<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, 1998

                                       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.

<TABLE>
<CAPTION>
              Class                     Outstanding at May 4, 1998
           ------------              ---------------------------------
      <S>                            <C>         
      COMMON STOCK, PAR VALUE                  197,876,690*
          $.001 PER SHARE
</TABLE>

* Includes 9,113,755 shares held in trust to be utilized in employee benefit
  plans.


<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 the caption
"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 business engaged in by the Company in particular are in a state
of significant flux. This, together with the circumstance that the Company has a
relatively short operating history in an industry that also is relatively young
and is the largest physician practice management company 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; risks relating to identification of growth opportunities; risks
relating to dependence on HMO enrollee growth; risks relating to the capitated
nature of revenues; risks relating to utilization of medical services; risks
relating to 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 risks relating to
possible volatility and/or decline of stock price.

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


<PAGE>   3





                                MEDPARTNERS, INC.

                          QUARTERLY REPORT ON FORM 10-Q

                                      INDEX

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

Item 1.           Financial Statements

         Consolidated Balance Sheets -
         December 31, 1997 (Audited) and March 31, 1998 (Unaudited).............          4

         Consolidated Statements of Operations (Unaudited) -
         Three Months Ended March 31, 1997 and 1998.............................          5

         Consolidated  Statements of Cash Flows (Unaudited) -
         Three Months Ended March 31, 1997 and 1998.............................          6

         Notes to Consolidated Financial Statements (Unaudited).................          7

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

PART II - OTHER INFORMATION

Item 2.           Changes in Securities.........................................         16

Item 6.           Exhibits and Reports on Form 8-K .............................         16
</TABLE>




                                       3
<PAGE>   4



PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                                MEDPARTNERS, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                     DECEMBER 31,     MARCH 31,
                                                                                         1997            1998
                                                                                     ------------     ---------
                                                                                      (AUDITED)      (UNAUDITED)
                                                                                            (IN THOUSANDS)
<S>                                                                                  <C>            <C>        
                                                   ASSETS
  Current assets:
    Cash and cash equivalents......................................................  $   215,801    $   199,148
    Accounts receivable, less allowances for bad debts of $204,249 and $214,713....      763,551        798,932
    Inventories....................................................................      164,049        127,044
    Income tax receivable..........................................................       10,446         13,402
    Deferred tax assets, net.......................................................       72,203         81,592
    Prepaid expenses and other current assets......................................       86,991         82,090
                                                                                     -----------    -----------  
           Total current assets....................................................    1,313,041      1,302,208
  Property and equipment, net......................................................      530,033        521,642
  Intangible assets, net...........................................................      731,586        779,175
  Deferred tax asset...............................................................      175,619        179,126
  Other assets.....................................................................      140,250        132,040
                                                                                     ===========    ===========   
           Total assets............................................................  $ 2,890,529    $ 2,914,191
                                                                                     ===========    ===========

                                    LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
    Accounts payable...............................................................  $   340,106    $   316,368
    Accrued medical claims payable.................................................      208,937        214,477
    Other accrued expenses and liabilities.........................................      670,615        562,922
    Current portion of long-term debt..............................................       17,636         25,257
                                                                                     -----------    -----------  
           Total current liabilities...............................................    1,237,294      1,119,024

  Long-term debt, net of current portion...........................................    1,470,622      1,609,632
  Other long-term liabilities......................................................       91,759        117,026

  Stockholders' equity:
    Common stock, $.001 par value; 400,000 shares 
      authorized; issued -- 197,766 in 1997                                                
      and 197,924 in 1998..........................................................          198            198
    Additional paid-in capital.....................................................      937,233        938,370
    Notes receivable from stockholders.............................................       (1,367)        (1,282)
    Other Comprehensive Income ....................................................       (5,035)        (4,723)
    Shares held in trust, 9,317 in 1997 and 9,186 in 1998..........................     (150,200)      (148,332)
    Accumulated deficit............................................................     (689,975)      (715,722)
                                                                                     -----------    -----------  
           Total stockholders' equity..............................................       90,854         68,509
                                                                                     ===========    ===========   
           Total liabilities and stockholders' equity..............................  $ 2,890,529    $ 2,914,191
                                                                                     ===========    ===========   
</TABLE>

See accompanying notes to unaudited consolidated financial statements.




                                       4
<PAGE>   5


                                MEDPARTNERS, INC.

                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED
                                                                                   MARCH 31,
                                                                         --------------------------
                                                                             1997          1998
                                                                         ------------- ------------
                                                                           (IN THOUSANDS, EXCEPT
                                                                             PER SHARE AMOUNTS)

<S>                                                                      <C>            <C>        
  Net revenue.........................................................   $ 1,481,933    $ 1,743,097
  Operating expenses:
    Clinic expenses...................................................       747,045      1,029,551
    Non-clinic goods and services.....................................       555,818        586,107
    General and administrative expenses...............................        70,828         84,697
    Depreciation and amortization.....................................        26,610         28,647
    Net interest expense..............................................         9,781         25,977
    Terminated merger expenses........................................            --          8,445
    Restructuring expense.............................................            --         34,000
    (Gain) on sale of international operations........................            --        (20,141)
                                                                         -----------    -----------
  Income (loss) before income taxes...................................        71,851        (34,186)
  Income tax expense (benefit)........................................        27,454         (8,439)
                                                                         ===========    ===========
  Net income (loss)...................................................   $    44,397    $   (25,747)
                                                                         ===========    ===========

  Basic earnings (loss) per common share..............................   $      0.24    $     (0.14)
                                                                         ===========    ===========
  Diluted earnings (loss) per common share............................   $      0.24    $     (0.14)
                                                                         ===========    ===========

  Weighted average common shares outstanding..........................       183,666        188,610
  Dilutive effect of employee stock options...........................         3,490             --
                                                                         -----------    -----------
  Weighted average shares outstanding, assuming dilution..............       187,156        188,610
                                                                         ===========    ===========
</TABLE>



See accompanying notes to unaudited consolidated financial statements.








                                       5
<PAGE>   6


                                MEDPARTNERS, INC.

                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED
                                                                             MARCH 31,
                                                                    ---------------------------
                                                                       1997             1998
                                                                    ---------         ---------
                                                                          (IN THOUSANDS)
<S>                                                                 <C>               <C>       
Operating activities:
 Income (loss) from continuing operations ..................        $  44,397         $ (25,747)
 Adjustments for non-cash items:

  Depreciation and amortization ............................           26,610            28,647
  Provision for deferred tax expense (benefit) .............           23,451           (12,896)
  Restructuring expense ....................................               --            34,000
  Terminated merger expenses ...............................               --             8,445
  Gain on sale of international operations .................               --           (20,141)
  Other ....................................................              612               194
Changes in operating assets and liabilities,
  net of effects of  acquisitions ..........................          (47,213)          (68,255)
                                                                    ---------         ---------
    Net cash and cash equivalents provided
     (used) by continuing operations .......................           47,857           (55,753)
Investing activities:

 Net cash used to fund acquisitions ........................          (44,391)          (85,461)
 Cash paid for merger charges ..............................          (25,887)           (3,068)
 Purchase of property and equipment ........................          (18,703)          (25,568)
 Additions to intangibles, net of acquisitions .............           (5,256)           (1,971)
 Net proceeds from sale of international operations ........               --            33,314
 Proceeds from sale of property and equipment ..............               --             4,095
 Other .....................................................             (416)             (338)
                                                                    ---------         ---------
    Net cash and cash equivalents used in
     investing activities ..................................          (94,653)          (78,997)
Financing activities:
  Capital contributions ....................................           27,401             2,383
  Net borrowings under line of credit ......................          (29,400)          153,000
  Proceeds from debt .......................................           82,705               188
  Repayment of debt ........................................          (12,045)           (4,094)
  Other ....................................................               75               (56)
                                                                    ---------         ---------
    Net cash and cash equivalents provided
     by financing activities ...............................           68,736           151,421
Cash paid for restructuring expenses .......................               --           (24,552)
Cash used in discontinued operations .......................           (1,453)           (8,772)
                                                                    ---------         ---------
Net increase (decrease) in cash and cash equivalents .......           20,487           (16,653)
Cash and cash equivalents at beginning of period ...........          127,397           215,801
Beginning cash and cash equivalents of immaterial
 pooling of interests entities .............................              491                --
                                                                    ---------         ---------

Cash and cash equivalents at end of period .................        $ 148,375         $ 199,148
                                                                    =========         =========
</TABLE>


See accompanying notes to unaudited consolidated financial statements.



                                       6
<PAGE>   7







                                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, 1997 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.

NOTE 2.  NEW ACCOUNTING PRONOUNCEMENTS

         As of January 1, 1998, the Company adopted Statement 130, Reporting
Comprehensive Income. Statement 130 establishes new rules for the reporting and
display of comprehensive income and its components; however, the adoption of
this Statement had no impact on the Company's net income or shareholders'
equity. Statement 130 requires unrealized gains or losses on the Company's
available-for-sale securities, which prior to adoption had been reported
separately in shareholders' equity, to be included in other comprehensive
income. Prior year financial statements have been reclassified to conform to
the requirements of Statement 130.

         During the first quarter of 1998 and 1997, total other comprehensive
income was immaterial to the consolidated financial statements.

         In June 1997, the FASB issued "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes standards
for the way that public business enterprises report information about operating
segments in annual financial statements, and requires that those enterprises
report selected information about operating segments in interim financial
reports issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major customers.
SFAS 131 is effective for financial statements for fiscal years beginning after
December 15, 1997. The adoption of SFAS 131 will have no impact on the Company's
results of operations, financial position or cash flows.

         The Emerging Issues Task Force ("EITF") issued guidance during 1997,
EITF 97-2, on the consolidation of physician practice revenues. Under EITF 97-2,
PPMs will be required to consolidate financial information of a physician
practice where the PPM acquires a "controlling financial interest" in the
practice through the execution of a contractual management agreement even though
the PPM does not own a controlling equity interest in the physician practice.
EITF 97-2 outlines six requirements for establishing a controlling financial
interest. The guidance continued in EITF 97-2 is effective for the Company's
financial statements for the year ended December 31, 1998. The Company does not
believe that the implementation of this guidance will have a material impact on
its financial condition, results of operations or cash flows.



                                       7
<PAGE>   8

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3.  INCOME TAXES

         Significant variations exist in the customary relationship between
income tax expense and pretax income. These variations exist primarily because
of the differences in the basis of foreign subsidiaries that have been sold for
income tax purposes.

NOTE 4.   ACQUISITIONS

         During the three months ended March 31, 1998, the Company's Contract
Medical Services Division acquired two physician groups. 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. Cash paid during the three months ended March
31, 1998 totaled $8.0 million related to these acquisitions. A total of $85.5
million in cash was paid during the three months ended March 31, 1998 primarily
related to deferred payments for 1997 acquisitions and the $8.0 million for 1998
acquisitions. The most significant deferred payment for 1997 acquisitions was a
$51.9 million payment for the acquisition of the Health Centers Division of Blue
Cross Blue Shield of Massachusetts.

NOTE 5.  EARNINGS (LOSS) PER COMMON SHARE

         The earnings (loss) per common share outstanding computation is
calculated by dividing income available to common stockholders by the weighted
average number of common shares outstanding. For the computation of diluted
earnings (loss) per share, no incremental shares related to options are included
for the period ended March 31, 1998, since the shares would be antidilutive.

NOTE 6.  SALE OF INTERNATIONAL OPERATIONS

         The Company, through Caremark, had established home care and other
businesses in various international markets. The international operations are in
the process of being sold. The home infusion operations in Germany, the
Netherlands and Canada were sold to Fresenius A.G. during the first quarter of
1998. In addition, other international operations in Puerto Rico and Japan were
sold to various parties during the first quarter of 1998.

The net gain on the sale of these operations totaled $20.1 million.

         The Company sold its remaining operations in the Netherlands subsequent
to March 31, 1998 and expects to sell its remaining international operations,
the home infusion operations in the U.K., during 1998.

NOTE 7.  TERMINATED MERGER AND RESTRUCTURING

         On October 1, 1997, the Company announced that it entered into an
agreement to acquire America Service Group Inc. ("ASG") in a stock transaction
valued at approximately $59 million. On February 26, 1998, it was announced that
the merger agreement had been terminated by mutual consent of both parties and
that a release and settlement agreement had been executed. Due to the exchange
of confidential information, the settlement agreement contains non-competition
and non-solicitation provisions and provides that certain expenses and costs be
paid by the Company. Included in the pre-tax loss for the three months ended
March 31, 1998 are terminated merger costs totaling $8.4 million. These costs
primarily relate to the terminated merger with ASG.

         In addition, during the first quarter of 1998 the Company recorded a
pre-tax restructuring charge of $34.0 million that primarily relates to $24.0
million in corporate severance costs and $10.0 million in costs associated with
the closing of certain clinic operations.

NOTE 8.  CREDIT FACILITY

         On May 9, 1998 the Company obtained a commitment to restructure its
current $1.0 billion revolving credit facility. The restructured facility is
scheduled to be effective during the second quarter of 1998 and will be
apportioned as follows:

      i.    a one-year non-amortizing term loan in an aggregate principal amount
            of up to $300 million (the Company has an option to extend the term
            loan an additional two years as an amortizing term loan);

      ii.   a three-year non-amortizing term loan in an aggregate principal
            amount of up to $300 million; and 



                                       8
<PAGE>   9

      iii.  a three-year revolving credit facility in an aggregate principal
            amount of up to $400 million.


NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 9.   SUBSEQUENT EVENTS

     Effective April 1, 1998 the Company acquired the Tampa Bay Healthcare
Group, P.A. Tampa Bay Healthcare Group has 16 physicians and four locations in
the Hillsborough County area. The acquisition will be accounted for by the
purchase method of accounting.

     Effective May 11, 1998, the Company acquired Mid-America Medical Group
("MAMG"). MAMG has 53 primary care physicians operating in 15 locations in
DuPage and Cook Counties in Illinois. The MAMG clinics will be combined with the
Company's Glen Ellyn/Wheaton Clinic operations.

NOTE 10. CONTINGENCIES

     In June 1995, Caremark agreed to settle an investigation with the Office of
the Inspector General of the U.S. Department of Health and Human Services (the
"OIG") and the U.S. Department of Justice ("DOJ"), the Veterans Administration,
the Federal Employee Health Benefits Program ("FEHBA"), the Civilian Health and
Medical Program of the Uniformed Services ("CHAMPUS") and related state
investigative agencies in all 50 states and the District of Columbia (the "OIG
Settlement"). Under the terms of the OIG Settlement, which covered allegations
dating back to 1986, a subsidiary of Caremark pled guilty to two counts of mail
fraud -- one each in Minnesota and Ohio. The basis of these guilty pleas was
Caremark's failure to provide certain information to CHAMPUS and FEHBP,
federally funded healthcare benefit programs, concerning financial relationships
between Caremark and a physician in each of Minnesota and Ohio. The OIG
Settlement allows Caremark to continue participating in Medicare, Medicaid and
other government healthcare programs. In its agreement with the OIG and the DOJ,
Caremark agreed to continue to maintain certain compliance-related oversight
procedures. Should these oversight procedures reveal credible evidence of legal
or regulatory violations, Caremark is required to report such violations to the
OIG and DOJ. Caremark is, therefore, subject to increased regulatory scrutiny
and, in the event it commits legal or regulatory violations, Caremark may be
subject to an increased risk of sanctions or penalties, including
disqualification as a provider of Medicare or Medicaid services, which would
have a material adverse effect on the operating results and financial condition
of MedPartners. Caremark took an after-tax charge to discontinued operations of
$154.8 million in 1995 for these settlement payments, costs to defend ongoing
derivative, security and related lawsuits and other associated costs.
 
     In connection with the matters described above relating to the OIG
Settlement, Caremark is the subject of various non-government claims and may in
the future become subject to additional OIG-related claims. Caremark is the
subject of, and may be in the future subjected to, various private suits and
claims being asserted in connection with matters relating to the OIG Settlement
by Caremark's stockholders, patients who received healthcare services from
Caremark and such patients' insurers. The Company does not believe that the
above-referenced settlements or suits will materially affect its ability to
pursue its long-term business strategy. There can be no assurance, however, that
additional costs, claims and damages will not occur or that the ultimate costs
related to the settlements will not exceed estimates in the preceding
paragraphs. MedPartners cannot determine at this time what costs or liabilities
may be incurred in connection with future disposition of non-governmental claims
or litigation. Such additional costs or liabilities, if incurred, could have a
material adverse effect on the operating results and financial condition of
MedPartners.
 
     In May 1996, three home infusion companies, purporting to represent a class
consisting of all of Caremark's competitors in the alternate site infusion
therapy industry, filed a complaint against Caremark, Inc., Caremark
International Inc., and two other corporations in the United States District
Court for the District of Hawaii alleging violations of the federal antitrust
laws, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the
federal antitrust laws and California's unfair business practices statute. The
complaint seeks unspecified treble damages, attorneys' fees and expenses. The
Company intends to defend this case vigorously. Although management believes,
based on information currently available, that the ultimate resolution is not
likely to have a material adverse effect on the operating results and financial
condition of the Company, there can be no assurance that the ultimate resolution
of the matter, if adversely determined would not have a material adverse effect
on the operating results and financial condition of the Company.
 
     In March 1998, a group of 22 private payors filed an action against
Caremark Inc. and Caremark International Inc. seeking recovery for losses
allegedly suffered by the plaintiffs during the period 1986-1995 as a result of
an allegedly fraudulent scheme conceived and implemented by Caremark Inc. and
Caremark International Inc. to submit and cause other providers to submit
fraudulent claims for payment of healthcare benefits by the plaintiffs related
to Caremark's home infusion business. Caremark sold its home infusion business
in 1995. The plaintiffs allege that Caremark failed to disclose to the
plaintiffs the existence and nature of certain relationships that Caremark had
with various physicians and the fact that certain funds were paid to such
physicians without the plaintiffs' knowledge or approval. The action prays for
an unspecified amount in damages and for trebled damages under RICO and other
related fraud claims. Caremark intends to defend this lawsuit vigorously.
Although management believes, based on information currently available, that
the ultimate resolution of this matter is not likely to have a material adverse
effect on the operating results and financial condition of MedPartners, there
can be no assurance that the ultimate resolution of this matter, if adversely
determined, would not have a material adverse effect on the operating results
and financial condition of MedPartners.
 
     In late August 1994, certain patients of a physician who prescribed human
growth hormone distributed by Caremark and the sponsor of a health insurance
plan of one of those patients filed complaints against Caremark, employees of
Caremark and others in the United States District Court for the District of
Minnesota. The complaint alleged violations of the federal mail and wire fraud
statutes, RICO and the state consumer fraud statute, as well as conspiracy to
breach a fiduciary duty, negligence and fraud. The complaint sought unspecified
treble damages, and attorneys' fees and expenses. In July 1996, these plaintiffs
also filed a separate purported class action lawsuit in the Minnesota State
Court in the County of Hennepin against a subsidiary of Caremark alleging all of
the claims contained in the federal complaint and sought unspecified damages,
attorneys' fees and expenses and an award of punitive damages. In November 1996,
in response to a motion by the plaintiffs, the Court dismissed the United States
District Court cases without prejudice. On March 28, 1997, the Minnesota state
court lawsuit was dismissed with prejudice, which decision was affirmed by the
Minnesota Court of Appeals on November 4, 1997. On December 31, 1997, the
Minnesota Supreme Court denied plaintiffs' petition for further reconsideration.
This action is concluded because plaintiffs have no further avenue of appeal. In
July 1995, another patient of the same physician filed a separate complaint in
the District of South Dakota against the physician, Caremark and another
corporation alleging violations of the federal laws prohibiting payment of
remuneration to induce referral of Medicare and Medicaid beneficiaries, the
federal mail fraud statutes and RICO. The complaint also alleges the intentional
infliction of emotional distress and seeks trebling of at least $15.9 million in
general damages, attorneys' fees and costs, and an award of punitive damages. In
August 1995, the parties agreed to a stay of all proceedings until final
judgment was entered in a criminal case that was then pending against this
physician. All charges against the physician have been dismissed. Caremark has
moved for the dismissal of the South Dakota case or transfer of the case to
Minnesota. Management believes, based on information currently available, that
the ultimate resolution of this matter is not likely to have a material adverse
effect on the operating results and financial condition of MedPartners.
 
     In December 1997, a class action was filed in the United States District
Court for the Central District of California. The action purports to be a class
action on behalf of all of the shareholders of Talbert which was acquired by
MedPartners in a cash tender offer transaction closed in September 1997 pursuant
to which each outstanding share of Talbert was acquired for $63 cash per share.
The action alleges that MedPartners violated Rule 14d-10 under the Securities
Exchange Act of 1934, the so-called "all holder, best price" rule, by reason of
provisions in the employment agreements of two senior officers of Talbert, which
provided for a certain contingent payment under certain circumstances. The
complaint requests a class certification and claims damages and interest. The
defendants have filed a Motion to Dismiss this action on a number of grounds,
asserting that the complaint fails to state a claim upon which relief can be
granted. Although management believes, based on information currently available,
that the ultimate resolution of this matter is not likely to have a material
adverse effect on the operating results and financial condition of MedPartners,
there can be no assurance that the ultimate resolution of the matter, if
adversely determined, would not have a material adverse effect on the operating
results and financial condition of MedPartners.
 
     On January 7, 1998, MedPartners issued a press release announcing the
termination of its proposed merger with PhyCor, Inc. On that date, MedPartners
also issued another press release announcing certain fourth quarter 1997
charges and negative earnings estimates, which have since been revised
downward. On January 8, 1998, there was a decline in the market prices for
MedPartners' publicly traded securities. Since then, certain persons claiming
to be stockholders of MedPartners have filed complaints in either state or
federal court against MedPartners and certain officers and directors of
MedPartners. To date, there are two state court actions and 14 federal court
actions, all filed in Birmingham, Alabama. In each of these lawsuits, the
plaintiff purports to represent a class and generally alleges violations of the
Securities Exchange Act of 1934, fraud and various state law claims in
connection with the public disclosure by MedPartners of the termination of the
PhyCor merger and the fourth quarter 1997 charges and earnings estimates. Four
of the lawsuits, one filed in the Circuit Court of Jefferson County, Alabama,
and three filed in the United States Federal Court for the Northern District of
Alabama, were filed against MedPartners and certain of its officers and
directors, purportedly on behalf of all persons who purchased MedPartners'
Threshold Appreciation Price Securities(TM) in the offering occurring on or
about September 16, 1997. The state complaint also asserts claims under
Sections 11 and 15 of the Securities Act of 1933, as well as Sections
8-6-17(a)(2) and 8-6-19 of the Alabama Code. Collectively, these complaints
seek class certification, damages and interest, as well as costs and expenses.
MedPartners' management believes that it and MedPartners have acted properly
throughout and intend to defend each of these cases vigorously. All of these
cases are in the preliminary stages, and their ultimate resolution cannot be
known at this time. Therefore, there can be no assurance that the ultimate
resolution of these matters will not have a material adverse effect on the
operating results and financial condition of MedPartners.
 
     Beginning in September 1994, Caremark was named as a defendant in a series
of lawsuits added to a pending group of actions (including a class action)
brought in 1993 under the antitrust laws by local and chain retail pharmacies
against brand name pharmaceutical manufacturers, wholesalers and prescription
benefit managers other than Caremark. The lawsuits, filed in federal district
courts in at least 38 states (including the United States District Court for the
Northern District of Illinois), allege that at least 24 pharmaceutical
manufacturers provided unlawful price and service discounts to certain favored
buyers and conspired among themselves to deny similar discounts to the
complaining retail pharmacies (approximately 3,900 in number). The complaints
charge that certain defendant prescription benefit managers, including Caremark,
were favored buyers who knowingly induced or received discriminatory prices from
the manufacturers, in violation of the Robinson-Patman Act. Each complaint seeks
unspecified treble damages, declaratory and equitable relief, and attorneys'
fees and expenses. All of these actions have been transferred by the Judicial
Panel for Multidistrict Litigation to the United States District Court for the
Northern District of Illinois for coordinated pretrial procedures. Caremark was
not named in the class action. In April 1995, the Court entered a stay of
pretrial proceedings as to certain Robinson-Patman Act claims in this
litigation, including the Robinson-Patman Act claims brought against Caremark,
pending the conclusion of a first trial of certain of such claims brought by a
limited number of plaintiffs against five defendants not including Caremark. On
July 1, 1996, the district court directed entry of a partial final order in the
class action approving an amended settlement with certain of the pharmaceutical
manufacturers. The amended settlement provides for a cash payment by the
defendants in the class action (which does not include Caremark) of
approximately $351.0 million to class members in settlement of conspiracy claims
as well as a commitment from the settling manufacturers to abide by certain
injunctive provisions. All class action claims against non-settling
manufacturers as well as all opt out and other claims generally, including all
Robinson-Patman Act claims against Caremark, remain unaffected by the
settlement. The district court has scheduled a trial of the remaining class
action claims for the fall of 1998. It is expected that trials of the remaining
individual conspiracy claims will also precede the trial of any Robinson-Patman
Act claims. The Company intends to defend these cases vigorously. Although
management believes, based on information currently available, that the ultimate
resolution of this matter is not likely to have a material adverse effect on the
operating results and financial condition of the Company, there can be no
assurance that the ultimate resolution of this matter, if adversely determined,
would not have a material adverse effect on the operating results and financial
condition of the Company.

     Although the Company cannot predict with certainty the outcome of
proceedings described above, based on information currently available,
management believes that the ultimate resolution of such proceedings,
individually and in the aggregate, is not likely to have a material adverse
effect on the Company.
 
     The Company is party to various other commitments, claims and routine
litigation arising in the ordinary course of business. Management does not
believe that the result of such commitments, claims and litigation, individually
or in the aggregate, will have a material adverse effect on the Company's
business or its results of operations, cash flows or financial condition.



                                       9
<PAGE>   10



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

GENERAL

         MedPartners is one of the largest healthcare companies in the United
States, with net revenue of approximately $1.7 billion for the three months
ended March 31, 1998. The Company operates three separate business divisions:
Physician Practice Services, Pharmaceutical Services and Contract Medical
Services. The Physician Practice Services Division is larger than any other
physician practice management company ("PPM") in the United States, based on
revenues in that business of approximately $3.0 billion for the year ended
December 31, 1997 ($0.9 billion for the three months ended March 31, 1998). The
Pharmaceutical Services Division operates one of the largest independent PBM and
therapeutic pharmaceutical services programs in the United States, with revenues
of approximately $0.6 billion for the three months ended March 31, 1998. The
Contract Medical Services Division operates one of the largest hospital-based
physician management services and one of the largest corrections and government
services managed care businesses, with combined revenues of approximately $0.2
billion for the three months ended March 31, 1998.

         The Company's Physician Practice Services Division 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. MedPartners also affiliates with physicians who seek greater
efficiencies in operations of traditional fee-for-service practices. The Company
contracts with health maintenance organizations (and other third-party payors
that compensate the Company and its affiliated physicians on a prepaid basis
(collectively, "HMOs")), hospitals and outside providers on behalf of its
affiliated physicians. These relationships provide physicians with the
opportunity to operate under a variety of payor arrangements.

         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 equity, 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 both the management of their practices by the Company and the
clinical independence of the physicians.

         The Company's Pharmaceutical Services business includes prescription
benefit management ("PBM") and other therapeutic pharmaceutical services. The
PBM manages programs for plan sponsors throughout the United States, including
corporations, insurance companies, unions, government employee groups and
managed care organizations. The Company dispenses an average of 44,000
prescriptions daily through its three mail service pharmacies and manages
patients' immediate prescription needs through a network of approximately 53,000
retail pharmacies. The Company's therapeutic pharmaceutical services are
designed to meet the healthcare needs of individuals with certain chronic
diseases or conditions. These services include the design, development and
management of comprehensive programs comprising drug therapy, physician support
and patient education. The Company currently provides therapies and services for
individuals with such conditions as hemophilia, growth disorders, immune
deficiencies, cystic fibrosis and multiple sclerosis. The Company is in the
process of integrating pharmaceutical service programs with the PPM business by
leveraging the existing pharmaceutical services core competencies in pharmacy
management, purchasing, and disease state management.

         The Contract Medical Services Division organizes and manages physicians
and other healthcare professionals engaged in the delivery of emergency,
radiology and teleradiology services, primary care and temporary staffing and
support services. Through its Team Health subsidiary the Company provides these
services to hospitals, clinics and managed care organizations, and the Company's
Government Services unit provides these services to correctional facilities,
Department of Defense facilities and government-affiliated physician groups
throughout the United States. The Division also provides occupational health
services to corporate industrial clients. Under contracts with hospitals and
other clients, the Contract Medical Services Division identifies and recruits
physicians and other healthcare professionals for admission to a client's
medical staff and coordinates the ongoing scheduling of staff physicians and
other healthcare professionals who provide clinical coverage in designated areas
of care.


                                       10
<PAGE>   11

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

RESULTS OF OPERATIONS

         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 other entities accounted for as
additional poolings of interests. The following table sets forth the earnings
summary by service area for the periods indicated. (Operating income (loss)
represents earnings (loss) before interest and income taxes and excludes
terminated merger expenses, restructuring expense and gains on sale of
international operations):

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED
                                                                  MARCH 31,
                                                          1997               1998
                                                        ---------          ---------
                                                               (in thousands)
             <S>                                        <C>                <C>      
             Physician Practice Services
                 Net revenue                            $ 674,491          $ 886,231
                 Operating income (loss)                   38,944            (25,003)
                 Margin                                      5.77%             (2.82)%
             Pharmaceutical Services

                 Net revenue                            $ 591,879          $ 620,226
                 Operating income                          32,865             35,389
                 Margin                                      5.55%              5.71%

             Contract Medical Services
                 Net revenue                            $ 190,272          $ 211,898
                 Operating income                          16,831             14,119
                 Margin                                      8.85%              6.66%

             International
                 Net revenue                            $  25,291          $  24,742
                 Operating income (loss)                     (334)               122
                 Margin                                     (1.32)%             0.49%

             Corporate Services
                 Operating (loss)                       $  (6,674)         $ (10,532)
                 Percentage of total net revenue            (0.45)%            (0.60)%
</TABLE>

Physician Practice Management Services

         The Company's PPM revenues have increased over the first quarter of
1997 primarily due to growth in prepaid enrollment, existing practice growth and
new practice affiliations during the last three quarters of 1997 (primarily
Talbert Medical Management Holdings Corporation, Aetna U.S. Healthcare's
physician practice management business and the Health Centers Division of Blue
Cross and Blue Shield of Massachusetts). 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:




                                       11
<PAGE>   12



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

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED
                                                      MARCH 31,
                                              -------------------------
                                                1997            1998
                                              --------        --------
             <S>                              <C>             <C>     
             Prepaid healthcare ......        $416,715        $563,765
             Fee-for-service .........         253,986         322,466
             Other ...................           3,790              --
                                              --------        --------
             Net Revenue .............        $674,491        $886,231
                                              ========        ========
</TABLE>

         From the first quarter of 1997 to the first quarter of 1998, prepaid
revenues increased 35%. Approximately 78% of the increase in prepaid revenues
relates to acquisitions made during the last three quarters of 1997 (primarily
Talbert Medical Management Holdings Corporation and the Health Centers Division
of Blue Cross and Blue Shield of Massachusetts). The remaining increase
primarily relates to additional institutional risk assumed.

         During the fourth quarter of 1997, the PPM service area began the
process of restructuring and reorganization which included practice
disassociations, site closings, physician and staff reductions and systems
standardization and conversions. As a part of the restructuring process, the
West Coast operations were restructured into three regions: Southern California,
Northwest (Idaho, Oregon, and Washington) and Southwest (Arizona, New Mexico,
Oklahoma, Texas and Utah). Additionally, the Company moved to strengthen the
financial capability of its West Coast operations, internalize its actuarial
capabilities to enhance risk management functions and strengthen the managed
care contracting process. This restructuring process has continued in the first
quarter of 1998, resulting in a $10.0 million restructuring charge related to
the closing of certain clinic operations.

         The operating loss for the first quarter of 1998 was $25.0 million,
compared to operating income of $38.9 million for the same period of 1997.
However, the first quarter 1998 operating loss is a substantial improvement from
the fourth quarter 1997 operating loss of $281.2 million for the PPM division.
The most significant component of the first quarter 1998 operating loss is
attributable to the negative performance in the PPM's Southern California
operations.




                                       12
<PAGE>   13





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

Pharmaceutical Services

         Pharmaceutical Services revenues continue their growth trend in the
first quarter of 1998. This growth is entirely internal and has not been
supplemented by acquisitions. Key factors contributing to this growth include
higher PBM claim volume from high customer retention, penetration of retained
customers, new contracts, drug cost inflation, and increased revenue in the
multiple sclerosis and hemophilia therapy lines. The preponderance of
Pharmaceutical Services revenue is earned on a fee-for-service basis through
contracts covering one to three-year periods. Revenues for selected types of
services are earned based on a percentage of savings achieved or on a
per-enrollee or per-member basis.

         Operating income growth in the first quarter of 1998 was 7.8%. Margins
increased from 5.6% in the first quarter of 1997 to 5.7% in the first quarter of
1998. The operating margin increase in the first quarter of 1998 is due
primarily to operational improvements and cost containment programs partially
offset by higher drug acquisition costs and a shift toward lower margin
products.

Contract Medical Services

         The Contract Medical Services Division includes Team Health, which
manages one of the largest hospital-based physician groups in the country, and
Government Services, one of the largest correctional and government services
managed care delivery businesses. These groups produced combined contract
medical services revenue of $211.9 million in the first quarter of 1998. Team
Health 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 throughout
the United States. Government Services provides similar services to medical
facilities at correctional institutions and Department of Defense facilities.
Operating income has decreased primarily due to the absorption by the division
of certain overhead costs from InPhyNet corporate operations previously absorbed
by the corporate division. Also contributing to the decrease are some unusually
large utilizations of services and losses on a large new contract in
correctional medical services ("Correctional Care"). It is anticipated that the
losses on this contract will be reduced in future periods.

         Team Health. Team Health is currently affiliated with more than 2,300
physicians in 30 states. As of March 31, 1998, Team Health operates under 369
hospital-based contracts compared to 351 contracts at March 31, 1997. Team
Health's net revenue has increased $13.6 million (8.5%) over the first quarter
of 1997 as a result of the increase in contracts.

         Government Services. Government Services currently has 1,977 clinical
employees, including 126 affiliated physicians working in 56 correctional
facilities in 18 states with approximately 61,564 globally capitated lives,
making the Company the nation's second largest provider of Correctional Care.
The contracts with correctional facilities are concentrated mainly on the East
Coast (from Florida to Vermont), the Midwest, Colorado and Nevada. Another 73
physicians work in 13 military facilities, covering 300,000 annual patient
visits ("Military Services"). The revenues under the Correctional Care contracts
are generally capitated while some of the Military Services contracts reimburse
the Company on an hourly basis. Government Services revenue has increased $8.1
million (26.8%) over the first quarter of 1997, primarily as a result of
Correctional Care contract growth. The Company obtained 12 contracts from March
31, 1997 through March 31, 1998, and increased globally capitated lives from
42,530 to 61,564 during the same period.

International

         The Company, through Caremark, had established home care and other
businesses in various international markets. The international operations are in
the process of being sold. The home infusion operations in Germany, the
Netherlands and Canada were sold to Fresenius A.G. during the first quarter of
1998. In addition, other international




                                       13
<PAGE>   14



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

operations in Puerto Rico and Japan were sold to various parties during the
first quarter of 1998. The net gain on the sale of these operations totaled
$20.1 million.

         The Company sold its remaining operations in the Netherlands subsequent
to March 31, 1998 and expects to sell its remaining international operations,
the home infusion operations in the U.K., during the remainder of 1998.

RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1998 AND 1997

         For the three months ended March 31, 1998, net revenue was $1,743.1
million, compared to $1,481.9 million for the same period in 1997, an increase
of 17.6%. The increase in net revenue primarily resulted from various increases
in PPM, PBM and Contract Medical Services as discussed above.

         Net loss for the first quarter of 1998 was $25.7 million, as compared
to net income of $44.4 million for the same period of 1997. Included in the net
loss for the first quarter of 1998 are several one-time items. These items
include $34.0 million of restructuring expenses, $8.4 million of terminated
merger expenses and a gain on the sale of international operations of $20.1
million. Net loss from operations excluding these non-recurring items is $7.4
million. The restructuring expense of $34.0 million relate primarily to $24.0
million in corporate severance costs and $10.0 million in costs associated with
the closing of certain clinic operations. The terminated merger expenses of $8.4
million relate primarily to the terminated merger with America Service Group
Inc.

         Future levels of operating income are dependent upon general economic
conditions, including competitive pressures on sales and profit margins, and
other factors beyond the Company's control. Management has considered these
factors in reaching its conclusion that it is more likely than not that future
taxable income will be sufficient to utilize certain net operating loss
carryforwards and other temporary differences prior to their expiration.

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.

         There are various legal matters which, if materially adversely
determined, could have a material adverse effect on the Company's operating
results and financial condition. 

LIQUIDITY AND CAPITAL RESOURCES

         As of March 31, 1998, the Company had working capital of $183.2
million, including cash and cash equivalents of $199.1 million. For the first
three months of 1998, cash used by operations was $55.8 million compared to cash
flows from operations of $47.9 million for the same period of 1997.

         For the three months ended March 31, 1998 and 1997, the Company
invested cash of $85.5 million and $44.4 million, respectively, in acquisitions
of the assets of physician practices, and $25.6 million and $18.7 million,
respectively, in property and equipment. During the three months ended March 31,
1998 and 1997, the Company paid $3.1 and $25.9 million, respectively, in cash
for terminated merger costs and merger costs. During the three months ended
March 31, 1998, the Company paid $24.6 for restructuring expenses. These
expenditures were primarily funded by net incremental


                                       14
<PAGE>   15



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

borrowings of $149.1 million for the three months ending March 31, 1998 and net
incremental borrowings of $41.3 million and $27.4 million derived from capital
contributions for the same period of 1997. Investments in property and equipment
are anticipated to continue to be substantial uses of funds in future periods.

         On May 9, 1998 the Company obtained a commitment to restructure its
current $1.0 billion revolving credit facility. The restructured credit facility
is scheduled to be effective May 28, 1998 and will be apportioned as follows:

      i.    a one-year non-amortizing term loan in an aggregate principal amount
            of up to $300 million (the Company has an option to extend the term
            loan an additional two years as an amortizing term loan);
      ii.   a three-year non-amortizing term loan in an aggregate principal
            amount of up to $300 million; and
      iii.  a three-year revolving credit facility in an aggregate principal
            amount of up to $400 million.

         The Company's long-term 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, and available borrowings under the 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.














                                       15
<PAGE>   16



PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

         The following table indicates all unregistered sales of the Company's
Common Stock during the quarter ended March 31, 1998:

<TABLE>
<CAPTION>
TRANSACTION                   PURPOSE         DATE                     # OF SHARES        MARKET VALUE
----------------------    ----------------    ------------------     ---------------   -----------------
<S>                       <C>                 <C>                     <C>              <C>
IMHC Management, Inc.     Merger              January 2, 1998             4,148             $  95,000
Bay Area Primary Care     Acquisition         February 11, 1998          38,747             $ 428,639
</TABLE>


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

(a)      Exhibits

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

         (10)-1   Retirement Agreement, dated January 16, 1998, between 
                  MedPartners, Inc. and Larry R. House.
         (10)-2   Letter Agreement, dated January 19, 1998, between 
                  MedPartners, Inc. and Richard M. Scrushy.
         (10)-3   Letter Agreement, dated January 19, 1998, between 
                  MedPartners, Inc. and Michael Martin.
         (10)-4   Employment Agreement, dated March 18, 1998, between 
                  MedPartners, Inc. and Edwin M. Crawford.
         (27)     Financial Data Schedule

(b)      Reports on Form 8-K

         The Company's Current Report on Form 8-K filed January 9, 1998
         (relating to the termination of the PhyCor Merger Agreements; certain
         fourth quarter charges and estimates concerning fourth quarter earnings
         and 1998 operating results).

         The Company's Current Report on Form 8-K filed January 26, 1998
         (reporting the filing of certain class action lawsuits filed against
         the Company).

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











                                       16
<PAGE>   17


         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.   Dual capacity as duly authorized officer of the 
                             Registrant and principal financial officer of the
                             Registrant

Date:  May 15, 1998


























                                       17