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

                                   FORM 10-K

<TABLE>
<S>              <C>
   (MARK ONE)
      [X]        ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                 THE SECURITIES EXCHANGE ACT OF 1934
                 FOR THE FISCAL YEAR ENDED DECEMBER 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 ____________
</TABLE>

                        COMMISSION FILE NUMBER 000-22005

                               CAREDATA.COM, INC.
             (Exact name of Registrant as specified in its charter)

<TABLE>
<S>                                            <C>
                   DELAWARE                                      58-2256400
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                     Identification Number)
        TWO PIEDMONT CENTER, SUITE 400
           3565 PIEDMONT ROAD, N.E.
               ATLANTA, GEORGIA                                  30305-1502
   (Address of principal executive offices)                      (Zip Code)
</TABLE>

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (404) 364-6700

     Securities registered pursuant to Section 12(b) of the Act: NONE

     Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK,
par value $0.001 per share

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

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.  [X]

     Aggregate market value of the Common Stock of the Registrant held by
non-affiliates of the registrant (6,463,291 shares) on March 20, 2000: $54.7
million

     The number of shares of Common Stock of the Registrant outstanding as of
March 20, 2000 was 8,253,701 shares.

DOCUMENTS INCORPORATED BY REFERENCE:  THE INFORMATION CALLED FOR BY PART III IS
INCORPORATED BY REFERENCE TO THE DEFINITIVE PROXY STATEMENT FOR THE 2000 ANNUAL
MEETING OF STOCKHOLDERS OF THE REGISTRANT WHICH WILL BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION NOT LATER THAN 120 DAYS AFTER DECEMBER 31,
1999.

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                                     PART I

ITEM 1.  BUSINESS

     Caredata.com, Inc. (together with its subsidiaries, Caredata.com or the
"Company") is an online syndicator of healthcare content and applications to a
wide range of Internet portals and e-commerce sites. The Company enables Web
sites to enhance their content offerings by delivering its proprietary databases
and co-branded tools to their established online communities. As a supplier of
Web-based content and applications the Company is not subjected to the intense
marketing costs needed to attract site users. E-Health portals, payor sites,
online destinations targeting small subsets of healthcare consumers and provider
sponsored sites all need to attract and keep visitors at their sites.
Caredata.com's Web applications and proprietary content attract visitors and
provide this "stickiness" to its customers' Web sites without the customer
having to spend the significant time and capital that would be required to
develop similar applications and content on their own. Caredata.com currently
has more than 30 strategic partnerships and alliances with leading Web
businesses.

     Caredata.com is also a provider of proprietary database products,
decision-support software and analytical services to the healthcare industry.
The Company's products and services enable its customers to make objective
comparisons of the financial costs and clinical outcomes of physician services
to customer-specific and industry benchmarks, assess member satisfaction with
specific managed-care plans, and obtain information concerning the background
and credentials of physicians. These capabilities assist healthcare industry
participants in strategic planning, effective contracting and improving the
delivery of care.

     Caredata.com's databases have been built by collecting, standardizing and
normalizing various forms and types of healthcare information. The Company's
databases include information submitted by customers, information purchased,
data gathered from various regulatory and governmental agencies, and data
generated from the results of proprietary surveys of consumers and other payors.
Caredata.com believes the long-standing relationships under which it collects
data and the data interpretation methodologies used by the Company represent
significant competitive advantages. Caredata.com's databases are updated to
reflect changes in the industry and, in the case of its market performance and
clinical performance databases, to take into consideration secondary factors
such as co-morbidity, case mix and demographics. These attributes permit
customers to compare objectively their financial and clinical performance to
industry or customer-specific benchmarks contained in the Company's databases
with specificity and precision.

INDUSTRY OVERVIEW

     Healthcare is the single largest vertical market in the United States,
representing over $1.2 trillion dollars in annual spending or approximately 14%
of the U.S. gross national product, according to the Health Care Financing
Administration ("HCFA"), with expectations of reaching $2.2 trillion dollars by
2008. Additionally, current estimates from the Department of Commerce indicate
that roughly $200 billion of these expenditures are related to wasteful
administrative costs. The Company believes a strong demand will continue in the
marketplace for its products. The result is a growing demand for products
incorporating financial, clinical, and analytical tools that leverage data in
order to assess managed-care contracts, analyze outcomes, evaluate managed-care
member satisfaction, verify the qualifications of providers, and meet ongoing
accreditation requirements. While some payors and providers have recently
adopted new information systems that allow them to capture cost, utilization,
and clinical outcomes data regarding their own businesses, the Company believes
these payors and providers generally have not been able to effectively use such
data to gain perspective on the marketplace. To accurately analyze the potential
impact of managed-care contracts, payors and providers need benchmark data
against which they can compare internal data and information relating to
statistical differences in healthcare costs, projected utilization and outcomes
among urban, suburban and rural markets.

     The increasing market penetration of managed care and government regulation
are forcing healthcare providers and payors to find more efficient and
profitable ways to conduct their businesses without compromising the quality of
care. However, the traditional infrastructure of healthcare technology has
largely

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consisted of disparate information systems and data repositories, with minimal
options for connectivity to use the information in concert. Physicians, who
account for the majority of decisions impacting healthcare spending, are
increasingly overwhelmed with professional and administrative burdens that
impose on their ability to practice medicine.

     Recognizing these opportunities, many "e" and ".com" Internet-based
companies have used the fastest growing medium in history to rapidly initiate
dramatic changes throughout the healthcare landscape. These digital health
companies are using the Internet as a universal communications platform to
provide an array of content and services to multiple players in the healthcare
industry, including consumers, physicians and payors. Media Metrix captured 49.1
million unique Internet visitors during the first week of 2000, and Jupiter
Communications expects the worldwide number of Internet users to exceed 250
million by the year 2002. With over 20,000 health-related Internet sites, an
estimated 40% of physicians claiming to use the Web, and approximately $1.5
billion dollars raised over the past year to support Internet-focused healthcare
companies, the impact of the Internet and the World Wide Web on the healthcare
industry is considerable and is expected to grow.

     The accessibility of medical information via the Internet and managed-care
arrangements have combined to empower consumers as active participants in their
healthcare, from researching a particular disease or medical topic to selecting
a primary-care physician for their family. A Harris poll conducted in February
1999 concluded that over 60 million people searched the World Wide Web for
health-related information in 1998 alone, clearly highlighting the desire people
have to utilize available healthcare information. A more defined study conducted
by Cyber Dialog noted that 85% of health-related searches were for information
about diseases and treatments.

     The professional-oriented sites target physicians, payors and healthcare
facilities, offering services such as timely news and filtered content, e-mail
services and online tools and applications to ease administrative requirements
like credentialing, scheduling, billing, transmitting prescriptions and
verifying patient eligibility. These Application Service Provider ("ASP")
Web-enabled products are attractive, as the Internet allows users to access and
share information through a common platform.

STRATEGY

     Caredata.com's objective is to be a leading online syndicator of healthcare
content and applications to a wide range of Internet portals and e-commerce
sites, as well as a provider of proprietary database products, decision-support
software and analytical services to all participants of the healthcare industry,
including: payors, providers, employers, pharmaceutical companies and consumers.
This objective is an expansion of the Company's historic business model as it
moves to focus on the Internet as a significant way to generate growth. This new
focus was evidenced by the co-branding relationships entered into in the third
and fourth quarters of 1999. This strategy continues to evolve as noted in the
"Internet Business Model" discussion below. To attain this objective,
Caredata.com is pursuing the following strategies:

          Leverage the Company's Content Assets Via the Internet.  Caredata.com
     will focus on building core competencies for the development of
     high-performance Internet applications and a solid Web operations platform
     that will support heavy user traffic among our syndicated content and
     applications. The Company also believes that it must focus on leveraging
     the capacity of the Internet as a channel for collecting additional data to
     enhance and grow its content assets.

          Establish the Company as a Highly-Visible Provider of Internet Content
     Infrastructure.  The Company plans to build a distribution platform (which
     Caredata.com refers to as an "eHealth network") on the Internet for
     generating e-commerce revenue growth. This will be accomplished by
     integrating Caredata.com content and applications into a plurality of
     eHealth Web sites in order to reach as many healthcare professionals and
     consumers as possible. Additionally, the Company plans to generate
     transactional revenue by making its eHealth network available as a
     distribution channel for products and services of various e-commerce
     partners.

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          Internet Business Model.  The current Internet business model involves
     several revenue streams: co-branding fees, revenue from e-commerce
     transactions, and advertising revenue. Co-branding fees relate to the
     deployment of the Company's Internet products on a co-branded and
     integrated basis with Web sites of its customers. Because the co-branded
     products are end-user oriented and hosted on Caredata.com's servers, the
     Company has the ability to make contextual, user-targeted placements
     promoting the products and services of e-commerce customers and
     advertisers. Over time, the Company expects to reduce its up-front
     co-branding fees in order to maximize the market penetration of its co-
     branded products and, thus, its Internet distribution channel. It is
     anticipated that this broader distribution channel will be leveraged to
     generate greater e-commerce and advertising revenues.

          Leverage the Company's Existing Customer Base.  Caredata.com believes
     the increasing demand for healthcare information, coupled with its broad
     customer base, provides an opportunity for internal growth. The Company
     believes it has developed a reputation for providing objective, value-added
     information products. The Company intends to leverage these relationships
     by cross-selling additional products and services to existing customers and
     increasing product penetration through sales to other operating units,
     departments or divisions of existing customers.

        Develop New Web-Based Applications, Database Products and
     Decision-Support Tools. Caredata.com actively develops new Internet
     applications, data products and decision-support tools. In 1999, the
     Company introduced several new products and product enhancements. The
     Company also expects to introduce additional new products and product
     enhancements during 2000. Over time, the Company intends to cross-correlate
     existing and future databases in an effort to develop integrated product
     offerings. For example, Caredata.com believes that by linking many of its
     market performance products, cost and quality could be evaluated together.
     Finally, by creating new Internet or Web-enabled products through
     versioning of the Company's current and future databases, Caredata.com will
     work to meet the needs of current and new healthcare customer segments.

          Acquire and Integrate Complementary Products and
     Businesses.  Caredata.com intends to acquire additional companies,
     products, databases and other resources to expand into related areas and to
     increase market share within the Company's existing product lines.
     Caredata.com believes that the acquisition of new products and customers
     creates compelling cross-selling opportunities, enhances the development of
     new products by facilitating cross-correlation of existing and acquired
     products and provides significant operating leverage. See "Acquisitions"
     and "Investments."

          Emphasize Recurring Revenue.  Caredata.com seeks to maximize recurring
     revenue by emphasizing multi-year contracts and contract renewals on its
     subscription-based products and co-branded syndicated Web-based content and
     applications. The Company believes that its recurring revenue results
     principally from revenue enhancements or cost savings achieved by
     Caredata.com customers when they use the Company's products, as well as
     from customers' ongoing need for current information due to the rapid pace
     of change within the healthcare industry.

ACQUISITIONS

     Caredata.com believes the selective acquisition of complementary businesses
results in a more rapid expansion of its product line and customer base and
enables the Company to leverage its sales and marketing organizations. As a
result, Caredata.com has invested significant resources to build the business
platform necessary to be a consolidator in the fragmented healthcare-information
technology and services industry. From its initial public offering in January
1997 through December 31, 1999, Caredata.com has acquired ten companies that
provide complementary products and services. The Company believes the
acquisition of these entities creates significant cross-selling opportunities
among its respective product offerings, increases its market share within
existing product lines, and provides product and customer expansion
opportunities. As part of a systematic approach to implementing its acquisition
strategy, Caredata.com has corporate resources dedicated to identifying,
analyzing and pursuing targeted acquisition candidates.

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INVESTMENTS

     Caredata.com will continue to participate in the rapid growth of the
eHealth industry through a selective investment program. During 1999, the
Company made minority equity investments in several private eHealth companies.
These investments and future investments are strategic partnerships where
Caredata.com can provide substantive value to these companies in the form of
products, distribution, strategic planning and connections with other business
partners. These strategic partnerships offer the Company the opportunity to
further distribute its products and to have access to new content synergies,
products and technologies.

PRODUCTS AND SERVICES

     Caredata.com is a leading online syndicator of healthcare content and
applications to a wide range of Internet portals and e-commerce sites. The
Company enables Web sites to enhance their content offerings by delivering
co-branded tools to established online communities. These syndicated tools and
services empower physicians, consumers and healthcare enterprises to gain
insight into critical healthcare information and conduct business more
efficiently.

     Caredata.com also provides products and services designed to enable its
customers to measure and assess the performance of healthcare services in the
United States and to forecast the supply of and demand for healthcare services.
At the core of the Company's products and services are several proprietary
databases. The detailed nature of Caredata.com's databases provides precise data
that customers can use to address specific decision-making needs and offers the
Company's customers competitive advantages. Caredata.com also provides
decision-support software tools that enhance the utility of its database
products, as well as customized analytical services. Caredata.com has developed
its databases and decision-support software for ease of use and the Company
updates these databases to ensure that its products are accurate and current.
The Company uses industry-standard software and database tools. All systems are
designed to be open, scalable and compatible with multiple technology platforms.

  Market Performance Products

     Caredata.com's market performance products, several of which are
Web-enabled, provide customers with comprehensive proprietary data and
decision-support tools for use in measuring clinical outcomes and analyzing
physician fees, healthcare utilization patterns and member satisfaction with
managed-care plans in the United States. The following is a description of the
Company's primary market performance products:

          Caredata(TM) Reports.  Caredata Reports are reports that are created
     utilizing information accumulated and analyzed by the Company regarding
     consumer satisfaction with managed health care. Based on this data,
     Caredata Reports rank specific health plans. Comparative market analysis is
     available for 28 geographic markets. To collect data used in Caredata
     Reports, the Company conducts healthcare consumer surveys that are
     sponsored by hundreds of major employers and measure member satisfaction
     with approximately 150 aspects of managed health care. This product line is
     utilized by health plans to assess their competitive position and quality
     of care, by employers to evaluate health plans and by pharmaceutical
     companies to target potential markets for their products.

          HealthPacs(R).  HealthPacs are unique sets of data organized by
     medical specialty or healthcare service lines. They are a source of current
     and future market demand and utilization data. HealthPacs include
     demographic information about a community, population-based models of the
     incidence or prevalence of diseases by category, estimates of the demand
     for services by setting (inpatient, outpatient, physician services, etc.),
     and the supply of local providers available to meet the demand. These
     models provide current-year estimates and forecast the demand of healthcare
     over the next 5 years.

          Avenir(R).  Avenir is a Windows(R)-based decision-support application
     that integrates HealthPacs data sets with reporting, mapping and graphics
     software. Avenir allows hospitals, health plans and other healthcare
     industry participants to conduct detailed market analyses, forecasting and
     strategic planning.

          Patient Care Analyst.  Patient Care Analyst ("PCA") is an Internet
     application for the analysis of patient origin, market share and competitor
     profiling. PCA allows the user secure, direct Internet access
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     to patient discharge data for state databases and the national MEDPAR(R)
     (discharge records for Medicare patients) data and can be used for analysis
     in multiple data sets.

          Caredata(TM) Fee Manager.  Fee Manager reports reimbursement rates for
     medical procedures for various types of payors and specific geographic
     markets across the United States. Fee Manager provides data concerning
     reimbursement levels that providers are accepting from managed-care plans
     and other payors, rather than fees charged by those providers, a
     distinction critical to an accurate understanding of market conditions. Fee
     data in Fee Manager are tracked by the AMA's Current Procedural Terminology
     ("CPT") codes, which define all current medical procedures, and are
     segregated into 287 separate market areas in the United States (compared to
     89 market areas that were tracked by HCFA in 1997). Caredata.com believes
     that Fee Manager divides the United States into more geographic markets
     than most competing products, thereby allowing customers to make more
     precise fee decisions. A customer can license data for a specific market,
     state or region or for the entire United States.

          Caredata(TM) Capitation Manager.  Capitation Manager is a
     decision-support application that integrates the Company's Fee Manager
     software and proprietary procedure utilization database and calculates
     capitation rates based on customer-provided pricing and demographic
     assumptions. With Capitation Manager, the customer enters the demographic
     profile of a group proposed to be covered in a capitated arrangement, the
     services to be provided and proposed capitated pricing for those services.
     Capitation Manager then calculates the expected utilization of the services
     to be provided and compares the proposed capitated pricing to managed-care,
     fee-for-service, Medicare and other fee benchmarks tracked by the Company
     within a specific market.

          RapidPlanner(TM).  For those customers desiring some of the
     functionality of Avenir without having to acquire and load a software
     application, RapidPlanner maps and reports are decision-support tools for
     forecasting and strategic planning which contain HealthPacs and MEDPAR(R)
     data, and which correspond to customer-defined market areas. The customer
     has access to a variety of reports and maps.

          myHealthPlanSelector(TM).  myHealthPlanSelector is a personalized
     health plan evaluation tool which ranks U.S. metropolitan health plans
     based on a consumer's stated profile. It contains customer satisfaction
     information derived from consumers surveyed semi-annually and administered
     at the employer level, covering 28 major metropolitan areas in the U.S.
     This Web-based application is provided to Web portals and healthcare Web
     sites on a co-branded basis.

          CiteLine(TM).  CiteLine is an editorially assisted consumer-oriented
     search engine which generates focused vertical searches of the World Wide
     Web on healthcare-related topics, allowing the end-user to perform medical
     searches over a screened collection of quality sites that contain
     information on disease and treatment, research and trials, news and
     journals and healthcare organizations.

          CiteLine(TM) Quick Reference.  CiteLine Quick Reference is a more
     selective and subscription-based version of CiteLine designed to be used by
     pharmaceutical and healthcare industry professionals for conducting
     business-relevant research including assessment of markets, competitive
     analyses, modeling the economics of healthcare markets and determining
     regulatory requirements. This product is deployed to the corporate
     Intranets of subscribing organizations.

          CiteLine(TM) Professional.  CiteLine Professional is the
     highest-powered subscription-based version of CiteLine and is designed to
     supplement research-intensive professionals in the pharmaceutical,
     diagnostics and medical device industries. This Windows(R)-based software
     product includes access to thousands of Web-based medical industry
     databases not found in CiteLine or CiteLine Quick Reference. In addition,
     CiteLine Professional's "Site Monitor" feature allows users to be
     automatically notified when relevant Web content changes.

          Caredata(TM) Clinical Outcomes Ratings Instruments.  Caredata.com
     offers clinical outcomes ratings instruments that enable customers to
     measure clinical outcomes across a full range of care within a variety of
     medical specialties. The data included in these products are gathered by
     Company-certified clinicians, automated patient information systems and
     Caredata.com's patient interview staff using the Company's standardized
     outcomes ratings instruments. These outcomes ratings instruments are
     currently
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     available to track clinical outcomes in rehabilitation, ambulatory surgery,
     orthopedics, occupational health, pain management, neurological care, wound
     care, respiratory care and nutrition and infection therapy.

  Physician Information Products

     Caredata.com provides database products, software and outsourced services
designed to enable its customers to access detailed information concerning the
background and credentials of physicians in the United States. The Company's
physician information products facilitate its customers' ability to establish or
improve physician recruiting efforts on a cost-effective basis, develop
healthcare networks and market the provider component of healthcare services.
Caredata.com's physician information products also aid hospital and managed-care
customers in verifying the credentials of physicians and other providers with
whom they work. Hospitals, managed-care organizations and other healthcare
industry participants are required to verify and periodically re-verify such
credentials in order to maintain accreditation by organizations such as the
National Committee for Quality Assurance ("NCQA") and JCAHO. The Company's
credentials service has successfully completed all 10 of the audits of
credentialing processes conducted by NCQA. The Company's physician database is
comprised in part of physician data from the AMA's Physician MasterFile. All
physician information is further validated and enhanced by Caredata.com's staff
conducting personal telephone interviews with the physicians. Current products
include:

          Provider Credential Verification Report.  The Provider Credential
     Verification Report is a report that provides customers with an efficient
     and cost-effective means to verify electronically the key professional
     credentials of participating healthcare practitioners using primary source
     data. When joined with the Company's electronic processing of a National
     Practitioner Database and/or Federation of State Medical Boards query and
     written verification of a practitioner's hospital privileges, malpractice
     insurance coverage and claims history, the Provider Credential Verification
     Report becomes the central component of the Company's credential and
     verification service.

          appSTAT(TM).  appSTAT is an Internet-based service that allows
     physicians to simplify the managed-care application process by maintaining
     a single, universal application for all current and future affiliations.
     Physician subscribers can update their professional information via secure
     Internet connections. This single data set can then be used to
     automatically populate the unique applications of HMO's, PPO's, hospitals
     and IPA's, as requested by the appSTAT subscriber.

          LUCI(TM).  LUCI offers payors, hospitals and health plans a tool to
     collect, manage and analyze vast amounts of provider-related data. The
     system simplifies the process of managing provider networks by enabling the
     storing and processing of complex provider relationship data, including
     contracts between providers, practices and networks, network affiliations,
     flexible fee schedules, group contracting and credentialing. LUCI is a
     32-bit, Microsoft(R)-based, ODBG-compliant application that works with a
     variety of databases, including SQL Server with the Microsoft NT(R) server
     operating system, Sybase(R) and Oracle(R) with either Microsoft NT(R) or
     Unix(R) operating systems. The client-server architecture makes it readily
     deployable across wide-area networks.

          SweetQ(TM).  SweetQ is a file server software program comprising eight
     flexible modules designed to meet specific provider-data management needs
     of payors, hospitals and health plans. SweetQ consists of three core
     applications: credentialing and recredentialing, network management and
     site survey. The system also contains five support applications: facility
     review, perceptions of care, report card, data exchange, and complaints,
     grievances and appeals.

          PrimeSource(R).  PrimeSource is the Company's database repository of
     primary source physician information. The database contains personal and
     professional data elements on more than 800,000 physicians across the
     United States. The PrimeSource information is used for a wide range of the
     Company's products and services, including specialized data packets for
     custom-loaded software, electronic credentials verification, the provision
     of outsource credentialing services, and information products suited to the
     consumer market. Additional applications of the PrimeSource database
     include

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     market planning for healthcare organizations, the support of physician
     locator services and the development of Web-based physician directories.

          PrimeSourceWeb(TM).  PrimeSourceWeb is an Internet-based product that
     provides access to the Company's PRIMESOURCE national database repository
     of primary source physician information, providing real-time credentials
     verification. Internet access provides continually refreshed credentialing
     information and reduces the paperwork traditionally associated with the
     credentialing process, thereby enhancing the efficiency of credentialing
     staffs.

          PrimeSource(R)EDI -- Validation and EDI -- Verification.  The
     PrimeSource EDI Practitioner Validation System and the PrimeSource EDI
     Practitioner Verification System allow PrimeSource customers to validate
     and/or verify healthcare practitioners in real time over the Internet.
     These systems each use a request/response model where a PrimeSource
     customer's client computer system transmits a validation or verification
     request for a practitioner to which the PrimeSource host computer system
     provides a validation or verification response.

          myPhysicianSelector(TM).  myPhysicianSelector is a consumer-oriented
     tool for identifying practicing physicians in the U.S. based on multiple
     criteria such as geography, specialty, years in practice, or name. Unlike
     similar competing locators, it includes board certifications, gender,
     training and years in practice. This Web-based application is provided on a
     co-branded basis to Web portals and healthcare Web sites.

          PracticeMatch(R) Physician Relocation Database.  PracticeMatch is a
     decision-support system that provides in-house physician recruiters with
     on-line Internet access to the Company's physician database. By
     establishing a series of search and selection criteria, subscribers obtain
     information about physicians who satisfy specified criteria. The customer
     can then print or download the information for use in building in-house
     databases, generating recruiting status reports and tracking recruiting
     expenses associated with specific candidates. PracticeMatch is constructed
     from proprietary records of approximately 135,000 physicians developed in
     part from data in the AMA's Willing-To-Relocate database.

          Caredata.com Physician Profiling.  Caredata.com Physician Profiling
     ("CPP") provides decision-support tools, consulting services and training
     materials to hospitals and physician-group practices to assist them in
     improving patient outcomes, achieving the efficient delivery of care and
     ensuring that billing and coding practices comply with industry
     requirements. CPP collects clinical and billing record data from customers
     and employs analytical tools and statistical algorithms to profile the
     relative performance of individual physicians. Based on an analysis of this
     information, Caredata.com implements on-site education through physician
     consultants and medical-records specialists to influence physician behavior
     and promote the effective and efficient delivery of health care. Tools and
     services for bill coding and medical-record documentation help customers
     achieve optimal and appropriate reimbursement for services delivered, while
     improving the quality of data for future comparative analysis.

DATA ACQUISITION METHODOLOGY

     In designing its products and services, Caredata.com emphasizes quality and
ease of use. The Company uses proprietary data-engineering methodologies to
standardize and interpret data in order to ensure that its products are as
comprehensive, accurate and current as practicable. The detailed nature of the
Company's databases provides precise data that customers can use to address
their specific decision-making needs. Furthermore, Caredata.com's
data-engineering methodologies are designed to ensure that its databases are
free of bias. The resulting objectivity of Caredata.com's products and services
allows the Company to market its products to a broad range of
healthcare-industry participants and improves the credibility of its databases
as benchmarking tools.

     The Company collects data for inclusion in its databases and related
products in a variety of ways, including collecting data from customer sources,
purchasing data from public and private sources and conducting surveys. Once the
data has been collected, Caredata.com's database personnel clean and analyze the
data before inclusion in the Company's databases. Caredata.com uses proprietary
processes to validate data by standardizing, normalizing, formatting and
segmenting the submitted data.

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     Caredata.com's databases are regularly updated to reflect changes in the
industry and, in the case of its market performance and clinical performance
databases, to take into consideration secondary factors such as co-morbidity,
case mix and demographics. These attributes permit customers to compare
objectively their financial and clinical performance to industry or
customer-specific benchmarks contained in the Company's databases with
specificity and precision.

     Market Performance Products.  The data used in Caredata.com's market
performance products have been collected through (i) Caredata.com's customer
data-collection program, whereby customers provide their medical claims or other
healthcare transaction data to the Company on a regular basis, (ii) surveys of
managed-care organizations, (iii) purchases of certain data sets, and (iv)
maintenance of a customer-support database. Caredata.com's market performance
databases include both public-sector data and private-sector data derived from
transaction data and clinical records. The Company believes that private-sector
data is more useful for comparative purposes than public-sector data and that
Caredata.com's comprehensive compilation of private-sector data represents a
competitive advantage for the Company. For the Company's Caredata Reports
products, Caredata.com conducts annual patient surveys regarding consumer
satisfaction with managed care. These surveys are sponsored by approximately 400
major employers and measure member satisfaction with approximately 150 aspects
of managed care including satisfaction with provider panels, pharmacy benefit
management and overall health plan design. For the Company's CiteLine product
line, editorial staff use an internally-developed set of proprietary-content
development tools as well as selection criteria relating to content quality,
depth and sponsorship to aggregate publicly-available content and databases from
the World Wide Web. For the Company's HealthPacs database sets, Caredata.com
collects demographic, market supply and utilization data from publicly-available
sources or purchases or licenses data from their sources. Caredata.com obtains
data for its clinical performance databases by collecting data from its
customers, purchasing data from public and private sources, and collecting data
from other Company-certified sources. To facilitate collection of data from
customers, the Company provides its customers with data-collection tools that
are tailored to the customer's clinical record-keeping environment.

     Physician Information Products.  The data included in Caredata.com's
physician information credentialing products is obtained from publicly-available
sources or is licensed, leased or purchased from the source of the data. Sources
of data for credentialing products include state medical boards, the Drug
Enforcement Agency, HCFA, the American Board of Medical Specialties, the
American Association of Medical Colleges and the National Association of Social
Workers. The data used in Caredata.com's physician information recruiting
products is collected from publicly-available sources and the AMA's
Willing-To-Relocate database and verified by personal telephone interviews with,
or Internet data submission by, physicians. Caredata.com employs professional
interview personnel who contact physicians directly, gather the required
information, record the information in the automated database and send a hard
copy to each physician for verification. Since each physician profiled in the
Company's recruiting database has personally verified his or her information,
the Company believes that its recruiting database ensures the highest-quality
profile and offers a significant competitive advantage over unverified
databases. In addition, the Company has an exclusive license to share and
enhance portions of the AMA's Physician MasterFile. This relationship greatly
enhances the quality and availability of information about practicing
physicians.

CUSTOMERS

     The breadth and independent nature of Caredata.com's data resources enables
the Company to version and market its products for a wide range of
healthcare-information consumers and decision makers, including eHealth portals
and content destinations, managed-care plans, indemnity insurers, integrated
delivery systems, hospitals, specialty healthcare providers, physician-practice
management companies, physician practices, consulting firms, equipment
suppliers, pharmaceutical companies and consumers. No one of the Company's
customers accounted for a material amount of the Company's revenues in 1999. An
increasing number of Caredata.com's major customers, which are defined as
generating annualized revenue of more than $5,000, license products from several
of the product areas offered by the Company. Caredata.com has approximately 600
major customers that in the aggregate accounted for more than 80% of the
Company's revenue in 1999.

                                        9
<PAGE>   10

PRODUCT DELIVERY

     The Company's products are delivered to customers via the Internet, on
CD-ROM, diskette, magnetic tape, on-line access or in hard copy depending upon
the customer's preference. Internet-based applications are hosted by
Caredata.com and accessed by customers via the World Wide Web. Caredata.com
believes that there are readily available alternative sources of supply for all
of the media on which its products are delivered.

COMPETITION

     Caredata.com faces intense competition in providing healthcare information
products and services. Competitors vary in size, scope and breadth of product
and service offerings. The Company competes with different competitors in each
of its target markets, and certain of such competitors have substantially
greater resources than those of the Company. Several large
horizontally-integrated information services companies, including McKesson/HBOC,
Eclipsys Corporation, IMS Healthcare, First Data Corporation, National Data
Corporation, United Healthcare and Thomson Publishing, have developed and are
marketing information products and services to the healthcare industry. In
addition, large emerging eHealth companies such as Healtheon/WebMD,
Intellihealth, Medicalogic/Medscape and Dr.Koop.com offer the potential for
competition as well as partnership. The Company believes it is likely that one
or more of such companies may become more directly competitive with
Caredata.com, either by acquiring existing competitors or by developing and
marketing their own products. Many of these larger companies are engaged in the
processing of healthcare claims and, thus, have access to substantial claims,
cost and other significant data from which they could build competing databases
or license content to other competitors of the Company. The Company also
competes with the internal information resources and systems of certain of its
prospective and existing customers. The Company believes that the principal
competitive factors in its target markets include the breadth and quality of
database and applications offerings, access to proprietary and other data, the
proprietary nature of methodologies and technical resources, number of partners
and total user base of its distribution network, price and the effectiveness of
marketing, sales and business development efforts.

EMPLOYEES

     On March 20, 2000, the Company had 281 full-time employees. Of these, 36
were corporate personnel, 46 were sales and marketing personnel and 199 were
involved in operations and product development. None of the Company's employees
is covered by a collective bargaining agreement. The Company considers relations
with its employees to be good.

RISK FACTORS

     In evaluating the Company and its business, prospective investors should
carefully consider the following risk factors in addition to the other
information contained herein. This annual report, as well as press releases and
other public statements made by the Company from time to time, contain
"forward-looking statements" within the meaning of the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These statements address
activities, events or developments that will or may occur in the future and are
based on assumptions and analyses made by the Company in light of its experience
and perception of historical trends, current conditions, expected future
developments and other factors. Forward-looking statements include those
statements that anticipate future financial performance, business prospects,
growth and operating strategies, industry and market dynamics, business
relationships, sources and types of revenue and similar matters, as well as
statements modified by the words "believes," "expects," "anticipates,"
"intends," "estimates" or similar expressions. These forward-looking statements
are subject to a number of risks and uncertainties (such as those set forth
below) that could cause future events or actual results to differ materially
from those expressed in or implied by the forward-looking statements. Many of
these risks and uncertainties are beyond the control of the Company.
Accordingly, readers are cautioned not to place undue reliance on such
forward-looking statements, which speak only as of the date made and which the
Company undertakes no obligation to revise or update in order to reflect events
after the date made.

                                       10
<PAGE>   11

     Variable Quarterly Operating Results; Seasonality.  The Company's quarterly
revenue and operating results have varied significantly in the past and are
likely to vary substantially from quarter-to-quarter in the future. Quarterly
results may fluctuate as a result of a variety of factors including, but not
limited to, the length and unpredictable nature of the Company's sales cycle;
demand for the Company's products; the timing of significant new customer
contracts; the loss or non-renewal of significant customer contracts; the
implementation of new pricing strategies for the Company's products and
services; the timing of acquisitions or new strategic relationships; competitive
conditions in the industry; changes in customer budgets; and general economic
factors. The Company has historically recorded a disproportionate amount of its
revenue for each quarter in the final month of the quarter, while expenses have
been incurred more evenly throughout the period. Furthermore, the Company has
experienced a seasonal pattern in its operating results, with a greater
proportion of the Company's revenue and more favorable operating margins
occurring in the second half of the year. Accordingly, results of operations for
any particular quarter may not be indicative of results of operations for future
periods. Additionally, significant portions of the Company's expenses are
relatively fixed, and the amount and timing of increases in such expenses are
based in large part on the Company's expectations concerning future revenue. If
revenue is below expectations in any given quarter, the adverse effect may be
magnified by the Company's inability to adjust spending quickly enough to
compensate for the revenue shortfall. Accordingly, even a small variation from
expected revenue could have a material adverse effect on the Company's operating
results and financial condition for a given quarter. Fluctuations in the
Company's revenue and operating results could have a material adverse effect on
the market price for the Company's Common Stock.

     History of Operating Losses; Uncertain Profitability.  Although the Company
had net income for the year ended December 31, 1999, the Company has recorded
net losses in the three years ended December 31, 1996, 1997 and 1998. In view of
the Company's prior operating history, there can be no assurance that the
Company will continue to achieve profitability on a quarterly or annual basis or
that it will be able to sustain or increase its revenue growth in future
periods. Furthermore, in applying the provisions of Statement of Financial
Accounting Standards No. 109 ("SFAS 109") to the Company, particularly
considering the Company's history of net losses, the Company has been unable to
support a conclusion that it is more likely than not that its deferred tax
assets will be realized for purposes of SFAS 109. As a result, the Company has
provided a full valuation allowance against its net deferred tax assets.

     Risks Related to Growth.  The Company's strategy is to grow aggressively
through investments in new products, strategic relationships, pursuit of
Internet-related opportunities and acquisitions. This strategy is likely to
place significant demands on the Company's financial, operational and management
resources, and exposes the Company to a variety of risks, including the risk
that the Company will be unable to retain the personnel or obtain the financial
and other resources necessary to pursue and manage such growth. The tremendous
opportunity related to equity upside in non-public, Internet startup companies
also makes it extremely difficult for the Company to recruit and retain quality
Web-knowledgable employees. The Company's growth has resulted in an increase in
the level of responsibility for the Company's key personnel. Expenses arising
from the Company's efforts to complete acquisitions, develop new products or
increase its existing market penetration could have an adverse impact on the
Company's business, results of operations and financial condition. Furthermore,
there can be no assurance that the Company will be able to identify, acquire or
integrate acquisition candidates successfully or manage profitably any
additional products and services resulting from such acquisitions. Acquired
businesses, products and services may not contribute to the Company's overall
strategy or produce returns that justify the related investment or
implementation by the Company. In addition, the Company's growth may involve the
acquisition of companies or the development of products or services in areas in
which the Company does not currently operate. Such acquisition or development
may require the Company's management to develop expertise in new areas and to
attract a new customer base, and could have a material adverse effect on the
Company's business, results of operations or financial condition. There can be
no assurance that the Company will be able to implement its growth strategy
successfully or, if successful in consummating acquisitions, that it will be
able to manage its expanded operations effectively and profitably.

                                       11
<PAGE>   12

     Risks of Integration of Acquired Operations.  The process of integrating
management services, administrative organizations, facilities, management
information systems and other operational aspects of acquired businesses,
products or services can be time consuming and costly, and may distract
management from day-to-day operations. The difficulties of integration may be
increased by challenges in coordinating geographically separated organizations,
integrating personnel with disparate business backgrounds and combining
different corporate cultures. If the Company is to realize the anticipated
benefits of past and future acquisitions, the operations of the acquired
entities must be combined and integrated successfully. There can be no assurance
that the Company's integration processes will be successful or that the
anticipated benefits of any past or future acquisitions will be realized.
Furthermore, there can be no assurance that there will not be substantial
unanticipated costs or liabilities, or other material adverse effects associated
with past or future acquisitions and integration activities conducted by the
Company.

     Dependence on Data Sources and AMA Licenses.  The Company incorporates the
Physicians' Current Procedural Terminology ("CPT") codes of the AMA into certain
of its market performance products under a non-exclusive five-year license with
the AMA that expired in February 2000, but which remains in effect based on an
oral understanding with the AMA while a new license is being negotiated. The CPT
code system is considered to be the current industry standard for identifying
physician procedures, and the loss of the AMA CPT code license or the failure to
agree upon the terms of a new AMA CPT code license would have a material adverse
effect on the Company's business, results of operations or financial condition.
In addition, the Company relies in large part on data from outside payor,
provider and other sources to develop its proprietary products, including
acquired data and data received from customers under the Company's data
collection program. In general, the Company's data sources are not subject to
exclusive agreements with the Company; therefore, data included in the Company's
data products may also be included in data products of the Company's
competitors. There can be no assurance that the Company's sources will continue
to provide data in the future. If any of the Company's sources of data becomes
unavailable, there can be no assurance that alternative sources of data would be
available or that the Company could purchase such data in a cost-efficient
manner.

     Risks of Rapid Technological Change.  The healthcare information market is
characterized by rapid technological change, changing customer needs and
evolving industry standards. The Company believes that as the market for its
current products matures, its future success will depend on its ability to
enhance its current products and to develop or acquire and introduce new
products to keep pace with technological developments and emerging industry
standards. In addition, the introduction of competing products embodying new
technologies and the emergence of new industry standards could render the
Company's existing products non-competitive or obsolete. Accordingly, the
Company anticipates that significant amounts of future revenue may be derived
from products and product enhancements that do not exist today or have not been
sold in sufficient quantities to measure accurately market acceptance. There can
be no assurance that the Company will not experience difficulties that could
delay or prevent the successful development and introduction of product
enhancements or new products, or that such enhancements or new products will
adequately meet the requirements of the marketplace or achieve market
acceptance. Any failure by the Company to develop and introduce product
enhancements and new products in a timely and cost-efficient manner in response
to changing market conditions or customer requirements could have a material
adverse effect on the Company's business, results of operations or financial
condition.

     Need for Additional Financing.  Implementation of the Company's growth
strategy will require significant capital resources. Capital is needed for both
internal growth and the acquisition and integration of new businesses, products
and services. In addition, many of the Company's acquisition agreements provide
for the payment of contingent consideration based on the performance of the
acquired business. If such acquired businesses exceed the relevant performance
goals, the Company will be required to make additional payments, which could be
material. If the Company does not have sufficient cash resources or if the
Company's Common Stock is not attractive to target businesses, the Company's
growth could be limited and its existing operations impaired, unless it is able
to obtain additional capital through debt or equity financings. Any debt
financings could result in the imposition on the Company of operational or
financial restrictions. Any equity financings could result in dilution to
holders of the Company's Common Stock. There can be no assurance

                                       12
<PAGE>   13

that the Company will be able to obtain financing in the future or that, if
available, such financing will be on terms acceptable to the Company.

     Dependence on Intellectual Property Rights.  The Company does not own any
patents or federally-registered copyrights relating to its databases or software
applications. The Company relies largely on copyright law, its license
agreements with customers and its own security systems, confidentiality
procedures and employee non-disclosure agreements to maintain the
confidentiality and trade secrecy of its proprietary procedures and resources.
Policing unauthorized use and piracy of the Company's products is difficult. The
Company is aware that from time to time there have been limited breaches of the
confidentiality provisions of customers' agreements with the Company, and there
can be no assurance that the precautions taken by the Company will be adequate
to prevent further breaches or misappropriation of the Company's proprietary
information. In addition, the Company cannot prevent the independent development
or implementation of functionally equivalent or superior systems, products or
methodologies. The misappropriation of the Company's information or independent
development of similar products may have a material adverse effect on the
Company's competitive position. Furthermore, there can be no assurance that
third parties will not assert infringement claims against the Company or that a
license or similar agreement will be available on reasonable terms in the event
of an unfavorable ruling on any such claim.

     Risk Related to Intangible Assets and Acquisition Related Charges.  Largely
as a result of the Company's various acquisitions, the Company has recorded
approximately $53.8 million in intangible assets net of accumulated amortization
as of December 31, 1999. Such intangible assets are being amortized over periods
of five to 15 years. The Company expects its intangible assets to increase in
connection with future acquisitions, in connection with future contingent
consideration payments for acquisitions that have been consummated and in
connection with capitalized software development projects, resulting in
increases in the Company's amortization expense. In the event of any sale or
liquidation of the Company or a portion of its assets, there can be no assurance
that the value of the Company's intangible assets will be realized. In addition,
the Company regularly evaluates whether events and circumstances have occurred
indicating that any portion of the remaining balance of amounts allocable to the
Company's intangible assets may not be recoverable. If factors indicate that the
carrying value of the Company's intangible assets has been impaired, the Company
would be required to reduce the carrying value of such assets. Any future
determination requiring the write-off of a significant portion of the
unamortized intangible assets could have a material adverse effect on the
Company's business, results of operations or financial condition.

     In connection with many of its acquisitions, the Company has recorded
non-recurring charges related to in-process research and development costs. The
amount of each of these non-recurring charges is equal to the estimated current
fair value of specifically identified technologies for which technological
feasibility has not yet been established pursuant to Statement of Financial
Accounting Standards No. 86, "Accounting for Costs of Computer Software to be
Sold, Leased or Otherwise Marketed" and for which future alternative uses did
not exist at the time of acquisition. The Company has recorded approximately
$4.4 million of these charges in 1997, $11.7 million in 1998 and $2.0 million in
1999. Similar charges could result in the future as a result of additional
acquisitions accounted for as purchases.

     Uncertainty and Consolidation in the Healthcare Industry.  The healthcare
industry is subject to changing political, economic and regulatory influences
that may affect the procurement practices and operation of healthcare providers,
payors and other industry participants. The Company's products and services are
designed to function within the current structure of the U.S. healthcare system;
therefore, the commercial value of the Company's products could be adversely
affected if there were material changes in the current U.S. healthcare system.
Many federal and state legislators have announced that they intend to propose
programs to reform the U.S. healthcare system at both the federal and state
levels. These programs may contain proposals to increase governmental
involvement in healthcare, lower reimbursement rates and otherwise change
healthcare delivery and payment systems. Participants in the healthcare market
may react to these proposals and the uncertainty surrounding such proposals by
curtailing or deferring investments, including investments in the Company's
products and services. In addition, in response to this changing environment,
many market participants are consolidating to create larger healthcare delivery
organizations. This consolidation reduces the number of potential customers for
the Company and may increase the
                                       13
<PAGE>   14

bargaining power of these organizations, which could lead to reduced prices for
the Company's products and services. The impact of these developments on the
healthcare industry is difficult to predict and could have a material adverse
effect on the Company's business, results of operations or financial condition.

     Competition.  The healthcare information market is intensely competitive
and rapidly changing. The Company believes that the principal competitive
factors in its target markets include the breadth and quality of database and
applications offerings, access to proprietary data, the proprietary nature of
methodologies and technical resources, price, and the effectiveness of marketing
and sales efforts. In each of its target markets, the Company competes with
various competitors, which vary in size, scope and breadth of product and
service offerings. In addition, other information companies not presently
offering healthcare information services competitive with the Company's products
and services may enter the markets in which the Company competes. Many of the
Company's competitors have, and many of its potential competitors may have,
significantly greater financial, technical, product development and marketing
resources than the Company. The Company also competes with the internal
information resources and systems of certain of its prospective and existing
customers. There can be no assurance that competitive pressures will not have a
material adverse effect on the Company's business, results of operations or
financial condition.

     Potential for System Defects or Flawed Data Products.  The information
products offered by the Company may contain undetected errors or failures. Any
such errors or failures could result in a loss of, or delay in, market
acceptance of the product and in claims against the Company. The Company also
depends on the accuracy of the data received from its data sources. If a
statistically significant number of medical records, transactions or physician
profiles were found to have been altered or incorrectly entered, or otherwise
contain flawed data, there could be a loss of, or delay in, market acceptance of
the product and possible claims against the Company. Any of the foregoing
results could have a material adverse effect on the Company's business, results
of operations or financial condition.

     Adverse Impact Of Anti-Takeover Provisions.  Certain provisions of the
Company's Certificate of Incorporation and Bylaws and of Delaware law could have
the effect of delaying, deterring or preventing a change of control involving
the Company. Specifically, the Company's Certificate of Incorporation, as
amended, provides for the issuance of preferred stock with such rights and
preferences as may be determined by the Board of Directors. Such shares may be
issued without further stockholder approval in circumstances that could have the
effect of preventing or delaying a change of control. The Company's Board of
Directors is classified into three classes, with each class of directors having
a staggered three-year term. The Company's Bylaws prohibit action by the
stockholders through written consent and restrict the ability of stockholders to
call stockholder meetings and propose action at meetings. In addition, Section
203 of the Delaware General Corporation Law restricts transactions between the
Company and any "interested stockholders" (as defined therein). Finally, the
Company adopted a Shareholder Protection Rights Agreement, commonly known as a
"poison pill," in August of 1998. These provisions could reduce or eliminate any
takeover premium in the market price for the Company's Common Stock or otherwise
limit the price certain investors might be willing to pay for the Company's
Common Stock.

     Reliance on Strategic Relationships.  The Company has established strategic
relationships with a number of healthcare industry participants and intends to
continue doing so. These relationships are intended to increase awareness of and
access to the Company's products and services without a substantial increase in
internal costs, proliferate the Caredata.com brand, improve product and data
offerings, generate revenue to the Company, and augment the Company's
healthcare, Internet, and marketing expertise. The Company's experience in
establishing and managing these relationships is limited; therefore, the success
or failure of such relationships is difficult to predict. The costs of
establishing and managing these relationships could exceed any revenue they
generate. Loss of these strategic relationships, failure of these relationships
to generate additional revenue, actions taken by the Company's partners in these
relationships which conflict with the Company's values and objectives, and
failure by the Company to establish new strategic relationships in the future
could have a material adverse effect on the Company's business, results of
operations and financial condition.

                                       14
<PAGE>   15

     Risks Related to Investing in Strategic Partners or Allowing Customers to
Pay for our Products Using their Equity Securities.  From time to time the
Company makes minority equity investments in private companies with whom it has
strategic relationships or customer relationships. In addition, in some cases
the Company agrees to accept equity securities from its customers in lieu of
cash as payment for products and services purchased by such customers from the
Company. These arrangements typically involve high risk, start-up companies
whose equity securities have no trading market and, therefore, no liquidity. As
a result, the Company may be required to hold these equity securities for an
indefinite period of time and may never have an opportunity to liquidate these
securities. In addition, these companies are subject to the numerous risks
typically associated with start-up, high growth companies. As a result, these
companies may fail, causing the Company's equity in these companies to become
worthless and be written off. Any such event could have a material adverse
effect on the Company's business, financial condition or results of operations.

     Internet Regulation Uncertainties.  Currently, Internet access, content,
commerce, privacy, and usage are largely unregulated. However, with the
increased usage of and transition to the Internet by both consumers and
commercial users, it is likely that local, state, federal, and international
government agencies and other regulators will adopt new laws and regulations
covering such issues. Numerous proposals to regulate these issues have been
introduced at both the federal and state levels, but the extent to which such
proposals will be adopted is uncertain. Because Internet-related revenues are
becoming a significant portion of the Company's revenue, any new law or
regulation impairing the growth and usage of the Internet may hinder the demand
for the Company's Internet-related products and services and could have a
material adverse effect on the Company's business, results of operations or
financial condition.

     Dependence on Key Personnel.  The Company's success is substantially
dependent on the performance of its key employees, including its senior
management team, key sales and marketing personnel, and key technical personnel.
The loss of the services of any of these key employees could have a material
adverse effect on the business, results of operations or financial condition of
the Company. The Company is heavily dependent upon its ability to attract,
retain and motivate skilled sales, marketing, technical and managerial
personnel. Competition for such personnel is intense, and there can be no
assurance that the Company will be able to attract, hire, or retain other highly
qualified sales, marketing, technical and managerial personnel in the future.
The inability to attract, hire, assimilate or retain the necessary sales,
marketing, technical and managerial personnel could have a material adverse
effect upon the Company's business, results of operations or financial
condition.

     Liability for Information Retrieved from the Internet.  Because information
distributed over the Internet is subject to unauthorized copying, redistribution
and other potential misuses, the Company may be exposed to potential copyright
infringement claims, privacy complaints, breach of contract claims, or other
legal claims that may not be covered by the Company's liability insurance, which
may have a material adverse effect on the Company's business, results of
operations or financial condition.

     Dependence on the Internet.  Access to the Company's Internet-related
products and services depends on the Internet infrastructure remaining a
reliable and effective medium. As the number of users of and products and
services offered on the Internet grows, there can be no assurance that the
Internet infrastructure will continue to be able to support the increased
demands placed upon it. In addition, the Internet could lose its commercial
viability if new technology and processes designed to alleviate increased levels
of Internet activity are not developed. Failure of the Internet to maintain a
reliable and effective infrastructure necessary to support commercial
transactions or the loss in confidence in the marketplace in the Internet's
ability to maintain a reliable and effective infrastructure may have a material
adverse effect on the Company's business, results of operations and financial
condition.

     Risks Associated with Internet "Hackers" and Computer Vandalism.  Recently,
computer vandals have caused certain leading Internet sites to shut down
temporarily and have materially affected the performance of the Internet during
key business hours by bombarding targeted sites with numerous false requests for
data. While the Company does not operate any Web sites like those recently
affected, the Company does rely on the Internet to deliver products and services
to certain customers and the Internet is expected to become an even more
significant distribution channel in the future. If the overall performance of
the Internet is seriously

                                       15
<PAGE>   16

downgraded by such Web site attacks or other acts of computer vandalism, the
Company's ability to deliver its products and services over the Internet could
be adversely impacted. In addition, traditional business interruption insurance
may not cover losses the Company could incur because of any such disruption of
the Internet.

     Risk of System Failure.  Many of the Company's products and services are
accessible only over the Internet. The Internet and the Company's related
hardware and software is vulnerable to interruption or damage from fire, floods,
earthquakes, power loss, telecommunications failures, computer viruses, and
intentional sabotage. The occurrence of any of these interruptions could have a
material adverse effect on the Company's business, results of operations and
financial condition.

ITEM 2.  PROPERTIES

     Caredata.com's corporate headquarters occupy approximately 16,000 square
feet of an office building located in Atlanta, Georgia, under a lease expiring
in March 2004. Caredata.com also leases office space in Chicago, Illinois; St.
Louis, Missouri; Rockville, Maryland; White Plains, New York; Nashville,
Tennessee; San Diego, California; Dallas, Texas; and San Francisco, California.
The Company believes that such offices are adequate for the Company's current
requirements.

ITEM 3.  LEGAL PROCEEDINGS

     The Company and certain of its officers and directors are named as
defendants in three purported securities class action lawsuits filed in the
United States District Court for the Northern District of Georgia: Richard Sturm
v. Medirisk, Inc., et al. (Civil Action No. 1:98-CV-1922), John T. Gallagher v.
Medirisk, Inc., et al. (Civil Action No. 1:98-CV-2099), and Frederick T.
Casiello v. Medirisk, Inc., et al. (Civil Action No. 1:98-CV-2100). The Sturm
action was filed on July 8, 1998. The Gallagher and Casiello actions were each
filed on July 24, 1998. These lawsuits have been consolidated under the style In
re Medirisk, Inc. Securities Litigation. Plaintiffs served their consolidated
and amended complaint on January 13, 1999. All defendants moved to dismiss this
complaint on March 12, 1999. The consolidated and amended complaint alleges that
the Company violated federal securities laws by making certain forward-looking
statements and by failing to disclose in its public statements and/or the
Prospectus for its June 1998 common stock offering certain alleged adverse
trends respecting its Market Performance and Physician Credentialing Products.
The consolidated and amended complaint asserts claims based on Sections 10(b)
and 20(a) of the Securities Exchange Act of 1934 and claims under Sections 11
and 15 of the Securities Act of 1933. Plaintiffs seek compensatory damages,
rescission or rescissory damages, and reimbursement of their attorneys' fees and
costs. Because of the uncertainty of the litigation process, the Company cannot
predict the outcome of these consolidated cases and, therefore, it is possible
that their outcome could have a material adverse effect on the Company. The
Company believes that plaintiffs' claims have no merit and intends to defend
these cases vigorously.

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

     No matter was submitted to a vote of the Company's security holders during
the quarter ended December 31, 1999.

                                       16
<PAGE>   17

                                    PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     The Common Stock is quoted on the Nasdaq National Market under the symbol
"CDCM." The following table sets forth the high and low sales prices for the
Common Stock for the quarters indicated as reported on the Nasdaq National
Market.

<TABLE>
<CAPTION>
                                                                   PRICE RANGE
                                                                ------------------
                                                                 HIGH        LOW
                                                                -------    -------
<S>                                                             <C>        <C>
Fourth Quarter ended December 31, 1999......................    $ 9.063    $ 6.625
Third Quarter ended September 30, 1999......................      9.125      6.750
Second Quarter ended June 30, 1999..........................     10.688      4.000
First Quarter ended March 31, 1999..........................      6.125      3.438
Fourth Quarter ended December 31,1998.......................      5.625      2.438
Third Quarter ended September 30, 1998......................      6.313      2.313
Second Quarter ended June 30, 1998..........................     25.250     18.625
First Quarter ended March 31, 1998..........................     25.625     11.000
</TABLE>

     The last reported sale price of the Common Stock on the Nasdaq National
Market on March 20, 2000 was $8.469 per share. As of March 20, 2000, the Company
had 171 stockholders of record.

     The Company has not declared or paid any cash dividends or distributions on
its Common Stock since 1991. It is the policy of the Company's Board of
Directors to retain earnings to support operations and to finance continued
growth of the Company rather than to pay dividends. Payments of future
dividends, if any, will be at the discretion of the Company's Board of
Directors. Additionally, the Credit Agreement between the Company and Bank of
America N.A. contains certain restrictions on the payment of dividends. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

     In September 1999, in connection with, and as partial additional
consideration for, the Healthdemographics acquisition (as discussed below), the
Company issued 465 shares of Series 1998-A Preferred Stock. Such shares are
convertible into an aggregate of 205,771 shares of the Company's Common Stock
upon the price of the Company's Common Stock reaching $22.61 per share. In June
1999, in connection with, and as partial consideration for, the acquisition of
Citizen 1 Software, Inc., the Company issued 770,652 shares of Common Stock to
various shareholders of Citizen 1 Software, Inc. In March 1998, in connection
with, and as partial consideration for, the acquisition of Healthdemographics,
Inc., the Company issued 171,315 shares of Common Stock to various shareholders
of Healthdemographics, Inc. In May 1998, in connection with, and as partial
consideration for, the acquisition of Successful Solutions, Inc., the Company
issued 189,811 shares of Common Stock to various shareholders of Successful
Solutions, Inc. All of such transactions were conducted without an underwriter
or other placement agent, and the Company claims that all of such transactions
were exempt from registration under the Securities Act pursuant to Section 4(2)
of the Securities Act.

ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

     The selected consolidated financial data presented below as of and for the
years ended December 31, 1995, 1996, 1997, 1998 and 1999 have been derived from
the audited consolidated financial statements of the Company and its
subsidiaries. The consolidated financial statements and related notes as of
December 31, 1998 and 1999 and for each of the years in the three-year period
ended December 31, 1999, together with the related report of KPMG LLP,
independent certified public accountants, are included elsewhere in this Form
10-K. As a result of the 1997 Acquisitions (as hereinafter defined), the 1998
Acquisitions (as hereinafter defined) and the acquisitions of PCA, HCMS and
Citizen 1 (collectively, the "1999 Acquisitions"), the Company's historical
financial statements are not representative of financial results to be expected
for future periods. The selected consolidated financial data should be read in
conjunction with "Management's

                                       17
<PAGE>   18

Discussion and Analysis of Financial Condition and Results of Operations" and
the Consolidated Financial Statements of the Company and Notes included
elsewhere in this Form 10-K.

<TABLE>
<CAPTION>
                                                              YEAR ENDED DECEMBER 31,
                                                  ------------------------------------------------
                                                   1995      1996      1997       1998      1999
                                                  -------   -------   -------   --------   -------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                               <C>       <C>       <C>       <C>        <C>
STATEMENTS OF OPERATIONS DATA:
Revenue.........................................  $ 3,655   $ 8,904   $16,749   $ 27,204   $39,828
Salaries, wages and benefits....................    2,578     6,093     7,910     12,972    16,542
Other operating expenses........................      956     2,314     4,374      8,040    12,436
Depreciation and amortization...................      193       787     1,304      2,815     6,351
Acquired in-process research and development
  costs and integration costs(1)................       --     6,180     4,575     13,547     3,539
                                                  -------   -------   -------   --------   -------
Operating income (loss).........................      (72)   (6,470)   (1,414)   (10,170)      960
Interest income (expense), net..................      (66)     (703)      345        626       115
Other expense...................................       --       (57)       --         --        --
Provision for income taxes......................       --        --      (707)      (550)     (675)
                                                  -------   -------   -------   --------   -------
Income (loss) before extraordinary item.........     (138)   (7,230)   (1,776)   (10,094)      400
Extraordinary item -- loss on early
  extinguishment of debt(1)(2)..................       --        --      (806)        --        --
                                                  -------   -------   -------   --------   -------
Net income (loss)...............................     (138)   (7,230)   (2,582)   (10,094)      400
                                                  =======   =======   =======   ========   =======
Accretion of discount on Series A Convertible
  Preferred stock...............................      (92)       --        --         --        --
Convertible preferred stock dividend
  requirement...................................     (202)     (202)      (25)        --       (58)
Accretion of redemption value of Series 1998-A
  Preferred stock...............................       --        --        --         --        (5)
                                                  -------   -------   -------   --------   -------
     Net income (loss) attributable to common
       stock....................................     (432)   (7,432)   (2,607)   (10,094)      337
                                                  =======   =======   =======   ========   =======
Income (loss) per common share -- basic(3):
Income (loss) per share before extraordinary
  item..........................................    (0.30)    (4.84)    (0.46)     (1.66)     0.04
Income (loss) per share -- extraordinary item...       --        --     (0.21)        --        --
                                                  -------   -------   -------   --------   -------
     Net income (loss) per share of common
       stock....................................    (0.30)    (4.84)    (0.67)     (1.66)     0.04
                                                  =======   =======   =======   ========   =======
Income (loss) per common share -- diluted(3):
Income (loss) per share before extraordinary
  item..........................................    (0.30)    (4.84)    (0.46)     (1.66)     0.04
Income (loss) per share -- extraordinary item...       --        --     (0.21)        --        --
                                                  -------   -------   -------   --------   -------
     Net income (loss) per share of common
       stock....................................    (0.30)    (4.84)    (0.67)     (1.66)     0.04
                                                  =======   =======   =======   ========   =======
Weighted average number of common shares used in
  calculating net income (loss) per share of
  common stock -- basic(3)......................    1,427     1,536     3,918      6,094     7,875
Weighted average number of common shares used in
  calculating net income (loss) per share of
  common stock -- diluted(3)....................    1,427     1,536     3,918      6,094     8,433

BALANCE SHEET DATA:
Working capital (deficit).......................  $   197   $(2,495)  $ 4,181   $ 25,945   $(8,496)
Total assets....................................    1,263     8,456    20,658     59,120    88,768
Long-term debt and capital lease obligations,
  excluding current portion.....................      151     7,195       165         16       105
Redeemable preferred stock......................    2,302        --        --         --     4,255
Stockholders' equity (deficit)..................   (2,333)   (4,823)   16,184     53,648    60,856
</TABLE>

                                       18
<PAGE>   19

---------------
(1) In 1997, the Company recorded non-recurring charges related to acquired
    in-process research and development and integration costs in connection with
    the 1997 Acquisitions. Excluding these charges and the extraordinary item
    (see (2) below), operating income, net income and net income per share of
    common stock -- diluted for the year ended December 31, 1997 would have been
    $3.2 million, $2.1 million and $0.45 respectively. In 1998, the Company
    recorded non-recurring charges related to acquired in-process research and
    development costs in connection with the 1998 Acquisitions as well as
    integration costs associated with the 1997 Acquisitions and the 1998
    Acquisitions. Excluding these charges, operating income, net income and net
    income per share of common stock -- diluted for the year ended December 31,
    1998 would have been $3.4 million, $2.4 million and $0.37, respectively. In
    1999, the Company recorded non-recurring charges related to acquired
    in-process research and development costs in connection with the 1999
    Acquisitions as well as integration costs associated with the 1998
    Acquisitions and the 1999 Acquisitions. Excluding these charges, operating
    income, net income and net income per share of common stock -- diluted for
    the year ended December 31, 1999 would have been $4.5 million, $2.6 million
    and $0.31, respectively. See "Management's Discussion and Analysis of
    Financial Condition and Results of Operations," Note 2 of Notes to
    Consolidated Financial Statements of the Company and the Consolidated
    Financial Statements of the Company.

(2) As a result of the application of a portion of the net proceeds of the
    Company's initial public offering to repay indebtedness, the Company
    incurred a one-time, non-recurring, non-cash charge of approximately
    $806,000 with respect to accelerated amortization of original issue discount
    on certain senior subordinated notes and related deferred financing costs.
    Due to the Company's losses, no income tax benefit was applied to the
    extraordinary loss presented.

(3) Computed on the basis described in Note 1 of Notes to Consolidated Financial
    Statements of the Company.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The following discussion should be read in conjunction with the
consolidated financial statements and accompanying notes, as well as the other
financial information appearing elsewhere in this Form 10-K. Except for
historical information, the following discussion contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from those discussed herein or those implied by such
forward-looking statements. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in
"Business -- Risk Factors."

OVERVIEW

     Caredata.com is an online syndicator of healthcare content and applications
to a wide range of Internet portals and e-commerce sites. The Company enables
Web sites to enhance their content offerings by delivering its proprietary
databases and co-branded tools to their established online communities. As a
supplier of Web-based content and applications, the Company is not subjected to
the intense marketing costs needed to attract site users. E-Health portals,
payor sites, online destinations targeting small subsets of healthcare consumers
and provider-sponsored sites all need to attract and keep visitors at their
sites. Caredata.com's Web applications and proprietary content attract visitors
and provide this "stickiness" to its customers' Web sites without the customer
having to spend the significant time and capital that would be required to
develop similar applications and content on their own. Caredata.com currently
has more than 30 strategic partnerships and alliances with leading Web
businesses.

     Caredata.com is also a provider of proprietary database products,
decision-support software and analytical services to the healthcare industry.
The Company's products and services enable its customers to make objective
comparisons of the financial costs and clinical outcomes of physician services
to customer-specific and industry benchmarks, assess member satisfaction with
specific managed-care plans, and obtain information concerning the background
and credentials of physicians. These capabilities assist healthcare industry
participants in strategic planning, effective contracting and improving the
delivery of care.

                                       19
<PAGE>   20

     Applications of Caredata.com's products include pricing managed care
contracts, evaluating physician fee schedules and utilization of physician
services, comparing provider outcomes and health plan performance, credentialing
and recruiting physicians, developing healthcare delivery networks, and
marketing healthcare services. The Company actively sells its products to over
600 major customers, including leading business-to-business and
business-to-consumer e-health companies, health plans, insurers, hospitals,
large multi-specialty physician groups, physician practice management companies,
employers, equipment suppliers and pharmaceutical companies, as well as several
hundred smaller customers, including single-specialty physician groups.
Caredata.com believes that it is the leading provider of clinical and financial
database products comprised of physician-oriented content and managed-care
member satisfaction information in the United States.

ACQUISITIONS

     Following the completion of its initial public offering in January 1997,
Caredata.com significantly expanded its operations by acquiring four companies
in 1997 (the "1997 Acquisitions"), three companies in 1998 (the "1998
Acquisitions") and three companies in 1999 (the "1999 Acquisitions"). The
acquisition of businesses with complementary products and services has broadened
the Company's customer base, created additional cross-selling opportunities,
increased market share within existing products and resulted in new product
extensions and enhancements. The following summarizes these transactions:

     -  In May 1997, Caredata.com acquired substantially all of the assets of
        Staff-Link, Inc. ("Staff-Link") of St. Louis, Missouri, a provider of a
        physician database and related software utilities designed to assist
        healthcare organizations with their in-house recruiting efforts.
        Staff-Link's customer base increased the market share of the Company's
        physician information products.

     -  In June 1997, Caredata.com acquired CIVS, Inc. ("CIVS") of Rockville,
        Maryland, a leading national provider of physician credentialing
        services and information products to healthcare organizations. The
        acquisition of CIVS added new customers to the Company's physician
        information product line and broadened the range of products and
        outsourced services offered by the Company.

     -  In August 1997, Caredata.com acquired CareData Reports, Inc. ("Caredata
        Reports") of New York, New York, which creates reports analyzing
        consumer satisfaction with more than 150 aspects of managed healthcare
        plans and ranks specific health plans accordingly. Caredata Reports'
        products are used by managed-care plans to assess their competitive
        position and quality of care, by employers to evaluate health plans and
        by pharmaceutical companies to target potential markets for their
        products.

     -  In November 1997, Caredata.com acquired Medsource, Inc. ("Medsource") of
        St. Paul, Minnesota, which licenses databases of physician information
        for use in recruiting physicians and developing healthcare networks. The
        acquisition strengthened the Company's physician information product
        line and extended the application of these products to the
        administrative and the marketing functions of healthcare organizations.

     -  In March 1998, Caredata.com acquired Healthdemographics of San Diego,
        California, which provides databases and decision-support applications
        to forecast the supply of and demand for healthcare services. Healthcare
        delivery organizations, insurers, equipment suppliers, consultants and
        other healthcare industry participants use Healthdemographics'
        proprietary demographic and market segmentation information and
        analytical tools to make informed strategic planning and analysis
        decisions. The acquisition of Healthdemographics resulted in an
        expansion of the Company's market performance products and customer
        base.

     -  In May 1998, Caredata.com acquired Successful Solutions, Inc.
        ("Successful Solutions") of Vidalia, Georgia, which provides
        decision-support tools, consulting services and training materials that
        assist hospitals and physician group practices to improve patient
        outcomes, achieve efficient delivery of care and establish billing and
        coding practices that comply with industry requirements. Successful
        Solutions collects clinical and billing record data from its customers
        and profiles the relative performance of individual physicians using its
        analytical tools and statistical algorithms. Successful Solutions'
        physician consultants and medical record specialists provide on-site
        education designed to

                                       20
<PAGE>   21
        influence physician behavior and promote the effective and efficient
        delivery of health care. Successful Solutions' tools and services
        improve medical record documentation to achieve optimal and appropriate
        reimbursement for services delivered and to benchmark physician and
        hospital performance for comparative analyses.

     -  In June 1998, Caredata.com acquired Sweetwater Health Enterprises, Inc.
        ("Sweetwater") of Dallas, Texas, which offers a comprehensive selection
        of physician credentialing services to hospitals and managed-care
        organizations. Sweetwater also offers a suite of quality management
        software used by healthcare organizations to facilitate in-house
        credentialing, network management and physician performance evaluation.
        Further, Sweetwater provides managed-care consulting and interim
        management services for healthcare organizations throughout the United
        States.

     -  In March 1999, the Company acquired Patient Care Analyst ("PCA"), an
        Internet-based product that provides evaluation of patient-level
        hospital discharge data.

     -  In March 1999, the Company acquired certain assets of Healthcare
        Credentials Management Services, Inc. ("HCMS") of Kennesaw, Georgia, a
        leading credentials verification organization. Assets acquired from HCMS
        include Healthcare Credentials Online, an Internet-based product that
        enables physician information to be verified online, and appSTAT, an
        Internet-based product that streamlines the physician application
        process by allowing physicians to electronically maintain a single set
        of credentials information that can be provided to any managed-care
        organization. The Company also acquired HCMS' outsourced physician
        credentialing services, which are provided to over 300 managed-care
        clients.

     -  In June 1999, the Company acquired Citizen 1 Software, Inc. ("Citizen
        1") of San Francisco, California, whose suite of tools organizes the
        Internet's broad base of healthcare content, improving the efficiency of
        on-line research as well as the quality of search results. Supported by
        an editorial staff and sophisticated search technology, Citizen 1 offers
        its advanced Web research capabilities via a free, consumer-based
        version at www.citeline.com, while premium Internet and intranet
        versions are licensed to healthcare industry researchers. Premium
        versions offer notification of content changes and dramatically improve
        research productivity by allowing simultaneous searches of the
        "invisible" Web databases, repositories of content which are typically
        reachable only through a particular site's own search engine.

     In connection with these acquisitions, the Company acquired intangible
assets, which are being amortized over various useful lives. The amortization
periods are based on, among other things, the nature of the products and
markets, the competitive position of the acquired companies and their
adaptability to changing market conditions.

     Also in connection with these acquisitions, the Company recorded
non-recurring charges related to acquired in-process research and development
costs of $3.1 million for CIVS, $975,000 for Caredata Reports, $300,000 for
Medsource, $4.8 million for Healthdemographics, $3.4 million for Successful
Solutions, $3.5 million for Sweetwater and $2.0 million for Citizen 1. The
amount of each of these non-recurring charges was equal to the estimated current
fair value, based on the adjusted cash flows (discounted by a risk-adjusted
weighted average cost of capital of 24% for CIVS and Caredata Reports, 20% for
Healthdemographics, 25% for Successful Solutions, 33% for Sweetwater, and 29%
for Citizen 1 and Medsource), of specifically identified technologies for which
technological feasibility had not yet been established pursuant to Statement of
Financial Accounting Standards No. 86, "Accounting for the Costs of Computer
Software to be Sold, Leased or Otherwise Marketed" and for which future
alternative uses did not exist. Similar charges could result in the future as a
result of additional acquisitions accounted for as purchases. The Company also
incurred $1.5 million, $1.9 million and $200,000 of integration costs in 1999,
1998 and 1997, respectively. Included in the 1999 and 1998 integration costs
were approximately $615,000 and $535,000, respectively, of internal expense
allocations, which may recur in other expense categories in the future.

     As a result of the 1997 Acquisitions, 1998 Acquisitions and 1999
Acquisitions, the Company's historical financial statements are not
representative of financial results to be expected for future periods. See Note
2 of Notes to Consolidated Financial Statements of the Company.

                                       21
<PAGE>   22

STOCK OFFERING

     In June 1998, the Company completed an offering of 2,250,000 shares of
Common Stock (the "Stock Offering"). As a result of the Stock Offering, the
Company received approximately $40.5 million, net of offering costs of
approximately $600,000.

SOURCES OF REVENUE

     The Company provides services and licenses its products within its two
segments, market performance and physician information. The Company also
co-brands or syndicates its products with its business partners in order to
enhance Caredata.com's brand recognition. The Company's product offerings enable
its partners to provide Internet features and functionality to their customers
and members, allowing them to remain competitive in the rapidly changing
Internet marketplace without having to incur the extensive time and costs
associated with the internal development of such products. In addition, because
many of the Company's products and databases are digitally linked, license
agreements often create multiple points of entry and distribution channels for
the Company's complementary products and services. These digital networks also
provide primary source data and strengthen the Company's information
infrastructure with minimal incremental costs.

     The Company's market performance products include healthcare forecasting
software, healthcare utilization and reimbursement data, clinical outcomes data,
healthcare satisfaction and pharmacy surveys, and on-line healthcare research
software. The Company's market performance services include facility
profitability analysis services, reimbursement compliance services, and clinical
outcomes reporting services. The Company's physician information products
consist of physician recruiting databases and software, physician credentialing
databases and software, and practice management software. The Company's
physician information services consist of physician recruiting services,
physician credentialing services, and healthcare administrative consulting
services.

     The Company's license and product revenues are generally recognized upon
delivery provided that no significant Company obligations remain and collection
of the receivable is probable. Revenue from healthcare surveys is recognized as
the related costs to produce the surveys are incurred. Fees from maintenance,
updates and support of the Company's products are deferred and recognized
ratably over the service period. Revenue from subscription to the Company's
physician recruiting databases is recognized over the term of the subscription.
Revenues for the Company's services are recognized as the services are
performed.

     The Company's two groups of products contribute varying percentages of the
Company's total revenue from quarter to quarter based on a variety of factors,
including, without limitation, the timing and size of acquisitions and the
seasonality of the Company's products. Of its total revenue for the year ended
December 31, 1999, the Company derived approximately 56% from market performance
products and approximately 44% from physician information products. Of its total
revenue for the year ended December 31, 1998, the Company derived approximately
61% from market performance products and approximately 39% from physician
information products.

     The Company's revenue is composed of both recurring revenue from the
Company's current customer base as well as revenue from new customers. The
Company defines its recurring revenue percentage with respect to any particular
period as the quotient, expressed as a percentage, of (i) revenue recognized
during such period from a sale of a product to a customer who purchased a
similar product in the prior period divided by (ii) the Company's total revenue
in the prior period. In determining its recurring revenue percentage, the
Company includes in its revenue the revenue of entities acquired during the
period as if such acquisitions had occurred at the beginning of the prior
period. The Company does not include revenue in its recurring revenue percentage
to the extent that such revenue exceeds total revenue in the prior period. The
Company's recurring revenue percentage has been in excess of 60% for each of the
last five years.

                                       22
<PAGE>   23

RESULTS OF OPERATIONS

     The following table sets forth, for the fiscal periods indicated, certain
items from the statements of operations of the Company expressed as a percentage
of revenue:

<TABLE>
<CAPTION>
                                                                  YEAR ENDED DECEMBER 31,
                                                                 -------------------------
                                                                 1997      1998      1999
                                                                 -----     -----     -----
<S>                                                              <C>       <C>       <C>
STATEMENTS OF OPERATIONS:
Revenue.....................................................      100%      100%      100%
Salaries, wages and benefits................................       47        48        42
Other operating expenses....................................       26        30        31
Depreciation and amortization...............................        8        10        16
Acquired in-process research and development costs,
  integration costs and acquisition-related costs...........       27        50         9
                                                                  ---       ---       ---
Operating income (loss).....................................       (8)      (38)        2
Interest income, net........................................        2         2         1
Provision for income taxes..................................       (4)       (2)       (2)
Extraordinary item: loss on early extinguishment of debt....       (5)       --        --
                                                                  ---       ---       ---
Net income (loss)...........................................      (15)%     (38)%       1%
                                                                  ===       ===       ===
</TABLE>

  YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

     Revenue.  Revenue in 1999 was $39.8 million, an increase of $12.6 million,
or 46%, over 1998. Internet-related revenue, which consists of sales of newly
developed Internet products, products acquired in connection with the 1999
Acquisitions and traditional products that became Web-enabled in 1999,
represented $16.7 million of the Company's revenue in 1999. The increase from
1998 to 1999 is primarily attributable to sales of these Internet-related
products.

     Salaries, wages and benefits.  Salaries, wages and benefits in 1999 were
$16.5 million, an increase of $3.6 million or 28% over 1998. The increase was
primarily the result of the 1999 Acquisitions, the full-year impact of the 1998
Acquisitions and incremental expenses associated with internal growth. As a
percentage of revenue, salaries, wages and benefits for 1999 and 1998 were 42%
and 48%, respectively. The decrease in salaries, wages and benefits as a
percentage of revenue was primarily attributable to efficiencies gained from the
Company's integration and consolidation efforts.

     Other operating expenses.  Other operating expenses in 1999 were $12.4
million, an increase of $4.4 million or 55% over 1998. The increase was
primarily related to costs associated with the 1999 Acquisitions, the full-year
impact of the 1998 Acquisitions and costs related to strengthening the
Caredata.com brand. Other operating expenses as a percentage of revenue were 31%
as compared to 30% in the same period in the prior year. As a percentage of
revenues, 1999 operating expenses remained comparable to 1998 as efficiencies
gained from the Company's integration and consolidation efforts were offset by
increased sales and marketing expenses related to the Company's branding
efforts.

     Depreciation and amortization.  Depreciation and amortization expenses in
1999 were $6.4 million, an increase of $3.5 million or 126% over 1998. The
increase was primarily the result of the amortization of intangible assets
acquired in the 1999 Acquisitions, 1998 Acquisitions and 1997 Acquisitions.
Depreciation and amortization as a percentage of revenue increased to 16% in
1999 compared to 10% in 1998.

     Acquired in-process research and development costs, integration costs and
acquisition-related costs. Acquired in-process research and development costs,
integration costs and acquisition-related costs in 1999 were $3.5 million, a
decrease of $10.0 million or 74% compared to 1998 as a result of fewer
acquisitions in 1999 having acquired in-process research and development costs
compared to 1998. In connection with the acquisition of Citizen 1 in 1999, the
Company recorded non-recurring charges resulting from expensing acquired
in-process research and development of $2.0 million. Integration costs in 1999
were $1.5 million as compared to $1.9 million in 1998. These integration charges
in 1999 were associated with both the 1999

                                       23
<PAGE>   24

Acquisitions and the 1998 Acquisitions. Included in the 1999 integration costs
were approximately $615,000 of internal expense allocations which may recur in
other expense categories in the future and may result in a future increase in
some expense categories as a percentage of total revenues.

     Interest income, net.  Interest income, net in 1999 was $115,000, compared
to $626,000 for 1998. The decrease was a result of decreased cash balances and
the interest expense related to draws on the Company's revolving credit facility
with Bank of America.

  YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

     Revenue.  Revenue in 1998 was $27.2 million, an increase of $10.5 million
or 62% over 1997. The increase was primarily attributable to the 1998
Acquisitions. Revenue associated with the 1998 Acquisitions represented $7.7
million or 73% of the total increase. The Company's revenue excluding these
acquisitions increased $2.7 million and represented a 16% increase in revenue
over 1997. This increase was due to internal growth.

     Salaries, wages and benefits.  Salaries, wages and benefits in 1998 were
$13.0 million, an increase of $5.1 million or 64% over 1997. The increase was
primarily the result of the 1998 Acquisitions and 1997 Acquisitions and
incremental expenses associated with internal growth. As a percentage of
revenue, salaries, wages and benefits for 1998 and 1997 were 48% and 47%,
respectively.

     Other operating expenses.  Other operating expenses in 1998 were $8.0
million, an increase of $3.7 million or 84% over 1997. This increase was
primarily related to costs associated with the 1998 Acquisitions and 1997
Acquisitions. Other operating expenses increased as a percentage of revenue to
30% as compared to 26% in the same period in the prior year primarily as a
result of differences in expense structures of the acquired companies.

     Depreciation and amortization.  Depreciation and amortization expenses in
1998 were $2.8 million, an increase of $1.5 million or 116% over 1997. The
increase was primarily the result of the amortization of intangible assets
acquired in the 1998 Acquisitions and 1997 Acquisitions. Depreciation and
amortization as a percentage of revenue increased to 10% in 1998 compared to 8%
in 1997.

     Acquired in-process research and development costs, integration costs and
acquisition-related costs. Acquired in-process research and development costs,
integration costs and acquisition-related costs in 1998 were $13.5 million, an
increase of $9.0 million or 196% over 1997. In connection with the acquisition
of Sweetwater, Successful Solutions and Healthdemographics in 1998, the
Company's recorded non-recurring charges resulting from expensing acquired
in-process research and development of $3.5 million, $3.4 million and $4.8
million, respectively. Integration costs in 1998 were $1.9 million as compared
to $200,000 in 1997. The integration charges in 1998 were associated with both
the 1997 Acquisitions and the 1998 Acquisitions. Included in the 1998
integration costs were approximately $535,000 of internal expense allocations
which may recur in other expense categories in the future and may result in an
increase in some expense categories as a percentage of total revenues.

     Interest income, net.  Interest income, net in 1998 was $626,000, compared
to $345,000 for 1997. The increase was a result of the interest income earned on
the net proceeds of the Company's stock offering in 1998.

     Extraordinary items.  The Company recorded an extraordinary loss in 1997 of
$806,000 related to a one-time, non-recurring, non-cash charge for bond discount
and debt issue cost associated with the early extinguishment of debt.

                                       24
<PAGE>   25

QUARTERLY RESULTS OF OPERATIONS

     The following table sets forth, for the fiscal periods indicated, certain
items from the statements of operations of the Company. In the opinion of the
Company's management this unaudited information has been prepared on the same
basis as the audited information and includes all adjustments necessary to
present fairly the information set forth therein. The operating results for any
quarter are not necessarily indicative of results for any future period:

<TABLE>
<CAPTION>
                                         1998 QUARTER ENDED                        1999 QUARTER ENDED
                                         -------------------                       -------------------
                               MAR. 31   JUN. 30    SEP. 30    DEC. 31   MAR. 31   JUN. 30    SEP. 30    DEC. 31
                               -------   --------   --------   -------   -------   --------   --------   -------
<S>                            <C>       <C>        <C>        <C>       <C>       <C>        <C>        <C>
STATEMENTS OF OPERATIONS:
Revenue......................  $5,176     $5,416     $7,762    $8,850    $8,078     $8,715    $10,377    $12,658
Salaries, wages and
  benefits...................   2,574      2,964      3,614     3,820     3,857      3,698      4,403      4,584
Other operating expenses.....   1,522      1,572      2,360     2,586     2,366      3,090      3,354      3,626
Depreciation and
  amortization...............     427        652        860       876     1,002      1,378      1,754      2,217
Acquired in-process research
  and development costs,
  integration costs and
  acquisition-related
  costs......................   4,815      7,249        992       491        --      2,549        802        188
                               ------     ------     ------    ------    ------     ------    -------    -------
Operating income (loss)......  (4,162)    (7,021)       (64)    1,077       853     (2,000)        64      2,043
Interest income (expense),
  net........................      36        (34)       298       326       273         71        (53)      (176)
Provision for income taxes...      --         --         --      (550)     (442)        --         --       (233)
                               ------     ------     ------    ------    ------     ------    -------    -------
Net income (loss)............  (4,126)    (7,055)       234       853       684     (1,929)        11      1,634
                               ======     ======     ======    ======    ======     ======    =======    =======
</TABLE>

     The Company's quarterly revenues and operating results have varied
significantly in the past. Quarterly results have fluctuated as a result of a
variety of factors, including but not limited to the following: the Company's
sales cycle; staffing changes in the Company's sales and marketing organization;
changes in the Company's resources; demand for the Company's products; the
timing of significant new customer contracts; the non-renewal of significant
customer contracts; the timing of acquisitions; competitive conditions in the
industry; changes in customer budgets; and general economic factors. The Company
has historically recorded a disproportionate amount of its revenue for each
quarter in the final month of the quarter, while expenses have been incurred
more evenly throughout the period. Furthermore, the Company has experienced a
seasonal pattern in its operating results, with a greater proportion of the
Company's revenue and operating profitability occurring in the second half of
the year. The Company attributes this seasonality to a combination of factors
including budgeting and other factors affecting the healthcare industry
generally, the compounding effect of historical renewal schedules (which
typically results in greater license renewals in the third and fourth quarters)
and internal staffing and growth issues. The Company believes the licensing and
subsequent renewal pattern of its market performance products are more seasonal
than its other products and expects the addition of new products, including
those from acquisitions, to moderate, but not end, this seasonal effect.

     A significant portion of the Company's expenses is relatively fixed, and
the amount and timing of increases in such expenses are based in large part on
the Company's expectations concerning future revenue. If revenues are below
expectations in any given quarter, the adverse effect may be magnified by the
Company's inability to adjust spending quickly enough to compensate for the
revenue shortfall. Accordingly, even a small variation from expected revenue
could have a material adverse effect on the Company's results of operations for
a given quarter.

SOFTWARE CAPITALIZATION

     In addition to acquisitions, the Company seeks to expand its product
offerings through internal development of new products. The Company capitalizes
product development costs incurred after technological feasibility has been
established and prior to general product release. Capitalized software
development costs, net of accumulated amortization, totaled approximately $5.6
million at December 31, 1999.

                                       25
<PAGE>   26

INCOME TAXES

     The Company recorded income tax expense of $675,000 during 1999 due to
taxable income, limitations on the utilization of net operating loss
carryforwards and the non-deductibility of certain acquired in-process research
and development costs and goodwill amortization. The net operating loss
carryforwards expire beginning in 2006 through 2012. The total gross deferred
tax asset was approximately $6.4 million as of December 31, 1999 and has been
reduced to zero by a valuation allowance and offsetting deferred income tax
liabilities of approximately $4.1 million.

     Deferred tax assets and liabilities are determined based on differences
between the financial reporting and the tax bases of assets and liabilities and
are measured using the enacted tax rates and laws that will be in effect when
the differences are expected to reverse. Applying the provisions of SFAS 109 to
the Company, particularly considering the Company's history of net losses, the
Company was unable to support a conclusion consistent with SFAS 109 that it is
more likely than not that it will generate future taxable income during the loss
carryforward periods; therefore, the Company has provided a full valuation
allowance against its net deferred tax assets. In determining that a valuation
allowance was required, management primarily considered such factors as the
Company's history of operating losses and expected near-term future losses and
earnings, the nature of the Company's deferred tax assets, the absence of
significant excess of appreciated asset value over the tax basis of the
Company's net assets, the absence of significant taxable income in prior
carryback years and the potential for deferred tax assets resulting from future
business acquisitions. Although management's operating plans assume taxable and
operating income in future periods, historical performance has produced an
accumulated deficit of approximately $22.1 million at December 31, 1999.
Consequently, the Company has provided a full valuation allowance against its
net deferred tax assets until such time as the Company produces sufficient
taxable and operating income to support a lower valuation allowance.

     At December 31, 1999, the Company had net operating loss carryforwards of
approximately $6.6 million, which expire beginning in 2006 through 2012.
Approximately $6.3 million of the net operating loss carryforwards at December
31, 1999 relates to loss carryforwards acquired in connection with the Company's
acquisitions. Accordingly, such losses are limited to income generated by the
acquired entity as well as substantial annual limitations.

LIQUIDITY AND CAPITAL RESOURCES

     The Company's Amended and Restated Credit Agreement with Bank of America
(the "Bank of America Revolver") under which $25.0 million was made available to
the Company is secured by substantially all of the Company's assets. Under the
terms of the Bank of America Revolver, the Company may borrow, subject to
customary terms, conditions and covenants, up to $25.0 million to fund working
capital needs, new product development and acquisitions. The Amended and
Restated Credit Agreement for the Bank of America Revolver provides for interest
at varying rates based on LIBOR and Bank of America's prime rate, and will
mature on July 15, 2000. Under the terms of the Bank of America Revolver, the
Company is subject to various restrictive covenants regarding, among other
things, payment of any dividends, capital expenditures limitations, incurrence
of indebtedness from others in excess of certain amounts, and consummation of
certain mergers and acquisitions without the consent of Bank of America.
Financial covenants include, but are not limited to, maintaining debt to
capitalization ratios, minimum net worth ratios, debt service coverage ratios
and cash flow leverage ratios. In 1999, the Company borrowed $5.0 million on the
Bank of America Revolver to partially fund the acquisition of Citizen 1, $1.7
million to partially fund the contingent consideration paid in connection with
the Healthdemographics acquisition, $2.0 million for general working capital use
and $7.9 million to make minority equity investments in several strategic
businesses, primarily e-health companies. At December 31, 1999, the Company had
approximately $8.5 million in borrowing availability remaining on the Bank of
America Revolver.

     The Company had a working capital deficit of $8.5 million as of December
31, 1999 as compared to working capital of $25.9 million at December 31, 1998.
The decrease was primarily due to the Company's acquisitions and investments,
which totaled $32.9 million for the year-ended December 31, 1999.

                                       26
<PAGE>   27

     Net cash provided by operating activities totaled $2.0 million for the year
ended December 31, 1999 as compared to net cash used of $3.1 million for the
prior year. The increase in cash provided by operating activities of $5.1
million was primarily due to income in 1999 versus a net loss in 1998.

     Net cash used in investing activities was approximately $39.8 million for
the year ended December 31, 1999 as compared to $18.0 million for the prior
year. In 1999, the Company invested $9.2 million in cash in the acquisitions of
PCA, HCMS and Citizen 1, and $10.2 million of contingent consideration was paid
in cash in connection with the acquisitions of Healthdemographics and Caredata
Reports. The remaining $20.4 million of net cash used in investing activities
for 1999 was used to fund $3.8 million in fixed asset purchases, $3.5 million of
software development and $13.5 million in minority investments in other
companies and other investments.

     Net cash provided by financing activities was $16.6 million for the year
ended December 31, 1999 as compared to $38.9 million for the prior year. In 1999
the Company borrowed $16.5 million under the Bank of America revolving credit
facility. In 1998 the Company received net proceeds of $40.5 million from its
follow-on stock offering.

     Many of the Company's acquisition agreements provide for the payment of
contingent consideration based upon the performance of the acquired businesses
over a prescribed period of time. If such acquired businesses exceed the
relevant performance goals, the Company is required to make additional payments,
which could be material. In connection with the Caredata Reports acquisition,
additional consideration payments of $5.5 and $3.0 million were made in 1999 and
1998, respectively. In connection with the Healthdemographics acquisition,
additional consideration payments of $4.7 million in cash and 465 shares of
Series 1998-A Preferred Stock were made in 1999. Additional contingent payments
will be forthcoming in 2000 and may be material.

     The Company believes that available borrowings under the Bank of America
Revolver and cash generated from operations will be sufficient to meet the
capital needs for the Company's operations for the near term. However, in
connection with the maturity of the Bank of America Revolver and the payment of
certain required contingent obligations in July 2000, the Company will either
refinance the Bank of America Revolver or will seek alternative borrowings to
satisfy its obligations in this regard. There can be no assurance that the
Company will be able to refinance the Bank of America Revolver or obtain
alternative financing in amounts and on terms acceptable to the Company. The
Company's future liquidity and cash requirements will depend on a wide range of
factors, including costs associated with development of new products,
enhancements of existing products and acquisitions. Although the Company has no
present commitments or agreements regarding acquisitions, part of the Company's
strategy is to acquire additional complementary products and businesses. The
Company believes that cash generated from operations and available borrowings
under either the Bank of America Revolver, if refinanced, or alternative
financing that the Company obtains, will be sufficient to fund its future
liquidity and cash requirements.

RECENT ACCOUNTING PRONOUNCEMENTS

     On September 15, 1998 the SEC issued a letter to the AICPA SEC Regulations
Committee outlining changes that the SEC believes should be made to the
methodology of calculating acquired in-process research and development costs.
The Company has applied this guidance with respect to the 1997, 1998 and 1999
acquisitions.

     In December 1998, the AICPA issued SOP No. 98-9, "Modification of SOP No.
97-2, Software Revenue Recognition, with Respect to Certain Transactions." This
SOP amends SOP No. 97-2 to, among other matters, require recognition of revenue
using the "residual method" in circumstances outlined in the SOP. Under the
residual method, revenue is recognized as follows: (1) the total fair value of
undelivered elements, as indicated by vendor-specific objective evidence, is
deferred and subsequently recognized in accordance with the relevant sections of
SOP No. 97-2, and (2) the difference between the total arrangement fee and the
amount deferred for the undelivered elements is recognized as revenue related to
the delivered elements. SOP No. 98-9 is effective for fiscal years beginning
after March 15, 1999. The Company does not believe that the adoption of SOP No.
98-9 will have a material effect on its revenue recognition.
                                       27
<PAGE>   28

EFFECTS OF INFLATION

     Management does not believe that inflation has had a material impact on
results of operations for the periods presented. Substantial increases in costs,
particularly the cost of labor for product development, marketing and sales,
could have an adverse impact on the Company and the healthcare information
industry.

FORWARD-LOOKING STATEMENTS

     This Annual Report on Form 10-K contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, that are based
on the beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in this
Annual Report on Form 10-K, the words "estimate," "project," "believe,"
"anticipate," "intend," "expect," "plan," "predict," "may," should," "will," and
similar expressions are intended to identify forward-looking statements.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which might not even
be anticipated. Future events and actual results, financial and otherwise, could
differ materially from those set forth in or contemplated by the forward-looking
statements contained herein. Important factors that could contribute to such
differences include, but are not limited to, the matters discussed above under
the caption "Risk Factors" and other factors that may be described from time to
time in the Company's other filings with the Securities and Exchange Commission,
news releases and other communications. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. The Company does not undertake any obligation to release publicly any
revisions to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the cautionary statements contained in this Annual Report on Form
10-K.

ITEM 7(A).  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The Company is subject to interest rate risk on its Bank of America
Revolver and obligations under capital leases. The Company's primary market risk
exposure relates to (i) the interest rate risk on long-term and short-term
borrowings, (ii) the impact of interest rate movements on its ability to meet
interest expense requirements and (iii) the impact of the interest rate
movements on the Company's ability to obtain adequate financing for future
operations. The Company manages interest rate risk on its outstanding long-term
and short-term debt through its use of fixed and variable rate debt. While the
Company cannot predict or manage its ability to refinance existing debt or the
impact interest rate movements will have on its existing debt, management
continues to evaluate its financial position on an ongoing basis.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Reference is made to the consolidated financial statements of Caredata.com
and its subsidiaries, consisting of the Consolidated Balance Sheets as of
December 31, 1999 and 1998, and the related Consolidated Statements of
Operations, Consolidated Statements of Stockholders' Equity (Deficit) and
Consolidated Statements of Cash Flows for each of the three years in the
three-year period ended December 31, 1999, together with the Notes to
Consolidated Financial Statements. The Company's Consolidated Financial
Statements and Notes thereto are attached hereto following the signature page,
and are incorporated herein by reference.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.

                                       28
<PAGE>   29

                                    PART III

ITEM 10.  EXECUTIVE OFFICERS AND DIRECTORS

     Incorporated by reference from the Company's Definitive Proxy Statement to
be filed by April 30, 2000 for its 2000 Annual Meeting of Stockholders under the
captions "Information Relating to Nominees and Directors" and "Our Executive
Officers."

ITEM 11.  EXECUTIVE COMPENSATION

     Incorporated by reference from the Company's Definitive Proxy Statement to
be filed by April 30, 2000 for its 2000 Annual Meeting of Stockholders under the
caption "Executive Compensation."

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference from the Company's Definitive Proxy Statement to
be filed by April 30, 2000 for its 2000 Annual Meeting of Stockholders under the
caption "Security by Ownership of Certain Beneficial Owners and Management."

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference from the Company's Definitive Proxy Statement to
be filed by April 30, 2000 for its 2000 Annual Meeting of Stockholders under the
caption "Compensation Committee Interlocks and Insider Participation."

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) Documents incorporated by reference or filed with this report:

     (1) Financial Statements.

     The Financial Statements of the Company are listed in Item 8 of Part II.
(Attached hereto following signature page.)

     (2) Financial Statement Schedules.

     Independent Auditors' Report

     Schedule II -- Valuation and Qualifying Accounts. (Attached hereto
following the Financial Statements.)

     (3) Exhibits Incorporated by Reference or Filed with this Report.

     The exhibits listed below are filed with or incorporated by reference into
this Annual Report on Form 10-K. ITEMS LISTED IN BOLDFACE CONSTITUTE MANAGEMENT
CONTRACTS OR COMPENSATORY PLANS OR ARRANGEMENTS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<S>       <C>  <C>
2.1       --   Stock Purchase Agreement dated June 24, 1997, by and among
               the company, CIVS, Inc. and the Shareholders of CIVS, Inc.
               (incorporated by reference from Exhibit 2.4 to the Company's
               Current Report on Form 8-K dated July 9, 1997).
2.2       --   Stock Purchase Agreement dated August 28, 1997, by and among
               the Company and the Shareholders of CareData Reports, Inc.
               (incorporated by reference from Exhibit 2.5 to the Company's
               Current Report on Form 8-K dated August 28, 1997).
</TABLE>

                                       29
<PAGE>   30

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<S>       <C>  <C>
2.3       --   Acquisition Agreement and Plan of Merger, dated as of March
               26, 1998, by and among the Company, Healthdemographics, Inc.
               and the Shareholders of Healthdemographics, Inc.
               (incorporated by reference from Exhibit 2.6 to the Company's
               Current Report on Form 8-K dated March 31, 1998).
2.4       --   Acquisition Agreement and Plan of Merger, dated as of May
               28, 1998 by and among the Company, Successful Solutions,
               Inc. and the Shareholders of Successful Solutions, Inc.
               (incorporated by reference from Exhibit 2.7 to the Company's
               Current Report on Form 8-K dated May 28, 1998).
2.5       --   Agreement and Plan of Merger dated June 25, 1998 by and
               among the Company and the Shareholders of Sweetwater Health
               Enterprises, Inc. (incorporated by reference from Exhibit
               2.8 to the Company's Current Report on Form 8-K dated June
               26, 1998).
2.6       --   Asset Purchase Agreement dated as of March 26, 1999 by and
               among Sweetwater Health Enterprises, Inc. and Healthcare
               Credentials Management Services, Inc. (incorporated by
               reference from Exhibit 2.8 to the Company's Current Report
               on Form 8-K dated April 15, 1999).
2.7       --   Agreement and Plan of Merger dated as of June 2, 1999 by and
               among the Company, Citizen 1 Software, Inc., a California
               corporation, Citizen 1 Software, Inc., a Delaware
               corporation, and certain Shareholders of Citizen 1 Software,
               Inc. a California corporation (incorporated by reference
               from Exhibit 2.9 to the Company's Current Report on Form 8-K
               dated June 4, 1999).
3.1       --   Certificate of Incorporation of the Company (incorporated by
               reference from Exhibit 3.1 to the Company's Registration
               Statement on Form S-1 (No. 333-12311) filed with the
               Commission on September 19, 1996).
3.1.1     --   Certificate of Designation of Series 1998-A Preferred Stock
               (incorporated by reference from Exhibit 3.1.1 to the
               Company's Current Report on Form 8-K dated March 31, 1998)
3.1.2     --   Certificate of Designation, Preferences and Rights of Series
               A Junior Participating Preferred Stock (incorporated by
               reference from Exhibit 3.1.2 to the Company's Annual Report
               on Form 10-k for the fiscal year ended December 31, 1998).
3.2       --   Bylaws of the Company (incorporated by reference from
               Exhibit 3.2 to the Company's Registration Statement on Form
               S-1 (No. 333-12311) filed with the Commission on September
               19, 1996).
4.1       --   Shareholder Protection Rights Agreement dated as of July 29,
               1998 between the Company and SunTrust Bank, Atlanta, as
               Rights Agent (incorporated by reference from Exhibit 2.8 to
               the Company's Current Report on Form 8-K dated July 29,
               1998).
4.2       --   Specimen Stock Certificate of the Common Stock of the
               Company (incorporated by reference from Exhibit 4.2 to the
               Company's Registration Statement on Form S-1 (No. 333-12311)
               filed with the Commission on September 19, 1996).
10.1      --   EMPLOYMENT AGREEMENT DATED AS OF AUGUST 18, 1998 BETWEEN THE
               COMPANY AND MARK A. KAISER (INCORPORATED BY REFERENCE TO
               EXHIBIT 10.2 TO THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q
               FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998).
10.2      --   AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN THE COMPANY
               AND MARK A. KAISER (INCORPORATED BY REFERENCE FROM EXHIBIT
               10.2 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE
               FISCAL YEAR ENDED DECEMBER 31, 1998).
10.3      --   AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT BETWEEN THE COMPANY
               AND MARK A. KAISER.
10.4      --   EMPLOYMENT AGREEMENT DATED AS OF AUGUST 21, 1998 BETWEEN THE
               COMPANY AND KENNETH M. GOINS, JR. (INCORPORATED BY REFERENCE
               FROM EXHIBIT 10.2 TO THE COMPANY'S QUARTERLY REPORT ON FORM
               10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998).
10.5      --   AMENDMENT NO. 1 TO EMPLOYMENT AGREEMENT BETWEEN THE COMPANY
               AND KENNETH M. GOINS, JR. (INCORPORATED BY REFERENCE FROM
               EXHIBIT 10.4 TO THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR
               THE FISCAL YEAR ENDED DECEMBER 31, 1998).
</TABLE>

                                       30
<PAGE>   31

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                           DESCRIPTION OF EXHIBITS
-------                          -----------------------
<S>       <C>  <C>
10.6      --   EMPLOYMENT AGREEMENT DATED AS OF NOVEMBER 4, 1998 BETWEEN
               THE COMPANY AND THOMAS C. KUHN, III (INCORPORATED BY
               REFERENCE FROM EXHIBIT 10.5 TO THE COMPANY'S ANNUAL REPORT
               ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998).
10.7      --   Form of Indemnification Agreement between the Company and
               each of its Officers and Directors (incorporated by
               reference from Exhibit 10.11 to the Company's Registration
               Statement on Form S-1 (No. 333-12311) filed with the
               Commission on September 19, 1996).
10.8      --   Caredata.com, Inc. 1996 Stock Incentive Plan (incorporated
               by reference from Exhibit 10.12 to the Company's
               Registration Statement on Form S-1 (No. 333-12311) filed
               with the commission on September 19, 1996).
10.9      --   Caredata.com, Inc. 1996 Nonmanagement Directors' Stock
               Option Plan (incorporated by reference from Exhibit 10.12 to
               the Company's Registration Statement on Form S-1 (No.
               333-12311) filed with the Commission on September 19, 1996).
10.10     --   Registration Agreement dated as of October 28, 1996, between
               the Company, Brantley Venture Partners II, L.P., Chase
               Manhattan Bank N.A., as trustee, and Laurence H. Powell
               (incorporated by reference from Exhibit 10.12 to the
               Company's Registration Statement on Form S-1 (No. 333-12311)
               filed with the Commission on September 19, 1996).
10.11     --   Amended and Restated Credit Agreement dated as of June 29,
               1998 between the Company, as borrower, and Bank of America,
               N.A. as lender (incorporated by reference from Exhibit 10.16
               to the Company's Quarterly Report on Form 10-Q for the
               quarterly period ended June 30, 1998).
10.12     --   Caredata.com, Inc. 1998 Employee Stock Purchase Plan.
10.13     --   Caredata.com, Inc. 1998 Long-Term Incentive Plan.
10.14     --   Amendment No.1 to the Caredata.com, Inc. 1998 Long-Term
               Incentive Plan.
21.1      --   List of Subsidiaries of the Registrant.
23.1      --   Consent of KPMG LLP.
27.1      --   Financial data schedule.
</TABLE>

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

(b) Reports on Form 8-K

     No Current Reports on Form 8-K were filed by the Registrant during the
fourth quarter of the fiscal year ended December 31, 1999.

                                       31
<PAGE>   32

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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, as of March 28, 2000.

                                          CAREDATA.COM, INC.


                                          By:   /s/ THOMAS C. KUHN III
                                          --------------------------------------
                                                     Thomas C. Kuhn III
                                                Executive Vice President and
                                                  Chief Financial Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities indicated as of March 28, 2000.

<TABLE>
<CAPTION>
                     SIGNATURE                                             TITLE
                     ---------                                             -----
<S>                                                   <C>
                /s/ MARK A. KAISER
---------------------------------------------------
                  Mark A. Kaiser                      Chairman of the Board and Chief Executive
                                                      Officer (Principal Executive Officer)

             /s/ KENNETH M. GOINS, JR.
---------------------------------------------------
               Kenneth M. Goins, Jr.                  President and Chief Operating Officer

              /s/ THOMAS C. KUHN III
---------------------------------------------------
                Thomas C. Kuhn III                    Executive Vice President and Chief Financial
                                                      Officer (Principal Financial and Accounting
                                                      Officer)

                /s/ KEITH O. COWAN
---------------------------------------------------
                  Keith O. Cowan                      Director

                /s/ MICHAEL J. FINN
---------------------------------------------------
                  Michael J. Finn                     Director

          /s/ WILLIAM M. MCCLATCHEY, M.D.
---------------------------------------------------
            William M. McClatchey, M.D.               Director

               /s/ ROBERT P. PINKAS
---------------------------------------------------
                 Robert P. Pinkas                     Director
</TABLE>

                                       32
<PAGE>   33

                                   FORM 10-K

                      CAREDATA.COM, INC. AND SUBSIDIARIES
                          YEAR ENDED DECEMBER 31, 1999

                   LIST OF CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                              PAGE
                                                              ----
<S>                                                           <C>
Caredata.com, Inc. and Subsidiaries
  Independent Auditors' Report..............................  F-2
  Consolidated Balance Sheets as of December 31, 1999 and
     1998...................................................  F-3
  Consolidated Statements of Operations for the years ended
     December 31, 1999, 1998 and 1997.......................  F-5
  Consolidated Statements of Stockholders' Equity (Deficit)
     for the years ended
     December 31, 1999, 1998 and 1997.......................  F-6
  Consolidated Statements of Cash Flows for the years ended
     December 31, 1999, 1998 and 1997.......................  F-7
  Notes to Consolidated Financial Statements................  F-8
</TABLE>

                                       F-1
<PAGE>   34

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Caredata.com, Inc.:

     We have audited the accompanying consolidated balance sheets of
Caredata.com, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the years in the three-year period ended December 31,
1999. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Caredata.com, Inc. and subsidiaries as of December 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1999, in conformity with generally accepted
accounting principles.

/s/ KPMG LLP
Atlanta, Georgia
February 4, 2000

                                       F-2
<PAGE>   35

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1999           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
                                         ASSETS
Current assets:
  Cash and cash equivalents.................................  $   199,415     21,365,208
  Accounts receivable, less allowances for doubtful accounts
     of $901,589 and $466,250, at December 31, 1999 and
     1998, respectively.....................................   12,053,142      8,009,496
  Prepaid expenses..........................................      955,837      1,181,007
  Notes receivable from officers............................       39,167        447,500
  Product and data licenses.................................    1,187,500             --
  Other current assets......................................      620,449        398,289
                                                              -----------    -----------
          Total current assets..............................   15,055,510     31,401,500
                                                              -----------    -----------
Property and equipment......................................    9,058,320      4,951,152
  Less accumulated depreciation and amortization............    4,020,613      2,376,702
                                                              -----------    -----------
     Property and equipment, net............................    5,037,707      2,574,450
                                                              -----------    -----------
Excess of cost over net assets of businesses acquired, less
  accumulated amortization of $4,466,930 and $1,689,233 at
  December 31, 1999 and 1998, respectively..................   42,568,470     17,760,644
Other intangible assets, less accumulated amortization of
  $2,009,543 and $921,932 at December 31, 1999 and 1998,
  respectively..............................................    5,637,384      4,337,329
Software development costs, less accumulated amortization of
  $924,537 and $363,237 at December 31, 1999 and 1998,
  respectively..............................................    5,564,378      2,436,673
Notes receivable from officers, excluding current portion...       22,500         45,000
Investments.................................................   13,490,000             --
Other assets................................................    1,392,254        564,292
                                                              -----------    -----------
                                                              $88,768,203     59,119,888
                                                              ===========    ===========
</TABLE>

                                       F-3
<PAGE>   36

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1999 AND 1998

<TABLE>
<CAPTION>
                                                                     DECEMBER 31,
                                                              --------------------------
                                                                 1999           1998
                                                              -----------    -----------
<S>                                                           <C>            <C>
                          LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Current installments of long-term debt and obligations
     under capital leases...................................  $16,619,758         62,057
  Accounts payable..........................................      677,844        276,967
  Accrued expenses..........................................    1,926,356      1,117,131
  Income taxes payable......................................      758,218      1,297,466
  Deferred revenue..........................................    3,569,346      2,702,469
                                                              -----------    -----------
          Total current liabilities.........................   23,551,522      5,456,090
Long-term debt and obligations under capital leases,
  excluding current installments............................      105,201         16,114
                                                              -----------    -----------
          Total liabilities.................................   23,656,723      5,472,204
                                                              -----------    -----------
Series 1998-A preferred stock, $.001 par value, redeemable;
  5,000 shares authorized and designated; 465 shares issued
  and outstanding with a per-share liquidation value of
  $10,000 at December 31, 1999, none issued or outstanding
  at December 31, 1998......................................    4,255,095             --
Stockholders' equity:
  Preferred stock, $.001 par value; 795,000 shares
     authorized; none issued or outstanding.................           --             --
  Series A junior participating preferred stock, $.001 par
     value; 200,000 shares authorized and designated; none
     issued or outstanding..................................           --             --
  Common stock, $.001 par value; 20,000,000 shares
     authorized; 8,236,018 and 7,344,795 shares issued and
     outstanding at December 31, 1999 and 1998,
     respectively...........................................        8,236          7,345
  Additional paid-in capital................................   82,920,626     76,113,254
  Accumulated deficit.......................................  (22,072,477)   (22,472,915)
                                                              -----------    -----------
                                                               60,856,385     53,647,684
                                                              -----------    -----------
Commitments and contingencies...............................           --             --
                                                              -----------    -----------
                                                              $88,768,203     59,119,888
                                                              ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   37

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                         1999           1998           1997
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Revenue.............................................  $39,828,010    $27,204,030    $16,748,839
Salaries, wages, and benefits.......................   16,542,012     12,971,839      7,909,600
Other operating expenses............................   12,436,701      8,040,290      4,373,954
Depreciation and amortization.......................    6,350,601      2,814,811      1,304,155
Acquired in-process research and development and
  integration costs.................................    3,538,606     13,546,639      4,575,025
                                                      -----------    -----------    -----------
     Operating income (loss)........................      960,090    (10,169,549)    (1,413,895)
Interest income, net................................      115,348        625,683        344,973
                                                      -----------    -----------    -----------
     Income (loss) before income taxes and
       extraordinary item...........................    1,075,438     (9,543,866)    (1,068,922)
Income taxes........................................     (675,000)      (550,000)      (707,000)
                                                      -----------    -----------    -----------
     Income (loss) before extraordinary item........      400,438    (10,093,866)    (1,775,922)
Extraordinary item -- early extinguishment of
  debt..............................................           --             --       (806,146)
                                                      -----------    -----------    -----------
     Net income (loss)..............................      400,438    (10,093,866)    (2,582,068)
Convertible preferred stock dividend requirement....      (58,156)            --        (24,673)
Accretion of redemption value of Series 1998-A
  convertible preferred stock.......................       (4,806)            --             --
                                                      -----------    -----------    -----------
     Net income (loss) attributable to common
       stock........................................  $   337,476    (10,093,866)    (2,606,741)
                                                      ===========    ===========    ===========
Net income (loss) per share of common stock --basic:
  Net income (loss) per share before extraordinary
     item...........................................  $      0.04          (1.66)         (0.46)
  Net income (loss) per share -- extraordinary
     item...........................................           --             --          (0.21)
                                                      -----------    -----------    -----------
     Net income (loss) per share of common stock....  $      0.04          (1.66)         (0.67)
                                                      ===========    ===========    ===========
Net income (loss) per share of common
  stock -- diluted:
  Net income (loss) per share before extraordinary
     item...........................................  $      0.04          (1.66)         (0.46)
  Net income (loss) per share -- extraordinary
     item...........................................           --             --          (0.21)
                                                      -----------    -----------    -----------
     Net income (loss) per share of common stock....  $      0.04          (1.66)         (0.67)
                                                      ===========    ===========    ===========
Weighted average number of common shares used in
  calculating net income (loss) per share of common
  stock -- basic....................................    7,875,376      6,094,343      3,918,347
                                                      ===========    ===========    ===========
Weighted average number of common shares used in
  calculating net income (loss) per share of common
  stock -- diluted..................................    8,433,301      6,094,343      3,918,347
                                                      ===========    ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>   38

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
            (DEFICIT) YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997
<TABLE>
<CAPTION>
                              SERIES A CONVERTIBLE   SERIES B CONVERTIBLE
                                PREFERRED STOCK         PREFERRED STOCK         COMMON STOCK       ADDITIONAL
                              --------------------   ---------------------   ------------------     PAID-IN      ACCUMULATED
                                SHARES     AMOUNT      SHARES      AMOUNT     SHARES     AMOUNT     CAPITAL        DEFICIT
                              ----------   -------   ----------   --------   ---------   ------   ------------   ------------
<S>                           <C>          <C>       <C>          <C>        <C>         <C>      <C>            <C>
Balance at December 31,
  1996.....................    1,292,359   $ 1,292     280,623      $ 281      709,943   $  710   $ 4,971,644    $ (9,796,981)
Common stock issued in
  initial public
  offering.................           --        --          --         --    2,300,000    2,300    22,623,371              --
Conversion of Series A and
  Series B convertible
  preferred stock into
  common stock.............   (1,292,359)   (1,292)   (280,623)      (281)   1,021,809    1,022           551              --
Dividends paid on Series A
  and Series B convertible
  preferred stock..........           --        --          --         --           --       --       (24,673)             --
Issuance of common stock in
  acquisitions.............           --        --          --         --      143,682      144       901,023              --
Stock option exercises.....           --        --          --         --       20,243       20       101,929              --
Common stock repurchased
  and canceled.............           --        --          --         --       (2,331)      (3)      (14,566)             --
Net loss...................           --        --          --         --           --       --            --      (2,582,068)
                              ----------   -------    --------      -----    ---------    -----   -----------    ------------
Balance at December 31,
  1997.....................           --        --          --         --    4,193,346     4,193   28,559,279     (12,379,049)
Common stock issued in
  public offering..........           --        --          --         --    2,250,000     2,250   40,527,942              --
Issuance of common stock in
  acquisitions.............           --        --          --         --      361,126       361    6,602,214              --
Stock option exercises.....           --        --          --         --       51,941        53       32,600              --
Common stock repurchased
  and canceled.............           --        --          --         --       (4,648)       (5)     (12,817)             --
Exercise of warrants.......           --        --          --         --      493,030       493      304,036              --
Income tax benefit
  resulting from exercise
  of stock options.........           --        --          --         --           --        --      100,000              --
Net loss...................           --        --          --         --           --        --           --     (10,093,866)
                              ----------   -------    --------      -----    ---------    ------  -----------    ------------
Balance at December 31,
  1998.....................           --        --          --         --    7,344,795     7,345   76,113,254     (22,472,915)
Issuance of common stock in
  acquisitions.............           --        --          --         --      770,652       771    6,259,391              --
Payment of Series 1998-A
  preferred stock
  dividends................           --        --          --         --           --        --      (58,156)             --
Issuance of common stock
  under employee stock
  purchase plan............           --        --          --         --       86,483        86      301,824              --
Issuance of common stock as
  restricted stock
  awards...................           --        --          --         --       26,363        26      144,971              --
Stock option exercises.....           --        --          --         --        8,098         8       14,378              --
Income tax benefit
  resulting from exercise
  of stock options.........           --        --          --         --           --        --      153,000              --
Common stock repurchased
  and canceled.............           --        --          --         --         (373)       --       (3,230)             --
Accretion of redemption
  value of Series 1998-A
  preferred stock..........           --        --          --         --            --       --       (4,806)             --
Net income.................           --        --          --         --            --       --           --         400,438
                              ----------   -------    --------      -----     ---------   ------  -----------    ------------
Balance at December 31,
  1999.....................           --   $    --          --      $  --    8,236,018    $8,236  $82,920,626    $(22,072,477)
                              ==========   =======    ========      =====    =========    ======  ===========    ============

<CAPTION>

                                  TOTAL
                              SHAREHOLDERS'
                             EQUITY (DEFICIT)
                             ----------------
<S>                          <C>
Balance at December 31,
  1996.....................    $(4,823,054)
Common stock issued in
  initial public
  offering.................     22,625,671
Conversion of Series A and
  Series B convertible
  preferred stock into
  common stock.............             --
Dividends paid on Series A
  and Series B convertible
  preferred stock..........        (24,673)
Issuance of common stock in
  acquisitions.............        901,167
Stock option exercises.....        101,949
Common stock repurchased
  and canceled.............        (14,569)
Net loss...................     (2,582,068)
                               -----------
Balance at December 31,
  1997.....................     16,184,423
Common stock issued in
  public offering..........     40,530,192
Issuance of common stock in
  acquisitions.............      6,602,575
Stock option exercises.....         32,653
Common stock repurchased
  and canceled.............        (12,822)
Exercise of warrants.......        304,529
Income tax benefit
  resulting from exercise
  of stock options.........        100,000
Net loss...................    (10,093,866)
                               -----------
Balance at December 31,
  1998.....................     53,647,684
Issuance of common stock in
  acquisitions.............      6,260,162
Payment of Series 1998-A
  preferred stock
  dividends................        (58,156)
Issuance of common stock
  under employee stock
  purchase plan............        301,910
Issuance of common stock as
  restricted stock
  awards...................        144,997
Stock option exercises.....         14,386
Income tax benefit
  resulting from exercise
  of stock options.........        153,000
Common stock repurchased
  and canceled.............         (3,230)
Accretion of redemption
  value of Series 1998-A
  preferred stock..........         (4,806)
Net income.................        400,438
                               -----------
Balance at December 31,
  1999.....................    $60,856,385
                               ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>   39

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                 YEARS ENDED DECEMBER 31, 1999, 1998, AND 1997

<TABLE>
<CAPTION>
                                                                   YEARS ENDED DECEMBER 31,
                                                           -----------------------------------------
                                                               1999           1998          1997
                                                           ------------   ------------   -----------
<S>                                                        <C>            <C>            <C>
Cash flows from operating activities:
  Net income (loss)......................................  $    400,438   $(10,093,866)  $(2,582,068)
  Adjustments to reconcile net income (loss) to net cash
    provided by(used in) operating activities:
    Acquired in-process research and development costs...     2,000,000     11,650,000     4,375,000
    Depreciation and amortization........................     6,350,601      2,814,811     1,304,155
    Loss due to early extinguishment of debt.............            --             --       806,146
    Decrease (increase) in:
       Accounts receivable...............................    (3,924,846)    (3,845,592)   (1,925,277)
       Other assets......................................    (2,053,338)      (762,951)      137,848
    Increase (decrease) in:
       Accounts payable..................................       118,488       (651,948)     (870,028)
       Accrued expenses and other liabilities............    (1,091,673)    (1,780,320)     (175,425)
       Deferred revenue..................................       216,001       (407,583)   (1,766,992)
                                                           ------------   ------------   -----------
         Net cash provided by (used in) operating
            activities...................................     2,015,671     (3,077,449)     (696,641)
                                                           ------------   ------------   -----------
Cash flows from investing activities:
  Acquisition of businesses, net of cash acquired........   (19,439,788)   (14,362,372)   (7,386,208)
  Purchases of property and equipment....................    (3,810,323)    (1,504,961)     (948,833)
  Additions to software development costs................    (3,457,029)    (1,695,004)     (983,937)
  Purchase of investments................................   (13,490,000)            --            --
  Repayment of (loans to) employees......................       372,500       (402,500)       22,500
                                                           ------------   ------------   -----------
         Net cash used in investing activities...........   (39,824,640)   (17,964,837)   (9,296,478)
                                                           ------------   ------------   -----------
Cash flows from financing activities:
  Proceeds from issuance of common stock.................       316,296     40,867,374    22,727,620
  Common stock repurchased and canceled..................        (3,230)       (12,822)      (14,569)
  Payment of dividends...................................       (58,156)            --      (642,683)
  Proceeds from draws on revolving credit facility.......    16,502,482             --            --
  Payments on long-term debt and obligations under
    capital leases.......................................      (114,216)    (1,962,989)   (9,008,575)
                                                           ------------   ------------   -----------
         Net cash provided by financing activities.......    16,643,176     38,891,563    13,061,793
                                                           ------------   ------------   -----------
         Net increase (decrease)in cash and cash
            equivalents..................................   (21,165,793)    17,849,277     3,068,674
Cash and cash equivalents at beginning of period.........    21,365,208      3,515,931       447,257
                                                           ------------   ------------   -----------
Cash and cash equivalents at end of period...............  $    199,415   $ 21,365,208   $ 3,515,931
                                                           ============   ============   ===========
Supplemental disclosure of cash flow information: cash
  paid during the period for interest....................  $    361,406   $    137,720   $   129,771
                                                           ============   ============   ===========
Supplemental disclosures of noncash activities:
  Issuance of restricted stock awards....................  $    144,997   $         --   $        --
                                                           ============   ============   ===========
Acquisitions of businesses:
  Fair value of assets acquired..........................  $ 15,531,083   $ 13,322,746   $ 8,249,588
  Acquired in-process research and development costs.....     2,000,000     11,650,000     4,375,000
  Fair value of liabilities assumed......................    (1,981,770)    (6,492,417)   (3,600,535)
  Common stock issued....................................    (6,260,162)    (6,602,575)     (901,167)
  Preferred stock issued.................................    (4,250,289)            --            --
  Contingent consideration paid..........................    14,430,738      2,999,941            --
                                                           ------------   ------------   -----------
         Total cash paid for acquisitions................    19,469,600     14,877,695     8,122,886
  Cash acquired..........................................       (29,812)      (515,323)     (736,678)
                                                           ------------   ------------   -----------
         Net cash paid for acquisitions..................  $ 19,439,788   $ 14,362,372   $ 7,386,208
                                                           ============   ============   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-7
<PAGE>   40

                      CAREDATA.COM, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       DECEMBER 31, 1999, 1998, AND 1997

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  (a) Description of Business

     Caredata.com, Inc. (formerly Medirisk, Inc.) (the "Company") is an online
syndicator of healthcare content and applications to a wide range of Internet
portals and e-commerce sites. The Company enables Web sites to enhance their
content offerings by delivering its proprietary databases and co-branded tools
to their established online communities. E-Health portals, payor sites, online
destinations targeting small subsets of healthcare consumers and provider
sponsored sites all need to attract and keep visitors at their sites.
Caredata.com's Web applications and proprietary content attract visitors and
provide this "stickiness" to its customers' Web sites without the customer
having to spend the significant time and capital that would be required to
develop similar applications and content on their own.

     Applications of the Company's products include pricing managed-care
contracts, evaluating physician fee schedules and utilization of physician
services, comparing provider outcomes and health plan performance, credentialing
and recruiting physicians, developing healthcare delivery networks, and
marketing healthcare services. The Company actively sells its products to
leading business-to-business and business-to-consumer e-health companies, health
plans, insurers, hospitals, large multi-specialty physician groups, physician
practice management companies, employers, equipment suppliers and pharmaceutical
companies, as well as several hundred smaller customers, including
single-specialty physician groups.

  (b) Basis of Financial Statement Presentation

     The consolidated financial statements have been prepared in conformity with
generally accepted accounting principles. In preparing the consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities as of the date of the
balance sheet, income and expenses for the period, and disclosure of contingent
assets and liabilities. Actual results could differ from those estimates.

     Business combinations, which have been accounted for under the purchase
method of accounting, include the results of operations of the acquired business
from the date of acquisition. Net assets of the companies acquired are recorded
at their fair value to the Company at the date of acquisition. Amounts allocated
to in-process research and development are expensed in the period of
acquisition.

     The consolidated financial statements include the accounts of Caredata.com,
Inc. and its subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

  (c) Cash Equivalents

     Cash equivalents at December 31, 1999 and 1998 include amounts of $17,729
and $19,325,318, respectively, invested in money market accounts with a major
brokerage firm. For purposes of the statement of cash flows, the Company
considers all highly liquid debt instruments with original maturities of three
months or less to be cash equivalents.

  (d) Revenue Recognition

     The Company provides services and licenses its products within its two
segments, market performance and physician information.

     The Company's market performance products include healthcare forecasting
software, healthcare utilization and reimbursement data, clinical outcomes data,
healthcare satisfaction and pharmacy surveys, and on-line healthcare research
software. The Company's market performance services include facility
profitability analysis services, reimbursement compliance services, and clinical
outcomes reporting services. The Com-
                                       F-8
<PAGE>   41

pany's physician information products consist of physician recruiting databases
and software, physician credentialling databases and software, and practice
management software. The Company's physician information services consist of
physician recruiting services, physician credentialling services, and healthcare
administrative consulting services.

     Revenue from software licensing and support fees is recognized in
accordance with Statement of Position ("SOP") 97-2, Software Revenue
Recognition, and SOP 98-4, Deferral of the Effective Date of Provision of 97-2.
The Company's license and product revenues are generally recognized upon
delivery provided that no significant Company obligations remain and collection
of the receivable is probable. Revenue from co-branding arrangements is
generally recognized upon implementation of the co-branded site, provided that
no significant obligation remains and collection of the receivable is probable.
Revenue from healthcare surveys is recognized as the related costs to produce
the surveys are incurred. Fees from maintenance, updates and support of the
Company's products are deferred and recognized ratably over the service period.
Revenue from subscription to the Company's physician recruiting databases is
recognized over the term of the subscription. Revenues for the Company's
services are recognized as the services are performed.

  (e) Deferred Revenue

     Deferred revenue represents accounts receivable and payments to the Company
by customers in advance of revenue recognition.

  (f) Accounts Receivable

     The Company often enters into multi-year, noncancelable subscription
contracts, for which the associated receivables are recorded as accounts
receivable and deferred revenue when they become due. The contract balances are
generally due at the beginning of their respective annual anniversary dates.

  (g) Property and Equipment

     Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation is provided on the straight-line method over the
estimated useful lives of the assets as follows:

<TABLE>
<S>                                                            <C>
Furniture and fixtures.....................................    3 to 7 years
Computer and office equipment..............................    1 to 5 years
Leasehold improvements.....................................    3 to 5 years
</TABLE>

     Amortization of assets acquired under capital lease arrangements not
transferring ownership or without a bargain purchase option is recorded using
the straight-line method over the estimated useful lives of the assets or the
lease term, whichever is shorter.

  (h) Excess of Cost Over Net Assets of Businesses Acquired

     The excess of cost over net assets of businesses acquired (goodwill) is
being amortized using the straight-line method over periods ranging from 10 to
15 years. The amortization period is based on, among other things, the nature of
the products and markets, the competitive position of the acquired companies and
their adaptability to changing market conditions. At each balance sheet date,
the Company assesses the recoverability of this intangible asset by determining
whether the amortization of the goodwill balance over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate equal to
the rate of return that would be required by the Company for a similar
investment with like risks.

  (i) Other Intangible Assets

     Other intangible assets are comprised mainly of acquired products and
acquired customer contracts. The costs of acquired products and acquired
customer contracts from business acquisitions are derived using a fair

                                       F-9
<PAGE>   42

value method of allocation. Other intangible assets are being amortized using
the straight-line method over five years. The Company makes an ongoing
assessment of the recoverability of its intangible assets by comparing the
amount capitalized for each asset to the estimated future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
future cash flows is less than the amount capitalized, a write-down to fair
value is recorded.

  (j) Research and Development Costs and Software Development Costs

     Research and development costs are expensed as incurred. Amounts expensed
for research and development for the years ended December 31, 1999, 1998, and
1997, were $3,031,351, $2,944,047, and $2,149,155, respectively.

     The Company capitalizes software development costs by project, commencing
when technological feasibility for the respective product is established and
concluding when the product is ready for general release to customers. The
Company makes an ongoing assessment of the recoverability of its capitalized
software projects by comparing the amount capitalized for each product to the
estimated net realizable value ("NRV") of the product. If the NRV is less than
the amount capitalized, a write-down to NRV is recorded.

     The Company capitalized computer software development costs of $3,457,029
and $1,695,004 for the years ended December 31, 1999 and 1998, respectively.
Capitalized computer software development costs are being amortized ratably
based on the projected revenue associated with the software products or the
straight-line method over five years, whichever method results in a higher level
of amortization. Amortization expense was $561,300, $266,729, and $76,597 for
the years ended December 31, 1999, 1998, and 1997, respectively.

  (k) Investments

     The Company has various investments, for which the Company does not have
the ability to exercise significant influence and for which there is not a
readily determinable market value, that are accounted for under the cost method
of accounting. The Company periodically evaluates the carrying value of its
investments accounted for under the cost method of accounting and as of December
31, 1999 such investments were recorded at the lower of cost or estimated net
realizable value.

  (l) Stock Option Plans

     The Company applies the intrinsic value-based method of accounting
prescribed by Accounting Principles Board ("APB") Opinion No. 25, Accounting for
Stock Issued to Employees, and related interpretations, in accounting for its
fixed plan stock options. As such, compensation expense is generally recorded on
the date of grant only if the current market price of the underlying stock
exceeds the exercise price.

  (m) Net Earnings (Loss) Per Share of Common Stock

     Basic earnings (loss) per common share available to common shareholders is
based on the weighted-average number of common shares outstanding. Diluted
earnings (loss) per common share available to common shareholders is based on
the weighted-average number of common shares outstanding and dilutive potential
common shares, such as dilutive stock options, determined using the treasury
stock method.

     Securities that could have potentially diluted basic earnings per share
("EPS") that were not included in diluted EPS because their effect on 1998 and
1997 was antidilutive totaled 447,827 and 765,515 for the years ended December
31, 1998 and 1997, respectively.

  (n) Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed Of

     The Company reviews long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If such assets are considered to be impaired, the
impairment to be recognized is
                                      F-10
<PAGE>   43

measured by the amount by which the carrying amounts of the assets exceed the
fair value of the assets. Assets to be disposed of are reported at the lower of
the carrying amount or fair value less costs to sell.

  (o) Income Taxes

     Income taxes are accounted for under the asset and liability method.
Deferred income tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss carryforwards. Deferred income tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred income tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes the
enactment date.

  (p) Industry Segments

     On January 1, 1998, the Company adopted SFAS No. 131, Disclosures about
Segments of an Enterprise and Related Information.

  (q) Comprehensive Income

     On January 1, 1998, the Company adopted SFAS No. 130, Reporting
Comprehensive Income. SFAS No. 130 establishes standards for reporting and
presentation of comprehensive income and its components in a full set of
financial statements. The Company has no "other comprehensive income" to report
for the years ended December 31, 1999, 1998 and 1997.

(2) BUSINESS ACQUISITIONS

  1999 ACQUISITIONS

  Patient Care Analyst ("PCA")

     Effective March 11, 1999, the Company acquired PCA, an Internet-based
software product that provides on-line evaluation of patient-level hospital
discharge data. PCA was acquired from the Center for Performance Improvement, a
subsidiary of the Maryland Hospital Association, for $289,000 in cash. The
acquisition was accounted for using the purchase method of accounting. The
acquisition resulted in excess of cost over net assets acquired of $162,000.

  Healthcare Credentials Management Services, Inc. ("HCMS")

     Effective March 31, 1999, the Company acquired certain assets, including
two Internet-based physician credentialing products, of HCMS, a leading
credentials verification organization, for $4.0 million in cash. The acquisition
was accounted for using the purchase method of accounting. The acquisition
resulted in excess of cost over net assets acquired of $1.9 million. If the
acquired business exceeds certain revenue goals, potential contingent
consideration will be paid by the Company based upon a multiple of certain HCMS
product revenues over a predetermined amount through March 2000. Contingent
consideration, if any, will be paid in cash and will be added to excess of cost
over net assets acquired and amortized prospectively.

  Citizen 1 Software, Inc. ("Citizen 1")

     Effective June 4, 1999, the Company acquired all of the outstanding shares
of Citizen 1 of San Francisco, California, a provider of Internet-based
healthcare research products to consumers and healthcare industry participants,
for $5.0 million in cash and 770,652 shares of the Company's common stock. The
acquisition was accounted for using the purchase method of accounting with the
results of operations of the business acquired included in the Company's results
of operations from the effective date of the acquisition. The acquisition
resulted in purchased in-process research and development costs of $2.0 million
and excess of cost over net assets acquired of $10.7 million. The Company used
borrowings under the Bank of America Revolver to finance the cash portion of the
acquisition consideration.
                                      F-11
<PAGE>   44

  1998 ACQUISITIONS

  Healthdemographics ("Healthdemographics")

     Effective March 23, 1998, the Company acquired all of the outstanding
shares of Healthdemographics of San Diego, California, which provides databases
and decision-support applications that forecast the supply of and demand for
healthcare services, for $2.7 million in cash and 171,315 shares of the
Company's common stock. The acquisition was accounted for using the purchase
method of accounting and resulted in purchased in-process research and
development costs of $4.8 million, acquired products of $120,000 and excess of
cost over net assets acquired of $2.0 million. If the acquired business exceeds
certain performance goals, contingent consideration will be paid by the Company
based upon a multiple of Healthdemographics' operating income over a
predetermined amount through March 31, 2001. Additional payments could be
significant. Contingent consideration paid will be added to excess of cost over
net assets acquired and amortized prospectively. Contingent consideration will
be paid by the Company in cash and common stock or in Series 1998 -- A Preferred
Stock, the determination of which is based on certain elections made by the
selling shareholders. As of December 31, 1999, the Company paid contingent
consideration of $4.7 million in cash and issued 465 shares of Series 1998 -- A
Preferred Stock.

  Successful Solutions, Inc. ("Successful Solutions")

     Effective May 28, 1998, the Company acquired all of the outstanding shares
of Successful Solutions of Vidalia, Georgia, which provides decision-support
tools, consulting services and training materials to hospitals and physician
group practices to assist in improving patient outcomes, achieving the efficient
delivery of care and establishing billing and coding practices that comply with
industry requirements. The Company purchased Successful Solutions for $2.9
million in cash and 189,811 shares of the Company's common stock. The
acquisition was accounted for using the purchase method of accounting and
resulted in purchased in-process research and development costs of $3.4 million,
acquired products of $500,000 and excess of cost over net assets acquired of
$2.2 million.

  Sweetwater Health Enterprises, Inc. ("Sweetwater")

     Effective June 25, 1998, the Company acquired all of the outstanding shares
of Sweetwater of Dallas, Texas, which provides (i) a comprehensive selection of
physician credentialing services to hospitals and managed-care organizations,
(ii) a suite of quality management software used by healthcare organizations to
facilitate in-house credentialing and network management and to track
perceptions of care and individual physician performance, and (iii) managed-care
and interim-management services for healthcare organizations throughout the
United States. The Company purchased Sweetwater for $6.2 million in cash. The
acquisition was accounted for using the purchase method of accounting and
resulted in purchased in-process research and development costs of $3.5 million,
acquired products of $2.2 million and excess of cost over net assets acquired of
$3.9 million.

  1997 ACQUISITIONS

  Staff-Link, Inc. ("Staff-Link")

     In May 1997, the Company acquired substantially all of the assets of
Staff-Link of St. Louis, Missouri, a provider of a physician database and
related software utilities designed to assist healthcare organizations with
their in-house recruiting efforts. The Company purchased Staff-Link for $300,000
in cash. The acquisition was accounted for using the purchase method of
accounting and resulted in acquired customer contracts of approximately $527,000
and excess of cost over net assets acquired of approximately $49,000.

  CIVS, Inc. ("CIVS")

     Effective June 1, 1997, the Company acquired all of the outstanding shares
of CIVS of Rockville, Maryland, a leading national provider of credentialing
services to hospitals and managed-care organizations for approximately $3.5
million in cash and 129,166 shares of the Company's common stock. The
acquisition was

                                      F-12
<PAGE>   45

accounted for using the purchase method of accounting and resulted in purchased
in-process research and development costs of approximately $3.1 million,
acquired products of approximately $415,000 and excess of cost over net assets
acquired of approximately $1.1 million.

  CareData Reports, Inc. ("Caredata Reports")

     Effective August 1, 1997, the Company acquired all of the outstanding
shares of Caredata Reports of New York, New York, which performs surveys and
creates reports analyzing consumer satisfaction with more than 150 aspects of
managed healthcare plans and ranks specific health plans accordingly. Caredata
Reports' products are used by managed-care plans to assess their competitive
position and quality of care, by employers to evaluate health plans and by
pharmaceutical companies to target potential markets for their products. The
Company purchased Caredata Reports for approximately $4.1 million in cash and
14,516 shares of the Company's common stock. The acquisition was accounted for
using the purchase method of accounting and resulted in purchased in-process
research and development costs of approximately $975,000, acquired products of
approximately $200,000, and excess of cost over net assets acquired of
approximately $2.9 million. If the acquired business exceeded certain
performance goals, contingent consideration would be paid by the Company based
upon a multiple of Caredata Reports' operating income over a predetermined
amount through 1999. In 1999 and 1998, the Company paid $5.5 million and $3.0
million, respectively, as contingent consideration and increased the excess of
cost over net assets acquired by a like amount.

  Medsource, Inc. ("Medsource")

     In November 1997, the Company acquired all of the outstanding shares of
Medsource of St. Paul, Minnesota, which licenses databases of physician
information for use in recruiting physicians, developing healthcare networks,
and marketing hospitals. The Company purchased Medsource for $250,000 in cash
and the assumption of net liabilities of $805,000. The acquisition was accounted
for using the purchase method of accounting and resulted in purchased in-process
research and development costs of approximately $300,000, acquired products of
approximately $125,000 and excess of cost over net assets acquired of
approximately $755,000.

  INTEGRATION COSTS

     The Company incurred approximately $1.5 million, $1.9 million and $200,000
of integration costs related to the 1999, 1998 and 1997 acquisitions for the
years ended December 31, 1999, 1998 and 1997, respectively; integration costs
include amounts incurred for such activities as cross-training, product and
facility integration and marketing. Included in integration costs for the years
ended December 31, 1999 and 1998 are approximately $615,000 and $535,000,
respectively, of internal expense allocations which may recur in other expense
categories in the future.

  PRO FORMA RESULTS

     Unaudited pro forma results of operations as if the above 1999 and 1998
acquisitions had been acquired January 1, 1998 are as follows:

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                            --------------------------
                                                               1999           1998
                                                            -----------    -----------
<S>                                                         <C>            <C>
Revenues..................................................  $40,742,000     36,444,000
                                                            ===========    ===========
Net income (loss).........................................      387,000    (10,228,000)
                                                            ===========    ===========
Net income (loss) per share...............................  $      0.04          (1.44)
                                                            ===========    ===========
</TABLE>

     The pro forma results include the historical accounts of the Company and
the acquired entities adjusted to reflect the effects of the depreciation and
amortization of the acquired identifiable tangible and intangible assets based
on the new cost basis of the assets acquired, additional interest expense
related to notes payable issued in connection with the acquisitions and the
reversal of the nonrecurring acquired in-process research

                                      F-13
<PAGE>   46

and development costs recorded in connection with the acquisitions. The pro
forma results are not necessarily indicative of actual results which might have
occurred had the operations and management of the Company and the acquired
entities been combined in 1999 and 1998, nor are they necessarily indicative of
future operations.

(3) PROPERTY AND EQUIPMENT

     Property and equipment are summarized as follows:

<TABLE>
<CAPTION>
                                                                   DECEMBER 31,
                                                              ----------------------
                                                                 1999        1998
                                                              ----------   ---------
<S>                                                           <C>          <C>
Furniture and fixtures......................................  $  880,410     653,527
Computer and office equipment...............................   7,744,163   4,050,612
Leasehold improvements......................................     433,747     247,013
                                                              ----------   ---------
                                                              $9,058,320   4,951,152
                                                              ==========   =========
</TABLE>

     Included in property and equipment is equipment under capital lease
arrangements with a cost of $1,060,324 and $967,929 and accumulated amortization
of $871,284 and $843,900 at December 31, 1999 and 1998, respectively.

     Amortization of equipment held under capital lease arrangements is included
in depreciation expense.

(4) LONG-TERM DEBT AND OBLIGATIONS UNDER CAPITAL LEASES

     Long-term debt and obligations under capital leases are summarized as
follows:

<TABLE>
<CAPTION>
                                                                    DECEMBER 31,
                                                              -------------------------
                                                                 1999          1998
                                                              -----------   -----------
<S>                                                           <C>           <C>
Borrowings under the Amended Credit Agreement (see below)...  $16,502,482            --
Obligations under capital leases, due in monthly
  installments, expiring at various dates through February
  2001, at varying interest rates, secured by property and
  equipment (note 5(a)).....................................      211,750        74,874
Other debt assumed in an acquisition with varying interest
  rates and maturity dates..................................       10,727         3,297
                                                              -----------   -----------
                                                               16,724,959        78,171
Less current installments...................................   16,619,758        62,057
                                                              -----------   -----------
     Total long-term debt and obligations under capital
       leases, excluding current installments...............  $   105,201        16,114
                                                              ===========   ===========
</TABLE>

     Future minimum debt payments and obligations under capital leases are as
follows:

<TABLE>
<CAPTION>
                 YEARS ENDING DECEMBER 31,
                 -------------------------
<S>                                                           <C>
2000........................................................  $16,619,758
2001........................................................       79,509
2002........................................................       25,692
                                                              -----------
                                                              $16,724,959
                                                              ===========
</TABLE>

     Based on the borrowing rates currently available to the Company for debt
with similar terms and average maturities, the fair value of long-term debt
approximates its carrying value.

     On June 29, 1998, the Company entered into an Amended and Restated Credit
Agreement (the "Amended Credit Agreement") with a commercial bank that amended
the Company's existing revolving line of credit agreement. The Amended Credit
Agreement has a maximum borrowing availability of $25 million, a maturity date
of July 15, 2000 and an interest rate ranging from LIBOR plus 1.50% to LIBOR
plus 2.10%.

                                      F-14
<PAGE>   47

The interest rate varies depending upon certain elections made by the Company
and certain financial ratio positions as defined in the Amended Credit
Agreement. Interest on borrowings is payable monthly and principal is due at
expiration of the Amended Credit Agreement, July 15, 2000. Borrowings under the
Amended Credit Agreement are subject to certain customary financial covenants
and dividend restrictions and are secured by substantially all of the Company's
assets. An annual commitment fee of 0.4% of the unused portion of the revolving
line of credit is payable monthly under the terms of the Amended Credit
Agreement. Total line of credit borrowings during 1998, all made prior to the
Company's June 1998 Stock Offering, were $9,794,929, all of which were repaid
with the June 1998 Stock Offering proceeds. In 1999, the Company borrowed $5.0
million under the Amended Credit Agreement to partially fund the acquisition of
Citizen 1, $1.7 million to partially fund the additional consideration paid in
connection with the Healthdemographics acquisition, $2.0 million for general
working capital use and $7.9 million to make several equity investments. At
December 31, 1999, the Company had approximately $8.5 million in borrowing
availability remaining under the Amended Credit Agreement.

(5) COMMITMENTS

  (a) Leases

     The Company has entered into noncancelable capital and operating lease
agreements for office space, furniture and fixtures, and computer and office
equipment. Future minimum payments under all such noncancelable capital and
operating leases as of December 31, 1999 are as follows:

<TABLE>
<CAPTION>
                                                                            CAPITAL
YEAR ENDING DECEMBER 31,                                      OPERATING     (NOTE 4)
------------------------                                      ----------    --------
<S>                                                           <C>           <C>
2000........................................................  $2,006,710    $122,304
2001........................................................   1,561,725      86,220
2002........................................................   1,246,411      27,267
2003........................................................   1,032,789          --
2004........................................................     362,888          --
                                                              ----------    --------
     Total minimum lease payments...........................  $6,220,522     235,792
                                                              ==========
Less amount representing interest and sales taxes...........                  24,042
                                                                            --------
     Present value of net minimum capital lease payments....                $211,750
                                                                            ========
</TABLE>

Rental expense for noncancelable operating leases was $1,868,417, $1,190,639 and
$661,302 for the years ended December 31, 1999, 1998, and 1997, respectively.

  (b) Advertising and Joint-Product Development Agreements

     During 1999, the Company entered into separate arrangements under which it
committed to purchase advertising and fund joint-product development. Total
commitments under these arrangements, all of which will be paid during 2000,
amount to approximately $600,000.

  (c) Employment Agreement

     The Company has entered into Employment Agreements (the "Employment
Agreements") with three senior officers of the Company. The Employment
Agreements provide for a base salary subject to annual increases at the
discretion of the compensation committee, annual performance bonuses based upon
attaining certain goals established by the compensation committee, minimum
annual stock option grants and certain severance benefits in the event of
termination. The Employment Agreements expire during 2001 and are automatically
renewable for one-year terms thereafter.

                                      F-15
<PAGE>   48

  (d) Employee Benefit Plan

     The Company maintains a 401(k) plan (the "Plan") for the benefit of all
eligible employees. The Plan provides for employer matching contributions at the
discretion of the Company's management. In 1998, the Company began matching 25%
of each employee's contribution, up to 4% of the employee's annual compensation.
The Company's matching contributions are subject to a five-year vesting
schedule. During 1999 and 1998, the Company contributed $93,100 and $59,544,
respectively, to the plan.

  (e) Legal Matters

     The Company and certain of its officers and directors are named as
defendants in three purported securities class action lawsuits filed in the
United States District Court for the Northern District of Georgia: Richard Sturm
v. Medirisk, Inc., et al. (Civil Action No. 1:98-CV-1922), John T. Gallagher v.
Medirisk, Inc., et al. (Civil Action No. 1:98-CV-2099), and Frederick T.
Casiello v. Medirisk, Inc., et al. (Civil Action No. 1:98-CV-2100). The Sturm
action was filed on July 8, 1998. The Gallagher and Casiello actions were each
filed on July 24, 1998. These lawsuits have been consolidated under the style In
re Medirisk, Inc. Securities Litigation. Plaintiffs served their consolidated
and amended complaint on January 13, 1999. All defendants moved to dismiss this
complaint on March 12, 1999. The consolidated and amended complaint alleges that
the Company violated federal securities laws by making certain forward-looking
statements and by failing to disclose in its public statements and/or the
Prospectus for its June 1998 common stock offering certain alleged adverse
trends respecting certain products. The consolidated and amended complaint
asserts claims based on Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 and claims under Sections 11 and 15 of the Securities Act of 1933.
Plaintiffs seek compensatory damages, rescission or rescissory damages, and
reimbursement of their attorneys' fees and costs.

     Because of the uncertainty of the litigation process, the Company cannot
predict the outcome of these cases and, therefore, it is possible that their
outcome could have a material adverse effect on the Company. The Company
believes that plaintiffs' claims have no merit and intends to defend these cases
vigorously.

     The Company is also involved in other legal proceedings and litigation
arising in the ordinary course of business. In the opinion of management, the
outcome of such proceedings and litigation currently pending will not have a
material adverse effect on the consolidated financial condition or results of
operations of the Company.

(6) INCOME TAXES

     Total income tax expense (benefit) provided for in the Company's
consolidated financial statements consists of the following:

<TABLE>
<CAPTION>
                                                                YEARS ENDED DECEMBER 31,
                                                           ----------------------------------
                                                             1999         1998         1997
                                                           ---------    ---------    --------
<S>                                                        <C>          <C>          <C>
Consolidated income tax expense........................    $ 675,000    $ 550,000    $707,000
Income tax benefit resulting from exercise of stock
  options credited to stockholders equity..............     (153,000)    (100,000)         --
Income tax benefit resulting from initial recognition
  of acquired tax benefits credited to goodwill........     (382,000)          --          --
                                                           ---------    ---------    --------
     Total.............................................    $ 140,000    $ 450,000    $707,000
                                                           =========    =========    ========
</TABLE>

                                      F-16
<PAGE>   49

     A reconciliation of the expected income tax expense (benefit) (based on a
U.S. Federal statutory tax rate of 34%) to the actual income taxes is as
follows:

<TABLE>
<CAPTION>
                                                              YEARS ENDED DECEMBER 31,
                                                      -----------------------------------------
                                                         1999           1998           1997
                                                      -----------    -----------    -----------
<S>                                                   <C>            <C>            <C>
Computed "expected" income tax expense(benefit)...    $   365,649    $(3,244,915)   $  (363,433)
In-process research and development costs expensed
  for financial accounting purposes, not
  deductible for tax purposes.....................        680,000      3,945,020      1,706,250
State income taxes, net of Federal income tax
  effect..........................................        187,109        294,117        (93,753)
Decrease in the valuation allowance for deferred
  income taxes....................................     (1,314,265)      (643,482)      (568,217)
Goodwill and other nondeductible items............        694,384        315,063             --
Other.............................................         62,123       (115,803)        26,153
                                                      -----------    -----------    -----------
Actual income taxes...............................    $   675,000    $   550,000    $   707,000
                                                      ===========    ===========    ===========
</TABLE>

     The tax effects of temporary differences and carryforwards, which give rise
to deferred income tax assets and liabilities, are presented below:

<TABLE>
<CAPTION>
                                                                      DECEMBER 31,
                                                                ------------------------
                                                                   1999          1998
                                                                ----------    ----------
<S>                                                             <C>           <C>
Deferred income tax assets:
  Acquired in-process research and development costs........    $1,795,322    $1,956,002
  Net operating loss carryforwards..........................     2,592,612       928,658
  Deferred revenue..........................................        40,457        82,625
  Property and equipment depreciation differences...........       150,631       162,033
  Cash to accrual adjustment................................       368,894       528,378
  Financial statement amortization in excess of tax.........       966,245       258,024
  Other.....................................................       443,643       213,658
                                                                ----------    ----------
       Total gross deferred income tax assets...............     6,357,804     4,129,378
  Less valuation allowance..................................     2,294,693     1,514,243
                                                                ----------    ----------
       Deferred income tax assets, net of valuation
        allowance...........................................     4,063,111     2,615,135
                                                                ----------    ----------
Deferred income tax liabilities:
  Intangible assets.........................................     1,000,000     1,000,000
  Capitalized software costs................................     3,063,111     1,615,135
                                                                ----------    ----------
     Deferred income tax liabilities........................     4,063,111     2,615,135
                                                                ----------    ----------
                                                                $       --    $       --
                                                                ==========    ==========
</TABLE>

     Deferred income tax assets and liabilities are initially recognized for
differences between the financial statement carrying amount and the tax bases of
assets and liabilities which will result in future deductible or taxable amounts
and operating loss and tax credit carryforwards. A valuation allowance is then
established to reduce the deferred income tax asset to the level at which it is
"more likely than not" that the tax benefits will be realized. Realization of
tax benefits of deductible temporary differences and operating loss or credit
carryforwards depends on having sufficient taxable income of an appropriate
character within the carryback and carryforward periods. Sources of taxable
income that may allow for the realization of tax benefits include: (1) taxable
income in the current year or prior years that is available through carryback;
(2) future taxable income that will result from the reversal of existing taxable
temporary differences; and (3) taxable income generated by future operations.

     At December 31, 1999, the Company had net operating loss carryforwards of
approximately $6,648,000, which expire beginning in 2006 through 2012. Under
Internal Revenue Code Section 382, approximately

                                      F-17
<PAGE>   50

$6,297,000 of the Company's net operating loss carryforwards are limited to
approximately $900,000 per year as a result of the Company's acquisitions.

(7) STOCKHOLDERS' EQUITY (DEFICIT)

  (a) Stock Options

     Effective October 1996, the Board of Directors adopted the 1996 Stock
Incentive Plan (the "1996 Plan"), under which 580,645 shares of common stock
have been reserved for issuance. Effective February 1998, the Board of Directors
adopted the 1998 Long-Term Incentive Plan (the "1998 Plan"), under which 850,000
shares of common stock have been reserved for issuance to date.

     Options granted under the 1996 and 1998 Plans may be incentive stock
options or nonqualified stock options, as determined by the Board of Directors
at the time of grant. Incentive stock options are granted at a price not less
than the fair market value of the stock on the grant date, and nonqualified
options are granted at a price to be determined by the Board of Directors on the
grant date. The Board of Directors establishes option-vesting terms at the time
of grant, presently five years. The expiration date of options granted under the
1996 and 1998 Plans is determined at the time of grant and may not exceed ten
years from the date of the grant. The 1996 and 1998 Plans also permit the
granting of certain stock incentives including restricted stock awards, stock
appreciation rights, and performance awards.

     Effective October 1996, the Board of Directors adopted the Caredata.com,
Inc. Nonmanagement Directors' Stock Option Plan (the "Director Plan"), under
which 100,000 common shares have been reserved for issuance. Under the terms of
the Director Plan, Directors receive a specified number of options for each year
that they serve as a member of the Board of Directors. Options must be granted
with exercise prices equal to the fair market value of the stock on the grant
date. Options granted vest over three years and expire ten years from the date
of grant.

     The following table summarizes option activity under all option plans for
the years ended December 31, 1999, 1998, and 1997:

<TABLE>
<CAPTION>
                                                                        EXERCISE PRICE
                                                            SHARES         PER SHARE
                                                           ---------    ---------------
<S>                                                        <C>          <C>
Options outstanding at December 31, 1996.................    318,928    $0.300 -  0.641
Granted..................................................    335,877     7.625 - 11.000
Exercised................................................    (20,243)    0.300 -  7.625
Canceled.................................................    (60,240)    0.300 -  7.625
                                                           ---------
Options outstanding at December 31, 1997.................    574,322     0.300 - 11.000
Granted..................................................    569,905     2.313 - 24.500
Exercised................................................    (51,941)    0.300 -  0.641
Canceled.................................................    (94,269)    0.300 - 22.438
                                                           ---------
Options outstanding at December 31, 1998.................    998,017     0.300 - 24.500
Granted..................................................    458,980     3.813 -  9.063
Exercised................................................     (8,098)    0.641 -  2.313
Canceled.................................................   (102,113)    2.313 - 11.000
                                                           ---------
Options outstanding at December 31, 1999.................  1,346,786    $0.300 - 24.500
                                                           =========    ===============
Options exercisable at December 31, 1999.................    391,716    $0.300 - 24.500
                                                           =========    ===============
</TABLE>

                                      F-18
<PAGE>   51

     The following table summarizes information about options outstanding and
exercisable at December 31, 1999:

<TABLE>
<CAPTION>
                                              OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
                                 ---------------------------------------------   -------------------------------
                                     NUMBER          WEIGHTED-       WEIGHTED-       NUMBER
                                 OUTSTANDING AT       AVERAGE         AVERAGE    EXERCISABLE AT     WEIGHTED-
   RANGE OF                       DECEMBER 31,       REMAINING       EXERCISE     DECEMBER 31,       AVERAGE
EXERCISE PRICES                       1999        CONTRACTUAL LIFE     PRICE          1999        EXERCISE PRICE
---------------                  --------------   ----------------   ---------   --------------   --------------
<S>               <C>            <C>              <C>                <C>         <C>              <C>
$ 0.00 -  5.00    .............      657,809          84 months       $ 1.865       262,662          $ 1.066
  5.00 - 10.00    .............      431,444         112 months         7.591        23,384            7.556
 10.00 - 15.00    .............      190,053          93 months        10.660        92,174           10.718
 20.00 - 25.00    .............       67,480         100 months        22.032        13,496           22.032
                                   ---------         ----------       -------       -------          -------
                                   1,346,786          95 months       $ 5.878       391,716          $ 4.447
                                   =========         ==========       =======       =======          =======
</TABLE>

     The Company has elected to follow APB Opinion No. 25 and related
interpretations in accounting for its stock options. Under APB Opinion No. 25,
because the exercise price of the Company's employee stock options equals the
market price of the underlying stock on the date of grant, no compensation
expense is recognized. However, SFAS 123 requires presentation of pro forma net
earnings (loss) and pro forma earnings (loss) per share as if the Company had
accounted for its employee stock options under the fair value method of that
statement. For purposes of pro forma disclosure, the estimated fair value of the
options is amortized to expense over the vesting period. Under the fair value
method, the Company's net earnings (loss) and earnings (loss) per share would
have been as follows:

<TABLE>
<CAPTION>
                                                1999            1998           1997
                                             -----------    ------------    -----------
<S>                                          <C>            <C>             <C>
Net loss...................................  $(1,264,611)   $(11,111,388)   $(3,062,437)
Loss per share.............................        (0.15)          (1.82)         (0.78)
</TABLE>

     The per share weighted-average fair value of stock options granted during
1999, 1998 and 1997 was $6.38, $4.49 and $7.02, respectively, on the date of
grant using the Black-Scholes option-pricing model with the following
assumptions:

<TABLE>
<CAPTION>
                                                               1999       1998       1997
                                                              -------    -------    -------
<S>                                                           <C>        <C>        <C>
Expected volatility.........................................      102%       112%        66%
Expected dividend yield.....................................     None       None       None
Risk-free interest rate.....................................        7%         5%         6%
Expected life of options....................................  6 years    6 years    7 years
</TABLE>

  (b) Warrants

     In 1998, the outstanding warrants to purchase the Company's common stock
were exercised, resulting in proceeds to the Company of $304,529 and the related
issuance of 493,030 shares of the Company's common stock. Such warrants were
originally issued during 1996 and 1993. As of December 31, 1999, there were no
outstanding warrants.

  (c) Public Offerings

     On January 31, 1997, the Company sold 2.3 million shares of Common Stock in
an initial public offering in which it received approximately $22.6 million, net
of offering expenses of approximately $750,000. As a result of the consummation
of the offering, the previously outstanding Series A convertible preferred stock
and Series B convertible preferred stock were converted into 1,021,809 shares of
common stock of the Company and the Company's $6.9 million senior subordinated
note was repaid. In connection with the repayment of the senior subordinated
note, the Company recorded an $806,000 extraordinary charge on the early
extinguishment of debt relating to the unamortized note discount and related
deferred financing costs.

                                      F-19
<PAGE>   52

     In June 1998, the Company completed a stock offering of 2,250,000 shares of
Common Stock in which it received approximately $40.5 million, net of offering
expenses of approximately $600,000.

  (d) Shareholder Protection Rights Agreement

     On July 29, 1998, the Board of Directors adopted a Shareholder Protection
Rights Agreement, pursuant to which they granted one purchase right (a "Right")
for each outstanding share of common stock.

     Each Right entitles the registered holder to purchase from the Company one
one-hundredth of a share of Series A Junior Participating Preferred Stock, par
value $0.001, at a price of $40.00 (the "Exercise Price"). The Rights are not
exercisable unless a person or group has acquired beneficial ownership or has
commenced a tender or exchange offer which would result in the beneficial
ownership of 15% or more of the Company's outstanding common shares. In such an
event, Rights held by the acquiring person or group will automatically become
void and each other Right will automatically become a right to buy, for the
Exercise Price, that number of common shares having a market value of twice the
Exercise Price. The Rights may have certain anti-takeover effects and will cause
substantial dilution to a person or group that attempts to acquire the Company
on terms not approved by the Board of Directors of the Company. The Rights are
intended to encourage persons who may seek to acquire control of the Company to
initiate such an acquisition through negotiations with the Board of Directors.
At any time prior to a person or group obtaining 15% or more of the Company's
common shares, the Board of Directors may amend the Rights in any respect,
including termination of the Rights.

  (e) Employee Stock Purchase Plan

     In September 1998, the Company adopted the 1998 Employee Stock Purchase
Plan (the "ESPP") and has reserved 200,000 shares of the Company's common stock
for future issuance under the ESPP. Under the ESPP, shares of the Company's
common stock may be purchased at three-month intervals at 85% of the lower of
the fair market value on the first or the last day of each three-month period.
All Company employees are eligible and may purchase shares having a value not
exceeding 10% of their gross compensation during an offering period. During
1999, employees contributed $301,910 to the ESPP, the amount of which was used
to purchase 86,483 of the Company's Common Stock. At December 31, 1999, 113,517
shares were reserved for future issuance.

  (f) Stock Repurchase Plan

     On September 14, 1998, the Board of Directors approved a Stock Repurchase
Plan (the "Repurchase Plan") pursuant to which the Company is authorized to
repurchase up to 720,000 shares of the Company's common stock at market prices.
The Repurchase Plan was effective October 7, 1998. No shares had been
repurchased under the Repurchase Plan as of December 31, 1999.

(8) SERIES 1998-A PREFERRED STOCK

     In March 1998, in connection with the acquisition of Healthdemographics,
the Company's Board of Directors designated 5,000 shares of the Company's
preferred stock, par value $0.001, as Series 1998-A Preferred Stock. Holders of
Series 1998-A Preferred Stock are entitled to receive cash dividends before any
dividends are paid to holders of the Company's common stock or any other
securities ranking junior to the Series 1998-A Preferred Stock at the rate of 5%
per annum of the initial liquidation preference per share of the Series 1998-A
Preferred Stock ($10,000). Dividends on the Series 1998-A Preferred Stock accrue
from the date shares are issued and are payable annually on December 31 of each
year.

     Upon any liquidation, dissolution and winding up of the Company, holders of
Series 1998-A Preferred Stock will be entitled to receive, from the assets of
the Company available for distribution to stockholders of the Company, an amount
equal to $10,000 per share plus any accrued and unpaid dividends on the Series
1998-A Preferred Stock (the "Liquidation Preference") before any distribution is
made to holders of common stock or any other class of stock ranking junior.

                                      F-20
<PAGE>   53

     Each share of Series 1998-A Preferred Stock is entitled to a number of
votes equal to the number of shares of common stock into which such share of
Series 1998-A Preferred Stock is then convertible.

     Beginning on the fifth anniversary of any issue date of shares of Series
1998-A Preferred Stock, the Company may, at its election, redeem all of the
shares of Series 1998-A Preferred Stock that were issued on such issue date and
that remain outstanding. Effective as of the twentieth anniversary of each issue
date of shares of Series 1998-A Preferred Stock, the Company is required to
redeem all of the shares of Series 1998-A Preferred Stock that were issued on
such issue date that remain outstanding. Upon any redemption of the Series
1998-A Preferred Stock, the Company will pay in cash the Liquidation Preference
in effect on the date established for redemption, and dividends shall cease to
accrue on that date. The Company will not establish any retirement or sinking
fund for the redemption of the Series 1998-A Preferred Stock.

     Each share of Series 1998-A Preferred Stock is subject to automatic
conversion into common stock if, at any time after issuance, a share of common
stock equals or exceeds $22.61 (the "Conversion Price"). In such event, each
share of Series 1998-A Preferred Stock will automatically be converted into a
number of shares of common stock that results from dividing the Liquidation
Preference in effect at the time by the Conversion Price.

     As of December 31, 1999, 465 shares of Series 1998-A Preferred Stock were
issued and outstanding, and $58,156 of dividends had been paid. A discount
associated with the issuance of the Series 1998-A Preferred Stock of $402,193,
representing the difference between the recorded fair value of the Series 1998-A
Preferred Stock and the redemption value, is being accreted using the effective
interest method. As of December 31, 1999, the unaccreted discount related to the
Series 1998-A Preferred Stock was $397,387.

(9) MAJOR CUSTOMERS

     During 1997, one customer accounted for approximately 16% of total
revenues. No individual customer accounted for more than 10% of the Company's
revenues during either 1999 or 1998.

(10) NOTES RECEIVABLE FROM OFFICERS

     In June 1996, the Company loaned $112,500 to an officer of the Company in
the form of an unsecured promissory note. The note is to be repaid in five equal
annual installments of $22,500 each, due and payable on the first through fifth
anniversaries of the date of the note. Interest accrues at a rate of 8.25% per
annum and is due and payable by the officer on the date each principal payment
is due. The annual installments of $22,500 were paid in 1997, 1998 and 1999.

     In July 1998, the Company loaned $75,000 to an officer of the Company in
the form of an unsecured promissory note. Interest accrued at 8.5% per annum.
The note was paid in full on August 2, 1999.

     In August 1998, the Company loaned $350,000 to an officer of the Company in
the form of an unsecured promissory note. Interest accrued at 7.5% per annum.
The note was paid in full on July 30, 1999.

     In June 1999, the Company loaned $50,000 to an officer of the Company in
the form of an unsecured promissory note. The note is to be repaid in three
equal annual installments of $16,666 each, due and payable on the first through
third anniversaries of the date of the note. Interest accrues at a rate of 8.00%
per annum and is due and payable by the officer on the date each principal
payment is due.

(11) SEGMENT REPORTING

     The Company's reportable segments are strategic business units that offer
different products and services. The Company provides its services and products
through its Market Performance and Physician Information segments. The Company's
market performance products include healthcare forecasting software, healthcare
utilization and reimbursement data, clinical outcomes data, healthcare
satisfaction and pharmacy surveys, and on-line healthcare research software. The
Company's market performance services include facility profitability analysis
services, reimbursement compliance services, and clinical outcomes reporting
services. The Company's physician information products consist of physician
recruiting databases and software, physician

                                      F-21
<PAGE>   54

credentialling databases and software, and practice management software. The
Company's physician information services consist of physician recruiting
services, physician credentialling services, and healthcare administrative
consulting services.

     The Company evaluates each segment's performance based on a modified
operating profit measurement (earnings before interest, taxes, depreciation,
amortization, or acquired in-process research and development costs and
integration costs).

<TABLE>
<CAPTION>
                                                        1999            1998           1997
                                                     -----------    ------------    -----------
<S>                                                  <C>            <C>             <C>
Revenue:
  Market Performance.............................    $22,218,890    $ 16,729,088    $ 9,535,428
  Physician Information..........................     17,609,120      10,474,942      7,213,411
                                                     -----------    ------------    -----------
                                                     $39,828,010    $ 27,204,030    $16,748,839
                                                     -----------    ------------    -----------
Operating profit(1):
  Market Performance.............................    $10,247,887    $  7,425,658    $ 4,686,212
  Physician Information..........................      7,608,238       2,618,848      2,805,269
  Corporate......................................     (7,006,828)     (3,852,605     (3,026,196)
                                                     -----------    ------------    -----------
                                                     $10,849,297    $  6,191,901    $ 4,465,285
                                                     -----------    ------------    -----------
Depreciation and Amortization:
  Market Performance.............................    $   902,982    $    766,523    $   457,405
  Physician Information..........................      1,706,297         464,555        265,174
  Corporate......................................      3,741,322       1,583,733        581,576
                                                     -----------    ------------    -----------
                                                     $ 6,350,601    $  2,814,811    $ 1,304,155
                                                     -----------    ------------    -----------
Reconciling items
  AIPR&D and Integration costs...................    $(3,538,606)   $(13,546,639)   $(4,575,025)
  Other..........................................        115,348         625,683        344,973
                                                     -----------    ------------    -----------
                                                     $(3,423,258)   $(12,920,956)   $(4,230,052)
                                                     -----------    ------------    -----------
Income (loss) before income taxes and
  extraordinary item.............................    $ 1,075,438    $ (9,543,866)   $(1,068,922)
                                                     ===========    ============    ===========
Assets:
  Market Performance.............................    $ 9,957,799    $ 11,828,473    $ 5,600,583
  Physician Information..........................      9,892,598       3,464,550      2,653,117
  Corporate......................................     68,917,806      43,826,865     12,404,566
                                                     -----------    ------------    -----------
                                                     $88,768,203    $ 59,119,888    $20,658,266
                                                     ===========    ============    ===========
</TABLE>

---------------
(1) Excludes depreciation costs, amortization costs, acquired in-process
    research and development costs, integration costs and acquisition-related
    costs.

                                      F-22
<PAGE>   55

                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Caredata.com, Inc.

     Under date of February 4, 2000, we reported on the consolidated balance
sheets of Caredata.com, Inc. and subsidiaries as of December 31, 1999 and 1998,
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
December 31, 1999, as contained in the annual report on Form 10-K for the year
1999. In connection with our audits of the aforementioned consolidated financial
statements, we also audited the related consolidated financial statement
schedule included in the annual report on Form 10-K for the year 1999. This
consolidated financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion on this consolidated
financial statement schedule based on our audits.

     In our opinion, such consolidated financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.

                                          /s/  KPMG LLP

Atlanta, Georgia
February 4, 2000

                                      F-23
<PAGE>   56

                                  SCHEDULE II

                      CAREDATA.COM. INC. AND SUBSIDIARIES

                       VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
                                                        ADDITIONS
                                               ----------------------------
                                 BALANCE AT                      CHARGES TO
                                 BEGINNING       CHARGES TO      COSTS AND        NET         BALANCE AT
DESCRIPTION                      OF PERIOD     OTHER ACCOUNTS     EXPENSES     DEDUCTIONS    END OF PERIOD
-----------                      ----------    --------------    ----------    ----------    -------------
<S>                              <C>           <C>               <C>           <C>           <C>
December 31, 1997
  Allowance for doubtful
     accounts..................   $ 97,439      $150,000(1)       $ 92,000      $191,882       $147,557
December 31, 1998
  Allowance for doubtful
     accounts..................    147,557       324,665(1)        213,760       219,732        466,250
December 31, 1999
  Allowance for doubtful
     accounts..................    466,250        90,000(1)        603,821       258,482        901,589
</TABLE>

---------------
(1) Represents beginning balance in allowance for doubtful accounts of acquired
    companies.