<PAGE>   1
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                ----------------

                                    FORM 10-Q

[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 0-24276

                          FPA MEDICAL MANAGEMENT, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                  33-0604264
(STATE OR OTHER JURISDICTION OF          (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
 INCORPORATION OR ORGANIZATION)

                                ----------------

                                3636 NOBEL DRIVE
                                    SUITE 200
                               SAN DIEGO, CA 92122
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (619) 453-1000
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                                      NONE
                 (FORMER NAME, FORMER ADDRESS AND FORMER FISCAL
                       YEAR, IF CHANGED SINCE LAST REPORT)
                                ----------------

     INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS:

                                 [X] YES [ ] NO

     AS OF MAY 4, 1998 THERE WERE OUTSTANDING 47,549,187 SHARES OF THE
REGISTRANT'S COMMON STOCK, PAR VALUE $.002 PER SHARE.

================================================================================



<PAGE>   2
FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
INDEX


                                                                            PAGE
                                                                            ----


PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements
   Condensed Consolidated Balance Sheets at March 31, 1998 (unaudited)
     and December 31, 1997....................................................3
   Condensed Consolidated Statements of Operations (unaudited) for the
     three months ended March 31, 1998 and 1997...............................4
   Condensed Consolidated Statements of Cash Flows (unaudited) for the
     three months ended March 31, 1998 and 1997...............................5
   Notes to Condensed Consolidated Financial Statements.......................6

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


PART II.  OTHER INFORMATION

  Item 4.  Submission of Matters to a Vote of Security Holders................15
  Item 6.  Exhibits and Reports on Form 8-K...................................15

SIGNATURES....................................................................16



                                       2
<PAGE>   3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS [1]
(IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                               MARCH 31,     DECEMBER 31,
                                                                                 1998            1997
                                                                              -----------    ------------
                                                                              (UNAUDITED)
                           ASSETS
<S>                                                                           <C>            <C>         
Current assets:
  Cash and cash equivalents                                                   $    12,446    $     23,883
  Accounts receivable, net of allowance for uncollectible accounts                313,557         215,983
  Accounts receivable, other                                                       33,872          41,608
  Income taxes receivable                                                           3,448           5,320
  Prepaid expenses                                                                  7,463           7,664
  Deferred income tax asset                                                         1,582           1,174
                                                                              -----------    ------------
        Total current assets                                                      372,368         295,632
Property and equipment, net of accumulated depreciation                            70,298          59,933
Restricted cash and deposits                                                          511             500
Goodwill and intangibles, net of accumulated amortization                         537,183         466,007
Deferred income tax asset                                                          15,067           9,470
Other assets                                                                       15,125          16,161
                                                                              -----------    ------------
        Total                                                                 $ 1,010,552    $    847,703
                                                                              ===========    ============
            LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable and accrued expenses                                       $   120,979    $     77,180
  Claims payable, including incurred but not reported claims                      237,438         159,987
  Accrued payroll and related liabilities                                          16,625          11,942
  Other current liabilities                                                        20,066          31,631
  Accrued liability for professional liability claims, current portion                999             700
  Long-term debt, current portion                                                   9,409          12,379
                                                                              -----------    ------------
        Total current liabilities                                                 405,516         293,819
Long-term debt, net of current portion                                            336,551         322,873
Accrued liability for professional liability claims, net of current portion         3,996           2,800
Other long-term liabilities                                                        50,569          48,051
                                                                              -----------    ------------
        Total liabilities                                                         796,632         667,543

Stockholders' equity:
  Preferred stock, $.001 par value per share, 2,000,000 shares authorized,
    no shares outstanding                                                            --              --
  Common stock, $.002 par value, 98,000,000 shares authorized, 44,415,799
    and 46,411,651 shares issued and outstanding at December 31, 1997
    and March 31, 1998, respectively                                                   93              89
  Additional paid-in capital                                                      347,913         304,990
  Stock payable                                                                       539             573
  Due from stockholder                                                               (427)           (427)
  Accumulated deficit                                                            (134,198)       (125,065)
                                                                              -----------    ------------
        Total stockholders' equity                                                213,920         180,160
                                                                              -----------    ------------
        Total                                                                 $ 1,010,552    $    847,703
                                                                              ===========    ============
</TABLE>

            See notes to condensed consolidated financial statements.

[1]  These financial statements include the accounts of St. Joseph Medical
     Corporation for all periods presented.



                                       3
<PAGE>   4
FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) [1]
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                         --------------------------------
                                                         MARCH 31, 1998    MARCH 31, 1997
                                                         --------------    --------------
<S>                                                      <C>               <C>           
Managed care revenue                                     $      317,980    $      228,652
Fee-for-service revenue, net of contractual deductions           50,223            47,829
Management services revenue                                       8,769             8,084
Other operating revenue                                          15,262            10,312
                                                         --------------    --------------

Operating revenue                                               392,234           294,877

Medical services expense                                        312,632           212,943
                                                         --------------    --------------
                                                                 79,602            81,934

General and administrative expense                               64,524            67,553
Depreciation and amortization expense                             8,733             7,161
Merger, restructuring and other unusual charges                  15,460            36,834
                                                         --------------    --------------

Loss from operations                                             (9,115)          (29,614)

Other income (expense):
  Interest and other income                                         831             1,299
  Interest expense                                               (6,447)           (4,430)
                                                         --------------    --------------
        Total other expense                                      (5,616)           (3,131)
                                                         --------------    --------------
Loss before minority interests and income taxes                 (14,731)          (32,745)
Minority interests' share in net loss                              --                 102
Income tax benefit                                                5,598             8,110
                                                         --------------    --------------
Net loss                                                 $       (9,133)   $      (24,533)
                                                         ==============    ==============

Net loss per share - basic and dilutive                  $         (.20)   $        (0.60)
                                                         ==============    ==============

Weighted average shares outstanding - basic                  44,990,494        40,815,202
                                                         ==============    ==============
</TABLE>

            See notes to condensed consolidated financial statements.

[1]  These financial statements include the accounts of St. Joseph Medical
     Corporation for all periods presented.



                                       4
<PAGE>   5
FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) [1]
(IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                         THREE MONTHS ENDED
                                                                  --------------------------------
                                                                  MARCH 31, 1998    MARCH 31, 1997
                                                                  --------------    --------------
<S>                                                               <C>               <C>            
Cash flows from operating activities:
  Net loss                                                        $       (9,133)   $      (24,533)
  Adjustments to reconcile net loss
   to net cash used by operating activities:
   Depreciation and amortization expense                                   8,733             7,161
   Minority interests' share in net loss                                    --                (102)
   Changes in assets and liabilities, net
    of effects of acquisitions:
     Accounts and notes receivable                                       (88,272)          (30,026)
     Income taxes receivable/payable                                       1,873              --
     Capitation deposit                                                     --              (5,538)
     Deferred income taxes                                                (5,593)          (10,405)
     Accounts payable and accrued expenses                                22,849            16,080
     Claims payable, including incurred but not reported claims           68,106            27,242
     Accrued liability for professional liability claims                    (505)             (770)
     Accrued payroll and related liabilities                               3,315             8,309
     Prepaid expenses and other assets                                     2,318            (1,495)
     Other liabilities                                                   (16,038)              294
                                                                  --------------    --------------
               Total adjustments                                          (3,214)           10,750
                                                                  --------------    --------------
   Net cash used by operating activities                                 (12,347)          (13,783)
Cash flows from investing activities:
  Purchase of property and equipment                                      (6,909)           (4,254)
  Net payments to affiliate                                                 --                 (26)
  Net sale of marketable securities                                         --              24,950
  Cash acquired from acquisitions                                            493              --
  Other                                                                      (11)             --
                                                                  --------------    --------------
   Net cash provided (used) by investing activities                       (6,427)           20,670
                                                                  --------------    --------------
Cash flows from financing activities:
  Net proceeds from issuance of common stock                                --               2,500
  Redemption of common stock                                                --                 (50)
  Proceeds from exercise of stock options and warrants                       754             1,195
  Net borrowings under bank credit facilities                             15,000              --
  Proceeds from issuance of notes payable                                   --               8,176
  Payments on long-term debt                                              (8,422)          (16,343)
  Other                                                                        5               (13)
                                                                  --------------    --------------
   Net cash provided (used) by financing activities                        7,337            (4,535)
                                                                  --------------    --------------
Net increase (decrease) in cash and cash equivalents                     (11,437)            2,352
Cash and cash equivalents, beginning of period                            23,883            32,951
                                                                  --------------    --------------
Cash and cash equivalents, end of period                          $       12,446    $       35,303
                                                                  ==============    ==============

Supplemental cash flow information:
  Cash paid for interest                                          $        2,938    $        2,431
  Cash paid for income taxes                                                  46              --
  Effects of acquisitions:
   Fair value of assets acquired                                  $       86,426    $         --
   Liabilities assumed                                                   (44,785)             --
   Common stock issued in connection with acquisitions                   (42,134)             --
                                                                  --------------    --------------
   Net cash acquired from acquisitions                            $         (493)   $         --
                                                                  ==============    ==============
</TABLE>

            See notes to condensed consolidated financial statements.

[1]  These financial statements include the accounts of St. Joseph Medical
     Corporation for all periods presented.



                                       5
<PAGE>   6
FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     The condensed consolidated financial statements include the accounts of FPA
Medical Management, Inc. ("FPA"), its wholly owned subsidiaries and certain
affiliated professional corporations ("Professional Corporations") over which
FPA has a controlling financial interest. All material intercompany transactions
and balances have been eliminated in consolidation.

     In the opinion of management, the accompanying condensed consolidated
financial statements include all adjustments (consisting of normal recurring
items) necessary for a fair presentation of results for the interim periods
presented of FPA, its subsidiaries and certain Professional Corporations
(collectively, the "Company"). The results of operations for any interim period
are not necessarily indicative of results for the full year. The condensed
consolidated financial statements and footnote disclosures should be read in
conjunction with the audited consolidated financial statements and related notes
thereto filed with the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.

2.   BUSINESS COMBINATIONS


     The Company completed the acquisition of Avanti Health Systems of Texas,
Inc. and its affiliated professional corporations ("Avanti") effective January
1, 1998. The purchase price consisted of $4.0 million cash and the issuance of
1,402,123 shares of FPA common stock valued at approximately $18.9 million.
Avanti managed 20 health care clinics in Houston and Dallas, Texas and employed
approximately 60 physicians who served approximately 50,000 enrollees. The
acquisition was accounted for under the purchase method of accounting. The
excess of the purchase price over the estimated fair value of the acquired net
assets, which approximates $25.5 million, was recorded as goodwill and amortized
on a straight-line basis over 25 years.

     The Company completed the acquisition of Physicians Quality Care, Ltd.
("PQC") and Associates in Managed Care, Ltd. ("AMC") effective January 1, 1998.
The purchase price consisted of the issuance of 299,165 shares of FPA common
stock valued at approximately $4.0 million, as well as future contingent
consideration of up to a maximum number of shares of FPA common stock equal to
$5.0 million. The contingent consideration will be payable based on achievement
of certain performance criteria. AMC was affiliated with approximately 420
primary care physicians who provided services to approximately 27,000 enrollees.
PQC provided physician practice management services in the Chicago area. The
acquisition was accounted for using the purchase method of accounting. The
excess of the purchase price over the estimated fair value of the acquired net
assets, which approximates $8.6 million, was recorded as goodwill and amortized
on a straight-line basis over 25 years.

     The Company completed the acquisition of Emergency Treatment Associates,
Inc. ("ETA") effective February 17, 1998. The purchase price consisted of $3.0
million cash and the issuance of 142,288 shares of FPA common stock valued at
approximately $2.8 million, as well as future contingent consideration of $2.9
million. The contingent consideration will be payable, in shares of FPA common
stock or cash, based on achievement of certain performance criteria. ETA
provided contract management services to six hospitals in two states through
approximately 40 affiliated emergency department physicians. The acquisition was
accounted for using the purchase method of accounting. The excess of the
purchase price over the estimated fair value of the acquired net assets, which
approximates $12.6 million, was recorded as goodwill and amortized on a
straight-line basis over 25 years.

     The Company completed the acquisition of Orange Coast Managed Care
Services, Inc. ("OCMCS") and St. Joseph Medical Corporation ("SJMC") effective
March 20, 1998. The purchase price consisted of the issuance of up to 2,828,680
shares of FPA common stock valued at approximately $42.4 million. OCMCS provided
administrative management services to SJMC's IPA and medical group physicians in
Orange County, California. OCMCS and SJMC served approximately 120,000 managed
care enrollees through approximately 250 primary care physicians. The
acquisition of OCMCS was accounted for under the purchase method of accounting.
The merger with SJMC was accounted for as a pooling of interests. The excess of
the purchase price allocated to OCMCS over the estimated fair value of the
acquired OCMCS net assets, which approximates $18.1 million, was recorded as
goodwill and amortized on a straight-line basis over 25 years.



                                       6
<PAGE>   7
     The Company completed the acquisition of Meridian Medical Group, Inc.
("Meridian") and certain assets of the Meridian clinic sites effective April 1,
1998. The purchase price of Meridian consisted of the issuance of 1,051,770
shares of FPA common stock valued at approximately $16.8 million, $363,000 cash
and $3.6 million in notes payable, as well as future contingent consideration of
up to $5.0 million payable in cash, based on achievement of certain performance
criteria. The purchase price of the assets consisted of $2.5 million cash and up
to approximately $9.8 million in future capitation payment reductions. Meridian
was affiliated with approximately 65 physicians and provided services to
approximately 70,000 enrollees. The acquisition will be accounted for under the
purchase method of accounting. The excess of the purchase price over the
estimated fair value of the acquired net assets, which approximates $44.9
million, will be recorded as goodwill during the second quarter of 1998.
Amortization of the goodwill will be on a straight-line basis over 25 years.




                                       7
<PAGE>   8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS


     GENERAL. FPA is a national physician practice management company which
acquires, organizes and manages primary care physician practice networks and
provides contract management services to hospital-based emergency departments.
The Company provides primary and specialty care services to capitated managed
care enrollees and fee-for-service patients. As of March 31, 1998, the Company
was affiliated with approximately 7,900 primary care physicians (including
emergency department physicians), who provided services to approximately
1,416,800 enrollees of 61 health maintenance organizations ("HMOs") or other
prepaid health insurance plans (collectively, "Payors") in 29 states (including
the District of Columbia).

     Through its subsidiary, Sterling Healthcare Group, Inc. ("Sterling"), the
Company provides contract management and support services primarily to emergency
departments. As of March 31, 1998, the Company provided physician practice
management services on a contract basis to 137 emergency departments, one
radiology department, three correctional health care facilities and three health
care clinics located in 25 states. The Company contracts with approximately
1,700 physicians who provide certain medical services to approximately 1.85
million patients annually.

     FPA's relationships with its subsidiaries and affiliated Professional
Corporations, other providers of medical services and Payors (collectively, the
"FPA Network"), offer physicians the opportunity to participate more effectively
in managed care programs by organizing physician groups within geographic areas
to contract with Payors. FPA enhances physician practice management operations
by providing administrative functions necessary in a managed care environment.

     The Company derives substantially all of its operating revenue from (i) the
payments made by Payors to the Professional Corporations and certain of the
Company's subsidiaries for managed care medical services, (ii) fee-for-service
revenues for the performance of medical services, (iii) fee-for-service revenues
from emergency department medical services, and (iv) medical management services
revenue. The Company has two types of Payor contracts: contracts for both
inpatient and outpatient services ("global capitation" contracts) and those
limited to covered primary and specialty medical care ("professional capitation"
contracts). Under global capitation contracts, the Company receives a fixed
monthly amount per enrollee for which the Company is financially responsible to
provide the enrollees with all covered necessary inpatient and outpatient care.
Under professional capitation contracts, the Company receives a fixed monthly
amount per enrollee for which the Company is financially responsible to provide
the enrollee with all necessary covered primary and specialty medical care.
Additionally, under professional capitation contracts, the Company is generally
a party to shared risk arrangements with Payors which generally reward the
Company for the efficient utilization of hospital inpatient services. Under
these shared risk arrangements, the Company shares any surplus or, in some
cases, deficit, of amounts pre-established by the Payor in relation to inpatient
expense.

     RECENT DEVELOPMENTS. In March 1998, the Company assembled a new management
team when Stephen J. Dresnick, M.D., Herbert A. Wertheim, O.D., Douglas E.
Kerner and James A. Lebovitz were elected President and Chief Executive Officer,
Vice Chairman of the Board of Directors, Vice President, Treasurer and Acting
Chief Financial Officer, and Executive Vice President and General Counsel,
respectively. In May 1998, Jack Greenman was elected Executive Vice President.
Sol Lizerbram, D.O., and Kevin Ellis, D.O., will remain Chairman of the Board of
Directors and Executive Vice President - Chief Medical Officer, respectively. In
conjunction with these management changes, the Company is completing an
assessment of all regional operations and their respective contributions to the
Company's operational and financial performance. As a result of this
assessment, the Company expects that in the second quarter of 1998 it will
record a pre-tax charge for one-time non-recurring charges of up to
approximately $200 million, which are expected to consist of the following
items: approximately $125 million representing goodwill impairment; an
approximately $40 million write-down of shared risk and other receivables; and
approximately $35 million for additional severance payments, anticipated office
consolidation and other miscellaneous charges. Based upon the Company's current
assessment, management anticipates no additional restructuring charges in 1998.

     The Company's growth during the past three years has been primarily the
result of acquisitions. This growth has enabled the Company to acquire critical
mass in multiple geographic locations, to enter into multi-state and national
Payor contracts and to increase operating revenue from $340.8 million in 1995 to
$1.2 billion in 1997. Consistent with the focus of the Company's new management
team, the Company's strategy is to promote internal growth by continuing to
improve and integrate existing and recently acquired operations, to
institutionalize medical management "best practices" throughout the Company's
medical groups and affiliated physicians, and to make selected, primarily
in-market, acquisitions. The future success of the Company is largely dependent
on the ability of the Company to retain enrollees and to increase the number of
enrollees in the FPA Network. The retention and increase in enrollment may come
from (i) the delivery of high-quality, cost-effective health care through
enhanced medical management systems, (ii) the development and enhancement of
infrastructure in order to expand internal growth, (iii) the addition of
physicians to the FPA Network who currently serve enrollees of Payors in the FPA
Network or of new Payors added to the FPA Network, (iv) increased membership in
plans of Payors with which the Professional Corporations or subsidiaries of the
Company currently have contracts and whose



                                       8
<PAGE>   9
members are patients of physicians in the FPA Network or (v) through other
affiliation arrangements with Payors, physicians and other providers.

     Listed below is a summary of enrollees, primary care physicians (including
emergency department physicians), and emergency department business contracts
(including seven radiology, urgent care and correctional facility contracts) by
state at March 31, 1998.


<TABLE>
<CAPTION>
                                                              EMERGENCY
                                          PRIMARY CARE       DEPARTMENT
                          ENROLLEES        PHYSICIANS         CONTRACTS
                          ---------       ------------       ----------
<S>                     <C>               <C>                <C>
Alabama                        --              130                7
Arizona                   224,300              470                4
Arkansas                       --               30                2
California                434,100            1,650                2
Delaware                   13,600              100               --
Florida                   130,700              450               13
Georgia                    37,300              220                6
Hawaii                         --               10                1
Illinois                   28,200              130               10
Indiana                        --               40                3
Kentucky                   12,000              110                5
Louisiana                  13,300              190                7
Maryland                       --               90                4
Michigan                       --               90               13
Mississippi                    --              100                7
Missouri                    8,300              170               13
Nevada                     51,200              240               --
New Jersey                 54,500              890               --
New York                  153,000              780                2
North Carolina             32,100              220               11
Ohio                        1,000               40                5
Oklahoma                       --               10                1
Pennsylvania                   --              360                1
South Carolina                 --              160                3
Tennessee                      --               90                8
Texas                     194,400            1,070               13
Virginia                   14,600               40                2
Washington, D.C.           14,200               10               --
West Virginia                  --               10                1
                        ---------           ------            -----
    Total               1,416,800            7,900              144
                        =========           ======            =====
</TABLE>



                                       9
<PAGE>   10
RESULTS OF OPERATIONS

   The following tables set forth for the three months ended March 31, 1997 and
1998 selected financial data (in thousands) and selected financial data
expressed as a percentage of operating revenue.

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED MARCH 31,
                       -----------------------------------------------------------------------------------
                                         1998                                        1997
                       ---------------------------------------     ---------------------------------------
                        MANAGED       EMERGENCY                     MANAGED       EMERGENCY
                          CARE        DEPARTMENT                      CARE        DEPARTMENT
                        BUSINESS       BUSINESS       TOTAL         BUSINESS       BUSINESS       TOTAL
                       ----------     ----------    ----------     ----------     ----------    ----------
<S>                    <C>            <C>           <C>            <C>            <C>           <C>       
Operating revenue      $  344,511     $   47,723    $  392,234     $  258,870     $   36,007    $  294,877
Medical services
  expense                 276,195         36,437       312,632        186,435         26,508       212,943
General and
  administrative
  expense                  57,944          6,580        64,524         61,475          6,078        67,553
Depreciation and
  amortization              7,591          1,142         8,733          6,312            849         7,161
Merger,
  restructuring
  and other
  unusual charges          15,460           --          15,460         36,834           --          36,834
                       ----------     ----------    ----------     ----------     ----------    ----------
Income (loss)
  from operations         (12,679)         3,564        (9,115)       (32,186)         2,572       (29,614)
Other (income)
  expense                   5,575             41         5,616          3,109             22         3,131
                       ----------     ----------    ----------     ----------     ----------    ----------
Income (loss)
  before minority
  interests and
  income taxes            (18,254)         3,523       (14,731)       (35,295)         2,550       (32,745)
Minority interests'
  shares in net loss         --             --            --              102           --             102
Income tax
  benefit (expense)         6,937         (1,339)        5,598          8,742           (632)        8,110
                       ----------     ----------    ----------     ----------     ----------    ----------
Net income (loss)      $  (11,317)    $    2,184    $   (9,133)    $  (26,451)    $    1,918    $  (24,533)
                       ==========     ==========    ==========     ==========     ==========    ==========
</TABLE>

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED MARCH 31,
                       -----------------------------------------------------------------------------------
                                         1998                                        1997
                       ---------------------------------------     ---------------------------------------
                        MANAGED       EMERGENCY                     MANAGED       EMERGENCY
                          CARE        DEPARTMENT                      CARE        DEPARTMENT
                        BUSINESS       BUSINESS       TOTAL         BUSINESS       BUSINESS       TOTAL
                       ----------     ----------    ----------     ----------     ----------    ----------

<S>                    <C>            <C>           <C>            <C>            <C>           <C>   
Operating revenue           100.0%         100.0%        100.0%         100.0%         100.0%        100.0%
Medical services
  expense                    80.2%          76.3%         79.7%          72.0%          73.6%         72.2%
General and
  administrative
  expense                    16.8%          13.8%         16.5%          23.7%          16.9%         22.9%
Depreciation and
  amortization                2.2%           2.4%          2.2%           2.4%           2.3%          2.4%
Merger,
  restructuring
  and other
  unusual charges             4.5%           0.0%          3.9%          14.2%           0.0%         12.5%
                       ----------     ----------    ----------     ----------     ----------    ----------
Income (loss)
  from operations            (3.7)%          7.5%         (2.3)%        (12.3)%          7.2%        (10.0)%
Other (income)
  expense                     1.6%           0.1%          1.4%           1.2%           0.1%          1.1%
                       ----------     ----------    ----------     ----------     ----------    ----------
Income (loss)
  before minority
  interests and
  income taxes               (5.3)%          7.4%         (3.7)%        (13.5)%          7.1%        (11.1)%
Minority interests'
  shares in net loss          0.0%           0.0%          0.0%           0.0%           0.0%          0.0%
Income tax
  benefit (expense)           2.1%          (2.8)%         1.4%           3.4%          (1.7)%         2.8%
                       ----------     ----------    ----------     ----------     ----------    ----------
Net income (loss)            (3.2)%          4.6%         (2.3)%        (10.1)%          5.4%         (8.3)%
                       ==========     ==========    ==========     ==========     ==========    ==========
</TABLE>



                                       10
<PAGE>   11
MANAGED CARE BUSINESS


     OPERATING REVENUE: The Company's managed care business operating revenue
increased to $344.5 million for the three months ended March 31, 1998 from
$258.9 million for the three months ended March 31, 1997. The revenue growth is
primarily attributable to enrollment growth from acquisitions, internal growth
and new Payor contracts and, to a lesser extent, the transition of existing
Payor contracts from fee-for service to capitated arrangements. Revenue growth
was adversely impacted by a decrease in administrative support payments
(primarily related to the acquisition of medical groups and related health care
centers from a predecessor to Foundation Health Systems, Inc. consummated in
late 1996) from $12.7 million in the quarter ended March 31, 1997 to $6.5
million in the quarter ended March 31, 1998. Global and professional capitation
contract revenue represented 44.5% and 47.8%, respectively, for the three months
ended March 31, 1998, and 28.2% and 60.1%, respectively, for the three months
ended March 31, 1997, of managed care business operating revenue. The Company
generates fee-for-service revenue from the performance of medical services
through the Professional Corporations and certain subsidiaries. These revenues
are presented net of contractual deductions and represented $50.2 million or
3.9% and $47.8 million or 6.9% for the three months ended March 31, 1998 and
1997, respectively, of managed care business operating revenue. The decrease in
fee-for-service revenue as a percentage of managed care business operating
revenue is attributable to continued enrollment growth under capitation
arrangements compared to fee-for-service business. Management services revenue
for the three months ended March 31, 1998 was $8.8 million or 2.5% of managed
care business operating revenue compared to $8.1 million or 3.1% of such
operating revenue for the three months ended March 31, 1997. The percentage
decrease in management services revenue can be attributed to the increase in
total managed care business operating revenue combined with the relative
stability of management services revenue.

     MEDICAL SERVICES EXPENSE: Medical services expense for the three months
ended March 31, 1998 was $276.2 million or 80.2% of managed care business
operating revenue as compared to $186.4 million or 72.0% of such operating
revenue for the three months ended March 31, 1997. The percentage increase
resulted from reduced administrative support payments and increased medical
costs associated with membership under global capitation contracts. Pursuant to
these arrangements, the Company is responsible for all inpatient and outpatient
medical care (except in limited circumstances); the Company typically
experiences higher costs initially under these contracts than under professional
capitation contracts as it seeks to negotiate capitated contracts with hospitals
and outpatient medical specialists and control pharmacy costs. In areas,
particularly outside California, where the penetration of managed care is low,
the Company may experience delays in capitating these providers or higher than
anticipated rates for these services.

     GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense
including depreciation and amortization for the three months ended March 31,
1998 was $65.5 million or 19.0% of managed care business operating revenue as
compared to $67.8 million or 26.1% of such operating revenue for the comparable
period in 1997. The percentage decrease resulted from integration of acquired
companies, achievement of synergies and an increase in efficiencies.

     MERGER, RESTRUCTURING AND OTHER UNUSUAL CHARGES: During the three months
ended March 31, 1998, the Company recorded a charge to operating expenses of
$15.5 million for direct and other merger-related costs pertaining to the St.
Joseph Medical Corporation ("SJMC") merger transaction, which was accounted for
as a pooling of interests, and certain restructuring activities. Merger
transaction costs for the SJMC merger consist primarily of fees for investment
bankers, attorneys, accountants and other related charges. Restructuring costs
include severance of former executives, severance of SJMC employees terminated
due to consolidation of functions and exit costs associated with the SJMC
merger. A charge to operating expenses of $36.8 million was recorded during the
same period in 1997 for merger-related costs pertaining to the AHI Healthcare
Systems, Inc. ("AHI") merger transaction and related restructuring activities.
Merger transaction costs for the AHI merger consist primarily of fees for
investment bankers, attorneys, accountants and other related charges.
Restructuring costs included severance of terminated employees due to
consolidation of functions associated with the AHI merger.

     LOSS FROM OPERATIONS: For the three months ended March 31, 1998, the
managed care business of the Company generated a loss from operations of $12.7
million as compared to a loss from operations of $32.2 million for the three
months ended March 31, 1997. The reduction in managed care business loss from
operations resulted primarily from the reduction in merger, restructuring and
other unusual charges, as well as reduced general and administrative expense.
This reduction in expenses was offset by a decrease in administrative support
payments received in connection with certain acquisitions and increased medical
services expense as previously discussed.



                                       11
<PAGE>   12
EMERGENCY DEPARTMENT BUSINESS


     OPERATING REVENUE: Emergency department business operating revenue consists
of (i) gross patient revenue, net of contractual deductions, (ii) hospital
subsidy payments, (iii) flat-rate hospital contract revenue and (iv) non-patient
generated revenue. Emergency department business operating revenue increased to
$47.7 million for the three months ended March 31, 1998 from $36.0 million for
the three months ended March 31, 1997. The revenue growth can be primarily
attributed to the increase in hospital emergency department contracts.

     The Company's contractual arrangements with hospitals are primarily
fee-for-service contracts whereby hospitals generally agree, in exchange for the
Company's services, to authorize the Company and its contracted health care
professionals to bill and collect the professional component of the charges for
medical services rendered by such professionals. Fee-for-service contracts may,
depending on the hospital's patient volume and payor composition, involve the
payment of a subsidy to the Company by the hospital. During the three months
ended March 31, 1998 and 1997, 76.8% and 83.2%, respectively, of the Company's
emergency department business operating revenue was earned on a fee-for-service
basis.

     MEDICAL SERVICES EXPENSE: Medical services expense for the emergency
department business consists primarily of payments made to independent
contractor and employee physicians ("Physician Costs") and, to a lesser extent,
the costs of medical supplies, malpractice insurance and laboratory fees.
Medical services expense increased to $36.4 million for the three months ended
March 31, 1998 from $26.5 million for the three months ended March 31, 1997.
Physician Costs accounted for $34.4 million or 94.3% and $30.0 million or 94.3%
of emergency department business medical services expense for the three months
ended March 31, 1998 and 1997, respectively. The increase in medical services
expense is due primarily to the increase in the number of health care
professionals under contract, resulting from the increase in the number of the
Company's emergency department contracts, as well as negotiated increases in
fees paid to certain health care professionals. Medical services expense as a
percentage of emergency department business operating revenue was 76.3% for the
three months ended March 31, 1998 compared to 73.6% of such operating revenue
for the three months ended March 31, 1997.

     GENERAL AND ADMINISTRATIVE EXPENSE: General and administrative expense
including depreciation and amortization was $7.7 million or 16.2% of emergency
department business operating revenue for the three months ended March 31, 1998
as compared to $6.9 million or 19.2% of such operating revenue for the
corresponding period of the prior year. The decrease in general and
administrative expense as a percentage of emergency department business
operating revenue is primarily attributable to internal growth without added
administrative infrastructure and an increase in efficiencies.

     INCOME FROM OPERATIONS: For the three months ended March 31, 1998, the
emergency department business of the Company generated income from operations of
$3.6 million as compared to $2.6 million for the three months ended March 31,
1997. The increase in emergency department business income from operations for
the three months ended March 31, 1998, results primarily from the increase in
emergency department contracts, internal growth and reduction in operating
expenses as a percentage of emergency department business operating revenue
through increased efficiencies.


LIQUIDITY AND CAPITAL RESOURCES

     The Company requires capital primarily to develop physician networks,
acquire physician practices and establish an infrastructure in new regions as
well as in acquired practices. Capitation arrangements positively impact cash
flow if the Company has accepted claims payment responsibility, because the
Company generally receives capitation revenue prior to the provision of, and
payment for, medical services. In those arrangements where the Payor retains
claims payment responsibility, the Payor generally withholds a substantial part
of the capitation revenue in order to pay the claims on behalf of the Company;
thus the Company does not receive the benefit of cash flow for the withheld
funds.

     Shared risk arrangements negatively impact cash flow because settlements in
connection with these arrangements are typically not collected until
significantly after the end of the period in which they are accrued.
Fee-for-service revenues



                                       12
<PAGE>   13
also negatively impact cash flow as payment for services rendered is generally
not collected until 90 to 120 days after the service is provided.

     At March 31, 1998, the Company had cash, cash equivalents and marketable
securities of $12.4 million and a working capital deficit (current liabilities
in excess of current assets) of $33.1 million compared to cash, cash equivalents
and marketable securities of $23.9 million and working capital surplus of $1.8
million at December 31, 1997.

     The Company's decrease in cash and working capital was caused by negative
cash flow from operations as well as the effect of Payor contracts where the
Payor retains claims payments responsibility on behalf of the Company. Of the
Company's $97.6 million increase in accounts receivable, $71.0 million is
directly attributable to such Payor arrangements.

     Government health care receivables are recorded based on estimates of
payments that are ultimately collectible. Since these amounts are subject to
government audit and negotiation, amounts ultimately collected may vary from
current estimates. Sterling is in the final stages of negotiating a compliance
plan with certain Medicare carriers regarding issues raised by the Health Care
Financing Administration related to claims for services rendered by Sterling's
independent contractor physicians. As a result of this process, Sterling's
reimbursement for Medicare billings has been significantly delayed. As of March
31, 1998, Sterling had accrued approximately $12.0 million related to Medicare
receivables. While the Company believes that it will favorably resolve the
issues raised by the Medicare carriers, there can be no assurance that Medicare
payments to the Company will not be further delayed as a result of these
inquiries.

     During the three months ended March 31, 1998, non-operating sources of cash
include $15.0 million of advances, net of repayments, pursuant to the Credit
Agreement (as described below) and proceeds from the exercise of stock options
and warrants of approximately $754,000. Non-operating uses of cash include the
purchase of property and equipment for approximately $6.9 million and the
payment of approximately $8.4 million in long-term debt.

     The Company has a $215 million three-year revolving line of credit ("Line
of Credit") and a $100 million four and one-quarter year term loan ("Term Loan")
with BankBoston, N.A., as administrative agent for the lenders thereto dated
June 30, 1997, as amended from time to time (collectively, the "Credit
Agreement"). Thirty million dollars of the proceeds of the Line of Credit is
used to support letter of credit obligations required of the Company pursuant to
certain Payor contracts. The remaining proceeds of the Line of Credit are
available for working capital and general corporate purposes. On May 14, 1998,
the Credit Agreement was amended to provide, among other matters : (i) that the
Applicable Margin for base rate loans will be 0.75% and for Eurodollar loans
will be 2.25%; (ii) for waiver until June 11, 1998 of any Default or Event of
Default under the Credit Agreement (as defined therein) prior to such amendment
as a result of the Company's failure to comply with the consolidated senior debt
covenant ratio as of March 31, 1998 and amendment of such ratio for the four
consecutive fiscal quarters ending March 31, 1998; and (iii) for waiver until
June 11, 1998 of any Default or Event of Default under the Credit Agreement
prior to such amendment as a result of the Company's failure to comply with the
limitation on Permitted Acquisitions during fiscal year 1998. The Credit
Agreement contains affirmative and negative covenants which include, among
others, requirements that the Company maintain certain financial ratios
(including minimum net worth, consolidated senior debt ratio, consolidated
leverage ratio and consolidated interest coverage ratio) and establishes certain
restrictions on investments, Permitted Acquisitions, additional indebtedness and
sales of assets. Failure by the Company to satisfy the covenants in the Credit
Agreement may result in a Default or Event of Default, which could have a
material adverse effect on the Company's financial condition. The obligations of
the Company under the Credit Agreement are collateralized by the assets of the
Company and the capital stock and assets of its subsidiaries and the
Professional Corporations. At March 31, 1998, the Company had $142.8 million
outstanding on the Line of Credit and $99.6 million outstanding under the Term
Loan. At May 15, 1998, the Company had $185.0 million outstanding on the Line of
Credit and $99.6 million outstanding under the Term Loan. As of May 15, 1998, no
additional borrowing capacity exists under the Credit Agreement as currently
structured.

     The Company relies on its subsidiaries to make dividend payments, loans or
other transfers of cash to the Company and on revenues received pursuant to
administrative services agreements with the Professional Corporations in order
to pay its obligations. Under the Knox-Keene Health Care Service Plan Act of
1975, the Company's California subsidiary must meet certain minimum tangible net
equity requirements which may limit the ability of such subsidiary to pay the
Company's obligations. To the extent the subsidiaries are unable to make cash
distributions to the Company or the costs to manage the Professional
Corporations are greater than the management fees received by the Company, the
Company may not have sufficient cash to pay its obligations.

     The Company believes that its cash on hand and anticipated cash flows from
operations will be sufficient to meet the Company's operating capital needs
through the second quarter of 1998. The Company is in the process of identifying
opportunities to improve cash flow in all regions of the Company and has
instituted a program to reduce general and



                                       13
<PAGE>   14
administrative expenses including a work-force reduction, the closing of its
Long Beach, California facility, consolidation of its credentialing department
to Miami, Florida and the pursuit of other office consolidations and closures.
In addition, the Company anticipates that the write-down of goodwill is expected
to result in reduced amortization charges of approximately $5 million on an
annualized basis. The Company also intends to seek both short-term and long-term
financing in order to meet its cash requirements. There can be no assurance that
the Company will be able to obtain such financing or that it will be able to
issue debt or equity-related securities on terms satisfactory to it. To the
extent that additional financing is not available, the Company will consider
additional restructuring of its operations and will delay certain potential
acquisitions or geographic expansion.


IMPACT OF INFLATION AND OTHER ELEMENTS

     The managed care industry is labor intensive and its profit margin is low;
hence, it is especially sensitive to inflation. Increases in medical expenses or
contracted medical rates without corresponding increases in capitated or
fee-for-service payments from Payors could have a material adverse effect on the
Company's results of operations and financial condition.

     Various federal and state legislature initiatives regarding the health care
industry have been proposed during recent legislative sessions, and health care
reform and similar issues continue to be in the forefront of social and
political discussion. If health care reform or similar legislation is enacted,
such legislation could impact the Company. Management cannot at this time
predict whether any such initiative will be enacted and, if enacted, the impact
on the financial condition or results of operations of the Company.

     The Company's ability to expand its business is dependent, in part, on its
ability to secure cost-effective contracts with providers and favorable
capitation rates from Payors. Achieving these objectives is becoming
increasingly difficult due to the competitive environment. In addition, the
Company's profitability is dependent, in part, on its ability to maintain
effective control over health care costs while providing members with quality
care. Factors such as health care reform, integration of acquired companies,
regulatory changes, utilization, new technologies, hospital and pharmaceutical
costs, major epidemics and numerous other external influences may affect the
Company's operating results. Accordingly, past financial performance is not
necessarily a reliable indicator of future performance, and investors should not
use historical financial results to anticipate results or future period trends.

     The Company's subsidiaries and Professional Corporations record reserves
to account for their estimated ultimate liability for medical expenses with
respect to reported and unreported claims incurred ("IBNR"), which are included
in the Company's claims payable. These reserves are estimates of future payments
based on various assumptions. Establishment of appropriate reserves is an
inherently uncertain process, and there can be no certainty that currently
established reserves will prove adequate in light of subsequent actual
experience, which could result in reserves being too high or too low. The
accuracy of these estimates may be affected by external forces such as changes
in the rate of inflation, the regulatory environment, medical costs and other
factors. As the Company's capitation managed care revenue increases as a
percentage of total managed care revenue, claims payable including IBNR will
increase. The increase in claims payable, including incurred but not reported,
from approximately $160.0 million at December 31, 1997 to approximately $237.4
million at March 31, 1998, resulted primarily from the increase in the number of
members served by the FPA Network and the increase in membership served pursuant
to global capitation contracts.

     Certain statements contained in this Quarterly Report on Form 10-Q
constitute forward-looking statements contemplated under the Private Securities
Litigation Reform Act of 1995. Although FPA Medical Management, Inc. believes
that its expectations are based on reasonable assumptions within the bounds of
its knowledge of its business and operations, there can be no assurance that
actual results will not differ materially from their expectations. Factors that
could cause actual results to differ from expectations include the difficulty in
controlling health care costs and integrating new operations, the ability of the
Company to secure financing for operations and acquisitions on reasonable terms,
the ability of the Company to realize the anticipated general and administrative
expense savings and overhead reductions, the ability of the Company to return
the Company's operations to profitability, the level and nature of the
restructuring and other one-time charges, the difficulty in estimating possible
costs related to exiting certain markets and consolidating and closing certain
operations, and the possible negative effects of prospective health care reform.
For other important factors that may cause actual results to differ materially
from expectations and underlying assumptions, see reports by FPA Medical
Management, Inc. filed with the Securities and Exchange Commission.


                                       14
<PAGE>   15
PART II.  OTHER INFORMATION


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

    NONE

ITEM 6.  Exhibits And Reports On Form 8-K

(a) Exhibits:

     10.14 Consulting and Settlement Agreement between the Company and Howard
           Hassman dated as of April 1, 1998.

(b) Reports on Form 8-K: The Company filed the following Current Reports on Form
    8-K since December 31, 1997:

    NONE



                                       15
<PAGE>   16
     SIGNATURES

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

                          FPA MEDICAL MANAGEMENT, INC.
                                  (Registrant)


<TABLE>
<CAPTION>
             SIGNATURE                                    TITLE                               DATE
             ---------                                    -----                               ----
<S>                                     <C>                                                <C> 
/s/     STEPHEN J. DRESNICK             President, Chief Executive Officer and Director    May 15, 1998
-------------------------------------   (Principal Executive officer)
        Stephen J. Dresnick

/s/      DOUGLAS E. KERNER              Vice President, Treasurer and Acting Chief         May 15, 1998
-------------------------------------   Financial Officer (Principal Financial Officer)
         Douglas E. Kerner
</TABLE>



                                       16