<PAGE>
 
                ----------------------------------------------

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q

(Mark One)

[x]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934
     For the quarterly period ended March 31, 1999

                                      OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934
     For the transition period from ____________ to ____________

Commission file number: 0-27064


                           FIRST COMMONWEALTH, INC.
            (Exact name of registrant as specified in its charter)

           Delaware                               75-2154228
(State or other jurisdiction of                  (IRS employer
 incorporation or organization)               identification number)

             444 North Wells Street, Suite 600, Chicago, IL  60610
                   (Address of principal executive offices)

                                (312) 644-1800
             (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant has (1) 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.

Common Stock, par value $.001 per share, outstanding as of April 30, 1999:
3,730,135 shares

                ----------------------------------------------
<PAGE>
 
                           First Commonwealth, Inc.
                                   Form 10-Q
                     For the quarter ended March 31, 1999

                                     INDEX

                         PART I. FINANCIAL INFORMATION
                         -----------------------------
<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                          <C>
Item 1.   Financial Statements

          Consolidated Balance Sheets as of March 31, 1999
          and December 31, 1998.........................................     3

          Consolidated Statements of Income and Comprehensive Income 
          for the three months ended March 31, 1999 and 1998............     5

          Consolidated Statements of Cash Flows for the three
          months ended March 31, 1999 and 1998..........................     6

          Reconciliations of Net Income to Net Cash Provided by
          Operating Activities for the three months ended
          March 31, 1999 and 1998.......................................     7

          Notes to Consolidated Financial Statements....................     8

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

                          PART II.   OTHER INFORMATION
                          ----------------------------

Item 6.   Exhibits and Reports on Form 8-K..............................     13

Item 7A.  Quantitative and Qualitative Disclosures About Market Risk....     13


SIGNATURES..............................................................     14
</TABLE>


                  SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

          Certain statements included or incorporated by reference in this Form
10-Q under the caption "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Form 10-Q constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance, or achievements of the Company to be materially different
from any future results, performance, or achievements expressed or implied by
such forward-looking statements. Such factors include, among other things,
increased competition in the markets in which the Company operates; changes in
regulation affecting the Company; changes in the utilization of services;
changes in arrangements relating to payments to providers; the level of the
Company's indemnity enrollment and the related indemnity risk of indemnity
plans; the ability to integrate and successfully operate acquired businesses and
the risks associated with such businesses; the possible need for, and ability to
obtain if needed, financing on acceptable terms to finance the Company's growth
strategy; the ability of the Company to operate within the limitations imposed
by any such financing arrangements; and other factors referenced or incorporated
by reference in this Form 10-Q.

                                       2
<PAGE>
 
                         PART I. FINANCIAL INFORMATION
                         -----------------------------

Item 1.  Financial Statements
<TABLE>
<CAPTION>

First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
-----------------------------------------
(Dollars in Thousands)

ASSETS                                                    March 31, 1999   December 31, 1998
------                                                    --------------   -----------------
                                                              (Unaudited)
<S>                                                      <C>              <C>
CURRENT ASSETS:

 Cash and cash equivalents                                       $10,388             $ 6,189

 Short-term investments                                            7,510               4,824

 Accounts receivable, net of allowance
   of $414 at March 31, 1999 and $410 at
   December 31, 1998                                               3,683               4,942

 Other receivables                                                   471                 579

 Deposit under reinsurance agreement                                   2                   2

 Prepaid expenses                                                  2,145               2,734

 Deferred tax asset                                                1,390                 982
                                                                 -------             -------

   Total current assets                                           25,589              20,252
                                                                 -------             -------

PROPERTY AND EQUIPMENT, at cost                                    5,014               4,778

 Less - Accumulated depreciation                                  (3,238)             (3,034)
                                                                 -------             -------

   Property and equipment, net                                     1,776               1,744
                                                                 -------             -------

OTHER ASSETS:

 Investments                                                         771               3,076

 Restricted cash equivalents and government securities
   on deposit, at market                                           2,502               2,967

 Deposits and other                                                   36                  38

 Intangible assets, net                                            9,933               9,999
                                                                 -------             -------

   Total other assets                                             13,242              16,080
                                                                 -------             -------

   TOTAL ASSETS                                                  $40,607             $38,076
                                                                 =======             =======
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       3
<PAGE>


<TABLE>
<CAPTION>
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS - continued
------------------------------------------------------------------
(Dollars in Thousands)

LIABILITIES AND STOCKHOLDERS' EQUITY
                                              March 31, 1999   December 31, 1998
                                              --------------   -----------------
                                                 (Unaudited)
<S>                                           <C>              <C>
CURRENT LIABILITIES:

 Accounts payable - trade                            $   256             $   155

 Accounts payable - dental service providers           1,138               1,131

 Claims liability                                      1,919               1,669

 Accrued payroll and related costs                       935               1,129

 Other accrued expenses                                  697                 812

 Deferred subscriber revenue                           5,272               5,089

 Payable under reinsurance agreement                      60                  87

 Income taxes payable                                  1,119                 109

 Other current liabilities                                 0                   0
                                                     -------             -------

   Total current liabilities                          11,396              10,181

DEFERRED TAX LIABILITY - long-term                       196                 176
                                                     -------             -------
   Total liabilities                                  11,592              10,357
                                                     -------             -------

STOCKHOLDERS' EQUITY:

 Common stock ($.001 par value; 15,000,000 shares
   authorized, 3,727,900 shares at March 31, 1999
   and 3,684,525 shares at December 31, 1998 issued
   and outstanding)                                        4                   4

 Capital in excess of par value                       13,418              13,353

 Retained earnings                                    15,284              14,072

 Less 735 shares of common stock at March 31, 1999
   and at December 31,1998 held in treasury, at cost     (16)                (16)

 Accumulated other comprehensive income                  325                 306
                                                     -------             -------
   Total stockholders' equity                         29,015              27,719
                                                     -------             -------
   Total liabilities and stockholders' equity        $40,607             $38,076
                                                     =======             =======
</TABLE> 

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

                                       4
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
-------------------------------------------------------------------
(Dollars in Thousands, except per share data)(Unaudited)
<TABLE>
<CAPTION>


                                        For the three months ended:
                                        ------------------------------
                                        March 31, 1999  March 31, 1998
                                        --------------  --------------
<S>                                     <C>             <C>
SUBSCRIBER REVENUE

  Managed Care                                 $12,188         $11,686
  Indemnity/PPO                                  4,231           3,649
  Fee Income                                       319             280
                                               -------         -------

     Total Subscriber Revenue                   16,738          15,615
                                               -------         -------


BENEFIT COVERAGE EXPENSES

  Managed Care                                   7,241           7,337
  Indemnity/PPO                                  3,596           3,113
  Fee Income                                        --              --
                                               -------         -------

     Total Benefit Coverage Expenses            10,837          10,450
                                               -------         -------

GROSS MARGIN

  Managed Care                                   4,947           4,349
  Indemnity/PPO                                    635             536
  Fee Income                                       319             280
                                               -------         -------

     Total Gross Margin                          5,901           5,165

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE                           4,136           3,772
                                               -------         -------

  Operating income                               1,765           1,393
INTEREST INCOME, net                               182             144
                                               -------         -------

  Income before income taxes                     1,947           1,537

PROVISION FOR INCOME TAXES                         735             624
                                               -------         -------

NET INCOME                                     $ 1,212         $   913
                                               -------         -------
COMPREHENSIVE INCOME, net of tax:

  UNREALIZED GAINS ON SECURITIES:
   Unrealized holding gains arising during 
   period, net of taxes of $10                      16              --
  STOCK OPTION EXPENSE, recognized only
   for tax purposes                                 --             183
                                               -------         -------
 Other comprehensive income                         16             183
                                               -------         -------
COMPREHENSIVE INCOME                           $ 1,228         $ 1,096
                                               =======         =======

BASIC EARNINGS PER SHARE                         $0.33           $0.25

DILUTED EARNINGS PER SHARE                       $0.32           $0.24

</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       5
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
--------------------------------------------------------------------------------
(Dollars in Thousands)(Unaudited)
<TABLE>
<CAPTION>
                                                       For the three months ended:
                                                     --------------------------------
                                                     March 31, 1999   March 31, 1998
                                                     --------------   ---------------
<S>                                                  <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

    Cash received from subscribers                          $18,310          $15,787
    Cash paid to providers of care                           (6,505)          (6,797)
    Cash paid to employees, brokers and suppliers            (3,812)          (3,448)
    Claims paid                                              (3,393)          (3,098)
    Interest paid                                                 0                0
    Interest received                                           212               94
    Income taxes paid                                          (112)            (181)
    Cash transferred from (to) restricted funds                  50                0
                                                            -------          -------

       Net cash provided by operating activities              4,750            2,357
                                                            -------          -------

CASH FLOWS FROM INVESTING ACTIVITIES:

    Purchase of property and equipment, net                    (236)            (151)
    Purchase of short-term investments                       (2,677)               0
    Proceeds from long-term investments                       2,297                0
    Acquisition related cost                                      0                0
                                                            -------          -------

       Net cash used in investing activities                   (616)            (151)
                                                            -------          -------

CASH FLOWS FROM FINANCING ACTIVITIES:

    Issuance of common stock                                     65               14
    Principal payments on capital leases                          0                0
    Purchase of treasury stock                                    0               (1)
    Payments of preferred dividends                               0                0
                                                              -----            -----

       Net cash provided (used) in financing activities          65               13
                                                              -----            -----

       Net change in cash and cash equivalents                4,199            2,219

CASH AND CASH EQUIVALENTS,
    beginning of period                                       6,189            9,047
                                                             ------          -------

CASH AND CASH EQUIVALENTS,
    end of period                                           $10,388          $11,266
                                                            =======          =======
</TABLE>


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

                                       6
<PAGE>
 
First Commonwealth, Inc. and Subsidiaries
RECONCILIATIONS OF NET INCOME TO NET CASH PROVIDED BY
OPERATING ACTIVITIES 
--------------------------------------------------------------------------------
(Dollars in Thousands)(Unaudited)
<TABLE>
<CAPTION>

                                                                       For the three months ended:
                                                                     ------------------------------
                                                                     March 31, 1999  March 31, 1998
                                                                     --------------  --------------
<S>                                                                  <C>             <C>

Net income                                                                 $ 1,212         $   913

Adjustments to reconcile net income to net cash provided
by operating activities:

    Depreciation and amortization                                              270             235

    (Increase) decrease in assets:

       Accounts receivable, net                                              1,259            (368)

       Other receivables                                                       108             (31)

       Deposit under reinsurance agreement                                       0               0

       Prepaid expenses                                                        589             155

       Deferred tax asset                                                     (408)           (120)

       Restricted cash equivalents and government
           securities                                                          465              (5)

       Deposits and other                                                        3              14

    Increase (decrease) in current liabilities:

       Accounts payable - trade                                                101              (9)

       Accounts payable - dental service providers                               7             287

       Claims liability                                                        250              53

       Accrued payroll and related costs                                      (194)            159

       Other accrued expenses                                                 (115)            104

       Deferred subscriber revenue                                             183             408

       Payable under reinsurance agreement                                     (27)              0

       Income taxes payable                                                  1,027             413

    Increase in long-term liabilities:

       Long-term deferred tax liability                                         20             149
                                                                           -------         -------
    Net cash provided by operating activities                              $ 4,750         $ 2,357
                                                                           =======         =======
</TABLE>

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

                                       7
<PAGE>
 
                            FIRST COMMONWEALTH, INC.

                   Notes to Consolidated Financial Statements
                                 March 31, 1999


1.   Interim Financial Statements

     The accompanying consolidated financial statements include the accounts of
First Commonwealth, Inc., together with its subsidiaries and an affiliate
(collectively, the "Company").  All material intercompany transactions and
balances have been eliminated in consolidation.

     The consolidated financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission.  Certain notes and other information
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted from the interim
financial statements presented in this quarterly report on Form 10-Q in
accordance with such rules and regulations.  In the opinion of the Company's
management, the accompanying consolidated financial statements include all
adjustments, consisting only of normal recurring adjustments, necessary to state
fairly the financial position of the Company as of March 31, 1999, and the
results of its operations and cash flows for the periods indicated.  The results
of operations for the three months ended March 31, 1999 are not necessarily
indicative of the results to be expected for the full year.  The accompanying
consolidated financial statements should be read in conjunction with the
Company's financial statements and notes thereto included in the Company's
annual report on Form 10-K for the year ended December 31, 1998.

2.   Earnings Per Share

     Under SFAS No. 128, primary earnings per share is replaced by "Basic"
earnings per share ("EPS"), which excludes dilution and is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the period.  "Diluted" EPS, which is computed similarly
to fully diluted EPS, reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock.

     The following table reconciles the numerators (Net Income) and denominators
(Shares) of the basic and diluted earnings per share computations.

<TABLE>
<CAPTION>
                         Three Months Ended         Three Months Ended
                             March 31, 1999  EPS        March 31, 1998  EPS
                             --------------             -------------- 
<S>                      <C>                 <C>    <C>                 <C>
Net Income                       $1,212,000                 $  913,000
                                 ==========                 ==========
Basic Shares/EPS                  3,723,881  $0.33           3,638,953  $0.25
                                             =====                      =====
Effect of dilutive
common stock options                 46,946                     98,357
                                 ----------                 ----------
Diluted Shares/EPS                3,770,827  $0.32           3,737,310  $0.24
                                 ==========  =====          ==========  =====
</TABLE>

                                       8
<PAGE>
 
Item 2. Management's Discussion and Analysis of Financial Condition and Results
        of Operations

Results of Operations

     The following discussion should be read in conjunction with the attached
consolidated financial statements and notes thereto.

Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998

     Total subscriber revenue increased by $1.1 million, or 7.2%, to $16.7
million in the three months ended March 31, 1999 from $15.6 million in the three
months ended March 31, 1998. The $1.1 million increase was partially
attributable to increased enrollment in the Company's indemnity/PPO dental
plans, as well as price increases that went into effect in 1999. Managed care
revenue increased $502,000, or 4.3% to $12.2 million in the three months ended
March 31, 1999 from $11.7 million in the same period in 1998, primarily due to
price increases.  During the quarter ending March 31, 1999, approximately 30,000
members transferred out of a managed care product, which was at a relatively low
per member per month charge, into a fee income product. Indemnity/PPO revenue
increased $582,000 to $4.2 million in 1999 from $3.6 million in 1998, primarily
as a result of adding new indemnity/PPO plan members and price increases.

     Total gross margin increased by $736,000, or 14.2%, to $5.9 million in the
three months ended March 31, 1999 from $5.2 million in the three months ended
March 31, 1998. Total gross margin as a percentage of revenue was 35.3% in 1999
as compared to 33.1% in 1998. This percentage increase was the result of
improved gross margins on both the managed care and indemnity/PPO lines of
business. Managed care gross margin as a percentage of managed care revenue was
40.6% in 1999 as compared to 37.2% in 1998. The improved managed care gross
margin percentage was the result of the completion of transitioning the
Company's Illinois membership to the new higher gross margin "template plan"
line of products; the transfer of approximately 30,000 low gross margin members,
mentioned above, out of a managed care product to a fee income product;
transitioning lower gross margin business acquired in Missouri to the Company's
higher gross margin standard products; and price increases. The Company expects
the managed care gross margin percentage to remain fairly consistent with the
current level throughout the balance of 1999. The level of indemnity/PPO gross
margin as a percentage of indemnity/PPO revenue increased to 15.0% in 1999 from
14.7% in 1998. This increase in indemnity/PPO gross margin percentage is mainly
the result of an increase in pricing under the Company's indemnity/PPO
contracts. The Company expects the indemnity/PPO gross margin percentage to
remain fairly consistent with the current level throughout the balance of 1999.
In addition, overall gross margin percentages will vary if the mix of the
Company's managed care and indemnity/PPO business changes from current levels.

     SG&A expenses increased by $364,000, or 9.7%, to $4.1 million for the three
months ended March 31, 1999 from $3.8 million in the three months ended March
31, 1998. As a percentage of revenue, SG&A expenses increased to 24.7% for 1998
from 24.2% for 1997. This increase is attributable to new staffing hires,
primarily in sales and marketing, salary adjustments, and the phase-in of
premium taxes that were effective July 1, 1998. The Company expects SG&A as a
percent of revenue to remain relatively constant in 1999 and management expects
it to decline thereafter, as the Company continues to achieve economies of scale
and operating efficiencies. Included in the SG&A total is $66,000, for the three
months ended in March 31, 1999 and 1998, for the amortization of goodwill
associated with the acquisitions.

     Operating income increased by $372,000, or 26.7%, to $1.8 million for the
three months ended March 31, 1999 from $1.4 million in the three months ended
March 31, 1998. As a percentage of revenue,

                                       9
<PAGE>
 
operating income was 10.5% in 1999 and 8.9% in 1998. The Company expects its
operating income percentage to remain relatively constant throughout 1999.

     The effective tax rate for the three months ended March 31, 1999 was 37.8%
compared to 40.6% for the three months ended March 31, 1998. The decline in
effective tax rate is primarily due to the purchase of federally tax exempt
municipal bonds purchased during the second half 1998 as well as the purchase of
United States Treasury Notes and Bills which are exempt from state tax. The
Company expects to continue to hold and/or purchase federally tax exempt
municipal bonds throughout 1999.

     Net income increased by $299,000, or 32.8%, to $1.2 million for the three
months ended March 31, 1999 from $913,000 for the three months ended March 31,
1998. Diluted earnings per share was $0.33 and $0.25 for the three months ended
March 31, 1998 and 1997, respectively.

Year 2000 Disclosure

     Many existing computer systems and applications abbreviate dates using only
two digits ("98") rather than four digits ("1998"). If not corrected, this
shortcut may cause problems when the century date "2000" occurs. On that date,
some computer operating systems and applications and embedded technology may
recognize the date as January 1, 1900 instead of January 1, 2000. If the Company
fails to correct any critical Year 2000 processing problems prior to January 1,
2000, the affected systems may either cease to function or produce erroneous
data, which could have material adverse operational and financial consequences.
Currently, the Company believes that the major risks associated with the
inability of systems and software to process Year 2000 data correctly include a
disruption in the operation of its core enterprise systems, telephony systems,
accounting and financial systems, and desktop and support systems. A failure of
such systems could materially and adversely affect the Company's results of
operations, financial position and cash flows.

     Throughout 1998 the Company had been actively working on its plan to
address year 2000 compliance. The plan consists of three phases. Phase 1, which
involved the assessment of the Company's internal systems, is completed. The
Company has found as a result of the assessment process that its core enterprise
systems have always contained the ability to store and process the full four-
digit year. Although this capability exists, several functional points of the
system have not fully utilized the capability. Phase 1 included the
identification of core business areas and processes, analysis of systems and
hardware supporting the core business areas and the prioritization of renovation
or replacement of systems and hardware that are not Year 2000 compliant.
Included in the assessment phase is an analysis of risk management factors such
as contingency plans and legal matters. The internal systems assessment process
of Phase 1 categorized internal systems into 4 functional areas: (1) Core
Enterprise System, (2) Telephony Systems, (3) Accounting and Financial Systems,
and (4) Desktop and Support Systems. The Core Enterprise System includes
computer systems that support key business functions such as billing, finance,
customer service, and network provider payments. Within each of these areas it
has been determined that the main suppliers of the systems utilized by the
Company are able to provide year 2000 compliant releases. The acquisition of the
available releases will be accomplished either through existing support
arrangements or through the purchase of upgraded products. A fifth area that
required additional investigation was the assessment of the Company's major
third party relationships outside of the information technology arena.

                                       10
<PAGE>
 
     Phase 2, scheduled for completion by July 1999, consists of the conversion
or replacement of selected platforms, applications, databases and utilities.
Phase 3, scheduled for the second and third quarters of 1999, includes the
testing, verifying and validating the renovated or replaced platforms,
applications, databases and utilities.

     The Company's current schedule is subject to change depending on
developments that may arise through unforeseen circumstances, and through
execution of the Company's compliance efforts. The Company is dependent on its
vendors for compliant hardware, systems and applications and upgrades by
experts, both internal and external, and the availability of critical resources
with the requisite skill sets. The Company's ability to meet its target dates is
dependent upon the timely provision of necessary upgrades and modifications by
its suppliers and internal resources. In addition, the Company cannot guarantee
that third parties on whom it depends for essential services (such as utilities,
telecommunications operators, etc.) will convert their critical systems and
processes in a timely manner. Failure or delay by any of these parties could
significantly disrupt the Company's business. The Company's contingency plans
will address mechanisms for preventing or mitigating interruption caused by such
third parties.

     The Company believes that it will cost approximately $80,000 to upgrade and
verify all critical areas identified. This cost includes the purchase of
required software and hardware as well as outside contracting services. The
Company has already secured the necessary resources for the remainder of 1999.

     Based on the Company's current schedule for completion of Year 2000 tasks,
the Company believes that its planning is adequate to secure Year 2000 readiness
of its critical systems. Nevertheless, management cannot provide assurance that
its plans to achieve Year 2000 compliance will be successful or that the cost of
its efforts will not differ materially from estimates, as each is subject to
various risks and uncertainties, many of which are described above. Accordingly,
the Company's goal is to develop business continuity and contingency plans in
1999 to address high-risk areas as they are identified. These plans are expected
to assess the potential for business disruption in various scenarios, and to
provide for key operational back-up, recovery and restoration alternatives.
However, if the Company, or third parties with whom it has significant business
relationships, fails to achieve Year 2000 readiness with respect to critical
systems, there could be a material adverse affect on the Company's results of
operations, financial position and cash flows.

     The Company's Year 2000 most reasonably likely worst case scenario may
involve interruption of data processing services and telecommunications services
and/or interruption of customer billing, operating and other information
systems. As part of its Year 2000 initiative, the Company is evaluating these
worst-case scenarios and is in the process of developing contingency and
business plans tailored for Year 2000-related occurrences. The contingency and
business contingency plans are expected to assess the potential for business
disruption in various scenarios, and to provide key operational back-up,
recovery and restorational alternatives.

     The Company's contingency plan initiatives include the following: personnel
to be on call during the Year 2000 change to monitor critical systems, 
telecommunications and other processes and to react promptly to facilitate 
repairs; back-up plans in the event of failure of information or 
telecommunications systems or other Year 2000 disruptions; identification of 
alternate suppliers and implementation of plans to be in place for third-party 
products/services that fail to meet Year 2000 compliance commitment schedules; 
and data retention and recovery procedures to be in place for customer and 
critical business data to provide backups with on-site as well as off-site data 
copies. The Company anticipates having these contingency plans in place before 
December 31, 1999.

                                       11
<PAGE>

     The above information, which contains statements that are "forward-looking"
within the meaning of the Private Securities Litigation Reform Act of 1995, is
based on the Company's current best estimates, which were derived using numerous
assumptions of future events, including the availability and future costs of
certain technological and other resources, third party modification actions and
other factors. Given the complexity of these issues and the possibility of
unidentified risks, actual results may vary materially from those anticipated
and discussed above. Specific factors that might cause such differences include,
among others, the availability and cost of personnel trained in this area, the
ability to locate and correct all affected computer codes, the timing and
success of remedial efforts of third party suppliers and similar uncertainties.

Liquidity and Capital Resources

     The Company's operating cash requirements for the three months ended March
31, 1999 have been met principally through operating cash flows. The primary
uses of cash have been for operating activities and capital investments in the
business. The Company believes that cash generated from operations will be
adequate to finance its anticipated operating needs for the foreseeable future.

     Cash flows from operating activities were $4.7 million and $2.4 million for
the three months ended March 31, 1999, and 1998, respectively. The Company
primarily receives premium payments in advance of disbursing managed care
dentist capitation payments and indemnity claims payments. Cash balances in
excess of current needs are invested in interest-bearing accounts or cash
equivalents. Cash flows from operations consist primarily of subscriber premiums
and investment income net of capitation payments to network dentists, claims
paid, brokers' commissions, general and administrative expenses and income
taxes.

     Cash used in investing activities was $616,000 and $151,000 for the three
months ended March 31, 1999 and 1998, respectively. The first three months of
1999 includes a net of $380,000 used to purchase short term investment grade
securities (securities which mature between 3 months and 12 months). Capital
expenditures were $236,000 for the three months ended March 31, 1999 for
computer hardware, software enhancements, and furniture, and $151,000 for the
three months ended March 31, 1998 for computer software enhancements.

     As of March 31, 1999, the Company had cash and cash equivalents of $10.4
million, short-term investments of $7.5 million, long term investments of $0.8
million, restricted cash of $2.5 million, and no long term debt outstanding. In
addition, the Company has a committed unsecured line of credit (the "Credit
Agreement") available which expires June 30, 1999, and to date has not been
executed and utilized. Upon execution of this Credit Agreement, the Company may
borrow up to $5 million at the rate of LIBOR plus one-half percent. To the
extent the Company makes acquisitions, a portion of the purchase price may be
financed through borrowings.

     Under applicable insurance laws of the states in which the Company conducts
business, the Company's subsidiaries operating in the particular state are
required to maintain a minimum level of net worth and reserves. The Company may
be required from time to time to invest funds in one or more of its subsidiaries
to meet regulatory requirements, or to expand its operations into new geographic
areas. In addition, applicable laws generally limit the ability of the Company's
subsidiaries to pay dividends to the extent that required regulatory capital or
surplus would be impaired.

Impact of Inflation

     The Company does not believe the impact of inflation has significantly
affected the Company's operations.

                                       12
<PAGE>
 
                          PART II. OTHER INFORMATION
                          --------------------------

Item 6. Exhibits and Reports on Forms 8-K

     (a) Exhibits:

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

               10.1        Amended and Restated Employment Agreement between the
                           Company and Christopher C. Multhauf dated as of
                           February 12, 1999

               10.2        Amended and Restated Employment Agreement between the
                           Company and David W. Mulligan dated as of February
                           12, 1999

               10.3        Amendment to Employment Agreement between the Company
                           and Gregory D. Stobbe dated as of February 12, 1999

               10.4        Amendment to Employment Agreement between the Company
                           and Mark R. Lundberg dated as of February 12, 1999

               10.5        Amendment to Employment Agreement between the Company
                           and Scott B. Sanders dated as of February 12, 1999

               11          Statement Regarding Computation of Earnings Per Share
                           (Included as Note 2 in Notes to Consolidated 
                           Financial Statements filed herewith)

               27          Financial Data Schedule

     (b) Reports on Form 8-K filed during the quarter ended March 31, 1999:

               None

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

     The Company has determined that its market risk exposures, which arise
primarily from exposures to fluctuations in interest rates, are not material to
its future earnings, fair value and cash flows.

                                       13
<PAGE>
 
                                   SIGNATURES


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

                              FIRST COMMONWEALTH, INC.
                                    (Registrant)


Date:  May 17, 1999           By:   /s/ Christopher C. Multhauf
                                    ----------------------------------- 
                                    Christopher C. Multhauf
                                    Chairman and Chief Executive Officer



Date:  May 17, 1999           By:   /s/ David W. Mulligan
                                    ----------------------------------- 
                                    David W. Mulligan
                                    President, Secretary and Chief Operating
                                    Officer



Date:  May 17, 1999           By:   /s/ Scott B. Sanders
                                    ----------------------------------- 
                                    Scott B. Sanders
                                    Chief Financial Officer and Treasurer 
                                    (Principal Financial and Accounting Officer)

                                       14
<PAGE>
 
                                 EXHIBIT INDEX
                                 -------------


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

10.1            Amended and Restated Employment Agreement between the Company
                and Christopher C. Multhauf dated as of February 12, 1999

10.2            Amended and Restated Employment Agreement between the Company
                and David W. Mulligan dated as of February 12, 1999

10.3            Amendment to Employment Agreement between the Company and
                Gregory D. Stobbe dated as of February 12, 1999

10.4            Amendment to Employment Agreement between the Company and 
                Mark R. Lundberg dated as of February 12, 1999

10.5            Amendment to Employment Agreement between the Company and 
                Scott B. Sanders dated as of February 12, 1999

11              Statement Regarding Computation of Earnings Per Share (Included 
                as Note 2 in Notes to Consolidated Financial Statements filed
                herewith)

27              Financial Data Schedule