in the San Francisco Superior Court against Caremark, its subsidiary,
Caremark Inc., and others. The complaint, which arose from Caremark's sale to
Coram of Caremark's home infusion therapy business in April 1995 for
approximately $209.0 million in cash and $100.0 million in securities, alleged
breach of the sale agreement and made other related claims seeking compensatory
damages, in the aggregate, of $5.2 billion. Caremark filed counterclaims against
Coram and also filed a lawsuit in the United States District Court in Chicago
against Coram, claiming securities fraud. On July 1, 1997, the parties to the
Coram litigation announced that a settlement had been reached pursuant to which
Caremark will return for cancellation all of the securities issued by Coram in
connection with the acquisition and will pay to Coram $45 million in cash on or
before September 1, 1997. The settlement agreement also provides for the
termination and resolution of all disputes and issues between the parties and
for the exchange of mutual releases. The settlement resulted in a second quarter
after-tax charge from discontinued operations of approximately $75.4 million.

ITEM 2. CHANGES IN SECURITIES


         The following table indicates all unregistered sales of the Company's
Common Stock during the quarter ended June 30, 1997:

<TABLE>
<CAPTION>
TRANSACTION                                      PURPOSE                    DATE                  MARKET VALUE
------------------------------    --------------------------------------    ------------------    ---------------------
<S>                               <C>                                       <C>                   <C>       
Fischer/ Mangold                  Acquisition                               June 26, 1997         $46,000,000
</TABLE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

              On May 13, 1997, the Annual Meeting of the Stockholders of the
Company was held, at which the following actions were taken:

              1.   The shares of Common Stock  represented  at the Annual  
                 Meeting were voted to elect  Richard M. Scrushy as a director 
                 of the Company as follows:

                    NUMBER
                    VOTING                 FOR            WITHHELD
                 -----------           -----------        ---------
                 147,385,018           139,410,479        7,974,539

              2.   The shares of Common Stock represented at the Annual Meeting
                 were voted to elect Ted. H. McCourtney as a director of the
                 Company as follows:

                    NUMBER
                    VOTING                 FOR            WITHHELD
                 -----------           -----------        ---------
                 147,385,018           139,413,151        7,971,867

              3.   The shares of Common Stock represented at the Annual Meeting 
                 were voted to elect Rosalio J. Lopez as a director of the
                 Company as follows:

                    NUMBER
                    VOTING                 FOR             WITHHELD
                 -----------           -----------        ---------
                 147,385,018           139,433,162        7,951,856

                                       17
<PAGE>   18


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - (CONTINUED)

              4.   The shares of Common Stock represented at the Annual Meeting
                 were voted to elect C.A. Lance Piccolo as a director of the
                 Company as follows:

<TABLE>
<CAPTION>
                    NUMBER
                    VOTING                 FOR             WITHHELD
                 -----------           -----------        ---------
                 <S>                   <C>               <C>                
                 147,385,018           141,179,806        6,205,212
</TABLE>

              5.   The shares of Common Stock represented at the Annual Meeting 
                 were voted to approve the 1997 Long Term Incentive Compensation
                 Plan as follows:

<TABLE>
<CAPTION>
                    NUMBER                                                                         BROKER
                    VOTING                FOR              AGAINST          ABSTENTIONS          NON-VOTES
                 -----------           ----------        ----------         -----------         ----------
                 <S>                   <C>               <C>                 <C>                <C>       
                 147,385,018           89,020,521        33,654,193          1,359,352          23,350,952
</TABLE> 

              6.   The shares of Common Stock represented at the Annual Meeting 
                 were voted to approve the Employee Stock Purchase Plan as
                 follows:

<TABLE>
<CAPTION>

                    NUMBER                                                                         BROKER
                    VOTING                 FOR             AGAINST          ABSTENTIONS          NON-VOTES
                 -----------           -----------        ---------         -----------         ----------
                 <S>                   <C>                <C>               <C>                 <C>
                 147,385,018           114,498,428        8,264,389          1,271,249          23,350,952
</TABLE> 

              The remaining  directors whose terms continued after the meeting 
were Larry R. House, Larry D. Striplin, Jr., Charles W. Newhall, III, Richard J.
Kramer, Walter T. Mullikin, M.D., Roger L. Headrick, Thomas W. Hodson, and Harry
M. Jansen Kraemer, Jr.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits

         The exhibits filed as a part of the Quarterly Report are listed in Item
         6(c) of this Quarterly Report on Form 10-Q, which is hereby
         incorporated herein by reference.

(b)      Reports on Form 8-K

(c)      Exhibits

         The exhibits required by Regulation S-K are set forth in the following
         list.

(11)     -        Statement re: Computation of Per Share Earnings (Unaudited)
(27)     -        Financial Data Schedule (for  SEC use only)

No other Items of Part II are applicable to the Company for the period covered
by this Quarterly Report on Form 10-Q.

                                       18
<PAGE>   19


         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.

MedPartners, Inc.

By:  /s/ Harold O. Knight, Jr.
   ----------------------------------------------------------------------------
     Harold O. Knight, Jr.  Executive Vice President and Chief Financial Officer

Date: August 14, 1997

By:  /s/ Larry R. House
   ----------------------------------------------------------------------------
     Larry R. House         Chairman and Chief Executive Officer

Date: August 14, 1997

                                       19