NEW STAT HEALTHCARE INC, 424B3, 1996-05-24

NEW STAT HEALTHCARE INC
424B3, 1996-05-24
HEALTH SERVICES

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STAT HEALTHCARE, INC.
12450 GREENSPOINT DRIVE, SUITE 1200
HOUSTON, TEXAS 77060

May 22, 1996

Dear Stockholder:

On behalf of your Board of Directors, I am pleased to invite you to attend
the 1996 Annual Meeting of Stockholders of STAT Healthcare, Inc., a Delaware
corporation ("OLD STAT"), which will be held at 12450 Greenspoint Drive, Suite
1200, Houston, Texas 77060 on Thursday, June 13, 1996 at 10:00 a.m., local time
(the "MEETING").

Among the matters to be acted upon at the Meeting is a proposal to approve
and adopt the Amended and Restated Agreement and Plan of Reorganization, dated
as of March 15, 1996 (the "REORGANIZATION AGREEMENT"), a copy of which is
attached as Appendix I to the accompanying Joint Proxy Statement/Prospectus,
pursuant to which (a) AmHealth Corporation, AmHealth Enterprises of the Valley,
Inc. and AmHealth Ambulatory Services, Inc., each of which is a Texas
corporation (collectively, the "AMHEALTH CORPORATIONS"), will be merged with and
into New STAT Healthcare, Inc., a Delaware corporation ("NEW STAT") recently
formed by Old STAT, with New STAT as the surviving corporation, (b) all the
general partners and the limited partners (excluding limited partners
representing a 25% interest in Brownsville Kidney Center, Ltd., which commenced
active operations on May 15, 1996) (the "AMHEALTH PARTNERS") of AmHealth Kidney
Centers of the Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center,
Ltd., Mission Kidney Center, Ltd., Brownsville Kidney Center, Ltd., AmHealth
Medical Management, Ltd., Brownsville Hyperbaric Healthcare, Ltd., Southwestern
Infusion Healthcare, Ltd. and AmHealth Ambulatory Healthcare, Ltd., each of
which is a Texas limited partnership (collectively, the "AMHEALTH PARTNERSHIPS"
and, together with the AmHealth Corporations, "AMHEALTH"), will be offered
shares of common stock of New STAT (the "NEW STAT COMMON STOCK") in exchange for
the outstanding general and limited partner interests in the AmHealth
Partnerships held by such partners (the "AMHEALTH UNITS"), and (c) Old STAT will
be merged with STAT Acquisition Corp., a Delaware corporation wholly owned by
New STAT, with Old STAT as the surviving corporation (such transactions being
collectively referred to as the "EXCHANGE"). If all the shareholders of the
AmHealth Corporations (the "AMHEALTH SHAREHOLDERS") and all the AmHealth
Partners participate in the Exchange and the Exchange is consummated, the
AmHealth Shareholders and the AmHealth Partners will collectively receive a
total of 11,200,000 shares of New STAT Common Stock, and each currently issued
and outstanding share of common stock of Old STAT (the "OLD STAT COMMON STOCK")
will be converted into one share of New STAT Common Stock. Upon consummation of
0the Exchange, the corporate name of New STAT will be changed to "STAT
Healthcare, Inc." The New STAT Common Stock has been approved for quotation on
the Nasdaq SmallCap Market under the symbol "STHC" and listed on the Boston
Stock Exchange under the symbol "EDR". It is anticipated that the Exchange will
qualify as a tax-free transaction pursuant to the Internal Revenue Code of 1986,
as amended. The accompanying Joint Proxy Statement/Prospectus provides a
detailed description of the proposed Exchange and the business of Old STAT and
AmHealth. Please give this information your careful attention.

Your Board of Directors, after careful consideration of many factors,
including the opinion of Old STAT's financial advisor, Southcoast Capital
Corporation, has determined that the Exchange is fair to, and in the best
interests of, Old STAT and its stockholders. Accordingly, the Old STAT Board of
Directors approved the Reorganization Agreement and recommends that you vote in
favor of the approval and adoption of the Reorganization Agreement at the
Meeting.

If the Reorganization Agreement is approved and the Exchange is
consummated, the Board of Directors of New STAT will consist of seven persons,
three of whom are anticipated to be certain of the present directors of Old
STAT, three of whom will be selected by certain affiliates of AmHealth and one
of whom will be selected by the mutual agreement of Old STAT and such AmHealth
affiliates. The accompanying Joint Proxy Statement/Prospectus includes detailed
information about the proposed management of New STAT.

At the Meeting, you will also be asked to consider and vote upon three
other proposals: (a) to elect four directors to Old STAT's Board of Directors to
serve until consummation of the Exchange, (b) to ratify the appointment of KPMG
Peat Marwick LLP as the independent auditors of Old STAT, and (c) to approve the
implementation of the New STAT Healthcare, Inc. 1996 Stock Incentive Plan. Your
Board of Directors recommends that you vote in favor of these proposals.
However, if the Reorganization Agreement is approved and adopted at the Meeting,
Old STAT will become a wholly-owned subsidiary of New STAT upon consummation of
the Exchange.

Your participation in the Meeting, in person or by proxy, is important. The
Reorganization Agreement requires the approval of the holders of a majority of
the outstanding shares of Old STAT Common Stock, and the New STAT Healthcare,
Inc. 1996 Stock Incentive Plan requires the approval of a majority of the shares
of Old STAT Common Stock present in person or represented by proxy at the
Meeting. Therefore, it is important that your shares be voted. We urge you to
complete, date and sign your proxy and return it promptly in the enclosed
envelope. You may revoke your proxy if you decide to attend the Meeting and vote
in person.

We look forward to seeing you at the Meeting.

Sincerely,
/s/ WILLIAM H. RICE, M.D.
William H. Rice, M.D.
Chairman of the Board

STAT HEALTHCARE, INC.
12450 GREENSPOINT DRIVE, SUITE 1200
HOUSTON, TEXAS 77060

NOTICE OF 1996 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 13, 1996
------------------------

Notice is hereby given that the 1996 annual meeting of stockholders (the
"MEETING") of STAT Healthcare, Inc. ("OLD STAT") will be held at 12450
Greenspoint Drive, Suite 1200, Houston, Texas 77060 at 10:00 a.m., local time,
on June 13, 1996, for the following purposes:

1. To consider a proposal to approve and adopt the Amended and Restated
Agreement and Plan of Reorganization, dated as of March 15, 1996 (the
"REORGANIZATION AGREEMENT"), a copy of which is attached as Appendix I to the
accompanying Joint Proxy Statement/Prospectus, pursuant to which (a) AmHealth
Corporation, AmHealth Enterprises of the Valley, Inc. and AmHealth Ambulatory
Services, Inc., each of which is a Texas corporation (collectively, the
"AMHEALTH CORPORATIONS"), will be merged with and into New STAT Healthcare,
Inc., a Delaware corporation ("NEW STAT") recently formed by Old STAT, with New
STAT as the surviving corporation, (b) all the general partners and all the
limited partners (excluding limited partners representing a 25% interest in
Brownsville Kidney Center, Ltd.) (the "AMHEALTH PARTNERS") of AmHealth Kidney
Centers of the Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center,
Ltd., Mission Kidney Center, Ltd., Brownsville Kidney Center, Ltd., AmHealth
Medical Management, Ltd., Brownsville Hyperbaric Healthcare, Ltd., Southwestern
Infusion Healthcare, Ltd. and AmHealth Ambulatory Healthcare, Ltd., each of
which is a Texas limited partnership (collectively, the "AMHEALTH
PARTNERSHIPS"), will be offered shares of common stock of New STAT (the "NEW
STAT COMMON STOCK") in exchange for the outstanding general and limited partner
interests in the AmHealth Partnerships held by such partners (the "AMHEALTH
UNITS"), and (c) Old STAT will be merged with STAT Acquisition Corp., a Delaware
corporation wholly owned by New STAT, with Old STAT as the surviving corporation
(such transactions being collectively referred to as the "EXCHANGE"). If all the
shareholders of the AmHealth Corporations (the "AMHEALTH SHAREHOLDERS") and all
the AmHealth Partners participate in the Exchange and the Exchange is
consummated, the AmHealth Shareholders and the AmHealth Partners will
collectively receive a total of 11,200,000 shares of New STAT Common Stock, and
each currently issued and outstanding share of common stock of Old STAT (the
"OLD STAT COMMON STOCK") will be converted into one share of New STAT Common
Stock.

2. To elect four directors to the Old STAT Board of Directors to serve
until the Exchange is consummated or until their successors have been elected
and qualified.

3. To ratify the appointment of KPMG Peat Marwick LLP as the independent
auditors of Old STAT.

4. To approve the implementation of the New STAT Healthcare, Inc. 1996
Stock Incentive Plan (the "NEW STAT STOCK PLAN") under which an initial
1,500,000 shares of New STAT Common Stock will be available for issuance to
officers, employees, consultants and non-employee directors of New STAT
following the Exchange.

5. To consider and act upon such other business as may properly be
presented to the Meeting or any adjournment thereof.

The Reorganization Agreement requires the approval of the holders of a
majority of the outstanding shares of Old STAT Common Stock, and the New STAT
Stock Plan requires the approval of a majority of the shares of Old STAT Common
Stock present in person or represented by proxy at the Meeting. If the
Reorganization Agreement is approved and the Exchange is consummated, New STAT
will be a publicly held company and Old STAT will become a wholly owned
subsidiary of New STAT. The New STAT Stock Plan may not be approved unless the
Reorganization Agreement is also approved and the Exchange is consummated.

Only holders of Old STAT Common Stock at the close of business on May 6,
1996 will be entitled to notice of and to vote at the Meeting. A list of
stockholders will be available commencing June 3, 1996, and may be inspected
during normal business hours prior to the Meeting at the offices of Old STAT at
12450 Greenspoint Drive, Suite 1200, Houston, Texas 77060.

By Order of the Board of Directors,
/s/ VICTOR M. MIRANDA, M.D.
Victor M. Miranda, M.D.
President

Houston, Texas
May 22, 1996

JOINT PROXY STATEMENT
OF
STAT HEALTHCARE, INC.
AMHEALTH CORPORATION
AMHEALTH ENTERPRISES OF THE VALLEY, INC.
AND
AMHEALTH AMBULATORY SERVICES, INC.
[/R]
------------------------

PROSPECTUS
OF
NEW STAT HEALTHCARE, INC.

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

This Joint Proxy Statement/Prospectus is being furnished to the holders of
common stock of STAT Healthcare, Inc., a Delaware Corporation ("OLD STAT"), in
connection with the solicitation of proxies by the Board of Directors of Old
STAT for use at the 1996 annual meeting of stockholders (the "MEETING") of Old
STAT. Among the matters to be acted upon at the Meeting is a proposal to approve
and adopt the Amended and Restated Agreement and Plan of Reorganization, dated
as of March 15, 1996 (the "REORGANIZATION AGREEMENT"), a copy of which is
attached as Appendix I to this Joint Proxy Statement/Prospectus, pursuant to
which (a) AmHealth Corporation, AmHealth Enterprises of the Valley, Inc. and
AmHealth Ambulatory Services, Inc., each of which is a Texas corporation
(collectively, the "AMHEALTH CORPORATIONS"), will be merged with and into New
STAT Healthcare, Inc., a Delaware corporation ("NEW STAT") recently formed by
Old STAT, with New STAT as the surviving corporation, (b) all the general
partners and the limited partners (excluding limited partners representing a 25%
interest in Brownsville Kidney Center, Ltd., which commenced active operations
on May 15, 1996) (the "AMHEALTH PARTNERS") of AmHealth Kidney Centers of the
Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center, Ltd., Mission
Kidney Center, Ltd., Brownsville Kidney Center, Ltd., AmHealth Medical
Management, Ltd., Brownsville Hyperbaric Healthcare, Ltd., Southwestern Infusion
Healthcare, Ltd. and AmHealth Ambulatory Healthcare, Ltd., each of which is a
Texas limited partnership (collectively, the "AMHEALTH PARTNERSHIPS" and,
together with the AmHealth Corporations, "AMHEALTH"), will be offered shares of
common stock of New STAT (the "NEW STAT COMMON STOCK") in exchange for the
outstanding general and limited partner interests in the AmHealth Partnerships
held by such partners (each 1.0% interest in any partnership being referred to
as an "AMHEALTH UNIT", except for interests in AmHealth Ambulatory Healthcare,
Ltd. for which the term "AmHealth Unit" shall represent a 0.5% interest
therein), and (c) Old STAT will be merged with STAT Acquisition Corp., a
Delaware corporation wholly owned by New STAT ("STAT ACQUISITION CORP."), with
Old STAT as the surviving corporation (such transactions being collectively
referred to as the "EXCHANGE"). If all the shareholders of the AmHealth
Corporations (the "AMHEALTH SHAREHOLDERS") and all the AmHealth Partners
participate in the Exchange and the Exchange is consummated, the AmHealth
Shareholders and AmHealth Partners will collectively receive a total of
11,200,000 shares of New STAT Common Stock, and each currently issued and
outstanding share of common stock of Old STAT (the "OLD STAT COMMON STOCK") will
be converted into one share of New STAT Common Stock. Upon consummation of the
Exchange, New STAT will be a publicly held company and the corporate name of New
STAT will be changed to "STAT Healthcare, Inc." Application has been made to
have the New STAT Common Stock approved for quotation on the Nasdaq SmallCap
Market and listed on the Boston Stock Exchange. At the Meeting, the stockholders
of Old STAT (the "OLD STAT STOCKHOLDERS") will also be asked to consider and
vote upon three other proposals: (a) to elect four directors to Old STAT's Board
of Directors to serve until the Exchange is consummated, (b) to ratify the
appointment of KPMG Peat Marwick LLP as the independent auditors of Old STAT and
(c) to approve the implementation of the New STAT Healthcare, Inc. 1996 Stock
Incentive Plan (the "NEW STAT STOCK PLAN"). If the Reorganization Agreement is
approved and adopted at the Meeting, Old STAT will become a wholly owned
subsidiary of New STAT upon consummation of the Exchange.

This Joint Proxy Statement/Prospectus is also being furnished to the
AmHealth Shareholders and the AmHealth Partners for consideration in their
decision to participate in the Exchange and approve the implementation of the
New STAT Stock Plan. THE PERIOD DURING WHICH THE AMHEALTH SHAREHOLDERS AND
AMHEALTH PARTNERS MAY ELECT TO PARTICIPATE IN THE EXCHANGE AND APPROVE THE
IMPLEMENTATION OF THE NEW STAT STOCK PLAN WILL EXPIRE AT 5:00 P.M. (CENTRAL
TIME) ON JUNE 21, 1996.

THE EXCHANGE INVOLVES VARIOUS RISKS THAT SHOULD BE CONSIDERED BY OLD STAT
STOCKHOLDERS, AMHEALTH SHAREHOLDERS AND AMHEALTH PARTNERS BEFORE DECIDING TO
PARTICIPATE IN THE EXCHANGE. SEE "RISK FACTORS" BEGINNING ON PAGE 15 OF THIS
JOINT PROXY STATEMENT/PROSPECTUS. In particular, Old STAT Stockholders, AmHealth
Shareholders and AmHealth Partners should consider the following factors:

o The terms of the Exchange were negotiated by management of Old STAT
and AmHealth, which have inherent conflicts of interest.

o The costs of the Exchange are expected to be significant and there is
no assurance that management will be successful in integrating the
businesses of Old STAT and AmHealth.

o All the shares of New STAT Common Stock issued in the Exchange will
be freely tradeable without restriction or further registration,
other than shares allocable to the common stock of each AmHealth
Corporation (which will not be registered in this offering), shares
held by "affiliates" and shares subject to lock-up arrangements
discussed herein that will expire 12 months following the Exchange.
The large number of shares available for sale in the public market
following termination of the lock-up arrangements could adversely
affect the market price of the New STAT Common Stock.

Old STAT Stockholders should also consider the following additional
factors:

o The business of AmHealth is now and, following the Exchange, New
STAT's business will be, subject to a number of risks inherent in the
kidney dialysis and healthcare management businesses.

o The Exchange will result in a change of control of Old STAT.

AmHealth Shareholders and AmHealth Partners should also consider the
following additional factors:

o The business of Old STAT is now and, following the Exchange, New
STAT's business will be, subject to a number of risks, including Old
STAT's dependence on its affiliated physician groups, the working
capital needs and collection risks relating to fee-for-service
reimbursement programs, and the affiliated physician groups'
dependence on contracts with hospitals.

o No financial advisor was retained to consider the fairness of the
Exchange to the AmHealth Shareholders or AmHealth Partners from a
financial point of view.

o An investment in a publicly held company will differ substantially
from an investment in a privately held limited partnership. In
particular, the AmHealth Partnerships have historically made
distributions to their partners, and New STAT has no plans to pay any
dividends on the New STAT Common Stock for the foreseeable future.

o The rights of the AmHealth Shareholders and of the AmHealth Partners
who elect to participate in the Exchange will change significantly
as a result of the Exchange. In addition, the Certificate of
Incorporation and Bylaws of New STAT, certain provisions of Delaware
law and the New STAT Stock Plan may have the effect of discouraging,
delaying or preventing a change in control of New STAT or
unsolicited acquisition proposals that a stockholder might consider
favorable.

o Substantially all AmHealth Shareholders and AmHealth Partners
participating in the Exchange will be required to enter into lock-up
agreements restricting the resale of New STAT Common Stock acquired in
the Exchange for a period of 12 months following the Exchange.

o If the Exchange is consummated, it is likely that New STAT will be
able to control all matters submitted to a vote of partners of each
AmHealth Partnership in which New STAT acquires less than all of the
outstanding partnership interests therein.

It is anticipated that adoption of the Reorganization Agreement and
approval of the Exchange and the New STAT Stock Plan on behalf of the AmHealth
Corporations will be achieved by the requisite written consent of the AmHealth
Shareholders. The election by an AmHealth Partner to participate in the Exchange
will constitute such partner's approval of the New STAT Stock Plan. If the
Exchange is consummated, New STAT will issue an aggregate of up to 11,200,000
shares of New STAT Common Stock to participating AmHealth Shareholders and
AmHealth Partners. UPON CONSUMMATION OF THE EXCHANGE AND ASSUMING PARTICIPATION
BY ALL THE AMHEALTH SHAREHOLDERS AND ALL THE AMHEALTH PARTNERS, THE AMHEALTH
SHAREHOLDERS AND AMHEALTH PARTNERS WILL COLLECTIVELY OWN APPROXIMATELY 75% OF
THE NEW STAT COMMON STOCK TO BE OUTSTANDING IMMEDIATELY AFTER THE EXCHANGE.

AmHealth Shareholders and AmHealth Partners who participate in the Exchange
shall receive, for each share of AmHealth Common Stock and AmHealth Unit owned
of record in each AmHealth entity, the number of shares of New STAT Common Stock
which corresponds to the respective AmHealth entity as follows: AmHealth
Corporation (339.6 shares), AmHealth Enterprises of the Valley, Inc. (82.7
shares), AmHealth Ambulatory Services, Inc. (91.2 shares), AmHealth Kidney
Centers of the Valley, Ltd. (58,630.7 shares), Weslaco Kidney Center, Ltd.
(10,626.6 shares), Starr Dialysis Center, Ltd. (2,789.4 shares), Mission Kidney
Center, Ltd. (10,626.6 shares), AmHealth Medical Management, Ltd. (32,833.1
shares), Brownsville Hyperbaric Healthcare, Ltd. (14,704.8 shares), Southwestern
Infusion Healthcare, Ltd. (1,557.3 shares) and AmHealth Ambulatory Healthcare,
Ltd. (21,065.5 shares). Certain of these share amounts include shares
attributable to indirect interests owned in other AmHealth entities. See "The
Exchange -- Consideration."

On May 21, 1996, the closing sales price for the Old STAT Common Stock on
the Nasdaq SmallCap Market was $9 3/8 per share. There is no public market for
the New STAT Common Stock, the AmHealth Common Stock or the AmHealth Units.

All information herein with respect to Old STAT, New STAT and STAT
Acquisition Corp. has been furnished by Old STAT, and all information with
respect to the AmHealth Corporations and the AmHealth Partnerships has been
furnished by AmHealth. Neither Old STAT nor AmHealth has actual knowledge that
would indicate that any statements or information (including financial
statements) relating to the other party contained herein are inaccurate or
incomplete.

This Joint Proxy Statement/Prospectus and the form of Proxy are first
being mailed to the Old STAT Stockholders, and this Joint Proxy
Statement/Prospectus is first being mailed to the AmHealth Shareholders and the
AmHealth Partners, on or about May 22, 1996.

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

THE SHARES OF NEW STAT COMMON STOCK TO BE ISSUED IN THE EXCHANGE
HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS JOINT PROXY STATEMENT/PROS-
PECTUS. ANY REPRESENTATION TO THE CON-
TRARY IS A CRIMINAL OFFENSE.

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

THE DATE OF THIS JOINT PROXY STATEMENT/PROSPECTUS IS MAY 22, 1996.

AVAILABLE INFORMATION

Old STAT is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "COMMISSION"). These materials can be
inspected and copied at the public reference facilities maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commissions regional offices at 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of these materials can also be obtained from the Commission at
prescribed rates by writing to the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549. In addition, these materials may
also be inspected at the offices of the National Association of Securities
Dealers, Inc., Market Listing Section, 1735 K Street, N.W., Washington, D.C.
20006.

New STAT has filed a Registration Statement on Form S-4 (Reg. No.
333-2486) (the "REGISTRATION STATEMENT") with the Commission under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), with respect to
the securities covered by this Joint Proxy Statement/Prospectus. This Joint
Proxy Statement/Prospectus does not contain all of the information set forth
in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. The Registration
Statement and any amendments thereto, including exhibits filed as a part
thereof, are available for inspection and copying as set forth above.
Statements contained in this Joint Proxy Statement/Prospectus as to the
contents of any contract or other document referred to herein are not
necessarily complete, and in each instance reference is made to the copy of
such contract or other document filed as an exhibit to the Registration
Statement, each such statement being qualified in all respects by such
reference. For further information with respect to New STAT, Old STAT,
AmHealth and the securities to be issued in connection with the Exchange,
reference is made to the Registration Statement, including the exhibits filed
as a part thereof.
------------------------

NO PERSON HAS BEEN AUTHORIZED BY NEW STAT, OLD STAT OR AMHEALTH TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS JOINT PROXY
STATEMENT/PROSPECTUS IN CONNECTION WITH THE OFFERING OF SECURITIES MADE HEREBY
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY NEW STAT, OLD STAT OR AMHEALTH. THIS JOINT
PROXY STATEMENT/PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED BY THIS JOINT PROXY
STATEMENT/PROSPECTUS IN ANY JURISDICTION WHERE, OR TO ANY PERSON TO WHOM, IT
WOULD BE UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS JOINT PROXY STATEMENT/PROSPECTUS NOR ANY DISTRIBUTION OF THE SECURITIES TO
WHICH THIS JOINT PROXY STATEMENT/PROSPECTUS RELATES SHALL, UNDER ANY
CIRCUMSTANCE, CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
INFORMATION CONTAINED HEREIN SINCE THE DATE HEREOF.

TABLE OF CONTENTS

PAGE
-----

SUMMARY .................................................................. 1
RISK FACTORS ............................................................. 15
THE EXCHANGE ............................................................. 23
General ............................................................. 23
Consideration ....................................................... 23
Shareholder and Partner
Approval .......................................................... 24
Exchange of Stock Certificates
and Partnership Interests ......................................... 25
Exchange of Warrants ................................................ 26
Background of the Exchange .......................................... 26
AmHealth's Reasons for the
Exchange; Recommendation
of AmHealth's Management ......................................... 29
Old STAT's Reasons for the
Exchange; Recommendation
of the Old STAT Board ............................................ 30
Operations after the Exchange ....................................... 32
Change of Control following the
Exchange .......................................................... 34
Opinion of Financial Advisor ........................................ 34
Certain Federal Income Tax
Consequences ...................................................... 40
Accounting Treatment ................................................ 42
Interests of Certain Persons in
the Transaction ................................................... 43
Restrictions on Transfer of
Shares ............................................................ 43
Regulatory Requirements ............................................. 44
THE REORGANIZATION AGREEMENT ............................................. 44
The Exchange ........................................................ 45
Certain Covenants ................................................... 45
Conditions Precedent ................................................ 47
Termination ......................................................... 48
Representations an
Warranties ........................................................ 49
Amendment; Waiver ................................................... 49
RIGHTS OF DISSENTING SHAREHOLDERS ........................................ 49
AmHealth Shareholders ............................................... 49
Old STAT Stockholders ............................................... 50
MARKET PRICE OF OLD STAT COMMON STOCK
AND DIVIDEND POLICY .................................................... 51
PRO FORMA COMBINED CAPITALIZATION ........................................ 52
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS ................................................... 53
SELECTED FINANCIAL DATA OF OLD
STAT ................................................................... 62
OLD STAT MANAGEMENT'S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS .......................................................... 64
SELECTED FINANCIAL DATA OF
AMHEALTH ............................................................... 69
AMHEALTH MANAGEMENT'S DISCUSSION AND
ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS .......................................................... 70
BUSINESS OF OLD STAT ..................................................... 72
PROPOSAL 2 -- ELECTION OF
DIRECTORS .............................................................. 80
MANAGEMENT OF NEW STAT ................................................... 81
MANAGEMENT OF OLD STAT ................................................... 83
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS OF OLD STAT ............................................... 87

PAGE
----
PRINCIPAL STOCKHOLDERS OF OLD STAT
AND NEW STAT ........................................................... 88
BUSINESS OF AMHEALTH ..................................................... 89
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS OF AMHEALTH ............................................... 103
PRINCIPAL SHAREHOLDERS AND PARTNERS
OF AMHEALTH ............................................................ 104
COMPARATIVE RIGHTS OF SHAREHOLDERS
AND PARTNERS ........................................................... 104
DESCRIPTION OF SECURITIES OF NEW
STAT ................................................................... 108
SHARES ELIGIBLE FOR FUTURE SALE .......................................... 111
PROPOSAL 3 -- APPOINTMENT OF
INDEPENDENT AUDITORS ................................................... 112
PROPOSAL 4 -- APPROVAL OF STAT
HEALTHCARE, INC
1996 STOCK INCENTIVE PLAN .............................................. 112
OTHER BUSINESS ........................................................... 119
STOCKHOLDER PROPOSALS .................................................... 119
LEGAL MATTERS ............................................................ 119
EXPERTS .................................................................. 119
INDEX TO FINANCIAL STATEMENTS ............................................ FS-1

Appendix I -- Amended and Restated
Agreement and Plan of
Reorganization
Appendix II -- Texas Business
Corporation Act, Articles 5.11,
5.12 and 5.13
Appendix III -- Fairness Opinion of
Southcoast Capital Corporation

iii

SUMMARY

THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION INCLUDED ELSEWHERE
IN THIS JOINT PROXY STATEMENT/PROSPECTUS. THIS SUMMARY DOES NOT PURPORT TO BE
COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED INFORMATION
CONTAINED IN THIS JOINT PROXY STATEMENT/PROSPECTUS AND THE APPENDICES HERETO,
ALL OF WHICH SHOULD BE CAREFULLY REVIEWED.

THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
WHICH INVOLVE RISKS AND UNCERTAINTIES. NEW STAT'S ACTUAL RESULTS FOLLOWING THE
EXCHANGE COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH UNDER "RISK
FACTORS" AND ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS.

THE PARTIES

OLD STAT. Old STAT provides physician contract management services to its
affiliated physician groups, currently South Texas Acute Trauma Physicians, P.A.
("STAT PHYSICIANS") and STAT Physicians, P.A. ("STAT P.A."), which in turn
provide emergency medical and other services to hospitals. Pursuant to
management and administrative services agreements between Old STAT and each of
STAT Physicians and STAT P.A., Old STAT manages and administers the day-to-day
business functions of its affiliated physician groups, which includes the
assumption of responsibility for the administrative, accounting, personnel and
business functions related to the practice of medicine. Old STAT is also
responsible for the billing and collection of professional fees for medical
services, the maintenance of all financial files and records and the negotiation
and administration of all hospital contracts for STAT Physicians and STAT P.A.
Consulting services are also provided by Old STAT in connection with the
procurement and administration of professional liability insurance and the
employment of personnel. Old STAT also coordinates the scheduling of staff
physicians to provide emergency department coverage and assists the hospital
administration and medical staff in such areas as quality assurance, risk
management, departmental accreditation and marketing.

The principal executive offices of Old STAT are located at 12450
Greenspoint Drive, Suite 1200, Houston, Texas 77060. Its telephone number is
(713) 872-6900. See "Business of Old STAT" for other relevant information.

AMHEALTH. AmHealth Corporation, together with two related corporations and
nine related partnerships, is a provider of kidney dialysis services as well as
healthcare management for home healthcare and hyperbaric medicine in the Rio
Grande Valley of southern Texas. Approximately 65% of AmHealth's business is in
the area of integrated dialysis services for patients suffering from chronic
kidney failure. AmHealth currently provides dialysis and related ancillary
services to approximately 250 patients through its five regional outpatient
dialysis facilities. The remainder of AmHealth's business relates to the
providing of management and administrative services to hospital hyperbaric
oxygen centers and home healthcare agencies. Pursuant to various management
agreements, AmHealth manages and administers the day-to-day functions of such
entities, including assuming responsibility for the administrative, accounting,
personnel and business functions of such entities, and providing quality
assurance, risk management, training, continuing education and marketing
services.

The principal executive offices of AmHealth are located at 8200 West I.H.
10, Suite 209, San Antonio, Texas 78230. Its telephone number is (210)
979-7788. See "Business of AmHealth" for other relevant information.

NEW STAT. New STAT is a Delaware corporation formed by Old STAT in March
1996 for the purpose of acting as a constituent entity in the Exchange and has
not engaged in any business activity unrelated to the Exchange. New STAT has no
assets or liabilities. Upon consummation of the Exchange, the corporate name of
New STAT will be changed to "STAT Healthcare, Inc." The principal executive
offices of New STAT are located at 12450 Greenspoint Drive, Suite 1200, Houston,
Texas 77060. Its telephone number is (713) 872-6900.

STAT ACQUISITION CORP. STAT Acquisition Corp., a Delaware corporation
wholly owned by New STAT, was formed for the purpose of acting as a constituent
entity in the Exchange and merging with Old STAT, and has not engaged in any
business activity unrelated to the Exchange. The principal executive offices of
STAT Acquisition Corp. are located at 12450 Greenspoint Drive, Suite 1200,
Houston, Texas 77060. Its telephone number is (713) 872-6900.

TRADING MARKETS. The Old STAT Common Stock is traded on the Nasdaq SmallCap
Market under the symbol "ERDR" and on the Boston Stock Exchange under the symbol
"EDR." On November 7, 1995, the last trading day prior to the public
announcement by Old STAT of the signing of the letter of intent summarizing the
fundamental terms of the initial Reorganization Agreement and the Exchange, the
last reported sale price on the Nasdaq SmallCap Market and the Boston Stock
Exchange was $3 3/8 per share. On May 21, 1996, the closing sales price for the
Old STAT Common Stock has been on the Nasdaq SmallCap Market was $9 3/8 per
share. The New STAT Common Stock has been approved for quotation on the Nasdaq
SmallCap Market under the symbol "STHC" and listed on the Boston Stock Exchange
under the symbol "EDR". There is no public market for the common stock of any of
the AmHealth Corporations (the "AMHEALTH COMMON STOCK") or the AmHealth Units.

RECENT DEVELOPMENTS

In January 1996, Old STAT, in connection with the negotiation of the
Columbia Agreement described below, acquired the rights to a contract (the "HEMA
CONTRACT") for the provision of emergency department medical services for a
total purchase price of $1.2 million, consisting of $960,000 in cash and 52,174
shares of Old STAT Common Stock. Old STAT also agreed to pay to the assignor of
the HEMA Contract up to $100,000 in each of the three twelve-month periods
following the acquisition of the contract depending upon the profits realized by
Old STAT under the HEMA Contract during such periods.

Effective February 1, 1996, Old STAT, though one of its affiliated
physician groups, entered into an agreement (the "COLUMBIA AGREEMENT") with the
Greater Houston Division of Columbia/HCA Healthcare Corporation ("COLUMBIA") to
provide emergency medical services to all but one of Columbia's emergency
departments in the Greater Houston Division. This agreement will result in the
addition of nine hospitals to the Old STAT service base between February 1 and
July 1, 1996 resulting in a total of 18 hospitals served (16 of which are owned
by Columbia). The 15 Greater Houston Division hospitals are covered by this
contract. The Columbia Agreement has an initial term of two years, and may be
renewed for successive two-year periods. The Columbia Agreement will account for
a significant portion of Old STAT's net service revenues and operating expenses.
The HEMA Contract rights are now part of the Columbia Agreement.

In February 1996, Old STAT acquired certain intangible assets of Amedica,
Ltd. for a total purchase price of $270,000, consisting of $200,000 in cash and
15,730 shares of Old STAT Common Stock. These assets consisted of certain
contract rights and the right to use the name "Amedica." However, it is
anticipated that neither Old STAT nor New STAT will conduct any business under
such name.

APPROVAL OF THE EXCHANGE

proposals to elect four directors and ratify the appointment of KPMG Peat
Marwick LLP as independent auditors of Old STAT would have no force or effect.
Only stockholders of record of Old STAT at the close of business on May 6, 1996
are entitled to receive notice of and to vote at the Meeting. On such date,
there were 3,702,472 shares of Old STAT Common Stock outstanding, each of which
is entitled to one vote on each matter to be properly presented at the Meeting.
The presence at the Meeting, in person or by proxy, of the holders of a majority
of the outstanding shares of Old STAT Common Stock is necessary to constitute a
quorum at the Meeting. Abstentions and broker non-votes will be included in
determining the presence of a quorum. Abstentions will have the effect of votes
against the proposals to approve the Reorganization Agreement and the Exchange,
to elect directors, to ratify the appointment of Old STAT's independent auditors
and to approve the New STAT Stock Plan. Broker non-votes will have the effect of
votes against the proposal to approve the Reorganization Agreement and the
Exchange, but will have no effect on the voting on the other proposals.

VOTE REQUIRED. The affirmative vote of the holders of a majority of the
outstanding shares of Old STAT Common Stock is required for Old STAT Stockholder
approval of the Reorganization Agreement and the Exchange. The affirmative vote
of a majority of the shares of Old STAT Common Stock present in person or by
represented proxy at the Meeting is required for Old STAT stockholder approval
of the proposals to elect directors, to ratify the appointment of Old STAT's
independent auditors and to approve the implementation of the New STAT Stock
Plan. The affirmative vote of at least 66 2/3% of the outstanding shares of
common stock of each AmHealth Corporation is required for AmHealth Shareholder
approval of the Reorganization Agreement and the Exchange. The affirmative vote
of the holders of a majority of the outstanding common stock of each AmHealth
Corporation is required for AmHealth Shareholder approval of the New STAT Stock
Plan. The affirmative vote of the limited partners of each AmHealth Partnership
who together with the general partner in each such partnership hold at least 67%
of the outstanding interest in such partnership is required for AmHealth Partner
approval of the New STAT Stock Plan. An AmHealth Partner's election to
participate in the Exchange will constitute such partner's approval of the New
STAT Stock Plan. In addition, the Exchange will not qualify as a "pooling of
interests" for accounting purposes (and the Exchange will not be consummated) if
New STAT does not acquire in the Exchange at least 90% of the combined equity
interests in all of the AmHealth entities.

The AmHealth Corporations intend to obtain the requisite written consents
for approval of the Exchange and the New STAT Stock Plan by their shareholders.
As of the date of this Joint Proxy Statement/Prospectus, Ruben A. Perez and
Daniel A. Perez, each of whom is a director and/or executive officer of each
AmHealth Corporation, collectively owned approximately 90% of the outstanding
shares of each of the AmHealth Corporations. Also as of such date, Ruben A.
Perez and David A. Perez, along with Russell D. Schneider (a director of Old
STAT), together beneficially owned more than 50% of the outstanding AmHealth
Units. Each of Messrs. R. Perez, D. Perez and Schneider will be executive
officers (and Mr. R. Perez will become and Mr. Schneider will remain a director)
of New STAT upon consummation of the Exchange. Such individuals have indicated
that they intend to vote their respective shares of the AmHealth Corporations in
favor of the Exchange and the New STAT Stock Plan, and to exchange their
respective AmHealth Units for New STAT Common Stock pursuant to the Exchange.
See "The Exchange -- Shareholder and Partner Approval." In addition, all the
AmHealth general partners, all AmHealth limited partners participating in the
Exchange and the holders of at least 90% of the outstanding shares of each
AmHealth Corporation will be required to execute certain lock-up agreements. See
"-- The Exchange -- Restrictions on Transfer of New STAT Common Stock" below.

In the event that one or more of the AmHealth Partners determines not to
participate in the Exchange, each AmHealth Partnership in which such AmHealth
Partner holds an interest shall continue its operations as a limited
partnership. The Limited Partnership Agreements of the AmHealth Partnerships
specifically permit the assignment or transfer by the General Partner of all or
any portion

of its interest in such partnership without the approval of any of the limited
partners, and it is intended that following the consummation of the Exchange,
New STAT will be the new general partner of any continuing AmHealth
Partnership. See "The Exchange -- Operations after the Exchange."

As of the date of this Joint Proxy Statement/Prospectus, the directors and
executive officers of Old STAT beneficially owned approximately 1,635,570 shares
(or approximately 45%) of the total outstanding shares of Old STAT Common Stock.
See "Principal Stockholders of Old STAT and New STAT" and "Principal
Shareholders and Partners of AmHealth."

RISK FACTORS. In connection with their consideration of the Reorganization
Agreement and the Exchange, Old STAT Stockholders, AmHealth Shareholders and
AmHealth Partners should carefully consider all of the information contained in
this Joint Proxy Statement/Prospectus, especially the factors mentioned in the
following paragraph and more fully described in
"Risk Factors."

Old STAT Stockholders should consider that (i) the Exchange will result in
a change of control of Old STAT, (ii) the business of New STAT will be subject
to a number of risks associated with AmHealth's business, and (iii) the
increased public share float following the Exchange may result in a prevailing
market price less than the historical trading price of Old STAT Common Stock.
AmHealth Shareholders and AmHealth Partners should consider that (i) the
business of New STAT would be subject to a number of risks associated with Old
STAT's business, (ii) New STAT has no plans to pay any dividends on the New STAT
Common Stock for the foreseeable future, (iii) no financial advisor was retained
to evaluate the fairness of the Exchange on behalf of the AmHealth Shareholders
and AmHealth Partners, (iv) New STAT stockholders will be subject to double
taxation on any distributions (I.E., at both the corporate and the individual
levels), (v) the rights of AmHealth securityholders will change significantly as
a result of the Exchange, (vi) there is expected to be a limited market for New
STAT's securities, and (vii) the combined company will have a limited operating
history. In addition, the Old STAT Stockholders, AmHealth Shareholders and
AmHealth Partners should all also consider that the terms of the Exchange were
negotiated by management of Old STAT and AmHealth, which have inherent conflicts
of interest.

THE EXCHANGE

ALLOCATION OF NEW STAT COMMON STOCK AMONG AMHEALTH ENTITIES. Upon
consummation of the Exchange and assuming participation by all AmHealth
Shareholders and all AmHealth Partners, New STAT shall issue 11,200,000 shares
of New STAT Common Stock to the AmHealth Shareholders and AmHealth Partners. The
New STAT Common Stock issued in the Exchange will be distributed to the AmHealth
Shareholders and AmHealth Partners who own shares of stock or partnership
interests in such AmHealth Corporations and AmHealth Partnerships, as the case
may be, except with respect to any AmHealth Shareholder who has perfected
dissenters rights under Texas law or any AmHealth Partner electing to not
participate in the Exchange. The number of shares of New STAT Common Stock to be
allocated among the shareholders and partners of each AmHealth entity for each
share of AmHealth Common Stock or AmHealth Unit owned, is set forth in the
following table. The shares allocable to each AmHealth Corporation will not be
registered in this offering. See "The Reorganization Agreement -- The Exchange."

SHARES OF NEW STAT
COMMON STOCK
ALLOCABLE TO EACH
AMHEALTH ENTITY AMHEALTH SHARE OR UNIT
- ------------------------------------- ----------------------
AmHealth Corporation................. 339.6
AmHealth Enterprises of the Valley,
Inc................................ 82.7(1)
AmHealth Ambulatory Services, Inc.... 91.2(1)
AmHealth Kidney Centers of the
Valley, Ltd........................ 58,630.7(1)
Weslaco Kidney Center, Ltd........... 10,626.6
Starr Dialysis Center, Ltd........... 2,789.4
Mission Kidney Center, Ltd........... 10,626.6
AmHealth Medical Management, Ltd..... 32,833.1
Brownsville Hyperbaric Healthcare,
Ltd................................ 14,704.8
Southwestern Infusion Healthcare,
Ltd................................ 1,557.3
AmHealth Ambulatory Healthcare,
Ltd................................ 21,065.5(1)

- ------------
(1) Includes shares attributable to indirect interests in other AmHealth
entities.

As soon as practicable following consummation of the Exchange, American
Stock Transfer & Trust Company, in its capacity as exchange agent (the "EXCHANGE
AGENT"), will provide transmittal materials to each holder of record of Old STAT
Common Stock for use in exchanging such holders stock certificates evidencing
Old STAT Common Stock for certificates evidencing shares of New STAT Common
Stock to be issued in the Exchange. OLD STAT STOCKHOLDERS SHOULD NOT FORWARD
CERTIFICATES TO BE EXCHANGED FOR NEW STAT COMMON STOCK UNTIL THEY HAVE RECEIVED
TRANSMITTAL MATERIALS. In addition, as soon as reasonably practicable following
consummation of the Exchange, each holder of record of AmHealth Common Stock or
AmHealth Units will receive a certificate or certificates representing the
shares of New STAT Common Stock to which such holder shall be entitled as a
result of the Exchange.

In the Exchange, the outstanding shares of AmHealth Common Stock (other
than shares held by dissenting AmHealth Shareholders) and the outstanding shares
of Old STAT Common Stock shall be canceled. The AmHealth Common Stock so
canceled shall thereafter represent only the right to receive New STAT Common
Stock in the amounts specified in the preceding table. The Old STAT Common Stock
so canceled shall thereafter represent the right to receive shares of New STAT
Common Stock, on a one-for-one basis.

Following the Exchange, the holders of outstanding stock options under Old
STAT's 1994 Stock Option Plan will be converted into options to purchase the
same number of shares of New STAT Common Stock at the same exercise price
provided for in the stock option agreements evidencing such stock options prior
to the Exchange. In addition, each outstanding Class A common stock purchase
warrant of Old STAT (the "OLD STAT CLASS A WARRANTS") shall be converted into a
similar warrant of New STAT (the "NEW STAT CLASS A WARRANTS"), and each of the
warrants to purchase Old STAT Common Stock and Old STAT Class A Warrants issued
to the underwriter of Old STAT's initial public offering (the "OLD STAT
REPRESENTATIVES' WARRANTS") shall be converted into new warrants (the "NEW STAT
REPRESENTATIVES' WARRANTS") to purchase the same number of shares of New STAT
Common Stock and New STAT Class A Warrants, each at the same exercise price as
provided previously in such Old STAT warrants. Upon such conversion, all such
Old STAT Class A Warrants and Old STAT Representatives' Warrants shall be
canceled. As soon as practicable following the consummation of the Exchange, the
Exchange Agent will send transmittal materials to each holder of Old STAT Class
A Warrants, and New STAT will send transmittal materials to each holder of Old
STAT Representatives' Warrants. The transmittal materials will contain
instructions with respect to the surrender of certificates representing the Old
STAT Class A Warrants and Old STAT Representatives'

Warrants to be exchanged for new certificates representing New STAT Class A
Warrants and New STAT Representatives' Warrants.

The shares of New STAT Common Stock which would have been issued with
respect to dissenting AmHealth Shareholders in connection with the mergers of
the AmHealth Corporations with and into New STAT shall not be issued. Instead,
AmHealth Shareholders that effectively exercise their dissenters' rights under
the Texas Business Corporation Act shall be entitled to receive cash payment for
their shares of AmHealth Common Stock. See "SUMMARY -- RIGHTS OF DISSENTING
AMHEALTH SHAREHOLDERS" and "RIGHTS OF DISSENTING SHAREHOLDERS -- AMHEALTH
SHAREHOLDERS."

COMPARISON OF MATERIAL RIGHTS OF NEW STAT STOCKHOLDERS TO THOSE OF OLD STAT
STOCKHOLDERS, AMHEALTH SHAREHOLDERS AND AMHEALTH PARTNERS. Both Old STAT and New
STAT are incorporated in Delaware. Upon consummation of the Exchange, the New
STAT Common Stock exchanged on a share-for-share basis for Old STAT Common Stock
will provide the Old STAT Stockholders who receive such New STAT Common Stock
with essentially the same rights they had as Old STAT Stockholders, except that
certain provisions of New STAT's Charter and Bylaws impose additional
limitations on the rights of stockholders with respect to the election of
directors, the calling of special meetings and the taking of stockholder action.
These and other provisions may have the effect of deterring or preventing
hostile takeovers including those that might result in a premium over the
then-current trading price of the New STAT Common Stock or delaying or
preventing changes in control or management of New STAT. See "COMPARATIVE RIGHTS
OF SHAREHOLDERS AND PARTNERS -- NEW STAT COMMON STOCK AND OLD STAT COMMON
STOCK."

The AmHealth Corporations are incorporated in Texas and, upon consummation
of the Exchange, the rights of the AmHealth Shareholders exchanging shares of
AmHealth Common Stock for shares of New STAT Common Stock will be governed by
Delaware law, rather than Texas law. New STAT stockholders will not be entitled
to cumulate their votes in elections of directors. In addition, holders of
AmHealth Common Stock in any AmHealth Corporation which is a Subchapter S
corporation will lose the benefits of ownership of stock in a "pass-through" tax
entity. See "COMPARATIVE RIGHTS OF SHAREHOLDERS AND PARTNERS -- NEW STAT COMMON
STOCK AND AMHEALTH COMMON STOCK."

Differences between laws governing corporations and those governing limited
partnerships will materially restrict the rights of former general partners of
the AmHealth Partnerships to participate in the management of New STAT. In
addition, New STAT's Certificate of Incorporation and Bylaws require that a
special meeting may be called by holders of not less than a majority of the
outstanding shares, while the Limited Partnership Agreements require that any
partner owning an aggregate of at least 20% of the outstanding partnership
interests may do so. Furthermore, New STAT stockholders will be subject to
double taxation on dividends. However, New STAT does not intend to pay dividends
on the New STAT Common Stock for the foreseeable future. See "COMPARATIVE RIGHTS
OF SHAREHOLDERS AND PARTNERS -- NEW STAT COMMON STOCK AND AMHEALTH UNITS."

CHANGE OF CONTROL FOLLOWING THE EXCHANGE. Assuming all the AmHealth
Shareholders and AmHealth Partners participate in the Exchange, the AmHealth
Shareholders and AmHealth Partners will own approximately 11,200,000 shares of
New STAT Common Stock representing approximately 75% of the New STAT Common
Stock to be outstanding immediately following the Exchange. In addition,
significant changes in the composition of the New STAT Board of Directors (the
"NEW STAT BOARD") and the appointment of certain AmHealth Shareholders and
AmHealth Partners as executive officers and directors of New STAT will occur
upon consummation of the Exchange. See "Management of New STAT." Messrs.
Schneider, R. Perez and D. Perez, each of whom is expected to be named an
executive officer and/or director of New STAT following consummation of the
Exchange, will collectively hold approximately 55% of the New STAT Common Stock
to be outstanding immediately following the Exchange.

REASONS FOR THE EXCHANGE. In considering the Exchange, the Old STAT Board
of Directors (the "OLD STAT BOARD") identified several potential benefits of the
Exchange that it believes will contribute to the success of New STAT. These
potential benefits include the addition of the dialysis centers to the core
business of Old STAT, permitting vertical expansion of Old STAT's services
business into a broader platform of services, with the prospect of potentially
higher profit margins than would have been achieved by the two separate
companies. The Old STAT Board believes that the Exchange is desirable based on,
among other things, the opinion of Southcoast Capital Corporation, Old STAT's
financial advisor ("SOUTHCOAST") that the Exchange is fair to the Old STAT
Stockholders; the business reputation and capabilities of AmHealth and its
management; the anticipated financial and operating synergies of the combined
businesses of Old STAT and AmHealth; the terms of the Exchange; and the Exchange
is expected to be treated as a tax-free reorganization for purposes of the
Internal Revenue Code of 1986, as amended (the "CODE"), and as a pooling of
interests for accounting purposes. In considering the Exchange, the Old STAT
Board also considered a number of potentially negative factors. See "The
Exchange -- Old STAT's Reasons for the Exchange; Recommendation of the Old STAT
Board."

In the opinion of the management of AmHealth, the addition of emergency
room management and administrative services to the platform of services already
provided by AmHealth will give New STAT the ability to engage in significant
vertical expansion of AmHealth's existing market base. By virtue of the
combination of services provided by Old STAT with those provided by AmHealth,
New STAT will have the capability to offer an integrated diabetic disease
management system, drawing from the emergency room "gateway" to the healthcare
system. Additionally, the relationship of Old STAT with hospitals may permit New
STAT to increase the number of medical providers to whom AmHealth provides
management services or from whom it accepts referrals for dialysis treatment. In
considering the Exchange, the AmHealth management also considered a number of
potentially negative factors. See "The Exchange -- AmHealth's Reasons for the
Exchange; Recommendation of AmHealth's Management."

OPERATIONS FOLLOWING THE EXCHANGE. Upon consummation of the Exchange, the
corporate name of New STAT will be changed to "STAT Healthcare, Inc." and the
assets of the AmHealth Corporations will, by virtue of the mergers of the
AmHealth Corporations with and into New STAT, become assets of New STAT.
Following the consummation of the Exchange, each AmHealth Partnership as to
which all the general partners and all the limited partners elect to participate
in the Exchange will dissolve by operation of law and its assets will be owned
by New STAT. In the event that one or more of the AmHealth Partners elects to
not participate in the Exchange, then any AmHealth Partnership in which such
AmHealth Partner holds an interest shall continue its existence as a stand-alone
limited partnership, with no change in its management, operations, structure,
relationships with patients or suppliers, except for the ownership by New STAT
of a substantial percentage of the interests (including general partner
interests) therein. The Limited Partnership Agreement of each AmHealth
Partnership provides that all matters presented to a vote of partners requires
the approval of the limited partners who together with the General Partner
thereof own at least 67% of the outstanding partnership interests therein.
Accordingly, if the limited partners and General Partner of any AmHealth
Partnership who together hold at least 67% of the outstanding partnership
interest in such partnership participate in the Exchange, New STAT will be able
to control all matters presented to a vote of the partners of such partnership.
New STAT's acquisition of the AmHealth Units of any General Partner electing to
participate in the Exchange will not result in the increase of compensation, if
any, payable to the General Partner with respect to such AmHealth Partnership,
and New STAT shall be subject to the same limitations previously applicable to
such General Partner. In addition, distributions of partnership profits will
continue in accordance with past practice.

Either AmHealth Ambulatory Services, Inc. or AmHealth Enterprises of the
Valley, Inc. serves as General Partner of each AmHealth Partnership. Other
than shares of New STAT Common Stock issued

on a pro rata basis in Exchange for the AmHealth Units owned by either General
Partner, no compensation of any kind shall be payable to the General Partner of
any AmHealth Partnership if all limited partners of such AmHealth Partnership
participate in the Exchange and such partnership subsequently dissolves. Ruben
A. Perez is an officer and director and the sole shareholder of each of AmHealth
Ambulatory Services, Inc. and AmHealth Enterprises of the Valley, Inc.

RESTRICTIONS ON TRANSFER. It is a condition to the consummation of the
Exchange that (i) all "affiliates" of AmHealth execute an Affiliate and
Shareholder Agreement in the form attached as Exhibit B to the Reorganization
Agreement included as Appendix I hereto, and (ii) all General Partners, all
AmHealth limited partners participating in the Exchange and the holders of at
least 90% of the outstanding stock of each AmHealth Corporation, as well as all
directors and certain other stockholders of Old STAT, execute a Lock-Up
Agreement in the form attached as Exhibit A to the Reorganization Agreement. See
"The Exchange -- Restrictions on Transfer of Shares" and "The Reorganization
Agreement -- Conditions Precedent."

OPINION OF FINANCIAL ADVISOR. Southcoast presented to the Old STAT Board
its oral opinion on December 15, 1995, to the effect that, as of the date of
such opinion and based upon and subject to certain matters as stated therein,
the consideration to be offered in the Exchange is fair, from a financial point
of view, to the holders of Old STAT Common Stock. See "The Exchange -- Opinion
of Financial Advisor." Southcoast subsequently confirmed its opinion by delivery
of written opinions dated as of January 4, March 15, and May 17, 1996. The full
text of the written opinion of Southcoast dated May 17, 1996, which sets forth
the assumptions made, matters considered and limitations on the review
undertaken by Southcoast, is attached as Appendix III hereto. Old STAT
Stockholders are urged to read the opinion carefully in its entirety.

EFFECTIVE TIME OF THE EXCHANGE. It is anticipated that the Exchange will
become effective as promptly as practicable after the requisite shareholder
and partner approvals and confirmations have been obtained and all other
conditions to the Exchange have been satisfied or waived. See "The
Reorganization Agreement -- Conditions Precedent."

CONDITIONS TO THE EXCHANGE; TERMINATION. The obligations of New STAT, Old
STAT and AmHealth to consummate the Exchange are subject to the satisfaction of
certain conditions, including obtaining requisite shareholder and partner
approvals and confirmations, the listing of the New STAT Common Stock on a stock
exchange and the execution by certain Old STAT Stockholders, holders of 90% of
the outstanding shares of each AmHealth Corporation, all General Partners and
all of the participating AmHealth limited partners of lock-up and/or affiliate
and shareholder agreements with respect to shares of New STAT Common Stock to be
issued in the Exchange. In addition, the Exchange will not qualify as a "pooling
of interests" for accounting purposes (and the Exchange will not be consummated)
if New STAT does not acquire in the Exchange at least 90% of the combined equity
interests in all of the AmHealth entities. THE PERIOD DURING WHICH THE AMHEALTH
SHAREHOLDERS AND AMHEALTH PARTNERS MAY ELECT TO PARTICIPATE IN THE EXCHANGE AND
APPROVE THE IMPLEMENTATION OF THE NEW STAT STOCK PLAN WILL EXPIRE AT 5:00 P.M.
(CENTRAL TIME) ON JUNE 21, 1996. See "The Reorganization Agreement -- Conditions
Precedent."

The Reorganization Agreement is subject to termination if the Exchange is
not consummated on or before May 27, 1996. In addition, the Reorganization
Agreement may be terminated under certain circumstances by either Old STAT or
AmHealth, including certain instances where payment of expenses relating to the
Exchange would be paid by the non-terminating party. In addition, under certain
circumstances, termination of the Reorganization Agreement could result in the
issuance by Old STAT to the AmHealth Corporations and AmHealth Partnerships of
200,000 shares of Old STAT Common Stock. See "The Reorganization Agreement --
Termination."

RIGHTS OF DISSENTING AMHEALTH SHAREHOLDERS. Under the Texas Business
Corporation Act, if the Exchange is effected, all holders of AmHealth Common
Stock who file with the applicable AmHealth

Corporation proper written objection to the Exchange will be entitled to
receive the fair value in cash for their shares of AmHealth Common Stock. See
"Rights of Dissenting Shareholders -- AmHealth Shareholders."

NO DISSENTERS' RIGHTS FOR AMHEALTH PARTNERS. AmHealth Partners will not be
entitled to dissenters' or appraisal rights under the Texas Business Corporation
Act. However, any AmHealth Partner may choose to not participate in the
Exchange.

NO APPRAISAL RIGHTS FOR OLD STAT STOCKHOLDERS. Holders of Old STAT
Common Stock are not entitled to appraisal rights under the Delaware General
Corporation Law. See "Rights of Dissenting Shareholders -- Old STAT
Stockholders."

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS. The Exchange is intended to
qualify as a reorganization (a "REORGANIZATION") under Section 351 and Section
368 of the Code in which case no gain or loss would generally be recognized by
the Old STAT Stockholders, AmHealth Shareholders or AmHealth Partners on the
exchange of their Old STAT Common Stock, AmHealth Common Stock and AmHealth
Units for shares of New STAT Common Stock. See "The Exchange -- Certain Federal
Income Tax Consequences" for a more detailed description of the federal income
tax consequences of the Exchange. All AmHealth Shareholders and AmHealth
Partners are urged to consult their own tax advisors.

ACCOUNTING TREATMENT. The Exchange is intended to be treated as a
pooling of interests for accounting purposes. As a condition to Old STAT's and
AmHealth's obligations to consummate the Exchange, both Old STAT and AmHealth
are to receive an opinion to such effect. See "The Exchange -- Accounting
Treatment."

REGULATORY REQUIREMENTS. Neither Old STAT nor AmHealth is aware of any
material federal, state or foreign regulatory approval that is required in
order to consummate the Exchange. Should any such approval be required, it is
currently contemplated that such approval will be sought. See "The
Exchange -- Regulatory Requirements."

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION. Russell D. Schneider, a
current member of the Old STAT Board and the holder of significant ownership
interests in the AmHealth Partnerships, abstained from the vote of the New STAT
Board and the Old STAT Board approving the Reorganization Agreement and the
Exchange. Mr. Schneider will receive a significant number of shares of New STAT
Common Stock if the Exchange is consummated. See "Principal Stockholders of Old
STAT and New STAT." New STAT has agreed to enter into three-year employment and
non-competition agreements with Messrs. Schneider and R. Perez, pursuant to
which such individuals will render certain services to New STAT and fulfill such
other duties as directed by the New STAT Board. New STAT will also enter into an
employment agreement with Daniel A. Perez. One of the properties currently
leased by AmHealth is owned by a joint venture in which Ruben A. Perez controls
a 50% interest. See "The Exchange -- Interests of Certain Persons in the
Transaction."

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following summary historical financial information of (i) Old STAT and
STAT Physicians, and (ii) AmHealth Corporation and its related health care
entities is derived from their respective historical financial statements
included elsewhere in this Joint Proxy Statement/Prospectus, and should be read
in conjunction with such financial statements and the notes thereto and "Old
STAT Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "AmHealth Management's Discussion and Analysis of Financial
Condition and Results of Operations."

OLD STAT AND STAT PHYSICIANS
<TABLE>
<CAPTION>
OLD STAT STAT
THREE MONTHS ENDED OLD STAT COMBINED PHYSICIANS
MARCH 31, YEAR ENDED YEAR ENDED YEAR ENDED
------------------------ DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994(1) 1993
----------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
STATEMENTS OF INCOME DATA:
(IN THOUSANDS EXCEPT PER SHARE AND
SHARE AMOUNTS)
Net service revenues................. $4,442 $3,255 $14,124 $10,548 $8,873
Operating income..................... 210 243 977 523 495
Income before income taxes........... 215 226 1,021 499 482
Net income(2)........................ 138 149 674 330 318
Net income per common share(3)....... $.03 $.07 $.21 $.15 $.15
Shares used in per share
calculation(3)..................... 3,980,390 2,199,624 3,180,504 2,199,624 2,199,624
</TABLE>
- ------------

(1) The combined income statement data for 1994 include STAT Physicians for the
eight months ended August 31, 1994 and Old STAT for the period from July 29,
1994 (date of incorporation) through December 31, 1994.

(2) The income statement data of STAT Physicians has been adjusted to reflect
the pro forma effect of income taxes based on an effective corporate tax
rate of 34%.

(3) Net income per common share, until the date of issuance of common stock in
connection with Old STAT's initial public offering (April 28, 1995), is
computed based on the number of common and common equivalent shares of Old
STAT as if all shares were outstanding for the entire period, less the
number of treasury shares assumed to have been purchased (at the initial
offering price of Old STAT's common stock) from the proceeds of actual sales
of stock. Net income per common share subsequent to Old STAT's initial
public offering is computed based on the weighted average number of common
and common equivalent shares outstanding.

OLD STAT
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------- DECEMBER 31, 1995 DECEMBER 31, 1994
ACTUAL AS ADJUSTED(1) ACTUAL ACTUAL
------- -------------- ----------------- -----------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
(IN THOUSANDS)
Working capital...................... $ 3,620 $4,893 $ 4,590 $ 514
Total assets......................... 7,036 11,660 5,860 2,094
Long-term debt and capital lease
obligations, less current
portion............................ -- 1,529 -- --
Total liabilities.................... 1,843 4,461 1,165 1,346
Common stock subject to rescission... 310 310 -- --
Shareholders' equity................. 4,883 6,889 4,695 748
</TABLE>
- ------------

(1) Adjusted to reflect the issuance of 11,200,000 shares of New STAT Common
Stock upon consummation of the Exchange.

AMHEALTH CORPORATION AND
ITS RELATED ENTITIES
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------- -------------------------------
1996 1995 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
COMBINED STATEMENTS OF INCOME DATA:
(IN THOUSANDS)
Net service revenues................. $ 3,107 $ 1,618 $ 9,017 $ 3,973 $ 1,170
Operating income..................... 1,054 662 2,789 957 155
Net Income........................... 1,003 623 2,624 976 135
Distributions to shareholders and
partners........................... 674 473 2,005 481 --
</TABLE>

DECEMBER 31,
MARCH 31, --------------------
1996 1995 1994
--------- --------- ---------
COMBINED BALANCE SHEET DATA:
(IN THOUSANDS)
Working capital...................... $ 1,273 $ 1,028 $ 701
Total assets......................... 4,624 4,715 2,730
Long-term debt and capital lease
obligations, less current
portion............................ 1,529 1,640 1,194
Total liabilities.................... 2,618 3,038 1,699
Shareholders' equity/partners'
capital.............................. 2,006 1,677 1,031

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The unaudited pro forma combined financial data are qualified in their
entirety by reference to, and should be read in conjunction with, the pro forma
unaudited combined financial statements and notes thereto that are included
elsewhere in this Joint Proxy Statement/Prospectus and do not purport to
represent what the financial position or results of operations actually would
have been had the Exchange taken place at the beginning of the earliest period
presented, nor are they necessarily indicative of future operating results.

The unaudited pro forma combined financial information presents the
combined data of Old STAT, STAT Physicians and AmHealth on a "pooling of
interests" basis and gives effect to the issuance of 11,200,000 shares of New
STAT Common Stock upon consummation of the Exchange.

The combined statements of income data for the year ended December 31, 1995
and combined balance sheet data as of December 31, 1995 also give effect to Old
STAT's 1996 acquisition of Amedica, Ltd. and the 1996 acquisition of a hospital
contract as if they had occurred January 1, 1995.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED DECEMBER 31,
-------------------------- ---------------------------------------
1996 1995 1995 1994 1993
------------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
COMBINED STATEMENTS OF
INCOME DATA:
(IN THOUSANDS EXCEPT PER SHARE AND
SHARE AMOUNTS)
Net service revenues................. $7,549 $4,873 $23,580 $14,521 $10,043
Operating income..................... 1,264 905 3,586 1,480 650
Income before income taxes(1)........ 1,218 849 3,464 1,475 617
Net income(1)........................ 800 560 2,287 974 407
Net income per common share(2)....... $0.05 $0.07 $0.19 $0.14 $0.08
Shares used in per share
calculation(2)..................... 15,180,390 7,651,080 11,965,275 7,079,131 5,257,954
</TABLE>
- ------------

(1) The combined income statement data has been adjusted to reflect the pro
forma effect of income taxes not otherwise payable by the entities which are
S corporations or partnerships based on an effective tax rate of 34%.

(2) Pro forma net income per common share is computed based on the number of
shares used in the calculation of net income per common share for Old STAT,
plus the number of shares of New STAT Common Stock to be issued to the
shareholders or partners of each AmHealth entity, as if such shares were
outstanding since the date of inception for each entity. Shares used in the
per share calculation for 1995 also include shares issued in the acquisition
of Amedica, Ltd. and the acquisition of a hospital contract.

MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
COMBINED BALANCE SHEET DATA:
(IN THOUSANDS)
Working capital...................... $ 4,543 $ 4,211
Total assets......................... 11,230 10,590
Long-term debt and capital lease
obligations, less current
portion............................ 1,529 1,765
Total liabilities.................... 4,381 4,273
Common stock subject to rescission... 310 310
Shareholders equity.................. 6,517 5,985

SUMMARY SELECTED COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

The following information reflects certain comparative per share data for
Old STAT and STAT Physicians on both historical and pro forma combined (giving
effect to the Exchange using the pooling-of-interests method, and the 1996
acquisition of Amedica, Ltd. and the 1996 acquisition of a hospital contract as
if they had occurred January 1, 1995) bases. Old STAT has not declared or paid
dividends since inception. It is anticipated that New STAT will retain all
earnings for use in expansion of the business and therefore does not anticipate
declaring or paying any dividends in the foreseeable future.

Information with respect to AmHealth is provided on a historical pro forma
basis (using the number of shares of New STAT Common Stock to be issued to the
shareholders or partners of each AmHealth entity, as if such shares were
outstanding since the date of inception for each entity) and on an equivalent
pro forma basis. Equivalent pro forma per share data has been computed by
multiplying Old STAT and STAT Physicians pro forma combined amounts by the ratio
of the number of shares of New STAT Common Stock to be issued for their
respective AmHealth interests to the total pro forma shares.

<TABLE>
<CAPTION>
AS OF AND FOR THE THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------
1996 1995
---------------------------- ----------------------------
PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OLD STAT AND STAT PHYSICIANS:
Book value per common share.......... $ 1.40 $ 0.46 $ 0.41 $ 0.27
Net income per common share.......... 0.03 0.05 0.07 0.07

HISTORICAL EQUIVALENT HISTORICAL EQUAVILENT
PRO FORMA(1) PRO FORMA(2) PRO FORMA(1) PRO FORMA(2)
------------ ------------ ------------ ------------
AMHEALTH:
Book value per common share.......... $ 0.18 $ 0.35 $ 0.22 $ 0.19
Net income per common share.......... 0.09 0.04 0.12 0.05

AS OF AND FOR THE YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------------------
1995 1994 1993
--------------------------- --------------------------- ---------------------------
PRO FORMA PRO FORMA PRO FORMA
HISTORICAL COMBINED HISTORICAL COMBINED HISTORICAL COMBINED
------------ ------------ ------------ ------------ ------------ ------------
OLD STAT AND
STAT PHYSICIANS:
Book value per common share.......... $ 1.30 $ 0.42 $ 0.34 $ 0.23 $ 0.17 $ 0.13
Net income per common share.......... 0.21 0.19 0.15 0.14 0.15 0.08

HISTORICAL EQUIVALENT HISTORICAL EQUIVALENT HISTORICAL EQUIVALENT
PRO FORMA(1) PROFORMA(2) PROFORMA(1) PRO FORMA(2) PRO FORMA(1) PRO FORMA(2)
------------ ------------ ------------ ------------ ------------ ------------
AMHEALTH:
Book value per common share.......... $ 0.15 $ 0.32 $ 0.19 $ 0.16 $ 0.11 $ 0.09
Net income per common share.......... 0.30 0.14 0.20 0.10 0.04 0.05
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)

13
- ------------
(1) Historical pro forma per share information is computed by dividing
historical amounts by the number of shares of New STAT Common Stock to be
issued to the shareholders or partners of each AmHealth entity, as if such
shares were outstanding since the date of inception for each entity. For
March 31, 1996 and 1995, the ending number of shares used in the book value
computation was 11,200,000 and 5,383,552, respectively, and the weighted
average number of shares used in the net income computation was 11,200,000
and 5,383,552, respectively. For December 31, 1995, 1994 and 1993, the
ending number of shares used in the book value computation was 11,200,000,
5,383,552, and 4,165,166, respectively, and the weighted average number of
shares used in the net income computation was 8,716,867, 4,879,507, and
3,058,330, respectively.

(2) Equivalent pro forma per share information is computed by multiplying Old
STAT and STAT Physicians pro forma combined per share amounts by the ratio
of the number of shares of New STAT Common Stock to be issued for their
respective AmHealth interests to the total pro forma shares.

RISK FACTORS

THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY BY THE OLD STAT
STOCKHOLDERS AND THE AMHEALTH SHAREHOLDERS IN EVALUATING WHETHER TO APPROVE THE
REORGANIZATION AGREEMENT AND THE EXCHANGE, AND BY THE AMHEALTH PARTNERS IN
EVALUATING WHETHER TO PARTICIPATE IN THE EXCHANGE.

THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS
WHICH INVOLVE RISKS AND UNCERTAINTIES. NEW STAT'S ACTUAL RESULTS FOLLOWING THE
EXCHANGE COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN THE
FOLLOWING RISK FACTORS AND ELSEWHERE IN THIS JOINT PROXY STATEMENT/PROSPECTUS.

RISKS INHERENT IN THE EXCHANGE

DISTRIBUTIONS ON NEW STAT COMMON STOCK UNLIKELY

New STAT is anticipated to retain all cash produced from operations and
does not expect to pay dividends on the New STAT Common Stock. Consequently,
participating AmHealth Partners should not expect to receive further dividends
or distributions following the Exchange. See "Comparative Rights of Shareholders
and Partners -- New STAT Common Stock and AmHealth Units" and "Market Price of
Old STAT Common Stock and Dividend Policy."

DOUBLE TAXATION OF FUTURE DISTRIBUTIONS

While the income of the AmHealth Partnerships (whether or not distributed)
is subject to a single-level tax at the partner level, the income of New STAT
will be subject to two levels of tax. First, there will be a tax on income at
the corporate level, and second, New STAT stockholders generally will pay income
taxes on any dividends received from New STAT. See "Comparative Rights of
Shareholders and Partners -- New STAT Common Stock and AmHealth Units."

NO DISSENTERS' OR APPRAISAL RIGHTS

Holders of Old STAT Common Stock, unlike holders of AmHealth Common Stock,
are not entitled to any dissenters' or appraisal rights pursuant to applicable
law.

POTENTIAL BENEFITS OF NOT COMPLETING THE EXCHANGE

The continuation of the operations of the AmHealth Partnerships in current
form could potentially result in the continued distributions of net profits
among the AmHealth Partners, whereas New STAT is expected to retain all cash
generated from operations and does not expect to pay dividends on the New STAT
Common Stock for the foreseeable future.

INTEGRATION OF OPERATIONS OF AMHEALTH

New STAT expects to incur costs and expenses of approximately $530,000 in
connection with the Exchange, which will be reflected in the financial
statements of New STAT in the period that the Exchange is consummated. The
integration of certain operations following the Exchange will require the
dedication of management resources and temporarily distract attention from the
day-to-day business of New STAT, which could temporarily adversely effect New
STAT's business and results of operations. There can be no assurance that New
STAT will not incur additional charges in subsequent quarters to reflect costs
associated with the Exchange or that management will be successful in its
efforts to integrate the operations of Old STAT and AmHealth.

RISKS INHERENT IN NEW STAT

LIMITED OPERATING HISTORY OF OLD STAT; DEPENDENCE ON AFFILIATED PHYSICIAN
GROUPS

Old STAT was incorporated in July 1994 to offer physician contract
management services to professional associations or other legal entities
organized for the purpose of practicing medicine under state law, which provide
emergency department services to hospitals. Old STAT has a limited operating
history and currently relies on its management and administrative services
agreements (the "MANAGEMENT AGREEMENTS") with and related fees from STAT
Physicians and STAT P.A., which are

professional associations, as its sole source of revenue. STAT Physicians and
STAT P.A. currently have in place contracts with 17 hospitals for the provision
of emergency department medical and administrative services. The termination or
failure by STAT Physicians or STAT P.A. to renew a significant number of these
contracts or a single contract covering a significant number of facilities would
have a material impact on the revenues attributable to the Management
Agreements, which in turn could have a material adverse effect on Old STAT and,
following the Exchange, New STAT. See "Business of Old STAT -- Contractual
Arrangements."

INCREASED WORKING CAPITAL NEEDS AND RISKS OF COLLECTION RELATING TO
FEE-FOR-SERVICE REIMBURSEMENT PROGRAMS

New STAT's business will be dependent upon its ability to obtain and
maintain reimbursement for Old STAT's affiliated physician groups on a
fee-for-service basis by third-party payors, including government programs (such
as Medicare and Medicaid). During the year ended December 31, 1995, Old STAT
derived approximately 97% of its revenues from payments made on a
fee-for-service basis by third party payors, private insurers and patients.
Under fee-for-service contracts, Old STAT, through the Management Agreements,
assumes the financial risks arising from changes in patient volume, payor mix
and third party reimbursement rates. Fee-for-service contractual arrangements
also involve a credit risk related to services provided to uninsured
individuals. See Notes 3 and 4 of Notes to Old STATs Financial Statements and
Notes 4 and 5 of Notes to STAT Physicians Financial Statements for information
concerning historical allowance for contractual adjustments and uncollectibles.
In addition, fee-for-service contracts also have less favorable cash flow
characteristics than traditional flat-rate contracts due to longer collection
periods. Old STAT's working capital needs are generally a function of the
acquisition of new hospital contracts. As a result, Old STAT and, following the
Exchange, New STAT may require additional working capital in the event of
significant growth. New STAT may experience a net use of cash in its operating
activities in future projects if the growth in fee-for-service contracts
continues. See "Old STAT Management's Discussion and Analysis of Financial
Condition and Results of Operations."

The public and private sectors are experiencing increasing pressures to
restrain health care costs and to restrict reimbursement rates for medical
services. Any change in reimbursement amounts or practices to the affiliated
physician groups could materially adversely affect the operations of New STAT
unless New STAT is able to renegotiate satisfactory contractual arrangements
with STAT Physicians' and STAT P.A's hospital clients and contracted physicians
of the affiliated physician groups. In addition, while Old STAT seeks to comply
with applicable Medicare and Medicaid reimbursement regulations on behalf of its
affiliated physician groups, there can be no assurance that Old STAT would be
found to be in compliance in all respects with such regulations. See "Business
of Old STAT -- Government Regulations."

ASSUMPTION OF OBLIGATIONS OF STAT PHYSICIANS AND STAT P.A.

The Management Agreements provide that Old STAT satisfy "specific
obligations" of STAT Physicians and STAT P.A. primarily relating to expenses
associated with payment of physicians' fees, billing and collection costs and
daily operations. There can be no assurance that cash flow from operations,
particularly under fee-for-service contracts, will provide sufficient resources
when needed to meet such obligations on a timely basis. In such event, New STAT
would have to rely on its working capital or seek additional financing. There
can be no assurance that bank financing will be available to New STAT on
acceptable terms or in sufficient amounts to allow New STAT to expand its
business to include management services under additional fee-for-service
contracts, and therefore, the payment of such obligations may have a material
adverse impact on the liquidity and capital resources of New STAT. See "Old STAT
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources."

CLASSIFICATION OF PHYSICIANS AS INDEPENDENT CONTRACTORS; POTENTIAL STATE AND
FEDERAL TAX LIABILITY

STAT Physicians and STAT P.A. contract with physicians as independent
contractors, rather than employees, to fulfill their contractual obligations to
hospitals. Therefore, neither STAT Physicians nor STAT P.A. currently withholds
federal or state income taxes, make federal or state unemployment tax payments,
or provide worker's compensation insurance with respect to such independent
contractors. The payment of applicable taxes is regarded as the responsibility
of such independent contractors. Management believes that classification of
physicians as independent contractors is standard industry practice and proper
for federal tax purposes. A contrary determination by federal taxing authorities
or a change in existing law could materially adversely affect New STAT and its
operations. Most state taxing authorities either have not challenged or have
accepted the classification of contract physicians as independent contractors.
However, there are some states in which the independent contractor
classification of physicians is or has been under administrative or judicial
review. See "Business of Old STAT -- Contractual Arrangements."

DEPENDENCE ON CONTRACTS WITH HOSPITALS

During the four-month period ended December 31, 1994, and the twelve-month
period ended December 31, 1995, four hospital contracts have each accounted for
10% or more of Old STAT's revenues. More importantly, effective February 1996
Old STAT, through an affiliated physician group, entered into the Columbia
Agreement to provide emergency medicine services to all but one of Columbia's
emergency departments in the Greater Houston Division. This agreement will
result in the addition of nine hospitals to Old STAT's service base between
February 1 and July 1, 1996 resulting in a total of 18 hospitals (16 of which
are owned by Columbia). The Columbia Agreement has an initial term of two years,
and may be renewed for successive two-year terms. Loss of this single contract
would have a material adverse impact on New STAT's business. See "Old STAT
Management's Discussion and Analysis of Financial Condition and Results of 7
Operations -- General" and "Business of Old STAT -- Contractual Arrangements."

HIGHLY COMPETITIVE INDUSTRY

The businesses in which Old STAT and AmHealth operate are highly
competitive. Old STAT and AmHealth have both national and local competitors. Old
STAT's national competitors include Coastal Healthcare Group, Inc., Sterling
Healthcare, Spectrum Emergency Services, Inc. and Emcare, Inc. Old STAT also
indirectly competes with the more traditional structures of emergency health
care delivery, including hospitals that do not contract with physician groups to
provide emergency medical services. AmHealth's competitors include numerous
independent dialysis facilities. More than 2,500 dialysis facilities were
operating in the United States in 1994, of which approximately 35% were owned by
independent physicians (down from 37% in 1992), 29% were hospital-based
facilities (down from 33% in 1992) and 36% were owned by six major
multi-facility dialysis providers (up from 30% in 1992), the largest of which is
National Medical Care, Inc. ("NMC"), a wholly-owned subsidiary of W.R. Grace.
AmHealth's largest competitors in the dialysis services market in the Rio Grande
Valley of southern Texas are NMC and Valley Baptist Hospital. A locally owned
private management company competes with AmHealth, providing hyperbaric
management services with two hospital contracts in the region where AmHealth
currently operates. Competition in the industry is based on the scope, quality
and cost of services provided. Certain of Old STAT's and AmHealth's actual or
potential competitors have substantially greater financial and other resources
available to them. See "Business of Old STAT -- Competition and Business of
AmHealth -- Competition."

RISKS OF EXPANSION

New STAT's plans include a focus on the expansion of its business through
the addition of new hospital contracts under the existing Management Agreements
with STAT Physicians and STAT P.A. or under management agreements with other
professional associations. There can be no assurance that New STAT's resources
will be sufficient to achieve such expansion or that upon achieving such

expansion its working capital and/or additional staffing will be sufficient for
its operating needs. In addition, New STAT's management and quality assurance
procedures may not be sufficient in the event of such expansion. Old STAT and
AmHealth have, from time to time, entered into confidentiality or similar
agreements with other companies, and investigated whether the acquisition of
such other companies would be an appropriate and advisable expansion. The
eventual completion of such contemplated transactions is highly uncertain, and
suitable candidates for acquisition may become available only at irregular
intervals. The long-term expansion plans of New STAT do not rule out the
possibility of expansion by the acquisition of existing businesses. Old STAT's
internal policy is to publicize transactions at the time of execution of a
letter of intent. Currently there are no executed letters of intent. See
"Business of Old STAT -- Plan of Operations." AmHealth's expansion plans include
a new dialysis facility and a hyperbaric medicine facility, both of which are
expected to be opened in the Spring of 1996, and future expansion by entry into
management services agreements with other providers of home healthcare and
hyperbaric medicine services in Texas.

DEPENDENCE UPON KEY PERSONNEL

The success of Old STAT to date has been dependent upon the active
involvement of its management, including Old STAT's Chairman, William H. Rice,
M.D., its President, Victor M. Miranda, M.D., and its Chief Financial Officer,
Ned E. Chapman. Old STAT maintains key employee life insurance in the amount of
$1,000,000 on each of the lives of Dr. Rice and Dr. Miranda and has entered into
employment agreements with Dr. Rice, Dr. Miranda and Mr. Chapman. In addition,
Russell Schneider, a director of Old STAT and Chairman of New STAT, upon
consummation of the Reorganization, will enter into an employment agreement with
New STAT. Each of the foregoing individuals will become executive officers of
New STAT, and the loss by New STAT of the services of any of such individuals
could materially adversely affect New STAT's business or operations.

The success of AmHealth to date has been dependent upon the active
involvement of its management personnel, including Ruben A. Perez and Daniel A.
Perez. Upon consummation of the Exchange, New STAT will enter into employment
agreements with Ruben A. Perez and Daniel A. Perez. Each of these individuals
will become executive officers of New STAT and the loss by New STAT of the
services of either Ruben A. Perez or Daniel A. Perez could materially adversely
affect the operations of New STAT. In addition, the continued success and growth
of New STAT will depend in part on its ability to attract and retain other
qualified personnel. See "Management of Old STAT" and "Management of New STAT."

ADVERSE EFFECT OF STATE LAWS REGARDING THE CORPORATE PRACTICE OF MEDICINE

Business corporations are legally prohibited in many states from providing
or holding themselves out as providers of medical care. While Old STAT has
structured its operations in a manner that it believes complies with the
corporate practice of medicine laws of Texas and New STAT will seek to structure
its operations in the future to comply with the laws of any state in which it
seeks to operate, there can be no assurance that, given varying and uncertain
interpretations of such laws, New STAT would be found to be in compliance with
restrictions on the corporate practice of medicine in such states. A
determination that New STAT is in violation of applicable restrictions on the
practice of medicine in any state in which it operates could have a materially
adverse effect on New STAT if New STAT were unable to restructure its operations
to comply with the requirements of such state. Such regulations may limit the
states in which New STAT can operate, thereby inhibiting future expansion of New
STAT into potential markets in other states. See "Business of Old STAT --
Government Regulation."

CORPORATE EXPOSURE TO PROFESSIONAL LIABILITIES

Due to the nature of their businesses, STAT Physicians and STAT P.A. and
certain physicians who provide services on their behalf may be the subject of
medical malpractice claims, with the attendant risk of substantial damage
awards. The most significant source of potential liability in this regard is the
alleged negligence of physicians placed by STAT Physicians or STAT P.A. at
contract

hospitals. To the extent such physicians were regarded as agents of New STAT in
the practice of medicine, New STAT could be held liable for any medical
negligence of such physicians. In addition, New STAT could be found in certain
instances to have been negligent in performing its contract management services
for the hospitals even if no agency relationship between New STAT, STAT
Physicians or STAT, P.A and/or such physician exists. STAT Physicians' and STAT
P.A.'s contracts with hospitals generally require STAT Physicians and STAT P.A.,
as the case may be, to indemnify such other parties for losses resulting from a
contracted physician's malpractice. However, there can be no assurance that a
future claim or claims will not exceed the limits of available insurance
coverage or that such coverage will continue to be available. See "Business of
Old STAT -- Corporate Liability and Insurance" and "Business of Old STAT --
Legal Proceedings."

POSSIBLE INSUFFICIENCY OF LIABILITY COVERAGE

Each of STAT Physicians, STAT P.A., Old STAT and AmHealth currently
maintains professional liability insurance coverage it believes to be adequate
in amount and coverage; however, there can be no assurance that any future
claims against STAT Physicians, STAT P.A., Old STAT or AmHealth will not be made
in the future in excess of the limits of such insurance, if any, or that any
such claims, if successful and in excess of such limits, will not have a
material adverse effect on New STAT's assets and its ability to conduct its
business. There can be no assurance that STAT Physicians, STAT P.A. and New STAT
will continue to maintain such insurance or that such insurance can be
maintained at acceptable costs. STAT Physician's and STAT P.A.'s insurance
primarily covers medical malpractice. Old STAT's insurance coverage currently
includes the following types of policies: fire, property damage and general
liability. AmHealth's insurance coverage currently includes the following types
of policies: hospital professional liability and commercial general liability.
Although New STAT will obtain professional liability insurance coverage it
believes will be adequate in amount and coverage, there can be no assurance that
any claim will be within the scope of New STAT's coverage or that such claims
will not exceed New STAT's coverage. See "Business of Old STAT -- Corporate
Liability and Insurance" and "Business of AmHealth -- Insurance."

INTERPRETATION OF OBRA 93 AND RECENT HCFA REGULATIONS AS THEY RELATE TO ESRD
REIMBURSEMENT

Recently, HCFA has promulgated regulations to implement certain provisions
of the Omnibus Budget Reconciliation Act of 1993 ("OBRA 93"). The recent
regulations, in part, address the coordination of benefits period for Medicare
beneficiaries. HCFA has established rules for Medicare beneficiaries who are
eligible for, or entitled to, Medicare on the basis of ESRD and are also
entitled on the basis of age or disability. Of the several rules that apply to
payment during the coordination period, one rule provides in part that Medicare
remains the primary payor if a group health plan was already secondary payor for
an individual entitled on the basis of age or disability when the individual
becomes eligible on the basis of ESRD. Initially, HCFA had interpreted OBRA 93
to require a private plan to become primary payor under these circumstances.
HCFA later corrected its interpretation of the statute and issued guidance on
April 24, 1995 that Medicare remains the primary payor. On June 6, 1995, a
federal court issued a preliminary injunction precluding HCFA from retroactively
implementing its corrected program instruction for items and services furnished
between August 10, 1993 (the enactment of OBRA 93) and April 24, 1995, pending
the court's decision on the merits. HCFA has stated that it will modify the
rules if required by the final ruling of the court.

While a portion of the plaintiff's memorandum in support of the motion for
preliminary injunction appeared to characterize the new policy as contrary to
law, even as it pertained to prospective enforcement, the court treated the
motion as a request to enjoin only the retroactive aspect of the new policy.
Thus, the court did not prohibit HCFA from adopting the new policy to apply from
April 24, 1995 onward. Nevertheless, the outcome of this case could have an
adverse effect on the business of AmHealth, with specific regard to the
potential expenses that AmHealth could incur by having to refund certain
payments to private insurers and then having to re-bill the Medicare Program for
such payments. See "Business of AmHealth -- Sources of Patient Reimbursement."

REFORM OF HEALTHCARE DELIVERY SYSTEM

Numerous legislative proposals have been introduced in the U.S. Congress
and in some state legislatures that would effect major changes in the U.S.
healthcare system nationally or at the state level. The federal proposals
generally involve allocating fewer federal dollars to Medicare, Medicaid, and
other federal government healthcare programs. If any such proposals are enacted,
the proposals could have an adverse effect on Old STAT, New STAT and AmHealth,
as all of the entities are materially dependent upon revenues from these federal
reimbursement programs. Congress is also considering other proposals that may
adversely impact Old STAT, AmHealth and New STAT, including proposals that would
implement price controls on federal healthcare program expenditures and would
permit greater flexibility in states' administration of their Medicaid programs.
It is not clear at this time what federal or state proposals, if any, will be
adopted or the timeframe of the enactment of any such proposals. There can be no
assurance that currently proposed or future healthcare legislation or other
changes in the administration or interpretation of governmental healthcare
programs will not have a material adverse effect on Old STAT, AmHealth and New
STAT. See "Business of Old STAT -- Government Regulation" and "Business of
AmHealth -- Government Regulation."

RESTRICTIONS ON SELF-REFERRAL

PROHIBITIONS ON CERTAIN REFERRALS. OBRA 93 included a provision that
significantly expanded the scope of the Ethics in Patient Referral Act, also
known as the "Stark Law." The Stark Law originally prohibited a physician from
referring a Medicare or Medicaid patient to any entity for the provision of
clinical laboratory services if the physician or an immediate family member of
the physician had an ownership interest or compensation relationship with the
entity. The revisions to the Stark Law included in OBRA 93 prohibit a referral
to an entity in which the physician or an immediate family member has an
ownership interest or compensation relationship if the referral is for any of a
list of "designated health services." The list of "designated health services"
includes the following: (1) clinical laboratory services; (2) physical therapy
services; (3) occupational therapy services; (4) radiology services, including
magnetic resonance services; (5) radiation therapy services and supplies; (6)
durable medical equipment and supplies; (7) parenteral and enteral nutrients and
supplies; (8) prosthetics, orthotics, and prosthetic devices and supplies; (9)
home health services; (10) outpatient prescription drugs; and (11) inpatient and
outpatient hospital services. Furthermore, the Stark Law prohibits any such
entity from billing the Medicare or Medicaid programs for the provision of
"designated health services" by the physician. The Stark Law applies as
described above unless the service provided is not a "designated health service"
or if an exception to the Stark Law exists. New STAT does not believe that the
Stark Law will adversely affect the operations of New STAT because Old STAT and
AmHealth, except as otherwise stated herein, are not currently and do not intend
to be "providers" of designated health services as the Stark Law contemplates;
however, no regulations for the Stark Law (except for clinical laboratory
services) have been promulgated by the federal regulatory agency responsible for
such regulations and enforcement, and New STAT cannot predict how the final
Stark Law regulations or their interpretation for enforcement will be handled or
whether Congress will ultimately modify the Stark Law as they have already
attempted (unsuccessfully) to do. Such interpretations of regulations or
statutory changes could impact the operations of New STAT in the future.

PROHIBITIONS ON CERTAIN COMPENSATION ARRANGEMENTS. The Stark Law also
prohibits physician group practices from developing compensation or bonus
arrangements that are directly related to the volume or value of referrals by a
physician in the group for "designated health services." While there are no
regulatory guidelines or case law interpretations of this provision of the Stark
Law, New STAT believes that the compensation arrangements of its existing
affiliated physician groups, administered by Old STAT are in compliance with the
Stark Law requirements. However, future regulatory interpretations for
enforcement of the Stark Law as it relates to compensation or bonus arrangements
could impact Old STAT's affiliated physician groups and the operations of New
STAT in this aspect of its business in the future.

CONTROL BY OFFICERS AND DIRECTORS

Upon consummation of the Exchange, the officers and directors of New STAT
are expected to have beneficial ownership of approximately 66% of the
outstanding New STAT Common Stock. As a result, these stockholders will have
significant influence over the outcome of all matters submitted to New STAT
stockholders for their approval, including the election of directors. This
ownership by the officers and directors may delay, defer or prevent a potential
change of control of New STAT and, consequently, the market price for New STAT
Common Stock may be less likely to reflect a "premium" for such potential
transactions. See "Principal Stockholders of Old STAT and New STAT."

CONFLICTS OF INTEREST FOR NEW STAT

The Compensation Committee of the New STAT Board will have the
responsibility for fixing the compensation of the employees of New STAT,
including New STAT's officers. No independent outside authority will review or
approve the decisions of the Compensation Committee of the New STAT Board
concerning compensation determinations. Currently, three of the New STAT
Directors are also officers of New STAT and, in effect, set their own
compensation. The New STAT Board currently consists of four members: Drs.
Miranda and Rice and Messrs. Chapman and Schneider. New STAT intends to have at
least two independent directors on its Board; Mr. Schneider, who will enter into
an employment agreement with New STAT in connection with the transactions
contemplated in the Reorganization Agreement, will cease to be an independent
director following consummation of the Exchange. The Bylaws of New STAT
("BYLAWS") will limit the number of directors to seven, and New STAT intends to
designate at least two independent directors as members of its Board following
consummation of the Exchange. See "Management of Old STAT and Management of New
STAT."

POTENTIAL LIABILITY FOR RESCISSION OF PRIVATE SALES AND UNDER SECTION 5 OF
THE SECURITIES ACT

Certain recent private sales of Old STAT securities may be required to be
integrated with the offering of securities in the Exchange. If so integrated,
the purported private sales would constitute an unregistered public offering in
violation of Section 5 of the Securities Act. Such a violation would entitle the
subscribers in such private sales to rescission and would subject Old STAT (and
New STAT following the Exchange) to liability under said Section 5. Management
does not believe that rescission of any of such private sales would have a
material adverse effect on Old STAT or on New STAT following the Exchange.

ANTI-TAKEOVER PROVISIONS

The Charter and Bylaws contain certain provisions that may have the effect
of discouraging, delaying or preventing a change in control of New STAT or
unsolicited acquisition proposals that a stockholder might consider favorable,
including provisions: authorizing the issuance of "blank check" preferred stock;
providing for a Board of Directors with staggered, three-year terms; limiting
the persons who may call special meetings of stockholders; prohibiting
stockholder action by written consent; and establishing advance notice
requirements for nominations for election to the Board of Directors or for
proposing matters that can be acted upon at stockholders meetings. Certain
provisions of Delaware law, Old STAT's 1994 Stock Option Plan and the New STAT
Stock Plan may also have the effect of discouraging, delaying or preventing a
change in control of New STAT or unsolicited acquisition proposals. See
"Management of New STAT," "Management of Old STAT -- Stock Option Plan,"
"Description of Securities of New STAT -- Certain Anti-Takeover, Limited
Liability and Indemnification Provisions" and "Proposal 4 -- Approval of New
STAT Healthcare, Inc. 1996 Stock Incentive Plan -- Description of New STAT Stock
Plan."

LIMITED MARKET FOR NEW STATS SECURITIES; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to the Exchange, there has been no public market for the New STAT
Common Stock. Although the consideration offered by New STAT to the AmHealth
Shareholders and AmHealth Partners pursuant to the Exchange was determined
based, in part, on the market price of the Old STAT Common Stock, there can be
no assurance that an active trading market in the New STAT Common Stock will
develop upon consummation of the Exchange or, if it does develop, that such a
market will be sustained or that such a market will be reflective of the
historical market prices for the Old STAT Common Stock. In addition, the failure
of any of Network 1 Financial Securities, Inc., R.G. Dickinson & Company and
Whale Securities Co., L.P., the principal market-makers of the Old STAT Common
Stock, to make a market in the New STAT Common Stock could have a material
adverse effect on the market price of New STAT's securities. In addition,
factors such as announcements by New STAT or its competitors concerning proposed
plans, procedures and proposed government regulations may have a significant
effect on the market price of New STAT's securities. The stock market has
experienced extreme price and volume fluctuations which have particularly
affected the market prices for many healthcare companies and which have often
been unrelated to the operating performance of the specific companies. These
broad market fluctuations may adversely affect the price of New STAT's
securities.

POSSIBLE ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Exchange and assuming that all AmHealth
Shareholders and AmHealth Partners participate in the Exchange, there will be
outstanding 14,902,472 shares of New STAT Common Stock. Of these shares,
approximately 2.0 million shares will be freely tradeable without restriction or
further registration under the Securities Act unless purchased by "affiliates"
of New STAT as that term is defined in Rule 144 under the Securities Act ("RULE
144"), an additional approximately 673,000 shares allocable to the common stock
of each AmHealth Corporation will be "restricted" shares (and not registered in
this offering) and subject to the Lock-Up Agreements described below, and the
remaining approximately 12.2 million shares will be held by "affiliates" of New
STAT or subject to the Lock-Up Agreements. In addition, as of the date of this
Joint Proxy Statement/Prospectus, there were outstanding warrants and options to
purchase an aggregate of 1,159,166 shares of Old STAT Common Stock which,
following the Exchange, will be exchanged for warrants and options exercisable
for New STAT Common Stock. All of the shares issued upon exercise of such
warrants and options will be freely tradeable without restriction or further
registration under the Securities Act, other than shares held by "affiliates" of
New STAT or subject to the lock-up arrangements described below.

Old STAT's officers, directors, and certain of its current stockholders,
have agreed not to sell or otherwise dispose of any of their shares of Old STAT
Common Stock now owned or issuable upon the exercise of warrants prior to
October 21, 1996 without the prior written consent of Network 1 Financial
Securities, Inc., the underwriter of Old STAT's initial public offering. These
agreements will extend to shares of New STAT Common Stock to be issued in the
Exchange. In addition, the holders of approximately 12.8 million shares of New
STAT Common Stock issuable in the Exchange (assuming participation by all
AmHealth Shareholders and AmHealth Partners in the Exchange) will be required to
execute Lock-Up Agreements providing that, without the prior written consent of
New STAT, such holders will not sell, assign, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any shares of New STAT Common Stock acquired
in the Exchange, or any shares acquired upon the exercise of any options or
warrants to purchase New STAT Common Stock, for a period of 12 months following
consummation of the Exchange.

Upon the expiration of the Lock-Up Agreements one year after the
consummation of the Exchange, approximately 9.2 million shares of New STAT
Common Stock will become eligible for sale pursuant to the volume and manner of
sale provisions of Rule 144, and approximately 2.9 million shares will become
eligible for sale under Rule 144 without regard to the volume or manner of sale
provisions thereof. Beginning two years after the consummation of the Exchange,
an additional

approximately 673,000 shares of New STAT Common Stock will become eligible for
sale pursuant to the volume and manner of sale provisions of Rule 144. See
"Shares Eligible for Future Sale."

THE EXCHANGE

The description of the Reorganization Agreement and related documents set
forth below does not purport to be complete and is qualified in its entirety by
reference to the Reorganization Agreement, which is attached as Appendix I to
this Joint Proxy Statement/Prospectus. Old STAT Stockholders, AmHealth
Shareholders and AmHealth Partners are urged to read the Reorganization
Agreement in its entirety.

GENERAL

This Joint Proxy Statement/Prospectus is being furnished to the Old STAT
Stockholders in connection with the solicitation of proxies by the Old STAT
Board for use at the 1996 annual meeting of Old STAT Stockholders. Among the
matters to be acted upon at the Meeting is a proposal to approve and adopt the
Reorganization Agreement, a copy of which is attached as Appendix I to this
Joint Proxy Statement/Prospectus, pursuant to which (a) the AmHealth
Corporations will be merged with and into New STAT, with New STAT as the
surviving corporation, (b) the AmHealth Partners will be offered shares of New
STAT Common Stock in exchange for the outstanding general and limited partner
interests in the AmHealth Partnerships held by such partners, and (c) Old STAT
will be merged with STAT Acquisition Corp., with Old STAT as the surviving
corporation. If all the AmHealth Shareholders and all the AmHealth Partners
participate in the Exchange and the Exchange is consummated, the AmHealth
Shareholders and the AmHealth Partners will collectively receive a total of
11,200,000 shares of New STAT Common Stock, and each currently issued and
outstanding share of Old STAT Common Stock will be converted into one share of
New STAT Common Stock. Upon consummation of the Exchange, the corporate name of
New STAT will be changed to "STAT Healthcare, Inc." At the Meeting, the Old STAT
Stockholders will also be asked to consider and vote upon three other proposals:
(a) to elect four directors to Old STAT's Board of Directors to serve until
consummation of the Exchange, (b) to ratify the appointment of KPMG Peat Marwick
LLP as the independent auditors of Old STAT and (c) to approve the New STAT
Stock Plan. If the Reorganization Agreement is approved and adopted at the
Meeting, Old STAT will become a wholly owned subsidiary of New STAT upon
consummation of the Exchange. Even if approved, the New STAT Stock Plan will not
become effective unless the Reorganization is also approved and the Exchange is
consummated.

This Joint Proxy Statement/Prospectus and the form of Proxy are first being
mailed to holders of Old STAT Common Stock, and this Joint Proxy
Statement/Prospectus is first being mailed to the AmHealth Shareholders and
AmHealth Partners, on or about May 22, 1996.

CONSIDERATION

Upon consummation of the transactions contemplated in the Reorganization
Agreement, each share of Old STAT Common Stock will be converted into one share
of New STAT Common Stock, on a one-for-one basis. At such time, assuming
participation by all AmHealth Shareholders and all AmHealth Partners, New STAT
shall issue 11,200,000 shares of New STAT Common Stock to the AmHealth
Shareholders and AmHealth Partners. The New STAT Common Stock issued in the
Exchange will be distributed to the AmHealth Shareholders and AmHealth Partners
who own shares of stock or partnership interests in each AmHealth Corporation
and AmHealth Partnership, as the case may be, except with respect to any
AmHealth Shareholder who has perfected dissenter's rights under Texas law or any
AmHealth Partner electing to not participate in the Exchange. The number of
shares of New STAT Common Stock to be allocated among the shareholders and
partners of each AmHealth entity for each share of AmHealth Common Stock or
AmHealth Unit owned of record is set forth in the

following table. The shares allocable to each AmHealth Corporation will not be
registered in this offering. See The "Reorganization Agreement -- The
Exchange" and "Rights of Dissenting Shareholders."

SHARES OF NEW STAT
COMMON STOCK
ALLOCABLE TO EACH
AMHEALTH ENTITY AMHEALTH SHARE OR UNIT
- ------------------------------------- ----------------------
AmHealth Corporation................. 339.6
AmHealth Enterprises of the Valley,
Inc................................ 82.7(1)
AmHealth Ambulatory Services, Inc.... 91.2(1)
AmHealth Kidney Centers of the
Valley, Ltd........................ 58,630.7(1)
Weslaco Kidney Center, Ltd........... 10,626.6
Starr Dialysis Center, Ltd........... 2,789.4
Mission Kidney Center, Ltd........... 10,626.6
AmHealth Medical Management, Ltd..... 32,833.1
Brownsville Hyperbaric Healthcare,
Ltd.................................. 14,704.8
Southwestern Infusion Healthcare,
Ltd.................................. 1,557.3
AmHealth Ambulatory Healthcare,
Ltd.................................. 21,065.5(1)
[/R]
- ------------
(1) Includes shares attributable to indirect interests in other AmHealth
entities.

SHAREHOLDER AND PARTNER APPROVAL

THE MEETING. The Meeting will be held at 10:00 a.m., local time, on June
13, 1996, at 12450 Greenspoint Drive, Suite 1200, Houston, Texas 77060. At the
Meeting, the Old STAT Stockholders will consider and vote upon proposals (i) to
approve and adopt the Reorganization Agreement and the Exchange, (ii) to elect
four directors to the Old STAT Board to serve until consummation of the
Exchange, (iii) to ratify the appointment of KPMG Peat Marwick LLP as the
independent auditors of Old STAT and (iv) to approve the implementation of the
New STAT Stock Plan. If the Reorganization Agreement is approved and the
Exchange is consummated, Old STAT will become a wholly owned subsidiary of New
STAT. Consequently, stockholder approval of the proposals to elect four
directors and ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of Old STAT would have no force or effect. Only stockholders of record
of Old STAT at the close of business on May 6, 1996 are entitled to receive
notice of and to vote at the Meeting. On such date, there were 3,702,472 shares
of Old STAT Common Stock outstanding, each of which is entitled to one vote on
each matter to be properly presented at the Meeting. The presence at the
Meeting, in person or by proxy, of the holders of a majority of the outstanding
shares of Old STAT Common Stock is necessary to constitute a quorum at the
Meeting. Abstentions and broker non-votes will be included in determining the
presence of a quorum. Abstentions will have the effect of votes against the
proposals to approve the Reorganization Agreement and the Exchange, to elect
directors, to ratify the appointment of Old STAT's independent auditors and to
approve the New STAT Stock Plan. Broker non-votes will have the effect of votes
against the Reorganization Agreement and the Exchange, but will have no effect
on the voting on the other proposals.

If the accompanying Proxy is properly executed and returned by Old STAT
Stockholders, the shares it represents will be voted at the Meeting in
accordance with the directions noted thereon or, if no direction is indicated,
it will be voted in favor of the proposals described in this Joint Proxy
Statement/Prospectus. In addition, the proxy confers discretionary authority in
the persons named in the Proxy authorizing those persons to vote, in their
discretion, on any other matters properly presented at the Meeting. The Old STAT
Board is not currently aware of any such other matters. Any Old STAT Stockholder
giving a proxy has the power to revoke it by oral or written notice to the
Secretary of Old STAT at any time before it is voted.

Old STAT will bear the cost of preparing and mailing the Joint Proxy
Statement/Prospectus and related materials as well as the cost of solicitation
of proxies. Old STAT will reimburse banks, brokerage firms, custodians, nominees
and fiduciaries for their expenses in sending proxy materials to the beneficial
owners of Old STAT Common Stock. Old STAT has retained the Exchange Agent to
assist in the solicitation of proxies. In addition to solicitation by mail,
certain directors, officers and regular employees of Old STAT and the Exchange
Agent may solicit proxies by telegraph, telephone and personal interview.

VOTE REQUIRED. The affirmative vote of the holders of a majority of the
outstanding Old STAT Common Stock is required for Old STAT Stockholder approval
of the Reorganization Agreement and the Exchange. The affirmative vote of a
majority of the shares of Old STAT Common Stock present in person or represented
by proxy at the Meeting is required for Old STAT Stockholder approval of the
proposals to elect directors, to ratify the appointment of Old STAT's
independent auditors and to approve the New STAT Stock Plan. The affirmative
vote of at least 66 2/3% of the outstanding shares of common stock of each of
the AmHealth Corporations is required for AmHealth Shareholder approval of the
Reorganization Agreement and the Exchange. The affirmative vote of the holders
of a majority of the outstanding common stock of each AmHealth Corporation is
required for AmHealth Shareholder approval of the New STAT Stock Plan. The
affirmative vote of the limited partners of each AmHealth Partnership who
together with the general partner in each such partnership hold at least 67% of
the outstanding interest in such partnership is required for AmHealth Partner
approval of the New STAT Stock Plan. An AmHealth Partner's election to
participate in the Exchange will constitute such partner's approval of the New
STAT Stock Plan. In addition, the Exchange will not qualify as a "pooling of
interests" for accounting purposes (and the Exchange will not be consummated) if
New STAT does not acquire in the Exchange at least 90% of the combined equity
interests in all of the AmHealth entities. THE PERIOD DURING WHICH THE AMHEALTH
SHAREHOLDERS AND AMHEALTH PARTNERS MAY ELECT TO PARTICIPATE IN THE EXCHANGE AND
APPROVE THE IMPLEMENTATION OF THE NEW STAT STOCK PLAN WILL EXPIRE AT 5:00 P.M.
(CENTRAL TIME) ON JUNE 21, 1996.

The AmHealth Corporations intend to obtain the requisite approval of the
Exchange and the New STAT Stock Plan by their stockholders by written consent.
As of the date of this Joint Proxy Statement/Prospectus, Ruben A. Perez and
Daniel A. Perez, each of whom is a director and/or executive officer of each
AmHealth Corporation, collectively owned approximately 90% of the outstanding
shares of each of the AmHealth Corporations. Also as of such date, Ruben A.
Perez and Daniel A. Perez, along with Russell D. Schneider (a director of Old
STAT), together beneficially owned more than 50% of the outstanding AmHealth
Units. Each of Messrs. R. Perez, D. Perez and Schneider will be executive
officers (and Mr. R. Perez will become, and Mr. Schneider will remain, a
director) of New STAT upon consummation of the Exchange. Such individuals have
indicated that they intend to vote their respective shares of the AmHealth
Corporations in favor of the Exchange and the New STAT Stock Plan, and to
exchange their respective AmHealth Units for New STAT Common Stock pursuant to
the Exchange.

In the event that one or more of the AmHealth Partners determines to not
participate in the Exchange, each AmHealth Partnership in which such AmHealth
Partner holds an interest shall continue its operations as a limited
partnership.

As of the date of this Joint Proxy Statement/Prospectus, the directors and
executive officers of Old STAT beneficially owned approximately 1,635,570 shares
(or approximately 45%) of the total outstanding shares of Old STAT Common Stock.
See "Principal Stockholders of Old STAT and New STAT" and "Principal
Shareholders and Partners of AmHealth."

EXCHANGE OF STOCK CERTIFICATES AND PARTNERSHIP INTERESTS

As soon as reasonably practicable following consummation of the Exchange,
the Exchange Agent will provide transmittal materials to each holder of record
of Old STAT Common Stock for use in

exchanging such holders stock certificates evidencing Old STAT Common Stock for
certificates evidencing shares of New STAT Common Stock to be issued in the
Exchange. OLD STAT STOCKHOLDERS SHOULD NOT FORWARD CERTIFICATES TO BE EXCHANGED
FOR NEW STAT COMMON STOCK UNTIL THEY HAVE RECEIVED TRANSMITTAL MATERIALS. In
addition, as soon as reasonably practicable following consummation of the
Exchange, each holder of record of AmHealth Common Stock or AmHealth Units will
receive a certificate or certificates representing shares of New STAT Common
Stock to which such holder shall be entitled as a result of the Exchange.

No certificates or scrip representing fractional shares of New STAT Common
Stock shall be issued in exchange for AmHealth Common Stock or AmHealth Units,
and such fractional share interests shall not entitle the owner thereof to vote
or to any rights of a stockholder of New STAT. Notwithstanding any other
provision of the Reorganization Agreement, each holder of AmHealth Common Stock
or AmHealth Units exchanged pursuant to the Exchange who would otherwise have
been entitled to receive a fraction of a share of New STAT Common Stock (after
aggregating all fractional shares of New STAT Common Stock to be received by
such holder) shall receive one full share of New STAT Common Stock if such
fraction equals or exceeds one-half share and no portion of a share if such
fraction is less than one-half share.

EXCHANGE OF WARRANTS

Upon consummation of the Exchange, the Old STAT Class A Warrants shall be
converted into New STAT Class A Warrants to purchase New STAT Common Stock and
the Old STAT Representatives' Warrants shall be converted into New STAT
Representatives' Warrants to purchase the same number of shares of New STAT
Common Stock and New STAT Class A Warrants. As soon as reasonably practicable
following consummation of the Exchange, the Exchange Agent will provide
transmittal materials to each holder of record of Old STAT Class A Warrants for
use in exchanging such holder's certificates evidencing Old STAT Class A
Warrants for certificates evidencing New STAT Class A Warrants. In addition, as
soon as reasonably practicable following consummation of the Exchange, New STAT
will send transmittal materials to each holder of record of Old STAT
Representatives' Warrants for use in exchanging such holders certificates
evidencing Old STAT Representatives' Warrants for certificates representing New
STAT Representatives' Warrants.

BACKGROUND OF THE EXCHANGE

Old STAT management has believed since its inception that expansion of its
operations into new, demographically attractive market areas is important to the
long-term success of Old STAT. As a result of the rapid consolidation of
physician practices and the entrance of other physician practice management
companies into the market, Old STAT's management determined that it was
important for Old STAT to accelerate its rate of expansion through acquisitions
and mergers with complementary companies already having market penetration.

Consistent with this strategy, beginning in May 1995 and continuing into
August 1995, senior management of Old STAT conducted preliminary discussions
with representatives of another regional healthcare service company regarding a
business combination of the two companies. These discussions were terminated
when Old STAT determined that a combination with such company could not be
consummated on favorable terms.

During September 1995, Old STAT's senior management was contacted by
AmHealth management to discuss a possible business combination with AmHealth.
Following very preliminary discussions regarding the compatibility of the two
businesses, the parties executed a confidentiality agreement.

During the next several weeks, representatives of the senior management of
each of Old STAT and AmHealth, together with their respective advisors,
continued to discuss, primarily through telephone conference calls, the terms of
a proposed combination, including the structure of the

transaction, the aggregate consideration payable to the owners of the AmHealth
entities, the tax and accounting treatment of the transaction, corporate
governance of the resulting entity, conditions of the transaction, covenants
regarding the operations of each company during the period between the signing
of the definitive agreement and the consummation of the transactions
contemplated thereby, regulatory matters and possible termination fees. As a
result of these discussions, AmHealth engaged KPMG Peat Marwick LLP, Old STAT's
independent auditors, to conduct an audit of AmHealth's accounts.

The Old STAT Board held a special meeting on October 9, 1995 to review
information gained from the discussions of the preceding weeks and to discuss
the proposed transaction. Representatives of AmHealth attended the meeting by
invitation of the Old STAT Board. Mr. Schneider, an Old STAT director, recused
himself from the discussion because of his significant ownership interest in the
AmHealth entities. (Mr. Schneider similarly recused himself from all other Old
STAT Board discussions of the Exchange at other meetings.) Michael L.
McAllister, a representative of Southcoast, and Carmelo M. Gordian, outside
counsel to Old STAT, also attended the meeting by invitation of the Old STAT
Board. At this meeting, the Old STAT Board reviewed and discussed with
representatives of senior management of AmHealth and with the Southcoast
representative the terms of the proposed transaction; the current market
conditions and trends of the healthcare industry; the aggregate consideration
payable to the owners of the AmHealth entities; and the potential benefits of
the combination, including the ability of the stronger combined company to
expand its service areas; recognized operational and financial synergies; and
enhanced management strength. The Old STAT Board also reviewed and discussed the
hiring of Southcoast as its financial advisor to render a fairness opinion in
connection with the proposed transaction. As a result of the foregoing review
and discussions, the Old STAT Board authorized its executive officers to begin
the negotiations of a definitive agreement for the proposed combination and
approved retaining Southcoast as its financial advisor. Following this meeting,
Southcoast and Old STAT executed a letter detailing Southcoast's engagement as
Old STAT's financial advisor to render a fairness opinion.

In November 1995, the Old STAT Board held a special meeting to further
discuss the proposed transaction. At such meeting, the Old STAT Board discussed
the actions taken by Old STAT's executive officers in connection with the
proposed transaction and the results of managements and Southcoast's due
diligence review of AmHealth. Following this discussion, the Old STAT Board
authorized the execution and delivery of a letter of intent with AmHealth
summarizing the fundamental terms of the Exchange.

During November 1995, the board of directors of each AmHealth Corporation
and each General Partner authorized the execution and delivery of the letter of
intent summarizing the fundamental terms of the Exchange.

At various times during November 1995, Old STAT sent representatives,
including members of management, accountants and outside counsel, to conduct due
diligence reviews at the offices of AmHealth Corporation in San Antonio, Texas.

On December 15, 1995, the Old STAT Board held a special meeting to discuss
other matters relating to the proposed transaction with AmHealth, including the
form and terms of a definitive reorganization agreement. At this meeting, Old
STAT's senior management described the terms and conditions of the proposed
reorganization agreement, including the aggregate consideration payable to the
owners of the AmHealth entities and the proposed transaction. Southcoast
rendered an oral opinion (subsequently confirmed in writing on January 4, 1996)
to the effect that, subject to certain matters, the Exchange was fair, from a
financial point of view, to the Old STAT Stockholders. As a result of the
foregoing discussions, the Old STAT Board, without assigning more weight to one
factor than any other, approved the form, terms and conditions of the initial
Reorganization Agreement, in the form submitted to the Old STAT Board, together
with such changes as the officers of Old STAT might authorize in their sole
discretion. See "--Old STAT's Reasons for the Exchange; Recommendation of the
Old STAT Board."

On December 15, 1995, Old STAT and each AmHealth Corporation, for itself
and on behalf of each AmHealth Partnership, executed the initial Reorganization
Agreement.

In January 1996, Old STAT received an unsolicited, preliminary acquisition
proposal from another publicly traded healthcare service company regarding a
proposed business combination with Old STAT. The Old STAT Board viewed the
potential alternative transaction as inadequate and speculative compared to the
more relative certainty of the proposed Exchange. Accordingly, the Old STAT
Board subsequently elected not to pursue the alternative proposal. Southcoast
provided no advice to the Old STAT Board regarding this proposal.

Beginning on March 1, 1996 and continuing through March 17, 1996,
representatives of Old STAT's senior management and representatives of
AmHealth's senior management conducted numerous discussions regarding a proposed
restructuring of the Exchange necessary for the Exchange to qualify as a
tax-free reorganization under the Code and as a pooling of interests for
accounting purposes. In the course of these discussions, these representatives,
along with legal, accounting and tax advisors, considered a number of
alternative structures. Through these discussions, the representatives of Old
STAT and AmHealth ultimately agreed that the Exchange should be restructured by
forming a new holding company (New STAT Healthcare, Inc.) to merge with the
AmHealth Corporations and to acquire interests in the AmHealth Partnerships, and
which would acquire Old STAT by merger with a newly formed subsidiary of the
holding company. Based upon these discussions, representatives of the senior
management of Old STAT and AmHealth negotiated the terms and conditions of an
amended and restated Reorganization Agreement, which incorporated the terms of
the revised structure. Also during this period, Southcoast was advised of the
proposed restructuring and, on March 15, 1996, Southcoast reconfirmed its
opinion in writing.

On or about March 15, 1996, the Old STAT Board held a special meeting to
discuss the proposed restructuring of the Exchange. At this meeting, senior
management of Old STAT reviewed and discussed with the Old STAT Board the terms
of and reasons for the revised structure. Based on these discussions, the Old
STAT Board approved the form, terms and conditions of the proposed amended and
restated Reorganization Agreement, in the form submitted to the Old STAT Board,
together with such changes as the officers of Old STAT might authorize in their
sole discretion.

Prior to execution of the amended and restated Reorganization Agreement,
the board of directors of each AmHealth Corporation and each General Partner
approved the execution and delivery of the amended and restated Reorganization
Agreement.

On March 15, 1996, Old STAT and each AmHealth Corporation, for itself and
on behalf of each AmHealth Partnership, executed the amended and restated
Reorganization Agreement.

During the week of May 13, 1996, in view of the significant increase in
the per share market price of the Old STAT Common Stock and certain positive Old
STAT business developments, including the delivery of the Columbia Agreement,
following the public announcement of the proposed Exchange, the Old STAT Board
requested Southcoast to deliver an updated opinion as to the fairness of the
Exchange to the Old STAT Stockholders. The March 15, 1995 opinion delivered by
Souhtcoast was based upon facts as of December 29, 1995. The Old STAT Board
believed that the above-described changes in circumstances occurring since
December 29, 1995 sufficiently reduced the usefulness of the March 15, 1996
opinion so as to warrant the delivery of a more recently dated opinion.
Accordingly, Southcoast reviewed and revised certain of the analyses performed
by it in preparation of its January 4 and March 15, 1996 written opinions and,
on May 17, 1996, Southcoast reconfirmed its opinion in writing.

On May 17, 1996, the Old STAT Board held a special meeting to discuss,
among other things, the status of the proposed Exchange and, in particular, the
delivery of Southcoast's updated opinion. At the meeting, the Old STAT Board
discussed the fairness of the Exchange to the Old STAT Stockholders in the light
of the changes in circumstances occurring subsequent to the public announcement
of the proposed Exchange. The Old STAT Board concluded that there was ample
evidence indicating that the recent

increases in the market price for the Old STAT Common Stock was, at least in
part, an indication that the general market viewed the proposed Exchange as
favorable. Based principally upon this belief and the delivery of Southcoast's
May 17, 1996 opinion, the Old STAT Board reaffirmed its approval of the
Exchange.

AMHEALTH'S REASONS FOR THE EXCHANGE; RECOMMENDATION OF AMHEALTH'S MANAGEMENT

The management of AmHealth believes that the terms of the Exchange are fair
and in the best interests of AmHealth, the AmHealth Shareholders and the
AmHealth Partners. The AmHealth Boards and General Partners have approved the
terms of the Reorganization Agreement.

The AmHealth entities consist of three corporations and ten limited
partnerships and provide dialysis services and management services for home
healthcare and hyperbaric medicine, all in the Rio Grande Valley of southern
Texas. Approximately 70% of AmHealth's net service revenues in and 61.5% of its
operating income in 1995 were derived from dialysis services. (See footnote 11
of the Notes to Combined Financial Statements of AmHealth herein.) These
dialysis services are provided by five of the AmHealth limited partnerships
(AmHealth Kidney Center of the Valley, Ltd. which operates in McAllen, Texas,
Starr Dialysis Center, Ltd., which operates in Rio Grande City, Texas, Weslaco
Kidney Center, Ltd., in Weslaco, Texas, Mission Kidney Center, Ltd., in Mission,
Texas, and Brownsville Kidney Center, Ltd., which commenced operations on May
15, 1996 in Brownsville, Texas) and one of the corporations, AmHealth
Enterprises of the Valley, Inc., which serves as general partner of the
dialysis-related partnerships. As discussed in greater length under "Business of
AmHealth," the operations conducted by these dialysis centers are virtually
identical.

Because of the proximity and similarity of the operations of these entities
and their common management, AmHealth management was approached by several
prospective purchasers of these dialysis units in 1995. With one exception,
these conversations never progressed beyond the informal stage and no purchase
offers were made, but these preliminary discussions provided AmHealth management
with a sense of range of values for its dialysis operations. AmHealth did
receive one written offer to purchase the dialysis centers for a purchase price
payable one-half in stock of a publicly traded company and one-half in cash.
Given the allocation of the shares to be issued in the Exchange to the
partnerships and corporation engaged in the dialysis portion of AmHealths
business, the consideration to be received in the Exchange exceeds the offered
price by approximately one-third (based upon the per share price of Old STAT's
stock at the date of the letter of intent between Old STAT and AmHealth, which
stock price has increased significantly since the date of announcement of the
transaction). AmHealth management did not receive or seek any offers for the
management services side of its business, for reasons principally related to its
size. The management services of AmHealth were deemed to be too small to attract
an offer which would be acceptable; in the view of AmHealth management, the
marketplace for such companies would not reflect the value of management
services until they attained a size threshold beyond their reach at that time.
Unless the management services were to be combined with the dialysis business,
with resulting economies of scale, it was the belief of AmHealth management that
the marketplace would not place sufficient value on the management services. By
merging all of its operations into Old STAT, all of the AmHealth entities,
including those engaged in management services (Southwestern Infusion
Healthcare, Ltd., AmHealth Ambulatory Services, Inc., AmHealth Ambulatory
Healthcare, Ltd., Brownsville Hyperbaric Healthcare, Ltd., and AmHealth Medical
Management, Inc.) have been able to realize a higher value together than would
have been attainable if AmHealth had sold its two different lines of business in
two separate transactions. This conclusion is principally due to the decreased
value which would be realized by separating an integrated system with common
management, sharing of personnel by numerous partnerships, and the ability to
deliver services to patients and physicians related to both lines of business in
which AmHealth is engaged. Given the discussions with other potential acquirors
and the one written offer which it received, AmHealth management did not
consider retaining a financial advisor in connection with evaluating the
prospective Exchange. No attempt was made to seek offers for the individual
partnerships, because separating entities which have shared an integrated

management system would increase the overhead of each partnership and reduce the
market value of all the partnerships. The management of each AmHealth entity
independently considered that the highest price would be obtained for such
individual entity by negotiating for the sale of the group of entities as a
whole (for the reasons described above), and allocating the total consideration
among the entities by reference solely to the earnings of each entity which the
management of each individual AmHealth entity considered to be a fair measure of
value.

In addition to price considerations, AmHealth management believes that the
addition of emergency room management and administrative services to the
platform of services already provided by AmHealth in the Rio Grande Valley will
give New STAT the ability to significantly expand AmHealth's existing market
base in that area, by drawing from the emergency room gateway to the healthcare
system. Also, AmHealth's presence in the Rio Grande Valley area will allow New
STAT to expand its emergency room services in that area. Additionally, the
Exchange will allow the combined entity to offer AmHealth's integrated diabetic
management system in the greater Houston area, the market in which Old STAT's
operations are concentrated. In a related manner, Old STAT's relationship with
various hospitals in the Houston area may permit New STAT to increase the number
of medical providers to whom it provides management services or from whom it
accepts referrals for dialysis treatment. Lastly, the combination with Old STAT,
an existing public vehicle, offers potential liquidity to AmHealth partners and
shareholders in an entity of larger size, with greater revenues and net income,
which AmHealth management believed is superior to attempting to take its
existing smaller entity public on a stand-alone basis, with the related costs
and time necessary to do so.

The structure of the Exchange was also viewed as advantageous to the
AmHealth partners and shareholders. Although the Exchange would result in a loss
of the control over AmHealth's operations, this is offset by the substantial
interest in New STAT which will be owned by AmHealth's partners and
shareholders. Furthermore, the risks of operations discussed under "Risk
Factors," and the risks of not achieving the benefits of economies of scale and
liquidity in New STAT Common Stock are offset in part by the tax-free nature of
the transaction to the AmHealth partners and shareholders, which would not be
achievable if AmHealth were able to sell its operations for cash considerations,
or a combination of cash and stock which would be taxable. A continuing
stand-alone strategy would have required future expansion of AmHealth to be
funded from internally generated cash flow, which would have had the effect of
reducing cash distributions, offsetting the negative factor of exchanging
partnership interests with historical cash distributions for common stock not
expected to pay dividends. Furthermore, the combination with Old STAT creates a
larger entity better capable of competing with companies with larger available
cash resources, and better capable of accessing capital markets in a public
company format.

Because of the numerous positive factors presented by the combination with
Old STAT, management of AmHealth did not quantify or otherwise assign relative
weight to each of the factors considered, although AmHealth management believes
that the value to be received in the Exchange must be considered primary.

OLD STAT'S REASONS FOR THE EXCHANGE; RECOMMENDATION OF THE OLD STAT BOARD

Old STAT management has believed since Old STAT's inception that expansion
of its operations into new, demographically attractive market areas is important
to the long-term success of Old STAT. As a result of the rapid consolidation of
physician practices and the entrance of other physician practice management
companies into the market, Old STAT's management determined that it was
important for Old STAT to accelerate its rate of expansion through acquisitions
and mergers with complementary companies already having market penetration. The
Old STAT Board believes that AmHealth, and the Exchange, fits in with this
strategy and the primary reasons in favor of the Exchange are set forth below.

The Old STAT Board believes the Exchange is desirable for the following
reasons, among others:

(i) The fact that AmHealth has an established position in markets
which are new and complimentary to the operations of Old STAT. The Old STAT
Board believed that AmHealth's presence in hospitals not presently served
by Old STAT, as well as AmHealth's existing relationships with doctors and
administrators not currently familiar with Old STAT, will facilitate the
expansion of Old STAT's existing operations. The Old STAT Board concluded
that by combining its resources with AmHealth it would provide Old STAT
with business opportunities it would not otherwise have.

(ii) The favorable business reputation and capabilities of AmHealth
and its management, and AmHealth's financial strengths, prospects, market
position and strategic objectives. The Old STAT Board believed these
characteristics are consistent with Old STAT's business and growth
objectives. In particular, the Old STAT Board was presented with evidence
that AmHealth's financial position and results of operations were sound,
and based on this evidence concluded that AmHealth would improve Old STAT's
earnings prospects.

(iii) The perceived strengths of Old STAT and AmHealth as a combined
company, including the potential developments and information that are
expected to be shared between the two companies after the Exchange is
consummated, and the belief of the Old STAT Board that Old STAT and
AmHealth can be integrated without disrupting or adversely affecting the
existing business operations of Old STAT or AmHealth. The Old STAT Board
believed that the Exchange offers the opportunity to create a combined
company with greater financial resources, management and competitive
strengths and business opportunities than would be possible for Old STAT
alone.

(iv) The belief that the size of Old STAT and AmHealth as a combined
company will yield operational and financial synergies. The Old STAT Board
was of the view that, with the pricing pressures prevalent in the
healthcare industry, an effective way to achieve more favorable operating
margins is through the achievement of operating efficiencies. The Old STAT
Board also believed that the complementary operations of the two companies
would generate desirable cross-marketing opportunities.

(v) The oral opinion of Southcoast, subsequently confirmed in writing,
that the consideration to be issued in the Exchange is fair to the Old STAT
Stockholders from a financial point of view. The Old STAT Board considered
the various analyses presented by Southcoast, and felt that such analyses,
taken as a whole, supported a conclusion that the Exchange was fair, from a
financial point of view, to the Old STAT Stockholders. Such conclusion was
a key factor in the Old STAT Board's decision to recommend approval of the
Exchange.

(vi) The terms of the Exchange, including the fact that the Exchange
is expected to be treated as a pooling of interests for accounting purposes
and a tax-free reorganization under the Code. See "-- Certain Federal
Income Tax Consequences" and "-- Accounting Treatment." Business
transactions that are not tax-free often result in the payment of a
relatively higher acquisition price (and/or the payment of cash) than is
paid in tax-free transactions to enable securityholders to pay the
resulting tax liability. The Old STAT Board concluded that a tax-free
transaction was favorable because it enabled Old STAT to avoid the payment
of any premium to compensate for the payment of federal income taxes.

(vii) The likelihood that the Exchange will be consummated. The Old
STAT Board believed that the interest exhibited by AmHealth senior
management in effecting the Exchange and the perceived benefits to all
parties in the transaction increased the likelihood that the Exchange would
be consummated.

Potential negative factors to the Exchange considered by the Old STAT Board
were: the risk that the separate businesses of Old STAT and AmHealth could not
be integrated with the ease expected, that resulting financial and operational
synergies would not be achieved to the extent expected, the risk

that the public market price of the Old STAT Common Stock might be adversely
affected by announcement of the proposed Exchange, and the resulting percentage
dilution of the Exchange to the Old STAT Stockholders.

In view of the variety of factors, both positive and negative, considered
by the Old STAT Board, it did not find it practical to, and did not, quantify or
otherwise assign relative weights to the specific factors considered. The
factors were considered in their entirety by the Old STAT Board in the course of
its deliberations and discussions regarding the Exchange. After taking into
consideration all of the factors set forth above, the Old STAT Board concluded
(with Russell D. Schneider abstaining) that the Reorganization Agreement and the
Exchange were in the best interests of Old STAT and the Old STAT Stockholders
and that Old STAT should proceed with the Reorganization Agreement and the
Exchange at this time.

THE OLD STAT BOARD HAS APPROVED THE REORGANIZATION AGREEMENT, AND
RECOMMENDS THAT OLD STAT STOCKHOLDERS VOTE FOR THE APPROVAL OF THE PROPOSAL TO
ADOPT THE REORGANIZATION AGREEMENT AND THE EXCHANGE. THE OLD STAT BOARD BELIEVES
THAT THE REORGANIZATION AGREEMENT AND THE EXCHANGE ARE FAIR AND IN THE BEST
INTERESTS OF THE OLD STAT STOCKHOLDERS.

OPERATIONS AFTER THE EXCHANGE

Following the Exchange, the assets of the AmHealth Corporations and the
AmHealth Partnerships will be transferred by New STAT to STAT Dialysis
Corporation and STAT Management Corporation, both wholly-owned subsidiaries of
New STAT to be formed specifically for such purpose.

In the event that one or more of the AmHealth Partners should elect not to
participate in the Exchange, then any AmHealth Partnership in which such
AmHealth Partners holds an interest shall continue its existence as a stand
alone limited partnership, with no change in its management, operations,
structure, or relationships with patients or suppliers, except for the ownership
by New STAT of a substantial percentage of the interests therein. The Limited
Partnership Agreement of each AmHealth Partnership provides that all matters
presented to a vote of partners requires the approval of the limited partners
who together with the General Partner thereof own at least 67% of the
outstanding partnership interest therein. Accordingly, if the limited partners
and General Partner of any AmHealth Partnership holding at least 67% of the
outstanding partnership interest in such partnership participate in the
Exchange, New STAT will be able to control all matters presented to a vote of
the partners of such partnership. Any AmHealth Partnership currently in the
business of providing kidney dialysis services would continue to do so at the
same locations and in substantially the same manner following consummation of
the Exchange, and any AmHealth Partnership involved in the business of providing
hyperbaric oxygen therapy or home healthcare management services would continue
to conduct its operations substantially as conducted prior to the Exchange. New
STAT's acquisition of the partnership interests of any General Partner electing
to participate in the Exchange will not result in the increase of compensation,
if any, payable to the General Partner with respect to such partnership, and New
STAT would be subject to the same limitations previously applicable to such
General Partner. In addition, distributions of partnership profits would
continue in accordance with past practice. Brownsville Kidney Center, Ltd. will
continue its operations as a limited partnership, with STAT Dialysis Corporation
as the sole general partner, holding 75% of the partnership interests in such
entity. The following describes certain aspects of the operations of each
AmHealth Partnership following the Exchange if New STAT fails to acquire all the
partnership interest in any partnership.

AMHEALTH AMBULATORY HEALTHCARE, LTD. AmHealth Ambulatory Healthcare, Ltd
would continue to operate as a stand-alone partnership holding a 10% interest
in Brownsville Kidney Center, Ltd. AmHealth Ambulatory Healthcare, Ltd. does
not presently operate any businesses, and would not operate any businesses
following the Exchange.

AMHEALTH KIDNEY CENTERS OF THE VALLEY, LTD. AmHealth Kidney Centers of the
Valley, Ltd would continue to operate the dialysis facility known as McAllen
Kidney Center which is located in McAllen, Texas, but would do so under the
management of the new general partner, New STAT. No changes would be made to the
personnel or to the procedures and policies by which the center is operated. New
STAT would continue to make distributions to limited partners of AmHealth Kidney
Centers of the Valley, Ltd. in the same manner as distributions were
historically made prior to the Exchange, I.E. approximately 90% of available
cash flow.

AMHEALTH MEDICAL MANAGEMENT, LTD. AmHealth Medical Management, Ltd.
would continue to provide management services pursuant to its existing
contracts with home healthcare providers, but would do so under the management
of the new general partner, New STAT. New STAT would continue to make
distributions to limited partners of AmHealth Medical Management, Ltd. in the
same manner as distributions were historically made prior to the Exchange,
I.E. approximately 90% of available cash flow.

BROWNSVILLE HYPERBARIC HEALTHCARE, LTD. Brownsville Hyperbaric Healthcare,
Ltd would continue to manage the hospital based hyperbaric treatment centers in
Corpus Christi, Texas and Brownsville, Texas that it manages pursuant to its
existing contract with hospitals in those cities, but would do so under the
management of the new general partner, New STAT. New STAT would continue to make
distributions to limited partners of Brownsville Hyperbaric Healthcare, Ltd. in
the same manner as distributions were historically made prior to the Exchange,
I.E. approximately 90% of available cash flow.

MISSION KIDNEY CENTER, LTD. Mission Kidney Center, Ltd would continue to
operate the dialysis facility which it presently operates, which is located in
Mission, Texas, but under the management of the new general partner, New STAT.
No changes would be made to the personnel or to the procedures and policies by
which the center is operated. New STAT would continue to make distributions to
limited partners of Mission Kidney Center, Ltd. in the same manner as
distributions were historically made prior to the Exchange, I.E. approximately
90% of available cash flow.

STARR DIALYSIS CENTER, LTD. Starr Dialysis Center, Ltd would continue to
operate the dialysis facility which it presently operates, in Rio Grande City,
Texas, but would do so under the management of the new general partner, New
STAT. No changes would be made to the personnel or to the procedures and
policies by which the center is operated. New STAT would continue to make
distributions to limited partners of Starr Dialysis Center, Ltd. in the same
manner as distributions were historically made prior to the Exchange, I.E.
approximately 90% of available cash flow.

SOUTHWESTERN INFUSION HEALTHCARE, LTD. Southwestern Infusion Healthcare,
Ltd will cease to offer infusion healthcare therapy to patients regardless of
whether the Exchange is consummated, but would continue to operate as a
partnership under the management of the new general partner, New STAT. New STAT
would continue to make distributions to limited partners of Southwestern
Infusion Healthcare, Ltd. in the same manner as distributions were historically
made prior to the Exchange, I.E. approximately 90% of available cash flow.
Southwestern Infusion Healthcare, Ltd. leases, and would continue to lease,
infusion therapy equipment to certain other AmHealth entities.

WESLACO KIDNEY CENTER, LTD. Weslaco Kidney Center, Ltd would continue to
operate the dialysis facility which it presently operates, which is located in
Weslaco, Texas, but would do so under the management of the new general partner,
New STAT. No changes would be made to the personnel or to the procedures and
policies by which the center is operated. New STAT would continue to make
distributions to limited partners of Weslaco Kidney Center, Ltd.in the same
manner as distributions were historically made prior to the Exchange, I.E.
approximately 90% of available cash flow.

Either AmHealth Ambulatory Services, Inc. or AmHealth Enterprises of the
Valley, Inc. serves as General Partner for each AmHealth Partnership. Other
than shares of New STAT Common Stock issued on a pro rata basis in exchange
for the AmHealth Units owned by a General Partner, no compensation of any
description shall be payable to the General Partner of any AmHealth
Partnership,

regardless of whether the limited partners elect to participate in the Exchange
and such partnership subsequently dissolves. AmHealth Ambulatory Services, Inc.
and AmHealth Enterprises of the Valley, Inc. are wholly owned by Ruben A. Perez,
who is otherwise affiliated with the AmHealth Corporations as an officer and
director and with the AmHealth Partnerships as an officer and/or partner. In
addition, Mr. Perez will be named an officer and director of New STAT upon
consummation of the Exchange.

Following the Exchange, the number of members of the New STAT Board will be
seven, three of whom are members of the Old STAT Board, three of whom will be
selected by certain affiliates of AmHealth, and one of whom will be jointly
selected by Old STAT and such AmHealth affiliates. At least two members of the
seven member New STAT Board will be "independent directors." See "Management of
New STAT."

CHANGE OF CONTROL FOLLOWING THE EXCHANGE

As of the date of this Joint Proxy Statement/Prospectus, the directors and
executive officers of Old STAT beneficially owned approximately 1,635,570 shares
(or approximately 45%) of the total outstanding shares of Old STAT Common Stock.
Also as of such date, Ruben A. Perez and Daniel A. Perez, along with Russell D.
Schneider (a director of Old STAT), together beneficially owned more than 50% of
the outstanding AmHealth Units and, after the Exchange, the new directors and
executive officers will beneficially own approximately 66% of the New STAT
Common Stock to be outstanding immediately following the Exchange. Each of
Messrs. R. Perez, D. Perez and Schneider will be executive officers (and Messrs.
R. Perez and Schneider will be directors) of New STAT upon consummation of the
Exchange. See "Principal Stockholders of Old STAT and New STAT," and "Principal
Shareholders and Partners of AmHealth."

Assuming no additional shares of Old STAT Common Stock are issued prior to
the Exchange, the AmHealth Shareholders and AmHealth Partners will own
approximately 11,200,000 shares of New STAT Common Stock or approximately 75% of
the New STAT Common Stock to be outstanding immediately following the Exchange.
In addition, significant changes in the composition of the New STAT Board and
the appointment of certain AmHealth Shareholders and AmHealth Partners as
executive officers and directors of New STAT will occur following consummation
of the Exchange. See "Principal Stockholders of Old STAT and New STAT,"
"Management of Old STAT" and "Management of New STAT."

OPINION OF FINANCIAL ADVISOR

Old STAT retained Southcoast to render a financial opinion letter to the
Old STAT Board with respect to the fairness, from a financial point of view, of
the consideration to be offered in the Exchange. At the December 15, 1995
meeting of the Old STAT Board, Southcoast rendered its oral opinion that, as of
such date and based upon and subject to the various considerations set forth in
its opinion, the terms of the Exchange were fair from a financial point of view
to the holders of Old STAT Common Stock. Southcoast subsequently updated and
confirmed its December 15, 1995 oral opinion by delivery of a written opinion
dated January 4, 1996, which was subsequently updated by its written opinions
dated March 15 and May 17, 1996.

THE FULL TEXT OF THE WRITTEN OPINION OF SOUTHCOAST DATED MAY 17, 1996,
WHICH SETS FORTH THE ASSUMPTIONS MADE, PROCEDURES FOLLOWED, MATTERS CONSIDERED
AND SCOPE OF THE REVIEW UNDERTAKEN BY, AS WELL AS THE LIMITATIONS ON, SOUTHCOAST
IN RENDERING ITS OPINION, IS ATTACHED AS APPENDIX III TO THIS JOINT PROXY
STATEMENT/PROSPECTUS. OLD STAT STOCKHOLDERS ARE URGED TO READ SOUTHCOAST'S
OPINION CAREFULLY IN ITS ENTIRETY. Southcoast was not engaged to determine the
number of shares of Old STAT Common Stock to be issued in the Exchange; the Old
STAT and AmHealth Boards mutually negotiated such number. Southcoast's opinion
is directed only to the fairness of the consideration to be offered in the
Exchange to the holders of Old STAT Common Stock from a financial point of view
and does not constitute a recommendation to any Old STAT stockholder as to how
such stockholder should vote at the Meeting. The summary of the opinion of
Southcoast set forth

in this Joint Proxy Statement/Prospectus is qualified in its entirety by
reference to the full text of such opinion.

To arrive at its opinion, Southcoast, among other things, (i) analyzed
certain publicly available financial statements and other information of Old
STAT and of AmHealth; (ii) analyzed certain internal financial reports and
operating data which are routinely prepared by the management of both Old STAT
and AmHealth but are not publicly available (i.e. revenue and cost data
applicable to individual facilities and/or contracts, pricing data applicable to
specific types of services and detailed cost analyses applicable to direct,
general and administrative functions); (iii) analyzed revenue and cost budget
and forecast information for 1995 through 2000 for Old STAT, AmHealth and the
combined company which had been prepared by management of each entity based upon
assumptions regarding future operations (members of each management group having
considered historical growth rates and having made assessments of future growth
opportunities and related revenue and cost implications); (iv) discussed the
past and current operations and financial condition and the prospects of
AmHealth with senior executives of AmHealth; (v) discussed the past and current
operations and financial condition and the prospects of Old STAT with senior
executives of Old STAT, and analyzed the pro forma impact of the Merger on Old
STAT's earnings per share, consolidated capitalization and financial ratios;
(vi) reviewed the reported prices and trading activity for the Old STAT Common
Stock; (vii) compared the financial performance of Old STAT and AmHealth and the
prices and trading activity of the Old STAT Common Stock with that of certain
other comparable publicly traded companies and their securities; (viii) reviewed
the financial terms, to the extent publicly available, of certain comparable
acquisition transactions; (ix) discussed with the respective managements of Old
STAT and AmHealth certain synergies and other benefits expected to be derived
from the Exchange; (x) reviewed the Agreement and Plan of Reorganization and
certain related documents; and (xi) performed such other analyses as it deemed
appropriate.

In rendering its opinion, Southcoast assumed and relied upon, without
independent verification, the accuracy and completeness of the information
reviewed by Southcoast for purposes of the opinion. With respect to the
financial projections, Southcoast assumed that they were reasonably prepared
on bases reflecting the best currently available estimates and judgments of
the future financial performance of each of Old STAT and AmHealth.
Southcoast's opinion was necessarily based on economic, market and other
conditions as in effect on, and the information made available to Southcoast
as of, the date of its opinion. In arriving at its opinion, Southcoast was not
authorized to solicit, and it did not solicit, interest from any party with
respect to the acquisition of Old STAT or any of its assets, nor did
Southcoast have discussions or negotiations with any parties in connection
with the Exchange.

The following is a brief summary of the analyses performed by Southcoast
in preparation of its oral opinion delivered December 15, 1995 and its opinion
letters dated as of January 4 and March 15, 1996 (collectively, the "Initial
Opinions") and May 17, 1996, and reviewed with the Old STAT Board. The
information dated as of December 29, 1995 was utilized by Southcoast in the
preparation of the Initial Opinions, and the information dated as of May 10,
1996 was utilized by Southcoast in the preparation of its May 17, 1996
opinion.

OLD STAT STOCK PRICE TRADING HISTORY. For the May 17, 1996 opinion,
Southcoast reviewed the per share market price of the Old STAT Common Stock
over the period from Old STAT's initial public offering on April 21, 1995 to
May 10, 1996, and for the Initial Opinions, Southcoast reviewed the per share
market price of the Old STAT Common Stock from April 21, 1995 to December 29,
1995. From April 21, 1995 to May 10, 1996, the Old STAT Common Stock ranged
from a high of $7.75 on May 10, 1996 to a low of $2.125 on June 7, 1995, and
from April 21, 1995 to December 29, 1995, the Old STAT Common Stock ranged
from a high of $5.00 on November 13, 1995 to a low of $2.125 on June 7, 1995.
The Old STAT Common Stock closed on May 10, 1996 at $7.75, and on December 29,
1995 at $4.50.

For the May 17, 1996 opinion, Southcoast also compared over the period
from April 21, 1995 to May 10, 1996 the Old STAT Common Stock price history to
the Standard & Poor's industrial average

of 400 stocks ("S&P 400") and to an index (the "OLD STAT COMPARABLE
COMPANIES INDEX") which consists of four healthcare service companies that
Southcoast deemed to be comparable to Old STAT for purposes of this analysis
(I.E. Coastal Physician Group, Inc., Emcare Holdings, Inc., Inphynet Medical
Management, Inc., and Sterling Healthcare Group, Inc.) (collectively the "OLD
STAT COMPARABLE COMPANIES"). The analysis indicated that during this period
the price of the Old STAT Common Stock increased 130% compared to an increase
of approximately 29% for the S&P 400 and approximately 17% for the Old STAT
Comparable Companies Index. This analysis was considered by Southcoast to be
supportive of its May 17, 1996 opinion.

For the Initial Opinions, Southcoast also compared over the period from
April 21, 1995 to December 29, 1995 the Old STAT Common Stock price history to
the S&P 400 and to an index consisting of the Old STAT Comparable Companies
plus Pacific Physician Services, Inc., which was no longer publicly traded at
May 10, 1996. This analysis indicated that during the period from April 21,
1995 to December 29, 1995 the price of the Old STAT Common Stock increased 33%
compared to an increase of approximately 19% for the S&P 400 and approximately
6% for the modified Old STAT Comparable Companies Index. This analysis was
considered by Southcoast to be supportive of its Initial Opinions.

AMHEALTH CONTRIBUTION ANALYSIS. For the May 17, 1996 opinion, Southcoast
compared the percentage ownership implied by the Exchange Ratio to the
contribution of AmHealth and Old STAT to pro forma combined revenue, earnings
before interest, taxes, depreciation and amortization ("EBITDA"), earnings
before interest and taxes ("EBIT") and net income for the latest twelve
months ("LTM") on a historical basis and for 1996 and 1997 on a projected
basis. On a combined basis, AmHealth stockholders would own approximately 74%
of the equity value of Old STAT upon completion of the Exchange and 74% of the
Enterprise Value (as defined below) of Old STAT upon completion of the
Exchange based upon the closing price of the Old STAT Common Stock on May 10,
1996. Compared to those percentages, Southcoast noted that AmHealth would
contribute approximately 40% to 41% of combined revenue, approximately 78% to
81% of combined EBITDA, approximately 77% to 81% of combined EBIT and
approximately 74% to 80% of combined net income. For the EBITDA, EBIT, and net
income methodologies above, the Exchange results in an AmHealth ownership
percentage that is within or below the ranges of contribution. This analysis
was considered by Southcoast to be supportive of its May 17, 1996 opinion.

For the Initial Opinions, Southcoast compared the percentage ownership
implied by the Exchange Ratio to the contribution of AmHealth and Old STAT to
pro forma combined revenue, EBITDA, EBIT and net income for the LTM on a
historical basis and for 1995 and 1996 on a projected basis. On a combined
basis, AmHealth stockholders would own approximately 75% of the equity value
of Old STAT upon completion of the Merger and 77% of the Enterprise Value (as
defined below) of Old STAT upon completion of the Exchange based upon the
closing price of the Old STAT Common Stock on December 29, 1995. Compared to
those percentages, Southcoast noted that AmHealth would contribute
approximately 37% to 41% of combined revenue, approximately 73% to 79% of
combined EBITDA, approximately 72% to 79% of combined EBIT and approximately
71% to 78% of combined net income. For the EBITDA, EBIT, and net income
methodologies above, the Exchange results in an AmHealth ownership percentage
that is within the ranges of contribution. This analysis was considered by
Southcoast to be supportive of its Initial Opinions.

AMHEALTH COMPARABLE COMPANY ANALYSIS. Using publicly available
information, Southcoast compared selected operating and financial ratios for
AmHealth to the corresponding ratios of the following publicly-traded
comparable companies: Renal Treatment Centers, Inc., Total Renal Care
Holdings, Inc., Vivra, Inc., MedCath, Inc., Physician Reliance Network, Inc.,
RoTech Medical Corporation, Lincare Holdings, Inc., and Caremark
International, Inc. (collectively, the "AMHEALTH COMPARABLE COMPANIES") that
in Southcoast's judgment were comparable to AmHealth for purposes of this
analysis. The AmHealth Comparable Companies were divided into two groups
(Renal Treatment Centers, Inc., Total Renal Care Holdings, Inc., and Vivra,
Inc.) (collectively, the "RENAL

TREATMENT COMPARABLES") and other healthcare companies (MedCath, Inc.,
Physician Reliance Network, Inc., RoTech Medical Corporation, Lincare
Holdings, Inc., and Caremark International, Inc.) (collectively, the
"SECONDARY COMPARABLES"). Such ratios compared included the market
capitalization of the common stock plus total long term debt less cash and
equivalents (the "ENTERPRISE VALUE") as a multiple of LTM revenues, EBITDA
and EBIT and the market capitalization of the common stock (the "EQUITY
VALUE") as a multiple of LTM net income, current fiscal year net income and
next fiscal year net income. For the May 17, 1996 opinion, based on closing
stock prices as of May 10, 1996, the multiples of the Renal Treatment
Comparables were a mean of 4.9x and a median of 4.2x LTM revenues, a mean of
21.1x and a median of 18.4x LTM EBITDA, a mean of 27.5x and a median of 27.4x
LTM EBIT, a mean of 55.2x and a median of 44.2x LTM net income, a mean of
35.9x and a median of 35.1x current fiscal year net income and a mean of 28.2x
and a median of 27.9x next year fiscal net income. The multiples of the
Secondary Comparables were a mean of 4.4x and a median of 3.7x LTM revenues, a
mean of 23.6x and a median of 26.8x LTM EBITDA, a mean of 36.4x and a median
of 35.6x LTM EBIT, a mean of 56.3x and a median of 60.7x LTM net income, a
mean of 32.9x and a median of 26.3x current fiscal year net income and a mean
of 25.8x and a median of 21.4x next year fiscal year net income. The Exchange
Ratio, based on a closing stock price for Old STAT on May 10, 1996 of $7.75,
equated to implied multiples for AmHealth of 8.4x LTM revenues, 24.6x LTM
EBITDA, 27.6x LTM EBIT, 45.1x LTM net income, 30.6x current fiscal year net
income and 21.9x next fiscal year net income. For the LTM net income, current
fiscal year net income, and next fiscal year net income methodologies above,
the Exchange results in multiples which are below those indicated by the Renal
Treatment Comparables and the Secondary Comparables. This analysis was
considered by Southcoast to be supportive of its May 17, 1996 opinion.

For the Initial Opinions, based on closing stock prices as of December
29, 1995, the multiples of the Renal Treatment Comparables were a mean of 4.0x
and a median of 4.0x LTM revenues, a mean of 17.3x and a median of 16.4x LTM
EBITDA, a mean of 23.5x and a median of 27.1x LTM EBIT, a mean of 45.6x and a
median of 40.4x LTM net income, a mean of 40.0x and a median of 33.8x current
fiscal year net income and a mean of 27.8x and a median of 27.0x next year
fiscal income. The multiples of the Secondary Comparables were a mean of 3.6x
and a median of 2.8x LTM revenues, a mean of 14.9x and a median of 10.0x LTM
EBITDA, a mean of 20.2x and a median of 14.4x LTM EBIT, a mean of 33.2x and a
median of 21.7x LTM net income, a mean of 28.4x and a median of 18.5x current
fiscal year net income and a mean of 20.7x and a median of 14.5x next year
fiscal year net income. The Exchange Ratio, based on a closing stock price for
Old STAT on December 29, 1995 of $4.50, equated to implied multiples for
AmHealth of 6.4x LTM revenues, 18.2x LTM EBITDA, 19.9x LTM EBIT, 24.7x LTM net
income, 25.7x current fiscal year net income and 16.0x next fiscal year net
income. For the LTM EBIT, LTM net income, current fiscal year net income, and
next fiscal year net income methodologies above, the Exchange results in
multiples which are below those indicated by the Renal Treatment Comparables.
This analysis was considered by Southcoast to be supportive of its Initial
Opinions.

OLD STAT COMPARABLE COMPANY ANALYSIS. Using publicly available
information, Southcoast compared similar selected operating and financial
ratios for Old STAT to the corresponding ratios of the Old STAT Comparable
Companies. Such ratios compared included the Enterprise Value as a multiple of
LTM revenues, EBITDA and EBIT and the Equity Value as a multiple of LTM net
income, current fiscal year net income and next fiscal year net income. For
the May 17, 1996 opinion, based on closing stock prices as of May 10, 1996,
the multiples of Old STAT Comparable Companies were a mean of 1.0x and a
median of 1.2x LTM revenues, a mean of 14.9x and a median of 14.4x LTM EBITDA,
a mean of 17.0x and a median of 16.7x LTM EBIT, a mean of 31.4x and a median
of 28.8x LTM net income, a mean of 21.5x and a median of 21.8x current fiscal
year net income and a mean of 17.5x and a median of 17.6x next fiscal year net
income. The corresponding multiples for Old STAT were 2.0x LTM revenues, 30.4x
LTM EBITDA, 32.3x LTM EBIT, 45.6x LTM net income, 36.9x current fiscal year
net income and 31.0x next fiscal year net income. This analysis was considered
by Southcoast to be supportive of its May 17, 1996 opinion.

For the Initial Opinions, based on closing stock prices as of December
29, 1995, the multiples of Old STAT Comparable Companies were a mean of 0.9x
and a median of 0.9x LTM revenues, a mean of 12.5x and a median of 11.4x LTM
EBITDA, a mean of 15.4x and a median of 14.2x LTM EBIT, a mean of 27.7x and a
median of 30.0x LTM net income, a mean of 21.0x and a median of 21.5x current
fiscal year net income and a mean of 17.2x and a median of 17.8x next fiscal
year net income. The corresponding multiples for Old STAT were 1.0x LTM
revenues, 14.0x LTM EBITDA, 14.0x LTM EBIT, 18.8x LTM net income, 18.2x
current fiscal year net income and 18.7x next fiscal year net income. This
analysis was considered by Southcoast to be supportive of its Initial
Opinions.

ANALYSIS OF SELECTED PRECEDENT TRANSACTIONS. Southcoast reviewed the
financial terms, to the extent publicly available, of twenty selected merger
and acquisition transactions in the healthcare industry completed between
January 1, 1990 and May 10, 1996 (collectively, the "PRECEDENT
TRANSACTIONS"). Southcoast reviewed the prices paid in such transactions in
terms of the Enterprise Value as a multiple of revenue and EBITDA and in terms
of the Equity Value as a multiple of net income and book value. Southcoast
noted that no transaction reviewed was identical to the Exchange and that,
accordingly, the foregoing analysis necessarily involves complex
considerations and judgments concerning differences in financial and operating
characteristics of AmHealth and other factors that would affect the
acquisition value of the companies to which it is being compared.

With respect to the May 17, 1996 opinion, the analysis indicated that,
for the Precedent Transactions, the range of multiples of Enterprise Value to
revenue was 0.4x to 2.7x with a mean of 1.3x and a median of 1.1x; the range
of Enterprise Value to EBITDA was 3.4x to 28.1x with a mean of 11.5x and a
median of 11.3x; the range of multiples of Equity Value to net income was 6.1x
to 502.5x with a mean of 84.7x and a median of 24.6x; and the range of
multiples of Equity Value to book value was 1.5x to 21.4x with a mean of 7.4x
and a median of 4.9x.

With respect to the Initial Opinions, the analysis indicated that, for
the Precedent Transactions, the range of multiples of Enterprise Value to
revenue was 0.4x to 2.7x with a mean of 1.3x and a median of 1.1x; the range
of Enterprise Value to EBITDA was 3.4x to 28.1x with a mean of 11.6x and a
median of 11.3x; the range of multiples of Equity Value to net income was 6.1x
to 502.5x with a mean of 84.9x and a median of 24.6x; and the range of
multiples of Equity Value to book value was 1.5x to 21.4x with a mean of 7.8x
and a median of 6.4x.

Southcoast gave less weight to this analysis because of the wide range of
multiples in this analysis and the lack of comparability of the Exchange to any
of the selected precedent transactions.

DISCOUNTED CASH FLOW ANALYSIS. Southcoast performed a discounted cash
flow analysis to estimate the present value of the stand-alone unlevered free
cash flows that each of Old STAT and AmHealth are expected to generate if Old
STAT and AmHealth, respectively, perform in accordance with the scenarios
developed based upon certain financial projections prepared by the managements
of Old STAT and AmHealth and certain variants thereof. The AmHealth revenue
projections were calculated using annual growth rates that ranged from 25% to
57% for the May 17, 1996 opinion and annual growth rates that ranged from 5%
to 11% for the Initial Opinions. These growth rates were provided by the
management of AmHealth and were based upon historical performance and
assumptions regarding increased revenue as a result of future business
expansion. The Old STAT revenue projections were calculated using annual
growth rates that ranged from 25% to 52% for the May 17, 1996 opinion and an
annual growth rate of 25% for the Initial Opinions. These growth rates were
provided by the management of Old STAT and were based upon historical
performance and assumptions regarding increased revenue as a result of future
business expansion. Management of Old STAT increased the AmHealth and Old STAT
growth rates following the delivery of the Initial Opinions because of
positive developments in Old STAT's business subsequent to December 29, 1995,
including the delivery of the Columbia Agreement, as well as additional
opportunities identified by Old STAT as being possible by the combination of
the Old STAT and AmHealth businesses. To arrive at the valuations of Old STAT
and AmHealth, Southcoast discounted the unlevered (before interest expenses)
after-tax cash flows that resulted from the aforementioned assumptions using a
range of

discount rates of 15% to 20%. This range was based on the weighted average
cost of capital for Old STAT Comparable Companies and the AmHealth Comparable
Companies. The unlevered after-tax cash flows were calculated as the after-tax
operating earnings plus projected depreciation and amortization, plus (or
minus) net changes in non-cash working capital, minus projected capital
expenditures. Southcoast added to the present value of the cash flows the
terminal value of the company in the year 2000, discounted back at the same
discount rates. The terminal value was computed by multiplying the companys
projected EBITDA in the year 2000 by a range of terminal multiples of 10x to
15x. The terminal multiple range was based on the LTM EBITDA multiples of the
AmHealth Comparable Companies. For the May 17, 1996 opinion, the discounted
cash flow valuation indicated an equity value range for Old STAT of between
$17.8 million and $29.7 million and for AmHealth of between $85.1 million and
$145.2 million. The Exchange Ratio, based on a closing stock price for Old
STAT on May 10, 1996 of $7.75, equaled to an implied equity value for AmHealth
of $86.8 million, which is within the range of equity values calculated by the
discounted cash flow methodology. This analysis was considered by Southcoast
to be supportive of its May 17, 1996 opinion.

For the Initial Opinions, the discounted cash flow valuation indicated an
equity value range for Old STAT of between $19.1 million and $22.8 million and
for AmHealth of between $45.3 million and $54.7 million. The Exchange Ratio,
based on a closing stock price for Old STAT on December 29, 1995 of $4.50,
equaled to an implied equity value for AmHealth of $50.4 million, which is
within the range of equity values calculated by the discounted cash flow
methodology. This analysis was considered by Southcoast to be supportive of
its Initial Opinions.

PRO FORMA MERGER ANALYSIS. Southcoast analyzed certain pro forma effects
resulting from the Exchange, including the effect of the consummation of the
Exchange, assuming the terms of the Exchange, on the earnings per share of Old
STAT Common Stock following the Exchange. The actual operating results or
financial position achieved by the combined company may vary from the
projected results and the variations may be material. Based on management's
earnings estimates, Southcoast observed that there would be accretion in the
earnings per share of the Old STAT Common Stock in 1996, assuming no synergies
were achieved by the combined company. This analysis was considered by
Southcoast to be supportive of its conclusion because Old STAT expects to
realize accretion to its earnings per share as a result of the Exchange.

In connection with review of the Exchange by the Old STAT Board,
Southcoast performed a variety of financial and comparative analyses for
purposes of its opinion given in connection therewith. The summary set forth
above addresses all material points of each presentation made to the Old STAT
Board; however, it does not purport to be a complete description of the
presentation by Southcoast to the Old STAT Board or the analyses performed by
Southcoast in arriving at its opinion.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Southcoast
believes that its analyses must be considered as a whole and that selecting
portions of its analyses and of the factors considered by it, without
considering all analyses and factors, could create a misleading view of the
processes underlying its opinion. Southcoast gave more weight to the AmHealth
Contribution Analysis, the AmHealth Comparable Company Analysis, the
Discounted Cash Flow Analysis, and the Pro Forma Merger Analysis and less
weight to the Analysis of Selected Precedent Transactions. Southcoast deemed
the assumptions made by the managements of AmHealth and Old STAT in preparing
their financial projections reasonable based upon, among other things, the
historical financial performance of the entities. In performing its analysis,
Southcoast made numerous assumptions with respect to industry performance,
general business and economic conditions and other matters, many of which are
beyond the control of Old STAT or AmHealth. Any estimates contained therein
are not necessarily indicative of future results or actual values, which may
be significantly more or less favorable than those suggested by such
estimates. In addition, estimates relating to the value of businesses or
assets do not purport to be appraisals or to necessarily reflect the prices at
which businesses or assets may actually be sold. The

analyses performed were prepared solely as part of Southcoasts analysis of the
fairness of the consideration to be offered in the Exchange from a financial
point of view, to the holders of Old STAT Common Stock and were provided to
the Old STAT Board in connection with the delivery of Southcoast's opinion.

The Old STAT Board retained Southcoast to render a financial opinion
letter based upon its qualifications, experience and expertise. Southcoast, as
part of its investment banking business, is continuously engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. In the ordinary course of
Southcoast's trading and brokerage activities, Southcoast or its affiliates
may at any time hold long or short positions, may trade or otherwise effect
transactions, for its own account or for the account of customers, in equity
securities of Old STAT.

Pursuant to a letter agreement dated as of December 5, 1995, between Old
STAT and Southcoast, Old STAT retained Southcoast to render a financial
opinion letter to the Old STAT Board in connection with the Exchange. Old STAT
has paid Southcoast its customary fee for delivering its opinions. Old STAT
has also agreed to reimburse Southcoast for its out-of-pocket expenses
including the fees of its legal counsel, and to indemnify Southcoast, its
directors, officers, agents, and employees, and each person, if any,
controlling Southcoast against certain liabilities and expenses, including
liabilities under the federal securities laws, incurred in connection with its
services.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

The following discussion of certain federal income tax consequences of the
Exchange is general in nature, is for general informational purposes only and is
not tax advice. This discussion does not cover all aspects of federal income
taxation that may be relevant to New STAT, STAT Acquisition Corp., Old STAT,
AmHealth, the AmHealth Shareholders or the AmHealth Partners, nor does the
discussion deal with tax issues peculiar to certain types of taxpayers (such as
life insurance companies, S corporations, financial institutions, tax-exempt
organizations or retirement accounts, foreign taxpayers and persons exercising
rights of dissenting shareholders). No aspect of foreign, state, local or estate
and gift taxation is addressed. Therefore, the following summary is not a
substitute for careful tax planning and advice based upon the individual
circumstances of each AmHealth Shareholder and AmHealth Partner.

In the opinion of KPMG Peat Marwick LLP, independent auditors to Old STAT
("KPMG"), the following discussion accurately summarizes the federal income tax
considerations pertaining to the Exchange that are likely to be material to Old
STAT, AmHealth, the AmHealth Shareholders and the AmHealth Partners (other than
certain types of shareholders described in the preceding paragraph). No rulings
or opinions have been requested from the Internal Revenue Service ("IRS") with
respect to any of the tax aspects of the Exchange, and an opinion of counsel is
not binding on the IRS. Moreover, KPMG's opinion is based on certain factual
representations and assumptions which, if untrue or incorrect, could affect the
discussion set forth below. As a result, the tax consequences of the Exchange
may differ from those described below.

The following summary is based on the Internal Revenue Code of 1986, as
amended (the "CODE"), Treasury Regulations promulgated and proposed thereunder,
judicial decisions and published administrative rules and pronouncements of the
IRS, as in effect as of the date hereof. Changes in or additions to such rules,
or new interpretations thereof, may have retroactive effect and therefore could
significantly affect the consequences described below.

TAX CONSEQUENCES TO THE AMHEALTH PARTNERS. KPMG has rendered an opinion,
subject to the assumptions and limitations set forth therein, that no gain or
loss will be recognized by the AmHealth Partners on the transfer of the AmHealth
Units to New STAT pursuant to the Exchange in return for New STAT Common Stock
except to the extent that an AmHealth Partner's liabilities assumed by New STAT
in the Exchange or to which the AmHealth Units are subject, including for this
purpose

the Partner's share of the Partnership's liabilities, (determined separately for
each Partnership) exceeds the Partner's tax basis in that Partnership interest.
AmHealth Partners should consult their own tax and other advisors to determine
the basis of their Partnership interests prior to the Exchange and the amount of
the liabilities to be assumed by New STAT or to which the AmHealth Units are
subject (including their share of the Partnerships' liabilities).

The aggregate basis of the New STAT Common Stock received by each Partner
will be the same as the aggregate basis of the Partnership interest contributed
by such Partner, decreased by the Partners share of Partnership liabilities
immediately prior to the Exchange and increased by the amount of gain recognized
by the Partner in the Exchange. The aggregate basis will be allocated pro rata
among all shares of New STAT Common Stock received in the Exchange. Each share
of New STAT Common Stock will have a holding period that begins on the day
following the date of the transfer to the extent that the value of such share on
such date is attributable to the Partner's interest in certain assets of the
Partnership (essentially its ordinary income assets) and will have a holding
period that includes the Partner's holding period for the AmHealth Units to the
extent of the balance.

Following the Exchange, AmHealth Partners will no longer be partners of the
AmHealth Partnerships and the income or loss of the Partnerships realized after
the Exchange will no longer pass through to the Partners. In addition, AmHealth
Partners will not be entitled to deduct any Partnership losses that previously
had been allocated to the Partner but that the Partner had not been able to
utilize because of any applicable basis or at risk limitation.

The opinion of KPMG is based on numerous assumptions and representations,
including representations from the AmHealth Partners, the AmHealth Corporations
(and their shareholders) and STAT Physicians (the "CONTROL GROUP") that the
Control Group will, jointly, be in "control" of New STAT within the meaning of
Section 368(c) of the Code. Control generally means ownership of at least 80% of
the New STAT Common Stock. The requisite ownership must exist immediately after
the transaction. However, for this purpose, the transaction may not be treated
as complete until all related transactions which one or more parties are
contractually bound to undertake or which one or more parties plan or intend to
undertake (including sales of the New STAT Common Stock), have been completed.

If, as a result of such related transactions, the Control Group does not
have control of New STAT immediately following the Exchange within the meaning
of Section 368(a), or if the Exchange otherwise does not qualify for
nonrecognition, each AmHealth Partner will recognize taxable gain equal to the
sum of (i) the value of the New STAT Common Stock received in the Exchange, (ii)
the amount of the liabilities to be assumed by New STAT or to which the AmHealth
Units are subject (including the Partners share of the Partnerships
liabilities); less the adjusted basis of the AmHealth Units being surrendered.

TAX CONSEQUENCES TO NEW STAT UPON RECEIPT OF THE PARTNERSHIP INTERESTS AND
ISSUANCE OF NEW STAT COMMON STOCK. In the opinion of KPMG, no gain or loss will
be recognized by New STAT upon the receipt of the AmHealth Units, the issuance
of the New STAT Common Stock, the termination of the Partnerships or upon the
receipt of assets of the Partnerships upon such terminations. New STAT's
aggregate basis in the Partnership assets which it will receive upon termination
of the Partnerships will be the same as the aggregate basis of the AmHealth
Units transferred to New STAT prior to the Exchange, increased by the amount of
any gain recognized by the AmHealth Partners in the Exchange. The holding period
of the assets transferred to New STAT will include the holding period of the
assets in the hands of each Partnership.

TAX CONSEQUENCES TO AMHEALTH SHAREHOLDERS. KPMG has rendered an opinion,
subject to the assumptions and limitations set forth therein, that the mergers
of the AmHealth Corporations with and into New STAT will each qualify as a
"reorganization" within the meaning of Section 368(a) of the Code and that, as a
consequence, the AmHealth Shareholders will not recognize gain or loss as a
result of the Exchange. In addition, the basis of the New STAT Common Stock
received by an AmHealth Shareholder will be, in each instance, the same as the
basis of the AmHealth Common Stock

surrendered in exchange therefor. The holding period of the shares of New STAT
Common Stock received by each AmHealth Shareholder, in each instance, would
include the AmHealth Shareholders holding period for the AmHealth Common Stock
exchanged therefor, provided the AmHealth Common Stock was held as a capital
asset by the AmHealth Shareholder prior to the Exchange.

In order to qualify as a Reorganization, among other things, the historic
shareholders of each AmHealth Corporation, must maintain a sufficient
"continuity of interest" in New STAT following the Exchange. The IRS has
indicated in published revenue procedures that the continuity of interest
requirement will be satisfied if the historic shareholders of the acquired
entity (I.E., each AmHealth Corporation) receive and retain, in the aggregate,
50% of the value of the stock of the acquired entity in the form of stock of the
acquiring corporation (I.E., New STAT). Shares received by shareholders who at
the time of receipt have an intention to sell or otherwise dispose of such
shares are treated as not having been retained for purposes of this requirement.

If the AmHealth Shareholders undertake substantial sales of common stock of
the AmHealth Corporations in anticipation of the Exchange or substantial sales
of New STAT Common Stock after the Exchange, pursuant to a plan or intention
existing at or around the time of the Exchange which, when combined with common
stock of the AmHealth Corporations or New STAT Common Stock converted to cash
pursuant to the exercise of rights of dissenting shareholders or in lieu of the
issuance of fractional shares, exceed 60% of the value of the stock of one or
more of the AmHealth Corporations immediately prior to the Exchange, the
continuity of interest test may not be met and the merger involving that
AmHealth Corporation may not qualify as a reorganization within the meaning of
Section 368(a) of the Code.

If the IRS were to successfully challenge the status of the Exchange as a
"reorganization" under Section 368(a) of the Code (based on a failure to satisfy
the continuity of interest requirement or otherwise), each AmHealth Shareholder
would be treated as recognizing gain or loss as a result of the Exchange equal
to the difference between such shareholder's tax basis in his or her shares of
common stock surrendered in the Exchange and the sum of (i) fair market value of
the New STAT Common Stock as of the effective time of the Exchange and (ii) the
amount of the liabilities of such shareholder which are assumed (or to which the
common stock is subject) in the Exchange. In such event, the shareholder's
aggregate basis in the New STAT Common Stock so received would equal the fair
market value of such stock as of the effective time of the Exchange, and the
shareholder's holding period for the New STAT Common Stock would begin the day
after the Exchange.

TAX CONSEQUENCES TO OLD STAT STOCKHOLDERS. KPMG has rendered an opinion,
subject to the assumptions and limitations set forth therein, that no gain or
loss will be recognized by the Old STAT Stockholders in connection with
consummation of the Exchange.

TREATMENT OF NEW STAT, OLD STAT AND THE AMHEALTH CORPORATIONS IN THE
EXCHANGE. If the Exchange is a "reorganization" as discussed above, neither New
STAT, Old STAT nor any of the AmHealth Corporations will recognize taxable gain
or loss as a result of the issuance of New STAT Common Stock to Old STAT
Stockholders or to AmHealth Shareholders or AmHealth Partners in the Exchange in
each instance. The tax basis of the assets of the AmHealth Corporations to New
STAT will be the same as the tax basis in those assets prior to the Exchange.

THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL
INFORMATION ONLY. OLD STAT STOCKHOLDERS, AMHEALTH SHAREHOLDERS AND AMHEALTH
PARTNERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE SPECIFIC TAX
CONSEQUENCES OF THE EXCHANGE APPLICABLE TO THEM, INCLUDING THE APPLICATION AND
EFFECT OF FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.

ACCOUNTING TREATMENT

The Exchange is intended to qualify as a pooling of interests for
accounting purposes. Under this accounting treatment, the recorded assets and
liabilities and the operating results of both Old STAT

and AmHealth are carried forward to the combined operations of New STAT at their
recorded amounts. No recognition of goodwill in the combination is required of
any party to the Exchange. To support the treatment of the Exchange as a pooling
of interests, the affiliates of Old STAT and AmHealth have entered into
agreements imposing certain resale limitations on their stock. See
"--Restrictions on Transfers of Shares" below. It is a condition to Old STAT's
and AmHealth's obligations to consummate the Exchange that, among other things,
both parties receive a letter from KPMG to the effect that the Exchange will be
treated as a pooling of interests for accounting purposes. See "The
Reorganization Agreement -- Conditions Precedent" and "Unaudited Pro Forma
Combined Financial Information."

INTERESTS OF CERTAIN PERSONS IN THE TRANSACTION

Russell D. Schneider, a current member of the Old STAT Board and the holder
of significant ownership interests in the AmHealth Partnerships, abstained from
the vote of the Old STAT Board approving the Reorganization Agreement.

New STAT has agreed to enter into three-year employment and non-competition
agreements with Mr. Schneider and Ruben A. Perez pursuant to which such
individuals will, on a part-time basis, render certain services to New STAT and
fulfill such other duties as directed by the New STAT Board. The employment
agreements provide for Messrs. Schneider and Perez to be paid compensation of
not less than $120,000 per year. Mr. Schneider will be Chairman of the New STAT
Board and Mr. Perez will be Treasurer of New STAT upon consummation of the
Exchange. The employment agreements may be terminated for cause at any time,
upon reasonable notice of the circumstances leading to such termination for
cause; in such case, the terminated employee will receive no severance pay or
other benefits not already accrued under the employment agreement. The
employment agreements contain non-competition provisions which will remain in
force for a period of two years following termination of the employment
agreements. New STAT will also enter into an employment agreement with Daniel A.
Perez, which is expected to provide for annual compensation of approximately
$133,000.

Weslaco Kidney Center, Ltd., one of the AmHealth Partnerships, has entered
into a lease agreement covering 5,440 square feet at an annual rental rate of
$13 per square foot with Weslaco Medical Partners Joint Venture, a joint venture
in which Ruben A. Perez controls a 50% interest.

Drs. Rice and Miranda have each executed Succession Agreements (the
"SUCCESSION AGREEMENTS") granting to New STAT the right to designate a purchaser
of all of the ownership interest held in STAT Physicians by such individuals.
Additionally, each of STAT Physicians and STAT P.A. is a party to a Management
Agreement with Old STAT.

RESTRICTIONS ON TRANSFER OF SHARES

Pursuant to Rule 145 under the Securities Act, any person or entity who is
an affiliate of AmHealth or Old STAT at the time of approval of the Exchange and
who publicly offers or sells New STAT Common Stock that such person or entity
receives in the Exchange will be deemed to be engaged in a distribution and,
therefore, an underwriter under the Securities Act. However, such person or
entity will not be deemed to be engaged in a distribution and not an underwriter
if (i) the New STAT Common Stock is sold in accordance with the volume
limitations and manner of sale requirements of paragraphs (e), (f) and (g) of
Rule 144 and New STAT, at the time of the offer or sale, has current public
information available, as specified in Rule 144(d); (ii) such person or entity,
at the time of such offer or sale, is not an affiliate of New STAT, a period of
two years from the effective time of the Exchange has elapsed and New STAT has
public information available; or (iii) such person or entity, at the time of
such offer or sale, is not, and has not been for at least three months, an
affiliate of New STAT and at least three years from the effective time of the
Exchange has elapsed. Persons who are deemed "affiliates" of AmHealth or Old
STAT generally include individuals or entities that control, are controlled by,
or are under common control with, such entities and may include certain officers
and directors of such entities as well as the principal shareholders and
partners. Old STAT Stockholders,

AmHealth Shareholders and AmHealth Partners should consult their legal advisors
prior to making any offer or sale of the New STAT Common Stock received in the
Exchange.

It is a condition to the consummation of the Exchange that all affiliates
of AmHealth execute the Affiliate and Shareholder Agreement in the form attached
as Exhibit B to the Reorganization Agreement attached as Appendix I hereto.
Compliance with such a requirement, among other requirements set forth in the
agreement, is an element required for New STAT to account for the Exchange as a
"pooling of interests". Pursuant to the terms of the Affiliate and Shareholder
Agreement, each affiliate will covenant, represent and warrant, among other
things: (i) that such affiliate has no current plan or intention to engage in a
sale of any shares of New STAT Common Stock; (ii) to not engage in a sale of
AmHealth Common Stock or AmHealth Units, other than pursuant to the Exchange,
and to not exercise insiders or dissenters rights with respect to the Exchange;
(iii) to not engage in any sale of New STAT Common Stock received pursuant to
the Exchange unless, subject to certain exceptions, (A) a registration statement
under the Securities Act, covering the New STAT Common Stock proposed to be sold
or transferred, has been filed with the Commission and made effective under the
Securities Act, or (B) such transaction is permitted pursuant to Rule 145(d)
under the Securities Act; (iv) to not engage in any sale of any New STAT Common
Stock received pursuant to the Exchange prior to the time that financial results
covering at least 30 days' post-Exchange operations of New STAT have been
published, and (v) to not take a position on any deferral or state income tax
return that is inconsistent with the treatment of the Exchange as a
"reorganization" for federal and state income tax purposes.

In addition, while it is anticipated that the Exchange will qualify as an
exchange within the meaning of Section 351 and as a "reorganization" within the
meaning of Section 351 and Section 368(a) of the Code, in order to qualify as a
reorganization, among other things, the Old STAT Stockholders, AmHealth
Shareholders and Partners must maintain a sufficient "continuity of interest" in
New STAT following the Exchange. Therefore, as a condition to the consummation
of the Exchange all directors and certain other Old STAT Stockholders, all
General Partners, all AmHealth limited partners participating in the Exchange,
and the holders of at least 90% of the outstanding stock of each AmHealth
Corporation will be required to execute a Lock-Up Agreement in the form attached
as Exhibit A to the Reorganization Agreement. The Lock-Up Agreement provides
that, without the prior written consent of New STAT, such holders will not sell,
assign, pledge, hypothecate or otherwise dispose of, directly or indirectly, any
shares of the New STAT Common Stock received in the Exchange, or any shares
acquired upon the exercise of any options or warrants to purchase New STAT
Common Stock, for a period of 12 months following consummation of the Exchange.
See "-- Certain Federal Income Tax Consequences."

REGULATORY REQUIREMENTS

New STAT, Old STAT and AmHealth are not aware of any material federal,
state or foreign regulatory approval that is required in order to consummate the
Exchange. Should any such approval be required, it is currently contemplated
that such approval will be sought. New STAT is not required to furnish
notification of the Exchange or provide information to the Federal Trade
Commission or the Department of Justice pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the rules promulgated thereunder.

THE REORGANIZATION AGREEMENT

The following description of certain provisions of the Reorganization
Agreement and the exhibits thereto is only a summary and does not purport to be
complete. This description is qualified in its entirety by reference to the
complete text of the Reorganization Agreement. A conformed copy of the
Reorganization Agreement is attached as Appendix I to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference.

THE EXCHANGE

Upon consummation of the Exchange and assuming participation by all
AmHealth Shareholders and all AmHealth Partners, New STAT shall issue 11,200,000
shares of New STAT Common Stock to the participating AmHealth Shareholders and
AmHealth Partners, which shall be allocated among the AmHealth Corporations and
AmHealth Partnerships in the manner set forth in the table under the caption
"The Exchange -- Consideration." The New STAT Common Stock issued in the
Exchange will be distributed to the AmHealth Shareholders and AmHealth Partners
who own shares of stock or partnership interests in such AmHealth Corporations
and AmHealth Partnerships, as the case may be, except with respect to any
AmHealth Shareholder who has perfected dissenters rights under Texas law or any
AmHealth Partner electing not to participate in the Exchange.

Each share of Old STAT Common Stock outstanding at the effective time of
the Exchange will be converted into one share of New STAT Common Stock.

Holders of AmHealth Common Stock who have complied with all requirements
for perfecting their rights to object to the Exchange as provided by the Texas
Business Corporations Act, relevant portions of which are attached as Appendix
II hereto, will be entitled to their rights under such laws. Holders of AmHealth
Units have no applicable dissenters' rights under the Texas Revised Limited
Partnership Act; however, no AmHealth Partner may be compelled to participate in
the Exchange. Holders of Old STAT Common Stock have no appraisal rights under
the Delaware General Corporation Law.

CERTAIN COVENANTS

The Reorganization Agreement contains various representations and
warranties of the parties, including representations by New STAT, Old STAT, STAT
Acquisition, the AmHealth Corporations and the AmHealth Partnerships as to their
organization and capitalization, their authority to enter into the
Reorganization Agreement and to consummate the transactions contemplated
thereby, the existence of certain liabilities and the absence of certain
material undisclosed liabilities and changes in their businesses. Such
representations and warranties will not survive consummation of the Exchange.

AGREEMENTS OF THE PARTIES. Under the terms of the Reorganization Agreement,
and for the period from the date of the Reorganization Agreement and continuing
until the earlier of the termination of the Reorganization Agreement or the
effective time of the Exchange, each of New STAT, Old STAT, STAT Acquisition,
the AmHealth Corporations and the AmHealth Partnerships have agreed (except to
the extent expressly contemplated by the Reorganization Agreement or as
consented to in writing by the others), to carry on its business in the usual,
regular and ordinary course in substantially the same manner as theretofore
conducted; to pay debts and taxes when due subject to good faith disputes over
such debts or taxes; to pay or perform other obligations when due; and to use
all reasonable efforts consistent with past practice and policies to preserve
intact its present business organizations, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors, licensors, licensees and others having
business dealings with it, to the end that its goodwill and ongoing businesses
shall be unimpaired at the effective time of the Exchange. Each of AmHealth and
Old STAT has also agreed to promptly notify the other of any event or occurrence
not in the ordinary course of its business, and of any event which could have a
material adverse effect on it.

In addition, each of New STAT, Old STAT and STAT Acquisition, on the one
hand, and AmHealth, on the other, has agreed that it will not, among other
things, do, cause or permit any of the following, without the prior written
consent of the other: (a) cause or permit any amendments to its Certificate of
Incorporation, Bylaws, Certificate of Limited Partnership, or Limited
Partnership Agreement, as applicable; (b) declare or pay any dividends on or
make any other distributions (whether in cash, stock or property) in respect of
any of its capital stock or partnership interests, as applicable, (except, in
the case of AmHealth, such dividends, distributions and bonuses as have been
customarily paid which shall continue to be paid in accordance with prior
practice prior to closing), or split,

combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of, or in substitution
for shares of its capital stock or partnership interests, as applicable, or
repurchase or otherwise acquire, directly or indirectly, any shares of its
capital stock or partnership interests, except from former employees, directors
and consultants in accordance with agreements providing for the repurchase of
shares or partnership interests in connection with any termination of service to
it; (c) accelerate, amend or change the period of exercisability or vesting of
options, or other rights granted under its stock plans, or authorize cash
payments in exchange for any options, or other rights granted under any of such
plans; (d) take any action which would interfere with New STAT's ability to
account for the Exchange as a pooling of interests; (e) enter into any material
contract or commitment, or violate, amend or otherwise modify or waive any of
the terms of any of its material contracts, other than in the ordinary course of
business consistent with past practice; (f) issue, deliver or sell or authorize
or propose the issuance, delivery or sale of, or purchase or propose the
purchase of, any shares of its capital stock or partnership interests or
securities convertible into, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares, partnerships interests or other convertible securities,
other than the issuance of shares of its capital stock pursuant to the exercise
of stock options, warrants or other rights therefor outstanding as of the date
of the Reorganization Agreement (provided, however, that in Old STAT's case, it
may, in the ordinary course of business consistent with past practice, grant
options, within certain limits, under its existing stock option plans), or in
the case of an AmHealth Partnership, admit new partners (except with respect to
the assignment of a partnership interest); (g) transfer to any person or entity
any rights to its intellectual property other than in the ordinary course of
business consistent with past practice; (h) enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology; (i) sell, lease, license or otherwise dispose of or encumber any of
its properties or assets which are material, individually or in the aggregate,
to its business, except in the ordinary course of business consistent with past
practice; (j) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or guarantee any debt
securities of others; (k) enter into any operating lease in excess of $10,000;
(l) pay, discharge or satisfy in an amount in excess of $10,000 in any one case
or $100,000 in the aggregate, any claim, liability or obligation (absolute,
accrued, asserted or unasserted, contingent or otherwise) arising other than in
the ordinary course of business, other than the payment, discharge or
satisfaction of liabilities reflected or reserved against in its financial
statements; (m) make any capital expenditures, capital additions or capital
improvements except in the ordinary course of business and consistent with past
practice; (n) materially reduce the amount of any material insurance coverage
provided by existing insurance policies; (o) terminate or waive any right of
substantial value, other than in the ordinary course of business; (p) adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee (except that it may hire a replacement
for any current director level or officer level employee if it first provides to
the other party advance notice regarding such hiring decision), pay any special
bonus or special remuneration to any employee or director, or increase the
salaries or wage rates of its employees; (q) grant any severance or termination
pay (i) to any director or officer, or (ii) to any other employee except (A)
payments made pursuant to standard written agreements outstanding on the date
hereof, or (B) grants which are made in the ordinary course of business in
accordance with its standard past practice; (r) commence a lawsuit other than
(i) for the routine collection of bills, (ii) in such cases where it in good
faith determines that failure to commence suit would result in the material
impairment of a valuable aspect of its business, provided that it consults with
the other party prior to the filing of such a suit, or (iii) for a breach of the
Reorganization Agreement; (s) acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business; (t) other than in the ordinary course of business,
make or change any material election in respect of taxes, adopt or change any
accounting method in respect of taxes, file any material tax return

or any amendment to a material tax return, enter into any closing agreement,
settle any claim or assessment in respect of taxes, or consent to any extension
or waiver of the limitation period applicable to any claim or assessment in
respect of taxes; (u) revalue any of its assets, including without limitation
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business; or (v) take, or agree in writing
or otherwise to take, any of the actions described in (a) through (u) above, or
any action which would make any of its representations or warranties contained
in the Reorganization Agreement untrue or incorrect or prevent it from
performing or cause it not to perform its covenants thereunder.

TAKEOVER PROPOSALS. Each of Old STAT and AmHealth has agreed that from and
after the date of the Reorganization Agreement until the earlier of the
effective time of the Exchange or the termination of the Reorganization
Agreement in accordance with its terms, it will not, directly or indirectly (i)
take any action to solicit, initiate or encourage any offer or proposal for, or
any indication of interest in, a merger or other business combination involving
such party or the acquisition of any significant equity interest in, or a
significant portion of the assets of, such party (a "TAKEOVER PROPOSAL"), other
than the transactions contemplated in the Reorganization Agreement; or (ii)
engage in negotiations with, or disclose any nonpublic information relating to
such party to, or afford access to its properties, books or records to, any
person that has advised it that it may be considering making, or that has made,
a Takeover Proposal.

CONDITIONS PRECEDENT

CONDITIONS TO OBLIGATIONS OF THE PARTIES. Each party's respective
obligation to effect the Exchange is subject to the satisfaction at or prior to
the effective time of the Exchange to, among other things, (a) the approval of
the Reorganization Agreement and the Exchange by the requisite votes of the Old
STAT Stockholders and the AmHealth Shareholders; (b) the Commission having
declared the Registration Statement effective; (c) all approvals, waivers and
consents, if any, necessary for consummation of or in connection with the
Exchange and the several transactions contemplated thereby, including such
approvals, waivers and consents as may be required under the Securities Act and
under state Blue Sky laws having been obtained; (d) each party having received a
written opinion to the effect that, based upon certain representations and
assumptions and subject to certain qualifications, the Exchange will constitute
a tax-free reorganization and will qualify for pooling of interests accounting
treatment if consummated in accordance with the Reorganization Agreement; (e)
the absence of any injunction or other legal action or regulatory restraint or
prohibition preventing the consummation of the Exchange or rendering the
consummation of the Exchange illegal; and (f) the cessation by AmHealth of its
infusion therapy business.

CONDITIONS TO OBLIGATIONS OF NEW STAT, OLD STAT AND STAT ACQUISITION. The
obligations of New STAT, Old STAT and STAT Acquisition to effect the Exchange
are subject to, among other things, the satisfaction at or prior to the
effective time of the Exchange of the following conditions, unless waived by New
STAT, Old STAT and STAT Acquisition: (a) the representations and warranties of
AmHealth in the Reorganization Agreement shall be true and correct in all
respects (except as specifically qualified) on and as of the effective time of
the Exchange as though such representations and warranties were made on and as
of such time, and each of the AmHealth Corporations and AmHealth Partnerships
shall have performed and complied in all respects with all covenants,
obligations and conditions of the Reorganization Agreement required to be
performed and complied with by them as of the effective time of the Exchange;
(b) officers of the AmHealth Corporations and AmHealth Partnerships shall have
certified that all representations and warranties are true and complete and that
all covenants, obligations and conditions of the Reorganization Agreement
required to be performed have been performed; (c) New STAT, Old STAT and STAT
Acquisition shall have been furnished with evidence satisfactory to them of the
consent or approval of those persons whose consent or approval shall be required
in connection with the Exchange under any material contract of AmHealth or
otherwise; (d) no proceeding by any administrative agency or commission or other
governmental authority or instrumentality, seeking to prevent the consummation
of the Exchange shall

have been brought or be pending; (e) New STAT, Old STAT and STAT Acquisition
shall have received a legal opinion as to certain matters from Jenkens &
Gilchrist, P.C., counsel to AmHealth; (f) there shall not have occurred any
material adverse change in the condition (financial or otherwise), properties,
assets (including intangible assets), liabilities, business, operations, results
of operations or prospects of AmHealth; (g) New STAT shall have received from
each of the affiliates of AmHealth an executed Affiliate and Shareholders
Agreement in the form attached as Exhibit B to the Reorganization Agreement; (h)
New STAT shall have received from each General Partner, from each AmHealth
limited partner electing to participate in the Exchange, and from the holders of
at least 90% of the outstanding AmHealth Common Stock, an executed Lock-up
Agreement in the form attached to the Reorganization Agreement as Exhibit A; and
(i) Russell D. Schneider, Ruben A. Perez and Daniel A. Perez shall have entered
into employment agreements with New STAT.

CONDITIONS TO OBLIGATIONS OF AMHEALTH. The obligations of AmHealth to
effect the Exchange are subject to, among other things, the satisfaction at or
prior to the effective time of the Exchange of the following conditions, unless
waived by AmHealth: (a) the representations and warranties of New STAT, Old STAT
and STAT Acquisition in the Reorganization Agreement shall be true and correct
in all respects on and as of the effective time of the Exchange as though such
representations and warranties were made on and as of such time, and each of New
STAT, Old STAT and STAT Acquisition shall have performed and complied in all
respects with all covenants, obligations and conditions of the Reorganization
Agreement required to be performed and complied with by them as of the effective
time of the Exchange; (b) an officer of New STAT, Old STAT and STAT Acquisition
shall have certified that all representations and warranties are true and
complete and that all covenants, obligations and conditions of the
Reorganization Agreement required to be performed have been performed; (c)
AmHealth shall have received a legal opinion as to certain matters from Brobeck,
Phleger & Harrison LLP, counsel to New STAT, Old STAT and STAT Acquisition; (d)
there shall not have occurred any material adverse change in the condition
(financial or otherwise), properties, assets (including intangible assets),
liabilities, business, operations, results of operations or prospects of Old
STAT; (e) STAT Physicians shall have executed a Lockup Agreement; (f) New STAT
shall have the New STAT Common Stock issued in the Exchange qualified for
trading in NASDAQ and shall remain a reporting company under the Exchange Act of
1934, as amended; (g) AmHealth shall have been furnished with evidence
satisfactory to it of the consent or approval of those persons whose consent or
approval shall be required in connection with the Exchange under any material
contract of New STAT, Old STAT and STAT Acquisition or otherwise; (h) no
proceeding by any administrative agency or commission or other governmental
authority or instrumentality, seeking to prevent the consummation of the
Exchange shall have been brought or be pending; (i) New STAT shall assume
responsibility for certain real estate leases; (j) AmHealth shall have received
from the directors and certain shareholders of Old STAT executed Lock-up
Agreements in the form attached as Exhibit A to the Reorganization Agreement;
(k) New STAT shall have provided to AmHealth copies of fully executed Physician
Agreements with certain physicians; (l) Russell D. Schneider and Ruben A. Perez
shall have been offered employment by New STAT; and (m) Drs. Rice and Miranda
shall have entered into employment agreements with New STAT and shall have
executed Succession Agreements for STAT Physicians' and STAT P.A.'s stock in
favor of New STAT.

TERMINATION

The Reorganization Agreement may be terminated by mutual consent of the
parties, or by either of Old STAT or AmHealth (a) if the closing of the Exchange
has not occurred on or before May 27, 1996; (b) as a result of a breach by the
other party of a representation, warranty, covenant or agreement set forth in
the Reorganization Agreement which breach has not been cured within ten (10)
days after written notice from the other (except that no cure period is provided
for a breach which by its nature cannot be cured); (c) if the required approval
of the stockholders and/or partners of the other is not obtained by May 28,
1996; (d) if a Trigger Event shall have occurred; or (e) if there is a final,
non-appealable order of a federal or state court in effect preventing
consummation of the Exchange.

The Reorganization Agreement may be terminated by New STAT or Old STAT in
the event that the AmHealth Boards and/or General Partners shall have withdrawn
or modified their recommendation of the Reorganization Agreement or the Exchange
in a manner adverse to Old STAT or shall have resolved to do so.

The Reorganization Agreement may be terminated by AmHealth in the event (a)
the New STAT Board or the Old STAT Board shall have withdrawn or modified its
recommendation of the Reorganization Agreement or the Exchange in a manner
adverse to AmHealth or shall have resolved to do so; (b) of the acquisition by
certain persons or groups of persons of more than 25% of the outstanding shares
of Old STAT Common Stock; or (c) the Old STAT Board accepts or publicly
recommends acceptance of an offer from a third party to acquire 50% or more of
the outstanding shares of Old STAT Common Stock or of Old STAT's consolidated
assets. In the event that (a) the Reorganization Agreement is terminated by New
STAT or Old STAT without the consent of AmHealth; (b) a Trigger Event shall take
place with regard to Old STAT; or (c) the Exchange shall not be consummated by
May 28, 1996, Old STAT shall promptly issue to AmHealth 200,000 shares of Old
STAT Common Stock, said shares to be allocated among the AmHealth Corporations
and AmHealth Partnerships in accordance with the ratio established in Schedule A
to the Reorganization Agreement.

REPRESENTATIONS AND WARRANTIES

The Reorganization Agreement contains various representations of AmHealth,
Old STAT, New STAT and STAT Acquisition. The representations and warranties of
the parties (absent fraud or wilful misrepresentation) will terminate upon
consummation of the Exchange.

The representations of AmHealth relate generally to: due organization and
qualification; absence of violations of, among other things, the certificates of
incorporation, bylaws, certificates of limited partnership, limited partnership
agreements, certain contracts or laws; approvals by the AmHealth Boards and
General Partners of the Reorganization Agreement and the transactions
contemplated thereby; the capital structure of AmHealth; the absence of certain
material changes or undisclosed liabilities; compliance with applicable laws;
and taxes.

The representations of New STAT, Old STAT and STAT Acquisition relate
generally to: due organization and qualification; absence of violations of,
among other things, its certificate of incorporation, bylaws, certain contracts
or laws; approval by the Old STAT Board of the Reorganization Agreement and the
transactions contemplated thereby; documents filed with the Commission and the
accuracy of information, including financial statements, contained therein; and
the absence of undisclosed liabilities.

AMENDMENT; WAIVER

Subject to applicable law, the Reorganization Agreement may be amended at
any time; provided, however, that an amendment made subsequent to the adoption
of the Reorganization Agreement by the Old STAT Stockholders and the AmHealth
Shareholders shall not alter or change the amount or kind of consideration to be
received in the Exchange or alter or change any of the terms and conditions of
the Reorganization Agreement so as to adversely affect the Old STAT
Stockholders, the AmHealth Shareholders or the AmHealth Partners. A party may,
to the extent legally allowed and at any time prior to the Exchange, extend the
time for performance of any of the obligations of the other party and waive
inaccuracies in the representations and warranties or compliance with any of the
agreements or conditions for its benefit contained in the Reorganization
Agreement.

RIGHTS OF DISSENTING SHAREHOLDERS

AMHEALTH SHAREHOLDERS

Article 5.12 of the Texas Business Corporation Act gives each AmHealth
Shareholder the right to object to the Exchange and to demand payment of the
fair value of such shareholders shares of AmHealth Common Stock calculated as of
the day that the action authorizing the Exchange was

approved by the requisite holders of shares needed to effect the Exchange,
excluding any appreciation or depreciation in anticipation of the Exchange. A
dissenting shareholder is not required to vote against the Exchange in order to
perfect his or her dissenters'rights.

If the terms of the Exchange are approved (without a meeting of the
AmHealth Shareholders), AmHealth must, within ten (10) days after the date the
Exchange is effected, mail to each stockholder of record as of the effective
date of the Exchange notice of the fact and date of the Exchange and that the
stockholder may exercise the right to dissent from the Exchange. The notice
shall be accompanied by a copy of Article 5.12 and any articles or documents
filed by AmHealth with the Secretary of State of the State of Texas to effect
the Exchange. If the AmHealth Shareholder did not vote in favor of the Exchange,
such AmHealth Shareholder may, within 20 days after the date of mailing of the
notice, make written demand on AmHealth for the fair value of his shares. The
fair value of the shares shall be the value thereof as of the date the written
consent authorizing the Exchange was delivered to AmHealth, excluding any
appreciation or depreciation in anticipation of the Exchange. The demand shall
state the number and class of shares owned by the dissenting shareholders and
the fair value of the shares as estimated by the shareholder. ANY SHAREHOLDER
FAILING TO MAKE DEMAND WITHIN THE TWENTY (20) DAY PERIOD SHALL BE BOUND BY THE
EXCHANGE.

Within twenty (20) days after receipt by AmHealth of a demand by a
dissenting shareholder for payment of the fair value of its shares, AmHealth
shall deliver or mail to the dissenting shareholder a written notice to the
effect that it will either (i) pay the amount claimed within ninety (90) days
after the date the Exchange was effected upon the surrender of the duly endorsed
share certificates or (ii) pay some other amount as the fair value within ninety
(90) days after the date the Exchange was effected, upon receipt of notice
within sixty (60) days after the date the Exchange was effected from the
dissenting shareholder that such shareholder will accept such amount in exchange
for surrender of its duly endorsed share certificates. If AmHealthand the
dissenting shareholder can agree upon the fair value, such value will be paid to
the dissenting shareholder and such shareholder shall cease to have any interest
in such shares or in either New STAT or AmHealth. If agreement as to the fair
value cannot be reached, either the dissenting shareholder or AmHealth may,
within the time limits prescribed by Article 5.12, file a petition in Bexar
County, Texas, asking for a finding and determination of the fair value of such
shares. Court costs shall be allotted between the parties in such manner as the
court shall determine to be fair and equitable.

The foregoing summary does not purport to be a complete statement of the
rights of dissenting shareholders, and such summary is qualified in its entirety
by references to Articles 5.11, 5.12 and 5.13 of the Texas Business Corporation
Act, which are reproduced in full as Appendix II hereto.

THERE ARE NO SIMILAR STATUTORY RIGHTS FOR AMHEALTH PARTNERS; HOWEVER, NO
AMHEALTH PARTNER MAY BE COMPELLED TO PARTICIPATE IN THE EXCHANGE.

OLD STAT STOCKHOLDERS

Section 262 of the Delaware General Corporation Law (the "DGCL")
specifically excludes appraisal rights for holders of Old STAT Common Stock.

MARKET PRICE OF OLD STAT COMMON STOCK AND DIVIDEND POLICY

Old STAT Common Stock has been quoted on the Nasdaq SmallCap Market System
since April 21, 1995 under the symbol "ERDR", and also on the Boston Stock
Exchange since April 21, 1995, under the symbol "EDR". On November 7, 1995, the
last full trading day prior to the public announcement of the initial
Reorganization Agreement, the last sale price per share of Old STAT Common Stock
on the Nasdaq SmallCap Market and on the Boston Stock Exchange was $3 3/8. On
May 21, 1996, the last sale price per share of Old STAT Common Stock on the
Nasdaq SmallCap Market was $9 3/8. Old STAT stockholders, AmHealth Shareholders
and AmHealth Partners are urged to obtain current quotations for Old STAT Common
Stock. The following table sets forth the high and low sales prices for the Old
STAT Common Stock as reported by the Nasdaq SmallCap Market and the Boston Stock
Exchange for the periods indicated.

HIGH LOW
----- -----
1995:
Second Quarter (beginning April
21)........................... $3 13/16 $2 1/8
Third Quarter................... 3 7/8 2 3/8
Fourth Quarter.................. 5 2 3/4
1996:
First Quarter................... 6 3/4 3 5/8
Second Quarter (through May
21)............................. 9 5/8 5 5/8

On May 6, 1996, there were approximately 1,100 beneficial holders of Old
STAT Common Stock.

To date, Old STAT has paid no cash dividends and New STAT has no present
intention of paying any dividends on the New STAT Common Stock in the
foreseeable future, as it intends to use its earnings, if any, to generate
increased growth. The payment by New STAT of cash dividends, if any, in the
future, rests solely within the discretion of the New STAT Board and will depend
upon, among other things, New STAT's earnings, capital requirements and
financial condition, as well as other factors deemed relevant by the New STAT
Board. Although dividends are not limited currently by any agreements, it is
anticipated that future agreements, if any, with institutional lenders may also
limit New STAT's ability to pay dividends.

The New STAT Common Stock has been approved for quotation on the Nasdaq
SmallCap Market under the symbol "STHC" and listed on the Boston Stock Exchange
under the symbol "EDR". The prices at which the Old STAT Common Stock has traded
in the past are not necessarily indicative of the prices at which the New STAT
Common Stock will trade after the consummation of the Exchange.

There is no public market for the AmHealth Common Stock or for the AmHealth
Units. The AmHealth Corporations have paid no cash dividends to date. The
AmHealth Partnerships have historically made cash distributions in an amount
approximately equal to 90% of their available cash flow. During the three months
ended March 31, 1996 and the years ended December 31, 1995 and 1994, cash
distributions declared aggregated $674,000, $2,005,000 and $481,000,
respectively. No cash distributions were declared in 1993. Cash distributions by
the AmHealth Partnerships during the three months ended March 31, 1996 and the
years ended December 31, 1995 and 1994 were as follows:

THREE MONTHS YEAR ENDED
ENDED DECEMBER 31,
MARCH 31, ---------------------------
AMHEALTH PARTNERSHIP 1996 1995 1994
- ------------------------------------- ------------ -------------- -----------
AmHealth Kidney Centers of the
Valley, Ltd. ...................... $ 275,000 $ 1,133,000 $ 423,000
Weslaco Kidney Center, Ltd. ......... 93,000 310,000 --
Starr Dialysis Center, Ltd. ......... 25,000 102,000 --
AmHealth Medical Management, Ltd. ... 200,000 550,000 --
Brownsville Hyperbaric Healthcare,
Ltd. .............................. 175,000 290,000 --
Southwestern Infusion Healthcare,
Ltd. .............................. -- 126,000 85,000
AmHealth Ambulatory Healthcare,
Ltd. .............................. 324,000 745,000 --
------------ -------------- -----------
1,092,000 3,256,000 508,000
Elimination of inter-entity
distributions...................... (418,000) (1,251,000) (27,000)
----------- -------------- -----------
Total distributions............. $ 674,000 $ 2,005,000 $ 481,000
=========== ============== ===========

PRO FORMA COMBINED CAPITALIZATION

The following table sets forth the actual capitalization of Old STAT and
the AmHealth Corporations and AmHealth Partnerships as of March 31, 1996. The
combined pro forma amounts for these entities give effect, as of that date, to
the issuance of 11,200,000 shares of Common Stock upon the consummation of the
Exchange, which will be accounted for on a pooling of interests basis. This
information should be read in conjunction with the financial statements and
related notes thereto appearing elsewhere in this Joint Proxy
Statement/Prospectus.
<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------------------------------
AMHEALTH
CORPORATION
STAT AND ITS RELATED
HEALTHCARE, HEALTHCARE COMBINED
INC. ENTITIES PRO FORMA(1)
----------- --------------- ------------
<S> <C> <C> <C>
Current portion of long-term debt.... $ -- $ 90,000 $ 90,000
Current portion of capital lease
obligations........................ -- 58,000 58,000
Long-term debt....................... -- 134,000 134,000
Long-term capital lease
obligations........................ -- 1,395,000 1,395,000
Common stock subject to rescission... 310,000 -- 310,000
Equity/capital:
Common stock.................... 36,000 -- 148,000
Capital in excess of par........ 3,907,000 -- 3,907,000
Retained earnings............... 940,000 2,006,000 2,834,000
----------- --------------- ------------
Total equity......................... 4,883,000 2,006,000 6,889,000
----------- --------------- ------------
Total capitalization................. $5,193,000 $3,683,000 $ 8,876,000
=========== =============== ============
</TABLE>

- ------------
(1) Adjusted to reflect the issuance of 11,200,000 shares of Common Stock upon
the consummation of the Exchange.

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements have been
prepared based on the historical financial statements of Old STAT and AmHealth
giving effect to the issuance of 11,200,000 shares of New STAT Common Stock upon
the consummation of the Exchange, which will be accounted for on a "pooling of
interests" basis. The Exchange must be approved by at least 66 2/3% of the
shareholders of AmHealth, but the merger will not be effected unless 90% approve
and a minimum number of AmHealth Partners participate in the Exchange, thereby
qualifying the transaction for pooling of interests accounting.

The unaudited pro forma combined balance sheet as of December 31, 1995 also
gives effect to the 1996 acquisition of Amedica, Ltd. and the 1996 acquisition
of a hospital contract as if they had occurred on December 31, 1995. The
unaudited pro forma combined income statement for the year ended December 31,
1995 also gives effect to the 1996 acquisitions of Amedica, Ltd. and the
hospital contract as if each had occurred as of January 1, 1995. The Amedica
acquisition will be accounted for by the purchase method of accounting.

The unaudited pro forma combined financial statements are not necessarily
indicative of the results that actually would have occurred if the combined
operations had been conducted during the periods presented and they are not
necessarily indicative of operating results to be expected in future periods.
They should be read in conjunction with the historical financial statements and
notes thereto included elsewhere in this Joint Proxy Statement/Prospectus.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1996

<TABLE>
<CAPTION>
OLD PRO FORMA COMBINED
STAT AMHEALTH ADJUSTMENTS PRO FORMA
------------- ------------- ----------- --------------
ASSETS
<S> <C> <C> <C> <C>
Cash and cash equivalents............ $ 375,000 $ 584,000 $ -- $ 959,000
Accounts receivable, net............. 4,283,000 1,426,000 -- 5,709,000
Prepaids and other current assets.... 805,000 352,000 (430,000) 727,000
------------- ------------- ----------- --------------
Total current assets...... 5,463,000 2,362,000 (430,000) 7,395,000
Property, equipment and furnishings,
net................................ 117,000 2,113,000 -- 2,230,000
Intangible assets, net............... 1,447,000 -- -- 1,447,000
Deferred offering costs and other
non-current assets................. 9,000 149,000 -- 158,000
------------- ------------- ----------- --------------
Total assets.............. $ 7,036,000 $ 4,624,000 $ (430,000) $ 11,230,000
============= ============= =========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current portion of long-term debt.... $ -- $ 90,000 $ -- $ 90,000
Current portion of capital lease
obligations........................ -- 58,000 -- 58,000
Accounts payable..................... 632,000 130,000 100,000 862,000
Accrued liabilities.................. 1,211,000 414,000 (180,000) 1,445,000
Distributions payable to shareholders
and partners....................... -- 397,000 -- 397,000
------------- ------------- ----------- --------------
Total current
liabilities............. 1,843,000 1,089,000 (80,000) 2,852,000
Long-term debt....................... -- 134,000 -- 134,000
Long-term capital lease
obligations........................ -- 1,395,000 -- 1,395,000
------------- ------------- ----------- --------------
Total liabilities......... 1,843,000 2,618,000 (80,000) 4,381,000
------------- ------------- ----------- --------------
Common stock subject to rescission... 310,000 -- -- 310,000
------------- ------------- ----------- --------------
Minority interest.................... -- -- 22,000 22,000
------------- ------------- ----------- --------------
Shareholders' equity:
Common stock.................... 36,000 -- 112,000 148,000
Capital in excess of par
value........................ 3,907,000 -- -- 3,907,000
Retained earnings............... 940,000 2,006,000 (484,000) 2,462,000
------------- ------------- ----------- --------------
Total shareholders'
equity.................. 4,883,000 2,006,000 (372,000) 6,517,000
------------- ------------- ----------- --------------
Total liabilities and
shareholders' equity.... $ 7,036,000 $ 4,624,000 $ (430,000) $ 11,230,000
============= ============= =========== ==============
</TABLE>

See accompanying notes to unaudited proforma financial statements.

UNAUDITED PRO FORMA COMBINED INCOME STATEMENT
THREE MONTHS ENDED MARCH 31, 1996

PRO FORMA COMBINED
OLD STAT AMHEALTH ADJUSTMENTS PRO FORMA
--------- --------- ------------ -------------
<S> <C> <C> <C> <C>
Net service revenues................. $4,442,000 $3,107,000 $ -- $ 7,549,000
--------- --------- ------------ -------------
Operating expenses:
Professional medical fees....... 2,823,000 -- -- 2,823,000
Human resources................. 560,000 1,187,000 -- 1,747,000
Supplies........................ 36,000 -- -- 566,000
Billing and collection costs.... 445,000 -- -- 445,000
Outside services and other...... 66,000 235,000 -- 301,000
Liability insurance............. 240,000 -- -- 240,000
Furniture and equipment......... -- 101,000 -- 101,000
Occupancy....................... 62,000 -- -- 62,000
--------- --------- ------------ -------------
Total operating
expenses.................. 4,232,000 2,053,000 -- 6,285,000
--------- --------- ------------ -------------
Operating income..................... 210,000 1,054,000 -- 1,264,000
Interest and other income
(expense).......................... 5,000 (51,000) -- (46,000)
--------- --------- ------------ -------------
Income before income taxes........... 215,000 1,003,000 -- 1,218,000
Pro forma income taxes............... 77,000 341,000 -- 418,000
--------- --------- ------------ -------------
Pro forma net income................. $ 138,000 $ 662,000 $ -- $ 800,000
========= ========= ============ =============
Pro forma net income per common
share.............................. $ 0.03 $ 0.05
========= =============
</TABLE>

See accompanying notes to unaudited pro forma financial statements.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1996

(1) The unaudited pro forma combined financial statements have been prepared
based on the historical financial statements of Old STAT and AmHealth
giving effect to the issuance of 11,200,000 shares of New STAT Common
Stock upon the consummation of the Exchange, which will be accounted for
on a "pooling of interests" basis ($112,000 increase in common stock
and $112,000 decrease in retained earnings). The Exchange will not be
consummated unless at least 90% of the combined equity interests in all
of the AmHealth entities participate in the Exchange, thereby enabling
the Exchange to qualify for pooling of interests accounting. Assuming
that dissenting shareholders/partners representing a 10% equity interest
in the AmHealth entities retain their minority interest, unaudited pro
forma combined financial statement information as of and for the three
months ended March 31, 1996 would be as follows:

Combined balance sheet information:
Total assets.................... $ 11,230,000
Total liabilities............... 4,381,000
Minority interest............... 201,000
Common stock subject to
rescission.................... 310,000
Shareholders' equity:
Common stock.............. 137,000
Capital in excess of
par....................... 3,907,000
Retained earnings......... 2,294,000
==============
Combined income statement
information:
Net service revenues............ $ 7,549,000
Operating income................ 1,264,000
Minority interest in earnings of
AmHealth..................... 100,000
Pro forma net income............ 734,000
==============
Pro forma net income per common
share........................ $ 0.05
==============

No effect has been given in the pro forma financial statements to the
possibility that 10% dissenting shareholder/partners could demand and
receive the fair value of their interests in cash ($6,440,000 based on the
closing price per share of $5.75 for Old STAT common stock on March 31,
1996) rather than retain a minority interest.

(2) The combined income statement data has been adjusted to reflect the pro
forma effect of income taxes not otherwise payable by the AmHealth entities
which are S corporations or partnerships based on an effective tax rate of
34%.

(3) Pro forma net income per common share is computed based on the number of
shares used in the calculation of net income per common share for Old STAT,
plus the number of shares of New STAT Common Stock to be issued to the
shareholders or partners of each AmHealth entity, as if such shares were
outstanding since the date of inception for each entity. The number of
shares used in this computation is as follows:

Old STAT............................. 3,980,390
AmHealth............................. 11,200,000
--------------
15,180,390
==============

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
MARCH 31, 1996
(CONTINUED)

(4) Pro forma adjustments have been made in the pro forma combined balance
sheet to reflect expensing of direct transaction costs ($430,000 reduction
of other current assets and $100,000 increase in accounts payable) and the
related decrease in income taxes payable ($180,000) and reduction in
retained earnings ($350,000).

(5) No effect has been given in the pro forma combined income statement to the
estimated direct transaction costs, aggregating approximately $350,000, net
of income taxes, which will be charged to operations in the period the
Exchange is consummated.

(6) The pro forma combined balance sheet has been adjusted to reflect a 25%
minority interest in Brownsville Kidney Center, Ltd. ($22,000 increase in
minority interest and $22,000 decrease in retained earnings). Because
operations will not commence until the second quarter of 1996, no
adjustment has been made to the pro forma income statement.

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 1995

<TABLE>
<CAPTION>
OLD AMEDICA, PRO FORMA COMBINED
STAT AMHEALTH LTD. ADJUSTMENTS PRO FORMA
------------- ------------- ------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents............ $ 1,763,000 $ 775,000 $ 14,000 $(1,160,000) $1,392,000
Accounts receivable, net............. 3,306,000 1,259,000 114,000 -- 4,679,000
Prepaids and other current assets.... 686,000 392,000 -- (430,000) 648,000
------------- ------------- ------------- ------------ ----------
Total current assets............ 5,755,000 2,426,000 128,000 (1,590,000) 6,719,000
Property, equipment and furnishings,
net................................ 96,000 2,165,000 7,000 -- 2,268,000
Intangible assets.................... -- -- -- 1,470,000 1,470,000
Deferred offering costs and other
non-current assets................. 9,000 124,000 -- -- 133,000
------------- ------------- ------------- ------------ ----------
Total assets.................... $ 5,860,000 $ 4,715,000 $ 135,000 $ (120,000) $10,590,000
============= ============= ============= ============ ==========
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current portion of long-term debt.... $ -- $ 88,000 $ 25,000 $ -- $ 113,000
Current portion of capital lease
obligations........................ -- 48,000 -- -- 48,000
Accounts payable..................... 307,000 618,000 -- 100,000 1,025,000
Accrued liabilities.................. 858,000 361,000 -- (180,000) 1,039,000
Distributions payable to shareholders
and partners....................... -- 283,000 -- -- 283,000
------------- ------------- ------------- ------------ ----------
Total current liabilities....... 1,165,000 1,398,000 25,000 (80,000) 2,508,000
Long-term debt....................... -- 156,000 125,000 -- 281,000
Long-term capital lease
obligations........................ -- 1,484,000 -- -- 1,484,000
------------- ------------- ------------- ------------ ----------
Total liabilities............... 1,165,000 3,038,000 150,000 (80,000) 4,273,000
------------- ------------- ------------- ------------ ----------
Common stock subject to rescission... -- -- -- 310,000 310,000
------------- ------------- ------------- ------------ ----------
Minority interest.................... -- -- -- 22,000 22,000
------------- ------------- ------------- ------------ ----------
Shareholders' equity:
Common stock.................... 36,000 -- -- 112,000 148,000
Capital in excess of par
value........................ 3,857,000 -- -- -- 3,857,000
Retained earnings............... 802,000 1,677,000 (15,000) (484,000) 1,980,000
------------- ------------- ------------- ------------ ----------
Total shareholders'
equity.................. 4,695,000 1,677,000 (15,000) (372,000) 5,985,000
------------- ------------- ------------- ------------ ----------
Total liabilities and
shareholders' equity.... $ 5,860,000 $ 4,715,000 $ 135,000 $ (120,000) $10,590,000
============= ============= ============= ============ ===========
</TABLE>

See accompanying notes to unaudited proforma financial statements.

UNAUDITED PRO FORMA COMBINED INCOME STATEMENTS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
------------------------------------------------------------ YEAR ENDED YEAR ENDED
AMEDICA, PRO FORMA COMBINED DECEMBER 31, DECEMBER 31,
OLD STAT AMHEALTH LTD. ADJUSTMENTS PRO FORMA 1994 1993
---------- --------- -------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net service revenues................. $14,124,000 $9,017,000 $439,000 $ -- $23,580,000 $14,521,000 $10,043,000
Operating expenses:
Professional medical fees........ 9,241,000 -- -- -- 9,241,000 7,714,000 6,822,000
Human resources.................. 1,405,000 3,235,000 227,000 -- 4,867,000 1,949,000 1,107,000
Supplies......................... 61,000 1,757,000 9,000 -- 1,827,000 1,143,000 375,000
Billing and collection costs..... 1,461,000 -- -- -- 1,461,000 795,000 304,000
Outside services and other....... 78,000 892,000 241,000 102,000 1,313,000 692,000 290,000
Liability insurance.............. 706,000 -- -- -- 706,000 481,000 368,000
Furniture and equipment.......... 56,000 344,000 -- -- 400,000 224,000 89,000
Occupancy........................ 139,000 -- 40,000 -- 179,000 43,000 38,000
---------- --------- -------- ----------- ---------- ------------ ------------
Total operating expenses..... 13,147,000 6,228,000 517,000 102,000 19,994,000 13,041,000 9,393,000
---------- --------- -------- ----------- ---------- ------------ ------------
Operating income..................... 977,000 2,789,000 (78,000 ) (102,000 ) 3,586,000 1,480,000 650,000
Interest and other income
(expense).......................... 44,000 (165,000) (1,000 ) -- (122,000) (5,000) (33,000)
---------- --------- -------- ----------- ---------- ------------ ------------
Income (loss) before income taxes.... 1,021,000 2,624,000 (79,000 ) (102,000 ) 3,464,000 1,475,000 617,000
Pro forma income taxes............... 347,000 892,000 (27,000 ) (35,000 ) 1,177,000 501,000 210,000
---------- --------- -------- ----------- ---------- ------------ ------------
Pro forma net income (loss).......... $ 674,000 $1,732,000 $(52,000) $ (67,000 ) $2,287,000 $ 974,000 $ 407,000
========== ========= ======== =========== ========== ============ ============
Pro forma net income per common
share.............................. $ 0.21 $ 0.19 $ 0.14 $ 0.08
========== ========== ============ ============
</TABLE>
See accompanying notes to unaudited pro forma financial statements.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995

Combined balance sheet information:
Total assets.................... $ 10,590,000
Total liabilities............... 4,273,000
Minority interest............... 168,000
Common stock subject to
rescission.................... 310,000
Shareholders equity:
Common stock.............. 137,000
Capital in excess of
par....................... 3,857,000
Retained earnings......... 1,845,000
==============
Combined income statement
information:
Net service revenues............ $ 23,580,000
Operating income................ 3,586,000
Minority interest in earnings of
AmHealth..................... 262,000
Pro forma net income............ 2,114,000
==============
Pro forma net income per common
share........................ $ 0.19
==============

No effect has been given in the pro forma financial statements to the
possibility that 10% dissenting shareholder/partners could demand and
receive the fair value of their interests in cash ($5,040,000 based on the
closing price per share of $4.50 for Old STAT common stock on December 31,
1995) rather than retain a minority interest.

(2) The combined income statement data has been adjusted to reflect the pro
forma effect of income taxes not otherwise payable by the AmHealth
entities which are S corporations or partnerships based on an effective
tax rate of 34%.

(3) The pro forma combined income statements for 1994 and 1993 represent the
historical financial statements of Old STAT and AmHealth together,
adjusted to reflect the pro forma effect of income taxes not otherwise
payable by the AmHealth entities which are S corporations and partnerships
and by STAT Physicians, an S corporation, for the eight months ended
December 31, 1994 and the year ended December 31, 1995.

NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
DECEMBER 31, 1995
(CONTINUED)

(4) Pro forma net income per common share is computed based on the number of
shares used in the calculation of net income per common share for Old
STAT, plus the number of shares of New STAT Common Stock to be issued to
the shareholders or partners of each AmHealth entity, as if such shares
were outstanding since the date of inception for each entity. The number
of shares used in this computation is as follows:

1995 1994 1993
------------- ----------- -----------
Old STAT.......................... 3,180,504 2,199,624 2,199,624
AmHealth.......................... 8,716,867 4,879,507 3,058,330
Other acquisitions................ 67,904 -- --
------------- ----------- -----------
11,965,275 7,079,131 5,257,954
============= =========== ===========

(5) Pro forma adjustments have been made in the pro forma combined balance
sheet to reflect expensing of direct transaction costs ($430,000 reduction
of other current assets and $100,000 increase in accounts payable) and the
related decrease in income taxes payable ($180,000) and reduction in
retained earnings ($350,000).

(6) No effect has been given in the 1995 pro forma combined income statement
to the estimated direct transaction costs, aggregating approximately
$350,000, net of income taxes, which will be charged to operations in the
period the Exchange is consummated.

(7) On February 1, 1996, Old STAT acquired Amedica, Ltd. The acquisition will
be accounted for as a purchase (cash of $200,000 and common stock of
$70,000, which is subject to rescission) and the acquired contract rights
will be amortized over 5 years using the straight-line method and the
excess of purchase price over fair value of assets acquired will be
amortized over 20 years using the straight-line method. Pro forma
adjustments have been made to reflect the intangible assets at December
31, 1995 ($270,000) and amortization of the intangible assets ($24,000)
assuming the acquisition had taken place January 1, 1995.

(8) The historical income statement data of Amedica, Ltd. has been adjusted to
reflect the pro forma effect of income taxes not otherwise payable by it
as a partnership based on an effective tax rate of 34%.

(9) On January 31, 1996, Old STAT acquired the rights to a hospital contract
(cash of $960,000 and common stock of $240,000, which is subject to
rescission). Covenants not to compete will be amortized over 5 years using
the straight-line method and the contract rights will be amortized over 20
years using the straight-line method. Pro forma adjustments have been made
to reflect the intangible assets (covenants not to compete and contract
rights) at December 31, 1995 ($1,200,000) and amortization of the
intangible assets ($78,000) assuming the contract acquisition had taken
place January 1, 1995.

(10) The pro forma combined balance sheet has been adjusted to reflect a 25%
minority interest in Brownsville Kidney Center, Ltd. ($22,000 increase in
minority interest and $22,000 decrease in retained earnings). Because
operations will not commence until 1996, no adjustment has been made to
the pro forma income statement.

SELECTED FINANCIAL DATA OF OLD STAT

The following table sets forth selected income statement data of Old STAT
and STAT Physicians. Operating results for the periods presented are not
necessarily indicative of future operating results. The following information
should be read in conjunction with the audited financial statements and the
notes thereto and "Old STAT Management's Discussion and Analysis of Financial
Condition and Results of Operations" included elsewhere in this Joint Proxy
Statement/Prospectus.

The statements of income data set forth below should be read in conjunction
with the audited financial statements listed in the "Index to Financial
Statements" included in this Joint Proxy Statement/Prospectus. The combined
statement of income data for the year ended December 31, 1994 is derived from
the consolidated income statement of Old STAT for the four months ended December
31, 1994 and the income statement of STAT Physicians for the eight months ended
August 31, 1994, the latter as adjusted to reflect the effect of income taxes.
Under a Management Agreement effective September 1, 1994, Old STAT began
management of the administration of physicians service contracts between STAT
Physicians and hospital emergency departments. According to the terms of the
Management Agreement between STAT Physicians and Old STAT, Old STAT is
responsible to pay for direct and operating expenses of STAT Physicians. The
income statement for 1993 includes only the income statement of STAT Physicians
as adjusted to reflect the effect of income taxes.

STAT HEALTHCARE, INC. ("OLD STAT")
AND SOUTH TEXAS ACUTE TRAUMA
PHYSICIANS, P.A. -- COMBINED

STATEMENTS OF INCOME DATA:

<TABLE>
<CAPTION>
SOUTH TEXAS
OLD STAT OLD STAT ACUTE TRAUMA
CONSOLIDATED OLD STAT CONSOLIDATED PHYSICIANS, P.A.
THREE MONTHS ENDED CONSOLIDATED COMBINED FOUR MONTHS EIGHT MONTHS
MARCH 31, YEAR ENDED YEAR ENDED ENDED ENDED
-------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31, AUGUST 31,
1996 1995 1995 1994 1994 1994(A)
--------- --------- ------------ ------------ ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Net service revenues................. $4,442,000 $3,255,000 $14,124,000 $10,548,000 $3,672,000 $6,876,000
Direct expenses:
Physicians' fees................. 2,823,000 2,200,000 9,241,000 7,714,000 2,601,000 5,113,000
Liability insurance.............. 240,000 143,000 706,000 481,000 167,000 314,000
Billing and collection........... 445,000 316,000 1,461,000 795,000 322,000 473,000
--------- --------- ------------ ------------ ------------ ----------------
Total direct expenses........ 3,508,000 2,659,000 11,408,000 8,990,000 3,090,000 5,900,000
--------- --------- ------------ ------------ ------------ ----------------
Gross profit................. 934,000 596,000 2,716,000 1,558,000 582,000 976,000
--------- --------- ------------ ------------ ------------ ----------------
Operating expenses:
Human resources.................. 560,000 316,000 1,405,000 861,000 336,000 525,000
Occupancy........................ 44,000 14,000 139,000 43,000 17,000 27,000
Furniture and equipment.......... 18,000 5,000 56,000 28,000 8,000 19,000
Supplies......................... 36,000 11,000 61,000 27,000 11,000 16,000
Outside services and other....... 66,000 7,000 78,000 76,000 8,000 68,000
--------- --------- ------------ ------------ ------------ ----------------
Total operating expenses..... 724,000 353,000 1,739,000 1,035,000 380,000 655,000
--------- --------- ------------ ------------ ------------ ----------------
Operating income............. 210,000 243,000 977,000 523,000 202,000 321,000
Interest income...................... 5,000 -- 75,000 -- -- --
Interest expense..................... -- (17,000) (31,000) (24,000) (9,000) (16,000)
--------- --------- ------------ ------------ ------------ ----------------
Income before income taxes....... 215,000 226,000 1,021,000 499,000 193,000 305,000
Income taxes......................... 77,000 77,000 347,000 65,000 65,000 --
Pro forma income taxes............... -- -- -- 104,000 -- 103,000
--------- --------- ------------ ------------ ------------ ----------------
Net income....................... $ 138,000 $ 149,000 $ 674,000 $ 128,000
========= ========= ============ ============
Pro forma net income............. $ 330,000 $ 202,000
============ ----------------

Net income per common share.......... $0.03 $0.07 $0.21 $0.06
========= ========= ============ ============

Pro forma net income per common
share(b)........................... $ 0.15 $ 0.09
============ ================
</TABLE>

SOUTH TEXAS
ACUTE TRAUMA
PHYSICIANS, P.A.
YEAR ENDED
DECEMBER 31,
1993(A)
----------------
Net service revenues................. $8,873,000
Direct expenses:
Physicians' fees................. 6,823,000
Liability insurance.............. 368,000
Billing and collection........... 304,000
----------------
Total direct expenses........ 7,495,000
----------------
Gross profit................. 1,378,000
----------------
Operating expenses:
Human resources.................. 713,000
Occupancy........................ 38,000
Furniture and equipment.......... 30,000
Supplies......................... 39,000
Outside services and other....... 63,000
----------------
Total operating expenses..... 883,000
----------------
Operating income............. 495,000
Interest income...................... --
Interest expense..................... (13,000)
----------------
Income before income taxes....... 482,000
Income taxes......................... --
Pro forma income taxes............... 164,000
----------------
Net income.......................

Pro forma net income............. $ 318,000
================

Net income per common share..........

Pro forma net income per common
share(b)........................... $ 0.15
================

- ------------
(a) Amounts represent historical results of STAT Physicians as adjusted to
reflect pro forma income taxes for STAT Physicians based on an effective
corporate tax rate of 34%.

(b) Pro forma net income per common share is based on the number of common and
common equivalent shares of Old STAT as if all shares were outstanding for
the entire period, less the number of treasury shares assumed to have been
purchased (at the initial offering price of the Old STAT common stock) from
the proceeds of actual sales of stock.

OLD STAT

DECEMBER 31,
MARCH 31, ----------------------------
1996 1995 1994
------------- ------------- -------------
BALANCE SHEET DATA:
Working capital.................... $ 3,620,000 $ 4,590,000 $ 514,000
Total assets....................... 7,036,000 5,860,000 2,094,000
Total liabilities.................. 1,843,000 1,165,000 1,346,000
Common stock subject to rescission. 310,000 -- --
Shareholders' equity............... 4,883,000 4,695,000 748,000

OLD STAT MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

Old STAT, through the Management Agreement with STAT Physicians, assumed
management of the business activities of STAT Physicians commencing September 1,
1994. Accordingly, its operating results from September 1, 1994 through March
31, 1996 represent a continuation of the operating results which had been
reported by STAT Physicians for the year ended December 31, 1993 and for the
eight-month period ended August 31, 1994. The income statement data for the year
ended December 31, 1994 represents the combination of eight months (January 1
through August 31, 1994) of STAT Physicians operations and four months
(September 1 through December 31, 1994) of Old STAT's consolidated operations.
Since STAT Physicians was a subchapter S corporation and not subject to federal
income taxes, adjustments were made to its net income for the eight month period
ended August 31, 1994 and the year ended December 31, 1993 to show those results
on a comparative basis with Old STAT, which is subject to federal income taxes.

Old STAT provides management services to STAT Physicians and STAT P.A.
which, in turn, provide physicians and related services to hospitals, primarily
to staff and manage emergency department operations. STAT Physicians and STAT
P.A. currently have contracts and/or agreements with 17 hospitals to provide
emergency department services by physicians, who are retained as independent
contractors, and to provide related administrative functions, which are
performed by Old STAT. Services are scheduled to commence at one additional
hospital on July 1, 1996. Sixteen of the hospitals are owned by Columbia and
services to 15 of these will be provided pursuant to the Columbia Agreement. All
hospitals currently served and the additional hospital being added prior to July
1, 1996, as described, are under fee-for-service arrangements. At December 31,
1994, 3 of 12 then existing contracts were compensated directly by hospitals on
a fixed-fee basis.

The following discussion provides an analysis of the results of operations
as described above and liquidity and capital resources of Old STAT and should be
read in conjunction with the audited financial statements of Old STAT and STAT
Physicians and notes thereto included elsewhere in this Joint Proxy
Statement/Prospectus.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995

NET SERVICE REVENUES. Net service revenues increased by $1.2 million or 36%
from $3.2 million to $4.4 million. This increase is attributable to a 23%
increase in the number of patients treated in hospital emergency departments
(from approximately 44,000 to approximately 54,000) coupled with a 10% increase
in average revenue per patient (from $73.92 in 1995 to $81.19 in 1996). During
the 1995 quarter, 12 emergency departments were served throughout the period and
1 emergency department was served for 1 month. During the 1996 quarter, 11
emergency departments were served throughout the period, 2 emergency departments
were served for 2 months and 3 additional emergency departments were served for
1 month. The 5 additional emergency departments which were served for only a
portion of the 1996 quarter, represent 5 of 9 additional emergency departments
that Old STAT will be serving pursuant to the Columbia Agreement. Service at the
remaining 4 emergency departments is scheduled to commence between April 1 and
July 1, 1996. Additionally, emergency department services at 2 non-Columbia
owned hospitals were terminated effective April 30, 1996.

DIRECT EXPENSES. Direct expenses increased $849 thousand or 32% from $2.7
million to $3.5 million. Fees paid to independent contract physicians increased
$623 thousand and represented 64% of net service revenues in 1996 compared to
68% in 1995. The comparative decrease, from 1995 to 1996 as a percent of
revenues, is the result of more efficient utilization of physicians (i.e.,
increase in patients treated per physician). Billing and collection costs
increased $129 thousand or 41%. During the 1995 period, 1 hospital contract was
compensated on a direct reimbursement basis and did not

incur billing and collection costs, whereas during 1996, all contracts are
fee-for-service. Insurance and other costs increased $97 thousand or 68% from
1995. This increase is attributable to an increase in insurance rates which are
charged on a per patient visit basis.

OPERATING EXPENSES. Operating expenses increased $371 thousand or 105% from
$353 thousand to $724 thousand. This increase is primarily attributable to human
resource costs which increased $244 thousand between the periods because of an
increase in administrative personnel necessitated by increased recruiting,
credentialing and administrative activities associated with the new hospital
contracts obtained during the first quarter of 1996. Occupancy costs increased
by $43 thousand from 1995 because of the May 1995 move into different and larger
office facilities. Outside services increased by $59 thousand from 1995
primarily because of additional administrative costs associated with Old STAT
becoming publicly owned during the second quarter of 1995.

INCOME TAXES. Income taxes were provided during 1995 at the standard
federal corporate rate of 34%. During 1996, the rate increased to approximately
36% because of state income (franchise) taxes. Old STAT has no significant book
to tax differences.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

NET SERVICE REVENUES. Net service revenues increased by $3.6 million, or
34%, to $14.1 million in 1995, from $10.5 million for the 1994. This increase is
attributable to an 18% increase in patients treated during the periods compared
coupled with a 14% increase in net revenue per patient in 1995 compared with
1994. Approximately 180,000 patients were treated during 1995 compared with
153,000 patients during 1994. The comparative increase in patients treated is
attributable to new contracts which were started in mid-December 1994 and in
March 1995. Patient volumes under contracts serviced throughout both periods
were mostly unchanged. The increase in net revenue per patient ($9.53 from
$68.94 to $78.47) is attributable to the conversion between 1995 and 1994 of
additional contracts to fee-for-service arrangements coupled with increases in
levels of service which were required by patients treated. Standard billing
rates for medical procedures were identical between the two years.

DIRECT EXPENSES. Direct expenses consist of professional fees (contract
physicians and physicians assistants), liability insurance and external billing
and collection costs associated with the contracting of these administrative
services. Professional fees increased by $1.5 million, or 20%, to $9.2 million
from $7.7 million in 1994. The rate of increase in these fees approximates the
rate of increase in number of patients treated. The cost of professional fees
per patient treated increased modestly from $50.42 in 1994 to $51.34 in 1995.
Liability insurance costs are incurred on a per patient treated basis. The
increase in this cost is attributable to the increased number of patients
treated coupled with an increase in premium rates from an average of $3.14 per
patient in 1994 to $3.92 per patient in 1995. Premium costs, which are subject
to change at the policy renewal date, were $4.25 per patient at December 31,
1995. The increase in billing and collection costs, $0.7 million, from $0.8
million to $1.5 million is attributable to the conversion from hospital
reimbursement to direct billing (fee-for-service) arrangements under those
contracts which had not been converted during 1994. These costs averaged 10.3%
of net service revenues for 1995 and would have been approximately 11% of net
service revenues had fee-for-service arrangements been in effect throughout the
year.

OPERATING EXPENSES. Operating expenses increased by $0.7 million, or 68%,
from $1.0 million in 1994 to $1.7 million in 1995. The majority of this increase
is attributable to increases in human resource costs ($0.5 million or 64%) and
occupancy costs ($0.1 million or 223%). The increase in human resource costs is
attributable to (i) an increase in administrative personnel associated with the
increased volume of business, (ii) a comparative increase in salaries paid to
the two physician officers of Old STAT whose combined salaried compensation
increased from $307 thousand in 1994 to $558 thousand in 1995, and (iii) normal
annual salary adjustments provided to employees. The salaries of the physician
officers of Old STAT were increased with the formation of Old STAT, whereas
during previous periods (when operating as STAT Physicians -- a privately-owned
company) they were

compensated in part through higher physician contract service rates which were
characterized as physician costs. The increase in occupancy costs is primarily
attributable to the April 1995 move into larger administrative facilities.

INTEREST INCOME. Interest income for 1995 was derived from the investment
of cash obtained from Old STATs initial public offering in April 1995. Old STAT
had no excess cash for investment during 1994.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

NET SERVICE REVENUES. Net service revenues increased by $1.7 million, or
19%, from $8.8 million to $10.5 million. This increase was primarily
attributable to an increase in patient visits associated with the addition of
hospital contracts that commenced in 1994 (from 130,000 to 153,000) and a modest
increase in average revenue per patient of $0.70, from $68.25 to $68.95. Average
revenue per patient can be and was positively influenced by an increased number
of commercially insured patients. Payors include private insurers, the federal
government, state governments, patients and other sources of payment.

DIRECT EXPENSES. Direct expenses consist of fees to contract physicians,
medical liability insurance and billing and collection costs associated with the
external contracting of these services. Contract physician fees increased $0.9
million, or 13%, from $6.8 million to $7.7 million and represent 73.1% of net
revenues for 1994, compared with 76.9% of net revenues for 1993. The decline as
a percent of net revenues is the result of better productivity in 1994 than in
1993. Productivity is measured by the number of patients each doctor treats.
Medical liability insurance costs increased 30% as a result of comparative
premium increases ($3.14 per patient average in 1994 compared with $2.83 per
patient for 1993) and the increase in patient visits. Billing and collection
costs increased $0.5 million from $0.3 million in 1993 to $0.8 million in 1994.
This increase was directly attributable to an industry wide shift from fixed fee
contracts to fee-for-service contracts.

OPERATING EXPENSES. Operating expenses increased 17%, compared with the 19%
increase in net revenues. This increase was primarily attributable to an
increase in human resource costs associated with a comparative increase in
personnel coupled with annual salary increases awarded to personnel included in
both periods.

INTEREST EXPENSE. The increase in interest expense during 1994, compared
with 1993, was attributable to an increase in borrowings to finance accounts
receivable necessitated by the shift from fixed fee to fee-for-service business.

LIQUIDITY AND CAPITAL RESOURCES

Capital requirements of the Old STAT currently relate to three major
areas. These are (i) capital needs in connection with the start-up of new
contracts; (ii) the need for capital to increase administrative capabilities,
including the internalization of billing and collection services and the
computerization of patient charts; and (iii) capital needs associated with the
AmHealth companies assuming that the Exchange described herein is consummated.
Additionally, Old STAT or New STAT may have cash requirements with respect of
rescission rights relating to common stock issued in connection with 2 asset
purchase transactions consummated during the first quarter of 1996. The stock
issued in these transactions was valued at $310,000.

Experience indicates that upon commencement of a new hospital contract, a
period ranging from 90 to 150 days is required to achieve normal cash flows
under the contract. Between February 1 and July 1, 1996, Old STAT anticipates
starting services at nine new hospitals pursuant to the Columbia Agreement. The
commencement of these contracts will create a significant cash flow deficit
during their start-up phase. Additionally, with the concurrence of Columbia, the
HEMA Contract was purchased, for a price of $1,200,000, from the group which had
provided contract emergency medicine services to the hospital for a period in
excess of 20 years. The purchase price was paid on January 31, 1996, in cash
totaling $960,000 and Old STAT Common Stock valued at $240,000 (52,174 shares).

It is impracticable to quantify the capital requirements for
administrative capabilities relating to the internalization of billing and
collection services and the computerization of patient charts. With respect to
internalizing the billing and collection services, Old STAT is presently
evaluating several alternatives which range from acquiring a company that
currently performs such services to assessing the costs and related obstacles
associated with staffing and equipping a new internal organization. If the
acquisition alternative is selected, the acquisition could be accomplished
either with cash or with issuance of Old STAT Common Stock. With respect to the
computerization of patient charts, there are a large number of alternative
systems which are available. Old STAT is currently evaluating several of these
alternatives which vary in cost and range from a low of approximately $25,000
per hospital to a high of approximately $100,000 per hospital depending upon
sophistication and type of end product. No decision has been made regarding
these matters.

Capital requirements relating to the AmHealth companies principally relate
to additional dialysis or hyperbaric equipment. Such needs will vary according
to the rate of expansion (i.e. new dialysis center expected to open in Spring of
1996 and a new hyperbaric center expected to open in May 1996) and can be
financed either through cash purchases or through bank or lease financing.

Historically, Old STAT's capital requirements have been met through
operating cash flows, bank borrowings and sales of Old STAT Common Stock
(private placements and an initial public offering). Old STAT presently has a
bank line of credit totaling $1,500,000, of which approximately $600,000 is
drawn, and is currently in discussions with several banks regarding a new line
of credit for New STAT of approximately $5,000,000. Additionally, management is
also in the process of evaluating a secondary public offering of New STAT Common
Stock during the second half of 1996. The increased line of credit and the
secondary public offering are being evaluated in the context of completion of
the Exchange. No assurances can be made that New STAT will be able to accomplish
either or both of these financing objectives.

Inflation has not had, nor is it expected to have, a material impact on the
operations and financial condition of Old STAT.

NEW ACCOUNTING PRONOUNCEMENTS

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"). SFAS No. 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. The financial accounting standards of SFAS No. 123
permit companies to either continue accounting for stock-based compensation
under existing rules or adopt SFAS No. 123 and begin reflecting the fair value
of stock options and other forms of stock-based compensation in the results of
operations as additional expense. The disclosure requirements of SFAS No. 123
require companies which elect not to record the fair value in the statement of
operations to provide pro forma disclosures of net income and earnings per share
in the notes to the financial statements as if the fair value of stock-based
compensation had been recorded. The disclosure requirements of SFAS No. 123 are
effective for financial statements for fiscal years beginning after December 15,
1995. Old STAT will provide the pro forma disclosures beginning with its 1996
Annual Report and will continue accounting for such plans under the existing
accounting rules.

In March 1995, the Financial Accounting Standards Board issued SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" ("SFAS No. 121"). SFAS No. 121 requires that
long-lived assets and certain identifiable intangibles held and used by an
entity be reviewed for impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. The
requirements are effective for financial statements for fiscal years beginning
after December 15, 1995. Old STAT does not anticipate that adoption of SFAS No.
121 will have a significant effect on its financial position or results of
operations.

FUTURE OUTLOOK FOLLOWING THE EXCHANGE

In addition to historical information, this Joint Proxy
Statement/Prospectus contains predictions, estimates and other forward-looking
statements that involve a number of risks and uncertainties. These risks and
uncertainties include the fact that, following the Exchange, New STAT will be a
relatively young company whose business is still developing. This development
will require substantial amounts of funding and New STAT will be dependent on
debt financing and the equity markets to finance such efforts. Where access to
funding is difficult, New STAT's stockholders may face significant dilution, and
the ability of New STAT to proceed with its programs and plans may be
significantly and adversely affected. Actions and advances by competitors may
also significantly affect New STAT's prospects.

While this outlook represents managements current judgment on the future
direction of the business, these risks and uncertainties are only some of the
factors that may ultimately affect New STAT's success, and actual results may
differ materially from any future performance suggested in this Joint Proxy
Statement/Prospectus. A more detailed explanation of these and other risks is
contained under "Risk Factors."

SELECTED FINANCIAL DATA OF AMHEALTH

The following table sets forth selected income statement data of AmHealth.
Operating results for the periods presented are not necessarily indicative of
future operating results. The following information should be read in
conjunction with the audited financial statements and the notes thereto and
"AmHealth Management's Discussion and Analysis of Financial Condition and
Results of Operations" included elsewhere in this Joint Proxy
Statement/Prospectus.

AMHEALTH CORPORATION AND ITS
RELATED HEALTHCARE ENTITIES

COMBINED STATEMENTS OF INCOME DATA:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, YEAR ENDED YEAR ENDED YEAR ENDED
---------------------------- DECEMBER 31, DECEMBER 31, DECEMBER 31,
1996 1995 1995 1994 1993
------------- ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net service revenues................. $ 3,107,000 $ 1,618,000 $9,017,000 $3,973,000 $1,170,000
Operating expenses:
Salaries and benefits........... 1,187,000 380,000 3,235,000 1,088,000 394,000
Supplies........................ 530,000 371,000 1,757,000 1,116,000 336,000
Depreciation and amortization.. 101,000 66,000 344,000 196,000 59,000
Contract services and other..... 235,000 139,000 892,000 616,000 226,000
------------- ------------- ------------ ------------ ------------
Total operating expenses.. 2,053,000 956,000 6,228,000 3,016,000 1,015,000
------------- ------------- ------------ ------------ ------------
Operating income..................... 1,054,000 662,000 2,789,000 957,000 155,000
Other income......................... 9,000 3,000 29,000 153,000 1,000
Interest expense..................... (60,000) (42,000) (194,000) (134,000) (21,000)
------------- ------------- ------------ ------------ ------------
Net income................ $ 1,003,000 $ 623,000 $2,624,000 $ 976,000 $ 135,000
============= ============= ============ ============ ============
Distributions to shareholders and
partners........................... $ 674,000 $ 473,000 $2,005,000 $ 481,000 $ --
============= ============= ============ ============ ============

BALANCE SHEET DATA:

DECEMBER 31,
MARCH 31, ----------------------------
1996 1995 1994
------------- ------------- -------------
Working capital................... $ 1,420,000 $ 1,028,000 $ 701,000
Total assets...................... 4,624,000 4,715,000 2,730,000
Long-term debt and capital lease
obligations, less current
portion......................... 1,676,000 1,640,000 1,194,000
Total liabilities................. 2,618,000 3,038,000 1,699,000
Equity/capital.................... 2,006,000 1,677,000 1,031,000
</TABLE>

AMHEALTH MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

AmHealth commenced active operations of its first dialysis center during
the second quarter of 1993. Between that date and March 31, 1996, AmHealth
opened a second dialysis center in 1993, a third during the second quarter of
1994 and a fourth during the third quarter of 1995. Additionally, AmHealth
commenced management of a hyperbaric medicine unit and personnel and management
services to a home healthcare provider during the second quarter for 1995. The
significant period to period changes in the comparative financial data provided
herein are attributable to these expanding operations throughout the periods
presented.

RESULTS OF OPERATIONS

QUARTER ENDED MARCH 31, 1996 COMPARED TO QUARTER ENDED MARCH 31, 1995

NET SERVICE REVENUES. Net service revenues increased by $1.5 million or
92%, from $1.6 million in 1995 to $3.1 million in 1996. This increase is
attributable to revenue producing units which were in operation throughout the
1996 quarter but were not in existence during the 1995 quarter (healthcare
management -- $1.0 million and new dialysis center -- $0.2 million) and revenue
increases associated with increased volumes at dialysis centers which were
operational throughout both periods -- $0.3 million.

OPERATING EXPENSES. Operating expenses increased by $1.1 million or 115%,
from $1.0 million in 1995 to $2.1 million in 1996. Salaries and benefits
accounted for $.8 million of the increase. Approximately $0.7 million of this
comparative salary and benefits increase is associated with healthcare
management services ($0.6 million) and the new dialysis center ($0.1 million)
which commenced services during 1995 but subsequent to the first quarter. The
remainder ($0.1 million) is attributable to increased costs at facilities
operational during both periods. Contract services and other costs accounted for
an additional $0.1 million of the increases. Increases in these costs are
attributable to new physician services, rental of medical equipment and
advertising and employee recruitment costs.

YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994

NET SERVICE REVENUES. Net service revenues increased by $5.0 million, or
127%, from $4.0 million in 1994 to $9.0 million in 1995. This increase is
attributable to the opening of two new dialysis centers in 1994 and 1995 ($1.3
million), the commencement of AmHealth management agreements related to a
hyperbaric medicine unit and personnel services to outpatient health care
providers ($2.6 million), and increases in revenues for same business volume
increases between 1994 and 1995 as an additional $1.1 million.

OPERATING EXPENSES. Operating expenses increased by $3.2 million or, 106%,
from $3.0 million in 1994 to $6.2 million in 1995. The overall increase is
primarily due to the expansion in operations as described above. Salaries and
benefits increased by 197% or $2.2 million. Approximately $1.2 million is
attributable to commencement of AmHealth management and support services
agreements, $0.4 million was due to opening of two new dialysis centers, and the
remaining increases are attributed to administration ($0.3 million) and year to
year increases ($0.3 million). Supplies increased by 57% or $0.6 million.
Approximately $0.35 million is due to the opening of two dialysis centers, and
$0.25 million is attributed to volume increases for existing operations. All
other operating expenses increased by 52% or $0.4 million. These increases were
due to the opening of two new dialysis centers and increased activity at
existing operations. Overall, the rate of increase in revenues was greater than
the rate of increase in operating expenses, because of greater efficiencies
obtained through expanded operations, and contributed to an improvement of 191%
in operating income.

YEAR ENDED DECEMBER 31, 1994 COMPARED TO YEAR ENDED DECEMBER 31, 1993

NET SERVICE REVENUES. Net service revenues increased by $2.8 million, or
240%, from $1.2 million in 1993 to $4.0 million in 1994. Approximately $1.0
million of the increase was due to the opening of two dialysis centers, one in
November 1993 and the second in June 1994, and approximately $1.8 million was
due to increases in volume at AmHealth's first dialysis center which opened
April 1993.

OPERATING EXPENSES. Operating expenses increased by $2.0 million, or 197%,
from $1.0 million in 1993 to $3.0 million in 1994. Approximately $0.65 million
of the increase was attributable to the opening of two dialysis centers as
described above, approximately $1.0 million was due to volume increases at
AmHealth's first dialysis center, and the remaining increase, $0.35million was
due to increases in administrative costs. Overall, operating income rose by 517%
between 1993 and 1994 due to business start ups and growth in volume.

LIQUIDITY AND CAPITAL RESOURCES

From inception through March 31, 1996, liquidity has been maintained and
capital resources have been obtained through a combination of equity
contributions, financing of capital assets, and operating cash flows.

AmHealth Shareholders and AmHealth Partners have made equity contributions
of approximately $400,000 since inception to capitalize its expanding
operations. This was coupled with debt financing for its equipment ($1,400,000)
and a $200,000 bank line of credit that remains unused. Operating cash flows
since inception have been approximately $4.4 million with approximately $3.2
million of that paid to stockholders and partners in distributions.

Inflation has not had, nor is expected to have, a material impact on the
operations and financial condition of AmHealth. Management believes that
operating cash flows will continue to be positive for the current medical
centers and that bank or alternative financing mechanisms will be available for
expansion needs.

FUTURE OUTLOOK FOLLOWING THE EXCHANGE

BUSINESS OF OLD STAT

GENERAL

Management of Old STAT believes that emergency departments, which are often
the first point of contact with patients, will play an increasingly important
role as emergency room physicians increasingly serve as the 24-hour gatekeepers
of the healthcare system. Old STAT was incorporated in July 1994 to offer
physician contract management services to professional associations that provide
emergency department services to hospitals. Old STAT's income is currently
derived exclusively from revenues related to the Management Agreements, less
direct expenses paid by Old STAT on behalf of STAT Physicians and STAT P.A., as
provided for in the Management Agreements, and less the operating expenses of
Old STAT. Under contracts with hospitals, STAT Physicians and STAT P.A. are
obligated to provide not only emergency department physicians for uninterrupted
coverage on a 24-hour, 365-day-a-year basis, but also management and
administrative services related to emergency departments.

Under the Management Agreements, Old STAT manages and administers STAT
Physicians' and STAT P.A.'s day-to-day business functions, which include
assuming responsibility for the administrative, accounting, personnel and
business functions related to the practice of medicine. Old STAT is also
responsible for the billing and collection of professional fees for medical
services, the maintenance of all financial files and records and the negotiation
and administration of all managed care contracts on behalf of STAT Physicians
and STAT P.A. Consulting services are also provided by Old STAT in connection
with the procurement and administration of professional liability insurance and
the employment of personnel by the affiliated physician groups. Old STAT also
coordinates the scheduling of STAT Physicians' and STAT P.A.'s staff physicians
to provide emergency department coverage and assists the hospital administration
and medical staff in such areas as quality assurance, risk management,
departmental accreditation and marketing.

In addition, Old STAT identifies and recruits physicians as candidates for
admission to each hospital's medical staff. Only physicians whose credentials
meet STAT Physicians' and STAT P.A.'s standards are engaged to provide medical
services. STAT Physicians and STAT P.A. currently have contracts with 11
hospitals in the Houston and southeastern Texas area to provide emergency room
physician services and contracts with approximately 105 physicians for the
delivery of medical services as independent contractors of STAT Physicians and
STAT P.A.

Competitive pressures have focused the attention of many hospital
administrators, in both the private and public sectors, on the need for better
management of their professional medical staff. Hospitals have increasingly
turned to contract management firms with specialized skills to help solve
physician contract and scheduling problems, to strengthen the management of
their professional medical staff and specific clinical departments, to better
control costs, and to assist in meeting their healthcare coverage needs and
obligations to patients who are indigent, uninsured or unassigned to a referring
private physician. Physicians are also encountering a changing environment in
which traditional private practice patterns are being adversely affected by
increasing administrative, liability and reimbursement constraints and
complexities. Using its management skills and experience, and the economies of
scale which the size and specialization of its operations permit, Old STAT
provides a management alternative to hospitals while offering a flexible
practice and lifestyle alternative to physicians.

A community's perception of a hospital's emergency department services can
be an important factor in determining a hospital's overall viability and
profitability, in part because the emergency department is a major source of
general admissions to hospitals. Old STAT believes that hospitals use physician
management firms to help solve problems associated with the administration and
management of hospital emergency departments. Old STAT believes that among the
management problems affecting the performance of many hospital emergency
departments are difficulties in the recruitment, scheduling and retention of
emergency physicians, budgetary concerns and increasing patient volumes.

CONTRACTUAL ARRANGEMENTS

MANAGEMENT AGREEMENTS WITH STAT PHYSICIANS AND STAT P.A. The Management
Agreements are perpetual, without provision for cancellation or termination.
Under the Management Agreements, Old STAT identifies, recruits and screens
potential candidates to serve as emergency room physicians in hospitals which
have contracted for STAT Physicians' and STAT P.A.'s physician contract
management services. STAT Physicians and STAT P.A. then enter into contracts
with physicians meeting its qualifications and provides those physicians as
candidates for admission to the hospital's medical staff. Old STAT also
coordinates on behalf of and with the assistance of STAT Physicians and STAT
P.A. the scheduling of staff physicians to provide coverage on a 24-hour,
365-day-a-year basis for the hospital's emergency departments. In addition, Old
STAT assists the hospital's administration and medical staff in such areas as
quality assurance, risk management, departmental accreditation and marketing.

Old STAT also manages and administers STAT Physicians' and STAT P.A.'s
day-to-day business functions, which include but are not limited to, assuring
responsibility for the administrative, accounting, payroll and personnel
functions related to the practice of medicine. Old STAT, under the Management
Agreements, also bills and collects the professional fees for the medical
services provided on behalf of STAT Physicians and STAT P.A., maintains all
files and records, negotiates and administers all hospital contracts, and
provides consulting services to STAT Physicians and STAT P.A. in connection with
the procurement and administration of professional liability insurance and the
employment of personnel. All final decisions relating to medical care are solely
that of STAT Physicians and STAT P.A.

In consideration of the services provided by Old STAT under the Management
Agreements, STAT Physicians and STAT P.A. each pays a management fee and
provides reimbursement of all related expenses to Old STAT. Each of STAT
Physicians and STAT P.A. has also appointed Old STAT its attorney in fact to act
on its behalf for the purposes of collecting and receiving all fees and revenues
payable to STAT Physicians or STAT P.A., as the case may be, as a result of
professional services rendered and for the purpose of carrying out its
management functions under its hospital contracts.

HOSPITAL CONTRACTS. Within the United States, there are approximately 5,200
hospital emergency departments (approximately 375 in the State of Texas). As a
general rule, control of emergency departments is fragmented, with less than 25%
of the market under the management of national or regional service
organizations. According to industry sources, of the 5,200 hospital emergency
departments, approximately 1,200 are served by service organizations. Old STAT's
management believes that significant opportunity exists to expand Old STAT's
base of hospitals and doctors because of the fragmented marketplace and the
desire of physicians to associate with larger organizations.

STAT Physicians or STAT P.A. currently provides emergency care services
through its indepen-
dent contracting physicians with the following hospitals:

FACILITY LOCATION STATE DATE
- ------------------------------------- ------------------ ------------------
San Jacinto Methodist Hospital Baytown, TX July 1, 1987
Twelve Oaks Hospital Houston, TX May 1, 1989
Fort Bend Hospital(a) Missouri City, TX April 5, 1990
Alvin Community Hospital(a) Alvin, TX February 1, 1991
Parkway Hospital(a) Houston, TX August 16, 1991
Katy Medical Center(a) Katy, TX December 1, 1992
Kingwood Plaza Hospital(a) Kingwood, TX January 28, 1993
Alice Physicians & Surgeons(b) Alice, TX January 1, 1994
Mainland Regional Health Hospital(a) Texas City, TX December 12, 1994
Conroe Regional Medical Center(a) Conroe, TX February 1, 1996
Springbranch Medical Center(a) Houston, TX February 1, 1996
Doctors Hospital Airline(a) Houston, TX March 1, 1996
West Houston Medical Center(a) Houston, TX March 1, 1996
Bellaire Hospital(a) Houston, TX March 19, 1996
Sunbelt Medical Center(a) Houston, TX April 1, 1996
Doctors Hospital East Loop(a) Houston, TX April 1, 1996
Rosewood Medical Center(a) Houston, TX April 9, 1996
- ------------
(a) Facility owned by Columbia and serviced under a single contract with
Greater Houston Division.

(b) Facility owned by Columbia.

During the year ended December 31, 1995, four hospitals each accounted for
10% or more of net service revenues of Old STAT. These hospitals and the
percentage of net service revenues attributable to each are as follows: San
Jacinto Methodist Hospital (11%), Katy Medical Center (11%), Fort Bend Hospital
(11%) and Mainland Regional Health Hospital (12%).

Old STAT, through its affiliated physician groups, currently STAT
Physicians and STAT P.A., provides contract management services to hospitals
under fee-for-service contracts. Hospitals entering into fee-for-service
contracts agree to authorize STAT Physicians or STAT P.A. to bill and collect
the professional component of the charges for medical services rendered by the
STAT Physicians' or STAT P.A.'s contracted physicians. Under fee-for-service
arrangements, STAT Physicians and STAT P.A. receive directed disbursements of
the amounts collected and, depending on the hospital's patient volume and payor
mix, may also receive a stand-by or on-call fee from the hospital. Pursuant to
such contracts, STAT Physicians and STAT P.A. assume responsibility for billing
and collection and assumes the risks of non-payment, changes in patient volume
or payor mix and delays attendant to reimbursement through government programs
or third party Payors. All of these factors are taken into consideration by STAT
Physicians and STAT P.A., in consultation with Old STAT, in arriving at
appropriate contractual arrangements with health care institutions and
professionals. STAT Physicians' and STAT P.A.'s service contracts with hospitals
generally have a term of two years, and contain provisions permitting renewal
for additional periods.

PHYSICIAN CONTRACTS. STAT Physicians and STAT P.A. contract with physicians
as independent contractors to fulfill their contractual obligations to provide
qualified doctors to hospital clients. While each hospital with which STAT
Physicians or STAT P.A. contracts ultimately determines whether a physician must
be board certified in emergency medicine to provide medical services in its
emergency room, hospitals generally do not require physicians to be so
certified. STAT Physicians and STAT P.A. require all physicians to be currently
licensed to practice medicine within the State of Texas and to be Advanced
Cardiac Life Support ("ACLS") certified before entering into a contract for the
doctor's

service. Professional fees payable to the physician are disbursed by Old STAT
pursuant to the Management Agreements. As independent contractors, the
physicians are responsible for their own income and social security taxes, as
well as workers compensation insurance. The contracts with independent
contractor physicians can be terminated by STAT Physicians, STAT P.A. or the
independent contractor physicians with 30 days notice, or immediately by STAT
Physicians or STAT P.A. for cause. See "Risk Factors -- Classification of
Physicians as Independent Contractors; Potential State and Federal Tax
Liability."

Each of STAT Physicians and STAT P.A. believes that its classification of
physicians as independent contractors is proper for federal tax purposes. A
contrary determination by federal taxing authorities or a change in existing
laws could materially adversely affect Old STAT or New STAT and its operations.
Most state taxing authorities either have not challenged or have accepted the
classification of contract physicians as independent contractors. However, there
are some states in which the independent contractor classification of physicians
is or has been under administrative or judicial review. Old STAT management
believes that the status of physicians under contract to STAT Physicians or STAT
P.A. as independent contractors may be important to limiting New STAT's
potential exposure to malpractice claims and to avoiding a determination that
Old STAT or New STAT is in violation of laws relative to the corporate practice
of medicine.

OLD STAT'S OPERATIONS

GENERAL. Aside from marketing and new business acquisition, the principal
operating activities of Old STAT include the recruitment and credentialing of
physicians, the maintenance of relations with clients (I.E. hospitals) the
development and maintenance of quality assurance systems, the scheduling and
reimbursement of physicians, the billing and collection on behalf of the STAT
Physicians and STAT P.A. for physician services fees and the administration of
personnel services. An overview of these activities follows:

RECRUITMENT AND CREDENTIALING. The recruitment and credentialing of
qualified independent contract physicians on behalf of its affiliated physician
groups is a central aspect of Old STAT's operations. Five full-time employees of
Old STAT are dedicated to recruiting and credentialing independent contract
physicians for the affiliated physician groups. The difficulty of this effort
fluctuates as market penetration is achieved in geographic areas and as the
organization grows in size and diversity of contract opportunities.

QUALITY ASSURANCE. Quality assurance systems are designed to monitor
physician documentation and a range of other factors that change from time to
time and are often independently established by individual hospitals. These
factors and the related systems are subject to review and examination by
independent hospital credentialing and regulatory agencies. Principally, quality
assurance is the responsibility of the STAT Physicians' and STAT P.A.'s Medical
Director assigned to the hospital. There are currently eight Medical Directors
responsible for quality assurance activities. The efficacy of these systems, and
the performance of its contract physicians, are critical to minimizing the
exposure of STAT Physicians, STAT P.A. and Old STAT to medical liability claims.

TIME SCHEDULING. The scheduling of physician hours is performed monthly.
Hospitals are provided a monthly physician coverage schedule one week prior to
the first of each month. Physicians are scheduled on the basis of either 12 or
24 hour shifts. Under five of the hospital contracts, multiple physician
coverage is required during certain periods. Because of varying other demands on
the contract physicians, the scheduling process is complex and requires
significant management attention. Old STAT has two full-time employees dedicated
to scheduling issues.

BILLING AND COLLECTION OF SERVICES. Fees charged to patients for
emergency department visits are comprised of two elements: (i) hospital
services; and (ii) physician services. Under all of STAT Physicians' and STAT
P.A.'s hospital contracts as of December 31, 1995, Old STAT, through the
Management Agreements, has the responsibility for the billing and collection
of physician fees on

behalf of STAT Physicians and STAT P.A. Currently, an independent company
performs the administrative billing and collection services on behalf of Old
STAT. The cost of using an independent company has now increased to the point
that the internalization of this function will be more cost effective.

PERSONNEL ADMINISTRATION. Old STAT assists STAT Physicians and STAT P.A. in
personnel administration, which includes the administration of payroll services.
In addition, Old STAT provides for the administration of fringe benefit
programs, which may include but are not limited to life insurance, health
insurance, education leave, professional dues, vacation allowances and
disability insurance.

PLAN OF OPERATIONS

Old STAT expects to continue its growth through the management of business
activities under additional hospital contracts. In particular, Old STAT intends
to both strategically target hospitals and health care alliances and acquire
currently existing physician service organizations. Old STAT assists STAT
Physicians and STAT P.A. in actively seeking opportunities to competitively bid
for hospital contracts. Old STAT also intends to assist other professional
associations, with which it will seek to enter similar management agreements, to
competitively bid for hospital contracts, both in the Houston area and, to the
extent possible, in other regions. Financing to date for expansion has come from
sales of common and preferred stock, a bridge loan and from revenues.

In addition, Old STAT intends to take advantage of the growing demand for
physician service networks by seeking to contract with large Payors, such as
managed care plans, to provide emergency medical services throughout the Houston
area on a capitation basis, which provides for fixed periodic payments for each
plan participant. While, initially, the direction of Old STATs growth is
expected to reflect its emphasis on providing and expanding its contract
emergency department services, Old STAT believes that contractual relationships
with large Payors could become an increasingly significant part of its growth.
If Old STAT succeeds in establishing contractual relationships with large Payors
in Houston, of which there can be no assurance, Old STAT will focus expansion in
this regard in nearby markets, where it believes it would then best be able to
derive advantages from existing relationships.

RECENT DEVELOPMENTS

In January 1996, Old STAT, in connection with the Columbia Agreement,
acquired the rights to the HEMA Contract for the provision of emergency
department medical services for a total purchase price of $1.2 million,
consisting of $960,000 in cash and 52,174 shares of Old STAT Common Stock. Old
STAT also agreed to pay to the assignor of the HEMA Contract up to $100,000 in
each of the three twelve-month periods following the acquisition of the contract
depending upon the profits realized by Old STAT under the HEMA Contract during
such periods.

Effective February 1, 1996, Old STAT, through one of its affiliated
physician groups, entered into the Columbia Agreement to provide emergency
medicine services to all but one of Columbia's emergency departments in the
Greater Houston Division. The Columbia Agreement will result in the addition of
nine hospitals to the Old STAT service base between February 1 and July 1, 1996
resulting in a total of 18 hospitals served (16 of which are owned by Columbia).
The 15 Greater Houston Division hospitals are covered by this contract. The
Columbia Agreement has an initial term of two years, and may be renewed for
successive two-year terms. This contract will account for a significant portion
of the Old STAT net service revenues and operating expenses. The HEMA Contract
rights are now part of the Columbia Agreement.

However, it is anticipated that neither Old STAT nor New STAT will conduct any
business under such name.

GOVERNMENT REGULATION

Old STAT's operations and relationships are subject to a variety of
governmental and regulatory requirements. Approximately 40% of patients treated
by STAT Physicians' contract physicians under fee-for-service arrangements
during 1994 and 1995 were participants in government-sponsored health care
programs (primarily Medicare and Medicaid). These programs are subject to
substantial regulation by federal and state governments, which are continually
revising and reviewing the programs and their regulations. Any change in
reimbursement regulations, policies, practices, interpretations or statutes that
places material limitations on reimbursement amounts or practices could
adversely affect the operations of Old STAT absent, or prior to, satisfactory
renegotiation of contracts with clients and arrangements with contracted
physicians.

GENERAL. The health care industry is highly regulated, and there can be no
assurance that the regulatory environment in which Old STAT operates will not
change significantly and adversely in the future. In general, regulation of
health care providers and companies managing the providers is increasing.

There are currently several federal and state initiatives designed to amend
statutes and regulations relating to the provision of health care services, the
access of health care, the costs of health care and the manner in which health
care providers are reimbursed for their services. However, it is not possible to
predict whether any such initiatives will be enacted as legislation or, if
enacted, what their form, effective dates or impact on Old STAT or New STAT or
its affiliated physician groups will be.

Every state imposes licensing requirements on individual physicians and on
facilities and services operated by physicians. Many states require regulatory
approval, including certificates of need, before establishing certain types of
health care facilities, offering certain services or making expenditures in
excess of statutory thresholds for health care equipment, facilities or
programs. The execution of a management agreement with a physician group
currently does not require any health care regulatory approval on the part of
Old STAT or the physician group. However, in connection with the expansion of
existing operations and the entry into new markets, New STAT and its affiliated
physician groups may become subject to additional regulation.

FEE-SPLITTING; CORPORATE PRACTICE OF MEDICINE. The laws of many states
prohibit physicians from splitting professional fees with non-physicians and
prohibit non-physician entities, such as Old STAT, from practicing medicine and
from employing physicians to practice medicine. The laws in most states
regarding the corporate practice of medicine have been subject to limited
judicial and regulatory interpretation. Old STAT believes its current and
planned activities do not constitute fee-splitting or the corporate practice of
medicine as contemplated by these statutes or case law interpretations. However,
there can be no assurance that future interpretations of such laws will not
require structural and organizational modifications of the Old STAT's existing
relationships with STAT Physicians.

MEDICARE FRAUD AND ABUSE PROVISIONS. Federal law prohibits the offer,
payment, solicitation or receipt of any form of remuneration in return for the
referral of Medicare or state health care program patients or patient care
opportunities, or in return for the purchase, lease or order of any item or
service that is covered by Medicare or a state health program. Pursuant to this
law, the federal government has recently announced a policy of increased
scrutiny of joint ventures and other transactions among health care providers in
an effort to reduce potential fraud and abuse relating to Medicare costs. The
applicability of these provisions to many business practices in the health care
industry, including Old STAT's management agreements has not to date been
subject to judicial and regulatory interpretation.

The Medicare and Medicaid anti-kickback amendments (the "ANTI-KICKBACK
LAW") provide criminal penalties for individuals or entities participating in
the Medicare or Medicaid programs who knowingly and willfully offer, pay,
solicit or receive remuneration in order to induce referrals for items

or services reimbursed under such programs. In addition to federal criminal
penalties, the Social Security Act also establishes the intermediate sanction of
excluding violators from participation in the Medicare or Medicaid programs.

A violation of the Anti-Kickback Law requires several elements: (i) the
offer, payment, solicitation or receipt of remuneration; (ii) the intent to
induce referrals; (iii) the ability of the parties to make or influence
referrals of patients; (iv) the provision of services that are reimbursable
under Medicare or state health programs; and (v) patient coverage under the
Medicare program or a state health program. Old STAT management believes that
Old STAT is receiving compensation under the Management Agreements for
management services. Old STAT also believes that it is not in a position to make
or influence referrals of patients or services reimbursed under Medicare or
state health programs to its affiliated physician groups. Consequently, Old STAT
does not believe that the management fees payable to it should be viewed as
remuneration for referring or influencing referrals of patients or services
covered by such programs as prohibited by the Anti-Kickback Laws. Furthermore,
Old STAT is not a provider or supplier of services or items reimbursed by
Medicare or state health programs.

In 1991, the Inspector General of the United States Department of Health
and Human Services published "Safe Harbor Regulations" defining safe harbors for
certain arrangements that do not violate the Anti-Kickback Laws. One of the safe
harbors specifically provided is a safe harbor for personal services and
management contracts. Under this safe harbor, "remuneration" prohibited by the
Anti-Kickback Laws will not include any payment made by a principal to an agent
as compensation for services of the agent as long as certain standards are met.
To Old STAT management's knowledge, there have been no agency interpretations or
case law decisions involving management agreements similar to Old STAT's that
would indicate that such agreements do not fall within a safe harbor. Further,
Old STAT management believes that since it is not a provider of medical
services, and is not in a position to refer patients to any particular medical
practice, the remuneration it receives for providing services should not be
found to violate the Anti-Kickback Laws.

PROHIBITIONS ON CERTAIN REFERRALS. As stated above, OBRA 93 includes
revisions to a provision known as the Stark Law. The Stark Law originally
prohibited a physician from referring a Medicare or Medicaid patient to any
entity for the provision of clinical laboratory services if the physician or an
immediate family member of the physician had an ownership interest or
compensation relationship with the entity. The revisions to the Stark Law
included in OBRA 93 prohibit a referral to an entity in which the physician or
an immediate family member has an ownership interest or compensation
relationship if the referral is for any of a list of "designated health
services" or if an exception to the Stark Law does not exist. The list of
designated health services does not include the management of a physician health
care practice such as Old STAT provides. Old STAT does not consider its
operations to include the provision of a designated health service nor is Old
STAT a provider of such services; however, no regulations for the Stark Law
(except for clinical laboratory services) have been promulgated by the
regulatory and enforcement agency of the Stark Law, therefore Old STAT cannot
predict how enforcement or interpretation of the Stark Law will be handled. A
determination of the applicability of the Stark Law could have a significant
adverse effect on Old STAT.

REGULATORY COMPLIANCE. Old STAT believes that health care regulations and
statutes will continue to change and, as a result, it regularly monitors
developments in health care law. Old STAT expects to modify its agreements and
operations from time-to-time as the business and statutory and regulatory
environment changes. While Old STAT believes it will be able to structure all
its agreements and operations in accordance with applicable laws, there can be
no assurance that its arrangements will not be successfully challenged in the
future.

CORPORATE LIABILITY AND INSURANCE

STAT Physicians, STAT P.A. and Old STAT maintain professional liability
insurance in amounts deemed appropriate by management, based upon historical
claims and the nature and risks of the business. The current coverage is
$1,000,000 per incident and $3,000,000 aggregate per physician per

hospital. There can be no assurance that a future claim will not exceed the
limits of available insurance or that such coverage will continue to be
available. Such insurance would provide coverage, subject to policy limits, in
the event Old STAT were held liable as a co-defendant in any lawsuit against a
contracted health care professional or hospital client. STAT Physicians
currently has certain pending and threatened litigation and claims incurred in
the ordinary course of business; however, Old STAT's management believes that
the probable resolution of such contingencies will not materially affect the
liquidity, the financial position, or results of operations of STAT Physicians
or of Old STAT. Old STAT management believes, although there can be no
assurance, that courts considering the question would not hold Old STAT
vicariously liable for the malpractice of physicians who are independent
contractors contracted by the affiliated physician group. In addition, Old STAT
cannot be shielded from liability in cases in which Old STAT was negligent.

In addition, STAT Physicians' and STAT P.A.'s contracts with hospital
clients generally contain provisions under which the client hospital is
indemnified for losses resulting from the contracting physician's malpractice up
to the limits of liability insurance (whether or not such losses are covered by
insurance policies), and the client agrees to indemnify STAT Physicians or Old
STAT, as the case may be, up to the limits of the client's professional
liability insurance for losses resulting from the negligence of the client or
client personnel (whether or not such losses are covered by insurance policies).
Both STAT Physicians and STAT P.A. requires its independent contracted
physicians to indemnify STAT Physicians or STAT P.A., as the case may be, for
losses related to the performance of their medical services. By requiring such
indemnification, STAT Physicians and STAT P.A. are afforded additional
protection in the event that one of its individual contractor physicians commits
malpractice in the performance of his or her duties under the contract.

COMPETITION

The business in which Old STAT operates is highly competitive. Old STAT has
both national and local competitors, including Coastal Healthcare Group, Inc.,
Sterling Healthcare, Spectrum Emergency Services, Inc. and Emcare, Inc. Based on
the number of hospitals which Old STAT's national competitors serve, its
national competitors are substantially larger in size than Old STAT. In the
greater Houston area, Old STAT has more hospital contracts than any other
competitor. Competition in the industry is based on the scope, quality and cost
of services provided. Certain of Old STAT's actual or potential competitors have
substantially greater financial resources available to them. While Old STAT
management believes that it competes on the basis of the quality of its
services, the larger resources of its national competitors may give them certain
cost advantages over Old STAT (E.G., in the areas of malpractice insurance,
cost, savings from internal billing and collection and a broader scope of
services).

LEGAL PROCEEDINGS

Old STAT is not presently a party to any material legal proceedings.
However, in the future it could be subject to claims arising from its business
management relationship to STAT Physicians, STAT P.A. or other professional
associations to which it may provide services. STAT Physicians is involved in
various legal proceedings incidental to its business, substantially all of which
involve claims related to the alleged medical malpractice of its independent
contracted physicians. In the opinion of Old STAT management, no individual item
of litigation or group of similar items of pending litigation is likely to have
a material adverse effect on Old STAT's liquidity, financial position or results
of operations.

EMPLOYEES

On March 31, 1996, Old STAT had 30 full-time employees, of whom six were in
general executive positions and 24 were in administration. In addition, as of
such date approximately 150 physicians were under contract with STAT Physicians
or STAT P.A. None of Old STAT's employees

is represented by a collective bargaining agreement, and Old STAT considers its
employee relations to be satisfactory.

William H. Rice, M.D., Chairman of Board, Victor M. Miranda, M.D.,
President, and Ned E. Chapman, Secretary, Treasurer and Chief Financial
Officer, have entered into employment agreements with Old STAT. See
"Management of Old STAT -- Employment Agreements."

PROPERTY

Old STAT's offices are located at 12450 Greenspoint Drive, Suite 1200,
Houston, Texas 77060. Old STAT has entered into a 39-month sublease agreement
with a non-affiliated sublessor in Houston, Texas for 9,556 square feet of space
for its operations at an average monthly rental of $8,760.

PROPOSAL 2 -- ELECTION OF DIRECTORS

Four directors are to be elected to the Old STAT Board at the Meeting to
serve until the earlier of consummation of the Exchange or the next annual
meeting of stockholders or until his successor has been elected or qualified.
The persons named as proxies on the enclosed proxy will vote all shares over
which they have control for the election of the Old STAT Board's nominees,
unless otherwise instructed.

Each of the nominees listed below are members of the present Old STAT
Board. Each nominee listed below has consented to be named in this Joint Proxy
Statement/Prospectus and to serve as a director if elected. Should any of the
nominees become unable or unwilling to accept nomination or election, it is
intended that the persons designated in the proxy will vote for the election, in
the nominee's stead, of such other person as the Old STAT Board may recommend.
Old STAT management has no reason to believe that any of the nominees will be
unable or unwilling to serve, if elected.

The four nominees for election as Old STAT directors at the Meeting, and
certain additional information with respect to each of them, are as follows:
<TABLE>
<CAPTION>

YEAR FIRST
BECAME
NAME AGE POSITION(S) A DIRECTOR
- ------------------------------------- --- ------------------------------------ ------------
<S> <C> <C> <C>
William H. Rice, M.D................. 38 Chairman of the Board 1994
Victor M. Miranda, M.D............... 38 President and Director 1994
Ned E. Chapman....................... 54 Chief Financial Officer, Treasurer
and Director 1994
Russell D. Schneider................. 41 Director 1995
</TABLE>
See "Management of New STAT -- Directors and Executive Officers" for
certain information concerning the occupation and business experience of each
nominee.

THE OLD STAT BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF
EACH OF THE ABOVE-NAMED NOMINEES.

MANAGEMENT OF NEW STAT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
executive officers and directors of New STAT following consummation of the
Exchange.
<TABLE>
<CAPTION>
NAME AGE POSITION(S)
- ------------------------------------- --- ---------------------------------------------------------------------
<S> <C>
Russell D. Schneider................. 41 Chairman of the Board (Class II Director)
William H. Rice, M.D................. 38 Chief Executive Officer and Director (Class I Director)
Victor M. Miranda, M.D............... 38 Chief Operating Officer, President and Director (Class II Director)
Ruben A. Perez....................... 41 Treasurer and Director (Class III Director)
Ned E. Chapman....................... 54 Chief Financial Officer and Secretary
Daniel A. Perez...................... 34 Executive Vice President
</TABLE>
The principal occupation and business experience of each director and
executive officer is set forth below.

Russell D. Schneider, co-founder of AmHealth Corporation with Ruben A.
Perez and Danny A. Perez in October 1992, and a director of Old STAT since July
1995, received an MBA from California Coast University in January 1981 and an
M.S. in Urban Studies and Administration from the University of Nebraska in
December 1978. Mr. Schneider was a co-founder of Columbia/HCA Corporation in
1988 and served on its Board of Directors and as Senior Vice President of Market
Development, overseeing the involvement of Columbia/HCA Corporation in physician
ventures, mergers, acquisitions and business development. From 1978 to 1988, he
served as Chief Executive Officer of San Jacinto Methodist Hospital and of Nan
Travis Memorial Hospital.

William H. Rice, M.D., co-founder of STAT Physicians in 1986 with Dr.
Miranda and Chairman of Old STAT since its inception, received his medical
degree from the University of Texas Medical School at San Antonio in 1983. After
post-graduate training in trauma and surgery, he began work in emergency
medicine. Dr. Rice is actively involved in the administrative and clinical
business of Old STAT. He is a physician consultant to the Texas Department of
Health, is active at the regional and national level with the American College
of Emergency Physicians on legislative and clinical issues and is an Affiliate
Professor of Medicine at the University of Texas Medical School at Houston. Dr.
Rice currently devotes 100% of his time to the management and operation of Old
STAT.

Victor M. Miranda, M.D., co-founder of STAT Physicians in 1986 with Dr.
Rice and President of Old STAT since its inception, graduated from the
University of Texas Medical School at Galveston in 1982. Dr. Miranda began his
career in emergency medicine after post-graduate training in trauma and
surgery. Dr. Miranda is Board certified in Emergency Medicine. Dr. Miranda is
actively involved in all aspects of the administrative and clinical management
of Old STAT. He is the medical director of two emergency medical services at
hospitals within Houston, and an active member of the American College of
Emergency Physicians. Dr. Miranda currently devotes 100% of his time to the
management and operation of Old STAT.

Ruben A. Perez, co-founder of AmHealth Corporation with Russell D.
Schneider and Daniel A. Perez in October 1992 and President and Secretary of
AmHealth Corporation since its inception, graduated from the University of Texas
at Pan American in Edinburg, Texas with a Bachelors of Business Administration
in Accounting in 1977. Mr. Perez was a co-founder and Senior Vice President of
Columbia Hospital Corporation in Forth Worth, Texas from 1988 to 1992 and
controller of The Methodist Healthcare Network for two years. Mr. Perez
currently devotes 100% of his time to the management and operation of AmHealth.

Ned E. Chapman joined STAT Physicians as Chief Financial Officer in 1992.
From 1989 until joining STAT Physicians, Mr. Chapman served as a financial
consultant to a number of private and public companies in California's Silicon
Valley. Mr. Chapman was formerly CFO of three companies,

two of which were public companies (Magnuson Computers and CAS, Inc.). Mr.
Chapman is a CPA and was with Price Waterhouse for 11 years, last serving as a
senior audit manager. Mr. Chapman received a B.S. degree from Northern
Illinois University. Mr. Chapman has been Chief Financial Officer of Old STAT
since its inception. Mr. Chapman currently devotes 100% of his time to the
management and operation of Old STAT.

Daniel A. Perez, a co-founder of AmHealth Corporation, has been Vice
President and Assistant Secretary of AmHealth Corporation since November 1992.
Mr. Perez also acts as Chief Operating Officer of AmHealth's Kidney Dialysis
Centers. He was a former area administrator for Bio-Medical Applications' South
Texas operations, where he gained extensive experience in the development and
management of dialysis centers, and served as Administrator of Bio-Medical
Applications of the Rio Grande Valley for over three years.

BOARD OF DIRECTORS

New STATs Charter and Bylaws provide that the New STAT Board shall be
staggered with respect to terms of office into three classes. Each class of
directors shall consist of an equal, or as near to equal as possible, number of
directors. The term of the Class I Directors will expire at the 1997 annual
meeting, the term of the Class II Directors will expire at the 1998 annual
meeting, and the term of the Class III Directors will expire at the 1999 annual
meeting. At each annual meeting, commencing with the 1997 annual meeting, the
successor or successors to the class of directors whose terms shall expire in
that year shall be elected to hold office for a term of three years, so that the
term of office of one class of directors shall expire in each year.

If the Reorganization Agreement is approved and the Exchange is
consummated, the Board of Directors of New STAT will consist of seven persons,
three of whom are anticipated to be certain of the present directors of Old
STAT, three of whom will be selected by AmHealth and one of whom will be
selected by the mutual agreement of Old STAT and AmHealth. With 90 days
following the consummation of the Exchange, New STAT intends to establish a
Compensation Committee and an Audit Committee.

Following the Exchange, New STAT anticipates that directors of New STAT
will not be paid any fees or additional compensation for service as members of
the New STAT Board or any committee thereof. However, New STAT directors may be
reimbursed for expenses incurred in connection with their services as such.

New STAT officers are elected to serve in such capacities until the earlier
to occur of the election and qualification of their respective successors or
until their respective deaths, resignations or removals from such positions by
the New STAT Board.

MANAGEMENT OF OLD STAT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning each of the
executive officers and directors of Old STAT.

NAME AGE POSITION(S)
- ------------------------------------- ---- -----------
William H. Rice, M.D. ............... 38 Chairman of the Board
Victor M. Miranda, M.D. ............. 38 President and Director
Ned E. Chapman....................... 54 Chief Financial Officer,
Treasurer and Director
Russell D. Schneider................. 41 Director

See "Management of New STAT -- Directors and Executive Officers" above for
a description of the principal occupation and business experience of each
director and executive officer.

Old STAT's officers are elected to serve in such capacities until the
earlier to occur of the election and qualification of their respective
successors or until their respective deaths, resignations or removals by the Old
STAT Board from such positions. Old STAT's directors are elected to serve in
such capacities until the earlier to occur of the election and qualification of
their respective successors or their respective deaths, resignations or removals
by the Old STAT stockholders from such positions. Directors do not currently
receive compensation for their services as such.

The Old STAT Board has established an Audit Committee and Compensation
Committee. The Old STAT Board does not have a standing nominating committee. The
current member of the Audit Committee is Mr. Schneider. The Audit Committee's
functions include recommending to the Old STAT Board the engagement of Old
STAT's independent auditors, reviewing with such auditors the plans for and the
results and scope of their auditing engagement and certain other matters,
including the independence of such auditors. The current member of the
Compensation Committee is Mr. Schneider. The Compensation Committee reviews
compensation of directors, executive officers and key employees and makes
recommendations to the Old STAT Board with respect to matters not involving
awards under Old STATs 1994 Stock Option Plan. Upon consummation of the
Exchange, Mr. Schneider will resign from each standing committee.

During 1995, the Old STAT Board held regular quarterly meetings. Each
member of the Old STAT Board attended 75% or more of the aggregate number of
meetings of the Old STAT Board during such year. No committee meetings were held
during 1995.

None of the Old STAT directors has received or will receive any cash
compensation for serving on the Old STAT Board; however, directors may be
reimbursed for expenses incurred in connection with their services as such.

KEY EMPLOYEE LIFE INSURANCE

The success of Old STAT and New STAT is largely dependent upon its senior
management. Old STAT currently maintains and intends to continue to maintain key
employee life insurance in the amount of $1,000,000 each on the lives of Drs.
Rice and Miranda.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE. The following table sets forth the cash
compensation, as well as certain other compensation paid or accrued, by Old STAT
and STAT Physicians, as identified, to Old STAT's Chairman, President and Chief
Financial Officer (the "named executive officers") for the fiscal years ended
December 31, 1995, 1994 and 1993. No other executive officer of Old STAT had a
total annual salary and bonus of more than $100,000 during the reported periods.
<TABLE>
<CAPTION>
OTHER
NAME AND ANNUAL OPTIONS
PRINCIPAL POSITION YEAR SALARY COMPENSATION GRANTED
--------- ----------- ------------- --------
<S> <C> <C> <C>
William H. Rice, M.D., Chairman...... 1993(2) $ 195,845 $ 217,372(1) --
1994(2) 86,800 137,874 --
1994(3) 66,667 16,291 --
----------- -----------
153,467 154,165(1)
=========== ===========
1995(3) 274,999 26,595(1) 21,658
Victor M. Miranda, M.D., President... 1993(2) 196,851 332,583(1) --
1994(2) 86,800 196,938 --
1994(3) 66,667 68,650 --
----------- -----------
153,467 265,588(1)
=========== ===========
1995(3) 283,218 65,182(1) 109,342
Ned E. Chapman, Chief Financial
Officer.............................. 1993 68,115 -- --
1994(2) 56,231 -- --
1994(3) 23,615 -- --
1995(3) 127,265 -- 45,000
</TABLE>
- ------------
(1) Represents shift pay for Drs. Miranda and Rice when performing services as
attending physicians.

(2) Represents compensation from STAT Physicians.

(3) Represents compensation from Old STAT.

OPTION/SAR GRANTS TABLE. The following table sets forth certain information
concerning stock options granted to the named executive officers during 1995. No
stock appreciation rights were granted during 1995.
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT
ASSUMED
ANNUAL
RATES
OF STOCK
PRICE
APPRECIATION
FOR
NUMBER OF PERCENT OF TOTAL OPTION
SECURITIES OPTIONS GRANTED TO TERM(3)
UNDERLYING EMPLOYEES IN FISCAL EXERCISE PRICE ---------
NAME OPTIONS GRANTED(1) YEAR PER SHARE(2) EXPIRATION DATE 5%
------------------ -------------------- --------------- ---------------- ---------
<S> <C> <C> <C> <C> <C>
William H. Rice, M.D................. 21,658 7% $3.17 10/16/00 $ 10,814
Victor M. Miranda, M.D............... 109,342 36 3.17 10/16/00 54,596
Ned E. Chapman....................... 45,000 15 2.88 10/16/00 35,744
</TABLE>

NAME 10%
---------
William H. Rice, M.D................. $ 31,625
Victor M. Miranda, M.D............... 159,663
Ned E. Chapman....................... 78,985
- ------------
(1) Each option will become exercisable in five equal annual installments over
the optionee's continued service measured from the date of grant.

(2) The exercise price must be paid in cash.

(3) Potential realizable value is based on the assumption that the price per
share of Old STAT Common Stock appreciates at the assumed annual rate of
stock appreciation for the option term. There is no assurance that the
assumed 5% and 10% annual rates of appreciation (compounded annually) will
actually be realized over the term of the option. The assumed 5% and 10%
annual rates are set forth in accordance with the rules and regulations
adopted by the Commission and do not represent Old STAT's estimate of stock
price appreciation.

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES. The following table sets forth certain information concerning
unexercised options held by the named executive officers at December 31, 1995.
No options or stock appreciation rights were exercised during 1995 and no
options were exercisable and no stock appreciation rights were outstanding at
December 31, 1995.

NUMBER OF
SECURITIES VALUES OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS OPTIONS
AT FISCAL AT FISCAL
NAME YEAR-END YEAR-END (1)
- ------------------------------------- ----------- -------------
William H. Rice, M.D................. 21,658 $ 36,927
Victor M. Miranda, M.D............... 109,342 $ 186,428
Ned E. Chapman....................... 45,000 $ 89,775
- ------------
(1) The estimated fair value per share of Common Stock used to value
unexercised, in-the-money options is $4.88 per share.

EMPLOYMENT AGREEMENTS

Effective September 1, 1994, Drs. Miranda and Rice entered into three-year
Employment Agreements with Old STAT providing for an annual base salary of
$200,000, plus bonuses as determined by the Board of Directors. The Employment
Agreements provide that in the event of termination of employment, Drs. Miranda
and Rice shall not compete with Old STAT for two years from the date of
termination. Old STAT also entered into a three-year Employment Agreement with
Ned E. Chapman for annual compensation of $103,200. Following consummation of
the Exchange, New STAT will enter into three-year Employment Agreements with
Russell D. Schneider, Ruben A. Perez and Daniel A. Perez pursuant to which such
individuals will receive annual compensation of not less than $120,000 each. The
Employment Agreements will contain non-competition provisions which will remain
in force for a period of two years following termination of employment.

STOCK OPTION PLAN

In July 1994, the Old STAT Board adopted and approved the 1994 Stock Option
Plan (the "PLAN" or the "OLD STAT STOCK PLAN"), and the Plan received
stockholder approval in July 1994. The Plan is administered by the Old STAT
Board or by a committee appointed by the Board (the "PLAN ADMINISTRATOR").
Pursuant to the Plan, options to acquire an aggregate of 300,000 shares of Old
STAT Common Stock are permitted to be granted, and options to acquire 290,000
shares have been granted as of the date hereof. The Plan provides for grants to
employees, consultants and directors of the Company. Old STAT's obligations
under the Plan will be assumed by New STAT under the terms of the Reorganization
Agreement. If the Exchange is consummated and the New STAT Stock Plan is also
approved, the options outstanding under the Plan will be incorporated into the
New STAT Stock Plan.

The Old STAT Stock Plan authorizes the Old STAT Board to issue incentive
stock options ("ISOS"), as defined in Section 422A of the Code as well as stock
options that do not conform to the requirements of the Code section
("NON-ISOS"). Consultants and directors who are not also employees of Old STAT
may be granted only Non-ISOs. The exercise price of each ISO may not be less
than 100% of the fair market value of the Old STAT Common Stock at the time of
grant, except that in the case of a grant to an employee who owns l0% or more of
the outstanding stock of Old STAT or a subsidiary or parent of Old STAT (a "10%
STOCKHOLDER"), the exercise price may not be less than 110% of the fair market
value on the date of the grant. For purposes of the Plan, STAT Physicians is not
a subsidiary or parent of Old STAT. The exercise price of each Non-ISO will be
determined by the Plan Administrator in its discretion and may be no more than
10% less than the fair market value of the Old STAT Common Stock on the date of
grant. Notwithstanding the foregoing, the exercise price of any option granted
on or after the effective date of the registration of any class of equity
security of

Old STAT pursuant to Section 12 of the Exchange Act and prior to six months
after the termination of such registration may be no less than 100% of the fair
market value per share on the date of the grant. ISOs may not be exercised after
the tenth anniversary (fifth anniversary in the case of any option granted to a
10% Stockholder) of their grant. Non-ISOs may not be exercised after the tenth
anniversary of the date of grant. Options may not be transferred during the
lifetime of an optionholder.

Subject to the provisions of the Plan, the Plan Administrator has the
authority to determine the individuals to whom the stock options are to be
granted, the number of shares to be covered by each option, the exercise price,
the type of option, the option period, the restrictions, if any, on the exercise
of the option, the terms for the payment of the option price and other terms and
conditions. Payments by optionholders upon exercise of an option may be made (as
determined by the Old STAT Board) in cash or such other form of payment as may
be permitted under the Plan, including without limitation, by promissory note or
by shares of Old STAT Common Stock.

If the New STAT Stock Plan is approved and the Exchange is consummated,
options outstanding under the Old STAT Stock Plan will be incorporated into the
New STAT Stock Plan. See "Proposal 4 -- Approval of New STAT Healthcare, Inc.
1996 Stock Incentive Plan -- Description of New STAT Stock Plan."

401(K) PLAN

It is presently anticipated that New STAT will adopt the 401(k) Plan
currently in place for AmHealth employees, and will make the plan available to
all employees of New STAT and its subsidiaries.

COMPLIANCE WITH SECTION 16(A)

Section 16(a) of the Exchange Act requires Old STAT's directors and
executive officers and persons who own more than ten percent of Old STAT Common
Stock, to file reports of ownership and changes in ownership with the Commission
and The Nasdaq Stock Market. Based on Old STAT's review of the copies of such
reports received by Old STAT and on written representations received by Old
STAT, Old STAT believes that no director, executive officer or holder of more
than ten percent of Old STAT Common Stock failed to file on a timely basis the
reports required by Section 16(a) of the Exchange Act relating to transactions
during fiscal year 1995, except that Drs. Rice and Miranda and Mr. Chapman each
filed one Form 4 report (relating to one option grant) late and Mr. Schneider
filed his initial Form 3 approximately ten days late.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF OLD STAT

On August 31, 1994, Old STAT issued 450,000 shares of Old STAT Common Stock
to its founders, which included Robert M. Rubin (200,000 shares), Ned E.
Chapman, Old STAT's Chief Financial Officer and a director (75,000 shares),
Carmelo M. Gordian, a member of the law firm representing Old STAT (30,000
shares), Gersten, Savage, Kaplowitz & Curtin, counsel to the underwriters of Old
STAT's April 1995 initial public offering (70,000 shares), and Kay Raley, an
employee of Old STAT (75,000 shares), at a price of $.01 per share. In September
1994, Old STAT issued 74,000 shares of Series A Convertible Preferred Stock at a
price of $5.00 per share to STAT Physicians which were converted into 1,480,000
shares of Old STAT Common Stock upon completion of Old STAT's initial public
offering. Drs. Rice and Miranda are controlling stockholders of Old STAT by
virtue of their ownership of STAT Physicians and are also officers and directors
of Old STAT. On October 31, 1994, Old STAT issued an aggregate 100,000 shares of
Old STAT Common Stock to its founders and STAT Physicians at a price of $.10 per
share. Pursuant to such issuance, Mr. Rubin purchased 10,363 shares, Mr. Chapman
purchased 3,886 shares, Mr. Gordian purchased 1,554 shares, Gersten, Savage,
Kaplowitz & Curtin purchased 3,627 shares, Ms. Raley purchased 3,886 shares and
STAT Physicians purchased 76,684 shares.

Effective as of September 1, 1994, Old STAT entered into a Management
Agreement with STAT Physicians whereby Old STAT has agreed to manage the
business and affairs of STAT Physicians.

Effective as of September 1, 1994, Old STAT entered into Employment
Agreements with Drs. Miranda and Rice, providing for annual compensation of
$200,000 plus bonuses as determined by the compensation committee of the Board
of Directors. Old STAT also entered into an Employment Agreement with Ned E.
Chapman which presently provides for annual compensation of $103,200. New STAT
will enter into three-year employment and non-competition agreements with
Russell D. Schneider and Ruben A. Perez pursuant to which such individuals shall
serve as Chairman of the Board and Treasurer, respectively, of New STAT, at
annual salaries of not less than $120,000 each. In addition, New STAT will enter
into an employment agreement with Daniel A. Perez, who will serve as Executive
Vice President and who will be a beneficial owner of more than 5% of the
outstanding New STAT Common Stock upon consummation of the Exchange. See
"Principal Stockholders of Old STAT and New STAT," "Business of Old STAT --
Contractual Arrangements," "Management of Old STAT" and "Management of New STAT
- -- Employment Agreements."

On April 11, 1995, Old STAT obtained a $600,000 bank line of credit and
borrowed the entire amount available under such line. The proceeds of such line
were used, in part, to repay the $400,000 principal amount outstanding under a
STAT Physicians line of credit, which amount had been used to finance operations
of Old STAT. In addition, New STAT will assume responsibility under AmHealth's
current leases including those four which relate to facilities directly or
indirectly owned in varying percentages by William Restrepo, M.D., M.K. Razdan,
M.D. and Ruben A. Perez, each an AmHealth Partner. Payments under such leases
totaled $87,000 and $147,000 in 1994 and 1995, respectively, and will total
approximately $238,000 during each of 1996 through 2005.

Russell D. Schneider, a member of the Old STAT Board since July 1995 and
the holder of a significant ownership interest in the AmHealth Partnerships,
abstained from the vote of the Old STAT Board at its December 15, 1995 meeting
approving the execution of the Reorganization Agreement.

On October 16, 1995, in order to meet federal income tax obligations
arising from the income of STAT Physicians attributable to them, Drs. Rice and
Miranda each borrowed $100,000 from Old STAT pursuant to loan agreements having
a maturity date of October 16, 1996.

PRINCIPAL STOCKHOLDERS OF OLD STAT AND NEW STAT

The following table sets forth, both as of the date of this Joint Proxy
Statement/Prospectus and upon the consummation of the Exchange, certain
information with respect to stock ownership of (i) all persons known by Old STAT
to be beneficial owners of more than 5% of the outstanding shares of Old STAT
Common Stock prior to the Exchange; (ii) each director; (iii) each named
executive officer of Old STAT; and (iv) all directors and officers as a group,
together with their respective percentage ownership of such shares before the
Exchange and as adjusted to reflect the ownership of New STAT Common Stock
following the Exchange. Unless otherwise indicated, the beneficial owners have
sole voting and investment power over the shares listed below:
<TABLE>
<CAPTION>

PERCENTAGE OF SHARES
NUMBER OF SHARES OWNED OWNED
------------------------ ----------------------
PRIOR TO AFTER PRIOR TO AFTER
NAME AND ADDRESS EXCHANGE EXCHANGE EXCHANGE EXCHANGE
- ------------------------------------- ----------- ----------- -------- --------
<S> <C> <C> <C> <C>
William H. Rice, M.D.(1)............. 778,342(2) 778,342(2) 21.0% 5.2%
Victor M. Miranda, M.D.(1)........... 778,342(2) 778,342(2) 21.0 5.2
Robert M. Rubin(3)................... 307,323 307,323 8.3 2.1
Ned E. Chapman(1).................... 78,886 78,886 2.1 *
Russell D. Schneider(1).............. 15,000(4) 2,826,922(4) * 19.0
Ruben A. Perez(5).................... -- 3,868,917 -- 26.0
Daniel A. Perez(6)................... -- 1,509,231 -- 10.1
William Restrepo, M.D.(7)............ -- 1,043,018 -- 7.0
M. K. Razdan, M.D.(8)................ -- 1,026,038 -- 6.9
All officers and directors as a
group.............................. 1,650,570(9) 9,840,640(10) 44.5%(9) 66.0%(10)
</TABLE>
- ------------
* Indicates less than 1%.

(1) The address for Dr. Rice, Dr. Miranda, Mr. Chapman and Mr. Schneider is
c/o STAT Healthcare, Inc., 12450 Greenspoint Drive, Suite 1200, Houston,
Texas 77060.

(2) Represents a 50% ownership interest in STAT Physicians which owned
1,556,684 shares of Old STAT Common Stock prior to the Exchange.

(3) The address for Mr. Rubin is 6060 Kingsgate Circle, Delray Beach, Florida
33484.

(4) Includes 10,000 shares subject to presently exercisable options.

(5) The address for Mr. Perez is 8200 I.H. 10 West, Suite 209, San Antonio,
Texas 78230.

(6) The address for Mr. Perez is 1300 North 10th, Suite 220, McAllen, Texas
78501.

(7) The address for Dr. Restrepo is 1801 South 5th Street, Suite 207, McAllen,
Texas 78503.

(8) The address for Dr. Razdan is 222 East Ridge Road, Suite 116, McAllen,
Texas 78503.

(9) Four persons.

(10) Six persons.

BUSINESS OF AMHEALTH

GENERAL

AmHealth is a provider of dialysis services in the Rio Grande Valley of
southern Texas through four regional centers and of management services relating
to home healthcare and hyperbaric medicine. For the year ended December 31,
1995, approximately 70% of AmHealth's net service revenues were derived from
integrated dialysis services for patients suffering from chronic kidney failure,
also known as end-stage renal disease. AmHealth currently provides dialysis and
related ancillary services to approximately 250 patients through its outpatient
dialysis facilities. AmHealth has plans for an additional facility in the region
which is expected to open in Spring of 1996.

The remainder of AmHealth's business is management and administrative
services provided to hospital hyperbaric oxygen centers and home healthcare
agencies. Pursuant to various management agreements, AmHealth manages and
administers the day-to-day functions of such entities, including assuming
responsibility for the administrative, accounting, personnel and business
functions of such entities. AmHealth also provides quality assurance, risk
management, training, continuing education and marketing services. Currently,
AmHealth has one hospital contract and one agency contract which accounts for
the revenues associated with such business.

DIALYSIS SERVICES

END-STAGE RENAL DISEASE

End-stage renal disease ("ESRD") is the state of advanced renal impairment
that is irreversible and requires routine dialysis treatments or kidney
transplantation to sustain life. Qualified patients with ESRD have been entitled
since 1972 to Medicare benefits regardless of age or financial circumstances.
According to figures published by the Health Care Financing Administration
("HCFA"), the number of patients requiring chronic dialysis services in the U.S.
has grown at a 9% compounded annual growth rate to 187,000 patients in 1994 from
66,000 in 1982. AmHealth estimates that the U.S. market for outpatient and
inpatient dialysis services in 1994 exceeded $11 billion dollars.

AmHealth attributes the continuing growth in the number of ESRD patients
principally to the aging of the general population and better treatment and
longer survival of patients with hypertension, diabetes and other illnesses that
lead to ESRD. AmHealth management also believes that improved dialysis
technology has enabled older patients and those who previously could not
tolerate dialysis due to other illnesses to benefit from this life-prolonging
treatment.

There were over 2,500 dialysis facilities in the United States in 1994, of
which approximately 35% were owned by independent physicians (down from 37% in
1992), 29% were hospital-based facilities (down from 33% in 1992), and 36% were
owned by multi-facility dialysis providers (up from 30% in 1992), including
AmHealth. The dialysis services industry is undergoing rapid consolidation.
AmHealth believes that many physician owners are selling their facilities to
obtain relief from changing government regulation and administrative
constraints, to enable them to focus on patient care and to realize a return on
their investment. Hospitals are also motivated to sell or outsource management
of their facilities as they refocus their resources on their core business due
to increasing competitive pressures within the hospital industry. AmHealth
believes that these changes in the health care environment will continue to
drive consolidation within the dialysis services industry.

TREATMENT OPTIONS FOR END-STAGE RENAL DISEASE

Treatment options for ESRD include hemodialysis, peritoneal dialysis and
kidney transplantation. ESRD patients are treated predominantly in outpatient
treatment facilities. HCFA estimates that as of December 31, 1994, 82% of the
ESRD patients in the United States were receiving hemodialysis treatment in
outpatient facilities, with the remaining patients being treated in the home
either through peritoneal dialysis (17%) or home hemodialysis (1%).

HEMODIALYSIS. Hemodialysis, the most common form of ESRD treatment, is
generally performed either in a freestanding facility or in a hospital-based
facility. Hemodialysis uses an artificial kidney, called a dialyzer, to remove
certain toxins, fluids and salt from the patient's blood combined with a machine
to control external blood flow and to monitor certain vital signs of the
patient. The dialysis process occurs across a semi-permeable membrane that
divides the dialyzer into two distinct chambers. While blood is circulated
through one chamber, a pre-mixed dialyzer fluid is circulated through the other
chamber. The toxins and excess fluid from the blood selectively cross the
membrane into the dialysis fluid. A hemodialysis treatment usually lasts
approximately three hours and is performed three times per week per patient.

PERITONEAL DIALYSIS. Peritoneal dialysis is generally performed by the
patient at home. There are several variations of peritoneal dialysis. The most
common are continuous ambulatory peritoneal dialysis ("CAPD") and continuous
cycling peritoneal dialysis ("CCPD") or automated peritoneal dialysis ("APD").
All forms of peritoneal dialysis use the patient's peritoneal (abdominal) cavity
to eliminate fluid and toxins from the patient. CAPD utilizes a sterile,
pharmaceutical-grade dialysis solution which is introduced into the patient's
peritoneal cavity through a surgically placed catheter. Toxins in the blood
continuously cross the peritoneal membrane into the dialysis solution. After
several hours, the patient drains the used dialysis solution and replaces it
with fresh solution. CCPD and APD are performed in a manner similar to CAPD, but
use a mechanical device to cycle dialysis solution while the patient is sleeping
or at rest.

OTHER TREATMENT OPTIONS. An alternative treatment not provided by AmHealth
is kidney transplantation. While transplantation, when successful, is generally
the most desirable form of therapeutic intervention, the shortage of suitable
donors limits the availability of this treatment option. AmHealth currently has
transplantation agreements with the University of Texas Medical Branch-Galveston
and the University of Texas Health Science Center, San Antonio, to provide
assessment and evaluation of AmHealth's patients for possible kidney transplant
services and to facilitate patient transfers. No fees are involved or paid in
connection with such relationship.

MANAGEMENT SERVICES

HOME HEALTHCARE. In addition to its dialysis services, AmHealth also
provides management services to a major provider of home healthcare services in
the Rio Grande Valley of southern Texas pursuant to a seven-year management
contract. Under the terms of the contract, AmHealth furnishes nursing staff to
perform basic nursing services as well as very specialized, high tech nursing
staff for the care of renal, transplant, cancer, diabetic and cardiac patients,
as well as provides continuing education and training for its employees on an
on-going basis. In addition, AmHealth provides administrative, financial, and
management services to the home health company such as quality assurance
programs, risk management, employee safety and physician relations services.

Home healthcare patients are generally referred to a licensed and certified
home healthcare agency following the diagnosis of a specific disease or upon
discharge from a hospital. Prior to the patient receiving home health services,
the attending physician devises the patient's plan of care and communicates it
to the agency. The agency works with the attending physician to administer the
plan of care and monitor the progress of approximately 210 patients. Throughout
the patient's treatment, the agency will regularly provide the attending
physician with reports on the patient's condition, allowing the attending
physician to play an active role in the patient's treatment. The attending
physician remains responsible for the patient's care, including changing the
patient's plan of care to meet the patient's needs and handling patient
emergencies.

When a patient's suitability for home healthcare has been confirmed, the
patient and the patient's family receive training and education concerning the
plan of care to be administered, including the care and use of intravenous
devices and other equipment used in connection with the plan of care. The
frequency of nursing visits depends upon the particular therapy ordered by the
attending physician for the patient involved. During these visits, nurses may
adjust the patient's intravenous lines and related

equipment, obtain blood samples, check wounds and catheter insertion points,
change drug administration after consulting with the attending physician, and
assess the patient's condition and compliance with the plan of care.

HYPERBARIC OXYGEN THERAPY. AmHealth, pursuant to a five-year management
contract, also manages a hospital-based hyperbaric treatment center in the Rio
Grande Valley. Under the terms of the contract, AmHealth manages and maintains
the hyperbaric and related medical equipment and furnishes qualified nurses and
technicians to perform the hyperbaric treatments to approximately 23 patients
monthly on behalf of the hospital. AmHealth recently opened a second hyperbaric
hospital-based treatment center in Corpus Christi, Texas pursuant to the
provisions of a three-year management contract.

Hyperbaric Oxygen Therapy ("HBO") is a medical treatment for specifically
indicated conditions in which a patient breathes 100% oxygen in a pressurized
chamber at elevated pressures. Although HBO therapy is a vital and primary
treatment for resolution of certain emergency situations such as air or gas
embolism, decompression sickness and carbon monoxide poisoning, it is also
considered an important adjunctive treatment for a growing number of chronic
conditions. HBO therapy conducted by the units managed by AmHealth is conducted
within and according to the strict regimen set forth by the Undersea and
Hyperbaric Medical Society ("UHMS").

Hyperbaric Medicine departments managed by AmHealth are under the direct
supervision of a physician specially trained in hyperbaric medicine. The unit is
staffed with experienced, professional nurses and medical technicians fully
trained in the medical, physical and mechanical aspects of hyperbaric medicine.
Hyperbaric oxygen is prescribed, either as a primary or adjunctive treatment,
and only for those physical conditions approved by the UHMS. In the case of
non-healing wounds, the average therapy consists of 20 treatments, each with a
duration of approximately 2 hours. Specially trained personnel observe and
monitor the entire treatment.

AmHealth has developed a program for enhancement of healing in selected
problem wounds and offers this program to units it manages. Problem wounds are
those which fail to respond to established medical/surgical management,
including diabetic feet, compromised amputation sites, non-healing traumatic
wounds, and vascular insufficiency ulcers. HBO therapy provides a significant
increase in tissue oxygenation in the poorly perfused, infected wound. This
elevation in oxygen tension induces significant positive changes in the wound
repair process. HBO therapy promotes wound healing by directly enhancing
fibroblast replication, collagen synthesis and the process of
neovascularization.

According to the UHMS, approximately 50,000 to 60,000 major lower extremity
amputations are performed in this country each year. The average mortality rate
after amputation is 10%. There is also significant post-operative morbidity. An
aggressive, well-planned approach can result in fewer amputations and reduced
morbidity and mortality. Adjunctive HBO therapy initiated early during
hospitalization as part of such a program will be cost effective because it
helps prevent amputation and its complications. Amputation is a significant
disability to the patient. Reduction in length of hospitalization and retention
of the patient's own limb greatly facilitates his or her re-entry into the
community and workforce.

BUSINESS STRATEGY

AmHealth's growth strategy is focused on developing local, integrated,
outpatient healthcare delivery networks to serve the unique needs of the
diabetic patient. These services include a comprehensive kidney dialysis network
of chronic care facilities, and management of supporting services in home
health, hyperbaric oxygen therapy and, until consummation of the Exchange,
infusion therapy. AmHealth believes that this approach enhances its operating
efficiency and positions AmHealth to be a leader in this segment of the
healthcare industry. AmHealth strives to continue its growth and margin
improvement by (i) expanding its existing networks and creating new facilities,
(ii) forming strategic alliances with physicians and other healthcare providers,
(iii) continuously improving

the quality of care provided through its facilities and its management services,
and (iv) maximizing operating efficiencies and utilization.

CREATION AND EXPANSION OF THE FACILITY NETWORKS. AmHealth develops new
dialysis facilities to accommodate the growing number of ESRD patients and to
satisfy the demand by local nephrologists. AmHealth has established an expertise
in the design and construction of dialysis facilities, having developed all of
its dialysis facilities. In addition, AmHealth is currently developing one new
facility scheduled for completion by March 1996.

ALLIANCES WITH PHYSICIANS. AmHealth has entered into long-term medical
director contracts with four nephrologists that work in partnership with
AmHealth to provide high-quality, integrated ESRD services while reducing total
costs.

ALLIANCES WITH OTHER HEALTHCARE PROVIDERS. AmHealth is committed to forming
innovative alliances directly with healthcare providers by providing
comprehensive integrated management services that assure the delivery of
high-quality care and reduce overall healthcare costs for providers. In May
1995, AmHealth was awarded a long-term management contract to manage a
hyperbaric oxygen center for Brownsville Medical Center and, in June 1995,
entered into a contract to provide management services to IPH, Inc., a major
home healthcare agency.

QUALITY ASSURANCE PROGRAM. AmHealth believes its reputation for quality
care in its dialysis business and the program relating to quality that it offers
in its management services business is a significant competitive advantage in
attracting patients and physicians and in pursuing growth in the managed care
environment. AmHealth engages in organized and systematic efforts to measure,
maintain and improve the quality of services it delivers through its Quality
Assurance Program. In response to current payor demands for cost-effective
healthcare treatments with measurable outcomes, AmHealth is developing programs
using outcome-based criteria for numerous diagnoses to promote more effective
healthcare services.

MAXIMIZING OPERATING EFFICIENCIES. AmHealth believes it has adequate
capacity within its existing facilities network to accommodate greater patient
volume and expects such operating leverage to contribute to increasing margins.
AmHealth will continue to focus on enhancing operating efficiencies, including
staffing, purchasing and financial reporting systems and controls.

OPERATIONS

BUSINESS LOCATIONS. AmHealth's operations are conducted in the following
locations:

FACILITY LOCATION START DATE
- ------------------------------------- --------------------- ---------------
AmHealth Corporation San Antonio, TX October 1992
McAllen Kidney Center McAllen, TX April 1993
Starr Dialysis Center Rio Grande City, TX November 1993
Southwestern Infusion Healthcare San Antonio, TX June 1994
Weslaco Kidney Center Weslaco, TX June 1994
Brownsville Hyperbaric Healthcare Brownsville, TX May 1995
AmHealth Medical Management McAllen, TX June 1995
Mission Kidney Center Mission, TX August 1995
Spohn Hyperbaric Center Corpus Christi, TX April 1996
Brownsville Kidney Center Brownsville, TX May 1996

CAPACITY AND USE OF FACILITIES. AmHealth currently operates four outpatient
dialysis centers with more than 91 dialysis stations, with each facility ranging
in size from 16 to 31 dialysis stations. The facilities are located in McAllen,
Rio Grande City, Weslaco and Mission, Texas. The two Hyperbaric Oxygen Therapy
Centers managed by AmHealth are located in Brownsville, Texas and in Corpus
Christi, Texas, and contain three and two hyperbaric chambers, respectively.

OPERATION OF DIALYSIS FACILITIES AND ANCILLARY SERVICES

DIALYSIS FACILITIES. AmHealth's dialysis facilities are designed
specifically for outpatient hemodialysis and generally contain, in addition to
space for dialysis treatments, a nurses' station, a patient weigh-in area, a
supply room, a water treatment space used to purify the water used in
hemodialysis treatments, a dialyzer reprocessing room (where, with both the
patient's and physician's consent, the patient's dialyzer is sterilized for
reuse), staff work areas, offices and a staff lounge and kitchen. Many of
AmHealth's facilities also have a designated area for training patients in home
dialysis. Each facility also offers amenities for the patients, such as a color
television with headsets at each dialysis station.

In accordance with conditions for participation in the Medicare ESRD
program, each facility has a qualified Medical Director. See "Physician
Relationships" below. Each facility also has an Administrator who supervises the
day-to-day operations of the facility and the staff. The staff of each facility
typically consists of registered nurses, licensed practical or vocational
nurses, patient care technicians, a social worker, a registered dietician, a
unit clerk and bio-medical technicians.

All of AmHealth's facilities offer high-flux and high-efficiency
hemodialysis, which most physicians practicing at AmHealth's facilities deem
suitable for most of their patients. High-flux and high-efficiency hemodialysis
utilize machinery that allow patients to dialyze in a shorter period of time per
treatment because such methods cleanse the blood at a faster rate than
conventional hemodialysis. Many of AmHealth's facilities also offer conventional
hemodialysis. AmHealth considers the equipment installed in its facilities to be
among the most technologically advanced equipment presently available to the
dialysis industry.

AmHealth also offers various forms of home dialysis, primarily CAPD. Home
dialysis services consist of providing equipment and supplies, training, patient
monitoring and follow-up assistance to patients who prefer and are able to
receive dialysis treatments in their homes. Patients and their families or other
patient helpers are trained by a registered nurse to perform either CAPD or CCPD
at home.

ANCILLARY SERVICES. Dialysis facilities also provide a comprehensive range
of related ancillary services to ESRD patients, the most significant of which is
the administration of EPO upon a physician's prescription. EPO is a
bio-engineered protein which stimulates the production of red blood cells and is
used in connection with all forms of dialysis to treat anemia, a medical
complication frequently experienced by ESRD patients. AmHealth also has an
infusion therapy service which provides ESRD patients with oral medications and
IDPN services upon a physician's prescription; however, upon consummation of the
Exchange, these ancillary services will no longer be provided by an AmHealth
related company. If such ancillary services are needed by the ESRD patients
after the consummation of the Exchange, they will be provided by an unrelated
provider of such services. Other ancillary services may include studies to test
the degree of bone deterioration, electrocardiograms ("EKGS"), nerve conduction
studies to test the degree of deterioration of nerves, doppler flow testing to
test the effectiveness of the patient's vascular access for dialysis, and blood
transfusions.

PHYSICIAN RELATIONSHIPS

A key factor in the success of any of AmHealth's dialysis facilities is its
relationship with local nephrologists. ESRD patients generally seek treatment at
a facility near home and where the attending nephrologist has practice
privileges. Consequently, AmHealth and its dialysis business relies upon its
ability to meet the needs of the referring physicians and the ESRD patients in
the communities AmHealth serves.

The conditions of participation in the Medicare ESRD program mandate that
treatment at a dialysis facility be "under the general supervision of a Medical
Director that is a physician." AmHealth contracts with qualified physicians to
serve as Medical Directors for each of its dialysis facilities. Generally, the
Medical Director must be board eligible or board certified in internal medicine
and have had at least 12 months of experience or training in the care of
patients at ESRD facilities.

Medical Directors enter into written contracts with AmHealth which specify
their duties and establish their compensation (which is fixed for periods of 3
years or more). The compensation of the Medical Directors and other physicians
for services under contract is separately negotiated for each facility and
generally depends upon competitive factors in the local market, the physician's
professional qualifications and responsibilities and the size and utilization of
the facility or relevant program.

QUALITY ASSURANCE

AmHealth engages in organized and systematic efforts to measure, maintain
and improve the quality of services it delivers and believes that it has earned
a favorable reputation as a dialysis service provider in the communities where
it maintains its facilities. AmHealth has implemented and maintains a Quality
Assurance Program designed to measure outcomes and improve the quality of its
services. Each of AmHealth's facilities, under the direction of the applicable
Medical Director, collects and analyzes quality assurance data which is reviewed
regularly by facility and corporate management to continually improve the
standard of care being provided. In addition, responsible personnel at each
facility monitor, evaluate and improve upon specific quality indicators and
outcomes. AmHealth believes its reputation for quality care is a competitive
advantage in attracting new patients and new referring physicians.

SOURCES OF PATIENT REIMBURSEMENT

The following table provides information for the years indicated regarding
the percentage of AmHealth dialysis services patients by payor category.

YEAR ENDED DECEMBER 31,
------------------------
1995 1994 1993
---- ---- ----
Medicare............................. 77% 81% 83%
Medicaid............................. 10 9 7
Private/alternative Payors........... 13 10 10
---- ---- ----
Total................................ 100% 100% 100%
==== ==== ====

Under the Medicare ESRD program, Medicare reimburses dialysis providers for
the treatment of individuals who are diagnosed to have ESRD and are eligible for
participation in the Medicare program, regardless of age or financial
circumstances. For each treatment, Medicare pays 80% of the amount set by the
Medicare prospective reimbursement system, and a secondary payor (usually
Medicare supplemental insurance or the state Medicaid program) pays
approximately 20% of the amount set by the Medicare prospective reimbursement
system. Texas provides Medicaid benefits to qualified recipients to supplement
their Medicare entitlement. The Medicare and Medicaid programs are subject to
statutory and regulatory changes, administrative rulings, interpretations of
policy and governmental funding restrictions, some of which may have the effect
of decreasing program payments, increasing costs or modifying the way AmHealth
operates its dialysis business. See "--Medicare Reimbursement", below.

Assuming a patient is eligible for participation in the Medicare program,
the commencement date of Medicare benefits for ESRD patients electing
hemodialysis is dependent on several factors. ESRD patients under 65 years of
age who are not covered by an employer group health plan (for example, the
uninsured, those covered by Medicaid and those covered by an individual health
insurance policy) must wait 90 days after commencing dialysis treatment to be
eligible for Medicare benefits. During the first 90 days of treatment, the
patient, Medicaid or the private insurer is responsible for payment (and, in the
case of the individual covered by private insurance, such responsibility is
limited to the terms of the policy, with the patient being responsible for the
balance). ESRD patients under 65 years of age who are covered by an employer
group health plan must wait 21 months after commencing dialysis treatment before
Medicare becomes the primary payor. During the first 21 months of treatment, the
employer group health plan is responsible for payment at its negotiated rate or,
in the absence of such a

rate, at AmHealth's usual and customary rates and the patient is responsible for
deductibles and co-payments, if applicable, under the terms of the employer
group health plan.

If an ESRD patient with an employer group health plan elects home dialysis
training during the first 90 days of dialysis, Medicare becomes the primary
payor after 18 months. If an ESRD patient without an employer group health plan
begins home dialysis training during the first three months of dialysis,
Medicare immediately becomes the primary payor.

Recently, HCFA has promulgated regulations to implement OBRA 93 with
respect to the coordination of benefits period for Medicare beneficiaries. HCFA
has established rules for Medicare beneficiaries who are eligible for, or
entitled to, Medicare on the basis of ESRD and are also entitled on the basis of
age or disability. There are essentially four rules currently in effect for
primary payor determination during the coordination of benefits period.

The first rule provides that if the 18-month period ended before August
1993, Medicare is primary payor from the first month of dual eligibility
entitlement. The second rule is that if the first month of ESRD-based
eligibility or entitlement and the first month of dual eligibility/entitlement
both fall after February 1992 and before August 10, 1993, Medicare is (i)
primary payor from the first month of dual eligibility/entitlement through
August 9, 1993; (ii) secondary payor from August 10, 1993 through the 18th month
of ESRD-based eligibility or entitlement; and (iii) primary payor again after
the 18th month of ESRD-based eligibility or entitlement. The third rule provides
that if the first month of dual eligibility or entitlement is after February
1992, and the first month of dual eligibility or entitlement is after August 9,
1993, Medicare is secondary during the first 18 months of ESRD-based eligibility
or entitlement, and primary after the 18th month of ESRD-based eligibility or
entitlement.

The fourth rule, and the most controversial, provides in part that Medicare
remains the primary payor if a group health plan was already secondary payor for
an individual entitled on the basis of age or disability when the individual
becomes eligible on the basis of ESRD. Initially, HCFA had interpreted OBRA 93
to require a private plan to become primary payor under these circumstances.
HCFA later corrected its interpretation of the statute and issued guidance on
April 24, 1995 that Medicare remains the primary payor. On June 6, 1995, a
federal court issued a preliminary injunction precluding HCFA from retroactively
implementing its corrected program instruction for items and services furnished
between August 10, 1993 (the enactment of OBRA 93) and April 24, 1993, pending
the courts decision on the merits. HCFA has stated that it will modify the rules
if required by the final ruling of the court.

If the court determines that Medicare is the primary payor during the
period between August 10, 1993 and April 24, 1995, then this decision could have
an adverse effect on AmHealth in that it would require AmHealth to refund
certain payments to private insurers for services during that time period, and
then re-bill the Medicare Program for such payments. This retroactive
application of HCFA's April 1995 program instruction could cause AmHealth to
incur a significant amount of cost in terms of work hours and office expenses.
If the court maintains its current position that these rules cannot be
retroactively applied, then AmHealth does not anticipate any impact on its
earnings from such finding. However, AmHealth cannot estimate with any
certainty, at the present time, the potential impact that any final ruling or
interpretation or the timing of same may have upon its earnings.

CERTAIN PAYOR ARRANGEMENTS

AmHealth has entered into contracts with third-party payors, including many
leading health maintenance organizations in AmHealth's service areas, to provide
dialysis services to their beneficiaries. AmHealth is a party to non-exclusive
agreements with certain of such third-party payors (none of which have accounted
for more than 5% of net operating revenues), and termination of such third-party
agreements could have an adverse effect on AmHealth.

MEDICARE REIMBURSEMENT

AmHealth is reimbursed by Medicare under a prospective reimbursement system
for chronic dialysis services provided to ESRD patients. Under this system, the
reimbursement rates are fixed in advance and have been adjusted from time to
time by Congress. Although this form of reimbursement limits the allowable
charge per treatment, it provides AmHealth with predictable and recurring per
treatment revenues and allows AmHealth to retain any profit earned. Medicare has
established a composite rate set by HCFA that governs the Medicare reimbursement
available for a designated group of dialysis services, including the dialysis
treatment, supplies used for such treatment, certain laboratory tests and
certain medications. The Medicare composite rate is subject to regional
differences based upon certain factors, including regional differences in wage
earnings. Certain other services and items are eligible for separate
reimbursement under Medicare and are not part of the composite rate, including
certain drugs (including EPO), blood (for amounts in excess of three units per
patient per year), and certain physician-ordered tests provided to dialysis
patients. Claims for Medicare reimbursement must generally be presented within
15 to 27 months of treatment depending on the month in which the service was
rendered and for Medicaid secondary reimbursement, if applicable, within 60 to
90 days after payment of the Medicare claim. AmHealth generally submits claims
monthly and is usually paid by Medicare within 30 days of the submission. If in
the future Medicare were to include in its composite reimbursement rate any of
the ancillary services presently reimbursed separately, AmHealth would not be
able to seek separate reimbursement for these services and this would adversely
affect AmHealth's results of operations to the extent a corresponding increase
were not provided in the Medicare composite rate.

AmHealth receives reimbursement for outpatient dialysis services provided
to Medicare-eligible patients at rates that are currently $117 per treatment.
The Medicare reimbursement rate is subject to change by legislation and
recommendations by the Prospective Payment Assessment Commission ("PROPAC"). The
Medicare ESRD reimbursement rate was unchanged from commencement of the program
in 1972 until 1983. From 1983 through December 1990 numerous Congressional
actions resulted in net reduction of the average reimbursement rate from a fixed
fee of $138 per treatment in 1983 to approximately $125 per treatment in 1990.
Congress increased the ESRD reimbursement rate, effective January 1, 1991,
resulting in an average ESRD reimbursement rate of $126 per treatment. In 1990,
Congress required that the Department of Health and Human Services ("HHS") and
PROPAC study dialysis costs and reimbursement and make findings as to the
appropriateness of ESRD reimbursement rates. In March 1995, PROPAC recommended
no changes be made in the reimbursement rate. However, Congress is not required
to implement this recommendation and could either raise or lower the
reimbursement rate. AmHealth is unable to predict what, if any, future changes
may occur in the rate of reimbursement, or, if made, whether any such changes
will have a material effect on AmHealth's revenues and net earnings.

On June 1, 1989, the FDA approved the production and sale of EPO, and HCFA
approved Medicare reimbursement for EPO's use by dialysis patients. EPO
stimulates the production of red blood cells and is beneficial in the treatment
of anemia, with the effect of reducing or eliminating the need for blood
transfusions for dialysis patients. Physicians began prescribing EPO for their
patients in AmHealth's dialysis facilities in April 1993.

From June 1, 1989 through December 31, 1990, the Medicare ESRD program
reimbursed for EPO at the fixed rate of $40 per administration of EPO in
addition to the dialysis facility's allowable composite rate of dosages of up to
9.999 units per administration. For higher dosages, an additional $30 per EPO
administration was allowed. Effective January 1, 1991, the Medicare allowable
prescribed rate for EPO was changed to $11 per 1,000 units, rounded to the
nearest 100 units. Subsequently, legislation was enacted to reduce the Medicare
prescribed rate for EPO by $1 per 1,000 units after December 31, 1993. There can
be no assurance that AmHealth can maintain current operating margins in the
future for EPO administrations due to potential reimbursement decreases, or to
potential increases in product costs from its sole manufacturer.

AmHealth currently provides certain of its patients with IDPN, a
nutritional supplement administered during dialysis to patients suffering from
nutritional deficiencies. AmHealth has historically been reimbursed by the
Medicare program for the administration of IDPN therapy. Beginning in 1993, HCFA
designated four DMERCs to process reimbursement claims for IDPN therapy. The
DMERCs recently established new, more stringent medical policies for
reimbursement of IDPN therapy, and many dialysis providers' claims have
subsequently been denied or delayed. Where appropriate, AmHealth has appealed
and continues to appeal such denials. In addition, the DMERCs are reportedly
reviewing the existing IDPN medical policies. The final outcome of appeals and
the anticipated review is uncertain and may ultimately reduce the number of
patients eligible to receive reimbursement for IDPN therapy. AmHealth has
continued to provide IDPN therapy to its patients pending clarification of this
policy; however, upon consummation of the Exchange, AmHealth will no longer
directly provide the IDPN service to its patients, but will instead refer these
services, if needed, to other providers of IDPN services. This change in
government reimbursement policy as well as the ceased operations and revenues
from the IDPN services may adversely affect AmHealth's net income in the future.

MEDICAID REIMBURSEMENT

Medicaid programs are state administered programs partially funded by the
federal government. These programs are intended to provide coverage for patients
whose income and assets fall below state defined levels and who are otherwise
uninsured. The programs also serve as supplemental insurance programs for the
Medicare co-insurance portion and provide certain coverages (E.G., oral
medications) that are not covered by Medicare. State regulations generally
follow Medicare reimbursement levels and coverages without any co-insurance
amounts. AmHealth is a licensed ESRD Medicaid provider in Texas.

GOVERNMENT REGULATION

GENERAL

AmHealth's dialysis operations are subject to extensive governmental
regulations at the federal, state and local levels. These regulations require
AmHealth to meet various standards relating to, among other things, the
management of facilities, personnel, maintenance of proper records, equipment
and quality assurance programs. The dialysis facilities are subject to periodic
inspection by state agencies and other governmental authorities to determine if
the premises, equipment, personnel and patient care meet applicable standards.
To receive Medicare reimbursement, AmHealth's dialysis facilities must be
certified by HCFA. All of AmHealth's dialysis facilities are so certified.

Any loss by AmHealth of its various federal certifications, its
authorization to participate in the Medicare or Medicaid programs or its license
under the laws of any state or other governmental authority from which a
substantial portion of its revenues is derived or a change resulting from
reforms that reduce dialysis reimbursement or reducing or eliminating coverage
for dialysis services would have a material adverse effect on AmHealth's
business. To date, AmHealth has not had any difficulty in maintaining the
required licenses or its Medicare and Medicaid certifications. The healthcare
services industry will continue to be subject to intense regulation at the
federal and state levels, the scope and effect of which cannot be predicted. No
assurance can be given that the activities of AmHealth will not be reviewed and
challenged or that healthcare reform will not result in a material adverse
change to the AmHealth business.

FRAUD AND ABUSE

MEDICARE FRAUD AND ABUSE PROVISIONS. Federal law prohibits the offer,
payment, solicitation or receipt of any form of remuneration in return for the
referral of Medicare or state healthcare program patients or patient care
opportunities, or in return for the purchase, lease or order of any item or
service that is covered by Medicare or a state health program. Pursuant to this
law, the federal government has recently announced a policy of increased
scrutiny of joint ventures and other transactions among healthcare providers in
an effort to reduce potential fraud and abuse relating to Medicare costs. The

applicability of these provisions to many business practices in the healthcare
industry, including specifically home health agencies, has been subject to
increased enforcement attention.

The Medicare and Medicaid anti-kickback amendments (the "ANTI-KICKBACK
LAWS") provide criminal penalties for individuals or entities participating in
the Medicare or Medicaid programs who knowingly and willfully offer, pay,
solicit or receive remuneration in order to induce referrals for items or
services reimbursed under such programs. In addition to federal criminal
penalties, the Social Security Act also establishes the intermediate sanction of
excluding violators from participation in the Medicare or Medicaid programs.

A violation of the Anti-Kickback Law requires several elements: (i) the
offer, payment, solicitation or receipt of remuneration; (ii) the intent to
induce referrals; (iii) the ability of the parties to make or influence
referrals of patients; (iv) the provision of services that are reimbursable
under Medicare or state healthcare programs; and (v) patient coverage under the
Medicare program or a state healthcare program. Management believes that
AmHealth is receiving compensation under the management agreements for
management services. AmHealth also believes that it is not in a position to make
or influence referrals of patients or services reimbursed under Medicare or
state healthcare programs to any provider of covered services. Consequently,
AmHealth does not believe that the management fees payable to it should be
viewed as remuneration for referring or influencing referrals of patients or
services covered by such programs as prohibited by the Anti-Kickback Laws.
Except for its dialysis services, AmHealth is not a provider or supplier of
services or items reimbursed by Medicare or state healthcare programs.

AmHealth believes that its dialysis operations do not involve the offer,
payment, solicitation or receipt of remuneration to induce referrals of patients
because compensation arrangements between the Medical Directors and the
facilities are designed to comply with the Safe Harbor provisions for such
agreements. These physicians are paid a fair market value for administrative
service and do not receive any financial benefit from making referrals. In
addition, AmHealth believes that the methods used to recruit new physicians do
not violate anti-kickback and anti-referral laws and regulations. Should any of
AmHealth's business arrangements be deemed to constitute arrangements designed
to induce the referral of Medicare or Medicaid patients, then such arrangements
could be viewed as violating anti-kickback laws and regulations. A determination
of liability under any such law could have a material adverse effect on
AmHealth's revenue.

In 1991, the Inspector General of the United States Department of Health
and Human Services published "Safe Harbor Regulations" defining safe harbors for
certain arrangements that do not violate the Anti-Kickback Laws. One of the safe
harbors specifically provided is a safe harbor for personal services and
management contracts. Under this safe harbor, remuneration prohibited by the
Anti-Kickback Laws will not include any payment made by a principal to an agent
as compensation for services of the agent as long as certain standards are met.
To AmHealth's knowledge, there have been no agency interpretations or case law
decisions of management agreements similar to AmHealth's that would indicate
that such agreements do not fall within a safe harbor. Further, AmHealth
believes that since it is not a provider of medical services (except for the
dialysis services), and is not in a position to refer patients to any particular
medical practice, the remuneration it receives for providing services does not
violate the Anti-Kickback Laws.

PROHIBITIONS ON CERTAIN REFERRALS. OBRA 93 includes a provision that
significantly expands the scope of the Stark Law. The Stark Law originally
prohibited a physician from referring a Medicare or Medicaid patient to any
entity for the provision of clinical laboratory services if the physician or an
immediate family member of the physician had an ownership interest or
compensation relationship with the entity. The revisions to the Stark Law
included in OBRA prohibit a referral to an entity in which the physician or an
immediate family member has an ownership interest or compensation relationship
if the referral is for any of a list of designated health services. The list of
designated health services includes enteral and parenteral nutrients and
supplies, outpatient pharmacy services, home health and inpatient and outpatient
hospital services (the latter which would encompass hyperbaric

therapy services); however, AmHealth believes that upon the consummation of the
Exchange it will neither own nor control such services, but merely supplies
certain management services to the ultimate providers. AmHealth does not believe
that the Stark Law applies to AmHealth because except for its dialysis business
(dialysis services are not a designated health service under the Stark Law and
therefore it does not apply) AmHealth is not a provider of healthcare services
and does not have any control over nor financial interest in a provider except
through AmHealth's management contracts. Furthermore, the one business where the
Stark Law would likely apply upon the consummation of the Exchange will cease
its operations upon consummation of the Exchange and will no longer provide such
services (i.e., infusion services business). AmHealth also does not believe that
it and its contracting entities are related parties to any provider under
Medicare rules, which address control of referrals, a fact that AmHealth
believes is important in determination of ownership interests. If the Stark Law
were determined to apply, then AmHealth would have to comply with one of the
exceptions to the act, and it has determined that it does not so comply at this
time. No final regulations interpreting the Stark Law were promulgated until
September 1995. These regulations only address the original scope of the Stark
Law (clinical laboratories) but representatives of HCFA assert that these
regulations will be used as the basis for interpretation of matters involving
the other designated health services, including home health and inpatient
hospital services.

Because there have been no cases or other interpretations of the Stark Law
or regulations applicable to organizations like AmHealth, AmHealth cannot
ascertain how its activities might be assessed if investigated. Failure to
comply with the Stark Law can result in the demand for repayment of all
government program funds expended as a result of referral by a physician with an
ownership interest in the entity. Because AmHealth will have publicly traded
stock after the transaction, determination of ownership of such shares by a
referring physician, or any member of his/her immediate family would be
extraordinarily difficult. It is, however, AmHealths belief that after the
consummation of the Exchange it will not provide, directly or indirectly, any
designated healthcare service and that the Stark Law will not apply.

For those physicians who do make referrals to the providers for which
AmHealth provides management services and with which AmHealth has medical
director agreements, AmHealth has assured that these medical director agreements
are in compliance with the Stark Law since such a relationship could be
determined to be a form of compensation relationship with the entity. In that
case, an exception to the Stark Law is available if the contract meets the
statutory requirements, and AmHealth has structured each such contract to meet
the statutory requirements in the event they should be determined to apply.

Finally, AmHealth has no ability to obtain advisory opinions from the
regulatory and enforcement agency that governs the Stark Law nor are there other
interpretations upon which it can rely. It is AmHealths belief that the Stark
Law does not apply, but if it were found to do so, AmHealth would institute a
plan to screen all potential referral physicians to avoid having a referral from
any shareholder of New STAT.

POSSIBLE NEGATIVE EFFECTS OF PROSPECTIVE HEALTHCARE REFORM. Various plans
have been proposed and are being considered on federal, state and local levels
to reduce costs in healthcare spending. Although AmHealth believes it responds
to the concerns addressed by such plans, it is not possible to assess the
likelihood of whether any of these proposals will be enacted or to assess the
impact any of these proposals may have on reimbursement to healthcare providers.
Any plan to control healthcare costs, however, could result in lower rates of
reimbursement. Lower rates of reimbursement may reduce the amounts paid by any
government payor and, accordingly, may have a material adverse effect on
AmHealth's businesses and the results of its operations.

POSSIBLE NEGATIVE EFFECTS OF GOVERNMENTAL REGULATION. The healthcare
industry is subject to extensive federal and state regulation. Changes in the
statutes or regulations or reinterpretations of existing statutes or regulations
may significantly affect the business of AmHealth as a dialysis provider. In the
states in which AmHealth as a dialysis provider conducts or may conduct
business,

general business corporations are not permitted to practice medicine, exercise
control over physicians who practice medicine or engage in certain practices
such as fee-splitting with physicians. The corporate practice of medicine refers
to the rendering directly, or through employment, of medical services by a
business corporation. AmHealth believes that it is not engaged in the corporate
practice of medicine because the nephrologists who provide patient care services
do so as independent professionals. Each dialysis unit does have a medical
director, who is paid for specific administrative and management services under
contracts that meet the accrediting requirements for such centers. These
agreements also reserve to the physicians exclusive authority to make all
decisions regarding medical care. Based on current interpretations of state law
in Texas where AmHealth as a dialysis provider now operates, the arrangement
does not appear to violate the prohibition against the corporate practice of
medicine. However, all such laws are subject to interpretation by the courts as
well as administrative agencies, and any restructuring required by such change
could be detrimental to the operations of AmHealth as a dialysis provider.

AmHealth as a dialysis provider is subject to federal legislation that
prohibits activities and arrangements that provide kickbacks or other economic
inducements for the referral of business under Medicare, Medicaid and other
government programs ("GOVERNMENT PROGRAMS"). Noncompliance with the federal
Anti-Kickback Law can result in exclusion from all such Government Programs as
well as civil and criminal penalties. The federal government has promulgated
safe harbor regulations that identify certain business and payment practices
which are deemed not to violate the federal Anti-Kickback Law. AmHealth believes
that its operations comply with all federal Anti-Kickback Law. In addition,
federal law referred to as the Stark Law currently restricts the ability of
physicians to refer government patients to certain entities if such physicians
or their immediate family have an ownership interest in or a compensation
relationship with such an entity and the entity performs a designated health
service. Renal dialysis is not a designated health service, so AmHealth believes
that the Stark Law statute does not apply to AmHealth as a dialysis provider.

In addition, healthcare reforms may expand existing Anti-Kickback Law and
the Stark Law to apply to all healthcare payors, not just Medicare and Medicaid.
It is unclear how any reform legislation would affect healthcare provider
networks or other types of managed care arrangements. There can be no assurance
that AmHealth will be able to comply with any new laws.

An increasing number of healthcare providers and other entities are being
faced with lawsuits alleging fraudulent billing practices under the federal
Civil False Claims Act. The Civil False Claims Act permits a person (generally
employees or former employees of the healthcare provider or other entity) to
assert the rights of the government by initiating a QUI TAM action against a
healthcare provider or other entity if such person has or purports to have
information that the healthcare provider or other entity submitted a claim to
the government for payment that could be false or fraudulent. Upon filing, the
government has the opportunity to intervene and assume control of the case.
Penalties of up to $10,000 for each false or fraudulent claim presented to the
government for payment may be awarded as well as treble damages. Defendants also
may be excluded permanently or for a period of time from participation in the
Medicare and Medicaid programs. Because of penalties and treble damages, many of
these lawsuits involve large monetary claims and substantial defense costs. In
the event that AmHealth as a dialysis provider is named as a defendant in a QUI
TAM action and it is successfully prosecuted, no assurance can be made that such
event would not have a material adverse effect on AmHealth and its operations.

All of AmHealth's dialysis facilities are currently owned by limited
partnerships in which physicians who refer patients to the facility hold
interests. Because these physicians refer patients to these facilities, the
Anti-Kickback Law may apply. AmHealth believes these business arrangements are
in compliance with the Anti-Kickback Law, and there is no intent to compensate
any party for referral of any patient, nor are any such payments made. After the
consummation of the Exchange, the limited partnerships in which all partners
elect to participate in the Exchange will be dissolved, except for the
Brownsville Kidney Center, Ltd. Safe harbors exist for some arrangements, and if
all elements of the

100

safe harbor are met then you are deemed in compliance with the Anti-Kickback
Law. However, failure to meet the safe harbors does not mean you are violating
the Anti-Kickback Law. The important factor is compliance with the statute.
AmHealth believes that the remaining limited partnership was formed in a manner
where fair market value was paid by all partners for the shares; payments are
related only to the partner's return on investment and is related to the
partner's ownership interests, and payments are not related to payments for
patient referrals, and is therefore in compliance with the Anti-Kickback Law. No
assurance can be made, however, how the government would interpret such an
investment interest, and a negative finding by the governmental regulatory
enforcement agency would likely have a material adverse effect on AmHealth and
its operations.

Four of AmHealth's dialysis facilities are leased from entities in which
physicians who refer patients to the facility hold interests. Because of the
referral of patients to the facilities by these physicians, the Anti-Kickback
Law may apply. The Secretary of HHS has promulgated a safe harbor relevant to
such arrangements, generally applicable to space rentals. AmHealth believes that
these leases are in compliance with the Anti-Kickback Law and that the leases
satisfy each of the elements of the space rental safe harbor.

AmHealth believes it is in material compliance with current applicable laws
and regulations. No assurance can be made that in the future AmHealth's business
arrangements, past or present, will not be the subject of an investigation or
prosecution by a federal or state governmental authority. Such an investigation
or prosecution could result in any, or a combination, of the penalties discussed
above depending upon the agency involved in such investigation and prosecution.
None of AmHealth's business arrangements with physicians, vendors, patients or
others have been the subject of investigation by any governmental authority. No
assurance can be given that AmHealth's activities will not be reviewed or
challenged by regulatory authorities. AmHealth monitors legislative developments
and would seek to restructure a business arrangement if AmHealth determined that
one or more of its business relationships placed it in material noncompliance
with such a statute.

MEDICARE

Because the Medicare program represents a substantial portion of the
federal budget, Congress takes action in almost every legislative session to
modify the Medicare program for the purpose of reducing the amounts otherwise
payable from the program to healthcare providers. Legislation or regulations may
be enacted in the future that may significantly modify the ESRD program or
substantially reduce the amount paid for the company's services. Further,
statutes or regulations may be adopted which impose additional requirements for
AmHealth to be eligible to participate in the federal and state healthcare
payment programs. Such new legislation or regulations may adversely affect
AmHealth's business operations.

OTHER REGULATIONS

AmHealth's operations are also subject to various state hazardous waste
disposal laws. Those laws as currently in effect do not classify most of the
waste produced during the provision of dialysis services to be hazardous,
although disposal of non-hazardous medical waste is also subject to regulation.
Occupational Safety and Health Administration regulations require employers of
workers who are occupationally subject to blood or other potentially infectious
materials to provide those workers with certain prescribed protections against
bloodborne pathogens. The regulatory requirements apply to all healthcare
facilities, including dialysis facilities, and require employers to make a
determination as to which employees may be exposed to blood or other potentially
infectious materials and to have in effect a written exposure control plan. In
addition, employers are required to provide or employ hepatitis B vaccinations,
personal protective equipment, infection control training, post-exposure
evaluation and follow-up, waste disposal techniques and procedures, and
engineering and work practice controls. Employers are also required to comply
with certain record-keeping requirements. AmHealth believes it is in material
compliance with the foregoing laws and regulations.

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Although AmHealth believes it complies in all material respects with
current applicable laws and regulations, the healthcare service industry will
continue to be subject to substantial regulation at the federal and state
levels, the scope and effect of which cannot be predicted by AmHealth. No
assurance can be given that AmHealth's activities will not be reviewed or
challenged by regulatory authorities.

REGULATORY COMPLIANCE. AmHealth believes that healthcare regulations will
continue to change and, as a result, regularly monitors developments in
healthcare law. AmHealth expects to modify its agreements and operations from
time to time as the business and regulatory environment changes. While AmHealth
believes it will be able to structure all its agreements and operations in
accordance with applicable law, there can be no assurance that its arrangements
will not be successfully challenged.

The dialysis industry is fragmented and highly competitive, particularly in
terms of acquisition of existing dialysis facilities and developing
relationships with physicians. Competition for qualified physicians to act as
Medical Directors is also high. There were over 2,500 dialysis facilities in the
United States in 1994, of which approximately 35% were owned by independent
physicians (down from 37% in 1992), 29% were hospital-based facilities (down
from 33% in 1992) and 36% were owned by six major multi-facility dialysis
providers (up from 30% in 1992), the largest of which is National Medical Care,
Inc. (NMC), a wholly-owned subsidiary of W.R. Grace. Grace has publicly
announced that NMC will become an independent public company. According to
figures published by the Texas Kidney Foundation, AmHealth's largest competitors
in the Rio Grande Valley are NMC, which served a total of 404 patients in 1994,
and Valley Baptist Hospital, which served 174 patients in 1994. Certain of
AmHealth's competitors have substantially greater financial resources than
AmHealth and may compete with AmHealth for acquisitions and development of
facilities in markets targeted by AmHealth. Competition for acquisitions has
increased the cost of acquiring existing dialysis facilities. A locally owned
private management company competes with AmHealth providing hyperbaric
management services with two hospital contracts in the region where AmHealth
currently operates.

INSURANCE

AmHealth carries property and general liability insurance, professional
liability insurance and other insurance coverage in amounts deemed adequate by
management. However, there can be no assurance that any future claims will not
exceed applicable insurance coverage. Furthermore, no assurance can be given
that malpractice and other liability insurance will be available at a reasonable
cost or that AmHealth will be able to maintain adequate levels of malpractice
insurance and other liability insurance in the future. Physicians practicing at
AmHealth's facilities are required to maintain their own malpractice insurance.
However, AmHealth maintains coverage for the administrative activities of its
Medical Directors (but not for their individual practice medical practices).

EMPLOYEES

As of March 31, 1996, AmHealth had approximately 125 employees, including a
professional staff of approximately 105 registered nurses and technicians, a
corporate and regional staff of approximately 15 employees and a facilities
support and maintenance staff of approximately 5 employees. AmHealth's Medical
Directors are not employees of AmHealth.

PROPERTIES

All of AmHealth's operations are conducted from leased facilities. AmHealth
leases four facilities from entities in which referring physicians hold an
interest. AmHealth's leases generally cover periods from three to ten years and
typically contain renewal options of one to five years at the fair rental value
at the time of renewal or at rates subject to consumer price index increases
since the inception of the lease. AmHealth's facilities range in size from 906
to 7,218 square feet. AmHealth's headquarters are located in a 1,100 square foot
facility in San Antonio, Texas, and are subject to a lease which expires in
April 1998. AmHealth considers its physical properties to be in good operating
condition and suitable for the purposes for which they are being used.

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AmHealth believes it has adequate capacity within most of its existing
facilities to accommodate significantly greater patient volume through increased
hours and/or days of operation. AmHealth believes that it can lease space at
economically reasonable rates in the area of each of these facilities. Expansion
or relocation of certain AmHealth facilities would be subject to review for
compliance with conditions relating to participation in the Medicare ESRD
program.

LEGAL PROCEEDINGS

AmHealth is subject to claims and suits in the ordinary course of business,
including those arising from patient treatment, for which AmHealth believes it
will be covered by malpractice insurance. AmHealth does not believe that the
ultimate resolution of pending proceedings will have a material adverse effect
on AmHealth's financial condition, results of operations or cash flows.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF AMHEALTH

Four of the facilities leased by AmHealth for its kidney dialysis business
are owned in varying percentages by William Restrepo, M.D., Ruben A. Perez and
M.K. Razdan, M.D., all of whom are AmHealth Partners. Payments under such leases
totaled $87,000 and $147,000 in 1994 and 1995, respectively, and will total
approximately $238,000 during each of 1996 through 2005. The lease rates for
such facilities are comparable to those paid by AmHealth to third party lessors
for other facilities in the region.

In addition, Dr. Restrepo and Dr. Razdan serve as Medical Directors
pursuant to agreements with AmHealth.

Various AmHealth entities hold the promissory notes (which aggregated
approximately $16,000 at December 31, 1995) of certain AmHealth employees, which
notes were issued in connection with the purchase by such employees of ownership
interests in such AmHealth entities.

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PRINCIPAL SHAREHOLDERS AND PARTNERS OF AMHEALTH

The following table sets forth certain information regarding the beneficial
ownership of AmHealth as of March 31, 1996 by (i) each person who is known by
AmHealth to beneficially own more than five percent of the equity of the
AmHealth Corporations and AmHealth Partnerships, taken as a whole; (ii) each
director; (iii) each executive officer; and (iv) all executive officers and
directors as a group.

PERCENTAGE OF
AMHEALTH EQUITY
---------------
Ruben A. Perez
8200 I.H. 10 West, Suite 209
San Antonio, TX 78230................ 34.5%

Russell D. Schneider
12450 Greenspoint Drive, Suite 1200
Houston, TX 77060.................... 25.1%

Daniel A. Perez
1300 North 10th
Suite 220
McAllen, Texas 78501................. 13.5%

David A. Perez
1300 North 10th
Suite 220
McAllen, Texas 78501................. 5.25%

William Restrepo, M.D.
1801 South 5th Street
Suite 207

McAllen, Texas 78503................. 9.3%
M.K. Razdan, M.D.
222 East Ridge Road
Suite 116
McAllen, Texas 78503................. 9.2%

All officers and directors as a group
(two persons)........................ 47.9%

COMPARATIVE RIGHTS OF SHAREHOLDERS AND PARTNERS

The following is a summary of material differences between the rights of
holders of New STAT Common Stock as compared to the rights of holders of Old
STAT Common Stock, AmHealth Common Stock and AmHealth Units, respectively. These
summaries do not purport to be complete statements of the rights of holders of
New STAT Common Stock under the Delaware General Corporation Law or New STAT's
Charter and Bylaws, or a complete description of the provisions referred to
herein. These summaries are qualified in their entirety by reference to the
Delaware General Corporation Law and the governing instruments of New STAT, Old
STAT, the AmHealth Corporations and the AmHealth Partnerships. The terms of New
STAT's securities are described in greater detail in "Description of Securities
of New STAT." Copies of New STAT's Charter and Bylaws are available without
charge to any person to whom this Joint Proxy Statement/Prospectus is delivered
upon written or oral request to New STAT Healthcare, Inc., Attention: Corporate
Secretary, 12450 Greenspoint Drive, Suite 1200, Houston, Texas 77060.

NEW STAT COMMON STOCK AND OLD STAT COMMON STOCK

Both New STAT and Old STAT are incorporated in Delaware. Upon consummation
of the Exchange, the New STAT Common Stock exchanged on a share-for-share basis
for Old STAT Common Stock will provide the Old STAT stockholders who receive
such New STAT Common Stock with essentially the same rights they had as Old STAT
stockholders, except as described in the following sentences. Old STAT's
certificate of incorporation and bylaws provide for each of the

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directors of Old STAT be elected annually, while the directors of New STAT will
be divided into three classes serving staggered, three year terms. Special
stockholders meetings of Old STAT may be called only by the President, a
majority of the Old STAT Board or the holders of at least 10% of the outstanding
Old STAT Common Stock. Special stockholders meetings of New STAT may be called
only by the Chairman of the Board, the President, a majority of the New STAT
Board or the holders of at least a majority of the outstanding New STAT Common
Stock. In addition, the Old STAT certificate of incorporation and bylaws permit
Old STAT stockholders to take action by written consent without a meeting. The
New STAT Charter and Bylaws require that all stockholder action be taken at a
duly called annual or special meeting of stockholders, and prohibits any
stockholder action by written consent.

NEW STAT COMMON STOCK AND AMHEALTH COMMON STOCK

New STAT is incorporated in Delaware, and the rights of New STAT
stockholders are currently governed by the Delaware General Corporation Law and
the Charter and Bylaws of New STAT. The AmHealth Corporations are incorporated
in Texas, and the rights of AmHealth Shareholders are currently governed by the
Texas Business Corporation Act and the articles of incorporation and bylaws of
the respective AmHealth Corporations. Upon consummation of the mergers
contemplated in the Exchange, the AmHealth Shareholders will become New STAT
stockholders, and will have the rights of New STAT stockholders.

DISTRIBUTIONS. It is not anticipated that New STAT will pay any cash
dividends on the New STAT Common Stock in the foreseeable future; to the extent
that dividends have been paid by the AmHealth Corporations, such dividends are
expected to cease, although New STAT has the legal power to declare and pay
dividends as a for-profit corporation under Delaware law.

TAX CONSEQUENCES. Certain of the AmHealth Corporations are Subchapter S
corporations, and holders of AmHealth Common Stock in such corporations will
lose any benefits of ownership of stock in a pass-through tax entity. New STAT
is subject to federal and state income taxes on its taxable income at the
corporate level. Consequently, corporate earnings that are distributed to New
STAT stockholders will have been taxed at both corporate and individual rates,
while net income of the AmHealth Corporations which are Subchapter S
corporations will have been taxed to the stockholder at their individual rates.
In addition, New STAT stockholders do not have the benefit of deductions for the
losses of New STAT, if any.

LIABILITY OF DIRECTORS. The New STAT Charter limits the liability of New
STAT directors for monetary damages for any breach of fiduciary duty as a
director. Neither the articles of incorporation or the bylaws of any of the
AmHealth Corporations includes a similar provision.

CUMULATIVE VOTING FOR DIRECTORS. Under Delaware law, stockholders are not
entitled to cumulate their votes in an election of directors unless the
corporation's certificate of incorporation so provides. New STAT's Charter does
not provide for cumulative voting. Under Texas law, shareholders are entitled to
cumulate their votes in an election of directors unless the articles of
incorporation specifically prohibit cumulative voting. The articles of
incorporation of each of the AmHealth Corporations do not prohibit cumulative
voting.

AMENDMENT OF CHARTER. Delaware law provides that amendments to the
certificate of incorporation must be approved by the holders of a majority of
the corporation's stock entitled to vote thereon, and the holders of a majority
of the outstanding stock entitled to vote thereon as a class, unless the
certificate of incorporation requires the vote of a larger portion of the
outstanding stock or any class thereof. New STAT's Charter does not require
approval by more than a majority vote. Texas law provides that amendments to
articles of incorporation must be approved by two-thirds of the outstanding
shares, and if any class or series of shares is entitled to vote thereon,
two-thirds of such class or series and two-thirds of the total outstanding
shares entitled to vote thereon must approve such amendment.

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NEW STAT COMMON STOCK AND AMHEALTH UNITS

The AmHealth Partnerships are Texas limited partnerships governed by the
Texas Revised Limited Partnership Act and by the limited partnership agreement
of each AmHealth Partnership (the "LIMITED PARTNERSHIP AGREEMENTS"). Upon the
consummation of the Exchange, the limited partners in the AmHealth Partnerships
electing to participate in the Exchange will become New STAT stockholders, and
their rights will be governed by the Delaware General Corporation Law and New
STAT's Charter and Bylaws. Certain significant differences between the rights of
the AmHealth Partners and the rights of New STAT stockholders are summarized
below.

DISTRIBUTIONS. Historically, approximately 90% of the net profits of the
AmHealth Partnerships have been periodically distributed to the relevant
AmHealth Partners, rather than being reinvested. After the consummation of the
Exchange, New STAT is expected to retain all cash produced from operations and
does not expect to pay dividends on the New STAT Common Stock. As a result, the
AmHealth Partners should not expect to receive dividends or other distributions
after the Exchange is consummated.

TAX CONSEQUENCES. Under present law, the AmHealth Partnerships are not
taxable entities and incur no federal tax liability. Instead, each item of
partnership income, gain, loss, deduction or credit flows through to the
partners. A distribution by a partnership to a partner is generally not taxable
to the partner unless the distribution is money in excess of the partner's
adjusted basis in his partnership interest or the amount such partner has at
risk in the partnership.

Any income of New STAT and its subsidiaries will be subject to tax at the
corporate level, and any dividends by New STAT to its stockholders will incur a
second level of tax in the hands of the stockholders. In other words, any income
of New STAT distributed to its stockholders will be subject to "double
taxation." New STAT does not intend to pay dividends on the New STAT Common
Stock in the foreseeable future. See "The Exchange -- Certain Federal Income Tax
Consequences."

TERM OF EXISTENCE. The AmHealth Partnerships terminate on December 31,
2050, unless sooner terminated under certain circumstances. New STAT's
existence is perpetual. It may be dissolved by the requisite stockholder vote.

MANAGEMENT. The Limited Partnership Agreements provide that, subject to
certain limitations, the management and control of the day-to-day operations of
each AmHealth Partnership shall rest exclusively in the general partner. The
general partner is given broad powers under the Limited Partnership Agreements;
however, the consent of all of the limited partners is required to: (i) change
or reorganize the partnership into any other legal form; (ii) to dissolve the
partnership at will; (iii) to admit additional or substitute partners; or (iv)
to perform any act which would subject any limited partner to liability as a
general partner under any jurisdiction. In addition, the approval of those
partners owning partnership interests representing at least a majority of the
voting rights of all of the partnership interests is required to: (i) sell all
or substantially all of the partnership's assets; or (ii) to amend the Limited
Partnership Agreement, except under certain enumerated conditions. The Limited
Partnership Agreements provide that the general partner shall be indemnified for
liability or damage incurred or suffered by the general partner by reason of any
act performed or omitted to be performed by the general partner; provided that
the general partner shall not be indemnified for actions or omissions that
constitute willful misconduct.

New STAT stockholders have no right as such to participate in the
management of New STAT except pursuant to their right to vote in the election of
members of the New STAT Board. New STAT's Bylaws provide that any person who was
or is a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of New STAT) by reason of the fact that he is or
was an officer, director, employee or agent of the corporation, or is or was
serving at the request of New STAT as an officer, director, employee or agent of
another corporation, partnership or other business entity, shall be indemnified
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually

106

and reasonably incurred or to be incurred by him in connection with such actions
or proceedings, if he acted in good faith and in a manner he reasonably believed
to be in or not opposed to the best interest of the corporation, and, with
respect to any criminal actions or proceeding, had no reasonable cause to
believe his conduct was unlawful.

New STAT's Charter provides that no director shall be personally liable to
the corporation or its stockholders for monetary damages for any breach of
fiduciary duty by such director as a director. Notwithstanding the foregoing
sentence, a director shall be liable to the extent provided by applicable law
(i) for breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) pursuant to Section
174 of the Delaware General Corporation Law; or (iv) for any transaction from
which the director derived an improper personal benefit.

VOTING RIGHTS. The Texas Revised Limited Partnership Act does not contain
any voting rights provisions, and the voting rights of the AmHealth Partners are
limited to the consent requirements referred to above. New STAT stockholders are
entitled to vote on the election of directors of New STAT and are also entitled
to vote on various other matters, including (i) amendments to the New STAT
Charter; (ii) the sale of all or substantially all the assets of New STAT; (iii)
the involuntary dissolution of New STAT; or (iv) any merger or share exchange.

MEETINGS. The Limited Partnership Agreements provide that meetings of the
AmHealth Partners may be called by the general partner and upon with written
request of any one or more limited partners who own in the aggregate 20% of the
aggregate partnership interests in the respective AmHealth Partnership. The New
STAT Bylaws provide for an annual meeting of stockholders, and further that a
special meeting of stockholders may be called by the Chairman of the Board, the
President, a majority of the members of the New STAT Board or the holders of at
least a majority of all outstanding shares of New STAT capital stock entitled to
vote.

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DESCRIPTION OF SECURITIES OF NEW STAT

The total authorized capital stock of New STAT consists of 40,000,000
shares of New STAT Common Stock, $.01 par value per share, and 5,000,000 shares
of preferred stock, $.01 par value per share (the "PREFERRED STOCK"). The
following descriptions of the capital stock are qualified in all respects by to
the Charter and Bylaws of New STAT, copies of which are available without charge
to any person to whom this Joint Proxy Statement/Prospectus is delivered upon
written or oral request to New STAT Healthcare, Inc., Attention: Corporate
Secretary, 12450 Greenspoint Drive, Suite 1200, Houston, Texas 77060.

As of the date of this Joint Proxy Statement/Prospectus, no shares of New
STAT Common Stock and no shares of Preferred Stock were issued and outstanding.

COMMON STOCK

The holders of shares of New STAT Common Stock are entitled to one vote per
share on all matters to be voted on by stockholders and do not have cumulative
voting rights. Subject to preferences that may be applicable to any Preferred
Stock that may by issued in the future, the holders of New STAT Common Stock are
entitled to receive ratably such dividends, if any, as may be declared from time
to time by the New STAT Board out of funds legally available for that purpose.
Upon liquidation, dissolution or winding up of New STAT, the holders of New STAT
Common Stock are entitled to share ratably in all assets available for
distribution after payment of liabilities, subject to prior distribution rights
of holders of shares of Preferred Stock, if any, then outstanding. The New STAT
Common Stock has no preemptive or conversion rights or other subscriptive
rights. There are no redemption or sinking fund provisions applicable to the New
STAT Common Stock. The shares of New STAT Common Stock to be issued upon
completion of the Exchange will be fully paid and nonassessable.

PREFERRED STOCK

The New STAT Board has the authority to issue the Preferred Stock in one or
more series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or the designation of such series,
without further vote or action by the New STAT stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of New STAT without further action by the stockholders and may
adversely affect the voting and other rights of the holders of New STAT Common
Stock.

CLASS A WARRANTS

Old STAT currently has 671,666 Class A redeemable common stock purchase
warrants (the "OLD STAT CLASS A WARRANTS") outstanding, each of which will be
exchanged for a similar warrant issued by New STAT (the "NEW STAT CLASS A
WARRANTS"). Each such warrant will entitle its holder to purchase one share of
New STAT Common Stock at an exercise price of $4.50 per share until April 19,
1998.

The New STAT Class A Warrants will be issued pursuant to a warrant
agreement (the "WARRANT AGREEMENT") among New STAT, Network 1 Financial
Securities, Inc. and American Stock Transfer & Trust Company, the warrant agent,
and will be evidenced by warrant certificates in registered form.

The exercise price of the New STAT Class A Warrants and the number and kind
of shares of New STAT Common Stock or other securities and property issuable
upon exercise of such warrants are subject to adjustment in certain
circumstances, including a stock split of, stock dividend on or a subdivision,
combination or capitalization of the New STAT Common Stock. Additionally, an
adjustment will be made upon the sale of all or substantially all of the assets
of New STAT in order to enable holders of New STAT Class A Warrants to purchase
the kind and number of shares or other

108

securities or property (including cash) receivable in such event by a holder of
the number of shares of New STAT Common Stock that might otherwise have been
purchased upon exercise of the New STAT Class A Warrants.

The New STAT Class A Warrants will not confer upon the holder any voting or
any other rights of a stockholder of New STAT. Upon notice to the holders of New
STAT Class A Warrants, New STAT has the right to reduce the exercise price or
extend the expiration date of the New STAT Class A Warrants.

The New STAT Class A Warrants may be exercised upon surrender of the
warrant certificate evidencing those warrants on or prior to the expiration date
(or earlier redemption date) of such warrants at the offices of American Stock
Transfer & Trust Company, the warrant agent, with the form of "Election to
Purchase" on the reverse side of the warrant certificate completed and executed
as indicated, accompanied by payment of the full exercise price (by certified
check payable to the order of the warrant agent) for the number of New STAT
Class A Warrants being exercised.

No New STAT Class A Warrant will be exercisable unless at the time of
exercise New STAT has filed with the Commission a current prospectus covering
the issuance of shares of New STAT Common Stock issuable upon exercise of such
warrant and the issuance of shares has been registered or qualified or is deemed
to be exempt from registration or qualification under the securities laws of the
state of residence of the holder of the warrant. New STAT will use its best
efforts to maintain a current prospectus relating to the issuance of shares of
New STAT Common Stock upon the exercise of the New STAT Class A Warrants until
the expiration of the warrants, subject to the terms of the Warrant Agreement.
While it is New STATs intention to maintain a current prospectus, there is no
assurance that it will be able to do so.

No fractional shares will be issued upon exercise of the New STAT Class A
Warrants. However, if a holder of a warrant exercises all New STAT Class A
Warrants then owned of record, New STAT will pay to that holder, in lieu of the
issuance of a fractional share which would be otherwise issuable, an amount in
cash equal to such fractional interest based on the market value of the New STAT
Common Stock on the last trading day prior to the exercise date.

The New STAT Class A Warrants will be immediately redeemable by New STAT at
a price of $.05 per warrant, and prior to their expiration, on 30 days' prior
written notice to the registered holders of the warrants, provided the closing
high bid or sale price per share of the New STAT Common Stock (if the New STAT
Common Stock is then traded on Nasdaq or a national securities exchange,
respectively) for a period of 20 consecutive trading days, ending on the third
business day prior to the date of any redemption notice, equals or exceeds at
least $5.50 (subject to adjustment in certain events). The New STAT Class A
Warrants shall be exercisable until the close of the business day preceding the
date fixed for redemption. In addition, subject to the rules of the National
Association of Securities Dealers, Inc., New STAT has agreed to engage the
representatives of the underwriters of Old STAT's April 1995 initial public
offering as its exclusive warrant solicitation agents, in connection with which
such firms would be entitled to a 4% fee upon exercise of the New STAT Class A
Warrants.

OTHER WARRANTS

In connection with the April 1995 initial public offering of Old STAT
Common Stock, Old STAT issued 62,500 Old STAT Representatives' Warrants, each of
which entitles the holders to purchase two shares of Old STAT Common Stock and
one Old STAT Class A Warrant for an aggregate price of $10.875 subject to
anti-dilution provisions, for a period of three and one-half years commencing 18
months from April 21, 1995. The terms of such warrants grant to the holders
thereof certain "piggyback" registration rights for a period of seven years from
April 21, 1995 and demand registration rights for a period of five years from
April 21, 1995 with respect to the registration under the Securities Act of the
securities directly and indirectly issuable upon exercise of the such warrants.
Following the Exchange, New STAT will issue substantially similar warrants
exercisable for New

109

STAT Common Stock and New STAT Class A Warrants in replacement of the Old STAT
Representatives' Warrants.

CERTAIN ANTI-TAKEOVER, LIMITED LIABILITY AND INDEMNIFICATION PROVISIONS

Certain provisions of New STAT's Charter and Bylaws may have the effect of
deterring or preventing hostile takeovers including those that might result in a
premium over the then-current trading price or delaying or preventing changes in
control or management of New STAT. The New STAT Board believes that these
provisions are in the best interests of stockholders because they will encourage
a potential acquiror to negotiate with the New STAT Board which then will be
able to consider the interest of all stockholders in a change of control
situation.

AUTHORIZED BUT UNISSUED CAPITAL STOCK. The authorization of undesignated
Preferred Stock permits the New STAT Board to issue Preferred Stock with voting
or other rights or preferences that could impede the success of any attempt to
effect a change of control of New STAT. There will also be a substantial number
of authorized but unissued shares of New STAT Common Stock that could be issued
for such purpose.

CLASSIFIED BOARD OF DIRECTORS. New STAT's Charter and Bylaws provide for a
classified Board of Directors. Under the classified New STAT Board, the New STAT
directors are divided into three classes as nearly as equal in size as
practicable. After the initial implementation of the classified Board, each
class of directors will be elected once every three years. Therefore, a
stockholder that has acquired enough stock to ensure control of the election
process can only elect approximately one-third of the directors in each year and
must wait at least two elections before electing a majority of directors.

LIMITATION ON ACTIONS BY WRITTEN CONSENT. New STAT's Bylaws require that
any action required or permitted to be taken by stockholders of New STAT must be
effected at a duly called annual or special meeting of stockholders and may not
be effected by written consent. New STAT's Bylaws also permit stockholders to
call a special meeting of stockholders only if approved by the holders of at
least a majority of the outstanding New STAT Common Stock.

DELAWARE TAKEOVER STATUTE. New STAT is subject to the provisions of Section
203 of the Delaware General Corporation Law. This statute generally prohibits,
under certain circumstances, a Delaware corporation whose stock is publicly
traded, from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder unless (i) the corporation has
elected in its certificate of incorporation or bylaws not to be governed by
Section 203 (New STAT has not made such an election), (ii) prior to the time the
stockholder became an interested stockholder, the board of directors approved
either the business combination or the transaction which resulted in the person
becoming an interested stockholder, (iii) the stockholder owned at least 85% of
the outstanding voting stock of the corporation (excluding shares held by
directors who were also officers or held in certain employee stock plans) upon
consummation of the transaction which resulted in the stockholder becoming an
interested stockholder or (iv) the business combination was approved by the
board of directors and by two-thirds of the outstanding voting stock of the
corporation (excluding shares held by the interested stockholders). An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or any time within the prior three years owned) 15% or more of
the corporations outstanding voting stock. The term "business combination" is
defined generally to include mergers, consolidations, stock sales, asset based
transactions, and other transactions resulting in a financial benefit to the
interested stockholder.

INDEMNIFICATION OF OFFICERS AND DIRECTORS. The Charter and Bylaws of New
STAT provide for indemnification of each director and officer or former director
or officer of another corporation in which New STAT owns shares of capital stock
or is a creditor. New STAT will indemnify against reasonable costs and expenses
incurred in connection with any action, suit or proceeding to which any of the
individuals described above were made a party by reason of his or her being or
having been such a director or officer, unless such director has been
adjudicated to have been liable for negligence or

110

misconduct in his or her corporate duties. As of the date of this Joint Proxy
Statement/Prospectus, New STAT is not aware of any existing or pending
litigation involving a former or current director that will require the
indemnification of New STAT.

Notwithstanding the foregoing indemnification provisions of New STAT's
Charter and Bylaws, New STAT has been informed that, in the opinion of the
Commission, indemnification for liabilities arising under the Securities Act is
against public policy and is therefore unenforceable.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Exchange and assuming that all AmHealth
Shareholders and AmHealth Partners participate in the Exchange, there will be
outstanding 14,902,472 shares of New STAT Common Stock. Of these shares,
approximately 2.0 million shares will be freely tradeable without restriction or
further registration under the Securities Act unless purchased by "affiliates"
of New STAT as that term is defined in Rule 144, an additional approximately
673,000 shares allocable to the common stock of each AmHealth Corporation will
be restricted shares (and not registered in this offering) and subject to the
Lock-Up Agreements described below, and the remaining approximately 12.2 million
shares will be held by "affiliates" of New STAT or subject to the Lock-Up
Agreements. In addition, as of the date of this Joint Proxy Statement/
Prospectus, there were outstanding warrants and options to purchase an aggregate
of 1,159,166 shares of Old STAT Common Stock which, following the Exchange, will
be exchanged for warrants and options exercisable for New STAT Common Stock. All
of the shares issued upon exercise of such warrants and options will be freely
tradeable without restriction or further registration under the Securities Act,
other than shares held by "affiliates" of New STAT or subject to the lock-up
arrangements described below.

Old STATs officers, directors, and certain of its current stockholders,
have agreed not to sell or otherwise dispose of any of their shares of Old STAT
Common Stock now owned or issuable upon the exercise of warrants prior to
October 21, 1996 without the prior written consent of Network 1 Financial
Securities, Inc., the underwriter of Old STAT's initial public offering. These
agreements will extend to shares of New STAT Common Stock to be issued in the
Exchange. In addition, the holders of approximately 12.8 million shares of New
STAT Common Stock issuable in the Exchange (assuming participation by all
AmHealth Shareholders and AmHealth Partners in the Exchange) will be required to
execute Lock-Up Agreements providing that, without the prior written consent of
New STAT, such holders will not sell, assign, pledge, hypothecate or otherwise
dispose of, directly or indirectly, any shares of New STAT Common Stock acquired
in the Exchange, or any shares acquired upon the exercise of any options or
warrants to purchase New STAT Common Stock, for a period of 12 months following
consummation of the Exchange.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) is entitled to sell in "brokers transactions" or to
market makers, within any three-month period commencing 90 days after the date
of this Joint Proxy Statement/Prospectus, a number of shares that does not
exceed the greater of (a) one percent of the number of shares of New STAT Common
Stock then outstanding (approximately 149,025 shares immediately after the
Exchange) or (b) the average weekly trading volume in the New STAT Common Stock
during the four calendar weeks

111

preceding the required filing of a Form 144 with respect to such sale. Sales
under Rule 144 are generally subject to the availability of current public
information about New STAT.

Approximately 30 days after the consummation of the Exchange, New STAT
intends to file a registration statement on Form S-8 covering the shares of New
STAT Common Stock that have been reserved for issuance under the New STAT Stock
Plan, thus permitting the resale of such shares in the public market without
restriction under the Securities Act subject, however, to lock-up agreements
with respect to such shares.

No prediction can be made as to the effect, if any, that sales of shares of
New STAT Common Stock or the availability of such shares for sale will have on
the market prices prevailing from time to time. The possibility that substantial
amounts of New STAT Common Stock may be sold in the public market may adversely
affect prevailing market prices for the New STAT Common Stock and could impair
New STATs ability to raise capital in the future through the sale of equity
securities.

PROPOSAL 3 -- APPOINTMENT OF INDEPENDENT AUDITORS

The Old STAT Board has appointed KPMG Peat Marwick LLP as independent
auditors for Old STAT for the fiscal year ending December 31, 1996.

Representatives of KPMG Peat Marwick LLP are expected to be present at the
Meeting. They will have an opportunity to make a statement if they so desire and
are expected to be available to respond to appropriate questions.

THE OLD STAT BOARD RECOMMENDS THAT OLD STAT STOCKHOLDERS VOTE FOR THE
APPROVAL OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS.

PROPOSAL 4 -- APPROVAL OF NEW STAT HEALTHCARE, INC.
1996 STOCK INCENTIVE PLAN

The Old STAT Stockholders, AmHealth Shareholders and AmHealth Partners are
each being asked to approve the New STAT Stock Plan, pursuant to which an
initial 1,500,000 shares of New STAT Common Stock have been reserved for
issuance. The New STAT Board has authorized the implementation of the New STAT
Stock Plan as the successor to the Old STAT Stock Plan, provided the requisite
Old STAT Stockholder, AmHealth Shareholder and AmHealth Partner approval is
obtained. The New STAT Stock Plan will become effective upon the effective time
of the Exchange. All options outstanding under the Old STAT Stock Plan at such
time will be incorporated into the New STAT Stock Plan and no further option
grants will be made under the Old STAT Stock Plan after such time.

The following is a summary of the principal features of the New STAT Stock
Plan. The summary, however, does not purport to be a complete description of all
of the provisions of the New STAT Stock Plan. Any Old STAT Stockholder, AmHealth
Shareholder or AmHealth Partner who wishes to obtain a copy of the New STAT
Stock Plan may do so by written request to the Secretary of New STAT at its
principal executive offices.

DESCRIPTION OF NEW STAT STOCK PLAN

EQUITY INCENTIVE PROGRAMS

The New STAT Stock Plan contains four separate equity incentive programs:
(i) a Discretionary Option Grant Program, (ii) an Automatic Option Grant
Program, (iii) a Salary Investment Option Grant Program and (iv) a Stock
Issuance Program. The principal features of these programs are described below.
The New STAT Stock Plan (other than the Automatic Option Grant Program) will be
administered by the New STAT Board or the Compensation Committee of the Board.
The New STAT Board or the committee (the "PLAN ADMINISTRATOR") will have
complete discretion (subject to the provisions of the New STAT Stock Plan) to
authorize option grants and direct stock issuances under the New STAT Stock
Plan. However, all grants under the Automatic Option Grant Program will be

112

made in strict compliance with the provisions of that program, and no
administrative discretion will be exercised by the Plan Administrator with
respect to the grants made thereunder.

SHARE RESERVE

A total of 1,500,000 shares of New STAT Common Stock has initially been
reserved for issuance over the ten-year term of the New STAT Stock Plan. This
reserve will be comprised of the number of shares which remained available for
issuance under the Old STAT Stock Plan and an additional increase of 1,200,000
shares. The share reserve will automatically increase on the first trading day
of each calendar year, beginning in 1997, by a number of shares equal to 1.5% of
the number of shares of New STAT Common Stock outstanding on the last trading
day of the immediately preceding calendar year. However, in no event may any one
participant in the New STAT Stock Plan be granted stock options, separately
exercisable stock appreciation rights and direct stock issuances for more than
300,000 shares in the aggregate over the term of the New STAT Stock Plan.

In the event any change is made to the outstanding shares of New STAT
Common Stock by reason of any recapitalization, stock dividend, stock split,
combination of shares, exchange of shares or other change in corporate structure
effected without New STAT's receipt of consideration, appropriate adjustments
will be made to the securities issuable (in the aggregate and to each
participant) under the New STAT Stock Plan and to the securities and exercise
price under each outstanding option.

ELIGIBILITY

Officers and other employees of New STAT and its parent or subsidiaries
(whether now existing or subsequently established), non-employee members of the
New STAT Board (other than those serving as members of the Compensation
Committee) and the board of directors of its parent or subsidiaries and
consultants and independent advisors of New STAT and its parent and subsidiaries
are eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs. Non-employee members of the New STAT Board (including members of the
Compensation Committee) are also eligible to participate in the Automatic Option
Grant Program. Only officers and highly compensated employees of New STAT and
its parent and subsidiaries are eligible to participate in the Salary Investment
Option Grant Program.

Following the Exchange, approximately six executive officers and 175 other
employees are expected to be eligible to participate in the New STAT Stock Plan,
and three non-employee New STAT Board members are expected to be eligible to
participate in the Automatic Option Grant Program.

VALUATION

The fair market value per share of New STAT Common Stock on any relevant
date under the New STAT Stock Plan will be the closing sale price per share on
that date on Nasdaq.

DISCRETIONARY OPTION GRANT PROGRAM

Options may be granted under the Discretionary Option Grant Program at an
exercise price per share not less than 85% of the fair market value per share of
New STAT Common Stock on the option grant date. No granted option will have a
term in excess of ten years.

Upon cessation of service, the optionee will have a limited period of time
in which to exercise any outstanding option to the extent such option is
exercisable for vested shares. The Plan Administrator will have complete
discretion to extend the period following the optionee's cessation of service
during which his or her outstanding options may be exercised and/or to
accelerate the exercisability or vesting of such options in whole or in part.
Such discretion may be exercised at any time while the options remain
outstanding, whether before or after the optionee's actual cessation of service.

The Plan Administrator is authorized to issue two types of stock
appreciation rights in connection with option grants made under the
Discretionary Option Grant Program:

113

TANDEM STOCK APPRECIATION RIGHTS provide the holders with the right to
surrender their options for an appreciation distribution from New STAT
equal in amount to the excess of (a) the fair market value of the vested
shares of New STAT Common Stock subject to the surrendered option over (b)
the aggregate exercise price payable for such shares. Such appreciation
distribution may, at the discretion of the Plan Administrator, be made in
cash or in shares of New STAT Common Stock.

LIMITED STOCK APPRECIATION RIGHTS may be granted to officers of New
STAT as part of their option grants. Any option with such a limited stock
appreciation right in effect for at least six (6) months may be surrendered
to New STAT upon the successful completion of a hostile take-over of New
STAT. In return for the surrendered option, the officer will be entitled to
a cash distribution from New STAT in an amount per surrendered option share
equal to the excess of (a) the take-over price per share over (b) the
exercise price payable for such share.

The Plan Administrator has the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of New STAT Common
Stock and to issue replacement options with an exercise price based on the
market price of New STAT Common Stock at the time of the new grant.

AUTOMATIC OPTION GRANT PROGRAM

Under the Automatic Option Grant Program, each individual who first becomes
a non-employee Board member after the effective time of the Exchange will
automatically be granted at that time an option grant for 20,000 shares of New
STAT Common Stock, provided such individual has not previously been in New
STAT's employ. In addition, on the date of each Annual Stockholders Meeting,
beginning with the 1997 Annual Meeting, each individual who is to continue to
serve as a non-employee Board member after such meeting will automatically be
granted an option to purchase 20,000 shares of New STAT Common Stock, provided
such individual has served as a non-employee Board member for at least six
months. There will be no limit on the number of such 20,000-share options which
any one non-employee Board member may receive over the period of Board service,
and non-employee Board members who have previously served in New STAT's employ
will be eligible for one or more 20,000-share option grants.

Each option will have an exercise price per share equal to 100% of the fair
market value per share of New STAT Common Stock on the option grant date and a
maximum term of ten years measured from the option grant date.

Each option will be immediately exercisable for all the option shares, but
any purchased shares will be subject to repurchase by New STAT, at the exercise
price paid per share, upon the optionee's cessation of Board service. Each
initial option grant will vest (and New STAT's repurchase rights will lapse) in
four equal annual installments over the optionee's period of Board service, with
the first such installment to vest upon the completion of one year of Board
service measured from the option grant date. Each annual option grant will vest
(and New STAT's repurchase rights will lapse) upon the completion of one year of
Board service measured from the option grant date.

The shares subject to each automatic option grant will immediately vest
upon the optionee's death or permanent disability or an acquisition of New STAT
by merger or asset sale or a hostile change in control of New STAT (whether by
successful tender offer for more than 50% of the outstanding voting stock or by
proxy contest for the election of Board members). In addition, upon the
successful completion of a hostile take-over, each automatic option grant which
has been outstanding for at least six months may be surrendered to New STAT for
a cash distribution per surrendered option share in an amount equal to the
excess of (a) the take-over price per share over (b) the exercise price payable
for such share.

114

SALARY INVESTMENT OPTION GRANT PROGRAM

In the event the Plan Administrator elects to activate the Salary
Investment Option Grant Program for one or more calendar years, each executive
officer and other highly compensated individual selected for participation must,
prior to the start of the calendar year of participation, file with the Plan
Administrator an irrevocable authorization directing New STAT to reduce, by a
designated dollar amount, his or her base salary for the upcoming calendar year.
However, the amount of such salary reduction may not be less than $10,000 and
may not be more than $50,000. The selected individuals will be granted options
on the first trading day in January of the calendar year for which the salary
reduction is to be in effect.

Each option will be subject to substantially the same terms and conditions
applicable to option grants made under the Discretionary Option Grant Program,
except for the following differences:

-- The exercise price per share will be equal to one-third of the fair
market value per share of New STAT Common Stock on the option grant
date.

-- The number of option shares will be determined by dividing the total
dollar amount of the approved reduction in the participant's base salary
by two-thirds of the fair market value per share of New STAT Common
Stock on the option grant date. As a result, the total spread on the
option (the fair market value of the option shares on the grant date
less the aggregate exercise price payable for those shares) will equal
the dollar amount of the reduction to the optionee's base salary to be
in effect for the calendar year for which the option grant is made.

-- Provided the optionee continues in service, the option will become
exercisable for the option shares in a series of 12 successive equal
monthly installments on the last day of each calendar month in the year
of the option grant.

STOCK ISSUANCE PROGRAM

Shares may be sold under the Stock Issuance Program at a price per share
not less than 85% of the fair market value per share of New STAT Common Stock on
the issuance date, payable in cash or through a promissory note payable to New
STAT. Shares may also be issued solely as a bonus for past services.

The issued shares may either be immediately vested upon issuance or subject
to a vesting schedule tied to the performance of service or the attainment of
performance goals. The Plan Administrator will, however, have the discretionary
authority at any time to accelerate the vesting of any unvested shares.

GENERAL PROVISIONS

ACCELERATION

In the event that New STAT is acquired by merger or asset sale, each
outstanding option under the Discretionary Option Grant Program which is not to
be assumed by the successor corporation or replaced with a comparable option to
purchase shares of the capital stock of the successor corporation will
automatically accelerate in full, and all unvested shares under the Stock
Issuance Program will immediately vest, except to the extent New STAT's
repurchase rights with respect to those shares are to be assigned to the
successor corporation. The Plan Administrator will have the discretion to grant
options and to structure repurchase rights so that the shares subject to those
options or repurchase rights will automatically vest in the event the
individual's service is terminated within 18 months following (i) a merger or
asset sale in which those options are assumed or those repurchase rights are
assigned or (ii) a hostile change in control of New STAT (whether by successful
tender offer for more than 50% of the outstanding voting stock or by proxy
contest for the election of New STAT Board members).

115

Outstanding stock options under the Old STAT Stock Plan which were
incorporated into the New STAT Stock Plan provide that, in the event of an
acquisition of New STAT, such options will be assumed or replaced by the
successor corporation unless the Plan Administrator accelerates the options, but
do not contain any provisions relating to a hostile change in control of New
STAT. However, the Plan Administrator has the authority to extend the
acceleration provisions of the New STAT Stock Plan to any or all stock options
incorporated from the Old STAT Stock Plan.

Any options outstanding under the Salary Investment Option Grant Program at
the time of an acquisition of New STAT (whether by merger or asset sale) or
hostile change in control of New STAT (whether by successful tender offer for
more than 50% of the outstanding voting stock or by proxy contest for the
election of Board members) will automatically accelerate in full. All such
options accelerated upon an acquisition of New STAT will be assumed by the
acquiror corporation.

The acceleration of vesting in the event of a change in the ownership or
control of New STAT may be seen as an anti-takeover provision and may have the
effect of discouraging a merger proposal, a takeover attempt or other efforts to
gain control of New STAT.

FINANCIAL ASSISTANCE

The Plan Administrator may permit one or more participants to pay the
exercise price of outstanding options or the purchase price of shares under the
New STAT Stock Plan by delivering a promissory note payable in installments. The
Plan Administrator will determine the terms of any such promissory note.
However, the maximum amount of financing provided any participant may not exceed
the cash consideration payable for the issued shares plus all applicable taxes
incurred in connection with the acquisition of the shares. Any such promissory
note may be subject to forgiveness in whole or in part, at the discretion of the
Plan Administrator, over the participant's period of service.

SPECIAL TAX ELECTION

The Plan Administrator may provide one or more holders of options or
unvested shares with the right to have New STAT withhold a portion of the shares
otherwise issuable to such individuals in satisfaction of the tax liability
incurred by such individuals in connection with the exercise of those options or
the vesting of those shares. Alternatively, the Plan Administrator may allow
such individuals to deliver previously acquired shares of New STAT Common Stock
in payment of such tax liability.

AMENDMENT AND TERMINATION

The New STAT Board may amend or modify the New STAT Stock Plan in any or
all respects whatsoever subject to any required stockholder approval. The Board
may terminate the New STAT Stock Plan at any time, and the New STAT Stock Plan
will in all events terminate on the tenth anniversary of the date of the
Meeting.

116

STOCK AWARDS

The table below shows, as to each of Old STAT's executive officers named in
the Summary Compensation Table and the various indicated groups, the number of
shares of Old STAT Common Stock subject to options granted between January 1,
1995 and March 31, 1996 under the Old STAT Stock Plan (which will be exchanged
for options to purchase New STAT Common Stock) together with the weighted
average exercise price payable per share.

WEIGHTED
NUMBER OF AVERAGE
NAME OPTION SHARES EXERCISE PRICE
- ------------------------------------- -------------- ---------------
William H. Rice, M.D................. 21,658 $3.17
Victor M. Miranda, M.D............... 109,342 3.17
Ned E. Chapman....................... 45,000 2.88
All current executive officers as a
group (three persons).............. 176,000 3.10
All employees, including current
officers who are not executive
officers, as a group (20 persons).. 80,000 $2.88

FEDERAL INCOME TAX CONSEQUENCES

OPTION GRANTS

Options granted under the New STAT Stock Plan may be either incentive stock
options which satisfy the requirements of Section 422 of the Code or
non-statutory options which are not intended to meet such requirements. The
Federal income tax treatment for the two types of options differs as follows:

INCENTIVE OPTIONS. No taxable income is recognized by the optionee at the
time of the option grant, and no taxable income is generally recognized at the
time the option is exercised. The optionee will, however, recognize taxable
income in the year in which the purchased shares are sold or otherwise disposed
of. For Federal income tax purposes, dispositions are divided into two
categories: (i) qualifying and (ii) disqualifying. A qualifying disposition
occurs if the sale or other disposition is made after the optionee has held the
shares for more than two years after the option grant date and more than one
year after the exercise date. If either of these two holding periods is not
satisfied, then a disqualifying disposition will result.

If the optionee makes a disqualifying disposition of the purchased shares,
then New STAT will be entitled to an income tax deduction, for the taxable year
in which such disposition occurs, equal to the excess of (i) the fair market
value of such shares on the option exercise date over (ii) the exercise price
paid for the shares. In no other instance will New STAT be allowed a deduction
with respect to the optionee's disposition of the purchased shares.

NON-STATUTORY OPTIONS. No taxable income is recognized by an optionee upon
the grant of a non-statutory option. The optionee will in general recognize
ordinary income, in the year in which the option is exercised, equal to the
excess of the fair market value of the purchased shares on the exercise date
over the exercise price paid for the shares, and the optionee will be required
to satisfy the tax withholding requirements applicable to such income.

If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by New STAT in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee will
not recognize any taxable income at the time of exercise but will have to report
as ordinary income, as and when New STAT's repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Code to include as
ordinary income in the year of exercise of the option an amount equal to the
excess of (i) the fair market value of the purchased shares on the exercise date
over (ii) the exercise price paid for such

117

shares. If the Section 83(b) election is made, the optionee will not recognize
any additional income as and when the repurchase right lapses.

New STAT will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year of New STAT in which such ordinary income is recognized by the optionee.

STOCK APPRECIATION RIGHTS

An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. New STAT will be entitled to an income tax deduction equal to the
appreciation distribution for the taxable year in which the ordinary income is
recognized by the optionee.

DIRECT STOCK ISSUANCE

The tax principles applicable to direct stock issuances under the New STAT
Stock Plan will be substantially the same as those summarized above for the
exercise of non-statutory option grants.

ACCOUNTING TREATMENT

Option grants or stock issuances with exercise or issue prices less than
the fair market value of the shares on the grant or issue date will result in a
compensation expense to New STAT's earnings equal to the difference between the
exercise or issue price and the fair market value of the shares on the grant or
issue date. Such expense will be accruable by New STAT over the period that the
option shares or issued shares are to vest. Option grants or stock issuances at
100% of fair market value will not result in any charge to New STAT's earnings,
but New STAT must disclose, in pro forma statements to its financial statements,
the impact those options would have upon New STAT's reported earnings were the
value of those options at the time of grant treated as compensation expense.
Whether or not granted at a discount, the number of outstanding options may be a
factor in determining New STAT's earnings per share on a fully-diluted basis.

Should one or more optionees be granted stock appreciation rights which
have no conditions upon exercisability other than a service or employment
requirement, then such rights will result in a compensation expense to New
STAT's earnings.

STOCKHOLDER AND PARTNER APPROVAL

The Old STAT Stockholders, AmHealth Shareholders and AmHealth Partners must
each approve the New STAT Stock Plan for it to become effective. For Old STAT,
such approval requires the affirmative vote of holders of a majority of the
shares of Old STAT Common Stock present in person or represented by proxy at the
Meeting. For each AmHealth Corporation, such approval requires the affirmative
vote of holders of a majority of the outstanding common stock of each AmHealth
Corporation. For each AmHealth Partnership, such approval requires the
affirmative vote of limited partners who together with the General Partner
thereof own at least 67% of the outstanding partnership interest therein. The
election by an AmHealth Partner to participate in the Exchange will constitute
such Partner's approval of the New STAT Stock Plan. The New STAT Stock Plan may
not be approved unless the Reorganization Agreement is also approved and the
Exchange is consummated. If such approval is obtained, the New STAT Stock Plan
will become effective upon the effective time of the Exchange. Should such
approval not be obtained or the Exchange not be consummated, then the New STAT
Stock Plan will not become effective.

NEW PLAN BENEFITS

The New STAT Board has no current plans to issue any stock options, stock
appreciation rights or other incentive awards under the New STAT Stock Plan,
except that options currently outstanding under the Old STAT Stock Plan will be
incorporated into the New STAT Stock Plan if the New STAT

118

Stock Plan becomes effective. However, it is likely that additional stock
options, stock appreciation rights and/or other incentive awards will be granted
to eligible individuals following the Exchange.

THE OLD STAT BOARD RECOMMENDS THAT OLD STAT STOCKHOLDERS VOTE "FOR" THE
APPROVAL OF THE NEW STAT STOCK PLAN.

OTHER BUSINESS

Old STAT does not intend to bring any business before the Meeting other
than the matters referred to in the accompanying notice and at this date Old
STAT has not been informed of any matters that may be presented at the Meeting
by others. If, however, any other matters properly come before such Meeting, it
is intended that the persons named in the accompanying Old STAT Proxy will vote
pursuant to such proxy in accordance with their best judgment on such matters.

A COPY OF OLD STAT'S ANNUAL REPORT ON FORM 10-KSB FOR THE YEAR ENDED
DECEMBER 31, 1995, INCLUDING THE FINANCIAL STATEMENTS THERETO, MAY BE OBTAINED
WITHOUT CHARGE BY WRITTEN REQUEST TO NED E. CHAPMAN, CHIEF FINANCIAL OFFICER, AT
STAT HEALTHCARE, INC., 12450 GREENSPOINT DRIVE, SUITE 1200, HOUSTON, TEXAS
77060. In addition, upon written request and payment of Old STAT's reasonable
expense, Old STAT will furnish a copy of any exhibit to the Form 10-KSB to any
person whose vote is solicited by this Joint Proxy Statement/Prospectus.

STOCKHOLDER PROPOSALS

Stockholder proposals to be presented at Old STAT's 1997 annual meeting of
stockholders must be in writing and received at Old STAT's principal executive
offices by the Secretary no later than January 22, 1997, and must otherwise
comply with the requirements of Old STAT's Bylaws and Rule 14a-8 under the
Exchange Act, if the proposal is to be considered for inclusion in Old STAT's
proxy statement relating to such meeting.

LEGAL MATTERS

The validity of the shares of New STAT Common Stock to be issued in
connection with the Exchange will be passed upon by Brobeck, Phleger & Harrison
LLP, Austin, Texas, counsel to New STAT. A member of such firm currently owns or
has the right to acquire 58,240 shares of Old STAT Common Stock. In addition, a
corporation controlled by such individual's family members owns or has the right
to acquire 20,001 shares of Old STAT Common Stock, of which he disclaims
beneficial ownership.

EXPERTS

The financial statements of Old STAT as of December 31, 1995 and 1994 and
for the year ended December 31, 1995 and the period from July 29, 1994 (date of
incorporation) through December 31, 1994, and the financial statements of STAT
Physicians as of August 31, 1994 and December 31, 1993 and for the eight months
ended August 31, 1994 and the year ended December 31, 1993 have been included
herein and in the Registration Statement in reliance upon the reports of KPMG
Peat Marwick LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.

The combined financial statements of AmHealth Corporation and its related
health care entities as of December 31, 1995 and for the year then ended have
been included herein and in the Registration Statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
appearing elsewhere herein, and upon the authority of said firm as experts in
accounting and auditing.

119

The combined financial statements of AmHealth Corporation and its related
health care entities as of December 31, 1994 and 1993 and for the years then
ended have been included herein and in the Registration Statement in reliance
upon the report of Long, Chilton, Payte & Hardin, LLP, independent certified
public accountants, appearing elsewhere herein, and upon the authority of said
firm as experts in accounting and auditing.

The firm of Southcoast Capital Corporation has opined as to the fairness of
the transaction. In addition, Network 1 Financial Securities, Inc. received
$25,000 for certain costs incurred in connection with its due diligence review
undertaken for purposes of the delivery of such firms consent to the Exchange.
Such firm is not rendering an opinion or providing advice in connection with the
transaction.

120

INDEX TO FINANCIAL STATEMENTS

PAGE
----
STAT HEALTHCARE, INC
Balance Sheet at March 31, 1996
(unaudited) .................................................. FS-2
Consolidated Statements of
Income for the three months
ended March 31, 1996 and 1995
(unaudited) .................................................. FS-3
Statement of Changes in
Shareholders' Equity for the
three months ended March 31,
1996 (unaudited) ............................................. FS-4
Statements of Cash Flows for the
three months ended March 31,
1996 and 1995 (unaudited) .................................... FS-5
Notes to Unaudited Financial
Statements ................................................... FS-6
Independent Auditors' Report ................................... FS-8
Balance Sheets at December 31,
1995 and 1994 ................................................ FS-9
Consolidated Statements of Income for the year ended
December 31, 1995 and the period from July 29, 1994
(date of incorporation) through December 31, 1994 ............ FS-10
Statements of Changes in
Shareholders' Equity for the year ended December 31,
1995 and the period from July 29, 1994 (date of
incorporation) through December 31, 1994 ..................... FS-11
Statements of Cash Flows for the
year ended December 31, 1995 and for the period
from July 29, 1994 (date of incorporation)
through December 31, 1994 .................................... FS-12
Notes to Financial Statements .................................. FS-13

SOUTH TEXAS ACUTE TRAUMA PHYSICIANS, P.A
Independent Auditors' Report ................................... FS-20
Balance Sheets at August 31,
1994 and December 31, 1993 ................................... FS-21
Statements of Income for the
eight months ended August 31,
1994 and the year ended
December 31, 1993 ............................................ FS-22
Statements of Changes in Shareholders' Equity
for the eight months ended August 31, 1994
and the year ended December 31, 1993 ......................... FS-23
Statements of Cash Flows for the
eight months ended August 31,
1994 and the year ended
December 31, 1993 ............................................ FS-24
Notes to Financial Statements .................................. FS-25

AMHEALTH CORPORATION AND ITS RELATED HEALTHCARE ENTITIES
Combined Balance Sheet at March
31, 1996 (unaudited) ......................................... FS-29
Combined Statements of Income
for the three months ended
March 31, 1996 and 1995
(unaudited) .................................................. FS-30
Combined Statement of Changes in
Shareholders' Equity and
Partners' Capital for the
three months ended March 31,
1996 (unaudited) ............................................. FS-31
Combined Statements of Cash
Flows for the three months
ended March 31, 1996 and 1995
(unaudited) .................................................. FS-32
Notes to Unaudited Combined
Financial Statements ......................................... FS-33
Independent Auditors' Report ................................... FS-34
Independent Auditors' Report ................................... FS-35
Combined Balance Sheets at
December 31, 1995, 1994 and
1993 ......................................................... FS-36
Combined Statements of Income
for the years ended December
31, 1995, 1994 and 1993 ...................................... FS-37
Combined Statements of Changes
in Shareholders' Equity and
Partners' Capital for the
years ended December 31, 1995,
1994 and 1993 ................................................ FS-38
Combined Statements of Cash
Flows for the years ended
December 31, 1995, 1994 and
1993 ......................................................... FS-39
Notes to Combined Financial
Statements ................................................... FS-40

FS-1

STAT HEALTHCARE, INC.
BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)

ASSETS
Cash and cash equivalents............ $ 375,000
Accounts receivable:
Customer accounts, net.......... 4,137,000
Due from STAT Physicians, P.A... 146,000
-------------
Net accounts receivable... 4,283,000
Prepaids and other current assets.... 605,000
Notes receivable..................... 200,000
-------------
Total current assets...... 5,463,000
Office equipment and furnishings,
net................................ 117,000
Purchased contract rights, net....... 1,131,000
Excess of cost over fair value of
assets acquired, net............... 200,000
Non-compete covenants, net........... 116,000
Other non-current assets............. 9,000
-------------
Total assets.............. $ 7,036,000
=============

LIABILITIES AND SHAREHOLDERS' EQUITY
Accrued physicians' fees............. $ 983,000
Accounts payable..................... 632,000
Accrued liabilities.................. 228,000
-------------
Total current liabilities
and total liabilities.... 1,843,000
-------------
Common stock subject to rescission
(note 13 - FS-18)............... 310,000
-------------
Shareholders' equity:
Preferred stock, $.01 par value.
Authorized 1,000,000 shares;
no shares outstanding......... --
Common stock, $.01 par value.
Authorized 10,000,000 shares;
issued and outstanding
3,702,472 shares.............. 36,000
Capital in excess of par
value......................... 3,907,000
Retained earnings............... 940,000
-------------
Total shareholders'
equity................... 4,883,000
Commitments and contingencies
-------------
Total liabilities and
shareholders' equity..... $ 7,036,000
=============

See accompanying notes to unaudited financial statements.

FS-2

STAT HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
------------- -------------
Net service revenues................. $ 4,442,000 $ 3,255,000
------------- -------------
Direct expenses:
Physicians' fees................ 2,823,000 2,200,000
Liability insurance............. 240,000 143,000
Billing and collection.......... 445,000 316,000
------------- -------------
Total direct expenses..... 3,508,000 2,659,000
------------- -------------
Gross profit.............. 934,000 596,000
------------- -------------
Operating expenses:
Human resources................. 560,000 316,000
Occupancy....................... 44,000 14,000
Furniture and equipment......... 18,000 5,000
Supplies........................ 36,000 11,000
Outside services and other...... 66,000 7,000
------------- -------------
Total operating
expenses................. 724,000 353,000
------------- -------------
Operating income.......... 210,000 243,000
Interest income...................... 5,000 --
Interest expense..................... -- (17,000)
------------- -------------
Income before income
taxes.................... 215,000 226,000
Income taxes......................... 77,000 77,000
------------- -------------
Net income................ $ 138,000 $ 149,000
------------- -------------
Net income per common
share.................... $ 0.03 $ 0.07
============= =============
Number of shares used in computing
net income per common share........ 3,980,390 2,199,624
============= =============

See accompanying notes to unaudited financial statements.

FS-3

STAT HEALTHCARE, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
COMMON STOCK
---------------------- CAPITAL IN TOTAL
NUMBER EXCESS OF RETAINED SHAREHOLDERS'
OF SHARES AMOUNT PAR VALUE EARNINGS EQUITY
----------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balances at December 31, 1995........ 3,623,332 $ 36,000 $ 3,857,000 $ 802,000 $ 4,695,000
Issuance of common stock............. 11,236 -- 50,000 -- 50,000
Issuance of common stock subject to
rescission......................... 67,904 -- -- -- --
Net income........................... -- -- -- 138,000 138,000
----------- --------- ------------- ----------- -------------
Balances at March 31, 1996........... 3,702,472 $ 36,000 $ 3,907,000 $ 940,000 $ 4,883,000
=========== ========= ============= =========== =============
</TABLE>

See accompanying notes to unaudited financial statements.

FS-4

STAT HEALTHCARE, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
-------------- ------------
Cash flows from operating activities:
Net income...................... $ 138,000 $ 149,000
Adjustments to reconcile net income
to net cash used in
operating activities:
Depreciation and amortization... 43,000 --
Changes in assets and
liabilities:
Increase in net accounts
receivable.............. (977,000) (565,000)
Decrease (increase) in
other current assets.... (77,000) 52,000
Increase in accrued
physicians' fees........ 277,000 58,000
Increase in accounts
payable................. 325,000 187,000
Increase in accrued
liabilities............. 76,000 170,000
Increase in amount due to
STAT Physicians......... -- 138,000
-------------- ------------
Total adjustments......... (333,000) 40,000
-------------- ------------
Net cash from operating
activities.............. (195,000) 189,000
-------------- ------------
Cash flows from investing activities:
Purchase of HEMA assets......... (963,000) --
Purchase of Amedica assets...... (200,000) --
Purchase of office equipment and
furnishings.................. (30,000) --
-------------- ------------
Net cash from investing
activities.............. (1,193,000) --
-------------- ------------
Cash flows from financing activities:
Deferred offering costs......... -- (127,000)
-------------- ------------
Net increase (decrease) in cash and
cash equivalents................... (1,388,000) 62,000
Cash and cash equivalents at
beginning of period................ 1,763,000 159,000
-------------- ------------
Cash and cash equivalents at end of
period............................. $ 375,000 $ 221,000
============== ============

See accompanying notes to unaudited financial statements.

FS-5

STAT HEALTHCARE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
MARCH 31, 1996

(1) BASIS OF PRESENTATION

The accompanying unaudited financial information does not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, the information furnished reflects all
adjustments which are, in the opinion of management, necessary for a fair
presentation of the results for the interim periods. All such adjustments were
of a normal and recurring nature.

(2) SERVICE AGREEMENT

In January 1996, STAT Healthcare, Inc. ("the Company") reached an agreement
with the Greater Houston Division of Columbia/HCA Healthcare Corporation
("Columbia") to provide emergency medicine services to all but one of Columbia's
emergency departments in the Greater Houston Division. This agreement will
result in the addition of nine hospitals to the Company's service base between
February 1 and July 1, 1996 resulting in a total of 18 hospitals served (16 of
which are owned by Columbia). The contract for services relating to this
agreement was finalized in April 1996. The Houston Division hospitals (15) are
covered by this contract with an initial term of two years which renews
automatically. This contract will account for a significant portion of the
Company's net service revenues and operating expenses.

(3) ACQUISITIONS

On January 31, 1996, and in connection with the Columbia agreement noted
above, the Company acquired the rights to a one hospital contract for the
provision of emergency department medical services. Consideration paid for the
contract and certain non-competition covenants consisted of $960,000 in cash and
52,174 shares of the Company's common stock. Up to an additional $100,000 may be
paid in each of the three twelve-month periods following the acquisitions of the
contract based on profits realized at the hospital.

On February 1, 1996, the Company acquired intangible assets of Amedica,
Ltd. ("Amedica") in a transaction that has been accounted for by the purchase
method of accounting. Amedica provides healthcare services relating to the
management of independent physician associations. Consideration paid consisted
of $200,000 in cash and 15,730 shares of the Company's common stock. Unaudited
financial information of Amedica as of December 31, 1995 and for the year then
ended is as follows:

Balance sheet information:
Current assets.................. $ 128,000
Total assets.................... 135,000
Current liabilities............. 25,000
Total liabilities............... 150,000
Partners' capital............... (15,000)
===========
Operations information:
Revenue......................... $ 439,000
Expenses........................ 518,000
Net income (loss)............... (79,000)
===========

FS-6

STAT HEALTHCARE, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS -- (CONTINUED)

Unaudited pro forma financial information showing the effects of the
hospital contract and Amedica acquisitions on the Company's balance sheet at
December 31, 1995 is as follows:

AS REPORTED PRO FORMA
------------- -------------
ASSETS
Cash and cash equivalents............ $ 1,763,000 $ 603,000
Intangible assets:
Covenants not to compete........ -- 120,000
Contract rights................. -- 1,150,000
Excess of cost over fair value
of assets acquired........... -- 200,000
All other assets..................... 4,097,000 4,097,000
------------- -------------
Total assets.............. $ 5,860,000 $ 6,170,000
============= =============
LIABILITIES AND SHAREHOLDER'S EQUITY
Total liabilities.................... $ 1,165,000 $ 1,165,000
------------- -------------
Common stock subject to rescission
(note 13 - FS-18).................. -- 310,000
------------- -------------
Common stock, $.01 par value.
Authorized 10,000,000 shares;
issued and outstanding 3,623,332
and 3,691,236, respectively........ 36,000 36,000
Capital in excess of par value....... 3,857,000 3,857,000
Retained earnings.................... 802,000 802,000
------------- -------------
Total shareholders' equity........... 4,695,000 4,695,000
------------- -------------
Total liabilities and
shareholders' equity.... $ 5,860,000 $ 6,170,000
============= =============

(4) PENDING PLAN OF REORGANIZATION

On December 21, 1995, the Company entered into an agreement and plan of
reorganization with AmHealth Corporation and its related health care entities
("AmHealth"). The agreement was amended on March 15, 1996. Under the terms of
this agreement, 11,200,000 shares of Common Stock of New STAT Healthcare, Inc.
("New STAT") will be exchanged for the stock and partnership interests
associated with the AmHealth organizations. New STAT is being organized to act
as a constituent entity in the exchange and will have no business activity
unrelated to the exchange. Consummation of the agreement is subject to the
fulfillment of certain covenants as well as shareholder/partner approvals and is
expected to occur in the second quarter of 1996. Upon consummation of the
pending plan of reorganization, the Company's Common Stock and common stock
equivalents will be exchanged on a one-for-one basis into common stock and
common stock equivalents of New STAT. If consummated, the transaction is
expected to be accounted for as a pooling of interests and, accordingly,
historical financial data will be restated to include the accounts of AmHealth.
In the event the transaction is not consummated, the Company will issue 200,000
shares of its Common Stock to the shareholders and partners of the AmHealth
organizations.

FS-7

INDEPENDENT AUDITOR'S REPORT

The Board of Directors
STAT Healthcare, Inc.:

We have audited the accompanying balance sheets of STAT Healthcare, Inc.
(the Company) as of December 31, 1995 and 1994, and the related consolidated
statements of income, and statements of changes in shareholders' equity and cash
flows for the year ended December 31, 1995 and the period from July 29, 1994
(date of incorporation) to December 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these 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 financial statements referred to above present fairly,
in all material respects, the financial position of STAT Healthcare, Inc. as of
December 31, 1995 and 1994, and the results of its operations and its cash flows
for the year ended December 31, 1995 and the period from July 29, 1994 (date of
incorporation) to December 31, 1994, in conformity with generally accepted
accounting principles.

KPMG PEAT MARWICK LLP

Houston, Texas
February 23, 1996, except as
to the first paragraph of
note 13, which is as
of April 8, 1996

FS-8

STAT HEALTHCARE, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994

1995 1994
------------- -------------
ASSETS
Cash and cash equivalents............ $ 1,763,000 $ 159,000
Accounts receivable:
Patient accounts, net (note
4)........................... 3,154,000 1,389,000
Hospital accounts............... 30,000 181,000
Due from STAT Physicians, P.A... 122,000 59,000
------------- -------------
Net accounts receivable... 3,306,000 1,629,000
Prepaids and other current assets.... 486,000 72,000
Notes receivable (note 5)............ 200,000 --
------------- -------------
Total current assets...... 5,755,000 1,860,000
Office equipment and furnishings, net
of accumulated depreciation of
$16,000 at December 31, 1995....... 96,000 --
Deferred offering costs and other
non-current assets (note 2)........ 9,000 234,000
------------- -------------
Total assets.............. $ 5,860,000 $ 2,094,000
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY
10% convertible secured notes (note
7)................................. $ -- $ 350,000
Accrued physicians' fees............. 706,000 724,000
Accounts payable..................... 307,000 135,000
Accrued liabilities.................. 152,000 137,000
------------- -------------
Total current liabilities
and total liabilities... 1,165,000 1,346,000
------------- -------------
Shareholders' equity (notes 7, 8 and 9):
Preferred stock, $.01 par value.
Authorized 1,000,000 shares;
Series A convertible, issued
and outstanding 74,000 shares
at December 31, 1994......... -- 370,000
Common stock, $.01 par value.
Authorized 10,000,000 shares;
issued and outstanding
3,623,332 and 800,000 shares,
respectively................. 36,000 8,000
Capital in excess of par
value........................ 3,857,000 242,000
Retained earnings............... 802,000 128,000
------------- -------------
Total shareholders'
equity.................. 4,695,000 748,000
Commitments and contingencies (notes
10, 11, 12 and 13)
------------- -------------
Total liabilities and
shareholders' equity.... $ 5,860,000 $ 2,094,000
============= =============

See accompanying notes to financial statements.

FS-9

STAT HEALTHCARE, INC.
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995 AND
PERIOD FROM JULY 29, 1994 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 1994

1995 1994
-------------- --------------
Net service revenues (note 3)........ $ 14,124,000 $ 3,672,000
-------------- --------------
Direct expenses:
Physicians' fees................ 9,241,000 2,601,000
Liability insurance............. 706,000 167,000
Billing and collection.......... 1,461,000 322,000
-------------- --------------
Total direct expenses..... 11,408,000 3,090,000
-------------- --------------
Gross profit.............. 2,716,000 582,000
-------------- --------------
Operating expenses:
Human resources................. 1,405,000 336,000
Occupancy....................... 139,000 17,000
Furniture and equipment......... 56,000 8,000
Supplies........................ 61,000 11,000
Outside services and other...... 78,000 8,000
-------------- --------------
Total operating
expenses................ 1,739,000 380,000
-------------- --------------
Operating income.......... 977,000 202,000
Interest income...................... 75,000 --
Interest expense..................... (31,000) (9,000)
-------------- --------------
Income before income
taxes................... 1,021,000 193,000
Income taxes (note 6)................ 347,000 65,000
-------------- --------------
Net income................ $ 674,000 $ 128,000
============== ==============
Net income per common
share (note 2).......... $ 0.21 $ 0.06
============== ==============
Number of shares used in computing
net income per
common share....................... 3,180,504 2,199,624
============== ==============

See accompanying notes to financial statements.

FS-10

STAT HEALTHCARE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1995 AND
PERIOD FROM JULY 29, 1994 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 1994
<TABLE>
<CAPTION>

PREFERRED STOCK COMMON STOCK
--------------------- ---------------------- CAPITAL IN TOTAL
NUMBER NUMBER EXCESS OF RETAINED SHAREHOLDERS'
OF SHARES AMOUNT OF SHARES AMOUNT PAR VALUE EARNINGS EQUITY
--------- --------- ----------- --------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at July 29, 1994............ -- $ -- -- $ -- $ -- $ -- $ --
Sale of common stock at par.. -- -- 450,000 5,000 -- -- 5,000
Sale of Series A, Convertible
Preferred stock.................... 74,000 370,000 -- -- -- -- 370,000
Sale of common stock at $.10 per
share.............................. -- -- 100,000 1,000 9,000 -- 10,000
Sale of common stock at $1.00 per
share, net of issuance costs....... -- -- 250,000 2,000 233,000 -- 235,000
Net income........................... -- -- -- -- -- 128,000 128,000
--------- --------- ----------- --------- ------------- ----------- -------------
Balances at December 31, 1994........ 74,000 370,000 800,000 8,000 242,000 128,000 748,000
Initial public offering of common
stock, net of issuance costs....... -- -- 1,250,000 12,000 3,243,000 -- 3,255,000
Conversion of 10% secured notes to
common stock....................... -- -- 93,332 1,000 17,000 -- 18,000
Conversion of Series A, Convertible
Preferred stock to common stock.... (74,000) (370,000) 1,480,000 15,000 355,000 -- --
Net income........................... -- -- -- -- -- 674,000 674,000
--------- --------- ----------- --------- ------------- ----------- -------------
Balances at December 31, 1995........ -- $ -- 3,623,332 $ 36,000 $ 3,857,000 $ 802,000 $ 4,695,000
========= ========= =========== ========= ============= =========== =============
</TABLE>
See accompanying notes to financial statements.

FS-11

STAT HEALTHCARE, INC.
STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995 AND
PERIOD FROM JULY 29, 1994 (DATE OF INCORPORATION) THROUGH DECEMBER 31, 1994

1995 1994
-------------- --------------
Cash flows from operating activities:
Net income...................... $ 674,000 $ 128,000
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation.................... 16,000 --
Changes in assets and
liabilities:
Increase in net accounts
receivable.............. (1,677,000) (1,269,000)
Increase in prepaids and
other current assets.... (414,000) (72,000)
Increase in other
non-current assets...... (9,000) --
(Decrease) increase in
accrued physicians'
fees...................... (18,000) 724,000
Increase in accounts
payable................. 172,000 135,000
Increase in accrued
liabilities............. 15,000 137,000
-------------- --------------
Total adjustments......... (1,915,000) (705,000)
-------------- --------------
Net cash used in operating
activities.............. (1,241,000) (577,000)
-------------- --------------
Cash flows from investing activities:
Increase in notes receivable.... (200,000) --
Purchase of office equipment and
furnishings.................. (112,000) --
-------------- --------------
Net cash used in investing
activities.............. (312,000) --
-------------- --------------
Cash flows from financing activities:
Proceeds from sales of common
stock.......................... 3,255,000 250,000
Proceeds from sale of preferred
stock.......................... -- 370,000
Proceeds from issuance of
convertible secured notes...... -- 350,000
Repayment of convertible secured
notes.......................... (332,000) --
Decrease (increase) in deferred
offering costs................. 234,000 (234,000)
-------------- --------------
Net cash provided by
financing activities.... 3,157,000 736,000
-------------- --------------
Net increase in cash and cash
equivalents........................ 1,604,000 159,000
Cash and cash equivalents at
beginning of period................ 159,000 --
-------------- --------------
Cash and cash equivalents at end of
period............................. $ 1,763,000 $ 159,000
============== ==============

See accompanying notes to financial statements.

FS-12

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994

(1) THE COMPANY

STAT Healthcare, Inc. (the Company) was incorporated in the state of
Delaware on July 29, 1994. From that date until September 1, 1994, the Company's
activities were limited to initial capitalization and the negotiation of a
Management Agreement with South Texas Acute Trauma Physicians, P.A. (STAT
Physicians).

The Management Agreement with STAT Physicians became effective September 1,
1994 and is perpetual. The Management Agreement has no termination or
cancellation provisions. In addition, the Company has the ability to control the
designation of physician owner(s) of STAT Physicians. The Company's income is
currently derived exclusively from revenues associated with the Management
Agreement, less direct expenses paid by the Company on behalf of Physicians, as
provided in the Management Agreement and less the operating expenses of the
company. Additionally, on September 1, 1994, the Company assumed the employment
of all personnel previously employed at STAT Physicians and the operating costs
associated therewith from that date forward.

Because of the existence of a parent-subsidiary relationship by means other
than record ownership of STAT Physicians' voting stock and because of the
unilateral control, notwithstanding the lack of technical majority ownership,
which the Company has over the assets and operations of STAT Physicians,
consolidation of the results of operations of the two companies is necessary to
present fairly the results of operations of the Company. Accordingly, the
Consolidated Statements of Income combine their operating results since
September 1, 1994. Assets and liabilities arising from consolidated operations
are included in the Balance Sheets of the Company. All significant intercompany
transactions have been eliminated in this consolidation.

The Company operates in a single business segment, emergency medical
management services. The Company's principal business relates to management and
administrative services provided to those engaged in physician staffing of
hospital emergency departments. At December 31, 1995 and 1994, the Company
managed contracts for physician services with 11 and 12 hospitals, respectively,
located in South Texas. Under these contracts, 24-hour physician coverage of the
emergency departments is provided.

Physicians providing services are independent contractors to STAT
Physicians and are paid monthly on the basis of fixed hourly rates. As
independent contractors, these physicians are responsible for their own income
and Social Security taxes as well as workers compensation insurance.

The contracts between STAT Physicians and hospitals are generally written
for an initial term of two years and automatically renew each year after the
initial term. These contracts have cancellation clauses which provide for 90-day
cancellation by either party without significant penalty. Certain terms and
conditions are routinely modified. Management believes that relations with all
hospitals are good and does not anticipate hospital cancellation of any
contracts.

STAT Physicians' contractual arrangements with hospitals are principally
fee-for-service contracts under which the Company bills and collects the
professional component of medical services on behalf of STAT Physicians. At
December 31, 1995, all contracts were fee-for-service contracts, while at
December 31, 1994, 9 of 12 contracts were fee-for-service contracts. Services
performed under contracts not subject to fee-for-service arrangements at
December 31, 1994 were compensated by the hospitals on a fixed fee basis.

FS-13

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimates utilized in preparing
its financial statements are reasonable and prudent. Actual results could differ
from these estimates.

CASH EQUIVALENTS

Cash invested in short-term instruments purchased with original maturities
of three months or less is deemed to be cash equivalents for financial statement
purposes.

SERVICE REVENUES AND ACCOUNTS RECEIVABLE

Service revenues are recorded at established billing rates, net of an
allowance for contractual adjustments and a provision for uncollectible
accounts.

Patient accounts receivable, which are payable to STAT Physicians, are
reduced to an estimated realizable value taking into consideration contractual
adjustments mandated by payors (Medicare, Medicaid and private insurers) and
expected write-offs of uncollectible accounts. These estimates are based upon
management judgements and historical experience at individual hospitals.

INCOME TAXES

The Company utilizes the asset and liability method of accounting for
income taxes. Deferred 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. Deferred 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 tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

DEFERRED OFFERING COSTS

Deferred offering costs totaling $234,000 at December 31, 1994 were
combined with additional offering costs incurred during 1995 and were recorded
as a reduction of the proceeds from the initial public offering of common stock
during 1995.

DEFERRED ACQUISITION COSTS

Costs incurred to effect an expected pooling of interests business
combination are deferred and charged to expense in the period that the business
combination is consummated. If a plan of combination is abandoned, costs that
have been deferred are expensed.

NET INCOME PER COMMON SHARE

Net income per common share for the period ended December 31, 1994 is
computed based on the number of common and common equivalent shares of the
Company as if all shares were outstanding for the entire period, less the number
of treasury shares assumed to have been purchased (at the initial offering price
of the Company's common stock) from the proceeds of actual sales of stock. Net
income per common share for the year ended December 31, 1995 is computed based
on the weighted average number of common shares outstanding adjusted for the
incremental shares attributed to outstanding options to purchase common stock.

FS-14

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of the Company's financial instruments (i.e., cash
equivalents, accounts and notes receivable, and payables) approximate their
carrying values due to the short-term nature of these items.

(3) NET SERVICE REVENUES

Gross service revenues represent the billed value of physician services
provided at hospital locations. Under the contracts between STAT Physicians and
the hospitals and under its management agreement with STAT Physicians, the
Company has the ability, subject to hospital concurrence, to establish the rates
to be billed to patients for services provided. Billings discounts represent the
difference between gross service revenues and the amount which is ultimately
expected to be received. These discounts relate principally to contractual
adjustments mandated by payors such as Medicare and Medicaid and also to
contracted arrangements with private insurers. Discounts also include provisions
for indigent patients without the means of paying for emergency medical
services.

Gross service revenues and billings discounts for the year ended December
31, 1995 and the period ended December 31, 1994 are as follows:

1995 1994
-------------- --------------
Gross service revenues............... $ 29,809,000 $ 7,646,000
Billings discounts................... (15,685,000) (3,974,000)
-------------- --------------
Net service revenues................. $ 14,124,000 $ 3,672,000
============== ==============

Net service revenues derived from fee-for-service contracts and from
hospital fixed fee contracts for the year ended December 31, 1995 and the period
ended December 31, 1994 are as follows:

1995 1994
-------------- --------------
Fee-for-service...................... $ 13,764,000 $ 2,807,000
Fixed fee............................ 360,000 865,000
-------------- --------------
Net service revenues................. $ 14,124,000 $ 3,672,000
============== ==============

For the year ended December 31, 1995, one hospital accounted for 12% of net
service revenues and three hospitals accounted for 11% each of net service
revenues. For the period ended December 31, 1994, three hospitals accounted for
14%, 12% and 11%, respectively, of net service revenues. Although subject to
individual contracts, net service revenues derived from hospitals which, at
December 31, 1995, were owned by Columbia/HCA Healthcare Corporation accounted
for 67% and 65% of 1995 and 1994 net service revenues, respectively. See note
13.

(4) NET PATIENT ACCOUNTS RECEIVABLE

Net patient accounts receivable at December 31, 1995 and 1994 are as
follows:

1995 1994
------------- -------------
Gross patient accounts receivable.... $ 7,648,000 $ 3,711,000
Allowance for contractual
adjustments.......................... (2,710,000) (1,795,000)
------------- -------------
Estimated accounts receivable........ 4,938,000 1,916,000
Allowance for doubtful accounts...... (1,784,000) (527,000)
------------- -------------
Net patient accounts receivable...... $ 3,154,000 $ 1,389,000
============= =============

FS-15

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(5) NOTES RECEIVABLE

Notes receivable represent two $100,000 notes, bearing interest at 6%, from
officer/shareholders. The notes are unsecured and are due October 31, 1996.

(6) INCOME TAXES

Income taxes for the year ended December 31, 1995 and the period ended
December 31, 1994 are as follows:

1995 1994
----------- -----------
Federal.............................. $ 330,000 $ 58,000
State................................ 17,000 7,000
----------- -----------
Total................................ $ 347,000 $ 65,000
=========== ===========

The actual income tax expense for the year ended December 31, 1995 and the
period ended December 31, 1994 differs from the expected federal income tax
computed by applying the U.S. corporate rate of 34% to income before income
taxes as follows:

1995 1994
----------- -----------
Computed "expected" tax expense.... $ 347,000 $ 66,000
Increase in tax resulting from
nondeductible expenses............. 2,000 1,000
State tax provision, net of federal
benefit............................ 11,000 4,000
Other................................ (13,000) (6,000)
----------- -----------
$ 347,000 $ 65,000
=========== ===========

For the year ended December 31, 1995 and the period ended December 31,
1994, there were no significant temporary differences which created deferred tax
assets or liabilities.

Refundable income taxes of $31,000 are included in other current assets at
December 31, 1995. Income taxes payable of $65,000 are included in accrued
liabilities at December 31, 1994. Income taxes of $440,000 were paid during the
year ended December 31, 1995. No income taxes were paid during the period ended
December 31, 1994.

(7) 10% CONVERTIBLE SECURED NOTES

The 10% convertible secured notes were issued in October and November 1994
in connection with a bridge financing. A total of $332,000 was repaid and the
balance of $18,000 was converted to common stock in connection with the
Company's initial public offering during 1995. The conversion of convertible
secured notes to common stock is a non cash investing and financing transaction
and is excluded from the 1995 Statement of Cash Flows.

Interest expense of $35,000 was paid during the year ended December 31,
1995. No interest expense was paid during the period ended December 31, 1994.

(8) CAPITAL STOCK

Authorized capital stock of the Company consists of 1,000,000 shares of
$.01 par value preferred stock and 10,000,000 shares of $.01 par value common
stock. In September 1994, the Company sold 74,000 shares of Series A convertible
preferred stock (Preferred Stock) to STAT Physicians for $370,000. The Preferred
Stock was converted into common stock at a rate of 20 shares of common stock for
each share of Preferred Stock (1,480,000 common shares) upon the completion of
the Company's initial public offering of common stock in 1995. The conversion of
Preferred Stock into common stock is a non cash investing and financing
transaction and is excluded from the 1995 Statement of Cash Flows.

FS-16

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

At December 31, 1995, shares of common stock are reserved for issuance in
connection with the future exercise of Class A warrants to purchase common stock
at the price of $4.50 per share (734,166 shares) and underwriter warrants for
125,000 shares of common stock at $5.44 per share. These warrants were issued in
connection with the Company's initial public offering of common stock and the
related conversion of 10% convertible secured notes. Additionally, 300,000
shares are reserved for issuance in connection with the Company's stock option
plan.

(9) STOCK OPTION PLAN

The Company has a stock option plan, providing for the granting of
incentive stock options or nonqualified stock options, for the benefit of its
employees and directors. Under this plan, options may be granted to purchase an
aggregate of 300,000 shares of common stock at no less than 100% (90% in the
event of a nonqualified stock option) of the fair market value of the common
stock at the time of the grant. At December 31, 1995, 10,000 unoptioned shares
were available for granting. All options which have been granted expire five
years from the date of grant. Information relating to stock options is as
follows:

NUMBER OF OPTIONS OPTION PRICE PER SHARE
----------------- ----------------------
Outstanding at December 31, 1994... -- --
Granted............................ 290,000 $2.88 - 3.17
----------------- ----------------------
Outstanding at December 31, 1995... 290,000 $2.88 - 3.17
================= ======================
Shares exercisable at December 31,
1995............................... 2,500 $ 3.00
================= ======================

(10) CONTINGENCIES

The Company procures professional liability insurance on behalf of STAT
Physicians which provides coverage on a claims-made basis during the policy
period. The coverage is purchased on a "slot" basis and extends to the Company,
to STAT Physicians and to contract physicians who perform services. Individual
policies are not provided to physicians; however, they must be prequalified for
coverage as a routine credentialing process. If a claims-made policy is not
renewed or replaced by a new policy which provides occurrence retroactively, it
becomes necessary to purchase an extended reporting period endorsement.
Management intends to renew the existing claims-made policy and in the past has
either renewed or successfully purchased retroactive coverage.

Although the Company does not directly contract with hospitals or
physicians for the provision or procurement of medical services, its contractual
relationship with STAT Physicians exposes it to potential claims from litigants.
Accordingly, the Company is named as an additional insured under the
professional liability coverage of STAT Physicians. STAT Physicians currently
has certain pending and threatened litigation and claims incurred in the
ordinary course of business; however, management believes that the probable
resolution of such contingencies will not materially affect the liquidity, the
financial position, or the results of operations of STAT Physicians or of the
Company.

(11) LEASE OBLIGATION

In April 1995, the Company entered into a lease agreement for office
facilities. Future minimum lease payments under this agreement as of December
31, 1995 are as follows:

1996................................. $ 103,000
1997................................. 108,000
1998................................. 58,000
-----------
$ 269,000
===========

FS-17

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(12) PENDING PLAN OF REORGANIZATION

On December 21, 1995, the Company entered into an agreement and plan of
reorganization with AmHealth Corporation and its related health care entities
(AmHealth). The agreement was amended on March 15, 1996. Under the terms of this
agreement, 11,200,000 shares of Common Stock of New STAT Healthcare, Inc. (New
STAT) will be exchanged for the stock and partnership interests associated with
the AmHealth organizations. New STAT is being organized to act as a constituent
entity in the exchange and will have no business activity unrelated to the
exchange. Consummation of the agreement is subject to the fulfillment of certain
covenants as well as shareholder/partner approvals and is expected to occur in
the second quarter of 1996. Upon consummation of the pending plan of
reorganization, the Companys common stock and common stock equivalents will be
exchanged on a one-for-one basis into common stock and common stock equivalents
of New STAT. If consummated, the transaction is expected to be accounted for as
a pooling of interests and, accordingly, historical financial data will be
restated to include the accounts of AmHealth. In the event that the transaction
is not consummated, the Company will issue 200,000 shares of its Common Stock to
the shareholders and partners of the AmHealth organizations.

(13) SUBSEQUENT EVENTS

In January 1996 the Company reached an agreement with the Greater Houston
Division of Columbia/HCA Healthcare Corporation (Columbia) to provide emergency
medicine services to all but one of Columbia's emergency departments in the
Greater Houston Division. This agreement will result in the addition of nine
hospitals to the Company's service base between February 1 and July 1, 1996
resulting in a total of 18 hospitals served (16 of which are owned by Columbia).
The contract for services relating to this agreement was finalized in April
1996. The Houston Division hospitals (15) are covered by this contract with an
initial term of two years which renews automatically. This contract will account
for a significant portion of the Company's net service revenues and operating
expenses.

On January 31, 1996, and in conjunction with the Columbia agreement noted
above, the Company acquired the rights to a one hospital contract for the
provision of emergency department medical services. Consideration paid for the
contract and certain non-competition covenants consisted of $960,000 in cash and
52,174 shares of the Company's common stock. Up to an additional $100,000 may be
paid in each of the three twelve-month periods following the acquisition of the
contract based on profits realized at that hospital.

On February 1, 1996, the Company acquired intangible assets of Amedica,
Ltd. (Amedica) in a transaction that will be accounted for by the purchase
method of accounting. Amedica provides healthcare services relating to the
management of independent physician associations. Consideration paid consisted
of $200,000 in cash and 15,730 shares of the Companys common stock.

The common stock (67,904 shares, with an ascribed value of $310,000)
issued in connection with the acquisitions noted in the preceding 2 paragraphs
may be required to be integrated with the offering of securities relating to the
pending plan of reorganization. If so integrated, the purported private sales
would constitute an unregistered public offering in violation of Section 5 of
the Securities Act. Such a violation would entitle the recipients in such
private sales to rescission and would subject the Company to liability under
said Section 5 Pending resolution of this matter, the stock value of the
transactions is reported in the pro forma balance sheet seperate from
shareholders' equity.

FS-18

STAT HEALTHCARE, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Unaudited financial information of Amedica as of December 31, 1995 and 1994
and for the years then ended is as follows:

1995 1994
----------- -----------
Balance sheet information:
Current assets.................. $ 128,000 $ 63,000
Total assets.................... 135,000 64,000
Current liabilities............. 25,000 --
Total liabilities............... 150,000 --
Partners' capital............... (15,000) $ 64,000
============ ===========
Operations information:
Revenue......................... $ 439,000 $ 347,000
Expenses........................ 518,000 312,000
Net income (loss)............... (79,000) 35,000
=========== ===========

Unaudited pro forma results of operations for the year ended December 31,
1995, giving effect to the Amedica acquisition as though it had occurred on
January 1, 1995, are as follows:

Net service revenues................. $ 14,563,000
Net income........................... 598,000
==============
Net income per common share.......... $ 0.19
==============

Unaudited pro forma financial information showing the effects of the
hospital contract and Amedica acquisitions on the Company's balance sheet at
December 31, 1995 is as follows:

LIABILITIES AND SHAREHOLDERS' EQUITY

Total liabilities.................... $ 1,165,000 $ 1,165,000
------------- -------------
Common stock subject to rescission,
67,904 shares...................... -- 310,000
------------- -------------
Common stock, $.01 par value.
Authorized 10,000,000 shares;
issued and outstanding 3,623,332
and 3,691,236, respectively........ 36,000 36,000
Capital in excess of par value....... 3,857,000 3,857,000
Retained earnings.................... 802,000 802,000
------------- -------------
Total shareholders' equity........... 4,695,000 4,695,000
------------- -------------
Total liabilities and
shareholders' equity.......... $ 5,860,000 $ 6,170,000
============= =============

FS-19

INDEPENDENT AUDITORS' REPORT

The Board of Directors
South Texas Acute Trauma
Physicians, P.A.:

We have audited the accompanying balance sheets of South Texas Acute Trauma
Physicians, P.A. (the Company) as of August 31, 1994 and December 31, 1993, and
the related statements of income, changes in shareholders' equity and cash flows
for the eight months ended August 31, 1994 and the year ended December 31, 1993.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of South Texas Acute Trauma
Physicians, P.A. as of August 31, 1994 and December 31, 1993, and the results of
its operations and its cash flows for the eight months ended August 31, 1994 and
the year ended December 31, 1993, in conformity with generally accepted
accounting principles.

KPMG PEAT MARWICK LLP

Houston, Texas
March 10, 1995, except as to
the last paragraph of note 6,
which is as of April 11, 1995

FS-20

SOUTH TEXAS ACUTE TRAUMA
PHYSICIANS, P.A.
BALANCE SHEETS

AUGUST 31, DECEMBER 31,
1994 1993
------------- -------------
ASSETS
Cash and cash equivalents............ $ 63,459 $ 10,410
Accounts receivable (notes 5 and 6):
Patient accounts, net........... 1,311,893 840,057
Hospital accounts............... 316,220 438,542
------------- -------------
Net accounts receivable... 1,628,113 1,278,599
Prepaid assets....................... 186,218 55,301
------------- -------------
Total current assets...... 1,877,790 1,344,310
Other assets......................... 14,508 7,440
------------- -------------
Total assets.............. $ 1,892,298 $1,351,750
============= =============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current installments of long-term
debt (note 6)...................... $ 209,459 $ 175,944
Notes payable to hospitals (note 7).. 203,334 70,000
Accrued physicians' fees............. 681,493 605,310
Accrued liabilities.................. 70,582 36,576
Accounts payable..................... 126,332 61,965
Bank overdraft....................... -- 21,792
------------- -------------
Total current
liabilities............. 1,291,200 971,587
Long-term debt, excluding current
liabilities (note 6)............... -- 3,135
------------- -------------
Total liabilities......... 1,291,200 974,722
------------- -------------
Shareholders' equity:
Common stock, $1 par value.
Authorized 100,000 shares;
issued and outstanding 1,000
shares....................... 1,000 1,000
Retained earnings............... 600,098 376,028
------------- -------------
Total shareholders'
equity.................. 601,098 377,028
Commitments and contingencies (notes
3, 8 and 9)
------------- -------------
Total liabilities and
shareholders' equity.... $ 1,892,298 $1,351,750
============= =============

See accompanying notes to financial statements.

FS-21

SOUTH TEXAS ACUTE TRAUMA
PHYSICIANS, P.A.
STATEMENTS OF INCOME

EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
1994 1993
------------- -------------
Net service revenues (note 4)........ $ 6,875,693 $8,872,811
Direct expenses:
Physicians' fees................ 5,112,348 6,822,463
Liability insurance............. 314,154 368,275
Billing and collection.......... 473,066 304,284
------------- -------------
Total direct expenses..... 5,899,568 7,495,022
------------- -------------
Gross profit.............. 976,125 1,377,789
------------- -------------
Operating expenses:
Human resources................. 524,802 713,162
Occupancy....................... 26,661 37,775
Furniture and equipment......... 19,568 29,602
Supplies........................ 16,409 39,206
Outside services and other...... 67,856 62,580
------------- -------------
Total operating
expenses.................. 655,296 882,325
------------- -------------
Operating income.......... 320,829 495,464
Interest expense..................... 15,372 13,396
------------- -------------
Net income................ 305,457 482,068
Pro forma income taxes (note 3)...... 103,457 164,068
------------- -------------
Pro forma net income...... $ 202,000 $ 318,000
============= =============

See accompanying notes to financial statements.

FS-22

SOUTH TEXAS ACUTE TRAUMA
PHYSICIANS, P.A.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

TOTAL
COMMON RETAINED SHAREHOLDERS'
STOCK EARNINGS EQUITY
------- ------------ -------------
Balances at December 31, 1992........ $1,000 $ 57,849 $ 58,849
Net income........................... -- 482,068 482,068
Shareholder distributions............ -- (163,889) (163,889)
------- ------------ -------------
Balances at December 31, 1993........ 1,000 376,028 377,028
Net income........................... -- 305,457 305,457
Shareholder distributions............ -- (81,387) (81,387)
------- ------------ -------------
Balances at August 31, 1994.......... $1,000 $ 600,098 $ 601,098
======= ============ =============

See accompanying notes to financial statements.

FS-23

SOUTH TEXAS ACUTE TRAUMA
PHYSICIANS, P.A.
STATEMENTS OF CASH FLOWS

EIGHT MONTHS
ENDED YEAR ENDED
AUGUST 31, DECEMBER 31,
1994 1993
------------ -------------
Cash flows from operating activities:
Net income...................... $ 305,457 $ 482,068
Adjustments to reconcile net
income to net cash used in
operating activities:
Changes in assets and
liabilities:
Increase in net accounts
receivable.............. (349,514) (669,509)
Increase in prepaids and
other assets............ (137,985) (42,042)
Increase in accrued
physicians' fees........ 76,183 78,867
Increase in accrued
liabilities............. 34,006 34,272
Increase in accounts
payable................. 64,367 61,965
------------ -------------
Total adjustments....... (312,943) (536,447)
------------ -------------
Net cash used in
operating
activities........... (7,486) (54,379)
------------ -------------
Cash flows from financing statements:
Proceeds from issuance of
long-term debt............... 50,000 150,000
Proceeds from issuance of
hospital notes............... 200,000 70,000
Principal payments on long-term
debt......................... (19,620) (36,312)
Principal payments on hospital
notes........................ (66,666) --
Shareholder distributions....... (81,387) (163,889)
Increase (decrease) in bank
overdraft.................... (21,792) 21,792
------------ -------------
Net cash provided by
financing
activities........... 60,535 41,591
------------ -------------
Net increase (decrease) in cash and
cash equivalents................... 53,049 (12,788)
Cash and cash equivalents at
beginning of period................ 10,410 23,198
------------ -------------
Cash and cash equivalents at end of
period............................. $ 63,459 $ 10,410
============ =============
Supplemental disclosure of cash flow
information -- cash payments
during the period for interest..... $ 8,958 $ 7,689
============ =============

See accompanying notes to financial statements.

FS-24

SOUTH TEXAS ACUTE TRAUMA PHYSICIANS, P.A.
NOTES TO FINANCIAL STATEMENTS
AUGUST 31, 1994
AND
DECEMBER 31, 1993

(1) THE COMPANY

South Texas Acute Trauma Physicians, P.A., dba STAT Physicians (the
Company) was incorporated as a professional association in the state of Texas on
November 22, 1985. The Company's principal business is the physician staffing of
hospital emergency departments. At August 31, 1994 and December 31, 1993, the
Company had contracts for physician services with eleven hospitals located in
South Texas. Under these contracts the Company provides 24-hour physician
coverage of the emergency departments, and one of the Company's physicians acts
as the designated Director of Emergency Medicine for each hospital. At December
31, 1993, the Company also provided weekend physician coverage under another
contract. The Company terminated this weekend contract effective June 30, 1994
for economic reasons.

Physicians providing services on behalf of the Company are independent
contractors and are paid monthly on the basis of either a fixed hourly rate or
on the basis of a minimum hourly rate which is adjustable upward based on
monthly volume. As independent contractors, these physicians are responsible for
their own income and Social Security taxes as well as workers compensation
insurance.

Hospital contracts are generally written for an initial term of two years
and automatically renew each year after the initial term. These contracts have
cancellation clauses which provide for 90-day cancellation by either party
without significant penalty. Certain terms and conditions are routinely
modified. The Company's management believes that relations with all hospitals
are good and does not anticipate the cancellation of any contracts.

Contractual agreements with hospitals are primarily (a) contracts where the
Company bills and collects the professional component for the charges for
medical services, and (b) contracts where the Company receives fees from the
hospital based on a fixed fee, hourly rate or percentage of gross billings.

Effective September 1, 1994, the Company entered into a management
agreement with STAT Healthcare, Inc. (STAT Healthcare). Under this agreement,
the Company assigned all revenues and related accounts receivable from September
1, 1994 forward to STAT Healthcare. In consideration thereof, STAT Healthcare
assumed responsibility for collection of receivables and agreed to pay for all
direct and operating costs associated with the hospital contracts from September
1, 1994 forward.

Additionally, on September 1, 1994 STAT Healthcare employed all
administrative personnel previously employed by the Company and assumed
responsibility for all administrative matters relating to these contracts,
pursuant to a management agreement.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS

Cash invested in short-term investments purchased with original maturities
of three months or less is deemed to be cash equivalents for financial statement
purposes. At August 31, 1994 and December 31, 1993, cash equivalents of $2,826
and $2,772, respectively, consisted of money market funds.

SERVICE REVENUES AND ACCOUNTS RECEIVABLE

Service revenues under contracts where fees are received from hospitals are
recorded at established billing rates, net of amounts to be retained by the
hospital. Service revenues under contracts

FS-25

SOUTH TEXAS ACUTE TRAUMA PHYSICIANS, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

where the Company bills and collects for services provided are recorded at
established billing rates, net of contractual adjustments and the provision for
uncollectible accounts.

Patient accounts receivable are reduced to an estimated realizable value
taking into consideration contractual adjustments mandated by payors (Medicare,
Medicaid and private insurers) and expected write-offs of uncollectible
accounts. These estimates are based upon historical experience at individual
hospitals.

(3) INCOME TAXES

For federal income tax purposes, the Company has elected to be treated as
an "S corporation. Accordingly, the Company's income is allocated to the
Company's shareholders, included in their personal income tax returns and taxed
at their respective individual rates. No federal income taxes will be assessed
the corporation. The pro forma income taxes reflected in the accompanying
statements of income are based on an effective corporate rate of 34%.

The Federal income tax return of the Company for the tax year ended January
31, 1992, is currently under examination by the Internal Revenue Service.
Management believes that the examination is routine in nature and does not
anticipate any significant adjustments from the examination.

(4) NET SERVICE REVENUES

Gross service revenues represent the billed value of physician services
provided at hospital locations. Under the contracts between the Company and the
hospitals, the Company has the ability, subject to hospital concurrence, to
establish the rates to be billed to patients for services provided.

Billings discounts represent the difference between gross service revenues
and the amount which the Company ultimately expects to receive. Net service
revenues consist of contractual payments from hospitals and estimated
collectible fees from patients and third-party payors where the Company is
responsible for billing and collection functions. Net service revenues for the
eight months ended August 31, 1994 and for the year ended December 31, 1993 are
as follows:

1994 1993
------------- -------------
Net service revenues:
From hospitals.................. $ 2,694,797 $ 6,249,569
From patients................... 4,180,896 2,623,242
------------- -------------
$ 6,875,693 $ 8,872,811
============= =============

Hospital account payments are usually received by the 15th day of the month
following service. Some hospitals make partial payments during the service
month. Patient accounts are collected over normal collection cycles from a
variety of payors including Medicare, Medicaid, private insurers and patients.

Gross and net service revenues from the eight months ended August 31, 1994
and for the year ended December 31, 1993 are as follows:

1994 1993
-------------- --------------
Gross service revenues............... $ 14,369,113 $ 14,900,171
Billings discounts................... (7,493,420) (6,027,360)
-------------- --------------
Net service revenues................. $ 6,875,693 $ 8,872,811
============== ==============

For the eight months ended August 31, 1994, four hospitals accounted for
between 10% and 14% each of net service revenues.

FS-26

SOUTH TEXAS ACUTE TRAUMA PHYSICIANS, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(5) NET PATIENT ACCOUNTS RECEIVABLE

Net patient accounts receivable at August 31, 1994 and at December 31, 1993
are as follows:

1994 1993
-------------- -------------
Gross patient accounts receivable.... $ 3,485,859 $ 1,866,677
Allowance for contractual
adjustments........................ (1,426,944) (614,988)
-------------- -------------
Estimated accounts receivable........ 2,058,915 1,251,689
Allowance for doubtful accounts...... (747,022) (411,632)
-------------- -------------
Net patient accounts receivable...... $ 1,311,893 $ 840,057
============== =============

(6) LONG-TERM DEBT

Long-term debt at August 31, 1994 and at December 31, 1993 is as follows:

1994 1993
------------ ------------
13% note payable, due in monthly
installments of $1,878 including
interest through April 1994. Paid
in full in April 1994.............. $ -- $ 7,735
10% note payable, due in monthly
installments of $1,616 including
interest through February 1995.
Paid in full in February 1995...... 9,459 21,344
Revolving credit note (up to
$200,000), interest due quarterly
at the bank's prime rate (7.75% at
August 31, 1994) plus 2%, principal
due August 1995.................... 200,000 150,000
------------ ------------
Total debt........................... 209,459 179,079
Less current installments............ (209,459) (175,944)
------------ ------------
Long-term debt............ $ -- $ 3,135
============ ============

The notes payable are secured by the Company's accounts receivable. The
revolving credit note is secured by the Company's accounts receivable and the
corporate guarantee and accounts receivable of STAT Healthcare. Subsequent to
August 31, 1994, the bank increased the revolving line of credit to $400,000. On
April 11, 1995, the line of credit was repaid by STAT Healthcare and was
canceled.

(7) NOTES PAYABLE TO HOSPITALS

Notes payable to hospitals at August 31, 1994 and at December 31, 1993 are
as follows:

1994 1995
----------- -----------
8% unsecured note, due in 16 monthly
installments of $4,690, including
interest, commencing in January
1995............................... $ 70,000 $ 70,000
Noninterest-bearing unsecured note,
due in monthly installments of
$33,333 through December 1994. Paid
in full in December 1994........... 133,334 --
----------- -----------
$ 203,334 $ 70,000
=========== ===========

Notes payable to hospitals arose as unsecured advances designed to provide
cash flow assistance during the inception of fee-for-service activities.

FS-27

SOUTH TEXAS ACUTE TRAUMA PHYSICIANS, P.A.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(8) LEASES

The Company leases its office space under a month-to-month lease. The
Company also leases certain equipment and vehicles under operating leases.
Future minimum lease payments under noncancelable operating leases at August 31,
1994 are as follows:

1994................................. $ 8,000
1995................................. 6,300
1996................................. 4,400
1997................................. 3,700
---------
$ 22,400
=========

Rental expense for the eight months ended August 31, 1994 and for the year
ended December 31, 1993 was $16,591 and $26,659, respectively.

(9) CONTINGENCIES

The Company procures professional liability insurance which provides
coverage on a claims-made basis during the policy period. The coverage is
purchased on a "slot" basis and extends to the Company and to contract
physicians who perform services. Individual policies are not provided to
physicians; however, they must be prequalified for coverage as a routine
credentialing process. If a claims-made policy is not renewed or replaced by a
new policy which provides occurrence retroactively, it becomes necessary to
purchase an extended reporting period endorsement. Management intends to renew
its existing claims-made policy and in the past has either renewed or
successfully purchased retroactive coverage.

The Company has certain pending and threatened litigation and claims
incurred in the ordinary course of business; however, management believes that
the probable resolution of such contingencies will not materially affect the
liquidity, the financial position, or the results of the Company's operations.

FS-28

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED BALANCE SHEET
MARCH 31, 1996
(UNAUDITED)

ASSETS
Cash................................. $ 584,000
Accounts receivable:
Patient accounts, net........... 1,012,000
Management services accounts.... 414,000
-------------
Net accounts receivable... 1,426,000
-------------
Notes receivable..................... 16,000
Inventories.......................... 124,000
Prepaids and other current assets.... 212,000
-------------
Total current assets...... 2,362,000
Property and equipment, net.......... 2,113,000
Organization and start-up costs,
net.................................. 149,000
-------------
Total assets.............. $ 4,624,000
=============
LIABILITIES AND EQUITY/CAPITAL
Current portion of long-term debt.... $ 90,000
Current portion of capital lease
obligations.......................... 58,000
Accounts payable..................... 130,000
Accrued liabilities.................. 414,000
Distributions payable to shareholders
and partners......................... 397,000
-------------
Total current
liabilities................. 1,089,000
Long-term debt....................... 134,000
Long-term capital lease
obligations.......................... 1,395,000
-------------
Total liabilities......... 2,618,000
Equity/capital....................... 2,006,000
Commitments and contingencies
-------------
Total liabilities and
equity/capital.............. $ 4,624,000
=============

See accompanying notes to unaudited combined financial statements.

FS-29

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
------------- -------------
Net service revenues................. $ 3,107,000 $ 1,618,000
------------- -------------
Operating expenses:
Salaries and benefits........... 1,187,000 380,000
Supplies........................ 530,000 371,000
Depreciation and amortization... 101,000 66,000
Contract services............... 84,000 55,000
Other........................... 151,000 84,000
------------- -------------
Total operating
expenses.................. 2,053,000 956,000
------------- -------------
Operating income.......... 1,054,000 662,000
Other income......................... 9,000 3,000
Interest expense..................... (60,000) (42,000)
------------- -------------
Net income................ $ 1,003,000 $ 623,000
============= =============

See accompanying notes to unaudited combined financial statements.

FS-30

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENT OF CHANGES IN SHAREHOLDERS'
EQUITY AND PARTNERS' CAPITAL
THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

Balances, December 31, 1995.......... $ 1,677,000
Distributions to shareholders and
partners........................... (674,000)
Net income for the three months ended
March 31, 1996..................... 1,003,000
-------------
Balances, March 31, 1996............. $ 2,006,000
=============

See accompanying notes to unaudited combined financial statements.

FS-31

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(UNAUDITED)

1996 1995
------------- -----------
Cash flows from operating activities:
Net income......................... $ 1,003,000 $ 623,000
Adjustments to reconcile net income
to net cash provided by
(used in) operating activities:
Depreciation and amortization... 101,000 66,000
Changes in assets and
liabilities:
Increase in net accounts
receivable................ (167,000) (248,000)
(Increase) decrease in
inventories............... (21,000) 14,000
Decrease in prepaids and
other current assets...... 11,000 45,000
(Increase) decrease in
organization and start-up
costs..................... (26,000) 35,000
(Increase) decrease in
accounts payable.......... (488,000) 53,000
(Increase) decrease in
accrued liabilities....... 53,000 (29,000)
Increase in distributions
payable................... 114,000 --
------------- -----------
Total adjustments......... (423,000) (64,000)
------------- -----------
Net cash provided by
operating activities... 580,000 559,000
------------- -----------
Cash flows from investing activities:
Increase in notes receivable....... 50,000 --
Purchase of property and
equipment....................... (48,000) (33,000)
------------- -----------
Net cash provided by (used
in) investing
activities............. 2,000 (33,000)
------------- -----------
Cash flows from financing activities:
Distributions to shareholders and
partners........................ (674,000) (473,000)
Repayments of long-term debt....... (20,000) (86,000)
Repayments of capital lease
obligations..................... (79,000) (31,000)
------------- -----------
Net cash used in financing
activities............. (773,000) (590,000)
------------- -----------
Net decrease in cash................. (191,000) (64,000)
Cash at beginning of period.......... 775,000 311,000
------------- -----------
Cash at end of period................ $ 584,000 $ 247,000
============= ===========

See accompanying notes to unaudited combined financial statements.

FS-32

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
MARCH 31, 1996

(1) BASIS OF PRESENTATION

(2) PENDING PLAN OF REORGANIZATION

On December 21, 1995, AmHealth Corporation and its related corporate and
partnership entities entered into an agreement and plan of reorganization with
STAT Healthcare, Inc. The agreement was amended on March 15, 1996. Under the
terms of this agreement, the stock and partnership interests associated with the
AmHealth organizations will be exchanged for 11,200,000 shares of Common Stock
of New STAT Healthcare, Inc. ("New STAT"). New STAT is being organized to act as
a constituent entity in the exchange and will have no business activity
unrelated to the exchange. Consummation of the agreement is subject to the
fulfillment of certain covenants as well as shareholder/partner approvals and is
expected to occur in the second quarter of 1996.

FS-33

INDEPENDENT AUDITORS' REPORT

The Boards of Directors/Partners
AmHealth Corporation and its
Related Health Care Entities:

We have audited the accompanying combined balance sheet of AmHealth
Corporation and its related health care entities (collectively referred to as
the Company) as of December 31, 1995, and the related combined statements of
income, changes in shareholders' equity and partners' capital, and cash flows
for the year then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audit.

We conducted our audit 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 audit provides a reasonable basis for our opinion.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of AmHealth Corporation
and its related health care entities as of December 31, 1995, and the results of
their operations and their cash flows for the year then ended in conformity with
generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Houston, Texas
February 23, 1996, except as
to note 12, which is as
of March 15, 1996

FS-34

INDEPENDENT AUDITORS' REPORT

The Boards of Directors/Partners
AmHealth Corporation and its
Related Health Care Entities:

We have audited the accompanying combined balance sheets of AmHealth
Corporation and its related health care entities (collectively referred to as
the Company) as of December 31, 1994 and 1993, and the related combined
statements of income, changes in shareholders' equity and partners' capital, and
cash flows for the years then ended. These combined financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these combined financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of AmHealth Corporation
and its related health care entities as of December 31, 1994 and 1993, and the
results of their operations and their cash flows for the years then ended in
conformity with generally accepted accounting principles.

LONG, CHILTON, PAYTE & HARDIN, LLP

McAllen, Texas
February 22, 1995

FS-35

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED BALANCE SHEETS
<TABLE>
<CAPTION>

DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
Cash................................. $ 775,000 $ 311,000 $ 114,000
Accounts receivable:
Patient accounts, net (notes 4
and 7)....................... 981,000 746,000 338,000
Management services accounts.... 341,000 7,000 1,000
------------- ------------- -------------
Net accounts receivable... 1,259,000 753,000 339,000
------------- ------------- -------------
Notes receivable (note 5)............ 66,000 8,000 8,000
Inventories (note 7)................. 103,000 63,000 32,000
Prepaids and other current assets.... 223,000 71,000 71,000
------------- ------------- -------------
Total current assets...... 2,426,000 1,206,000 564,000
Property and equipment, net (notes 6
and 7)............................. 2,165,000 1,446,000 526,000
Organization and start-up costs,
net................................ 124,000 78,000 53,000
------------- ------------- -------------
Total assets.............. $4,715,000 $2,730,000 $1,143,000
============= ============= =============

LIABILITIES AND EQUITY/CAPITAL
Current portion of long-term debt
(note 7)........................... $ 88,000 $ 120,000 $ 122,000
Current portion of capital lease
obligations (note 8)............... 48,000 37,000 80,000
Accounts payable..................... 618,000 217,000 116,000
Accrued liabilities.................. 361,000 131,000 49,000
Distributions payable to shareholders
and partners....................... 283,000 -- --
------------- ------------- -------------
Total current
liabilities............. 1,398,000 505,000 367,000
Long-term debt (note 7).............. 156,000 95,000 87,000
Long-term capital lease obligations
(note 8)........................... 1,484,000 1,099,000 243,000
------------- ------------- -------------
Total liabilities......... 3,038,000 1,699,000 697,000
Equity/capital (note 9).............. 1,677,000 1,031,000 446,000
Commitments and contingencies
(notes 7, 8, 10 and 12)
------------- ------------- -------------
Total liabilities and
equity/capital.......... $4,715,000 $2,730,000 $1,143,000
============= ============= =============
</TABLE>
See accompanying notes to combined financial statements.

FS-36

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENTS OF INCOME
<TABLE>
<CAPTION>

YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
------------ ------------ ------------
<S> <C> <C> <C>
Net service revenues................. $ 9,017,000 $ 3,973,000 $ 1,170,000
------------ ------------ ------------
Operating expenses:
Salaries and benefits........... 3,235,000 1,088,000 394,000
Supplies........................ 1,757,000 1,116,000 336,000
Depreciation and amortization... 344,000 196,000 59,000
Contract services............... 269,000 211,000 59,000
Other........................... 623,000 405,000 167,000
------------ ------------ ------------
Total operating
expenses.................. 6,228,000 3,016,000 1,015,000
------------ ------------ ------------
Operating income.......... 2,789,000 957,000 155,000
Other income......................... 29,000 153,000 1,000
Interest expense..................... (194,000) (134,000) (21,000)
------------ ------------ ------------
Net income................ $ 2,624,000 $ 976,000 $ 135,000
============ ============ ============
</TABLE>
See accompanying notes to combined financial statements.

FS-37

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY AND PARTNERS' CAPITAL
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993

Balances, January 1, 1993............ $ 22,000
Sale of common stock and capital
contributions...................... 289,000
Net income for 1993.................. 135,000
--------------
Balances, December 31, 1993.......... 446,000
Sale of common stock and capital
contributions........................ 90,000
Distributions to shareholders and
partners............................. (481,000)
Net income for 1994.................. 976,000
--------------
Balances, December 31, 1994.......... 1,031,000
Sale of common stock and capital
contributions........................ 27,000
Distributions to shareholders and
partners............................. (2,005,000)
Net income for 1995.................. 2,624,000
--------------
Balances, December 31, 1995 (note
9)................................... $ 1,677,000
==============

See accompanying notes to combined financial statements.

FS-38

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
COMBINED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1994 1993
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income...................... $2,624,000 $ 976,000 $ 135,000
Adjustments to reconcile net
income to net cash provided
by (used in) operating
activities:
Depreciation and
amortization............ 344,000 196,000 59,000
Changes in assets and
liabilities:
Increase in net
accounts
receivable..... (506,000) (414,000) (337,000)
Increase in
inventories....... (40,000) (31,000) (32,000)
Increase in prepaids
and other current
assets............ (152,000) -- (71,000)
Increase in
organization and
start-up costs.... (68,000) (43,000) (59,000)
Increase in accounts
payable........... 401,000 101,000 116,000
Increase in accrued
liabilities....... 230,000 82,000 49,000
Increase in
distributions
payable........... 283,000 -- --
------------- ------------- -------------
Total
adjustments... 492,000 (109,000) (275,000)
------------- ------------- -------------
Net cash
provided by
(used in)
operating
activities... 3,116,000 867,000 (140,000)
------------- ------------- -------------
Cash flows from investing activities:
Increase in notes receivable.... (58,000) -- (8,000)
Purchase of property and
equipment.................... (436,000) 186,000 (219,000)
------------- ------------- -------------
Net cash used
in investing
activities... (494,000) (186,000) (227,000)
------------- ------------- -------------
Cash flows from financing activities:
Sale of common stock and capital
contributions................ 27,000 90,000 289,000
Distributions to shareholders
and partners................. (2,005,000) (481,000) --
Issuance of long-term debt...... 278,000 360,000 220,000
Repayments of long-term debt.... (249,000) (354,000) (11,000)
Repayments of capital lease
obligations.................. (209,000) (99,000) (34,000)
------------- ------------- -------------
Net cash
provided by
(used in)
financing
activities... (2,158,000) (484,000) 464,000
------------- ------------- -------------
Net increase in cash................. 464,000 197,000 97,000
Cash at beginning of period.......... 311,000 114,000 17,000
------------- ------------- -------------
Cash at end of period................ $ 775,000 $ 311,000 $ 114,000
============= ============= =============
</TABLE>
See accompanying notes to combined financial statements.

FS-39

AMHEALTH CORPORATION AND ITS
RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS
DECEMBER 31, 1995, 1994 AND 1993

(1) BUSINESS OF THE COMPANY AND ORGANIZATION

BUSINESS OF THE COMPANY

AmHealth Corporation and its related health care entities (the Company)
operate in two business segments, kidney dialysis services and healthcare
management services. The company owns and operates outpatient kidney dialysis
centers, provides management services for an outpatient hyperbaric medicine
unit, and provides management and personnel services to outpatient home health
providers. The Company operates in the Rio Grande Valley of Southern Texas.

ORGANIZATION

The combined financial statements include the accounts of AmHealth
Corporation and its related health care organizations. The accounts of each
entity are included from its date of inception. The entities, their structure
and their dates of inception are as follows:

ENTITY STRUCTURE DATE OF INCEPTION
- ------------------------------------- --------------- -------------------
Management operations:
AmHealth Corporation............ S Corporation Oct 1992

Kidney dialysis center operations:
AmHealth Enterprises of the
Valley, Inc.................. S Corporation Oct 1992
AmHealth Kidney Center of the
Valley, Ltd.................. Partnership Apr 1993
Starr Dialysis Center, Ltd...... Partnership Nov 1993
Weslaco Kidney Center, Ltd...... Partnership Jun 1994
Mission Kidney Center, Ltd...... Partnership Aug 1995
Brownsville Kidney Center,
Ltd.......................... Partnership Expected Apr 1996

Healthcare management operations:
Southwestern Infusion
Healthcare, Ltd.............. Partnership Jun 1994
AmHealth Ambulatory Services,
Inc.......................... C Corporation Apr 1995
AmHealth Ambulatory Healthcare,
Ltd.......................... Partnership Apr 1995
Brownsville Hyperbaric
Healthcare, Ltd.............. Partnership May 1995
AmHealth Medical Management,
Ltd.......................... Partnership Jun 1995

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The Company's combined financial statements have been prepared using the
accrual method of accounting. All significant inter-entity balances and
transactions have been eliminated in the combined financial statements.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Management believes that the estimates utilized in preparing
its combined financial statements are reasonable and prudent. Actual results
could differ from these estimates.

FS-40

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

SERVICE REVENUES AND ACCOUNTS RECEIVABLE

Patient service revenues are recorded at established billing rates, net of
an allowance for contractual adjustments and a provision for uncollectible
accounts. Management services revenue for hospital and home health agency
accounts are recorded net of an allowance for doubtful accounts. For the year
ended December 31, 1995, one management services agreement accounted for 21% of
net service revenues.

INVENTORIES

Inventories, consisting primarily of dialysis and pharmacy supplies, are
stated at the lower of cost or market. Cost is determined using the first-in,
first-out method.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and are depreciated using the
straight-line depreciation method over the estimated useful lives of the assets
by class: minor equipment, 3 years; major equipment, 5 years; improvements, 5
years.

Equipment under capital lease is stated at the lesser of the present value
of the minimum lease payments or the fair value of the leased property at the
inception of the lease. Equipment under capital lease is amortized using the
straight-line method over the term of the leases which is 4 to 7 years.
Buildings and land under capital lease are stated at the fair value of the
properties and are amortized using the straight-line method over the term of the
leases which is 10 years.

ORGANIZATION AND START-UP COSTS

Organization and start-up costs have been capitalized and are being
amortized using the straight-line method over five years.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Methods and assumptions used to estimate the fair value of each class of
financial instruments are as follows:

o Cash equivalents, trade accounts receivable, notes receivable and
payables -- The carrying amounts approximate fair value because of the
short maturity of these instruments.

o Long-term debt -- The carrying amount approximates fair value because
the notes generally have an adjustable interest rate which is updated
based on the prime rate.

(3) INCOME TAXES

For federal income tax purposes, each of the entities whose financial
statements are included in these combined financial statements (except AmHealth
Ambulatory Services, Inc.) is a partnership or has elected to be treated as an S
Corporation. Accordingly, each entity's income or loss is allocated to that
entity's shareholders or partners for inclusion in their personal federal income
tax returns. No federal income taxes will be assessed to any of the entities
(except AmHealth Ambulatory Services, Inc.), and accordingly, no provision for
federal income taxes for these entities has been reflected in the accompanying
combined statements of income.

AmHealth Ambulatory Services, Inc. began operations in April 1995.
Taxable income of this corporation from its date of inception through December
31, 1995 was not material.

FS-41

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(4) NET PATIENT ACCOUNTS RECEIVABLE

Net patient accounts receivable at December 31, 1995, 1994 and 1993 are as
follows:

1995 1994 1993
------------- ------------ -----------
Gross patient accounts receivable.... $ 1,244,000 $ 906,000 $ 436,000
Allowance for contractual
adjustments........................ (228,000) (148,000) (81,000)
------------- ------------ -----------
Estimated accounts receivable........ 1,016,000 758,000 355,000
Allowance for doubtful accounts...... (98,000) (12,000) (17,000)
------------- ------------ -----------
Net patient accounts receivable...... $ 918,000 $ 746,000 $ 338,000
============= ============ ===========

(5) NOTES RECEIVABLE

Notes receivable at December 1995, 1994 and 1993 are as follows:

1995 1994 1993
--------- --------- ---------
Non interest-bearing note receivable
from Mission Medical Properties.... $ 50,000 $ -- $ --
Other................................ 16,000 8,000 8,000
--------- --------- ---------
$ 66,000 $ 8,000 $ 8,000
========= ========= =========

Mission Medical Properties leases buildings and land under capital leases
to the Company and is owned by certain shareholders/partners of the Company.

(6) PROPERTY AND EQUIPMENT

Property and equipment at December 31, 1995, 1994 and 1993 are as follows:

1995 1994 1993
------------- ------------- -----------
Land and buildings................... $ 969,000 $ 619,000 $ --
Equipment............................ 1,593,000 915,000 515,000
Improvements......................... 155,000 142,000 63,000
------------- ------------- -----------
2,717,000 1,676,000 578,000
Less accumulated depreciation
and amortization............. (552,000) (230,000) (52,000)
------------- ------------- -----------
$ 2,165,000 $ 1,446,000 $ 526,000
============= ============= ===========

Depreciation and amortization of property and equipment charged to
operations was $322,000, $178,000 and $52,000 during the years ended December
31, 1995, 1994 and 1993, respectively.

FS-42

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(7) LONG-TERM DEBT

Long-term debt at December 31, 1995, 1994 and 1993 is as follows:

1995 1994 1993
----------- ------------ ------------
Revolving credit payable to bank,
due in quarterly installments
of $9,375 plus interest through
March 1999; interest at prime
plus .5%........................... $ 122,000 $ -- $ --
Revolving credit payable to bank;
interest at prime plus 1%.......... -- 75,000 79,000
Note payable to TransAmerican
Insurance Finance, due January 1,
1996; interest at 11.64%........... 4,000 -- --
Note payable to bank, due April 2,
1996; interest at prime plus 1%.... 10,000 27,000 54,000
Noninterest-bearing note payable to
Palmco, Inc., for construction
allowance on leased building, due
April 1, 1996...................... 4,000 15,000 26,000
Note payable to bank, due October 30,
1997; interest at prime plus 1%.... 6,000 38,000 50,000
Note payable to bank, due June 15,
1998; interest at prime plus 1%.... 48,000 60,000 --
Note payable to bank, due November 6,
1999; interest at prime plus 1%.... 50,000 -- --
----------- ------------ ------------
Total debt................ 244,000 215,000 209,000
Less current portion...... (88,000) (120,000) (122,000)
----------- ------------ ------------
Long-term debt............ $ 156,000 $ 95,000 $ 87,000
=========== ============ ============

The revolving credit payables to bank and notes payable to bank are secured
by the Company's accounts receivable, inventories and equipment. Long-term debt
totaling $240,000 at December 31, 1995 was guaranteed by a shareholder/partner
of the Company.

Future payments of long-term debt at December 31, 1995 are as follows:

1996................................. $ 88,000
1997................................. 66,000
1998................................. 68,000
1999................................. 22,000
-----------
$ 244,000
===========

The Company has a $50,000 bank line of credit agreement which expires June
15, 1996. Outstanding borrowings against the line of credit will bear interest
at the lender's prime rate plus.5%. The line of credit is secured by accounts
receivable and equipment. At December 31, 1995 no borrowings were outstanding
under this bank line of credit.

Cash paid for interest was $179,000, $126,000 and $21,000 during the years
ended December 31, 1995, 1994 and 1993, respectively.

FS-43

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(8) LEASE OBLIGATIONS

Future minimum lease payments under capital leases, together with the
present value of the net minimum lease payments, as of December 31, 1995 are as
follows:

1996................................. $ 476,000
1997................................. 426,000
1998................................. 341.000
1999................................. 261,000
2000................................. 203,000
Later years.......................... 781,000
--------------
Total minimum lease payments......... 2,488,000
Less amount representing interest.... (956,000)
--------------
Present value of net minimum lease
payments........................... 1,532,000
Less current portion............ (48,000)
--------------
Long-term capital lease
obligations................... $ 1,484,000
==============

At December 31, 1995 the Company's capital lease obligations include
amounts payable to entities owned or controlled by shareholders/partners of the
Company. Total payments to these entities under the capital leases were $147,000
and $87,000 for the years ended December 31, 1995 and 1994, respectively.

On September 10, 1995 the Company entered into an agreement to lease a
facility located in Brownsville, Texas, to be constructed and owned by an entity
owned by shareholders/partners of the Company. Lease payments begin 45 days
after completion and are $7,600 per month for a term of 120 months. Based on an
estimated fair market value of $490,000 and the terms of the lease, the lease
will be a capital lease.

Future minimum rental payments required under operating leases that have
initial or remaining noncancelable lease terms in excess of one year as of
December 31, 1995 are as follows:

1996................................. $ 162,000
1997................................. 160,000
1998................................. 63,000
1999................................. 16,000
-----------
Total minimum lease payments......... $ 401,000
===========

Rental expense under operating leases was $60,000, $31,000 and $16,000 for
the years ended December 31, 1995, 1994 and 1993, respectively.

Obligations under capital lease incurred for property and equipment were
$605,000, $912,000 and $358,000 during the years ended December 31, 1995, 1994
and 1993, respectively. These non cash investing and financing transactions have
been excluded from the combined statements of cash flows.

FS-44

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(9) EQUITY/CAPITAL

The combined financial statements of the Company include its three
corporations and eight partnerships. The equity/capital account balance by
entity at December 31, 1995 is as follows:

EQUITY/CAPITAL
---------------
AmHealth Corporation................. $ 132,000
AmHealth Enterprises of the Valley,
Inc................................ 9,000
AmHealth Kidney Center of the Valley,
Ltd................................ 1,202,000
Starr Dialysis Center, Ltd........... 131,000
Weslaco Kidney Center, Ltd........... 203,000
Mission Kidney Center, Ltd........... 54,000
Brownsville Kidney Center, Ltd....... 89,000
Southwestern Infusion Healthcare,
Ltd................................ 33,000
AmHealth Ambulatory Services, Inc.... 6,000
AmHealth Ambulatory Healthcare,
Ltd................................ 173,000
Brownsville Hyperbaric Healthcare,
Ltd................................ 236,000
AmHealth Medical Management, Ltd..... 240,000
---------------
2,508,000
Elimination of inter-entity
balances........................... (831,000)
---------------
$1,677,000
===============

Disclosure of changes in the separate equity/capital accounts has not been
included in the financial statements because, in the opinion of management, such
disclosure would not be meaningful.

(10) COMMITMENTS AND CONTINGENT LIABILITIES

The Company has entered into compensation agreements with doctors who serve
as medical directors for the dialysis centers and the hyperbaric unit. The
agreements range in length from three to five years and are with doctors who are
also shareholders/partners of the Company. Amounts paid under these agreements
totaled $134,000, $18,000 and $6,000 for the years ended December 31, 1995, 1994
and 1993, respectively.

Future payments required under the compensation agreements as of December
31, 1995 are as follows:

1996................................. $ 135,000
1997................................. 132,000
1998................................. 145,000
1999................................. 35,000
2000................................. 20,000
-----------
$ 467,000
===========

In July 1995 the Company entered into an agreement with a doctor who is a
shareholder/partner to serve as medical director of the Brownsville Kidney
Center (the Center). The agreement calls for an up

FS-45

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

front payment of $18,000 and monthly payments to begin one month after the
Center opens (estimated to be April 1996) in the amount of $3,500 per month for
five years. The agreement also calls for the payments to escalate $3,000 per
year after the first year.

All of the agreements allow for renewal at the same or similar terms.

Effective October 1, 1995 the Company established the AmHealth Corporation
Employees 401(k) Plan (the Plan). The Plan allows participants with at least one
year of prior service to make elective deferrals of from 0% to 15% of their
compensation. The Plan also allows discretionary matching employer contributions
as well as additional discretionary contributions which shall be allocated to
each eligible employee in proportion to his or her compensation as a percentage
of the compensation of all eligible employees. Employer contributions vest at
the rate of 20% per year of service. The Company has not elected to make
discretionary contributions to the Plan.

(11) BUSINESS SEGMENTS

The Company operates in two business segments; kidney dialysis services and
healthcare management services. Information by business segment as of and for
the years ended December 31, 1995, 1994 and 1993 is as follows:

1995 1994 1993
------------- ------------- -------------
Net service revenues:
Kidney dialysis.............. $ 6,262,000 $ 3,766,000 $ 1,170,000
Healthcare management........ 2,755,000 207,000 --
------------- ------------- -------------
Total.................. $ 9,017,000 $ 3,973,000 $ 1,170,000
============= ============= =============
Operating income:
Kidney dialysis.............. $ 1,715,000 $ 998,000 $ 210,000
Healthcare management........ 1,120,000 123,000 --
General corporate............ (46,000) (164,000) (55,000)
------------- ------------- -------------
Total.................. $ 2,789,000 $ 957,000 $ 155,000
============= ============= =============
Identifiable assets:
Kidney dialysis.............. $ 3,642,000 $ 2,557,000 $ 1,117,000
Healthcare management........ 970,000 103,000 --
General corporate............ 103,000 70,000 26,000
------------- ------------- -------------
Total.................. $ 4,715,000 $ 2,730,000 $ 1,143,000
============= ============= =============
Depreciation and amortization:
Kidney dialysis.............. $ 301,000 $ 192,000 $ 57,000
Healthcare management........ 40,000 2,000 --
General corporate............ 3,000 2,000 2,000
------------- ------------- -------------
Total.................. $ 344,000 $ 196,000 $ 59,000
============= ============= =============
Capital expenditures:
Kidney dialysis.............. $ 742,000 $ 1,094,000 $ 572,000
Healthcare management........ 282,000 4,000 --
General corporate............ 17,000 -- 5,000
------------- ------------- -------------
Total.................. $ 1,041,000 $ 1,098,000 $ 577,000
============= ============= =============

FS-46

AMHEALTH CORPORATION AND ITS RELATED HEALTH CARE ENTITIES
NOTES TO COMBINED FINANCIAL STATEMENTS -- (CONTINUED)

(12) PENDING PLAN OF REORGANIZATION

On December 21, 1995, the Company entered into an agreement and plan of
reorganization with STAT Healthcare, Inc. The agreement was amended on March 15,
1996. Under the terms of this agreement, the stock and partnership interests
associated with the AmHealth organizations will be exchanged for 11,200,000
shares of Common Stock of New STAT Healthcare, Inc. (New STAT). New STAT is
being organized to act as a constituent entity in the exchange and will have no
business activity unrelated to the exchange. Consummation of the agreement is
subject to the fulfillment of certain covenants as well as shareholder/partner
approvals and is expected to occur in the second quarter of 1996.

FS-47

Appendix 1

AMENDED AND RESTATED

AGREEMENT AND PLAN OF REORGANIZATION

by and among

NEW STAT HEALTHCARE, INC.,

STAT HEALTHCARE, INC.,

STAT ACQUISITION CORP.,

and

AMHEALTH CORPORATION,
AMHEALTH ENTERPRISES OF THE VALLEY, INC.,
AMHEALTH AMBULATORY SERVICES, INC.,
AMHEALTH KIDNEY CENTER OF THE VALLEY, LTD.,
WESLACO KIDNEY CENTER, LTD.,
STARR DIALYSIS CENTER, LTD.,
MISSION KIDNEY CENTER, LTD.,
BROWNSVILLE KIDNEY CENTER, LTD.,
AMHEALTH AMBULATORY HEALTHCARE, LTD.,
SOUTHWESTERN INFUSION HEALTHCARE, LTD.,
BROWNSVILLE HYPERBARIC HEALTHCARE, LTD. AND
AMHEALTH MEDICAL MANAGEMENT, LTD.

March 15, 1996

TABLE OF CONTENTS

ARTICLE I
ACCOUNTING TERMS AND DEFINITIONS............................................. 2

1.1 Terms Defined Above........................................... 2
1.2 Certain Defined Terms......................................... 2
1.3 Accounting Terms and Determinations........................... 7

ARTICLE II
TERMS OF TRANSACTIONS........................................................ 7

2.1 Terms of Transactions......................................... 7
2.2 Filings....................................................... 7
2.3 The Exchange.................................................. 7
2.4 The Exchange.................................................. 8
2.5 Federal Income Tax Characterization of Transactions........... 10
2.6 Taking of Necessary Action; Further Action.................... 11

ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE AMHEALTH ENTITIES...................... 11

3.1 Organization, Standing and Power of the Corporations.......... 11
3.2 Organization, Standing and Power of the AmHealth Partnerships. 11
3.3 Capital Structure............................................. 11
(a) AmHealth............................................. 11
(b) AEV.................................................. 12
(c) AAS.................................................. 12
(d) AKC.................................................. 12
(e) WKC.................................................. 13
(f) SDC.................................................. 13
(g) MIKC................................................. 13
(h) BKC.................................................. 13
(i) AAH.................................................. 13
(j) SIH.................................................. 13
(k) BHH.................................................. 13
(l) AMM.................................................. 13
3.4 Authority..................................................... 13
3.5 Financial Statements.......................................... 14
3.6 Absence of Certain Changes.................................... 14
3.7 Absence of Undisclosed Liabilities............................ 14
3.8 Litigation.................................................... 15
3.9 Restrictions on Business Activities........................... 15
3.10 Governmental Authorization.................................... 15
3.11 Title and Condition of Property.............................. 15
3.12 AmHealth Intellectual Property................................ 15
3.13 Environmental Matters......................................... 16
3.14 Taxes......................................................... 17
3.15 Employee Benefit Plans........................................ 17

3.16 Certain Agreements Affected by the Exchange................... 18
3.17 Employee Matters.............................................. 19
3.18 Interested Party Transactions................................. 19
3.19 Insurance..................................................... 19
3.20 Compliance With Laws.......................................... 19
3.21 Minute Books.................................................. 19
3.22 Complete Copies of Materials.................................. 19
3.23 Pooling of Interests.......................................... 19
3.24 Brokers' and Finders' Fees.................................... 19
3.25 Vote Required................................................. 19
3.26 Board Approval................................................ 20
3.27 Accounts Receivable........................................... 20
3.28 Customers and Suppliers....................................... 20
3.29 Representations Complete...................................... 20

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF NEW STAT, OLD STAT AND STAT ACQUISITION.... 20

4.1 Organization, Standing and Power.............................. 20
4.2 Capital Structure............................................. 21
4.3. Authority..................................................... 22
4.4 STAT SEC Documents; Financial Statements...................... 22
4.5 Absence of Certain Changes.................................... 23
4.6 Absence of Undisclosed Liabilities............................ 23
4.7 Litigation.................................................... 23
4.8 Governmental Authorization.................................... 23
4.9 Compliance With Laws.......................................... 23
4.10 Complete Copies of Materials.................................. 24
4.11 Pooling of Interests.......................................... 24
4.12 Broker's and Finders' Fees.................................... 24
4.13 Vote Required................................................. 24
4.14 Board Approval................................................ 24
4.15 Restrictions on Business Activities........................... 24
4.16 Title to Property............................................. 24
4.17 Environmental Matters......................................... 24
4.18 Old STAT Intellectual Property................................ 25
4.19 Taxes......................................................... 26
4.20 Employee Benefit Plans........................................ 26
4.21 Certain Agreements Affected by the Exchange................... 27
4.22 Employee Matters.............................................. 28
4.23 Independent Contractors....................................... 28
4.24 Interested Party Transactions................................. 28
4.25 Insurance..................................................... 28
4.26 Compliance With Laws.......................................... 28
4.27 Minute Books.................................................. 28
4.28 Accounts Receivable........................................... 28
4.29 Customers and Suppliers....................................... 28
4.30 Physicians Agreements......................................... 29
4.31 Representations Complete...................................... 29

ARTICLE V
CONDUCT PRIOR TO THE CLOSING DATE............................................ 29

5.1 Conduct of Business of the Parties............................ 29
(a) Charter Documents.................................... 29
(b) Dividends; Changes in Capital Stock or Partnership
Interests......................................... 29
(c) Stock Option Plans, Etc.............................. 30
(d) Pooling.............................................. 30
(e) Material Contracts................................... 30
(f) Issuance of Securities or Partnership Interests...... 30
(g) Intellectual Property................................ 30
(h) Exclusive Rights..................................... 30
(i) Dispositions......................................... 30
(j) Indebtedness......................................... 30
(k) Leases............................................... 30
(l) Payment of Obligations............................... 30
(m) Capital Expenditures................................. 31
(n) Insurance............................................ 31
(o) Termination or Waiver................................ 31
(p) Employee Benefit Plans; New Hires; Pay Increases..... 31
(q) Severance Arrangements............................... 31
(r) Lawsuits............................................. 31
(s) Acquisitions......................................... 31
(t) Taxes................................................ 31
(u) Notices.............................................. 31
(v) Revaluation.......................................... 31
(w) Other................................................ 31
5.2 No Solicitation............................................... 31

ARTICLE VI
ADDITIONAL AGREEMENTS........................................................ 32

6.1 Preparation of Information Statement.......................... 32
6.2 Approval of the Transaction................................... 33
6.3 Access to Information......................................... 33
6.4 Confidentiality............................................... 33
6.5 Public Disclosure............................................. 33
6.6 Consents; Cooperation......................................... 33
6.7 Pooling of Interests Accounting............................... 33
6.8 Legal Requirements............................................ 34
6.9 Blue Sky Laws................................................. 34
6.10 Lockup Agreements............................................. 34
6.11 STAT, P.A. Stock Restriction Agreement........................ 34
6.12 Pooling of Interests Letters.................................. 34
6.13 Best Efforts and Further Assurances........................... 34

ARTICLE VII
CONDITIONS TO THE EXCHANGE................................................... 34

7.1 Conditions to Obligations of Each Party to Effect the
Exchange.................................................... 34
(a) Shareholder Approval................................. 34

iii

(b) Old STAT Stockholder Approval........................ 35
(c) No Injunctions or Restraints; Illegality............. 35
(d) Governmental Approval................................ 35
(e) Infusion Therapy..................................... 35
(f) Tax Opinion.......................................... 35
(g) Pooling of Interest Opinion.......................... 35
(h) New STAT Board of Directors and Officers............. 35
(i) Additional Tax Representations....................... 35
7.2 Additional Conditions to Obligations of the AmHealth
Entities.................................................... 35
(a) Representations, Warranties and Covenants............ 36
(b) Certificate of New STAT, Old STAT and STAT
Acquisition........................................ 36
(c) Legal Opinion........................................ 36
(d) No Material Adverse Changes.......................... 36
(e) Common Stock......................................... 36
(f) Third Party Consents................................. 36
(g) Injunctions or Restraints on Exchange and
Conduct of Business................................ 36
(h) Assumption of Certain Obligations.................... 36
(i) Lockup Agreement..................................... 37
(j) Physician Agreements................................. 37
(k) Employment and Non-Competition Agreements............ 37
(l) Agreements with William H. Rice M.D., and
Victor M. Miranda, M.D............................. 37
7.3 Additional Conditions to the Obligations of New STAT,
Old STAT and STAT Acquisition............................... 37
(a) Representations, Warranties and Covenants............ 37
(b) Certificate of the AmHealth Entities................. 37
(c) Third Party Consents................................. 37
(d) Injunctions or Restraints on Exchange and
Conduct of Business................................ 38
(e) Legal Opinion........................................ 38
(f) No Material Adverse Changes.......................... 38
(g) Affiliate and Shareholder Agreements................. 38
(h) Lockup Agreements.................................... 38
(i) Employment and Non-Competition Agreements............ 38

ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER............................................ 38

8.1 Termination................................................... 38
8.2 Effect of Termination......................................... 39
8.3 Expenses and Termination Fees................................. 39
(i) Incidental Registration..................... 40
(ii) Priority on Registrations................... 40
8.4 Amendment..................................................... 40
8.5 Extension; Waiver............................................. 40

ARTICLE IX
GENERAL PROVISIONS........................................................... 41

9.1 Non-Survival at Closing Date.................................. 41
9.2 Notices....................................................... 41
9.3 Interpretation................................................ 41
9.4 Counterparts.................................................. 42
9.5 Entire Agreement; Nonassignability; Parties in Interest....... 42

9.6 Severability.................................................42
9.7 Remedies Cumulative..........................................42
9.8 Governing Law................................................42
9.9 Rules of Construction........................................42

SCHEDULES

Schedule A Allocation of Common Stock among AmHealth Entities
Schedule 3.8 AmHealth Entities Litigation
Schedule 3.11 AmHealth Entities Real Property
Schedule 3.12(b) AmHealth Entity Intellectual Property
Schedule 3.12(g) AmHealth Entity Confidential Information
Schedule 3.15(a) AmHealth Entity Employee Plans
Schedule 3.18 AmHealth Entities Interested Party Transactions
Schedule 4.6 Old STAT Material Obligations
Schedule 4.7 Old STAT Litigation
Schedule 4.16 Old STAT Real Property
Schedule 4.18(b) STAT Intellectual Property
Schedule 4.18(g) STAT Confidential Information
Schedule 4.20(a) STAT Employee Plans
Schedule 4.24 Old STAT Interested Party Transactions
Schedule 4.29 Old STAT Customers and Suppliers
Schedule 6.10 Parties to Lockup Agreements
Schedule 7.2(j) Physician Agreements

EXHIBITS

Exhibit A Lockup Agreement
Exhibit B Affiliate and Shareholder Agreement
Exhibit C Employment and Non-Competition Agreement of
Ruben A. Perez
Exhibit D Employment and Non-Competition Agreement of
Russell D. Schneider
Exhibit E Employment Agreement of William H. Rice, M.D.
Exhibit F Employment Agreement of Victor M. Miranda, M.D.
Exhibit G Succession Agreement
Exhibit H Employment Agreement of Daniel Perez

AMENDED AND RESTATED
AGREEMENT AND PLAN OF REORGANIZATION

THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF REORGANIZATION (the
"AGREEMENT") is made as of the 15th day of March, 1996, by and among New STAT
Healthcare, Inc. ("NEW STAT"), STAT Healthcare, Inc. ("OLD STAT"), STAT
Acquisition Corp. ("STAT ACQUISITION"), AmHealth Corporation, AmHealth
Enterprises of the Valley, Inc. and AmHealth Ambulatory Services,
Inc.(collectively, the "AMHEALTH CORPORATIONS") and AmHealth Kidney Center of
the Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center, Ltd.,
Mission Kidney Center, Ltd., Brownsville Kidney Center, Ltd., AmHealth
Ambulatory Healthcare, Ltd., Southwestern Infusion Healthcare, Ltd., Brownsville
Hyperbaric Healthcare, Ltd. and AmHealth Medical Management, Ltd. (collectively,
the "AMHEALTH PARTNERSHIPS" and, together with the AmHealth Corporations, the
"AMHEALTH ENTITIES").

RECITALS

WHEREAS, Old STAT is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is engaged in the
physician contract management service business with authorized capitalization
consisting of 10,000,000 shares of common stock, par value $.01 per share, of
which 3,702,472 shares are issued and outstanding (the "OLD STAT COMMON STOCK");

WHEREAS, each of the AmHealth Entities is a corporation or a limited
partnership duly organized and validly existing and in good standing under the
laws of the State of Texas; .
WHEREAS, the AmHealth Entities are in the business of providing kidney
dialysis services and healthcare management services for home healthcare and
hyperbaric medicine;

WHEREAS, Old STAT and the AmHealth Entities previously entered into an
Agreement and Plan of Reorganization dated December 21, 1995 (the "PRIOR
AGREEMENT");

WHEREAS, since the date of the Prior Agreement, STAT and each of the
AmHealth Entities have determined that the transactions contemplated in such
Prior Agreement must be restructured in order to accomplish the objectives of
said parties;

WHEREAS, Old STAT and each of the AmHealth Entities have mutually
agreed that the Prior Agreement should be amended and restated as set forth
herein;

WHEREAS, New STAT is a corporation duly organized and validly existing
and in good standing under the laws of the State of Delaware with authorized
capitalization consisting of 40,000,000 shares of common stock, par value $.01
per share, of which no shares are issued and outstanding (the "NEW STAT COMMON
STOCK");

WHEREAS, STAT Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is a
wholly-owned subsidiary of New STAT;

WHEREAS, the respective Board of Directors of New STAT, STAT
Acquisition, Old STAT and the AmHealth Corporations and the respective Board of
Directors of each of the corporate general partners of each of the AmHealth
Partnerships has approved the proposed business combination pursuant to which
New STAT will acquire the businesses of the AmHealth Entities;

WHEREAS, on the Closing Date (as hereinafter defined), (i) each of the
AmHealth Corporations will be merged with and into New STAT (the "AMHEALTH
MERGER"), with New STAT as the surviving corporation, upon the terms and
conditions set forth in this Agreement, whereby the common stock of each
AmHealth Corporation (except for Dissenting Shares, as hereinafter defined),
will be converted into a number of shares of New STAT Common Stock equal to such
AmHealth Shareholder's fractional ownership interest in each AmHealth
Corporation multiplied by the number of shares of New STAT Common Stock to be
allocated to such AmHealth Corporation as set forth in Schedule A hereto, and
(ii) the units of general and limited partnership interest (the "AMHEALTH
PARTNERSHIP UNITS") of the AmHealth Partnerships owned by those AmHealth
Partners electing to participate in the Exchange (as hereinafter defined) will
be converted into a number of shares of New STAT Common Stock equal to such
AmHealth Partner's fractional ownership share of each AmHealth Partnership,
multiplied by the number of shares of New STAT Common Stock to be allocated to
such AmHealth Partnership as set forth in Schedule A hereto;

WHEREAS, on the Closing Date, STAT Acquisition will be merged with and
into Old STAT (the "OLD STAT MERGER"), with Old STAT as the surviving
corporation, upon th`e terms and conditions set forth in this Agreement, and
pursuant to which each share of Old STAT Common Stock will be converted into one
share of New STAT Common Stock; and

WHEREAS, the parties hereto intend that the transactions contemplated
hereby be treated as a tax-free reorganization of New STAT, Old STAT, STAT
Acquisition and each of the AmHealth Entities, and tax-free transactions to each
of the Old STAT Stockholders (as hereinafter defined), each of the AmHealth
Shareholders (as hereinafter defined) and each of the AmHealth Partners (as
hereinafter defined) under the Internal Revenue Code of 1986, as amended (the
"CODE"), and further intend that the transactions described herein be treated as
a "pooling of interests" under generally accepted accounting principles ("GAAP")
and applicable Securities and Exchange Commission ("SEC") regulations;

NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties hereto, intending to be legally bound,
agree as follows:

ARTICLE I

ACCOUNTING TERMS AND DEFINITIONS

1.1 TERMS DEFINED ABOVE. As used in this Agreement, the terms
"AGREEMENT", "AMHEALTH CORPORATIONS", "AMHEALTH ENTITIES", "AMHEALTH MERGER",
"AMHEALTH PARTNERSHIPS", "AMHEALTH PARTNERSHIP UNITS", "CODE", "GAAP", "NEW
STAT", "NEW STAT COMMON STOCK","OLD STAT", "OLD STAT COMMON STOCK", "OLD STAT
MERGER", "PRIOR AGREEMENT", "SEC" and "STAT ACQUISITION", and shall have the
meanings indicated above.

1.2 CERTAIN DEFINED TERMS. When used in this Agreement, the following
terms will have the meanings specified:

"AAH" shall mean AmHealth Ambulatory Healthcare, Ltd., a Texas limited
partnership.

"AAS" shall mean AmHealth Ambulatory Services, Inc., a Texas
corporation.

"AEV" shall mean AmHealth Enterprises of the Valley, Inc., a Texas
corporation.

"AKC" shall mean AmHealth Kidney Center of the Valley, Ltd., a Texas
limited partnership.

"AMM" shall mean AmHealth Medical Management, Ltd., a Texas limited
partnership.

"AFFILIATES" shall mean "affiliates" within the meaning of Rule 145.

"AMHEALTH" shall mean AmHealth Corporation, a Texas corporation.

"AMHEALTH BALANCE SHEETS" shall mean balance sheets for the AmHealth
Entities for the twelve month period ended December 31, 1995.

"AMHEALTH CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 2.2 hereof.

"AMHEALTH COMMON STOCK" shall mean the capital stock of each of the
AmHealth Corporations.

"AMHEALTH CONFIDENTIAL INFORMATION" shall mean all AmHealth
Intellectual Property not otherwise protected by patents, patent applications or
copyrights.

"AMHEALTH EMPLOYEE PLANS" shall mean all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements of each AmHealth Entity, and other fringe or employee benefit
plans, programs or arrangements that apply to senior management of any of the
AmHealth Entities and that do not generally apply to all employees.

"AMHEALTH FINANCIAL STATEMENTS" shall mean the consolidated [and
consolidating] audited financial statements for the AmHealth Entities (balance
sheets, statements of operations and statements of cash flows) on a consolidated
basis as at, and for the twelve month period ended December 31, 1995.

"AMHEALTH INTELLECTUAL PROPERTY" shall mean all patents, trademarks,
trade names, service marks, copyrights, and any applications therefor,
maskworks, net lists, schematics, technology, know-how, trade secrets,
inventory, ideas, algorithms, processes, computer software programs or
applications (in both source code and object code form), and tangible or
intangible proprietary information or material used or proposed to be used by
any of the AmHealth Entities in connection with its business as currently
conducted or as proposed to be conducted.

"AMHEALTH PARTNERS"shall refer to each of the holders of AmHealth
Partnership Units.

"AMHEALTH SHAREHOLDERS" shall refer to each of the holders of AmHealth
Common Stock.

"AUTHORIZATIONS" shall mean each material federal, state, county, local
or foreign governmental consent, license, permit, grant, or other authorization
of a Governmental Entity (i) pursuant to which any of the AmHealth Entities
currently operate or hold any interest in any of their properties; or (ii) that
is required for the operation of the business of any of the AmHealth Entities or
the holding of any such interest.

"BHH" shall mean Brownsville Hyperbaric Healthcare, Ltd., a Texas
limited partnership.

"BKC" shall mean Brownsville Kidney Center, Ltd., a Texas limited
partnership.

"BREAKUP SHARES" shall have the meaning set forth in Section 8.3(c)
hereof.

"COBRA" shall mean the applicable health care continuation and notice
provisions of the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended, and the proposed regulations thereunder.

"CERTIFICATES" shall mean each certificate or certificates which
immediately prior to the Closing represented outstanding shares of capital stock
of each of the AmHealth Corporations or Old STAT.

"CLOSING" shall refer to the consummation of the transactions
contemplated herein.

"CLOSING DATE" shall refer to the date upon which the Closing occurs,
which is anticipated to be on or about May 15, 1996.

"CONFIDENTIALITY AGREEMENT" shall mean that certain non-disclosure
agreement dated September 25, 1995, by and between Old STAT and the AmHealth
Entities.

"DGCL" shall mean the Delaware General Business Corporation Law.

"DISSENTING SHARES" shall have the meaning set forth in Section 2.3 (e)
hereof.

"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.

"ERISA AFFILIATES" shall mean any trade or business (whether or not
incorporated) which is treated as a single employer with a party hereto within
the meaning of Section 414(b), (c), (m) or (o) of the Code.

"ENVIRONMENTAL AND SAFETY LAWS" shall mean any legally applicable
federal, state or local laws, ordinances, codes, regulations, rules and orders
that are intended to assure the protection of the environment, or that classify,
regulate, call for the remediation of, require reporting with respect to, or
list or define air, water, groundwater, solid waste, hazardous or toxic
substances, materials, wastes, pollutants or contaminants, or which are intended
to assure the safety of employees, workers or other persons, including the
public.

"EXCHANGE" shall refer to the transfers of New STAT Common Stock to
each of the Old STAT Stockholders, the AmHealth Shareholders and each of the
AmHealth Partners pursuant to Section 2.3 hereof.

"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

"EXCHANGE AGENT" shall mean The American Stock Transfer & Trust
Company.

"FACILITIES" shall mean all buildings and improvements leased by any of
the AmHealth Entities or by Old STAT, as applicable.

"GOVERNMENTAL ENTITY" shall mean any court, administrative agency or
commission or other governmental authority or instrumentality.

"HAZARDOUS MATERIALS" shall mean any toxic or hazardous substance,
material or waste, or any pollutant or contaminant, or infectious or radioactive
substance or material including, without limitation, those substances, materials
and wastes defined in or regulated under any Environmental and Safety Laws.

"INFORMATION STATEMENT" shall have the meaning specified in Section 6.1
hereof.

"LOCKUP AGREEMENT" shall have the meaning specified in Section 6.10
hereof.

"MIKC" shall mean Mission Kidney Center, Ltd., a Texas limited
partnership.

"MATERIAL ADVERSE EFFECT" shall mean, with respect to the AmHealth
Entities on one hand and Old STAT on the other, any event, change or effect that
is materially adverse to the condition (financial or otherwise), properties,
assets, liabilities, business, operations, results of operations or prospects of
such respective entity or entities, taken as a whole.

"NASD" shall mean the National Association of Securities Dealers.

"NEW STAT CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 2.2 hereof.

"OLD STAT" shall refer to STAT Healthcare, Inc., a Delaware
corporation.

"OLD STAT CERTIFICATE OF MERGER" shall have the meaning set forth in
Section 2.2 hereof.

"OLD STAT CERTIFICATES" shall have the meaning set forth in Section
2.4(b)(iii) hereof.

"OLD STAT COMMON STOCK" shall have the meaning set forth in the
Introductory Recitals hereof.

"OLD STAT MERGER"shall have the meaning set forth in the Introductory
Recitals.

"OLD STAT STOCKHOLDERS" shall mean the holders of capital stock of Old
STAT.

"PHYSICIAN AGREEMENTS" shall have the meaning set forth in Section 4.30
hereof.

"PROPERTY" shall mean all real property leased or owned by any of the
AmHealth Entities or by Old STAT, either currently or in the past.

"RECIPIENTS" shall have the meaning set forth in Section 8.3(c).

"RIGHTS" shall have the meaning set forth in Section 2.3(f) hereof.

"RULE 145" shall mean Rule 145 promulgated under the Securities Act.

"SDC" shall mean Starr Dialysis Center, Ltd., a Texas limited
partnership.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

"SIH" shall mean Southwestern Infusion Healthcare, Ltd., a Texas
limited partnership.

"STAT AUTHORIZATIONS" shall mean each federal, state, county, local or
foreign governmental consent, license, permit, grant, or other authorization of
a Governmental Entity (i) pursuant to which Old STAT currently operates or holds
any interest in any of its properties; or (ii) that is required for the
operation of Old STAT's business or the holding of any such interest.

"STAT BALANCE SHEET" shall have the meaning set forth in Section 4.6
hereof.

"STAT BALANCE SHEET DATE" shall have the meaning set forth in Section
4.5 hereof.

"STAT CONFIDENTIAL INFORMATION" shall mean all Old STAT Intellectual
Property not otherwise protected by patents, patent applications or copyrights.

"STAT EMPLOYEE PLANS" shall mean (a) all bonus, pension, profit
sharing, savings, deferred compensation or incentive plans, programs or
arrangements of Old STAT; and (b) other fringe or employee benefit plans,
programs or arrangements that apply to senior management of Old STAT and that do
not generally apply to all employees.

"STAT FINANCIAL STATEMENTS" shall mean the financial statements of Old
STAT, including the notes thereto, included in the Old STAT SEC Documents.

"STAT INTELLECTUAL PROPERTY" shall mean all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor, maskworks, net
lists, schematics, technology, know-how, trade secrets, inventory, ideas,
algorithms, processes, computer software programs or applications (in both
source code and object code form), and tangible or intangible proprietary
information or material used or proposed to be used by Old STAT in connection
with its business as currently conducted or as proposed to be conducted.

"STAT P.A." shall have the meaning set forth in Section 6.11 hereof.

"STAT SEC DOCUMENTS" shall mean each statement, report, registration
statement (with the prospectus in the form filed pursuant to Rule 424(b) of the
Securities Act), definitive proxy statement, and other filings filed with the
SEC by Old STAT since April 21, 1995 and any additional documents filed with the
SEC by Old STAT prior to the Closing Date.

"STAT STOCK OPTION PLAN" shall mean the 1994 Old STAT Stock Option
Plan.

"STOCK RESTRICTION AGREEMENT" shall have the meaning set forth in
Section 6.11 hereof.

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.

"TBCA" shall refer to the Texas Business Corporations Act, as amended.

"TRLPA" shall refer to the Texas Revised Limited Partnership Act, as
amended.

"TAKEOVER PROPOSAL" shall mean any offer or proposal for, or any
indication of interest in, a merger or other business combination involving the
AmHealth Entities, on the one hand, or Old STAT, on the other, or the
acquisition of any significant equity interest in, or a significant portion of
the assets of, the AmHealth Entities or of Old STAT, respectively, other than
the transactions contemplated by this Agreement.

"TAX" (and, with correlative meaning, "TAXES" and "TAXABLE") means (i)
any net income, alternative or add-on minimum tax, gross income, gross receipts,
sales, use, ad valorem, transfer, franchise, profits, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other tax governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or any penalty, addition to tax or additional amount imposed by any
Governmental Entity (a "TAX AUTHORITY") responsible for the imposition of any
such tax (domestic or foreign); (ii) any liability for the payment of any
amounts of the type described in (i) as a result of being a member of an
affiliated, consolidated, combined or unitary group for any Taxable period; and
(iii) any liability for the payment of any amounts of the type described in (i)
or (ii) as a result of any express or implied obligation to indemnify any other
person.

"TAX RETURN" shall mean any return, statement, report or form
including, without limitation, estimated Tax returns and reports, withholding
Tax returns and reports and information reports and returns required to be filed
with respect to Taxes.

"THIRD PARTY CONFIDENTIAL INFORMATION" shall mean all Third Party
Intellectual Property Rights not otherwise protected by patents, patent
applications or copyright.

"THIRD PARTY INTELLECTUAL PROPERTY RIGHTS" shall mean all licenses,
sublicenses and other agreements as to which Old STAT or any AmHealth Entity is
a party and pursuant to which such party is authorized to use any third party
patents, trademarks or copyrights, including software.

"TRIGGER EVENT" shall mean an event that occurs if any Person acquires
securities or partnership interests representing 10% or more, or commences a
tender or exchange offer following the successful consummation of which

the offeror and its affiliates would beneficially own securities or partnership
interests representing 25% or more of the voting power of any of the AmHealth
Entities, on the one hand, or Old STAT, on the other, except that this
definition shall not include the transactions contemplated by this Agreement.

"WKC" shall mean Weslaco Kidney Center, Ltd., a Texas limited
partnership.

1.3 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished hereunder shall be prepared in accordance with GAAP as
in effect applied on a consistent basis (except for changes concurred with by a
"big six" or equivalent firm of independent public accountants).

ARTICLE II

TERMS OF TRANSACTIONS

2.1 TERMS OF TRANSACTIONS. Upon the terms and conditions set forth in this
Agreement, on the Closing Date:

(a) Each of the AmHealth Corporations shall be merged with and into New
STAT. At the Closing, the separate existence of each of the AmHealth
Corporations shall cease and New STAT shall continue as the surviving
corporation of the AmHealth Merger; and simultaneously

(b) Each AmHealth Partner electing to participate in the Exchange shall
transfer AmHealth Partnership Units owned by it to New STAT in exchange for
shares of New STAT Common Stock. If all AmHealth Partnership Units of a specific
AmHealth Partnership are so transferred, such AmHealth Partnership shall
thereupon terminate and dissolve, and its assets will become, by operation of
law, the property of New STAT. Notwithstanding the foregoing, in the event that
one or more of the AmHealth Partners should elect not to participate in the
Exchange, then any AmHealth Partnership in which such AmHealth Partner holds
AmHealth Partnership Units shall continue its existence as a limited
partnership, with New STAT as its general partner.

(c) STAT Acquisition shall be merged with and into Old STAT. At the
Closing, the separate corporate existence of STAT Acquisition shall cease and
Old STAT shall continue as the surviving corporation of the Old STAT Merger.

(d) After the Closing, the combined businesses of Old STAT and the
AmHealth Entities shall be directly or indirectly operated by New STAT.

2.2 FILINGS. Subject to the provisions of this Agreement, the AmHealth
Corporations and New STAT shall file a Certificate of Merger (the "AMHEALTH
CERTIFICATE OF MERGER") executed in accordance with the relevant provisions of
the TBCA and a Certificate of Merger (the "NEW STAT CERTIFICATE OF MERGER")
executed in accordance with the relevant provisions of the DGCL in the
respective offices in the states of Texas and Delaware where such filings are
required, and Old STAT and STAT Acquisition shall file a Certificate of Merger
(the "OLD STAT CERTIFICATE OF MERGER") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings or recordings required
under the DGCL. The transactions contemplated herein shall be deemed consummated
at such time as each of the New STAT Certificate of Merger and the Old STAT
Certificate of Merger are duly filed with the Delaware Secretary of State and
the AmHealth Certificate of Merger is duly filed with the Texas Secretary of
State, or at such other time as each of the AmHealth Entities, New STAT, Old
STAT and STAT Acquisition shall agree should be and are specified in the New
STAT Certificate of Merger, the Old STAT Certificate of Merger and the AmHealth
Certificate of Merger.

2.3 THE EXCHANGE. On the Closing Date:

(a) Conversion of AmHealth Partnership Units. In the Exchange, the
AmHealth Partnership Units of each of the AmHealth Partners electing to
participate shall be converted into a number of shares of New STAT Common Stock
equal to such AmHealth Partner's fractional ownership share of each AmHealth
Partnership, multiplied by the number of shares of New STAT Common Stock to be
allocated to such AmHealth Partnership as set forth in Schedule A hereto. All
such shares of New STAT Common Stock shall be fully paid and nonassessable. Upon
such conversion, all such AmHealth Partnership Units shall be canceled and
retires and cease to exist, and each holder thereof shall cease to have any
rights with respect thereto other than the right to receive New STAT Common
Stock issued in exchange therefor on the terms provided herein.

(b) Conversion of AmHealth Common Stock. In the AmHealth Merger, all of
the AmHealth Common Stock (other than Dissenting Shares) shall be converted into
a number of shares of New STAT Common Stock equal to such AmHealth Shareholder's
fractional ownership interest in each AmHealth Corporation multiplied by the
number of shares of New STAT Common Stock to be allocated to such AmHealth
Corporation as set forth in Schedule A hereto. All such shares of New STAT
Common Stock shall be fully paid and nonassessable. Upon such conversion, all
such AmHealth Common Stock shall be canceled and retired and cease to exist, and
each holder thereof shall cease to have any rights with respect thereto other
than the right to receive New STAT Common Stock issued in exchange therefor on
the terms provided herein.

(c) Conversion of Shares of Old STAT Common Stock. In the Old STAT
Merger, each issued and outstanding share of Old STAT Common Stock shall be
converted into one share of New STAT Common Stock. All such shares of New STAT
Common Stock shall be fully paid and nonassessable. Upon such conversion, all
such Old STAT Common Stock shall be canceled and retired and cease to exist, and
each holder thereof shall cease to have any rights with respect thereto other
than the right to receive the shares of New STAT Common Stock issued in exchange
therefor on the terms provided herein.

(d) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, AmHealth Common Stock outstanding at the time that the AmHealth
Shareholders approve this Agreement which are held by a holder (if any) who is
entitled to demand the fair market value of such shares in accordance with
Section 5.12 of the TBCA ("DISSENTING SHARES"), shall not be converted into New
STAT Common Stock in the Exchange, but shall be converted into such
consideration as may be due with respect to such shares, unless and until the
right of such holder to receive payment under such statute shall be terminated
pursuant to its terms, whereupon such shares shall be treated as if they have
been converted as of the Closing Date into New STAT Common Stock pursuant to
Section 2.3(b) hereof.

(e) Old STAT Stock Options. Immediately upon Closing, all stock
options, warrants, puts, calls or other such rights with respect to Old STAT
Common Stock, if any (the "RIGHTS") that are outstanding at the Closing Date,
whether or not then exercisable, shall be converted into and become rights with
respect to New STAT Common Stock and New STAT shall assume each Right in
accordance with the terms of the stock option plan under which it was issued
and/or the stock option, warrant or other agreement, as the case may be, by
which it is evidenced. Upon such conversion, all such Rights shall be canceled
and retired and cease to exist, and each holder thereof shall cease to have any
rights with respect thereto other than the right with respect to New STAT Common
Stock. It is intended that the foregoing provisions shall be undertaken in a
manner that will not constitute a "modification" as defined in Section 425 of
the Code, as to any stock option which is an "incentive stock option."

2.4 THE EXCHANGE.

(a) New STAT to Provide Common Stock. On or before the Closing Date,
New STAT shall make available to the Exchange Agent for exchange in accordance
with this Article II, through such reasonable procedures as New STAT may adopt,
certificates representing the shares of New STAT Common Stock issuable pursuant
to this Section 2.

(b) Exchange Procedures. (i) On or prior to the Closing Date, the
AmHealth Partnerships shall provide the Exchange Agent with a list of the
holders of AmHealth Partnership Units, which list shall set forth the respective
interests of such holders and the number of New STAT Shares which each such
holder shall be entitled to receive in the Exchange and indicating those holders
of AmHealth Partnership Units who have accepted the exchange offer and those who
have not. Such list shall be certified as true and correct by the general
partner of each AmHealth Partnership. Promptly after the Closing, New STAT shall
cause to be mailed to each holder of record of an AmHealth Partnership Unit, a
certificate or certificates representing New STAT Common Stock to which such
holder shall be entitled as set forth in the list provided by the AmHealth
Partnerships as provided herein. In the event of a transfer of ownership of an
AmHealth Partnership Unit which is not registered in the transfer records of the
applicable AmHealth Partnership, a certificate representing the proper number of
shares of New STAT Common Stock may be issued to a person other than the person
in whose name the AmHealth Partnership Unit is registered, if such AmHealth
Partnership Unit shall be in proper form for transfer and the person requesting
such issuance shall pay any transfer or other Taxes required by reason of the
issuance of shares of New STAT Common Stock to a person other than the
registered holder of such AmHealth Partnership Unit or establish to the
satisfaction of New STAT that such Tax has been paid or is not applicable. To
the extent permitted by law, former holders of record of AmHealth Partnership
Units shall be entitled to vote after the Closing Date at any meeting of New
STAT stockholders the number of shares of New STAT Common Stock into which their
respective AmHealth Partnership Units are converted, regardless of whether such
holders have received their certificates representing New STAT Common Stock in
accordance with this Section 2.4(b)(i).

(ii) On or prior to the Closing Date, each of the AmHealth
Corporations shall provide the Exchange Agent with a list of the holders of
AmHealth Common Stock, which list shall set forth the respective interests of
such holders and the number of shares of New STAT Common Stock which each such
holder shall be entitled to receive in the AmHealth Merger. Each such list shall
be certified as true and correct by an officer of such AmHealth Corporation.
Promptly after the Closing, New STAT shall cause to be mailed to each holder of
record of AmHealth Common Stock whose shares were converted into the right to
receive the New STAT Common Stock pursuant to Section 2.3(b) hereof, a
certificate or certificates representing that number of shares of New STAT
Common Stock which such holder has the right to receive pursuant to the
provisions of this Section 2. In the event of a transfer of ownership of shares
of AmHealth Common Stock which is not registered in the transfer records of the
applicable AmHealth Corporation, a certificate representing the proper number of
shares of New STAT Common Stock may be issued to a person other than the person
in whose name such AmHealth Common Stock is registered, if such AmHealth Common
Stock shall be in proper form for transfer and the person requesting such
issuance shall pay any transfer or other Taxes required by reason of the
issuance of shares of New STAT Common Stock to a person other than the
registered holder of such AmHealth Common Stock or establish to the satisfaction
of New STAT that such Tax has been paid or is not applicable. To the extent
permitted by law, former stockholders of record of AmHealth Common Stock shall
be entitled to vote after the Closing Date at any meeting of New STAT
stockholders the number of shares of New STAT Common Stock into which their
respective shares of AmHealth Common Stock are converted, regardless of whether
such holders have received their certificates representing New STAT Common Stock
in accordance with this Section 2.4(b)(ii).

(iii) On or prior to the Closing Date, Old STAT shall provide
the Exchange Agent with a list of the holders of Old STAT Common Stock entitled
to receive shares of New STAT Common Stock in the Old STAT Merger, which list
shall reflect the number of shares of Old STAT Common Stock held by each such
holder, certified by the transfer agent and registrar for Old STAT Common Stock.
As soon as reasonably practicable after the Closing, the Exchange Agent shall
mail to each holder of record of a certificate or certificates which immediately
prior to the Closing Date represented outstanding shares of Old STAT Common
Stock (the "OLD STAT CERTIFICATES") whose shares were converted into the right
to receive the New STAT Common Stock pursuant to Section 2.3(d), (i) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Old STAT Certificates shall pass, only upon delivery of
the Old STAT Certificates to the Exchange Agent and shall be in such form and
have such other provisions as New STAT and Old STAT may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Old STAT
Certificates in exchange for certificates representing shares of New

STAT Common Stock. Upon surrender of an Old STAT Certificate for cancellation to
the Exchange Agent or to such other agent or agents as may be appointed by New
STAT and Old STAT, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Exchange Agent, the
holder of such Old STAT Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of shares of New STAT Common
Stock which such holder has the right to receive pursuant to the provisions of
this Section 2, and the Old STAT Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of Old STAT Common
Stock which is not registered in the transfer records of Old STAT, a certificate
representing the proper number of shares of New STAT Common Stock may be issued
to a person other than the person in whose name the Old STAT Certificate so
surrendered is registered, if such Old STAT Certificate shall be properly
endorsed or otherwise be in proper form for transfer and the person requesting
such issuance shall pay any transfer or other Taxes required by reason of the
issuance of shares of New STAT Common Stock to a person other than the
registered holder of such Old STAT Certificate or establish to the satisfaction
of New STAT and Old STAT that such Tax has been paid or is not applicable. Until
surrendered as contemplated in this Section 2.4(b)(iii), each Old STAT
Certificate shall be deemed at any time after the Closing Date to represent only
the right to receive upon such surrender the certificate representing shares of
New STAT Common Stock as contemplated by this Section 2.4(b)(iii). To the extent
permitted by law, former stockholders of record of Old STAT shall be entitled to
vote after the Closing Date at any meeting of New STAT stockholders the number
of shares of New STAT Common Stock into which their respective Old STAT Common
Stock are converted, regardless of whether such holders have exchanged their Old
STAT Certificates for certificates representing shares of New STAT Common Stock
in accordance with this Section 2.4(b)(iii).

(c) Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to New STAT Common Stock with a record date
after the Closing Date shall be paid to the holder of any unsurrendered Old STAT
Certificate with respect to the shares of Old STAT Common Stock represented
thereby. Subject to the effect of applicable laws, following surrender of any
such certificate, there shall be paid to the holder of the certificate
representing shares of New STAT Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of dividends or
other distributions with a record date after the Closing Date theretofore paid
with respect to such shares of New STAT Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Closing Date but prior to such surrender and with a
payment date subsequent to such surrender payable with respect to such shares of
New STAT Common Stock.

(d) No Further Ownership Rights in AmHealth Partnership Units, AmHealth
Common Stock or Old STAT Common Stock. All shares of New STAT Common Stock
issued in accordance with the terms of this Section 2 shall be deemed to have
been issued (and paid) in full satisfaction of all rights pertaining to the
AmHealth Partnership Units and the shares of AmHealth Common Stock and Old STAT
Common Stock exchanged. If, after the Closing Date, Old STAT Certificates are
presented to New STAT or the Exchange Agent for any reason, they shall be
exchanged as provided in this Section 2, except as otherwise provided by law.

(e) No Fractional Shares. No fraction of a share of New STAT Common
Stock will be issued, but each AmHealth Shareholder, AmHealth Partner or Old
STAT Stockholder who would otherwise be entitled to a fraction of a share of New
STAT Common Stock (after aggregating all fractional shares of New STAT Common
Stock to be received by such holder) shall receive from New STAT one share of
New STAT Common Stock if such fraction equals or exceeds one half share.

(g) No Liability. Neither the Exchange Agent, New STAT, Old STAT, STAT
Acquisition nor any AmHealth Entity shall be liable to any person for any amount
properly paid to a public official pursuant to any applicable abandoned
property, escheat or similar law.

2.5 FEDERAL INCOME TAX CHARACTERIZATION OF TRANSACTIONS. The parties
hereto hereby acknowledge and agree that (i) the transactions described in this
Section 2 collectively constitute a tax-free transfer of property to New

STAT and Old STAT under Section 351 of the Code; (ii) without limiting the
characterization in clause (i) above, the mergers of the AmHealth Corporations
with and into New STAT and of STAT Acquisition with and into Old STAT constitute
tax-free reorganizations described in Section 368 of the Code; and (iii) they
will cooperate in the preparation and filing of federal income tax returns and
schedules attached thereto for the parties to these transactions consistent with
the foregoing characterization of these transactions for any purpose.

2.6 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Closing Date, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest New STAT with full right, title and
possession to all assets, property, rights, privileges, powers and franchises of
Old STAT or any of the AmHealth Entities which have been transferred in toto to
New STAT as the result of a merger or by the transfer of all existing AmHealth
Partnership Units into New STAT, the officers and directors of each such
AmHealth Entity or Old STAT, as applicable, are fully authorized in the name of
their respective AmHealth Corporations and AmHealth Partnership or otherwise to
take, and will take, all such lawful and necessary action, so long as such
action is not inconsistent with this Agreement.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE AMHEALTH ENTITIES

Except as disclosed in any schedule hereto, each of the AmHealth
Entities severally as to itself, but not jointly, represents and warrants as of
the date of this Agreement as follows:

3.1 ORGANIZATION, STANDING AND POWER OF THE CORPORATIONS. Each of the
AmHealth Corporations is a corporation duly organized, validly existing and in
good standing under the laws of the State of Texas. Each of the AmHealth
Corporations represents and warrants that it has the corporate power to own its
properties and to carry on its business as now being conducted and as proposed
to be conducted and is duly qualified to do business and is in good standing in
each jurisdiction in which the failure to be so qualified and in good standing
would have a Material Adverse Effect on it. Each of the AmHealth Corporations
has delivered to New STAT a true and correct copy of its Articles of
Incorporation and Bylaws or other charter documents, as applicable, as amended
to date. None of the AmHealth Corporations is in violation of any of the
provisions of its Articles of Incorporation or Bylaws or equivalent
organizational documents. None of the AmHealth Corporations directly or
indirectly, other than as to other AmHealth Entities, owns any equity or similar
interest in, or any interest convertible or exchangeable or exercisable for, any
equity or similar interest in, any corporation, joint venture or other business
association or entity.

3.2 ORGANIZATION, STANDING AND POWER OF THE AMHEALTH PARTNERSHIPS. Each
of the AmHealth Partnerships is a limited partnership duly organized and validly
existing under the laws of the State of Texas. Each of the AmHealth Partnerships
has the power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted. Each of the AmHealth Partnerships has
delivered to New STAT true and correct copies of its Certificate of Limited
Partnership and Limited Partnership Agreement, each as amended to date. None of
the AmHealth Partnerships is in material violation of any of the material
provisions of its Certificate of Limited Partnership or Limited Partnership
Agreement. None of the AmHealth Partnerships directly or indirectly, other than
as to other AmHealth Entities, owns any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for, any equity or similar
interest in, any corporation, joint venture or other business association or
entity.

3.3 CAPITAL STRUCTURE.

(a) AMHEALTH. The authorized capital stock of AmHealth
consists of 1000 shares of common stock, par value $1.00 per share, of which
there were issued and outstanding as of the close of business on December 15,
1995, 1000 shares. There are no other outstanding shares of common stock or
voting securities and no outstanding commitments to issue any shares of common
stock or voting securities after December 15, 1995. All outstanding

shares of common stock of AmHealth are duly authorized, validly issued, fully
paid and non-assessable and are free of any liens or encumbrances other than any
liens or encumbrances created by or imposed upon the holders thereof, and are
not subject to preemptive rights or rights of first refusal created by statute,
the Articles of Incorporation or Bylaws of AmHealth or any agreement to which
AmHealth is a party or by which it is bound. Except for the rights created
pursuant to this Agreement, there are no other options, warrants, calls, rights,
commitments or agreements of any character to which AmHealth is a party or by
which it is bound obligating AmHealth to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of capital stock of AmHealth or obligating AmHealth to grant, extend,
accelerate the vesting of, change the price of, or otherwise amend or enter into
any such option, warrant, call, right, commitment or agreement. There are no
contracts, commitments or agreements relating to voting, purchase or sale of any
of AmHealth's capital stock (i) between or among AmHealth and any of its
shareholders; and (ii) to the best of AmHealth's knowledge, between or among any
of AmHealth's shareholders.

(b) AEV. The authorized capital stock of AEV consists of 1000
shares of common stock, par value $1.00 per share, of which there were issued
and outstanding as of the close of business on December 15, 1995, 1000 shares.
There are no other outstanding shares of common stock or voting securities and
no outstanding commitments to issue any shares of common stock or voting
securities after December 15, 1995. All outstanding shares of common stock of
AEV are duly authorized, validly issued, fully paid and non-assessable and are
free of any liens or encumbrances other than any liens or encumbrances created
by or imposed upon the holders thereof, and are not subject to preemptive rights
or rights of first refusal created by statute, the Articles of Incorporation or
Bylaws of AEV or any agreement to which AEV is a party or by which it is bound.
Except for the rights created pursuant to this Agreement, there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which AEV is a party or by which it is bound obligating AEV to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of capital stock of AEV or obligating AEV to grant,
extend, accelerate the vesting of, change the price of, or otherwise amend or
enter into any such option, warrant, call, right, commitment or agreement. There
are no contracts, commitments or agreements relating to voting, purchase or sale
any of AEV's capital stock (i) between or among AEV and any of its shareholders;
and (ii) to the best of AEV's knowledge, between or among any of AEV's
shareholders.

(c) AAS. The authorized capital stock of AAS consists of 1000
shares of common stock, par value $1.00 per share, of which there were issued
and outstanding as of the close of business on December 15, 1995, 1000 shares.
There are no other outstanding shares of common stock or voting securities and
no outstanding commitments to issue any shares of common stock or voting
securities after December 15, 1995. All outstanding shares of common stock of
AAS are duly authorized, validly issued, fully paid and non-assessable and are
free of any liens or encumbrances other than any liens or encumbrances created
by or imposed upon the holders thereof, and are not subject to preemptive rights
or rights of first refusal created by statute, the Articles of Incorporation or
Bylaws of AAS or any agreement to which AAS is a party or by which it is bound.
Except for the rights created pursuant to this Agreement, there are no other
options, warrants, calls, rights, commitments or agreements of any character to
which AAS is a party or by which it is bound obligating AAS to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of capital stock of AAS or obligating AAS to grant,
extend, accelerate the vesting of, change the price of, or otherwise amend or
enter into any such option, warrant, call, right, commitment or agreement. There
are no contracts, commitments or agreements relating to voting, purchase or sale
of any of AAS' capital stock (i) between or among AAS and any of its
shareholders; and (ii) to the best of AAS' knowledge, between or among any of
AAS' shareholders.

(d) AKC. AEV, the general partner of AKC, owned 1% of the
partnership interest in AKC as of the close of business on December 15, 1995 and
five (5) limited partners owned 99% of the partnership interest at such time.

(e) WKC. AAS, the general partner of WKC, owned 1% of the
partnership interest in WKC as of the close of business on December 15, 1995 and
three (3) limited partners owned 99% of the partnership interest at such time.

(f) SDC. AEV, the general partner of SDC, owned 1% of the
partnership interest in SDC as of the close of business on December 15, 1995 and
one (1) limited partner owned 99% of the partnership interest at such time.

(g) MIKC. AEV, the general partner of MIKC, owned 1% of the
partnership interest in MIKC as of the close of business on December 15, 1995
and one (1) limited partner owned 99% of the partnership interest at such time.

(h) BKC. AEV, the general partner of BKC, owned 1% of the
partnership interest in BKC as of the close of business on December 15, 1995 and
six (6) limited partners owned 99% of the partnership interest at such time.

(i) AAH. AAS, the general partner of AAH, owns 1% of the
partnership interest in AAH as of the close of business on December 15, 1995 and
four (4) limited partners owned 99% of the partnership interest at such time.

(j) SIH. AAS, the general partner of SIH owns 1% of the
partnership interest in SIH as of the close of business on December 15, 1995 and
two (2) limited partners owned 99% of the partnership interest at such time.

(k) BHH. AAS, the general partner of BHH, owns 1% of the
partnership interest in BHH as of the close of business on December 15, 1995 and
three (3) limited partners owned 99% of the partnership interest at such time.

(l) AMM. AAS, the general partner of AMM, owns 1% of the
partnership interest in AMM as of the close of business on December 15, 1995 and
four (4) Partners owned 99% of the partnership interest at such time.

3.4 AUTHORITY. Each of the AmHealth Corporations has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of each of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of each of the
AmHealth Corporations, subject only to the approval by the respective AmHealth
Shareholders as contemplated by Section 7.1(a). Each of the AmHealth
Partnerships has all requisite power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary partnership action on the part
of each of the AmHealth Partnerships. This Agreement has been duly executed and
delivered by each of the AmHealth Entities and constitutes the valid and binding
obligation of each AmHealth Entity enforceable against it in accordance with its
terms. The execution and delivery of this Agreement by each of the AmHealth
Corporations does not, and the consummation of the transactions contemplated
hereby will not, conflict with, or result in any violation of, or default under
(with or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any material obligation or loss of
any benefit under (i) any provision of the Articles of Incorporation or Bylaws
of each such AmHealth Corporations, or (ii) any material mortgage, indenture,
lease, contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to each such AmHealth Corporation or any of their properties or
assets such as to give rise to a Material Adverse Effect. The execution and
delivery of this Agreement by each of the AmHealth Partnerships does not, and
the consummation of the transactions contemplated hereby will not, conflict
with, or result in any violation of, or default under (with

or without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of any
benefit under (a) any provision of the Certificate of Limited Partnership or the
Limited Partnership Agreement of each such AmHealth Partnerships, or (b) any
material mortgage, indenture, lease, contract or other agreement or instrument,
permit, concession, franchise, license, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to AmHealth Partnerships or any of its
properties or assets such as to give rise to a Material Adverse Effect. Other
than such notices which have been filed, no consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to any of the AmHealth Entities in
connection with the execution and delivery of this Agreement or the consummation
of the transactions contemplated hereby, except for (1) such consents,
approvals, orders, authorizations, registrations, declarations and filings as
may be required under applicable state securities laws and the securities laws
of any foreign country; and (2) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on the AmHealth Entities and would not prevent, or
materially alter or delay any of the transactions contemplated by this
Agreement.

3.5 FINANCIAL STATEMENTS. The AmHealth Entities have delivered to New
STAT the AmHealth Financial Statements. The AmHealth Financial Statements are
complete and correct in all material respects as of their respective dates and
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods indicated. The AmHealth Financial Statements fairly
present the financial condition and operating results of the AmHealth Entities
as of the dates, and for the periods, indicated therein. The AmHealth Entities
maintain and will continue to maintain a standard system of accounting
established and administered in accordance with GAAP.

3.6 ABSENCE OF CERTAIN CHANGES. Since December 31, 1995, each of the
AmHealth Entities has conducted its business in the ordinary course consistent
with past practice and there has not occurred: (i) any change, event or
condition (whether or not covered by insurance) that has resulted in, or might
reasonably be expected to result in, a Material Adverse Effect to any of the
AmHealth Entities; (ii) any acquisition, sale or transfer of any material asset
of the AmHealth Entities other than in the ordinary course of business and
consistent with past practice; (iii) any change in accounting methods or
practices (including any change in depreciation or amortization policies or
rates) by any of the AmHealth Entities or any revaluation by any of the AmHealth
Entities of any of its assets; (iv) any declaration, setting aside, or payment
of a dividend or other distribution with respect to the shares of any of the
AmHealth Corporations or the partnership interests of any of the AmHealth
Partnerships (except such dividends, distributions and bonuses as have been
customarily paid by such AmHealth Entity, which shall continue to be paid in
accordance with prior practice prior to Closing, and may accrue at Closing, with
some such payments occurring after the Closing Date), or any direct or indirect
redemption, purchase or other acquisition by any of the AmHealth Entities of any
of their shares of capital stock or partnership interests; (v) any material
contract entered into by any of the AmHealth Entities, other than in the
ordinary course of business and as provided to New STAT, or any material
amendment or termination of, or default under, any material contract to which
any of the AmHealth Entities is a party or by which any of them are bound; (vi)
any amendment or change to the Articles of Incorporation or Bylaws of any of the
AmHealth Corporations; (vii) any amendment or change to the Certificate of
Partnership or Partnership Agreement of any of the AmHealth Partnerships; (viii)
any increase in or modification of the compensation or benefits payable or to
become payable by any of the AmHealth Entities to any of its officers, directors
or employees; or (ix) any negotiation or agreement by any of the AmHealth
Entities to do any of the things described in the preceding clauses (i) through
(viii) (other than negotiations with New STAT and its representatives regarding
the transactions contemplated by this Agreement).

3.7 ABSENCE OF UNDISCLOSED LIABILITIES. None of the AmHealth Entities
have any material obligations or liabilities of any nature (matured or
unmatured, fixed or contingent) other than (i) those set forth or adequately
provided for in the AmHealth Entity Balance Sheets; (ii) those incurred in the
ordinary course of business and not required to be set forth in the AmHealth
Balance Sheets under GAAP; (iii) those incurred in the ordinary course of
business since December 31, 1995 and consistent with past practice; and (iv)
those incurred in connection with the execution of this Agreement.

3.8 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic or, to the knowledge of any of the AmHealth
Entities, threatened against any of the AmHealth Entities or any of their
respective properties or any of their respective officers, directors, or
employees (in their capacities as such) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on any of the
AmHealth Entities. There is no judgment, decree or order against any of the
AmHealth Entities or, to the knowledge of any of the AmHealth Entities, any of
their respective directors, officers, or employees (in their capacities as
such), that could prevent, enjoin, or materially alter or delay any of the
transactions contemplated by this Agreement, or that could reasonably be
expected to have a Material Adverse Effect on any of the AmHealth Entities. All
litigation to which any of the AmHealth Entities is a party (or, to the
knowledge of any of the AmHealth Entities, is threatened to become a party) is
disclosed in SCHEDULE 3.8 attached hereto.

3.9 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon any of the AmHealth Entities
which has or could reasonably be expected to have the effect of prohibiting or
materially impairing any current or future business practice of any of the
AmHealth Entities, any acquisition of property by any of the AmHealth Entities
or the conduct of business by any of the AmHealth Entities as currently
conducted.

3.10 GOVERNMENTAL AUTHORIZATION. Each of the AmHealth Entities has
obtained or will obtain the Authorizations, and all of such Authorizations are
in full force and effect, except notification of the Texas Department of Health,
which has been made, and except where the failure to obtain or have any such
Authorizations could not reasonably be expected to have a Material Adverse
Effect on any of the AmHealth Entities.

3.11 TITLE AND CONDITION OF PROPERTY. Each of the AmHealth Entities has
good and marketable title to all of its material properties, interests in
properties and assets, real and personal, tangible, intangible and mixed
reflected in the AmHealth Balance Sheets or acquired after the date of the
AmHealth Balance Sheets (except properties, interests in properties and assets
sold or otherwise disposed of since the date of the AmHealth Balance Sheets in
the ordinary course of business which will not result in a Material Adverse
Effect), or with respect to leased properties and assets, valid leasehold
interests, free and clear of all mortgages, liens, pledges, charges or
encumbrances of any kind or character, except (i) the lien of current taxes not
yet due and payable; (ii) such imperfections of title, liens and easements as do
not and will not materially detract from each of or interfere with the use of
the properties subject thereto or affected thereby, or otherwise materially
impair business operations involving such properties; and (iii) liens securing
debt which is reflected on the AmHealth Balance Sheets. The property and
equipment of each of the AmHealth Entities that is used in the operation of its
business is in good operating condition and repair. All properties used in the
operations of each of the AmHealth Entities are reflected in the AmHealth
Balance Sheets to the extent GAAP require the same to be reflected. SCHEDULE
3.11 identifies each parcel of real property owned or leased by each of the
AmHealth Entities.

3.12 AMHEALTH INTELLECTUAL PROPERTY.

(a) Each of the AmHealth Entities owns, or is licensed or
otherwise possesses legally enforceable rights to use AmHealth Intellectual
Property, except to the extent that the failure to have such rights has not had
and could not reasonably be expected to have a Material Adverse Effect on any of
the AmHealth Entities.

(b) SCHEDULE 3.12(B) lists (i) all patents and patent
applications and all registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks, included
in the AmHealth Intellectual Property, including the jurisdictions in which each
such AmHealth Intellectual Property right has been issued or registered or in
which any application for such issuance and registration has been filed; (ii)
all licenses, sublicenses and other agreements as to which each of the AmHealth
Entities is a party and pursuant to which any person is authorized to use any
AmHealth Intellectual Property; and (iii) all Third Party

Intellectual Property Rights which are incorporated in, are, or form a part of
any product that is material to the business of any of the AmHealth Entities.

(c) To the knowledge of any of the AmHealth Entities, there is
no material unauthorized use, disclosure, infringement or misappropriation of
any AmHealth Intellectual Property, any trade secret material to any of the
AmHealth Entities, or any Third Party Intellectual Property Rights to the extent
licensed by or through any of the AmHealth Entities, by any third party,
including any employee or former employee of any of the AmHealth Entities. None
of the AmHealth Entities has entered into any agreement to indemnify any other
person against any charge of infringement of any AmHealth Intellectual Property,
other than indemnification provisions contained in purchase orders arising in
the ordinary course of business.

(d) None of the AmHealth Entities is, nor will any of them be
as a result of the execution and delivery of this Agreement or the performance
of its obligations under this Agreement, in breach of any license, sublicense or
other agreement relating to the AmHealth Intellectual Property or Third Party
Intellectual Property Rights, the breach of which would have a Material Adverse
Effect on any of the AmHealth Entities.

(e) To the knowledge of each of the AmHealth Entities, all
patents, registered trademarks, service marks and copyrights held by any of the
AmHealth Entities are valid and subsisting. None of the AmHealth Entities (i)
have been sued in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks, copyrights or violation
of any trade secret or other proprietary right of any third party; (ii) have
knowledge that the manufacturing, marketing, licensing or sale of its products
infringes any patent, trademark, service mark, copyright, trade secret or other
proprietary right of any third party, which such infringement would have a
Material Adverse Effect on any of the AmHealth Entities; and (iii) have not
brought any action, suit or proceeding for infringement of AmHealth Intellectual
Property or breach of any license or agreement involving AmHealth Intellectual
Property against any third party.

(f) Each of the AmHealth Entities has secured valid written
assignments from all consultants and employees who contributed to the creation
or development of AmHealth Intellectual Property of the rights to such
contributions that each of the AmHealth Entities does not already own by
operation of law.

(g) Each of the AmHealth Entities has taken all necessary and
appropriate steps to protect and preserve the AmHealth Confidential Information
identified in SCHEDULE 3.12(G) hereto. All use, disclosure or appropriation of
AmHealth Confidential Information by or to a third party has been pursuant to
the terms of a written agreement between the owner of such AmHealth and such
third party. All use, disclosure or appropriation of any Third Party
Confidential Information has been pursuant to the terms of a written agreement
between such AmHealth Entity and the owner of such Third Party Confidential
Information and is otherwise lawful.

3.13 ENVIRONMENTAL MATTERS. For the purposes of this Section 3.13
"knowledge" shall mean the personal knowledge of the officers and directors of
the applicable party, gained during the ordinary course of business, and shall
not include the requirement of specific inquiry into the matter at issue. Each
of the AmHealth Entities represents and warrants to its knowledge without due
enquiry as follows: (a) no methylene chloride or asbestos has been released from
any of the Facilities in violation of Environmental and Safety Laws; (b) all
Hazardous Materials and wastes which have been discarded have been disposed of
in accordance with all Environmental and Safety Laws; (c) none of the AmHealth
Entities has received written notice of any noncompliance with Environmental and
Safety Laws of any of the Facilities or its past or present operations; (d) no
notices, administrative actions or suits are pending or threatened relating to a
violation by any AmHealth Entity of any Environmental and Safety Laws; (e) none
of the AmHealth Entities has received written notice from a Governmental Entity
that it is considered a potentially responsible party under the federal
Comprehensive Environmental Response, Compensation and Liability Act, as
amended, (CERCLA), or state analog statute, as amended, arising out of events
occurring prior to the Closing Date; (f) there are not any released Hazardous
Materials migrating on or from the Facilities; (g) there are not any underground
tanks or underground improvements (excluding utility or similar improvements)
at, on or under the

Property including, without limitation, treatment or storage tanks, sumps, or
water, gas or oil wells; (h) there are no polychlorinated biphenyls (PCBs)
deposited, stored, disposed of or located on the Facilities or any equipment
(excluding electric transformers or related oil-containing equipment) on the
Property containing PCBs at levels in excess of 50 parts per million; (i) there
is no insulating material containing urea formaldehyde in the Facilities; (j)
each of the AmHealth Entities' uses of and activities at the Facilities have at
all times materially complied with all Environmental and Safety Laws; and (k)
each of the AmHealth Entities has all the permits and licenses required to be
issued and are in material compliance with the terms and conditions of those
permits, if failure to have and comply with such permits and licenses would have
a Material Adverse Effect.

3.14 TAXES. Each of the AmHealth Entities, and any consolidated,
combined, unitary or aggregate group for Tax purposes of which any of the
AmHealth Entities are or has been a member, has timely filed all Tax Returns
required to be filed, has paid all Taxes shown thereon to be due and has
provided adequate accruals in accordance with GAAP in its financial statements
for any Taxes that have not been paid, whether or not shown as being due on any
Tax Returns. There is (i) no material claim for Taxes that is a recorded lien
against the property of any of the AmHealth Entities or is being asserted
against any of the AmHealth Entities other than liens for Taxes not yet due and
payable; (ii) no audit of any Tax Return of any of the AmHealth Entities being
conducted by a Tax Authority; (iii) no extension of the statute of limitations
on the assessment of any Taxes granted by any of the AmHealth Entities and
currently in effect; and (iv) no agreement, contract or arrangement to which any
of the AmHealth Entities is a party that may result in the payment of any amount
that would not be deductible by reason of Sections 280G, 162 or 404 of the Code.
None of the AmHealth Entities has been and none will be required to include any
material adjustment in Taxable income for any Tax period (or portion thereof)
pursuant to Section 481 or 263A of the Code or any comparable provision under
state or foreign Tax laws as a result of transactions, events or accounting
methods employed prior to the Exchange. None of the AmHealth Entities is a party
to any tax sharing or tax allocation agreement nor do any of the AmHealth
Entities owe any amount under any such agreement. Each of the AmHealth Entities
is in full compliance with all terms and conditions of any Tax exemptions or
other Tax-sharing agreement or order of a foreign government, and the
consummation of the Exchange shall not have any adverse effect on the continued
validity and effectiveness of any such Tax exemptions or other Tax-sharing
agreement or order.

3.15 EMPLOYEE BENEFIT PLANS.

(a) SCHEDULE 3.15(A) lists, with respect to each of the
AmHealth Entities and any ERISA Affiliate thereof, all AmHealth Employee Plans.

(b) Each of the AmHealth Entities has furnished to New STAT a
copy of each of the AmHealth Employee Plans and related plan documents
(including trust documents, insurance policies or contracts, employee booklets,
summary plan descriptions and other authorizing documents, and, to the extent
still in its possession, any material employee communications relating thereto)
and has, with respect to each AmHealth Employee Plan which is subject to ERISA
reporting requirements, provided copies of the Form 5500 reports filed for the
last three plan years. Any AmHealth Employee Plan intended to be qualified under
Section 401(a) of the Code has either obtained from the Internal Revenue Service
a favorable determination letter as to its qualified status under the Code,
including all amendments to the Code effected by the Tax Reform Act of 1986 and
subsequent legislation, or has applied to the Internal Revenue Service for such
a determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. Each of the AmHealth Entities has
also furnished New STAT with the most recent Internal Revenue Service
determination letter issued with respect to each such AmHealth Employee Plan,
and, to the knowledge of each AmHealth Entity, nothing has occurred since the
issuance of each such letter which could reasonably be expected to cause the
loss of the tax-qualified status of any AmHealth Employee Plan subject to Code
Section 401(a).

(c) (i) None of the AmHealth Employee Plans promises or
provides retiree medical or other retiree welfare benefits to any person; (ii)
there has been no "prohibited transaction," as such term is defined in

Section 406 of ERISA and Section 4975 of the Code, with respect to any AmHealth
Employee Plan subject to Title I of ERISA, which could reasonably be expected to
have a Material Adverse Effect; (iii) each AmHealth Entity Employee Plan has
been administered in accordance with its terms and in compliance with the
requirements prescribed by any and all applicable statutes, rules and
regulations (including ERISA and the Code), except as would not have, in the
aggregate, a Material Adverse Effect, and each of the AmHealth Entities or ERISA
Affiliates have performed all obligations required to be performed by them
under, are not in any material respect in default under or violation of, and
have no knowledge of any material default or violation by any other party to,
any of the AmHealth Employee Plans; (iv) none of the AmHealth Entities or, to
the knowledge of any AmHealth Entity, any ERISA Affiliate, is subject to any
liability or penalty under Sections 4976 through 4980 of the Code or Title I of
ERISA with respect to any of the AmHealth Employee Plans; (v) all material
contributions required to be made by any of the AmHealth Entities or ERISA
Affiliates to any AmHealth Employee Plan have been made on or before their due
dates and amounts required to be accrued for contributions to each AmHealth
Employee Plan for the current plan years under GAAP have been accrued; (vi) with
respect to each AmHealth Employee Plan subject to Title IV of ERISA, no
"reportable event" within the meaning of Section 4043 of ERISA (excluding any
such event for which the thirty (30) day notice requirement has been waived
under the regulations to Section 4043 of ERISA) nor any event described in
Section 4062, 4063 or 4041 or ERISA has occurred; and (vii) no AmHealth Employee
Plan is covered by, and none of the AmHealth Entities or ERISA Affiliates has
incurred or expects to incur any liability under Title IV of ERISA or Section
412 of the Code. With respect to each AmHealth Employee Plan subject to ERISA as
either an employee pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
each of the AmHealth Entities has prepared in good faith and timely filed all
requisite governmental reports (which were true and correct as of the date
filed) and has properly and timely filed and distributed or posted all notices
and reports to employees required to be filed, distributed or posted with
respect to each such AmHealth Employee Plan, which filings, if not filed, would
give rise to a Material Adverse Effect. No suit, administrative proceeding,
action or other litigation has been brought, or to the best knowledge of each of
the AmHealth Entities is threatened, against or with respect to any such
AmHealth Entity Employee Plan, including any audit or inquiry by the IRS or
United States Department of Labor. None of the AmHealth Entities or controlled
group member within the meaning of ERISA Section 4001 is a party to, or has made
any contribution to or otherwise incurred any obligation under, any
"multiemployer plan" as defined in Section 3(37) of ERISA.

(d) With respect to each AmHealth Employee Plan, each of the
AmHealth Entities has complied with COBRA and the applicable requirements of the
Family Leave Act of 1993, as amended, and the regulations thereunder, except to
the extent that such failure to comply would not, in the aggregate, have a
Material Adverse Effect.

(e) The consummation of the transactions contemplated by this
Agreement will not (a) entitle any current or former employee or other service
provider of any of the AmHealth Entities or any ERISA Affiliate to severance
benefits or any other payment, except as expressly provided in this Agreement;
or (b) accelerate the time of payment or vesting, or increase the amount of
compensation due any such employee or service provider.

(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by any of the AmHealth Entities or other
ERISA Affiliates within the last twelve months preceding the date of this
Agreement relating to, or change in participation or coverage under, any
AmHealth Employee Plan which would materially increase the expense of
maintaining such Plan above the level of expense incurred with respect to that
Plan for the most recent fiscal year included in the AmHealth Financial
Statements.

3.16 CERTAIN AGREEMENTS AFFECTED BY THE EXCHANGE. Except as ser forth
in SCHEDULE 3.16 hereto, neither the execution and delivery of this Agreement
nor the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any director
or employee of any of the AmHealth Corporations or to any employee of any of the
AmHealth Partnerships; (ii) materially increase any benefits otherwise payable
by any of the AmHealth Entities; or (iii) result in the acceleration of the time
of payment or vesting of any such benefits.

3.17 EMPLOYEE MATTERS. To the knowledge of each of the AmHealth
Entities, it is in compliance in all material respects with all currently
applicable laws and regulations respecting employment, discrimination in
employment, terms and conditions of employment, wages, hours and occupational
safety and health and employment practices, and is not engaged in any unfair
labor practice. There are no pending claims against any of the AmHealth Entities
under any workers compensation plan or policy or for long term disability. None
of the AmHealth Entities has any material obligations under COBRA with respect
to any former employees or qualifying beneficiaries thereunder. There are no
controversies pending or, to the knowledge of any of the AmHealth Entities,
threatened, between any of the AmHealth Entities or any of their respective
employees, which controversies have or could reasonably be expected to have a
Material Adverse Effect on any of the AmHealth Entities. None of the AmHealth
Entities is a party to any collective bargaining agreement or other labor union
contract nor do any of the AmHealth Entities know of any activities or
proceedings of any labor union to organize any such employees.

3.18 INTERESTED PARTY TRANSACTIONS. With the exception of those
arrangements set forth in SCHEDULE 3.18 hereto, none of the AmHealth Entities is
indebted to any director, officer, partner, employee or agent of any of the
AmHealth Entities (except for amounts due as normal salaries and bonuses and in
reimbursement of ordinary expenses), and no such person is indebted to any of
the AmHealth Entities.

3.19 INSURANCE. Each of the AmHealth Entities has currently effective
policies of insurance and bonds of the type and in amounts customarily carried
by persons conducting businesses or owning assets similar to those of the
AmHealth Entities which policies of insurance or bonds were effective at all
times in the past, except where failure to be effective could not result in a
Material Adverse Effect. There is no material claim pending under any of such
policies or bonds as to which coverage has been questioned, denied or disputed
by the underwriters of such policies or bonds. All premiums due and payable
under all such policies and bonds have been paid and each of the AmHealth
Entities is otherwise in compliance with the terms of such policies and bonds.
None of the AmHealth Entities has knowledge of any threatened termination of, or
material premium or fee increase with respect to, any of such policies or bonds.

3.20 COMPLIANCE WITH LAWS. Each of the AmHealth Entities has complied
with, is not in violation of, and has not received any notices of violation with
respect to, any federal, state, local or foreign statute, law or regulation with
respect to the conduct of its business, or the ownership or operation of its
business, except for such violations or failures to comply as would not have a
Material Adverse Effect on any of the AmHealth Entities.

3.21 MINUTE BOOKS. The minute books of each of the AmHealth
Corporations made available to New STAT contain a complete and accurate summary
of all meetings of directors and shareholders or actions by written consent
since the time of incorporation of each such AmHealth Corporation through the
date of this Agreement, and reflect all transactions referred to in such minutes
accurately in all material respects.

3.22 COMPLETE COPIES OF MATERIALS. The AmHealth Entities have delivered
or made available true and complete copies of each document which has been
requested by New STAT or its counsel in connection with New STAT's legal and
accounting review of the AmHealth Entities.

3.23 POOLING OF INTERESTS. None of the AmHealth Entities, to the
knowledge of each such AmHealth Entity, any of their respective directors,
officers, shareholders or general or limited partners, has taken any action
which would interfere with New STAT's ability to account for the Exchange as a
pooling of interests.

3.24 BROKERS' AND FINDERS' FEES. None of the AmHealth Entities has
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.

3.25 VOTE REQUIRED. The affirmative vote of the holders of two-thirds
of the shares of capital stock of each of the AmHealth Corporations entitled to
vote is the only vote of the holders of any of the AmHealth

Corporations' respective capital stock necessary to approve this Agreement and
the transactions contemplated hereby.

3.26 BOARD APPROVAL. The Board of Directors of each of the AmHealth
Corporations has (i) approved this Agreement and the Exchange; (ii) determined
that the Exchange is in the best interests of the AmHealth Shareholders and is
on terms that are fair to such AmHealth Shareholders; and (iii) recommended that
the AmHealth Shareholders approve this Agreement and the Exchange.

3.27 ACCOUNTS RECEIVABLE. Subject to any reserves set forth therein,
the accounts receivable shown on the AmHealth Financial Statements represent and
will represent bona fide claims against debtors for sales and other charges, and
are not subject to discount except for normal cash and immaterial trade
discounts.

3.28 CUSTOMERS AND SUPPLIERS. As of the date hereof, no customer which
individually accounted for more than 10% of the gross revenues of any of the
AmHealth Entities during the 12 month period preceding the date hereof, and no
supplier of any of the AmHealth Entities, has canceled or otherwise terminated,
or made any written threat to any of the AmHealth Entities to cancel or
otherwise terminate its relationship with such AmHealth Entity, or has at any
time on or after December 31, 1995 decreased materially its services or supplies
to any of the AmHealth Entities in the case of any such supplier, or its usage
of the services or products of any of the AmHealth Entities in the case of such
customer, and to the knowledge of each of the AmHealth Entities, no such
supplier or customer intends to cancel or otherwise terminate its relationship
with the AmHealth Entities or to decrease materially its services or supplies to
any such AmHealth Entity or its usage of the services or products of the
AmHealth Entities, as the case may be. From and after the date hereof, no
customer which individually accounted for more than 5% of the gross revenues of
any of the AmHealth Entities during the 12 month period preceding the Closing
Date, has canceled or otherwise terminated, or made any written threat to any of
the AmHealth Entities to cancel or otherwise terminate, for any reason,
including without limitation the consummation of the transactions contemplated
hereby, its relationship with any of the AmHealth Entities, and to the knowledge
of each of the AmHealth Entities, no such customer intends to cancel or
otherwise terminate its relationship with any of the AmHealth Entities or to
decrease materially its usage of the services or products of any of the AmHealth
Entities. None of the AmHealth Entities has knowingly breached, so as to provide
a benefit to any of the AmHealth Entities that was not intended by the parties,
any agreement with, or engaged in any fraudulent conduct with respect to, any
customer or supplier of the AmHealth Entities.

3.29 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by each of the AmHealth Entities herein or in any Schedule
hereto, or certificates furnished by each of the AmHealth Entities pursuant to
this Agreement, when all such documents are read together in their entirety,
contains or will contain at the Closing Date any untrue statement of a material
fact, or omits or will omit at the Closing Date to state any material fact
necessary in order to make the statements contained herein or therein, in the
light of the circumstances under which made, not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF NEW STAT,
OLD STAT AND STAT ACQUISITION

Except as disclosed in any schedule hereto, New STAT, Old STAT and STAT
Acquisition jointly and severally represent and warrant to the AmHealth Entities
as of the date of this Agreement as follows:

4.1 ORGANIZATION, STANDING AND POWER.

(a) New STAT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. New STAT has the
corporate power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified to do business
and is in good

standing in each jurisdiction in which the failure to be so qualified and in
good standing would have a Material Adverse Effect on New STAT. New STAT has
delivered to the AmHealth Entities a true and correct copy of its Articles of
Incorporation and Bylaws or other charter documents, as applicable, each as
amended to date. New STAT is not in violation of any of the provisions of its
Articles of Incorporation or Bylaws or equivalent organizational documents.
Except as disclosed in 4.1(a) hereof, New STAT does not directly or indirectly
own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or entity.

(b) Old STAT is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Old STAT has the
corporate power to own its properties and to carry on its business as now being
conducted and as proposed to be conducted and is duly qualified to do business
and is in good standing in each jurisdiction in which the failure to be so
qualified and in good standing would have a Material Adverse Effect on Old STAT.
Old STAT has delivered to the AmHealth Entities a true and correct copy of its
Articles of Incorporation and Bylaws or other charter documents, as applicable,
each as amended to date. Old STAT is not in violation of any of the provisions
of its Articles of Incorporation or Bylaws or equivalent organizational
documents. Except as disclosed in the Old STAT SEC Documents, Old STAT does not
directly or indirectly own any equity or similar interest in, or any interest
convertible or exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, joint venture or other business association or
entity.

(c) STAT Acquisition is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. STAT
Acquisition has the corporate power to own its properties and to carry on its
business as now being conducted and as proposed to be conducted and is duly
qualified to do business and is in good standing in each jurisdiction in which
the failure to be so qualified and in good standing would have a Material
Adverse Effect on STAT Acquisition. STAT Acquisition has delivered to the
AmHealth Entities a true and correct copy of its Articles of Incorporation and
Bylaws or other charter documents, as applicable, each as amended to date. STAT
Acquisition is not in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational documents. STAT Acquisition
does not directly or indirectly own any equity or similar interest in, or any
interest convertible or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.

4.2 CAPITAL STRUCTURE.

(a) The authorized capital stock of New STAT consists of
40,000,000 shares of New STAT Common Stock, par value $.01 per share, of which
there are no shares issued and outstanding as of the date of this Agreement.
There are no other outstanding shares of capital stock or voting securities of
New STAT. Other than this Agreement, there are no other options, warrants,
calls, rights, commitments or agreements of any character to which New STAT is a
party or by which it is bound obligating New STAT to issue, deliver, sell,
repurchase or redeem, or cause to be issued, delivered, sold, repurchased or
redeemed, any shares of the capital stock of New STAT or obligating New STAT to
grant, extend or enter into any such option, warrant, call, right, commitment or
agreement.

(b) The authorized capital stock of Old STAT consists of
10,000,000 shares of Old STAT Common Stock, par value $.01 per share, and
1,000,000 shares of Preferred Stock, par value $.01 per share, of which there
were issued and outstanding as of the close of business on March 14, 1996,
3,702,472 shares of Old STAT Common Stock and no shares of Preferred Stock.
There are no other outstanding shares of capital stock or voting securities of
Old STAT other than shares of Old STAT Common Stock issued after October 17,
1995 upon the exercise of options issued under the STAT Stock Option Plan. As of
the close of business on October 17, 1995, Old STAT has reserved 300,000 shares
of Old STAT Common Stock for issuance to employees, directors and independent
contractors pursuant to the STAT Stock Option Plan, of which no shares have been
issued pursuant to option exercises, and 300,000 shares are subject to
outstanding, unexercised options. Other than this Agreement and warrants
representing the right to purchase 859,166 shares of Old STAT Common Stock,
there are no other options,

warrants, calls, rights, commitments or agreements of any character to which Old
STAT is a party or by which it is bound obligating Old STAT to issue, deliver,
sell, repurchase or redeem, or cause to be issued, delivered, sold, repurchased
or redeemed, any shares of the capital stock of Old STAT or obligating Old STAT
to grant, extend or enter into any such option, warrant, call, right, commitment
or agreement.

(c) The authorized capital stock of STAT Acquisition consists
of 1,000 shares of common stock, par value $.01 per share, of which there are no
shares issued and outstanding as of the date of this Agreement. There are no
other outstanding shares of capital stock or voting securities of STAT
Acquisition. There are no options, warrants, calls, rights, commitments or
agreements of any character to which STAT Acquisition is a party or by which it
is bound obligating STAT Acquisition to issue, deliver, sell, repurchase or
redeem, or cause to be issued, delivered, sold, repurchased or redeemed, any
shares of the capital stock of STAT Acquisition or obligating STAT Acquisition
to grant, extend or enter into any such option, warrant, call, right, commitment
or agreement.

4.3. AUTHORITY. Each of New STAT, Old STAT and STAT Acquisition has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of each of
New STAT, Old STAT and STAT Acquisition, subject only to the approval of the Old
STAT Stockholders as contemplated in Section 7.1(b). This Agreement has been
duly executed and delivered by each of New STAT, Old STAT and STAT Acquisition
and constitutes the valid and binding obligations of each of them. The execution
and delivery of this Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with, or result in any violation of, or
default under (with or without notice or lapse of time, or both), or give rise
to a right of termination, cancellation or acceleration of any obligation or
loss of a benefit under (i) any provision of the Articles of Incorporation or
Bylaws of Old STAT, as amended; or (ii) any material mortgage, indenture, lease,
contract or other agreement or instrument, permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Old STAT or its properties or assets, or to STAT P.A. or its
properties or assets. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to Old STAT or STAT P.A. in connection with the execution and
delivery of this Agreement by Old STAT or the consummation by Old STAT of the
transactions contemplated hereby, except for (i) the filing of a Form 8-K with
the SEC and NASD within 15 days after the Closing Date; (ii) any filings as may
be required under applicable state securities laws and the securities laws of
any foreign country; and (iii) such other consents, authorizations, filings,
approvals and registrations which, if not obtained or made, would not have a
Material Adverse Effect on Old STAT or STAT P.A. and would not prevent,
materially alter or delay any of the transactions contemplated by this
Agreement.

4.4 STAT SEC DOCUMENTS; FINANCIAL STATEMENTS. Old STAT has furnished to
the AmHealth Entities a true and complete copy of the STAT SEC Documents. In
addition, Old STAT has made available to the AmHealth Entities all exhibits to
the STAT SEC Documents filed prior to the date hereof, and will promptly make
available to the AmHealth Entities all exhibits to any additional STAT SEC
Documents filed prior to the Closing Date. All documents required to be filed as
exhibits to the STAT SEC Documents have been so filed, and all material
contracts so filed as exhibits are in full force and effect, except those which
have expired in accordance with their terms, and Old STAT is not in default
thereunder. As of their respective filing dates, the STAT SEC Documents complied
in all material respects with the requirements of the Exchange Act and the
Securities Act, and none of the STAT SEC Documents contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, except to the extent
corrected by a subsequently filed STAT SEC Document. The STAT Financial
Statements were complete and correct in all material respects as of their
respective dates, complied as to form in all material respects with applicable
accounting requirements and with the published rules and regulations of the SEC
with respect thereto as of their respective dates, and have been prepared in
accordance with GAAP applied on a basis consistent throughout the periods
indicated and consistent with each other (except as may be indicated in the
notes thereto or, in the case of unaudited statements included in Quarterly
Reports on Form 10-QSBs, as permitted by Form

10-QSB of the SEC). The STAT Financial Statements fairly present the
consolidated financial condition and operating results of Old STAT at the dates
and during the periods indicated therein (subject, in the case of unaudited
statements, to normal, recurring year-end adjustments). There has been no change
in Old STAT accounting policies except as described in the notes to the STAT
Financial Statements.

4.5 ABSENCE OF CERTAIN CHANGES. Since December 31, 1995 (the "STAT
BALANCE SHEET DATE"),Old STAT has conducted its business in the ordinary course
consistent with past practice and there has not occurred: (i) any change, event
or condition (whether or not covered by insurance) that has resulted in, or
might reasonably be expected to result in, a Material Adverse Effect to Old
STAT; (ii) any acquisition, sale or transfer of any material asset of Old STAT
other than in the ordinary course of business and consistent with past practice;
(iii) any change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Old STAT or any revaluation
by Old STAT of any of its assets; (iv) any declaration, setting aside, or
payment of a dividend or other distribution with respect to the shares of Old
STAT, or any direct or indirect redemption, purchase or other acquisition by Old
STAT of any of its shares of capital stock; (v) any material contract entered
into by Old STAT, other than in the ordinary course of business and as provided
to the AmHealth Entities, or any material amendment or termination of, or
default under, any material contract to which Old STAT is a party or by which it
is bound; (vi) any amendment or change to Old STAT's Articles of Incorporation
or Bylaws; (vii) any increase in or modification of the compensation or benefits
payable or to become payable by Old STAT to any of its officers, directors or
employees, (viii) any negotiation or agreement by Old STAT to do any of the
things described in the preceding clauses (i) through (vii) (other than
negotiations with the AmHealth Entities and their representatives regarding the
transactions contemplated by this Agreement), or (ix) other than such changes
precipitated by the master agreement with Columbia/HCA Corporation, any change
in the underlying contracts of STAT P.A. such as could give rise to a Material
Adverse Effect upon Old STAT.

4.6 ABSENCE OF UNDISCLOSED LIABILITIES. Old STAT has no material
obligations or liabilities of any nature (matured or unmatured, fixed or
contingent) other than (i) those set forth or adequately provided for in the
balance sheet included in Old STAT's Quarterly Report on Form 10-QSB for the
period ended December 31, 1995 (the "STAT BALANCE SHEET"); (ii) those incurred
in the ordinary course of business and not required to be set forth in the STAT
Balance Sheet under GAAP; and (iii) those incurred in the ordinary course of
business since the STAT Balance Sheet Date and consistent with past practice set
forth in SCHEDULE 4.6 hereto.

4.7 LITIGATION. There is no private or governmental action, suit,
proceeding, claim, arbitration or investigation pending before any agency, court
or tribunal, foreign or domestic, or, to the knowledge of Old STAT, threatened
against Old STAT or any of its properties or any of its directors, officers or
employees (in their capacities as such) that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect on Old STAT.
There is no judgment, decree or order against Old STAT or, to the knowledge of
Old STAT, any of its directors or officers (in their capacities as such), that
could prevent, enjoin, or materially alter or delay any of the transactions
contemplated by this Agreement, or that could reasonably be expected to have a
Material Adverse Effect on Old STAT. All litigation to which Old STAT or STAT,
P.A. is a party (or, to the knowledge of Old STAT, is threatened to become a
party) is disclosed on SCHEDULE 4.7 attached hereto.

4.8 GOVERNMENTAL AUTHORIZATION. Old STAT has obtained the STAT
Authorizations and all of such STAT Authorizations are in full force and effect,
except where the failure to obtain or have any of such STAT Authorizations could
not reasonably be expected to have a Material Adverse Effect on Old STAT.

4.9 COMPLIANCE WITH LAWS. Old STAT has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, local or foreign statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for such violations or failures to comply as could not be reasonably expected to
have a Material Adverse Effect on Old STAT.

4.10 COMPLETE COPIES OF MATERIALS. Old STAT has delivered or made
available true and complete copies of each document which has been requested by
the AmHealth Entities or their counsel in connection with their legal and
accounting review of Old STAT, with the exception of the Physician Agreements to
be provided on or before the Closing Date pursuant to Subsection 7.2(j) hereof.

4.11 POOLING OF INTERESTS. Neither Old STAT nor, to the knowledge of
Old STAT, any of its directors, officers or shareholders has taken any action
which would interfere with New STAT's ability to account for the Exchange as a
pooling of interests.

4.12 BROKER'S AND FINDERS' FEES. Other than fees paid to Southcoast
Capital Corporation and Network One Financial Securities, Inc., Old STAT has not
incurred, nor will it incur, directly or indirectly, any liability for brokerage
or finders' fees or agents' commissions or investment bankers' fees or any
similar charges in connection with this Agreement or any transaction
contemplated hereby.

4.13 VOTE REQUIRED. The affirmative vote of a majority of the shares of
capital stock of Old STAT entitled to vote is the only vote of the holders of
capital stock of Old STAT necessary to approve this Agreement and the
transactions contemplated hereby

4.14 BOARD APPROVAL. The Board of Directors of Old STAT has (i)
approved this Agreement and the Exchange; (ii) determined that the Exchange is
in the best interests of the Old STAT Stockholders and is on terms that are fair
to the stockholders; and (iii) recommended that the Old STAT Stockholders
approve the Agreement and the Exchange.

4.15 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
judgment, injunction, order or decree binding upon Old STAT which has or could
reasonably be expected to have the effect of prohibiting or materially impairing
any current or future business practice of Old STAT, any acquisition of property
by Old STAT or the conduct of business by Old STAT as currently conducted.

4.16 TITLE TO PROPERTY. Old STAT has good and marketable title to all
of its material properties, interests in properties and assets, real and
personal, reflected in the STAT Balance Sheets or acquired after the STAT
Balance Sheet Date (except properties, interests in properties and assets sold
or otherwise disposed of since the STAT Balance Sheet Date in the ordinary
course of business which will not results in a Material Adverse Effect), or with
respect to leased properties and assets, valid leasehold interests, free and
clear of all mortgages, liens, pledges, charges or encumbrances of any kind or
character, except (i) the lien of current taxes not yet due and payable, (ii)
such imperfections of title, liens and easements as do not and will not
materially detract from each of or interfere with the use of the properties
subject thereto or affected thereby, or otherwise materially impair business
operations involving such properties and (iii) liens securing debt which is
reflected on the STAT Balance Sheets. The property and equipment of Old STAT
that is used in the operation of its business is in good operating condition and
repair. All properties used in the operations of Old STAT are reflected in the
STAT Balance Sheets to the extent GAAP require the same to be reflected.
SCHEDULE 4.16 identifies each parcel of real property owned or leased by Old
STAT.

4.17 ENVIRONMENTAL MATTERS. For the purposes of this Section 4.17,
"knowledge" shall mean the personal knowledge of the executive officers and
directors of the applicable party, gained during the ordinary course of
business, and shall not include the requirement of specific inquiry into the
matter at issue. Old STAT represents and warrants to its knowledge without due
enquiry as follows: (a) no methylene chloride or asbestos has been released from
any of the Facilities in violation of Environmental and Safety Laws; (b) all
Hazardous Materials and wastes which have been discarded have been disposed of
in accordance with all Environmental and Safety Laws; (c) Old STAT has not
received written notice of any noncompliance of any of the Facilities or its
past or present operations with Environmental and Safety Laws; (d) no notices,
administrative actions or suits are pending or threatened relating to a
violation by Old STAT of any Environmental and Safety Laws; (e) Old STAT has not
received written notice from a Governmental Entity that it is considered a
potentially responsible party under the federal Comprehensive

Environmental Response, Compensation and Liability Act (CERCLA), or state analog
statute, arising out of events occurring prior to the Closing Date; (f) there
are not any released Hazardous Materials migrating on or from the Facilities;
(g) there are not any underground tanks or underground improvements (excluding
utility or similar improvements) at, on or under the Property including, without
limitation, treatment or storage tanks, sumps, or water, gas or oil wells; (h)
there are no polychlorinated biphenyls (PCBs) deposited, stored, disposed of or
located on the Facilities or any equipment (excluding electric transformers or
related oil-containing equipment) on the Property containing PCBs at levels in
excess of 50 parts per million; (i) there is no insulating material containing
urea formaldehyde in the Facilities; (j) Old STAT's uses of and activities at
the Facilities have at all times materially complied with all Environmental and
Safety Laws; and (k) Old STAT has all the permits and licenses required to be
issued and is in material compliance with the terms and conditions of those
permits, if failure to have and comply with such permits and licenses would have
a Material Adverse Effect.

4.18 OLD STAT INTELLECTUAL PROPERTY.

(a) Old STAT owns, or is licensed or otherwise possesses
legally enforceable rights to use the STAT Intellectual Property, except to the
extent that the failure to have such rights has not had and could not reasonably
be expected to have a Material Adverse Effect on Old STAT.

(b) SCHEDULE 4.18(B) lists (i) all patents and patent
applications and all registered and unregistered trademarks, trade names and
service marks, registered and unregistered copyrights, and maskworks, included
in the STAT Intellectual Property, including the jurisdictions in which each
such STAT Intellectual Property right has been issued or registered or in which
any application for such issuance and registration has been filed, (ii) all
licenses, sublicenses and other agreements as to which Old STAT is a party and
pursuant to which any person is authorized to use any STAT Intellectual
Property, and (iii) all Third Party Intellectual Property Rights which are
incorporated in, are, or form a part of any product that is material to the
business of Old STAT.

(c) To the knowledge of Old STAT, there is no material
unauthorized use, disclosure, infringement or misappropriation of any STAT
Intellectual Property, any trade secret material to Old STAT, or any Third Party
Intellectual Property Right to the extent licensed by or through Old STAT, by
any third party, including any employee or former employee of Old STAT. Old STAT
has not entered into any agreement to indemnify any other person against any
charge of infringement of any STAT Intellectual Property, other than
indemnification provisions contained in purchase orders arising in the ordinary
course of business.

(d) Old STAT is not, nor will it be as a result of the
execution and delivery of this Agreement or the performance of its obligations
under this Agreement, in breach of any license, sublicense or other agreement
relating to the STAT Intellectual Property or Third Party Intellectual Property
Rights, the breach of which would have a Material Adverse Effect on Old STAT.

(e) To the knowledge of Old STAT, all patents, registered
trademarks, service marks and copyrights held by Old STAT are valid and
subsisting. Old STAT: (i) has not been sued in any suit, action or proceeding
which involves a claim of infringement of any patents, trademarks, service
marks, copyrights or violation of any trade secret or other proprietary right of
any third party; (ii) does not have knowledge that the manufacturing, marketing,
licensing or sale of its products infringes any patent, trademark, service mark,
copyright, trade secret or other proprietary right of any third party, which
such infringement would have a Material Adverse Effect on Old STAT; and (iii)
has not brought any action, suit or proceeding for infringement of STAT
Intellectual Property or breach of any license or agreement involving STAT
Intellectual Property against any third party.

(f) Old STAT has secured valid written assignments from all
consultants and employees who contributed to the creation or development of STAT
Intellectual Property of the rights to such contributions that Old STAT does not
already own by operation of law.

(g) Old STAT has taken all necessary and appropriate steps to
protect and preserve the STAT Confidential Information. All use, disclosure or
appropriation of STAT Confidential Information identified in SCHEDULE 4.18(G)
hereto owned by Old STAT by or to a third party has been pursuant to the terms
of a written agreement between Old STAT and such third party. All use,
disclosure or appropriation of any Third Party Confidential Information has been
pursuant to the terms of a written agreement between Old STAT and the owner of
such Third Party Confidential Information, or is otherwise lawful.

4.19 TAXES. Old STAT, and any consolidated, combined, unitary or
aggregate group for Tax purposes of which Old STAT is or has been a member, has
timely filed all Tax Returns required to be filed, has paid all Taxes shown
thereon to be due and have provided adequate accruals in accordance with GAAP in
its financial statements for any Taxes that have not been paid, whether or not
shown as being due on any Tax Returns. There is (i) no material claim for Taxes
that is a recorded lien against the property of Old STAT or is being asserted
against Old STAT other than liens for Taxes not yet due and payable, (ii) no
audit of any Tax Return of Old STAT being conducted by a Tax Authority, (iii) no
extension of the statute of limitations on the assessment of any Taxes granted
by Old STAT and currently in effect, and (iv) no agreement, contract or
arrangement to which Old STAT is a party that may result in the payment of any
amount that would not be deductible by reason of Sections 280G, 162 or 404 of
the Code. Old STAT has not been and will not be required to include any material
adjustment in Taxable income for any Tax period (or portion thereof) pursuant to
Section 481 or 263A of the Code or any comparable provision under state or
foreign Tax laws as a result of transactions, events or accounting methods
employed prior to the Exchange. Old STAT is not a party to any tax sharing or
tax allocation agreement nor does Old STAT owe any amount under any such
agreement. Old STAT is in full compliance with all terms and conditions of any
Tax exemptions or other Tax-sharing agreement or order of a foreign government
and the consummation of the Exchange shall not have any adverse effect on the
continued validity and effectiveness of any such Tax exemptions or other
Tax-sharing agreement or order.

4.20 EMPLOYEE BENEFIT PLANS.

(a) SCHEDULE 4.20(A) lists, with respect to Old STAT and any
ERISA Affiliate of Old STAT, all STAT Employee Plans.

(b) Old STAT has furnished to the AmHealth Entities a copy of
each of the STAT Employee Plans and related plan documents (including trust
documents, insurance policies or contracts, employee booklets, summary plan
descriptions and other authorizing documents, and, to the extent still in its
possession, any material employee communications relating thereto) and has, with
respect to each STAT Employee Plan which is subject to ERISA reporting
requirements, provided copies of the Form 5500 reports filed for the last three
plan years. Any STAT Employee Plan intended to be qualified under Section 401(a)
of the Code has either obtained from the Internal Revenue Service a favorable
determination letter as to its qualified status under the Code, including all
amendments to the Code effected by the Tax Reform Act of 1986 and subsequent
legislation, or has applied to the Internal Revenue Service for such a
determination letter prior to the expiration of the requisite period under
applicable Treasury Regulations or Internal Revenue Service pronouncements in
which to apply for such determination letter and to make any amendments
necessary to obtain a favorable determination. Old STAT has also furnished to
the AmHealth Entities the most recent Internal Revenue Service determination
letter issued with respect to each such STAT Employee Plan, and, to the
knowledge of Old STAT, nothing has occurred since the issuance of each such
letter which could reasonably be expected to cause the loss of the tax-qualified
status of any STAT Employee Plan subject to Code Section 401(a).

(c) (i) None of the STAT Employee Plans promises or provides
retiree medical or other retiree welfare benefits to any person; (ii) there has
been no "prohibited transaction," as such term is defined in Section 406 of
ERISA and Section 4975 of the Code, with respect to any STAT Employee Plan
subject to Title I of ERISA, which could reasonably be expected to have, in the
aggregate, a Material Adverse Effect; (iii) each STAT Employee Plan has been
administered in accordance with its terms and in compliance with the
requirements prescribed by any and all applicable statutes, rules and
regulations (including ERISA and the Code), except as would not have, in the
aggregate, a Material Adverse Effect, and each of Old STAT or its ERISA
Affiliates have performed all obligations required to be performed by them
under, are not in any material respect in default under or violation of, and
have no knowledge of any material default or violation by any other party to,
any of the STAT Employee Plans; (iv) neither Old STAT nor, to the knowledge of
Old STAT, any ERISA Affiliate, is subject to any liability or penalty under
Sections 4976 through 4980 of the Code or Title I of ERISA with respect to any
of the STAT Employee Plans; (v) all material contributions required to be made
by Old STAT or any ERISA Affiliates to any STAT Employee Plan have been made on
or before their due dates and amounts required to be accrued for contributions
to each STAT Employee Plan for the current plan years under GAAP have been
accrued; (vi) with respect to each STAT Employee Plan subject to Title IV of
ERISA, no "reportable event" within the meaning of Section 4043 of ERISA
(excluding any such event for which the thirty (30) day notice requirement has
been waived under the regulations to Section 4043 of ERISA) nor any event
described in Section 4062, 4063 or 4041 or ERISA has occurred; and (vii) no STAT
Employee Plan is covered by, and neither Old STAT nor any ERISA Affiliate has
incurred or expects to incur any liability under Title IV of ERISA or Section
412 of the Code. With respect to each STAT Employee Plan subject to ERISA as
either an employee pension plan within the meaning of Section 3(2) of ERISA or
an employee welfare benefit plan within the meaning of Section 3(1) of ERISA,
Old STAT has prepared in good faith and timely filed all requisite governmental
reports (which were true and correct as of the date filed) and has properly and
timely filed and distributed or posted all notices and reports to employees
required to be filed, distributed or posted with respect to each such STAT
Employee Plan, which filings, if not filed, would give rise to a Material
Adverse Effect. No suit, administrative proceeding, action or other litigation
has been brought, or to the best knowledge of Old STAT, is threatened, against
or with respect to any such STAT Employee Plan, including any audit or inquiry
by the IRS or United States Department of Labor. Neither Old STAT nor a
controlled group member within the meaning of ERISA Section 4001 is a party to,
or has made any contribution to or otherwise incurred any obligation under, any
"multiemployer plan" as defined in Section 3(37) of ERISA.

(d) With respect to each STAT Employee Plan, Old STAT has
complied with (i) COBRA and (ii) the applicable requirements of the Family Leave
Act of 1993 and the regulations thereunder, except to the extent that such
failure to comply would not, in the aggregate, have a Material Adverse Effect.

(e) The consummation of the transactions contemplated by this
Agreement will not (a) entitle any current or former employee or other service
provider of Old STAT or any ERISA Affiliate to severance benefits or any other
payment, except as expressly provided in this Agreement, or (b) accelerate the
time of payment or vesting, or increase the amount of compensation due any such
employee or service provider.

(f) There has been no amendment to, written interpretation or
announcement (whether or not written) by Old STAT or other ERISA Affiliates
within the last twelve months preceding the date of this Agreement relating to,
or change in participation or coverage under, any STAT Employee Plan which would
materially increase the expense of maintaining such Plan above the level of
expense incurred with respect to that Plan for the most recent fiscal year
included in financial statements.

4.21 CERTAIN AGREEMENTS AFFECTED BY THE EXCHANGE. Neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment (including, without
limitation, severance, unemployment compensation, golden parachute, bonus or
otherwise) becoming due to any director or employee of Old STAT; (ii) materially
increase any benefits otherwise payable by Old STAT; or (iii) result in the
acceleration of the time of payment or vesting of any such benefits.

4.22 EMPLOYEE MATTERS. To the knowledge of Old STAT, it is in
compliance in all material respects with all currently applicable laws and
regulations respecting employment, discrimination in employment, terms and
conditions of employment, wages, hours and occupational safety and health and
employment practices, and is not engaged in any unfair labor practice. There are
no pending claims against Old STAT under any workers compensation plan or policy
or for long term disability. Old STAT has no material obligations under COBRA
with respect to any former employees or qualifying beneficiaries thereunder.
There are no controversies pending or, to the knowledge of Old STAT, threatened,
between Old STAT or any of its employees, which controversies have or could
reasonably be expected to have a Material Adverse Effect on Old STAT. Old STAT
is not a party to any collective bargaining agreement or other labor union
contract nor does Old STAT know of any activities or proceedings of any labor
union to organize any such employees.

4.23 INDEPENDENT CONTRACTORS. There are no controversies pending or
threatened between Old STAT and any of its independent contractor physicians or
between STAT, P.A. and any of its independent contractor physicians, which
controversies have or could reasonably be expected to have a Material Adverse
Effect on Old STAT.

4.24 INTERESTED PARTY TRANSACTIONS. With the exception of those
arrangements set forth in SCHEDULE 4.24 hereof, Old STAT is not indebted to any
director, officer, employee or agent of Old STAT (except for amounts due as
normal salaries and bonuses and in reimbursement of ordinary expenses), and no
such person is indebted to Old STAT.

4.25 INSURANCE. Old STAT has policies of insurance and bonds of the
type and in amounts customarily carried by persons conducting businesses or
owning assets similar to those of Old STAT. There is no material claim pending
under any of such policies or bonds as to which coverage has been questioned,
denied or disputed by the underwriters of such policies or bonds. All premiums
due and payable under all such policies and bonds have been paid and Old STAT is
otherwise in compliance with the terms of such policies and bonds. Old STAT has
no knowledge of any threatened termination of, or material premium increase with
respect to, any of such policies.

4.26 COMPLIANCE WITH LAWS. Old STAT has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state, local or foreign statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, except
for such violations or failures to comply as could not be reasonably expected to
have a Material Adverse Effect on Old STAT.

4.27 MINUTE BOOKS. The Old STAT minute books made available to the
AmHealth Entities contain a complete and accurate summary of all meetings of
directors and shareholders or actions by written consent since the time of
incorporation of Old STAT through the date of this Agreement, and reflect all
transactions referred to in such minutes accurately in all material respects.

4.28 ACCOUNTS RECEIVABLE. Subject to any reserves set forth in the STAT
Financial Statements, the accounts receivable shown on the STAT Financial
Statements represent and will represent bona fide claims against debtors for
sales and other charges, and are not subject to discount except for normal cash
and immaterial trade discounts.

4.29 CUSTOMERS AND SUPPLIERS. As of the date hereof except for items
disclosed on SCHEDULE 4.29, no customer which individually accounted for more
than 10% of the gross revenues of Old STAT or STAT P.A. during the 12 month
period preceding the date hereof, and no supplier of Old STAT or STAT P.A., has
canceled or otherwise terminated, or made any written threat to Old STAT or to
STAT P.A. to cancel or otherwise terminate its relationship with Old STAT or
STAT P.A., or has at any time on or after December 31, 1995 decreased materially
its services or supplies to Old STAT or STAT P.A. in the case of any such
supplier, or its usage of the services or products of Old STAT or STAT P.A. in
the case of such customer, and to the knowledge

of Old STAT, no such supplier or customer intends to cancel or otherwise
terminate its relationship with Old STAT or with STAT P.A. or to decrease
materially its services or supplies to Old STAT or to STAT P.A. or its usage of
the services or products of Old STAT or STAT P.A., as the case may be. From and
after the date hereof, no customer which individually accounted for more than 5%
of the gross revenues of either of Old STAT or STAT P.A. during the 12 month
period preceding the Closing Date, has canceled or otherwise terminated, or made
any written threat to Old STAT or to STAT P.A. to cancel or otherwise terminate,
for any reason, including without limitation the consummation of the
transactions contemplated hereby, its relationship with Old STAT or with STAT
P.A., and to the knowledge of Old STAT, no such customer intends to cancel or
otherwise terminate its relationship with Old STAT or with STAT P.A. or to
decrease materially its usage of the services or products of either of Old STAT
or STAT P.A. To the knowledge of Old STAT, neither Old STAT nor STAT P.A. has
breached, so as to provide a benefit to Old STAT or STAT P.A. that was not
intended by the parties, any agreement with, or engaged in any fraudulent
conduct with respect to, any customer or supplier of Old STAT or STAT P.A.

4.30 PHYSICIANS AGREEMENTS. STAT P.A. has entered into or will enter
into fully executed, valid, written independent contractor agreements which are
in compliance with all applicable federal and state laws, rules, and regulations
with the physicians identified on Schedule 7.2(j) hereto (the "PHYSICIAN
AGREEMENTS").

4.31 REPRESENTATIONS COMPLETE. None of the representations or
warranties made by New STAT, Old STAT or STAT Acquisition herein or in any
Schedule hereto, or any certificate furnished by New STAT, Old STAT or STAT
Acquisition pursuant to this Agreement, or the STAT SEC Documents, when all such
documents are read together in their entirety, contains or will contain at the
Closing Date any untrue statement of a material fact, or omits or will omit at
the Closing Date to state any material fact necessary in order to make the
statements contained herein or therein, in the light of the circumstances under
which made, not misleading.

ARTICLE V

CONDUCT PRIOR TO THE CLOSING DATE

5.1 CONDUCT OF BUSINESS OF THE PARTIES. During the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement or the Closing Date, each of the parties hereto agrees (except to the
extent expressly contemplated by this Agreement or as consented to in writing by
the other), to carry on its business in the usual, regular and ordinary course
in substantially the same manner as heretofore conducted, to pay debts and Taxes
when due subject to good faith disputes over such debts or Taxes, to pay or
perform other obligations when due, and to use all reasonable efforts consistent
with past practice and policies to preserve intact present business
organizations, keep available the services of its present officers and key
employees and preserve their relationships with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with
them, to the end that its goodwill and ongoing businesses shall be unimpaired at
the Closing Date. Each of the parties hereto agrees to promptly notify the other
of any event or occurrence not in the ordinary course of its business, and of
any event which could have a Material Adverse Effect. Without limiting the
foregoing, except as expressly contemplated by this Agreement, none of the
parties shall do, cause or permit any of the following, without the prior
written consent of the other:

(a) CHARTER DOCUMENTS. Cause or permit any amendments to its
Articles or Certificate of Incorporation or Bylaws or Certificate of Limited
Partnership or Limited Partnership Agreements, as applicable;

(b) DIVIDENDS; CHANGES IN CAPITAL STOCK OR PARTNERSHIP
INTERESTS. Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock or
partnership interests, as applicable (except such dividends, distributions and
bonuses as have been customarily paid which shall continue to be paid in
accordance with prior practice prior to Closing, and may accrue at Closing, with
some such payments occurring after the Closing Date), or split, combine or
reclassify any

of its capital stock or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for shares of its capital stock or
partnership interests, as applicable, or repurchase or otherwise acquire,
directly or indirectly, any shares of its capital stock or partnership
interests, except from former employees, directors, and consultants in
accordance with agreements providing for the repurchase of shares or partnership
interests in connection with any termination of service to it;

(c) STOCK OPTION PLANS, ETC. Accelerate, amend or change the
period of exercisability or vesting of options or other rights granted under its
stock plans or authorize cash payments in exchange for any options or other
rights granted under any of such plans;

(d) POOLING. Take any action which would interfere with New
STAT's ability to account for the Exchange as a pooling of interests;

(e) MATERIAL CONTRACTS. Enter into any material contract or
commitment, or violate, amend or otherwise modify or waive any of the terms of
any of its material contracts, other than in the ordinary course of business
consistent with past practice;

(f) ISSUANCE OF SECURITIES OR PARTNERSHIP INTERESTS. (i)
Issue, deliver or sell or authorize or propose the issuance, delivery or sale
of, or purchase or propose the purchase of, any shares of its capital stock or
partnership interests or securities convertible into, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or partnership interests or
other convertible securities, other than the issuance of shares of its capital
stock pursuant to the exercise of stock options, warrants or other rights
therefor outstanding as of the date of this Agreement; provided, however, that
Old STAT may, in the ordinary course of business consistent with past practice,
grant options for the purchase of Old STAT Common Stock under its existing stock
option plans not to exceed an aggregate of 300,000 shares; or (ii) In the case
each of the AmHealth Partnerships, admit new AmHealth Partners, except with
respect to the assignment of an AmHealth Partnership Unit;

(g) INTELLECTUAL PROPERTY. Transfer to any person or entity
any rights to the AmHealth Intellectual Property or STAT Intellectual Property,
as applicable, other than in the ordinary course of business consistent with
past practice;

(h) EXCLUSIVE RIGHTS. Enter into or amend any agreements
pursuant to which any other party is granted exclusive marketing or other
exclusive rights of any type or scope with respect to any of its products or
technology;

(i) DISPOSITIONS. Sell, lease, license or otherwise dispose of
or encumber any of its properties or assets which are material, individually or
in the aggregate, to its business, taken as a whole, except in the ordinary
course of business consistent with past practice;

(j) INDEBTEDNESS. Incur any indebtedness for borrowed money or
guarantee any such indebtedness or issue or sell any debt securities or
guarantee any debt securities of others;

(k) LEASES. Enter into any operating lease in excess of
$10,000;

(l) PAYMENT OF OBLIGATIONS. Pay, discharge or satisfy in an
amount in excess of $10,000 in any one case or $100,000 in the aggregate, any
claim, liability or obligation (absolute, accrued, asserted or unasserted,
contingent or otherwise) arising other than in the ordinary course of business,
other than the payment, discharge or satisfaction of liabilities reflected or
reserved against in the AmHealth Financial Statements or STAT Financial
Statements, as applicable;

(m) CAPITAL EXPENDITURES. Make any capital expenditures,
capital additions or capital improvements except in the ordinary course of
business and consistent with past practice;

(n) INSURANCE. Materially reduce the amount of any material
insurance coverage provided by existing insurance policies;

(o) TERMINATION OR WAIVER. Terminate or waive any right of
substantial value, other than in the ordinary course of business;

(p) EMPLOYEE BENEFIT PLANS; NEW HIRES; PAY INCREASES. Adopt or
amend any employee benefit or stock purchase or option plan, or hire any new
director level or officer level employee (except that it may hire a replacement
for any current director level or officer level employee if it first provides to
the other party hereto advance notice regarding such hiring decision), pay any
special bonus or special remuneration to any employee or director, or increase
the salaries or wage rates of its employees;

(q) SEVERANCE ARRANGEMENTS. Grant any severance or termination
pay (i) to any director or officer or (ii) to any other employee except (A)
payments made pursuant to standard written agreements outstanding on the date
hereof or (B) grants which are made in the ordinary course of business in
accordance with its standard past practice;

(r) LAWSUITS. Commence a lawsuit other than (i) for the
routine collection of bills, (ii) in such cases where it in good faith
determines that failure to commence suit would result in the material impairment
of a valuable aspect of its business, provided that it consults with the other
party hereto prior to the filing of such a suit, or (iii) for a breach of this
Agreement;

(s) ACQUISITIONS. Acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial portion of the assets of, or
by any other manner, any business or any corporation, partnership, association
or other business organization or division thereof, or otherwise acquire or
agree to acquire any assets which are material, individually or in the
aggregate, to its business;

(t) TAXES. Other than in the ordinary course of business, make
or change any material election in respect of Taxes, adopt or change any
accounting method in respect of Taxes, file any material Tax Return or any
amendment to a material Tax Return, enter into any closing agreement, settle any
claim or assessment in respect of Taxes, or consent to any extension or waiver
of the limitation period applicable to any claim or assessment in respect of
Taxes;

(u) NOTICES. Each party shall give all notices and other
information required to be given to its employees, any collective bargaining
unit representing any group of its employees, and any applicable government
authority under the WARN Act, the National Labor Relations Act, the Code, COBRA,
and other applicable law in connection with the transactions provided for in
this Agreement;

(v) REVALUATION. Revalue any of its assets, including without
limitation writing down the value of inventory or writing off notes or accounts
receivable other than in the ordinary course of business; or

(w) OTHER. Take or agree in writing or otherwise to take, any
of the actions described in Sections 5.1(a) through (v) above, or any action
which would make any of its representations or warranties contained in this
Agreement untrue or incorrect or prevent it from performing or cause it not to
perform its covenants hereunder.

5.2 NO SOLICITATION. Until the Closing Date or termination,
each of the parties hereto agrees that it will not, directly or indirectly, (i)
take any action to solicit, initiate or encourage any Takeover Proposal, or (ii)

engage in negotiations with, or disclose any nonpublic information relating to
it to, or afford access to its properties, books or records to, any person that
has advised it that it may be considering making, or that has made, a Takeover
Proposal.

ARTICLE VI

ADDITIONAL AGREEMENTS

6.1 PREPARATION OF INFORMATION STATEMENT. As soon as practicable after
the execution of this Agreement, New STAT shall prepare and distribute to the
Old STAT Stockholders and to the AmHealth Shareholders and AmHealth Partners,
with the cooperation of the AmHealth Entities, an Information Statement (the
"INFORMATION STATEMENT") for the approval of this Agreement and the transactions
contemplated hereby by the AmHealth Shareholders, the AmHealth Partners and the
Old STAT Stockholders. The Information Statement shall constitute a disclosure
document for the offer and issuance of the shares of New STAT Common Stock to be
received by the AmHealth Shareholders, AmHealth Partners and Old STAT
Stockholders in the Exchange. New STAT, Old STAT and each of the AmHealth
Entities shall use its best efforts to cause the Information Statement to comply
with applicable federal and state securities laws requirements. Each of Old STAT
and the AmHealth Entities agrees to provide promptly such information concerning
its business and financial statements and affairs as, in the reasonable judgment
of the providing party or its counsel, may be required or appropriate for
inclusion in the Information Statement, or in any amendments or supplements
thereto, and to cause its counsel and auditors to cooperate with the other's
counsel and auditors in the preparation of the Information Statement. Each of
the AmHealth Entities and Old STAT will promptly advise the other in writing if
at any time prior to the Closing Date it shall obtain knowledge of any facts
that might make it necessary or appropriate to amend or supplement the
Information Statement in order to make the statements contained or incorporated
by reference therein not misleading or to comply with applicable law. The
Information Statement shall contain the recommendation of the Boards of
Directors of New STAT, Old STAT, the AmHealth Corporations and of the General
Partners of the AmHealth Partnerships that the Exchange and this Agreement be
approved and the conclusion of such Boards of Directors that the terms and
conditions of the Exchange are fair and reasonable to the AmHealth Shareholders,
the AmHealth Partners and the Old STAT Stockholders. Anything to the contrary
contained herein notwithstanding, New STAT shall not include in the Information
Statement any information with respect to any AmHealth Entity, the form and
content of which information shall not have been approved by such AmHealth
Entity prior to such inclusion.

As soon as practicable after the execution of this Agreement, New STAT
shall prepare and file with the SEC, and cause to become effective, a
registration statement on Form S-4 under the Securities Act (the "REGISTRATION
STATEMENT") (such Registration Statement to include the Information Statement
referred to above) pertaining to the shares of New STAT Common Stock to be
issued pursuant to this Agreement to the AmHealth Shareholders, the AmHealth
Partners and the Old STAT Stockholders, and shall take such actions reasonably
required to be taken under any applicable state securities laws in connection
with the issuance of such New STAT Common Stock.

New STAT agrees that the Information Statement, at the time the
Information Statement is first mailed to the AmHealth Partners, AmHealth
Shareholders and Old STAT Stockholders, at the Closing Date and at the time the
Registration Statement is declared effective, will comply as to form in all
material respects with the requirements of the Securities Act of 1933 and the
rules and regulations thereunder and the Securities Exchange Act of 1934 and the
rules and regulations thereunder, and that the Information Statement and
Registration Statement will not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading. New STAT will advise the AmHealth
Entities promptly in writing if, prior to the Closing Date, it shall obtain
knowledge of any facts that would make it necessary to amend or supplement the
Information Statement or Registration Statement in order to make the statements
therein not misleading to comply with applicable law.

6.2 APPROVAL OF THE TRANSACTION. Each of the parties shall promptly
after the date hereof take all action necessary in accordance with applicable
law and its organizational documents to obtain the necessary shareholder and/or
partner approvals required to consummate the transactions contemplated herein.

6.3 ACCESS TO INFORMATION.

(a) The AmHealth Entities shall afford New STAT and its
accountants, counsel and other representatives reasonable access during normal
business hours during the period prior to the Closing Date to (i) all of the
properties, books, contracts, commitments and records, and (ii) all other
information concerning the business, properties and personnel of each of the
AmHealth Entities as New STAT may reasonably request. Each of the AmHealth
Entities agrees to provide to New STAT and its accountants, counsel and other
representatives copies of internal financial statements promptly upon request.
Old STAT shall afford the accountants, counsel and other representatives of the
AmHealth Entities reasonable access during normal business hours during the
period prior to the Closing Date to (i) all of Old STAT's properties, books,
contracts, commitments and records, and (ii) all other information concerning
the business, properties and personnel of Old STAT as the AmHealth Entities may
reasonably request. Old STAT agrees to provide to each of the AmHealth Entities
and their accountants, counsel and other representatives copies of internal
financial statements promptly upon request.

(b) Subject to compliance with applicable law, from the date
hereof until the Closing Date, each of New STAT, Old STAT and the AmHealth
Entities shall confer on a regular and frequent basis with one or more
representatives of the other party to report operational matters of materiality
and the general status of ongoing operations.

(c) No information or knowledge obtained in any investigation
pursuant to this Section 6.3 shall affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Exchange.

6.4 CONFIDENTIALITY. The parties acknowledge that Old STAT and each of
the AmHealth Entities have previously executed the Confidentiality Agreement,
which Confidentiality Agreement shall continue in full force and effect in
accordance with its terms.

6.5 PUBLIC DISCLOSURE. Unless otherwise permitted by this Agreement,
the parties shall consult with each other before issuing any press release or
otherwise making any public statement or making any other public (or
non-confidential) disclosure (whether or not in response to an inquiry)
regarding the terms of this Agreement and the transactions contemplated hereby,
and neither party shall issue any such press release or make any such statement
or disclosure without the prior approval of the other (which approval shall not
be unreasonably withheld), except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange or with
the NASD.

6.6 CONSENTS; COOPERATION. New STAT, Old STAT, STAT Acquisition and
each of the AmHealth Entities shall promptly apply for or otherwise seek, and
use its best efforts to obtain, all consents and approvals required to be
obtained by it for the consummation of the Exchange, and shall use its best
efforts to obtain all necessary consents, waivers and approvals under any of its
material contracts in connection with the Exchange for the assignment thereof or
otherwise.

6.7 POOLING OF INTERESTS ACCOUNTING. Each party shall use its best
efforts to cause the business combination to be effected by the Exchange to be
accounted for as a pooling of interests. Each party shall use its best efforts
to cause its Affiliates not to take any action that would adversely affect the
ability of New STAT to account for the business combination to be effected by
the Exchange as a pooling of interest.

6.8 LEGAL REQUIREMENTS. Each party will take all reasonable actions
necessary to comply promptly with all legal requirements which may be imposed on
it with respect to the consummation of the transactions contemplated by this
Agreement and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such requirements imposed upon such
other party in connection with the consummation of the transactions contemplated
by this Agreement and will take all reasonable actions necessary to obtain (and
will cooperate with the other parties hereto in obtaining) any consent,
approval, order or authorization of, or any registration, declaration or filing
with, any Governmental Entity or other person, required to be obtained or made
in connection with the taking of any action contemplated by this Agreement.

6.9 BLUE SKY LAWS. New STAT shall take such steps as may be necessary
to comply with the securities and blue sky laws of all jurisdictions which are
applicable to the issuance of New STAT Common Stock, including that issued in
connection with the Exchange. Each of Old STAT and each of the AmHealth Entities
shall use its best efforts to assist New STAT as may be necessary to comply with
the securities and blue sky laws of all jurisdictions which are applicable in
connection with the issuance of New STAT Common Stock in connection with the
Exchange.

6.10 LOCKUP AGREEMENTS. Each of the AmHealth Entities will use their
best efforts to cause the AmHealth Entities, AmHealth Shareholders and AmHealth
Partners listed in Schedule 6.10 hereof to execute and deliver to New STAT a
Lockup Agreement substantially in the form attached hereto as EXHIBIT A (the
"LOCKUP AGREEMENT") which imposes certain restrictions regarding the resale of
New STAT Common Stock received in the Exchange.

6.11 STAT, P.A. STOCK RESTRICTION AGREEMENT. Old STAT will use its best
efforts to cause South Texas Acute Trauma Physicians, P.A. ("STAT, P.A.") or any
successor entity and Victor M. Miranda, M.D. and William H. Rice, M.D. to
execute and deliver to Old STAT a Lockup Agreement with respect to shares of
Common Stock owned or acquired in the future.

6.12 POOLING OF INTERESTS LETTERS. KPMG Peat Marwick L.L.P.,
independent auditors to the parties, shall have delivered to the parties an
opinion, dated prior to the filing of the Registration Statement, to the effect
that the Exchange qualifies for pooling of interests accounting treatment if
consummated in accordance with this Agreement. Such letter shall be in a form
reasonably satisfactory to the parties and customary in scope and substance for
letters delivered by independent public accountants in connection with
transactions of this type.

6.13 BEST EFFORTS AND FURTHER ASSURANCES. Each of the parties to this
Agreement shall use its best efforts to effectuate the transactions contemplated
hereby and to fulfill and cause to be fulfilled the conditions to closing under
this Agreement. Each party hereto, at the reasonable request of another party
hereto, shall execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.

ARTICLE VII

CONDITIONS TO THE EXCHANGE

7.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE EXCHANGE. The
respective obligations of each party hereto to consummate and effect this
Agreement and the transactions contemplated hereby shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, by agreement of all the
parties hereto:

(a) SHAREHOLDER APPROVAL. This Agreement and the Exchange
shall have been approved and adopted by the holders of 66 2/3% of the shares of
common stock eligible to vote of each AmHealth Corporation.

(b) OLD STAT STOCKHOLDER APPROVAL. This Agreement and the
Exchange shall have been approved and adopted by the holders of a majority of
the Old STAT Common Stock issued and outstanding as of the Closing Date.

(c) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or other legal or regulatory restraint or
prohibition preventing the consummation of the Exchange shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign, seeking any of
the foregoing be pending; nor shall there be any action taken, or any statute,
rule, regulation or order enacted, entered, enforced or deemed applicable to the
Exchange, which makes the consummation of the Exchange illegal. In the event an
injunction or other order shall have been issued, each party agrees to use its
reasonable diligent efforts to have such injunction or other order lifted.

(d) GOVERNMENTAL APPROVAL. New STAT, Old STAT and each of the
AmHealth Entities shall have timely obtained from each Governmental Entity all
approvals, waivers and consents, if any, necessary for consummation of or in
connection with the Exchange and the several transactions contemplated hereby,
including such approvals, waivers and consents as may be required under the
Securities Act and under state blue sky laws.

(e) INFUSION THERAPY. The AmHealth Entities shall have ceased
operations of the infusion therapy business.

(f) TAX OPINION. The parties shall have received the written
opinion of KPMG Peat Marwick, L.L.P., in form and substance reasonably
satisfactory to them, and dated on or about the date of and referred to in the
Information Statement as first mailed to the AmHealth Shareholders, the AmHealth
Partners and Old STAT Stockholders to the effect that the Exchange will
constitute tax-free transactions within the meaning of Section 368(a) and
Section 351, as applicable, of the Code, and such opinions shall not have been
withdrawn. In rendering such opinion, KPMG Peat Marwick, L.L.P. shall be
entitled to rely upon, among other things, reasonable assumptions and
representations of New STAT, Old STAT, the AmHealth Entities, the AmHealth
Shareholders and the AmHealth Partners.

(g) POOLING OF INTEREST OPINION. The parties hereto shall have
received the opinion of KPMG Peat Marwick, L.L.P. as provided in Section 6.12
hereof.

(h) NEW STAT BOARD OF DIRECTORS AND OFFICERS. Immediately upon
consummation of the Exchange, the New STAT Board of Directors shall consist of
William H. Rice, M.D., Victor M. Miranda, M.D., Russell D. Schneider, Ruben A.
Perez, two members selected by the AmHealth Entities and one selected by the
mutual consent of the parties. The total number of members of the New STAT Board
of Directors shall be limited by the bylaws of New STAT to seven. In addition,
William H. Rice, M.D., Victor M. Miranda, M.D., Mr. Ned E. Chapman, Mr. Ruben
Perez, Mr. Russell Schneider, Mr. Daniel Perez and Mr. David Perez shall be
named as officers of New STAT.

(i) ADDITIONAL TAX REPRESENTATIONS. New STAT, each of the
AmHealth Corporations and each of the AmHealth Partnerships will have executed
mutually acceptable representation letters, the intent of which is to ensure the
tax-free nature of the transactions contemplated hereby.

7.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE AMHEALTH ENTITIES. The
obligations of the AmHealth Entities to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, by the AmHealth Entities:

(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of New STAT, Old STAT and STAT Acquisition in
this Agreement shall be true and correct in all material respects (except for
such representations and warranties that are qualified by their terms by a
reference to materiality which representations and warranties as so qualified
shall be true in all respects) on and as of the Closing Date as though such
representations and warranties were made on and as of such time; and (ii) New
STAT, Old STAT and STAT Acquisition shall have performed and complied in all
material respects with all covenants, obligations and conditions of this
Agreement required to be performed and complied with by them as of the Closing
Date.

(b) CERTIFICATE OF NEW STAT, OLD STAT AND STAT ACQUISITION.
The AmHealth Entities shall have been provided with a certificate executed on
behalf of each of New STAT, Old STAT and STAT Acquisition by their respective
Presidents and Chief Financial Officers to the effect that, as of the Closing
Date:

(i) all representations and warranties made by New
STAT, Old STAT and STAT Acquisition under this Agreement are true and complete
in all material respects; and

(ii) all covenants, obligations and conditions of
this Agreement to be performed by New STAT, Old STAT and STAT Acquisition on or
before such date have been so performed in all material respects.

(c) LEGAL OPINION. The AmHealth Entities shall have received
an acceptable legal opinion from Brobeck, Phleger & Harrison, LLP, legal counsel
for New STAT, Old STAT and STAT Acquisition.

(d) NO MATERIAL ADVERSE CHANGES. There shall not have occurred
any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of New STAT and Old STAT, taken
as a whole.

(e) COMMON STOCK. New STAT shall, at the Closing Date, have
the New STAT Common Stock to be issued hereunder qualified for trading on NASDAQ
and shall remain a reporting company under the Exchange Act.

(f) THIRD PARTY CONSENTS. The AmHealth Entities shall have
been furnished with evidence satisfactory to them of the consent or approval of
those persons whose consent or approval shall be required in connection with the
Exchange under any material contract of New STAT, Old STAT or of STAT P.A.
Additionally, New STAT, Old STAT and STAT P.A. shall use their best efforts to
have remedied any deficiencies in any contract or contracts of New STAT, Old
STAT or STAT P.A. as may have been identified by the AmHealth Entities which
deficiencies, taken as a whole, might give rise to a Material Adverse Effect to
New STAT, Old STAT or STAT P.A.

(g) INJUNCTIONS OR RESTRAINTS ON EXCHANGE AND CONDUCT OF
BUSINESS. No proceeding brought by any administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, seeking to
prevent the consummation of the Exchange shall be pending. In addition, no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting New STAT's conduct or operation of
the business of the AmHealth Entities and Old STAT following the Exchange shall
be in effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.

(h) ASSUMPTION OF CERTAIN OBLIGATIONS. New STAT will assume
responsibility for the leases listed in Schedule 3.11 hereof.

(i) LOCKUP AGREEMENT. The AmHealth Entities shall have
received from Victor M. Miranda, M.D. and William H. Rice, M.D. (on behalf of
STAT, P.A.), Mr. Ned. E. Chapman and Kay Raley an executed Lockup Agreement.

(j) PHYSICIAN AGREEMENTS. New STAT shall have provided to the
AmHealth Entities, on or before the Closing Date, true and complete copies of
the fully executed, valid, written independent contractor or employment
agreements ("PHYSICIAN AGREEMENTS"), which are in compliance with all applicable
federal and state laws, rules and regulations, between STAT P.A. and each of the
physicians listed in Schedule 7.2(j) hereto.

(k) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Ruben A. Perez
and Russell D. Schneider shall have been offered employment by New STAT pursuant
to the terms of an employment agreement substantially in the form attached
hereto as EXHIBITS C AND D, as applicable.

(l) AGREEMENTS WITH WILLIAM H. RICE M.D., AND VICTOR M.
MIRANDA, M.D.. New STAT shall have entered into employment agreements
substantially in the form of EXHIBITS E AND F hereto with William H. Rice , M.D.
and Victor M. Miranda, M.D., respectively, specifying the duties and
responsibilities of each of them under such employment agreements. Additionally,
Victor M. Miranda, M.D. and William H. Rice, M.D. shall have executed a
Succession Agreement in substantially the form attached hereto as EXHIBIT G,
replacing each of their Cross-Purchase Agreements, which shall be terminated. In
addition, STAT P.A. shall have entered into an agreement with William H. Rice,
M.D. and Victor M. Miranda, M.D. pursuant to which each will perform any medical
services to be provided by them on behalf of STAT P.A.

7.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF NEW STAT, OLD STAT AND
STAT ACQUISITION. The obligations of New STAT, Old STAT and STAT Acquisition to
consummate and effect this Agreement and the transactions contemplated hereby
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, by New STAT:

(a) REPRESENTATIONS, WARRANTIES AND COVENANTS. (i) The
representations and warranties of each of the AmHealth Entities in this
Agreement shall be true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a reference
to materiality which representations and warranties as so qualified shall be
true in all respects) on and as of the Closing Date as though such
representations and warranties were made on and as of such time; and (ii) each
of the AmHealth Entities shall have performed and complied in all material
respects with all covenants, obligations and conditions of this Agreement
required to be performed and complied with by it as of the Closing Date.

(b) CERTIFICATE OF THE AMHEALTH ENTITIES. New STAT shall have
been provided with certificates executed on behalf of each of the AmHealth
Corporations by its respective President and Chief Financial Officer and on
behalf of each of the AmHealth Partnerships by its respective general partner to
the effect that, as of the Closing Date:

(i) all representations and warranties made by each
of the AmHealth Entities under this Agreement are true and complete in all
material respects; and

(ii) all covenants, obligations and conditions of
this Agreement to be performed by each of the AmHealth Entities on or before
such date have been so performed in all material respects.

(c) THIRD PARTY CONSENTS. New STAT shall have been furnished
with evidence satisfactory to it of the consent or approval of those persons
whose consent or approval shall be required in connection with the Exchange
under any material contract of any of the AmHealth Entities or otherwise.

(d) INJUNCTIONS OR RESTRAINTS ON EXCHANGE AND CONDUCT OF
BUSINESS. No proceeding brought by any administrative agency or commission of
other governmental authority or instrumentality, domestic or foreign, seeking to
prevent the consummation of the Exchange shall be pending. In addition, no
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint provision limiting or restricting New STAT's conduct or operation of
the business of the AmHealth Entities or Old STAT, following the Exchange shall
be in effect, nor shall any proceeding brought by an administrative agency or
commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending.

(e) LEGAL OPINION. New STAT shall have received an acceptable
opinion from Jenkens and Gilchrist, legal counsel for the AmHealth Entities.

(f) NO MATERIAL ADVERSE CHANGES. There shall not have occurred
any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of any of the AmHealth Entities,
viewed for the purposes of this Section 7.3(f) as a single entity, other than
any change that shall result from general economic conditions.

(g) AFFILIATE AND SHAREHOLDER AGREEMENTS. New STAT shall have
received from each of the Affiliates of the AmHealth Entities an executed
Affiliate and Shareholder Agreement in substantially the form attached hereto as
EXHIBIT B.

(h) LOCKUP AGREEMENTS. New STAT shall have received from all
holders of 100% of the general partnerships interests and the holders of such
percentage of the limited partnership interests as elect to participate in the
Exchange of each of the AmHealth Partnerships, and from all holders of at least
ninety percent (90%) of the AmHealth Common Stock outstanding immediately prior
to the Closing Date, a duly executed and delivered Lockup Agreement.

(i) EMPLOYMENT AND NON-COMPETITION AGREEMENTS. Ruben A. Perez,
Russell D. Schneider and Daniel A. Perez shall have accepted employment with New
STAT and shall have entered into an Employment and Non-Competition Agreement
substantially in the form attached hereto as EXHIBITS C, D AND H, as applicable.
The existing employment agreement with Daniel A. Perez shall have been amended
to reflect a two year non-competition term.

ARTICLE VIII

TERMINATION, AMENDMENT AND WAIVER

8.1 TERMINATION. At any time prior to the Closing Date, whether before
or after required shareholder and partner approval of the matters presented in
connection with the Exchange, this Agreement may be terminated:

(a) by mutual consent of the parties;

(b) by any party, if, without fault of the terminating party,
the Closing shall not have occurred on or before May 27, 1996 (or such later
date as may be agreed upon in writing by the parties hereto);

(c) by New STAT, if (i) any of the AmHealth Entities shall
breach any of its representations, warranties or obligations hereunder and such
breach shall not have been cured within ten business days of receipt by such
AmHealth Entity of written notice of such breach; (ii) the Board of Directors of
any of the AmHealth Corporations and the general partners of any of the AmHealth
Partnerships shall have withdrawn or modified their recommendation of this
Agreement or the Exchange in a manner adverse to New STAT or shall

have resolved to do any of the foregoing; or (iii) if for any reason any
AmHealth Entity fails to obtain the necessary AmHealth Shareholder and AmHealth
Partner approvals by May 27, 1996.

(d) by the AmHealth Entities, if (i) either New STAT or Old
STAT shall breach any of its representations, warranties or obligations
hereunder and such breach shall not have been cured within ten business days of
receipt by New STAT or Old STAT, as applicable, of written notice of such
breach; (ii) the Board of Directors of New STAT or Old STAT shall have withdrawn
or modified its recommendation of this Agreement or the Exchange in a manner
adverse to the AmHealth Entities or shall have resolved to do any of the
foregoing; or (iii) for any reason Old STAT fails to obtain the necessary
shareholder approvals by May 27, 1996.

(e) by any party if a Trigger Event shall have occurred.

(f) by any party if any permanent injunction or other order of
a court or other competent authority preventing the consummation of the Exchange
shall have become final and nonappealable;

(g) by the AmHealth Entities, in the event (i) of the
acquisition, by any person or group of persons (other than persons or groups of
persons who (A) acquired shares of Old STAT Common Stock pursuant to any merger
of Old STAT in which Old STAT was the surviving corporation or any acquisition
by Old STAT of all or substantially all of the capital stock or assets of
another person or (B) disclose their beneficial ownership of shares of Old STAT
Common Stock on Schedule 13G under the Exchange Act), of beneficial ownership of
25% or more of the outstanding shares of Old STAT Common Stock (the terms
"person," "group" and "beneficial ownership" having the meanings ascribed
thereto in Section 13(d) of the Exchange Act and the regulations promulgated
thereunder); or (ii) the Board of Directors of Old STAT accepts or publicly
recommends acceptance of an offer from a third party to acquire 50% or more of
the outstanding shares of Old STAT Common Stock or of Old STAT's consolidated
assets.

8.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.1, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of New STAT, Old STAT,
STAT Acquisition, the AmHealth Entities or their respective officers, directors,
shareholders, affiliates or general or limited partners, except to the extent
that such termination results from the breach by a party hereto of any of its
representations, warranties or covenants set forth in this Agreement; provided
that the provisions of Section 6.4 (Confidentiality), Section 8.3 (Expenses and
Termination Fees) and this Section 8.2 shall remain in full force and effect and
survive any termination of this Agreement.

8.3 EXPENSES AND TERMINATION FEES.

(a) Subject to subsections (b) and (c) of this Section 8.3,
whether or not the Exchange is consummated, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby
(including, without limitation, the fees and expenses of its advisers,
accountants and legal counsel) shall be paid by the party incurring such
expense.

(b) In the event that a party shall terminate this Agreement
pursuant to Section 8.1(c), (d) or (f), or in the event that the AmHealth
Entities terminate this Agreement pursuant to Section 8.1(e), then the
non-terminating party shall reimburse the other party for all of the
out-of-pocket costs and expenses incurred by the terminating party in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, the fees and expenses of its advisors, accountants, and legal
counsel), with the exception that the AmHealth Entities shall in no event be
liable to New STAT or Old STAT for expenses of such parties exceeding twice the
expenses incurred by the AmHealth Entities.

(c) In the event that (i) this Agreement is terminated by New
STAT or Old STAT without the mutual consent of the AmHealth Entities; (ii) a
Trigger Event shall take place with regard to Old STAT,

followed by termination of this Agreement by the AmHealth Entities or Old STAT;
or (iii) this Agreement shall fail to close by May 28, 1996, unless the AmHealth
Entities shall consent to a later date (which consent shall not be unreasonably
withheld), then upon the first of such events to occur, Old STAT shall promptly
issue to the AmHealth Shareholders and AmHealth Partners ("RECIPIENTS"), in the
ratio established in Schedule A hereof, 200,000 shares of Old STAT Common Stock
(the "BREAKUP SHARES"). The Breakup Shares shall be issued with the following
registration rights:

(i) INCIDENTAL REGISTRATION. If Old STAT, at any time
within five years of the date of such issuance, proposes to register or qualify
any of its Old STAT Common Stock under any applicable federal or state
securities laws for sale (other than a registration on Form S-4, S-8 or any
similar form), it will serve written notice of such proposed registration or
qualification to Recipients at least 21 days before the anticipated filing date.
Written notices served by Old STAT pursuant to the preceding sentence of this
Section 8.3(c)(i) shall be referred to herein as "Notices". Subject to the
restrictions and in accordance with the procedures set forth below, Old STAT
will use its best efforts to include in any registration or qualification to
which a Notice relates all Breakup Shares with respect to which Old STAT has
received written requests for inclusion therein within 7 days prior to such
filing.

(ii) PRIORITY ON REGISTRATIONS.

(1) Notwithstanding the provisions of Section
8.3(c)(i) hereof, in the case of an underwritten offering, the managing
underwriter or underwriters of the registration or qualification may limit the
number of Breakup Shares included in the underwriting pursuant to or in any
registration or qualification, if, in its or their opinion, the number of
Breakup Shares proposed to be sold in such underwriting exceeds the number that
can be sold without materially adversely interfering with the orderly sale and
distribution of the securities being offered under such registration statement
or qualification. In the event the number is to be so limited in the
underwriting, qualification or registration, a sufficient number of securities
to be included in such underwriting, qualification or registration to the amount
recommended by such underwriter. In reducing the amount of securities to be
included in such underwriting, qualification or registration, Old STAT will
include in such underwriting, qualification or registration (A) first, all
securities Old STAT proposes to sell, and (B) second, all Breakup Shares
beneficially owned by Recipients requested to be included in the underwriting,
qualification or registration and Old STAT Common Stock requested to be included
by other holders of Old STAT Common Stock who have registration rights in
respect thereof PARI PASSU with the registration rights granted hereby, reduced
PRO RATA according to the number of Breakup Shares or shares of Old STAT Common
Stock which are beneficially owned by each such holder and requested to be
included in such registration or qualification in good faith with the bona fide
intention of selling the same.

(2) Old STAT shall use its best efforts to
enable the Breakup Shares of Recipients, if inclusion in a registration in a
registration or qualification and related underwriting is properly requested, to
be included in such registration or qualification and underwriting.

8.4 AMENDMENT. The board of director and/or the general partner, as
appropriate, of any of the parties hereto may cause this Agreement to be amended
at any time by execution of an instrument in writing signed on behalf of each of
the parties hereto; provided that an amendment made subsequent to adoption of
the Agreement by the AmHealth Shareholders or the participating AmHealth
Partners and the Old STAT Stockholders shall not (i) alter or change the amount
or kind of consideration to be received on conversion of the AmHealth Common
Stock or Old STAT Common Stock or upon exchange of the AmHealth Partnership
Units; or (ii) alter or change any of the terms and conditions of the Agreement
if such alteration or change would adversely affect the holders of the AmHealth
Common Stock, the Old STAT Common Stock or the AmHealth Partnership Units.

8.5 EXTENSION; WAIVER. At any time prior to the Closing Date any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties

hereto; (ii) waive any inaccuracies in the representations and warranties made
to such party contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions for the benefit
of such party contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in an instrument
in writing signed on behalf of such party.

ARTICLE IX

GENERAL PROVISIONS

9.1 NON-SURVIVAL AT CLOSING DATE. With the exception of subsection 8.3
(c), the representations, warranties and agreements set forth in this Agreement
shall terminate at the Closing Date.

9.2 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or mailed by registered or certified mail (return receipt
requested) or sent via facsimile (with confirmation of receipt) to the parties
at the following addresses (or at such other address for a party as shall be
specified by like notice):

(a) if to New STAT, Old STAT or STAT Acquisition

c/o STAT Healthcare, Inc.
12450 Greenspoint Drive
Suite 1200
Attention: President
Facsimile No.: (713) 876-2999
Telephone No.: (713) 872-6900

(b) if to the AmHealth Entities, to:

AmHealth Corporation
8200 IH 10 West, Suite 209
San Antonio, TX 78230
Attention: President
Facsimile No.: (210) 979-8333
Telephone No.: (210) 979-7788

9.3 INTERPRETATION. When a reference is made in this Agreement to
Exhibits or Schedules, such reference shall be to an Exhibit or Schedule to this
Agreement unless otherwise indicated. The words "include," "includes" and
"including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The phrase "made available" in this Agreement shall
mean that the information referred to has been made available if requested by
the party to whom such information is to be made available. The phrases "the
date of this Agreement", "the date hereof", and terms of similar import, unless
the context otherwise requires, shall be deemed to refer to March __, 1996. Any
reference to any event, change, condition or effect being "material" with
respect to any entity or group of entities means any material event, change,
condition or effect related to the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of such entity or group of
entities. Any reference to a party's "knowledge" means such party's actual
knowledge after due and diligent inquiry of officers, directors and other
employees of such party reasonably believed to have knowledge of such matters.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.

9.5 ENTIRE AGREEMENT; NONASSIGNABILITY; PARTIES IN INTEREST. This
Agreement and the documents and instruments and other agreements specifically
referred to herein or delivered pursuant hereto, including the Exhibits and the
Schedules, (a) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, except for the Confidentiality Agreement, which shall continue in full
force and effect, and shall survive any termination of this Agreement or the
Closing, in accordance with its terms; (b) are not intended to confer upon any
other person any rights or remedies hereunder, and (c) shall not be assigned by
operation of law or otherwise except as otherwise specifically provided.

9.6 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.

9.7 REMEDIES CUMULATIVE. Except as otherwise provided herein, any and
all remedies herein expressly conferred upon a party will be deemed cumulative
with and not exclusive of any other remedy conferred hereby, or by law or equity
upon such party, and the exercise by a party of any one remedy will not preclude
the exercise of any other remedy.

9.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws that might otherwise govern under applicable principles
of conflicts of law. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any court located within the State of Texas, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, agrees that process may be served upon them in any
manner authorized by the laws of the State of Texas for such persons and waives
and covenants not to assert or plead any objection which they might otherwise
have to such jurisdiction and such process.

9.9 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation, preparation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.

IN WITNESS WHEREOF, each of the AmHealth Corporations, each of the
AmHealth Partnerships, each of the AmHealth Shareholders, each of the
participating AmHealth Partners, New STAT, Old STAT, STAT Acquisition and the
Old STAT Stockholders have caused this Agreement to be executed and delivered by
their respective officers thereunto duly authorized, all as of the date first
written above.

NEW STAT HEALTHCARE, INC. OLD STAT HEALTHCARE, INC.

By: /s/ WILLIAM H. RICE, M.D. By: /s/ WILLIAM H. RICE, M.D.
Authorized Officer Authorized Officer

TAT ACQUISITION CORP. AMHEALTH CORPORATION

By: /s/ WILLIAM H. RICE, M.D. By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

AMHEALTH ENTERPRISES OF THE VALLEY, INC. AMHEALTH AMBULATORY SERVICES, INC.

By: /s/ RUBEN A. PEREZ By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

AMHEALTH KIDNEY CENTER OF THE WESLACO KIDNEY CENTER, LTD.
VALLEY, LTD.

By:/s/ RUBEN A. PEREZ By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

STARR DIALYSIS CENTER, LTD. MISSION KIDNEY CENTER, LTD.

By: /s/ RUBEN A. PEREZ By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

.
BROWNSVILLE KIDNEY CENTER, LTD. AMHEALTH AMBULATORY HEALTHCARE, LTD.

By: /s/ RUBEN A. PEREZ By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

SOUTHWESTERN INFUSION HEALTHCARE, LTD. BROWNSVILLE HYPERBARIC HEALTHCARE,
LTD.

By: /s/ RUBEN A. PEREZ By: /s/ RUBEN A. PEREZ
Authorized Officer Authorized Officer

AMHEALTH MEDICAL MANAGEMENT, LTD.

By: /s/ RUBEN A. PEREZ
Authorized Officer
44

SCHEDULE A
ALLOCATIONS OF NEW STAT COMMON STOCK AMONG
AMHEALTH ENTITIES
NUMBER
AMHEALTH ENTITY OF SHARES
- --------------- ---------
AmHealth............................................................ 339,604
AEV................................................................. 120,897
AAS................................................................. 212,121
AKC................................................................. 3,546,615
WKC................................................................. 1,062,656
SDC................................................................. 278,947
MIKC................................................................ 1,062,656
BKC................................................................. -0-
AMM................................................................. 3,283,310
BHH................................................................. 1,470,482
SIH................................................................. 155,730
AAH................................................................. 4,213,103
===========
Total Shares of New STAT Common Stock Distributed................... 11,200,000

EXHIBIT A
FORM OF LOCK-UP AGREEMENT

New STAT Healthcare, Inc.
12450 Greenspoint Drive, Suite 1200
Houston, Texas 77060
Attention: Chief Financial Officer

Re: LOCKUP AGREEMENT

Dear Sir:

The undersigned understands that New STAT Healthcare, Inc. ("New STAT")
has filed with the Securities and Exchange Commission a registration statement
on Form S-4 (No. 333- 2486) (the "Registration Statement") relating to shares of
its common stock, par value $.01 per share (the "New STAT Common Stock"), to be
issued to the AmHealth Shareholders and AmHealth Partners (as such terms are
defined in the Registration Statement) and to the shareholders of STAT
Healthcare, Inc. ("Old STAT"), including the undersigned, pursuant to an
exchange (the "Exchange") contemplated by an Amended and Restated Agreement and
Plan of Reorganization dated as of March 15, 1996, as amended.

In order to induce New STAT to proceed with such Exchange, the
undersigned hereby agrees, for the benefit of New STAT, that should such
Exchange be effectuated, he/she will not, without the prior written consent of
New STAT, sell, assign, pledge, hypothecate or otherwise dispose of, directly or
indirectly, any shares of New STAT Common Stock issuable to him/her pursuant to
the Exchange, or subsequently acquired through the exercise of any options,
warrants or rights, split or other distribution of stock, or grant of options,
rights or warrants with respect to any such shares of New STAT Common Stock,
during the twelve (12) month period commencing on the effective date of the
Exchange. Furthermore, the undersigned will permit all certificates evidencing
his/her shares of New STAT Common Stock to be endorsed with the appropriate
restrictive legends, and will consent to the placement of appropriate stop
transfer orders with the transfer agent for New STAT in connection herewith.

In the event that the Exchange is consummated, the undersigned agrees
to be bound by the provisions of this Agreement.

Very truly yours,

--------------------------
Signature

--------------------------
Printed Name

Please indicate number of
shares of Old STAT Common Stock
currently owned:

- ----------------------------
Please list any options, warrants, rights or convertible securities owned and
the number of shares of Old STAT Common Stock issuable upon the exercise or
conversion of
such securities:

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

EXHIBIT B
AFFILIATE AND SHAREHOLDER AGREEMENT

THIS AFFILIATE AND SHAREHOLDER AGREEMENT (the "Affiliate and
Shareholder Agreement") is entered into as of the _____ day of ______________,
1996 between New STAT Healthcare, Inc., a Delaware corporation ("New STAT"), and
the undersigned shareholder (the "Shareholder") and/or partner (the "Partner"),
as applicable, of one or more of the following corporations (the "Corporations")
and partnerships (the "Partnerships" and, collectively with the Corporations,
the "AmHealth Entities"): AmHealth Corporation, AmHealth Enterprises of the
Valley, Inc., AmHealth Ambulatory Services, Inc., AmHealth Kidney Center of the
Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center, Ltd., Mission
Kidney Center, Ltd., Brownsville Kidney Center, Ltd., AmHealth Ambulatory
Healthcare, Ltd., Southwestern Infusion Healthcare, Ltd., Brownsville Hyperbaric
Healthcare, Ltd., and AmHealth Medical Management, Ltd.

RECITALS

A. The AmHealth Entities, New STAT, STAT Healthcare, Inc. ("Old STAT")
and STAT Acquisition Corp. ("STAT Acquisition") are parties to an Amended and
Restated Agreement and Plan of Reorganization, dated as of March 15, 1996 (the
"Reorganization Agreement"), pursuant to which the AmHealth Entities will be
merged into New STAT, STAT Acquisition will be merged with and into Old STAT,
and New STAT will issue shares of Common Stock of New STAT (the "New STAT
Shares") in exchange (the "Exchange") for shares of common stock of the AmHealth
Entities held by the Shareholders, units of partnership interest held by the
Partners and outstanding shares of common stock of Old STAT.

B. The parties intend for the Exchange to qualify as a "reorganization"
under the provisions of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the
Internal Revenue Code of 1986, as amended (the "Code").

C. The parties to the Reorganization Agreement intend to cause the
Exchange to be accounted for as a pooling of interests pursuant to APB Opinion
No. 16, Staff Accounting Series Releases No. 130, 135 and 146 and Staff
Accounting Bulletins Topic Two.

NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and covenants set forth in the Reorganization Agreement
and in this Affiliate and Shareholder Agreement, it is hereby agreed as follows:

1. The undersigned Shareholder and/or Partner hereby agrees that:

(a) If the undersigned Shareholder is determined by the
AmHealth Entities to be (but does not hereby admit to be) an "affiliate" of the
AmHealth Entities within the meaning of Rule 145 under the Securities Act of
1933, as amended (the "Securities Act"), and Accounting Series Release No. 130,
as amended, of the Securities and Exchange Commission (the "SEC") ("Release No.
130"), the undersigned Shareholder and/or Partner will not sell, exchange,
transfer, pledge, dispose of or otherwise reduce the undersigned Shareholder's
risk relative to the New STAT Shares or any part thereof until such time after
the Effective Time of the Exchange as financial results covering at least thirty
(30) days of the combined operations of Old STAT and the AmHealth Entities after
the effective date of the Exchange have been, within the meaning of said Release
No. 130, filed by New STAT with the SEC or published by New STAT in an Annual
Report on Form 10-K or Form 10-KSB, a Quarterly Report on Form 10-Q or Form
10-QSB, a Current Report on Form 8-K, a quarterly earnings report, a press
release or other public issuance that includes combined sales and income of the
AmHealth Entities and Old STAT. New STAT agrees to make such filing or
publication as soon as practicable and to notify the undersigned Shareholder
and/or Partner promptly upon making such filing or publication. The undersigned
will not, during the thirty (30) day period prior to the effective date of the
Exchange as determined in New STAT's reasonable discretion, sell, exchange,
transfer, pledge, dispose of or otherwise reduce the undersigned's risk relative
to the New STAT Shares or any part thereof (including any disposition, within
such period, of Shareholder's shares of common stock and/or partnership
interests in the AmHealth Entities).

(b) The undersigned Shareholder and/or Partner has, and as of
the effective date of the Exchange will have, no present plan or intent (a
"Plan") to engage in a sale, exchange, transfer, pledge, disposition or any
other transaction (including a distribution by a partnership to its partners or
by a corporation to its shareholders) that results in a reduction in the risk of
ownership (collectively, a "Sale") of the New STAT Shares to be acquired by the
undersigned Shareholder and/or Partner upon consummation of the Exchange. The
undersigned Shareholder and/or Partner is not aware of, or participating in, any
Plan or intent on the part of the shareholders or partners of the AmHealth
Entities to engage in Sales of the New STAT Shares to be issued in the Exchange
such that the aggregate fair market value, as of the effective date of the
Exchange, of the shares subject to such Sales would exceed fifty percent (50%)
of the aggregate fair market value of all shares of outstanding the common stock
of a Corporation or partnership interests of a Partnership immediately prior to
the Exchange. A sale of New STAT Shares shall be considered to have occurred
pursuant to a Plan if such Sale occurs in a transaction that is in contemplation
of, or related or pursuant to, the Reorganization Agreement (a "Related
Transaction"). In addition, shares of a Corporation's common stock or a
Partnership's partnership interests with respect to which a Sale occurred in a
Related Transaction prior to the Exchange shall be considered to have been
shares of outstanding common stock of a Corporation or partnership interests of
a Partnership that were exchanged for New STAT Shares in the Exchange and then
disposed of pursuant to a Plan. If any of the undersigned Shareholder's or
Partner's representations in this subsection (b) cease to be true at any time
prior to the effective date of the

Exchange, the undersigned Shareholder and/or Partner shall deliver to each of
the AmHealth Entities and New STAT, prior to the effective date of the Exchange,
a written statement to that effect. Except as otherwise set forth in APPENDIX A,
the undersigned Shareholder has not engaged in a sale of any shares of a
Corporation's common stock or a Partnership's partnership interests since
[______________].

The undersigned Shareholder and/or Partner is
currently the owner of shares of a Corporation's common stock and/or units of a
Partnership's partnership interest as set forth on the signature page hereto
and, except as otherwise set forth on the signature page hereto, (i) has held
such common stock and/or partnership interests at all times since ____________;
and (ii) did not acquire any shares of a Corporation's common stock and/or a
Partnership's partnership interests in contemplation of the Exchange. These
securities constitute the undersigned's entire interest in the outstanding
capital stock and partnership interests of the AmHealth Entities. No other
person or entity not a signatory to this Agreement has a beneficial interest in
or a right to acquire such shares of a Corporation's common stock and/or a
Partnership's partnership interests or any portion thereof (except, with respect
to shareholders which are partnerships, partners of such shareholders). The
undersigned's principal residence or place of business is set forth on the
signature page hereto.

The undersigned Shareholder and/or Partner
understands and acknowledges that the AmHealth Entities, New STAT, Old STAT,
STAT Acquisition and their respective shareholders and/or partners, as well as
legal counsel to such parties, are entitled to rely on (i) the truth and
accuracy of the undersigned Shareholder's and/or Partner's representations
contained herein; and (ii) the undersigned Shareholder's and/or Partner's
performance of the obligations set forth herein.

(c) Subject to paragraphs (a) and (b) of this Section
1, the undersigned Shareholder and/or Partner agrees not to offer, sell,
exchange, transfer, pledge or otherwise dispose of any of the New STAT Shares
unless at that time either:

(i) such transaction is permitted pursuant to
the provisions of Rule 145(d) under the Securities Act;

(ii) counsel representing the undersigned
Shareholder and/or Partner, satisfactory to New STAT, shall have advised New
STAT in a written opinion letter satisfactory to New STAT and New STAT's
counsel, and upon which New STAT and its counsel may rely, that no registration
under the Securities Act is required in connection with the proposed sale,
transfer or other disposition;

(iii) a registration statement under the
Securities Act covering the New STAT Shares proposed to be sold, transferred or
otherwise disposed of, describing the manner and terms of the proposed sale,
transfer or other disposition, and containing a current prospectus, is filed
with the SEC and made effective under the Securities Act; or

(iv) an authorized representative of the SEC
shall have rendered written advice to the undersigned Shareholder and/or Partner
(sought by the undersigned Shareholder and/or Partner or counsel to the
undersigned Shareholder and/or Partner, with a copy thereof and of all other
related communications delivered to New STAT) to the effect that the SEC will
take no action, or that the staff of the SEC will not recommend that the SEC
take action, with respect to the proposed offer, sale, exchange, transfer,
pledge or other disposition if consummated.

(d) All certificates representing New STAT Shares
deliverable to a Shareholder and/or Partner (and such Shareholders and/or
Partners deemed to be an Affiliate of the AmHealth Entities at the time the
Exchange was submitted for vote or consent) pursuant to the Reorganization
Agreement and in connection with the Exchange and any certificates subsequently
issued with respect thereto or in substitution therefor shall bear a legend that
such New STAT Shares may only be sold or disposed of in accordance with (i) the
provisions of Rule 145 under the Securities Act; (ii) pursuant to an effective
registration statement; or (iii) pursuant to an exemption provided by the
Securities Act, and the conditions specified in this Shareholder and Affiliate
Agreement. New STAT, at its discretion, may cause stop transfer orders to be
placed with its transfer agent with respect to the certificates for such New
STAT Shares but not as to the certificates for any part of the New STAT Shares
as to which said legend is no longer appropriate.

(e) The undersigned Shareholder and/or Partner will
observe and comply with the Securities Act and the General Rules and Regulations
thereunder, as now in effect and as from time to time amended and including
those hereafter enacted or promulgated, in connection with any offer, sale,
exchange, transfer, pledge or other disposition of the New STAT Shares or any
part thereof.

(f) The undersigned Shareholder and/or Partner
undertakes and agrees to indemnify and hold harmless New STAT, the AmHealth
Entities, and each of their respective current and future officers and directors
and each person, if any, who now or hereafter controls or may control New STAT
or the AmHealth Entities within the meaning of the Securities Act (an
"Indemnified Person") from and against any and all claims, demands, actions,
causes of action, losses, costs, damages, liabilities and expenses ("Claims")
based upon, arising out of or resulting from any breach or nonfulfillment of any
undertaking, covenant or agreement made by the undersigned Shareholder and/or
Partner in subsection (a), (b), (c), (d) or (e) of this Section 1, or caused by
or attributable to the undersigned Shareholder and/or Partner, or the
undersigned Shareholder's and/or Partner's agents or employees, or
representatives, brokers, dealers and/or underwriters insofar as they are acting
on behalf of and in accordance with the instruction of or with the knowledge of
the undersigned Shareholder and/or Partner, in connection with or relating to
any offer, sale, pledge, transfer or other disposition of any of the New STAT
Shares by or on behalf of the undersigned Shareholder and/or Partner, which
claim or claims result from any breach or nonfulfillment as set forth above. The
indemnification set forth herein shall be in addition to any liability that the
undersigned Shareholder and/or Partner may otherwise have to the Indemnified
Persons.

(g) Promptly after receiving definitive notice of any
Claim in respect of which an Indemnified Person may seek indemnification under
this Affiliate and Shareholder Agreement, such Indemnified Person shall submit
notice thereof to the undersigned Shareholder and/or Partner. The omission by
the Indemnified Person to so notify the undersigned Shareholder and/or Partner
of any such Claim shall not relieve the undersigned Shareholder and/or Partner
from any liability the undersigned Shareholder and/or Partner may have hereunder
except to the extent that (i) such liability was caused or increased by such
omission, or (ii) the ability of the undersigned Shareholder and/or Partner to
reduce or defend against such liability was adversely affected by such omission.
The omission of the Indemnified Person to so notify the undersigned Shareholder
and/or Partner of any such Claim shall not relieve the undersigned Shareholder
and/or Partner from any liability the undersigned Shareholder and/or Partner may
have otherwise than hereunder. The Indemnified Persons and the undersigned
Shareholder and/or Partner shall cooperate with and assist one another in the
defense of any Claim and any action, suit or proceeding arising in connection
therewith.

2. The undersigned Shareholder and/or Partner agrees to vote
all shares of a Corporation's common stock or a Partnership's partnership
interests owned beneficially or of record by the undersigned, whether voting at
a shareholders or partners meeting or by written consent, for approval of the
Exchange, the Reorganization Agreement and any related corporate actions on
terms conforming in all material respects to the Reorganization Agreement and
against any corporate action that, in the reasonable judgment of the AmHealth
Entities' Boards of Directors or General Partners, would violate, frustrate the
purpose of, prevent or delay consummation of the Exchange.

3. The undersigned Shareholder and/or Partner agrees to
maintain in strictest confidence information about the Reorganization Agreement
and the Exchange, including information about the existence of this agreement
and such Exchange, and not to disclose any such information without prior
written approval of the AmHealth Entities, New STAT and Old STAT.

4. The undersigned Shareholder and/or Partner will not,
directly or indirectly, (i) take any action to solicit, initiate or encourage
any Takeover Proposal (defined below); or (ii) subject to the terms of the
immediately following sentence, engage in negotiations with, or disclose any
nonpublic information relating to the AmHealth Entities to, or afford access to
the properties, books or records of the AmHealth Entities to, any person that
has advised the AmHealth Entities that it may be considering making, or that has
made, a Takeover Proposal. The undersigned Shareholder and/or Partner will
promptly notify STAT after receipt of any Takeover Proposal or any notice that
any person is considering making a Takeover Proposal or any request for
nonpublic information relating to the AmHealth Entities or for access to the
properties, books or records of the AmHealth Entities by any person that has
advised the undersigned Shareholder and/or Partner that it may be considering
making, or that has made, a Takeover Proposal and will keep New STAT fully
informed of the status and details of any such Takeover Proposal notice or
request. For purposes of this agreement, "Takeover Proposal" means any offer or
proposal for, or any indication of interest in, a merger or other business
combination involving the AmHealth Entities

or the acquisition of any significant equity interest in, or a significant
portion of the assets of, the AmHealth Entities, other than the transactions
contemplated by this Agreement.

5. From and after the effective date of the Exchange and for
so long as necessary in order to permit the undersigned Shareholder and/or
Partner to sell the New STAT Shares pursuant to Rule 145 and, to the extent
applicable, Rule 144 under the Securities Act, New STAT will file on a timely
basis all reports required to be filed by it pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934, referred to in paragraph (c)(1) of Rule 144
under the Securities Act (or, if applicable, New STAT will make publicly
available the information regarding itself referred to in paragraph (c)(2) of
Rule 144), in order to permit the undersigned Shareholder and/or Partner to
sell, pursuant to the terms and conditions of Rule 145 and the applicable
provisions of Rule 144, the New STAT Shares.

6. No waiver by any party hereto of any condition or of any
breach of any provision of this Affiliate and Shareholder Agreement shall be
effective unless in writing.

7. All notices, requests, demands or other communications that
are required or may be given pursuant to the terms of this Affiliate and
Shareholder Agreement shall be in writing and shall be deemed to have been duly
given if delivered by hand or mailed by registered or certified mail, postage
prepaid, as follows:

(a) If to the Shareholder, at the address set forth
below the Shareholder's signature at the end hereof.

(b) If to New STAT, Old STAT, the AmHealth Entities
or the other Indemnified Persons:

STAT Healthcare, Inc.
12450 Greenspoint Drive, Suite 1200
Houston, Texas 77060
Attn: Ned Chapman
Tel: (713) 872-6900
Fax: (713) 876-2999

with a copy (which shall not constitute notice) to:

Brobeck, Phleger & Harrison LLP
301 Congress Avenue, Suite 1200
Austin, Texas 78701
Attention: Carmelo M. Gordian
Tel: (512) 477-5495
Fax: (512) 477-5813

or to such other address as any party hereto or any Indemnified Person may
designate for itself by notice given as herein provided.

8. For the convenience of the parties hereto, this Affiliate
and Shareholder Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same document.

9. This Affiliate and Shareholder Agreement shall be
enforceable by, and shall inure to the benefit of and be binding upon, the
parties hereto and their respective successors and assigns. Moreover, this
Affiliate and Shareholder Agreement shall be enforceable by, and shall inure to
the benefit of, the Indemnified Persons and their respective successors and
assigns. As used herein, the term "successors and assigns" shall mean, where the
context so permits, heirs, executors, administrators, trustees and successor
trustees, and personal and other representatives.

10. This Affiliate and Shareholder Agreement shall be governed
by and construed, interpreted and enforced in accordance with the laws of the
State of Texas (other than the conflicts of law principles thereof).

11. If a court of competent jurisdiction determines that any
provision of this Affiliate and Shareholder Agreement is unenforceable or
enforceable only if limited in time and/or scope, this Affiliate and Shareholder
Agreement shall continue in full force and effect with such provision stricken
or so limited.

12. All capitalized terms used herein shall have the meaning
defined in the Reorganization Agreement, unless otherwise defined herein.

IN WITNESS WHEREOF, the parties have caused this Affiliate and
Shareholder Agreement to be executed as of the date first above written.

NEW STAT HEALTHCARE, INC. SHAREHOLDER AND/OR PARTNER

By:
--------------------- -----------------------------
(Signature)

Name:
--------------------- -----------------------------
(Print Name)

Title:
--------------------- -----------------------------
(Print Address)

-----------------------------
(Print Address)

-----------------------------
(Print Telephone Number)

Total Number of Shares of Corporation Common Stock and/or Partnership Interests
owned on the date hereof:

Name of Corporation(s): ____________________________

Number of Shares: ____________________________

Name of Partnership(s): ____________________________

Percentage Interest: ____________________________

State of Residence: ____________________________

Appendix 2

5.11 RIGHTS OF DISSOLVING SHAREHOLDERS IN THE EVENT OF CERTAIN
CORPORATE ACTIONS. --- A. Any shareholder of a domestic corporation shall have
the right to dissent from any of the following corporate actions:

(1) Any plan of merger to which the corporation is a party if
shareholder approval is required by Article 5.03 or 5.16 of this Act and the
shareholder holds shares of a class or series that was entitled to vote thereon
as a class or otherwise;

(2) Any sale, lease, exchange or other disposition (not including any
pledge, mortgage, deed of trust, or trust indenture unless otherwise provided in
the articles of incorporation) of all, or substantially all, the property and
assets, with or without good will, of a corporation requiring the special
authorization of the shareholders as provided by this Act;

(3) Any plan of exchange pursuant to Article 5.02 of this Act in which
the shares of the corporation of the class or series held by the shareholder are
to be acquired.

B. Notwithstanding the provisions of Section A of this Article, a shareholder
shall not have the right to dissent from any plan of merger in which there is a
single surviving or new domestic or foreign corporation, or from any plan of
exchange, if (1) the shares held by the shareholder are part of a class shares
of which are listed on a national securities exchange, or are held of record by
not less than 2,000 holders, on the record date fixed to determine the
shareholders entitled to vote on the plan of merger or the plan of exchange, and
(2) the shareholder is not required by the terms of the plan of merger or the
plan of exchange to accept for his shares any consideration other than (a)
shares of a corporation that, immediately after the effective time of the merger
or exchange, will be part of a class or series of shares of which are 1(I)
listed, or authorized for listing upon official notice of issuance, on a
national securities exchange, or 2(II) held of record by not less than 2,000
holders, and (b) cash in lieu of fractional shares otherwise entitled to be
received. (Last amended by Ch. 901, L. '91, eff. 8-26-91.)
- ----------------
Ch. 901, L '91, eff. 8-26-91, added matter in italic and deleted 1"(a)" and
2"(b)"

5.12 PROCEDURE FOR DISSENT BY SHAREHOLDERS AS TO SAID COR PORATE
ACTION. ---A. Any shareholder of any domestic corporation who has the right to
dissent from any of the corporate actions referred to in Article 5.11 of this
Act may exercise that right to dissent only by complying with the following
procedures:

(1) (a) With respect to proposed corporate action that is submitted to
a vote of shareholders at a meeting, the shareholder shall file with the
corporation, prior to the meeting, a written objection to the action, setting
out that the shareholder's right to dissent will be exercised if the action is
effective and giving the shareholder's address, to which notice thereof shall be
delivered or mailed in that event. If the action is effected and the shareholder
shall not have voted in favor of the action, the corporation, in the case of
action other than a merger, or the surviving or new corporation (foreign or
domestic) or other entity that is liable to the shareholder's right of dissent,
in the case of a merger, shall, within ten (10) days after the action is
effected, deliver or mail to the shareholder written notice that the action has
been effected, and the shareholder may, within ten (10) days from the delivery
or of the notice, make written demand on the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, for
payment of the fair value of the shareholder's shares. The fair value of the
shares shall be the value thereof as of the day immediately preceding the
meeting, excluding any appreciation or depreciation in anticipation of the
proposed action. The demand shall state the number and class of the shares owned
by the shareholder and the fair value of the shares as estimated by the
shareholder. Any shareholder failing to make demand within the ten (10) day
period shall be bound by the action.

(b) With respect to proposed corporate action that is approved
pursuant to Section A of Article 9.10 of this Act, the corporation, in the case
of action other than a merger, and the surviving or new corporation (foreign or
domestic) or other entity that is liable to discharge the shareholder's right of
dissent, in the case of a merger, shall, within ten (10) days after the date the
action is effected, mail to each shareholder of record as of the effective date
of the action notice of the fact and date of the action and that the shareholder
may exercise the shareholder's right to dissent from the action. The notice
shall be accompanied by a copy of this Article and any articles or documents
filed by the corporation with the Secretary of State to effect the action. If
the shareholder shall not have consented to the taking of the action, the
shareholder may, within twenty (20) days after the mailing of the notice, make
written demand on the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, for payment of the fair value of
the shareholder's shares. The fair value of the shares shall be the value
thereof as of the date the written consent authorizing the action was delivered
to the corporation pursuant to Section A of Article 9.10 of this Act, excluding
any appreciation or depreciation in anticipation of the 1ACTION. The demand
shall state the number and class of shares owned by the dissenting shareholder
and the fair value of the shares as estimated by the shareholder. Any
shareholder failing to make demand within the twenty (20) day period shall be
bound by the action.

(2) Within twenty (20) days after receipt by the existing, surviving,
or new corporation (foreign or domestic) or other entity, as the case may be, of
a demand for payment made by a dissenting shareholder in accordance with
Subsection (1) of this Section, the corporation (foreign or domestic) or other
entity shall deliver or mail to the shareholder a written notice that shall
either set out that the corporation (foreign or domestic) or other entity
accepts the amount claimed on the demand and agrees to pay that amount within
ninety (90) days after the date on which the action was effected, and, in the
case of shares represented by certificates, upon the surrender of the
certificates duly endorsed, or shall contain an estimate by the corporation
(foreign or domestic) or other entity of the fair value of the shares, together
with an offer to pay the amount of that estimate within ninety (90) days after
the date on which the action was effected, upon receipt of notice within sixty
(60) days after that date from the shareholder that the shareholder agrees to
accept that amount AND, IN THE CASE OF SHARES REPRESENTED BY CERTIFICATES, upon
the surrender of the certificates duly endorsed.

(3) If, within sixty (60) days after the date on which the corporate
action was effected, the value of the shares is agreed upon between the
shareholder and the existing, surviving, or new corporation (foreign or
domestic) or other entity, as the case may be, payment for the shares shall be
made within ninety (90) days after the date on which the action was effected
and, in the case of shares represented by certificates, upon surrender of the
certificates duly endorsed. Upon payment of the agreed value, the shareholder
shall cease to have any interest in the shares or in the corporation.

B. If, within the period of sixty (60) days after the date on which the
corporate action was effected, the shareholder and the existing, surviving, or
new corporation (foreign or domestic) or other entity, as the case may be, do
not so agree, then the shareholder or the corporation (foreign or domestic) or
other entity may, within sixty (60) days after the expiration of the sixty (60)
day period, file a petition in any court of competent jurisdiction in the county
in which the principal office of the domestic corporation is located, asking for
a finding and determination of the fair market value of the shareholder's
shares. Upon the filing of any such petition by the shareholder, service of a
copy thereof shall be made upon the corporation (foreign or domestic) or other
entity, which shall within ten (10) days after service, file in the office of
the clerk of the court in which the petition was filed a list containing the
names and addresses of all shareholders of the domestic corporation who have
demanded payment for their shares and with whom agreements as to the value of
their shares have not been reached by the corporation (foreign or domestic) or
other entity. If the petition shall be filed by the corporation (foreign or
domestic) or other entity, the petition shall be accompanied by such a list. The
clerk of the court shall give notice of the time and place fixed for the hearing
of the petition by registered mail to the corporation (foreign or domestic) or
other entity and to the shareholders named on the list at the addresses therein
stated. The forms of the notices by mail shall be approved by the court. All
shareholders thus notified and the corporation (foreign or domestic) or other
entity shall thereafter be bound by the final judgment of the court.

C. After the hearing of the motion, the court shall determine the
shareholders who have complied with the provisions of this Article and have
become entitled to the valuation of and payment for their shares, and shall
appoint one or more qualified appraisers to determine that value. The appraisers
shall have power to examine any of the books and records of the corporation the
shares of which they are charged with the duty of valuing, and they shall make a
determination of the fair value of the shares upon such investigation as to them
may seem proper. The appraisers shall also afford a reasonable opportunity to
the parties interested to submit to them pertinent evidence as to the value of
the shares. The appraisers shall also have such power and authority as may be
conferred on Masters in Chancery by the Rules of Civil Procedure or by the order
of their appointment.

D. The appraisers shall determine the fair value of the shares of the
shareholders adjudged by the court to be entitled to payment for their shares
and shall file their report of that value in the office of the clerk of the
court. Notice of the filing of the report shall be given by the clerk to the
parties in interest. The report shall be subject to exceptions to be heard
before the court both upon the law and the facts. The court shall by its
judgment determine the fair value of the shares of the shareholders entitled to
payment for their shares and shall direct the payment of that value by the
existing, surviving, or new corporation (foreign or domestic) or other entity,
together with interest thereon, BEGINNING 91 DAYS AFTER THE DATE ON WHICH THE
APPLICABLE CORPORATE ACTION FROM WHICH THE SHAREHOLDER ELECTED TO DISSENT WAS
EFFECTED to the date of such judgment, to the orders entitled to payment. The
judgment shall be payable to the holders of uncertificated shares immediately
but to the holders of shares represented by certificates only upon, and
simultaneously with, the surrender to the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, of duly
endorsed certificates for those shares. Upon payment of the judgment, the
dissenting shareholders shall cease to have any interest in those shares or in
the corporation. The court shall allow the appraisers a reasonable fee as court
costs, and all court costs, shall be allotted between the parties in the manner
that the court determines to be fair and equitable.

E. Shares acquired by the existing, surviving, or new corporation
(foreign or domes tic) or other entity, as the case may be, pursuant to the
payment of the agreed value of the shares or pursuant to payment of the judgment
entered for the value of the shares, as in this Article provided, shall, in the
case of a merger, be treated as provided in the plan of merger, and, in all
other cases, may be held and disposed of by the corporation as in the case of
other treasury shares.

F. The provisions of this Article shall not apply to a merger if, on
the date of the filing of the articles of merger, the surviving corporation is
the owner of all the outstanding shares of the other corporations, domestic or
foreign, that are parties to the merger.

G. In the absence of fraud in the transaction, the remedy provided by
this Article to a shareholder objecting to any corporate action referred to in
Article 5.11 of this Act is the exclusive remedy for the recovery of the value
of his shares or money damages to the

shareholder with respect to the action. If the existing, surviving, or new
corporation (foreign or domestic) or other entity, as the case may be, complies
with the requirements of this Article, any shareholder who fails to comply with
the requirements of this Article shall not be entitled to bring suit for the
recovery of the value of his shares or money damages to the shareholder with
respect to the action. (Last amended by Ch. 215, L. '93, eff. 9-1-93.)

- ------------------------------
.1 WHERE STOCKHOLDER MAY SUE FOREIGN CORPORATION. --- Stockholders may
sue foreign corporation in his county of residence, when corporation has no
agent or representative in state; all stockholders later joining suit are bound
by his choice. MORRIS V SCALING, 347 SW2D 377 (CIV APP 1961).

.2 TIME OF FILING; EFFECT ON DISSENT. --- Dissenting shareholder to
merger cannot get appraisal, when he does not file petition timely; that is so
even though he mails petition to clerk of proper court on last allowed under
statute. HOCHBERG V SCHICK INVESTMENT CO, 469 SW2D 474 (CIV APP 1971).

5.13 PROVISIONS AFFECTING REMEDIES OF DISSENTING SHAREHOLDERS. ---A.
Any shareholder who has demanded payment for his shares in accordance with
EITHER Article 5.12 OR.5.16 OF THIS ACT shall not thereafter be entitled to vote
or exercise any other rights of a shareholder except the right to receive
payment for his shares pursuant to the provisions of 1THOSE ARTICLES and the
right to maintain an appropriate action to obtain relief on the ground that the
corporate action would be or was fraudulent, and the respective shares for which
payment has been demanded shall not thereafter be considered outstanding for the
purposes of any subsequent vote of shareholders.

B. Upon receiving a demand for payment from any dissenting shareholder,
the corporation shall make an appropriate notation thereof in its shareholder
records. Within twenty (20) days after demanding payment for his shares in
accordance with EITHER Article 5.12 OR 5.16 OF THIS ACT, each holder of
certificates representing shares so demanding payment shall submit such
certificates to the corporation for notation thereon that such demand has been
made. The failure of holders of certificated shares to do so shall, at the
option of the corporation, terminate such shareholder's rights under 2ARTICLES
5.12 AND 5.16 OF THIS ACT unless a court of competent jurisdiction for good and
sufficient cause shown shall otherwise direct. If uncertificated shares for
which payment has been demanded or shares represented by a certificate on which
notation has been so made shall be transferred, any new certificate issued
therefor shall bear similar notation together with the name of the original
dissenting holder of such shares and a transferee of such shares shall acquire
by such transfer no rights in the corporation other than those which the
original dissenting shareholder had after making demand for payment of the fair
value thereof.

C. Any shareholder who has demanded payment for his shares in
accordance with EITHER Article 5.12 OR 5.16 OF THIS ACT may withdraw such demand
at any time before payment for his shares or before any petition has been filed
pursuant to Article 5.12 OR 5.16 OF THIS ACT asking for a finding and
determination of the fair value of such shares, but no such demand may be
withdrawn after such payment has been made or, unless the corporation shall
consent thereto, after any such petition has been filed. If, however, such
demand shall be withdrawn as hereinbefore provided, or if pursuant to Section B
of this Article the corporation shall terminate the shareholder's rights under
Article 5.12 OR 5.16 OF THIS ACT, AS THE CASE MAY BE, or if no petition asking
for a finding and determination of fair value of such shares by a court shall
have been filed within the time provided in Article 5.12 OR 5.16 OF THIS ACT, AS
THE CASE MAY BE, or if after the hearing of a petition filed pursuant to Article
5.12 OR 5.16, the court shall determine that such shareholder is not entitled to
the relief provided by THOSE ARTICLES, then, in any such case, such older and
all persons claiming under him shall be conclusively presumed to have approved
and ratified the corporate action from which he dissented and shall be bound
thereby, the right of such shareholder to be paid the fair value of his shares
shall cease, and his status as a shareholder shall be restored without prejudice
to any corporate proceedings which may have been taken during the interim, and
such shareholder shall be entitled to receive any dividends or other
distributions made to shareholders in the interim. (Last amended by Ch. 215, L.
'93, eff. 9-1-93.)
- ---------------------------------
CH. 215, L.'93, EFF. 9-1-93, ADDED MATTER IN ITALIC AND DELETED "SAID ARTICLE
5.12"; 2"Article"; and 3"Article 5.12".

Appendix 3

CONFIDENTIAL

May 17, 1996

Board of Directors
Stat Healthcare, Inc.
12450 Greenspoint Drive
Suite 1200
Houston, TX 77060

Dear Sirs:

We understand that STAT Healthcare, Inc. ("Old STAT") has entered into an
Amended and Restated Agreement and Plan of Reorganization dated as of March 15,
1996 (the "Reorganization Agreement") with AmHealth Corporation, AmHealth
Enterprises of the Valley, Inc., and AmHealth Ambulatory Services, Inc.
(collectively, the "AmHealth Corporations") and with the general and
substantially all of the limited partners of AmHealth Kidney Center of the
Valley, Ltd., Weslaco Kidney Center, Ltd., Starr Dialysis Center, Ltd., Mission
Kidney Center, Ltd., Brownsville Kidney Center Ltd., AmHealth Medical
Management, Ltd., Brownsville Hyperbaric Care, Ltd., Southwestern Infusion
Healthcare, Ltd. and AmHealth Ambulatory Healthcare, Ltd. (collectively the
"AmHealth Partnerships") (the AmHealth Corporations and AmHealth Partnerships
referred to collectively herein as "AmHealth") to be merged with and into New
STAT Healthcare, Inc. ("New STAT"). Pursuant to the Reorganization Agreement the
shareholders of the AmHealth Corporations (except for those shareholders who
perfect dissenters rights under Texas law) and the general and limited partners
of the AmHealth Partnerships will receive, in exchange for shares of common
stock and partnership interest of AmHealth, shares of common stock of New STAT
(the "New STAT Common Stock") (such transaction referred to as the "Exchange").
If the Exchange is consummated, New STAT shall issue an aggregate of 11,200,000
shares of New STAT Common Stock, which shall be allocated among the shareholders
and partners of AmHealth pursuant to Schedule A of the Reorganization Agreement
and each currently issued and outstanding share of common stock of Old STAT will
be converted into the right to receive one share of common stock of New STAT.
Upon consummation of the Exchange, the corporate name of New STAT will be
changed to "STAT Healthcare, Inc." New STAT would be a publicly held company and
application will be made to have the New STAT Common Stock approved for
quotation on the Nasdaq SmallCap Market and listed on the Boston Stock Exchange.
The Exchange is intended to qualify as a tax-free transaction and to be
accounted for as a "pooling of interests". The terms and conditions of the
Exchange are set forth in more detail in the Reorganization Agreement.

You have asked for our opinion as to whether the consideration to be offered in
the Exchange is fair, from a financial point of view, to the holders of Old
STAT's Common Stock.

In arriving at our opinion, we have: (i) reviewed financial information on
AmHealth and Old STAT furnished to us by both companies, including financial
forecasts; (ii) reviewed publicly available information; (iii) held discussions
with the managements of AmHealth and Old STAT concerning the businesses,
operations and prospects of both companies; (iv) reviewed the Reorganization
Agreement; (v) reviewed the reported prices and trading activity for the Old
STAT Common Stock; (vi) analyzed the pro forma impact of the Exchange on Old
STAT's earnings per share, consolidated capitalizaiton and financial ratios;
(vii) reviewed the contribution by each company to the pro forma combined
revenue, gross profit,operating income, pre-tax income and net income; (viii)
reviewed the valuations of publicly traded companies which we deemed comparable
to AmHealth and Old STAT; (ix) reviewed the financial terms, to the extent
publicly available, of certain comparable acquisition transactions which we
deemed relevant; (x) prepared discounted cash flow analyses of both companies;
and (xi) performed such other analyses as we deemed appropriate.

We have assumed and relied upon the accuracy and completeness of the financial
and other information used by us in arriving at our opinion without independent
verification. Furthermore, we did not obtain any independent appraisal of the
properties or assets of AmHealth or Old STAT. With respect to the financial
forecasts of AmHealth and Old STAT which we have reviewed, we have assumed that
such forecasts have been reasonably prepared and have relied upon estimates and
judgments of AmHealth and Old STAT management as to the future financial
performance of both companies. Our opinion is necessarily based upon economic,
market and other conditions as they exist on, and can be evaluated as of, the
date of this letter.

In arriving at our opinion, we were not authorized to solicit, and did not
solicit, interest from any party with respect to the acquisition of Old STAT or
any of its assets, nor did we have discussions or negotiate with any parties in
connection with the Reorganization Agreement and Exchange. Furthermore, we were
not asked to review, and did not review the allocation of New STAT Common Stock
among the shareholders and partners of AmHealth.

We have been retained by the Board of Directors of Old STAT as financial advisor
solely for the purpose of rendering this opinion and will receive a fee for our
services and accordingly, we have not been requested to and have not provided
any other services in connection with the Reorganization and Exchange.

It is understood that this letter is for the information of the Board of
Directors of Old STAT and may not be used for any other purpose without our
prior written consent. We hereby consent, however, to the inclusion of this
opinion as an exhibit to any proxy or registration statement distributed in
connection with the issuance of shares pursuant to the Reorganization Agreement.

Based upon and subject to the foregoing, we are of the opinion as of the date
here of that, from a financial point of view, the consideration to be offered in
the Exchange is fair to the holders of Old STAT's Common Stock.

Very truly yours,

SOUTHCOAST CAPITAL CORPORATION

By: MICHAEL L. MCALLISTER
Michael L. McAllister
Senior Vice President