RESPONSE ONCOLOGY INC, S-2, 1996-07-17

RESPONSE ONCOLOGY INC
S-2, 1996-07-17
SPECIALTY OUTPATIENT FACILITIES, NEC

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 17, 1996

REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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RESPONSE ONCOLOGY, INC.
(Exact name of registrant as specified in governing instrument)

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<TABLE>
<S> <C> <C>
TENNESSEE 8099 62-1212264
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

1775 MORIAH WOODS BLVD.
MEMPHIS, TENNESSEE 38117
(901) 761-7000
(Address of principal executive office)

JOHN A. GOOD, ESQ.
1775 MORIAH WOODS BLVD.
MEMPHIS, TENNESSEE 38117
(901) 761-7000
(Name and address of agent for service)
COPIES TO:

<TABLE>
<S> <C>
LINDA M. CROUCH, ESQ. FREDERICK W. KANNER, ESQ.
BAKER, DONELSON, BEARMAN & CALDWELL DEWEY BALLANTINE
165 MADISON AVE., 20TH FLOOR 1301 AVENUE OF THE AMERICAS
MEMPHIS, TENNESSEE 38103 NEW YORK, NEW YORK 10019
TELEPHONE (901) 577-2262 TELEPHONE (212) 259-7300
FACSIMILE (901) 577-2303 FACSIMILE (212) 259-6333
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 (the "Securities Act"), check the following box. / /

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
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PROPOSED MAXIMUM
TITLE OF SECURITIES AGGREGATE AMOUNT OF
BEING REGISTERED OFFERING PRICE(1) REGISTRATION FEE
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<S> <C> <C>
Common Stock, $.01 par value.................. $91,425,000 $31,526
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</TABLE>

(1) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE> 2

CROSS REFERENCE SHEET

<TABLE>
<CAPTION>
ITEM
NO. DESCRIPTION IN FORM S-2 LOCATION IN PROSPECTUS
- ---- ------------------------------------------- -------------------------------------------
<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus... Outside Front Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus............................ Additional Information; Inside Front Cover;
Outside Back Cover Page
3. Summary Information, Risk Factors and Ratio
of Earnings to Fixed Charges............. Outside Front Cover Page; Prospectus
Summary; Risk Factors
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price............ Not Applicable
6. Dilution................................... Not Applicable
7. Selling Security Holders................... Principal and Selling Shareholders
8. Plan of Distribution....................... Outside Front Cover Page; Prospectus
Summary; Underwriting
9. Description of Securities to be
Registered............................... Description of Capital Stock
10. Interests of Named Experts and Counsel..... Legal Matters; Experts
11. Information as to Registrant............... Prospectus Summary; Use of Proceeds;
Capitalization; Price Range of Common
Stock; Dividend Policy; Selected
Consolidated Financial Data; Unaudited
Combined Pro Forma Financial Information;
Management's Discussion and Analysis of
Financial Condition and Results of
Operations; Business; Management;
Principal and Selling Shareholders;
Additional Information; Consolidated
Financial Statements
12. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................. Management
</TABLE>
<PAGE> 3

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 17, 1996

PROSPECTUS

5,300,000 SHARES

RESPONSE ONCOLOGY, INC.
COMMON STOCK
---------------------

Of the 5,300,000 shares of Common Stock offered hereby, 4,700,000 shares
are being sold by Response Oncology, Inc. (the "Company") and 600,000 shares are
being sold by the Selling Shareholders named under "Principal and Selling
Shareholders." The Company will not receive any proceeds from the sale of shares
of Common Stock by the Selling Shareholders.

The Common Stock is quoted on The Nasdaq Stock Market's National Market
under the symbol "ROIX." On July 12, 1996, the last sale price for the Common
Stock as reported by Nasdaq was $15 per share.

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OF COMMON
STOCK OFFERED HEREBY.
---------------------
THESE SECURITIES 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 PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDERS
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<S> <C> <C> <C> <C>
Per Share $ $ $ $
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Total(3) $ $ $ $
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</TABLE>

(1) The Company and the Selling Shareholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."

(2) Before deducting expenses of the offering estimated at $650,000 payable by
the Company.

(3) The Selling Shareholders have granted the Underwriters a 30-day option to
purchase up to 795,000 additional shares of Common Stock on the same terms
as set forth above solely to cover over-allotments, if any. If the
Underwriters exercise such option in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to Selling Shareholders
will be $ , $ and $ , respectively. See "Underwriting."
---------------------
The shares of Common Stock are being offered by the several Underwriters
named herein, subject to prior sale, when, as and if accepted by them and
subject to certain conditions. It is expected that certificates for the shares
of Common Stock offered hereby will be available for delivery on or about
, 1996, at the offices of Smith Barney Inc., 333 West 34th Street, New
York, New York, 10001.
---------------------
SMITH BARNEY INC. J.C. BRADFORD & CO.
, 1996
<PAGE> 4

MAP

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

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OF
THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS (IF ANY) OR THEIR RESPECTIVE AFFILIATES MAY ENGAGE IN PASSIVE MARKET
MAKING TRANSACTIONS IN THE COMMON STOCK ON THE NASDAQ STOCK MARKET IN ACCORDANCE
WITH RULE 10B-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934. SEE "UNDERWRITING."
---------------------

2
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus. See "Risk Factors" for information that should be carefully
considered by prospective investors.

THE COMPANY

Response Oncology, Inc. (the "Company") is a comprehensive cancer
management company. The Company provides advanced cancer treatment services
through outpatient facilities known as IMPACT(R) Centers under the direction of
approximately 350 independent oncologists, manages the practices of oncologists
with whom the Company has affiliated and conducts clinical cancer research on
behalf of pharmaceutical manufacturers. The Company intends to build on its
relationships with oncologists developed through operation of its IMPACT(R)
Centers and on its expertise in clinical cancer research to rapidly expand the
number of oncology practices it manages. The Company has practice management
affiliations with a 10-physician medical oncology practice in Miami, Florida
(the "Miami Practice"), a four-physician medical oncology practice in Knoxville,
Tennessee (the "Knoxville Practice"), a two-physician medical oncology practice
in St. Petersburg, Florida (the "St. Petersburg Practice") and a four-physician
medical oncology practice in Ft. Lauderdale, Florida (the "Ft. Lauderdale
Practice"). The Company has entered into a definitive agreement for a practice
management affiliation with an eight-physician medical oncology practice in
Memphis, Tennessee (the "West Clinic"). The Company has also entered into
letters of intent for practice management affiliations with six medical oncology
practices consisting of an aggregate of 16 physicians in Broward, Dade, Palm
Beach and Martin Counties, Florida and Knoxville, Tennessee.

The Company presently operates 41 IMPACT(R) Centers in 21 states which
provide high dose chemotherapy with stem cell support to cancer patients on an
outpatient basis. The Company believes that it is the leading national provider
of complex chemotherapy with stem cell rescue and has been the leading force in
"re-engineering" the process of bone marrow transplantation through the
utilization of outpatient centers and standardization of supportive care in
conjunction with leading oncologists. Through its IMPACT(R) Centers, the Company
has developed extensive medical information systems and databases containing
clinical and patient information, analysis of treatment results and side effects
and clinical care pathways. These systems and databases support the Company's
clinical trials program, which involves carefully planned, uniform treatment
regimens administered to a significant group of patients together with the
monitoring of outcomes and side effects of these treatments. The clinical trials
program allows the Company to develop a rational means of improving future
treatment regimens by predicting which patients are most likely to benefit from
different treatments.

The Company believes that private and public reforms in the health care
industry emphasizing cost containment and accountability have prompted a trend
among oncologists to expand their traditional practices of two to five
physicians into larger group practices that provide a wider range of services in
an outpatient setting. The Company believes that many of these providers lack
the capital, management capabilities and infrastructure necessary to address
changes in the increasingly competitive and complex health care environment,
which is characterized by rising business complexity, growing control by payors
over practice patterns and patient flows, substantial investment in medical
technology and information systems and cost pressures on physicians that require
them to seek operating efficiencies. Practice management companies have
increasingly provided the management expertise, bargaining power, capital
resources and general business and medical industry knowledge required by
physicians to effectively contract with hospitals, governmental agencies,
private payors and managed care payors. However, of the approximately 6,000
practicing oncologists in the United States, the Company believes that less than
10% are affiliated with public practice management companies.

strategically positioned the Company to promote and facilitate the consolidation
of oncology practices into a national cancer care network providing
comprehensive, outpatient oncology services. The Company believes that its
integrated system of practice and disease management (i) produces economies of
scale and other efficiencies, thus reducing the costs of providing healthcare;
(ii) positions the Company to operate effectively in an environment dominated by
managed care; and (iii) allows physicians with whom the Company affiliates to
focus on medicine and research without sacrificing autonomy and control over the
medical aspects of their business.

COMPLETED AND PROPOSED AFFILIATIONS

Since January 1996, the Company has consummated practice management
affiliations with the Miami Practice, the Knoxville Practice, the St. Petersburg
Practice and the Ft. Lauderdale Practice (collectively, the "Completed
Affiliations"), consisting of an aggregate of 20 medical oncologists in two
states. In addition, the Company has entered into a definitive agreement for a
practice management affiliation with the West Clinic in Memphis, Tennessee, and
has entered into non-binding letters of intent for practice management
affiliations with six medical oncology practices consisting of an aggregate of
16 physicians in Broward, Dade, Palm Beach and Martin Counties, Florida and
Knoxville, Tennessee (collectively, the "Proposed Affiliations"). See
"Business -- Overview -- Completed and Proposed Affiliations." If all of the
Proposed Affiliations are consummated, the Company will have practice management
affiliations with an aggregate of 11 medical oncology practices consisting of an
aggregate of 44 physicians. See "Risk Factors -- Risks Related to Expansion" and
"Unaudited Pro Forma Combined Financial Information."

THE OFFERING

Common stock being offered by:
The Company............................ 4,700,000 shares
The Selling Shareholders............... 600,000 shares(1)

Common Stock to be outstanding after
the offering.............................. 12,071,589 shares(2)

Use of proceeds............................. Funding of Proposed Affiliations
and
reduction of debt

The Nasdaq Stock Market symbol.............. ROIX
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(1) Excludes up to 795,000 shares that may be sold by the Selling Shareholders
pursuant to the Underwriters' overallotment option.
(2) Based upon the number of shares of Common Stock outstanding as of March 31,
1996; excludes an aggregate of 313,754 shares issued and 85,000 shares of
Common Stock issuable upon exercise of warrants delivered as purchase price
consideration in the Completed Affiliations and 1,878,100 shares of Common
Stock issuable upon the exercise of stock options outstanding under the
Company's Stock Option Plans. See Note F of Notes to Consolidated Financial
Statements of the Company.
4
<PAGE> 7

SUMMARY CONSOLIDATED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
--------------------------------------- --------------------------------
PRO FORMA PRO FORMA
1993 1994 1995 1995(1) 1995 1996 1996(1)
------- ------- ------- --------- ------- ------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS DATA:
REVENUE:
Net revenue................................... $37,697 $38,251 $44,298 $83,083 $11,201 $13,341 $22,879
Other income.................................. 188 220 282 282 51 17 17
------- ------- ------- --------- ------- ------- ---------
Total revenue............................... 37,885 38,471 44,580 83,365 11,252 13,358 22,896
------- ------- ------- --------- ------- ------- ---------
OPERATING EXPENSE:
Operating and clinic.......................... 29,744 31,758 32,893 63,932 8,218 10,345 17,155
General and administrative.................... 2,891 4,286 5,512 5,512 1,244 1,267 1,267
Depreciation and amortization................. 1,917 2,125 1,736 6,109 413 571 1,516
Interest...................................... 92 120 17 1,835 4 193 512
Provision for doubtful accounts............... 2,470 2,528 2,106 2,106 545 372 372
------- ------- ------- --------- ------- ------- ---------
Earnings (loss) before minority interest,
equity in earnings (loss) of unconsolidated
affiliate and income tax expense............ 771 (2,346) 2,316 3,871 828 610 2,074
Equity in earnings (loss) of unconsolidated
affiliate................................... (71) -- -- -- -- -- --
Minority interest in consolidated joint
ventures' earnings.......................... -- -- (2) (2) -- (94) (94)
------- ------- ------- --------- ------- ------- ---------
Earnings (loss) before income tax expense..... 700 (2,346) 2,314 3,869 828 516 1,980
Income tax expense(2)......................... -- -- -- (310) -- -- (580)
------- ------- ------- --------- ------- ------- ---------
Net earnings (loss)........................... 700 (2,346) 2,314 3,559 828 516 1,400
Common Stock dividend to preferred
stockholders................................ (3) (3) (3) (4) -- -- --
------- ------- ------- --------- ------- ------- ---------
Net earnings (loss) to common stockholders.... $ 697 $(2,349) $ 2,311 $ 3,555 $ 828 $ 516 $ 1,400
======= ======= ======= ========== ======= ======= ==========
Net earnings (loss) per share of Common
Stock(3).................................... $ 0.10 $ (0.34) $ 0.32 $ 0.28 $ 0.12 $ 0.07 $ 0.11
======= ======= ======= ========== ======= ======= ==========
Weighted average shares....................... 7,166 6,953 7,171 12,683 6,967 7,669 13,180
======= ======= ======= ========== ======= ======= ==========
OPERATING DATA:
Physician Relationships:
IMPACT(R) Center Medical Directors(4)....... 221 250 312 312 280 344 344
Affiliated Physicians(5).................... -- -- -- 44 -- 9 44
IMPACT(R) Centers wholly-owned................ 28 27 27 27 28 27 27
IMPACT(R) Center joint ventures............... -- 6 14 14 7 16 16
States........................................ 16 19 21 21 19 21 21
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
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PRO FORMA
AS
ACTUAL ADJUSTED(6)
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<S> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents......................................................................... $ 483 $ --
Working capital.............................................................................. 11,114 14,396
Total assets................................................................................. 38,619 185,538
Long-term debt, less current maturities...................................................... 6,265 28,518
Total stockholders' equity................................................................... 20,442 94,043
</TABLE>

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the treasury stock method (based on the assumed public offering price set
forth on the cover page hereof). Shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock are assumed to be common
share equivalents for all periods presented.
(4) Includes Medical Directors of both wholly owned and joint venture IMPACT(R)
Centers.
(5) Includes physicians comprising the Completed Affiliations and those
physicians comprising the Proposed Affiliations. There can be no assurance
that the Proposed Affiliations will be consummated. See "Risk
Factors -- Risks Related to Expansion."
(6) Gives effect to the consummation of the Completed Affiliations and Proposed
Affiliations as if such transactions had occurred on March 31, 1996. Also
adjusted to give effect to the sale of the Common Stock offered hereby (at
an assumed public offering price of $15.00 per share) and the application
of the net proceeds therefrom as described under "Use of Proceeds" as if
such transaction had occurred on March 31, 1996.

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

Unless otherwise noted, the information in this Prospectus reflects a
1-for-5 reverse stock split effected by the Company with respect to the Common
Stock on November 1, 1995.
6
<PAGE> 9

RISK FACTORS

Prospective investors are cautioned that this Prospectus may contain, in
addition to historical information, forward-looking statements that involve
risks and uncertainties. Such statements reflect management's current views, are
based on many assumptions and are subject to risks and uncertainties. The
Company's actual results could differ materially from those currently
anticipated due to a number of factors, including, but not limited to, those
discussed below, as well as those discussed elsewhere in this Prospectus.

RISKS RELATED TO EXPANSION

A principal element of the Company's strategy involves growth through
consummation of additional oncology practice management affiliations. This
affiliation and expansion strategy will require substantial capital, and the
Company anticipates that it may, in the future, seek to raise additional funds
through debt financing or the issuance of equity or debt securities. There can
be no assurance that sufficient funds will be available on terms acceptable to
the Company or at all. In addition, the Company may issue equity or convertible
securities as consideration in affiliation transactions. If additional equity
securities are issued, dilution to the Company's shareholders may result, and if
additional funds are raised through the incurrence of debt, the Company may
become subject to restrictions on its operation and finances. Any limitation on
the Company's ability to obtain additional financing could have a material
adverse effect on the Company.

The success of the Company's growth strategy is dependent in part on its
ability to manage and control the costs and non-medical operations of affiliated
practices. The Company has entered into a definitive agreement for a practice
management affiliation with the West Clinic and non-binding letters of intent
for six of the Proposed Affiliations, comprising an aggregate of seven practices
with an aggregate of 24 physicians. The West Clinic definitive agreement is
subject to certain conditions, including the availability of financing, which
have not been and may not be satisfied. There can be no assurance that all or
any of the Proposed Affiliations can be consummated on terms acceptable to the
Company, or at all. Further, there can be no assurance that the Company will be
able to integrate additional practices into the Company's operations, to
effectively manage or control the costs of such practices or that the Company
will be able to identify additional suitable practice management affiliation
candidates and/or consummate practice management affiliation transactions in the
future. See "Business -- Overview -- Completed and Proposed Affiliations" and
"-- Strategy."

LIMITED HISTORY OF MANAGING ONCOLOGY PRACTICES

The Company entered into its initial practice management affiliation with
the Miami Practice in January 1996. Thereafter, the Company consummated similar
transactions with the Knoxville Practice in April 1996, the St. Petersburg
Practice in June 1996 and the Ft. Lauderdale Practice in July 1996. Except for
the Completed Affiliations, the Company has no significant experience in
managing physician practices, and there can be no assurance that the Company can
profitably provide services to oncology practices or that the Company's
personnel, systems and infrastructure will be sufficient to permit effective
management of oncology practices. Although the Company intends to enter into
managed care capitated contracts, no such contracts have been consummated.

PRIOR OPERATING LOSSES

Since the Company's inception in June 1984 through December 1994, the
Company had recorded operating losses in all but three years and as of March 31,
1996, had a cumulative deficit of $39.8 million. Although the Company recorded
net income for the year ended December 31, 1995 and the three months ended March
31, 1996, there can be no assurance that the Company will sustain such
profitability. See "Selected Consolidated Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

7
<PAGE> 10

COMPETITION

The physician practice management industry is highly competitive. Several
companies that have established operating histories and greater resources than
the Company are pursuing acquisition, development and management activities
similar to those of the Company. In addition, some hospitals, clinics, health
care companies, HMOs and insurance companies provide services similar to those
provided by the Company. There can be no assurance that the Company will be able
to compete effectively with such competitors, that additional competitors will
not enter the market or that such competition will not make it more difficult to
consummate additional practice management affiliations with oncology practices
on terms beneficial to the Company. The Company also believes that changes in
governmental and private reimbursement policies, among other factors, have
resulted in increased competition among providers of medical services. There can
be no assurance that the Company will be able to compete effectively in the
markets that it serves. See "Business -- Competition."

The demand for oncology services currently exceeds the supply of qualified
oncologists. As a result, the Company is under competitive pressures for the
recruitment and retention of qualified oncologists. There can be no assurance
that the Company and its affiliated oncology practices will be able to
successfully recruit qualified oncologists in the face of increased competition
for such persons.

REDUCTIONS IN THIRD PARTY REIMBURSEMENT

Substantially all of the Company's revenue is derived directly or
indirectly from third party payors, which consist of managed care plans and
private insurance for the IMPACT(R) Centers and managed care plans, private
insurance and governmental programs (e.g., Medicare and Medicaid) for oncology
practices with which the Company has practice management affiliations. These
third party payors are increasingly negotiating reduced payment schedules with,
and imposing stricter utilization and reimbursement standards on, the providers
of health care services. The Company believes that per-patient revenue from
oncology-related services will continue to decline due to these actions by third
party payors. Third party payors may also deny reimbursement for
pharmaceuticals, supplies and certain medical services provided by the Company
and its affiliated oncologists, if they determine that a treatment was not
performed in accordance with treatment protocols established by such payors or
for other reasons. Historically, third party payers have not covered high dose
chemotherapy, such as provided at the Company's IMPACT(R)Centers, for some
indications. Further reductions in payments to physicians or other changes in
reimbursement for health care services could have a material adverse effect on
the Company. Certain health care services, including those rendered by the
Company and its affiliated oncologists, may be subject from time to time to
changes in both the degree of regulation and level of reimbursement. There can
be no assurance that payments under governmental and private third party payor
programs will not be reduced or will, in the future, be sufficient to cover
costs allocable to patients eligible for reimbursement pursuant to such
programs, or that any reductions in the Company's revenue resulting from reduced
payments could be offset by the Company through cost reductions, increased
volume, introduction of new procedures or otherwise. See
"Business -- Reimbursement and Cost Containment."

IMPAIRMENT OF COST OF SERVICE AGREEMENTS

The Company has consummated practice management affiliations with the Miami
Practice, Knoxville Practice, St. Petersburg Practice and Ft. Lauderdale
Practice since December 31, 1995 and has entered into a definitive agreement
with the West Clinic and six letters of intent for the Proposed Affiliations. In
affiliating with physician practices, the Company enters into management
services agreements with an initial term of 40 years ("Service Agreements"). The
pro forma cost of Service Agreements as of March 31, 1996 resulting from the
consummation of the Completed Affiliations and in connection with the Proposed
Affiliations is approximately $133.4 million. The Company amortizes the Service
Agreements on a straight-line basis over their 40-year lives which, on a pro
forma basis, would constitute an annual expense of approximately $3.3 million.
The Company evaluates on a regular basis whether events and circumstances have
occurred that indicate all or a portion of the carrying amount of such assets
may no longer be recoverable, in which case an additional charge to earnings
would become necessary. Any such future determination requiring the write-off

8
<PAGE> 11

of a significant portion of unamortized cost of Service Agreements could
adversely affect the Company's results of operations. There can be no assurance
that the value of such assets will ever be realized by the Company.

RISKS ASSOCIATED WITH MANAGED CARE CONTRACTS

As an increasing percentage of patients come under the control of managed
care entities, the Company believes that its success will be, in part, dependent
upon the Company's ability to negotiate contracts on behalf of its affiliated
oncologists with HMOs, employer groups and other private third party payors
pursuant to which its affiliated oncologists' services will be provided on a
risk-sharing or capitated basis. Under a capitated agreement, a health care
provider such as the Company agrees to accept a predetermined amount per member
per month in exchange for undertaking to provide all covered services to
patients. Such contracts pass much of the economic risk of providing care from
the payor to the provider. The Company's success in implementing its strategy of
entering into such contracts on behalf of its affiliated oncologists could
result in greater predictability of revenue, but increased risk to the Company
resulting from greater uncertainty regarding expenses. To the extent that
patients or enrollees covered by such contracts require more frequent or
extensive care than the Company anticipates, additional costs would be incurred,
resulting in a reduction in the Company's operating margins. In the worst case,
service fee revenue derived from risk-sharing or capitated contracts would be
insufficient to cover the costs of the services provided. Any such reduction or
elimination of earnings could have a material adverse effect on the Company.
Moreover, there is no certainty that the Company will be able to establish and
maintain satisfactory relationships with third party payors, many of which
already have existing provider structures in place and may not be able or
willing to re-arrange their provider networks. Increasingly, some jurisdictions
are taking the position that capitated agreements in which the provider of
medical services bears the economic risk of providing such services should be
regulated by insurance laws. As a consequence, the Company may be limited in
some of the states in which it operates in its attempt to enter into or arrange
capitated agreements for its affiliated oncology practices when those capitated
arrangements involve the assumption of risk.

DEPENDENCE ON PHYSICIAN PRACTICES

The Company is dependent upon its affiliations with physician practices.
The Company has entered into Service Agreements with the Completed Affiliations,
each having a term of 40 years, and has proposed to enter into similar Service
Agreements with the practices comprising the Proposed Affiliations. There can be
no assurance that existing and future practices with which the Company
affiliates will maintain successful medical practices, that the Service
Agreements with the practices will not be terminated, or that any of the key
members of a particular practice will continue practicing with such practice.
Loss of revenue by the affiliated practices could have a material adverse effect
on the Company. See "Business."

GOVERNMENT REGULATION

The relationships among health care providers, including physicians and
other clinicians, are subject to extensive federal and state regulation. The
fraud and abuse provisions of the Social Security Act, as well as the laws of
certain states, prohibit the solicitation, payment, receipt or offering of any
direct or indirect remuneration in return for, or for the inducement of, the
referral of patients, items or services that are paid for, in whole or in part,
by Medicare or Medicaid (or, in the case of the laws of certain states, all
third party reimbursers). These laws also impose significant penalties for false
or improper billings for physician services and impose restrictions on
physicians' referrals for designated health services to entities with which they
have financial relationships. Although the Company believes that all financial
relationships between oncologists and the Company are in compliance with federal
and state laws, there can be no assurance that such relationships will not be
challenged as violating any federal or state law. Violations of these laws may
result in substantial civil or criminal penalties, including large civil
monetary penalties and exclusion from participation in the Medicare and Medicaid
programs. Such exclusion and penalties, if applied to the Company or its
affiliated oncology practices, could have a material adverse effect on the
Company. See "Business -- Government Regulation."

9
<PAGE> 12

Under certain provisions of the Omnibus Budget Reconciliation Act of 1993
known as "Stark II," physicians who refer Medicare and Medicaid patients to the
Company for certain designated health services may not have an investment
interest in or a compensation arrangement with the Company, and the Company may
not accept Medicare or Medicaid referrals from such physicians without first
complying with certain specified exceptions to the law. Violation of Stark II by
the Company could have a material adverse effect on the Company.

The laws of many states prohibit business corporations such as the Company
from exercising control over the medical judgments or decisions of physicians
and from engaging in certain financial arrangements, such as splitting fees with
physicians. These laws and their interpretations vary from state to state and
are enforced by both the courts and regulatory authorities, each with broad
discretion. Expansion of the operations of the Company to certain jurisdictions
may require structural and organizational modifications of the Company's form of
relationship with oncology practices, which could have an adverse effect on the
Company. There can be no assurance that the Company's Service Agreements will
not be challenged as constituting the unlawful corporate practice of medicine or
unlawful fee splitting arrangements or that the enforceability of the provisions
of such agreements, including non-competition agreements, will not be limited.

In addition to extensive existing governmental health care regulation,
there are numerous initiatives at the federal and state levels for comprehensive
reforms affecting the payment for and availability of health care services.
Aspects of certain of these health care proposals, such as further reductions in
or capitation of Medicare and Medicaid payments and additional prohibitions on
direct or indirect physician ownership of facilities to which they refer
patients, if adopted, could have a material adverse effect on the results of
operations and stock prices of companies in health care and related industries
and may similarly affect the price of the Common Stock following the offering.
See "Business -- Government Regulation."

The Company believes that its operations are conducted in material
compliance with applicable laws; however, the Company has not received a legal
opinion to this effect, and many aspects of the Company's business operations
have not been the subject of state or federal regulatory interpretation. There
can be no assurance that a review of the Company's operations by federal or
state regulatory authorities will not result in a determination that could have
a material adverse effect on the Company or its affiliated oncologists.
Additionally, there can be no assurance that the health care regulatory
environment will not change so as to adversely affect the Company's or the
affiliated oncologists' existing operations or restrict their expansion. The
regulatory framework of certain jurisdictions may limit the Company's expansion
into, or ability to continue operations within, such jurisdictions if the
Company is unable to modify its operational structure to conform to such
regulatory framework or to obtain necessary approvals, licenses and permits. Any
limitation on the Company's ability to expand could have a material adverse
effect on the Company. See "Business -- Government Regulation."

POTENTIAL LIABILITY AND INSURANCE

The provision of medical services entails an inherent risk of professional
malpractice and other similar claims. Under the Service Agreements, the Company
provides only non-medical services such as preparing annual capital and
operating budgets, preparing financial statements, ordering and purchasing
medical and office inventory and supplies, billing patients and third party
payors, maintaining records, negotiating and administering all managed care
contracts, arranging for legal and accounting services related to practice
operations and recruiting and supervising all non-physician professional support
and administrative personnel. In its IMPACT(R) Centers, employees of the
Company, acting under the supervision of physicians, deliver medical care to
patients. The Company could be implicated in claims related to medical services
provided by affiliated oncologists or at the IMPACT(R) Centers, and there can be
no assurance that claims, suits or complaints relating to services delivered by
an affiliated oncologist will not be asserted against the Company in the future.
Although the Company maintains insurance it believes is adequate both as to
risks and amounts, there can be no assurance that any claim asserted against the
Company for professional or other liability will be covered by, or will not
exceed the coverage limits of, such insurance.

10
<PAGE> 13

The availability and cost of professional liability insurance has been
affected by various factors, many of which are beyond the control of the
Company. There can be no assurance that the Company will be able to maintain
insurance in the future at a cost that is acceptable to the Company, or at all.
Any claim made against the Company not fully covered by insurance could have a
material adverse effect on the Company.

DEPENDENCE UPON KEY PERSONNEL

The Company is dependent upon the ability and experience of its executive
officers. The Company currently has employment contracts with four of the
Company's executive officers. The loss of the services of any or all of its
executive officers or the Company's inability in the future to attract and
retain management and other key personnel could have a material adverse effect
on the Company.

CERTAIN ANTI-TAKEOVER PROVISIONS

Certain provisions of the Company's Charter and By-laws, as well as
Tennessee law, could together or separately discourage potential acquisition
proposals, delay or prevent a change in control of the Company and limit the
price that certain investors might be willing to pay in the future for shares of
the Common Stock. Certain provisions of the Company's Charter provide for a
classified Board of Directors and the issuance, without further shareholder
approval, of preferred stock with rights and privileges which could be senior to
the Common Stock. The Company also is subject to the Tennessee Business
Combination Act which, with certain exceptions, prohibits a Tennessee
corporation from engaging in any of a broad range of business combinations with
any "interested shareholder" for a period of five years following the date that
such shareholder became an interested shareholder. See "Description of Capital
Stock."

POSSIBLE VOLATILITY OF STOCK PRICE

Although prior to the offering there has been a public market for the
Common Stock, there can be no assurance that an active public market for the
Common Stock will continue after the offering. From time to time after the
offering, there may be significant volatility in the market price for the Common
Stock. Quarterly operating results of the Company, changes in general conditions
in the economy or the health care industry, or other developments affecting the
Company or its competitors could cause the market price of the Common Stock to
fluctuate substantially. The equity markets have, on occasion, experienced
significant price and volume fluctuations that have affected the market prices
for many companies' securities and that have often been unrelated to the
operating performance of these companies. Concern about the potential effects of
health care reform measures has contributed to the volatility of stock prices of
companies in health care and related industries and may similarly affect the
price of the Common Stock following the offering. Any such fluctuations that
occur following the closing of the offering may adversely affect the market
price of the Common Stock.

11
<PAGE> 14

THE COMPANY

The Company was incorporated in June 1984 as a Tennessee corporation and
the Company's name was changed to Response Oncology, Inc. on November 1, 1995.
Unless otherwise indicated or required by context, references to the Company
include its consolidated subsidiaries. The Company's principal offices are
located at 1775 Moriah Woods Blvd., Memphis, Tennessee 38117, and its telephone
number at that address is (901) 761-7000.

USE OF PROCEEDS

The net proceeds from the sale of the 4,700,000 shares of Common Stock
being offered by the Company hereby (assuming a public offering price of $15.00
per share and after deducting underwriting discounts and commissions and
estimated offering expenses) are estimated to be approximately $65.2 million.
The Company intends to use the estimated net proceeds as follows: (i) $10.0
million will be used to satisfy a note payable (the "Seafield Note") to the
Company's majority shareholder, Seafield Capital Corporation, which note matures
upon the later of completion of the offering or August 31, 1998 and has an
interest rate of 9.5%; (ii) $27.5 million will be used to pay the cash
consideration required by the definitive agreement between the Company and West
Clinic; (iii) approximately $22.0 million will be used to pay a portion of the
cash consideration payable in connection with the Proposed Affiliations; and
(iv) approximately $5.7 million will be used to repay indebtedness to
NationsBank of Tennessee, N.A. ("NationsBank") and Union Planters National Bank
("Union Planters") pursuant to the Company's revolving credit facility (the
"Credit Facility"). The Credit Facility is a $27.5 million committed facility,
comprised of a $20.0 million acquisition facility (the "Acquisition Facility")
and a $7.5 million working capital facility (the "Working Capital Facility").
The Acquisition Facility matures May 31, 1998 and bears interest at a variable
rate equal to the London Interbank Offered Rate ("LIBOR") plus a spread of
between 1.5% and 2.625%, depending upon borrowing levels. As of June 30, 1996
the interest rate was approximately 7.6%. The Working Capital Facility matures
May 30, 1997, subject to a one year extension at the Company's election, and
bears interest at a variable rate equal to LIBOR plus a spread of between 1.875%
and 2.375%. As of July 10, 1996, $18.7 million aggregate principal amount was
outstanding on the Credit Facility with a current interest rate of approximately
8.2%. See "Risk Factors -- Risks Related to Expansion."

12
<PAGE> 15

PRICE RANGE OF COMMON STOCK

The Common Stock is quoted on The Nasdaq Stock Market's National Market
under the symbol "ROIX." Prior to October 26, 1995, the Common Stock was listed
on The American Stock Exchange under the symbol "RTK." The following table sets
forth, for the periods indicated, the high and low sales prices for the Common
Stock as reported on The American Stock Exchange through October 26, 1995 and
The Nasdaq Stock Market's National Market. All prices are adjusted to give
effect to a reverse stock split effected by the Company with respect to the
Common Stock on November 1, 1995.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994
First Quarter.............................................................. $14 3/8 $ 8 1/8
Second Quarter............................................................. $15 5/8 $ 8 3/4
Third Quarter.............................................................. $16 1/4 $11 1/4
Fourth Quarter............................................................. $13 3/4 $ 8 1/8
YEAR ENDED DECEMBER 31, 1995
First Quarter.............................................................. $12 1/2 $ 8 1/8
Second Quarter............................................................. $13 3/4 $ 9 1/16
Third Quarter.............................................................. $21 1/4 $ 7 1/2
Fourth Quarter............................................................. $20 $ 9 5/8
YEAR ENDING DECEMBER 31, 1996
First Quarter.............................................................. $16 1/2 $12
Second Quarter............................................................. $21 $12 1/2
Third Quarter, through July 12, 1996....................................... $17 $15
</TABLE>

On July 12, 1996 the last reported sale price of the Common Stock on The
Nasdaq Stock Market's National Market was $15 per share. On July 12, 1996 there
were approximately 620 holders of record of Common Stock.

DIVIDEND POLICY

The Company has not declared or paid any cash dividends on its Common Stock
since its inception. The Company currently anticipates that it will retain
earnings to finance its growth and does not intend to pay dividends in the
foreseeable future. The payment and rate of future cash dividends on the
Company's Common Stock, if any, will be subject to review by the Board of
Directors in light of the Company's financial condition, results of operations
and capital requirements, and other factors deemed pertinent by the Company's
Board of Directors. There can be no assurance that the Company will ever pay any
dividend.

13
<PAGE> 16

CAPITALIZATION

The following table sets forth the capitalization of the Company as of
March 31, 1996 and on a pro forma basis as adjusted to give effect to (i)
additional long-term debt incurred to finance Completed Affiliations; (ii) the
consummation of the Completed and Proposed Affiliations and the issuance of
Common Stock in connection therewith and (iii) the sale of the 4,700,000 shares
of Common Stock offered by the Company hereby (at an assumed public offering
price of $15.00 per share) and the application of the net proceeds therefrom as
described under "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1996(1)
------------------------
PRO FORMA
ACTUAL AS ADJUSTED
-------- -----------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt, net of current portion.............................. $ 6,265 $ 28,518
-------- -----------
Shareholders' equity:
Preferred stock, $1.00 par value, 3,000,000 shares authorized,
27,833 shares outstanding and as adjusted....................... 28 28
Common stock, $.01 par value, 30,000,000 shares authorized,
7,371,589 shares outstanding and 13,180,264 shares outstanding,
as adjusted(1).................................................. 74 128
Additional paid-in capital....................................... 60,137 133,684
Accumulated deficit.............................................. (39,797) (39,797)
-------- -----------
Total shareholders' equity.................................. 20,442 94,043
-------- -----------
Total capitalization........................................ $ 26,707 $ 122,561
======== =========
</TABLE>

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

(1) Does not include 85,000 shares of Common Stock issuable upon the exercise of
certain warrants and 1,878,100 shares of Common Stock issuable upon the
exercise of options granted pursuant to the Company's Stock Option Plans.

14
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the
Company. The consolidated financial data as of and for each of the years ended
December 31, 1993, 1994 and 1995 are derived from the consolidated financial
statements of the Company audited by KPMG Peat Marwick LLP, independent
certified public accountants. The consolidated financial data as of and for the
eight months and year ended December 31, 1991 and 1992, respectively, are
derived from the audited consolidated financial statements of the Company
audited by Ernst & Young LLP, independent certified public accountants. The
consolidated financial statements as of December 31, 1994 and 1995, and for each
of the years in the three-year period ended December 31, 1995, including the
Notes thereto, and the independent auditors' report thereon, are included
elsewhere in this Prospectus. The selected financial data for the three months
ended March 31, 1996 and the balance sheet data as of March 31, 1996 are derived
from unaudited financial statements which, in the opinion of management, include
all adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of financial condition and the results of operations.
Operating results for the three months ended March 31, 1996 are not necessarily
indicative of the results that may be expected for the fiscal year ended
December 31, 1996. The selected consolidated financial data presented below
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations," the Consolidated Financial
Statements and Notes thereto, and other financial information appearing
elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
EIGHT MONTHS YEAR ENDED DECEMBER 31, MARCH 31,
ENDED ------------------------------------------------- -----------------------------
------------ PRO FORMA PRO FORMA
1991 1992 1993 1994 1995 1995(1) 1995 1996 1996(1)
------------ ------- ------- ------- ------- --------- ------- ------- ---------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net revenue.................... $8,797 $27,870 $37,697 $38,251 $44,298 $83,083 $11,201 $13,341 $22,879
Other income................... 124 173 188 220 282 282 51 17 17
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Total revenue................ 8,921 28,043 37,885 38,471 44,580 83,365 11,252 13,358 22,896
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Operating expenses:
Operating and clinic........... 7,106 20,293 29,744 31,758 32,893 63,932 8,218 10,345 17,155
General and administrative..... 1,101 2,648 2,891 4,286 5,512 5,512 1,244 1,267 1,267
Depreciation and
amortization................. 340 1,118 1,917 2,125 1,736 6,109 413 571 1,516
Interest....................... 13 71 92 120 17 1,835 4 193 512
Provision for doubtful
accounts..................... 869 3,613 2,470 2,528 2,106 2,106 545 372 372
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Earnings (loss) before
minority interest and
equity in earnings (loss)
of unconsolidated affiliate
and income tax expense..... (508) 300 771 (2,346) 2,316 3,871 828 610 2,074
Equity in earnings (loss) of
unconsolidated affiliate..... 224 272 (71) -- -- -- -- -- --
Minority interest in
consolidated joint ventures'
earnings..................... (85) 19 -- -- (2) (2) -- (94) (94)
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Earnings (loss) before income
tax expense.................. (369) 591 700 (2,346) 2,314 3,869 828 516 1,980
Income tax expense(2).......... -- -- -- -- (310) -- -- (580)
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Net earnings (loss)............ $ (369) $ 591 $ 700 $(2,346) $ 2,314 $ 3,559 $ 828 $ 516 $ 1,400
Common Stock dividend to
preferred stockholders....... (213) (6) (3) (3) (3) (4) -- -- --
------------ ------- ------- ------- ------- --------- ------- ------- ---------
Net earnings (loss) to common
stockholders................. $ (582) $ 585 $ 697 $(2,349) $ 2,311 $ 3,555 $ 828 $ 516 $ 1,400
============ ======= ======= ======= ======= ========== ======= ======= ==========
Net earnings (loss) per share
of Common Stock(3)........... $ (.13) $ .09 $ 0.10 $ (0.34) $ 0.32 $ 0.29 $ 0.12 $ 0.07 $ 0.11
============ ======= ======= ======= ======= ========== ======= ======= ==========
Weighted average shares........ 4,406 6,608 7,166 6,953 7,171 12,683 6,967 7,669 13,180
============ ======= ======= ======= ======= ========== ======= ======= ==========
OPERATING DATA:
Physician Relationships:
IMPACT(R) Center Medical
Directors(4)............... 71 163 221 250 312 312 280 344 344
Affiliated Physicians(5)..... -- -- -- -- -- 44 -- 9 44
IMPACT(R) Centers wholly
owned........................ 12 22 28 27 27 27 28 27 27
IMPACT(R) Center joint
ventures..................... -- -- -- 6 14 14 7 16 16
States......................... 5 12 16 19 21 21 19 21 21
</TABLE>

15
<PAGE> 18

<TABLE>
<CAPTION>
MARCH 31, 1996
AS OF DECEMBER 31, ------------------------
----------------------------------------------- PRO FORMA
1991 1992 1993 1994 1995 ACTUAL AS ADJUSTED(6)
------- ------- ------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and equivalents............................ $ 2,383 $ 1,762 $ 3,101 $ 2,922 $ 4,205 $ 483 $ --
Working capital................................. 4,770 6,240 12,937 12,285 15,753 11,114 14,396
Total assets.................................... 10,274 17,100 25,877 21,037 24,765 38,619 185,538
Long-term debt, less current maturities......... 261 320 185 29 15 6,265 28,518
Stockholders' equity............................ 8,105 12,252 18,779 16,507 19,843 20,442 94,043
</TABLE>

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

(1) Gives effect to (i) the Completed Affiliations and Proposed Affiliations and
(ii) the sale of the Common Stock offered hereby (at an assumed public
offering price of $15.00 per share) and the application of the net proceeds
therefrom as set forth under "Use of Proceeds" as if such transactions had
occurred as of January 1, 1995. See "Use of Proceeds" and "Unaudited Pro
Forma Combined Financial Information."
(2) Provisions for income taxes have not been reflected in historical net income
since there is no taxable income due to utilization of net operating loss
carryovers.
(3) Pro forma net earnings per share is computed by dividing net earnings by the
number of common and common equivalent shares outstanding during the
period. All stock options and warrants issued have been considered as
outstanding common share equivalents for all periods presented, even if
anti-dilutive, under the treasury stock method (at an assumed public
offering price of $15.00 per share). Shares of Common Stock issuable upon
conversion of the Convertible Preferred Stock are assumed to be common
share equivalents for all periods presented.
(4) Includes Medical Directors of both wholly owned and joint venture IMPACT(R)
Centers.
(5) Includes physicians comprising the Completed Affiliations and those
physicians comprising the Proposed Affiliations. There can be no assurance
that the Proposed Affiliations will be consummated. See "Risk
Factors -- Risks Related to Expansion."
(6) Gives effect to the consummation of the Completed Affiliations and Proposed
Affiliations as if such transactions had occurred on March 31, 1996. Also
adjusted to give effect to the sale of the Common Stock offered hereby (at
an assumed public offering price of $15.00 per share) and the application
of the net proceeds therefrom as described under "Use of Proceeds" as if
such transaction had occurred on March 31, 1996.

16
<PAGE> 19

UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The following Unaudited Pro Forma Combined Balance Sheet of the Company at
March 31, 1996 and the Unaudited Pro Forma Combined Statements of Operations for
the year ended December 31, 1995 and the three months ended March 31, 1996 have
been prepared to reflect adjustments to the Company's historical results of
operations and financial position to give effect to the Completed and Proposed
Affiliations.

The Unaudited Pro Forma Combined Statements of Operations for the year
ended December 31, 1995 and the three months ended March 31, 1996 give effect to
the Completed and Proposed Affiliations as if all transactions occurred on
January 1, 1995. The Unaudited Pro Forma Combined Balance Sheet has been
prepared as if all of the transactions occurring after March 31, 1996 occurred
as of March 31, 1996.

The Unaudited Pro Forma Combined Balance Sheet at March 31, 1996 gives
effect to the availability of the Credit Facility and the consummation of the
Offering and the application of net proceeds therefrom, including the repayment
of indebtedness, as if the Credit Facility had been available and the Offering
had occurred on March 31, 1996. In addition, the Unaudited Pro Forma Combined
Statements of Operations for the year ended December 31, 1995 and the three
months ended March 31, 1996 give effect to the availability of the Credit
Facility and the consummation of the Offering and the application of net
proceeds therefrom, as if the Credit Facility had been available and the
Offering had occurred as of January 1, 1995. See "Use of Proceeds."

The Unaudited Pro Forma Combined Statement of Operations for the year ended
December 31, 1995 have been prepared by the Company based on the audited
financial statements of the Company and of the Completed and Proposed
Affiliations (with the exception of Lawrence Snetman, M.D., P.A. which is
unaudited), which statements are included elsewhere in this Prospectus. The
Unaudited Pro Forma Combined Statement of Operations for the three months ended
March 31, 1996 and the Unaudited Pro Forma Combined Balance Sheet as of March
31, 1996 have been prepared by the Company based on the unaudited financial
statements of the Company and of the Completed and Proposed Affiliations, which
statements are included elsewhere in this Prospectus. For the purposes of
preparing the pro forma financial statements, the Company has computed net
revenue from Service Agreements for the periods prior to consummation of the
Completed and Proposed Affiliations by applying the management fee formula
pursuant to the applicable Service Agreement to the historical medical practice
revenue of such practice. These unaudited pro forma combined financial
statements are presented for illustrative purposes only and may not be
indicative of the actual results that would have been obtained if the
transactions had occurred on the dates indicated or that may be realized in the
future. The pro forma information should be read in conjunction with the
historical financial statements of the Company and the Completed and Proposed
Affiliations and the notes thereto included elsewhere in this Prospectus.

17
<PAGE> 20

UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996

<TABLE>
<CAPTION>
HISTORICAL PRO FORMA
-------------------------------------------- -------------------------------------------------------------------
COMPLETED COMPLETED PROPOSED FINANCING AND
RESPONSE AFFILIATIONS PROPOSED AFFILIATIONS AFFILIATIONS OFFERING
ONCOLOGY, INC. ------------ AFFILIATIONS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS AS ADJUSTED
-------------- (A) ------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and
equivalents... $ 483,191 $ 315,018 $ 740,631 $(24,107,026)(B) $(50,247,430)(C) $72,816,000(M) $ 384
Short-term
investments... 361,718 7,756 (7,756)(D) 361,718
Accounts
receivable,
net.......... 15,100,543 2,947,650 5,325,343 23,373,536
Supplies...... 1,090,643 309,798 688,333 2,088,774
Prepaids...... 525,882 47,862 38,981 612,725
Other current
assets....... 5,202,142 277,313 48,542 (277,313)(D) 5,250,684
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
current
assets... 22,764,119 3,897,641 6,849,586 (24,384,339) (50,255,186) 72,816,000 31,687,821
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Property and
equipment,
net.......... 3,695,637 1,966,369 1,629,162 (148,479)(D) 7,142,689
Intangible
assets....... 502,538 502,538
Service
agreements... 40,863,325(E) 93,521,642(E) 134,384,967
Other
assets....... 11,656,558 363,060 (199,456)(D) 11,820,162
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
assets... $ 38,618,852 $ 5,864,010 $ 8,841,808 $ 16,330,507 $ 43,067,000 $72,816,000 $185,538,177
=============== =========== =========== ============== ============== ============== ==============
Accounts
payable &
accrued
expenses..... $ 7,587,978 $ 1,039,266 $ 2,042,689 $ 408,680(F) $ (43,488) (F) $ 11,035,125
Income taxes
payable...... 88,691 1,449,094 1,537,785
Notes
payable...... 4,004,708 1,897,822 607,128 (1,694,741)(F) (375,403)(F) 4,439,514
Capital lease
obligations... 57,622 46,947 175,116 279,685
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
current
liabilities... 11,650,308 3,072,726 4,274,027 (1,286,061) (418,891) 17,292,109
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Capital lease
obligations... 48,865 740,031 788,896
Notes
payable...... 6,265,369 23,131 313,730 5,068,411(G) 8,422,872(H) 7,636,000(M) 27,729,513
Deferred tax
liability.... 11,501,045(I) 33,922,439(I) 45,423,484
Minority
interest..... 261,425 136,175 (136,175)(J) 261,425
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
liabilities... 18,177,102 3,144,722 5,463,963 15,187,583 40,875,098 7,216,000 90,064,468
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Stockholders'
equity:
Preferred
stock...... 27,833 27,833
Common
stock...... 73,782 1,501 (36,656) 1,637(K) 40,780(L) 47,000(M) 128,044
Paid-in
capital.... 60,137,024 2,035 3,763,262(K) 4,648,441(L) 65,133,000(M) 133,683,762
Retained
earnings
(accumulated
deficit)... (39,796,889) 2,717,787 3,412,466 (2,717,787)(K) (3,412,466)(L) (39,796,889)
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
stockholders'
equity... 20,441,750 2,719,288 3,377,845 1,047,112 1,276,755 65,180,000 94,042,750
-------------- ------------ ------------ ------------ ------------ ------------- ------------
Total
liabilities
and
stockholders'
equity... $ 38,618,852 $ 5,864,010 $ 8,841,808 $ 16,330,507 $ 43,067,000 $72,816,000 $185,538,177
=============== =========== =========== ============== ============== ============== ==============
</TABLE>

See Unaudited Historical Combined Balance Sheet and accompanying notes to
Unaudited Pro Forma Combined Balance Sheet.

18
<PAGE> 21

UNAUDITED HISTORICAL COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>

PROPOSED
COMPLETED AFFILIATIONS AFFILIATIONS
--------------------------------------------------------- ----------
KNOXVILLE SOUTHEAST
HEMATOLOGY JEFFREY L. FLORIDA ONCOLOGY TOTAL ROSENBERG
ONCOLOGY PAONESSA, HEMATOLOGY COMPLETED & KALMAN,
ASSOCIATES M.D., P.A. GROUP, P.A. AFFILIATIONS M.D., P.A.
---------- ---------- ---------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
HISTORICAL INFORMATION:
Cash and equivalents................................... $ 166,362 $ 9,998 $ 138,658 $ 315,018 $ 37,506
Short-term investments................................. 7,756
Accounts receivable, net............................... 998,657 1,178,648 770,345 2,947,650 763,137
Supplies............................................... 109,350 139,631 60,817 309,798 97,621
Prepaids............................................... 3,875 43,987 47,862 35,699
Other current assets................................... 277,313 277,313
---------- ---------- ---------- ------------ ----------
Total current assets............................. 1,274,369 1,609,465 1,013,807 3,897,641 941,719
Property and equipment, net............................ 1,698,479 247,492 20,398 1,966,369 72,216
Other assets........................................... 7,049
---------- ---------- ---------- ------------ ----------
Total assets..................................... $2,972,848 $1,856,957 $1,034,205 $ 5,864,010 $1,020,984
========== ========== ========== ============ ==========
Accounts payable & accrued expenses.................... $ 245,001 $ 314,758 $ 479,507 $ 1,039,266 $ 295,302
Income taxes payable................................... 88,691 88,691 235,026
Notes payable.......................................... 1,713,757 184,065 1,897,822 10,364
Capital lease obligations.............................. 46,947 46,947
--------- ---------- ---------- ------------ ----------
Total current liabilities........................ 2,005,705 314,758 752,263 3,072,726 540,692
Capital lease obligations.............................. 48,865 48,865
Notes Payable.......................................... 23,131 23,131 18,138
Minority interest......................................
Stockholders' equity:
Common stock.......................................... 1,000 501 1,501 100
Paid-in capital.......................................
Retained earnings..................................... 895,147 1,541,199 281,441 2,717,787 462,054
---------- ---------- ---------- ------------ ----------
895,147 1,542,199 281,942 2,719,288 462,154
---------- ---------- ---------- ------------ ----------
Total liabilities and stockholders' equity............ $2,972,848 $1,856,957 $1,034,205 $ 5,864,010 $1,020,984
========== ========== ========== ============ ==========

<CAPTION>
PROPOSED AFFILIATIONS
------------------------------------------------------------------
DRS.
HANAF, HEMATOLOGY
WEINREB, ANTONUCCI, ONCOLOGY
WEST CLINIC, WEISBERG & MCCORMACK ASSOCIATES OF THE
P.C. WEISS, M.D.,P.A. & KERNS TREASURE COAST
---------------- ---------------- --------- ------------------
<S> <C> <C> <C> <C>
HISTORICAL INFORMATION:
Cash and equivalents................................... $ 410,957 $ 36,201 $ 38,340 $ 197,771
Short-term investments.................................
Accounts receivable, net............................... 2,291,043 239,550 520,796 591,137
Supplies............................................... 25,299 195,000 166,413
Prepaids............................................... 3,282
Other current assets................................... 28,356 18,793
---------- -------- -------- -----------
Total current assets............................. 2,730,356 319,843 757,418 955,321
Property and equipment, net............................ 1,332,392 78,637 14,345 70,089
Other assets........................................... 48,926 188,851 32,420
---------- -------- -------- -----------
Total assets..................................... $4,111,674 $398,480 $960,614 $ 1,057,830
========== ======== ======== ===========
Accounts payable & accrued expenses.................... $ 762,727 96,500 $ 91,995 $ 115,515
Income taxes payable................................... 785,600 92,184 336,284
Notes payable.......................................... 492,432 2,230 20,500
Capital lease obligations.............................. 164,006 4,310
---------- -------- -------- -----------
Total current liabilities........................ 2,204,765 195,224 112,495 451,799
Capital lease obligations.............................. 717,911 12,600
Notes Payable.......................................... 71,423 48,536
Minority interest...................................... 136,175
Stockholders' equity:
Common stock.......................................... 13 (37,569) 500
Paid-in capital....................................... 2,035
Retained earnings..................................... 979,352 228,225 799,583 605,531
---------- -------- -------- -----------
981,400 190,656 799,583 606,031
---------- -------- -------- -----------
Total liabilities and stockholders' equity............ $4,111,674 398,480 $960,614 $ 1,057,830
========== ======== ======== ===========

<CAPTION>
PROPOSED AFFILIATIONS
---------------------------------------
THE CENTER
FOR (UNAUDITED)
HEMATOLOGY LAWRENCE A. TOTAL
ONCOLOGY, SNETMAN, PROPOSED
P.A. M.D.,P.A. AFFILIATIONS
---------- ----------- ------------
<S> <C> <C> <C>
HISTORICAL INFORMATION:
Cash and equivalents................................... $ 16,784 $ 3,072 $ 740,631
Short-term investments................................. 7,756
Accounts receivable, net............................... 826,767 92,913 5,325,343
Supplies............................................... 204,000 688,333
Prepaids............................................... 38,981
Other current assets................................... 1,393 48,542
---------- -------- ----------
Total current assets............................. 1,048,944 95,985 6,849,586
Property and equipment, net............................ 37,721 23,762 1,629,162
Other assets........................................... 85,814 363,060
---------- -------- ----------
Total assets..................................... $1,086,665 $205,561 $8,841,808
========== ======== ==========
Accounts payable & accrued expenses.................... $ 662,067 $ 18,583 $2,042,689
Income taxes payable................................... 1,449,094
Notes payable.......................................... 71,190 10,412 607,128
Capital lease obligations.............................. 6,800 175,116
---------- -------- ----------
Total current liabilities........................ 740,057 28,995 4,274,027
Capital lease obligations.............................. 9,520 740,031
Notes Payable.......................................... 60,916 114,717 313,730
Minority interest...................................... 136,175
Stockholders' equity:
Common stock.......................................... 300 (36,656)
Paid-in capital....................................... 2,035
Retained earnings..................................... 275,872 61,849 3,412,466
---------- -------- ----------
276,172 61,849 3,377,845
---------- -------- ----------
Total liabilities and stockholders' equity............ $1,086,665 $205,561 $8,841,808
========== ======== ==========
</TABLE>

19
<PAGE> 22

NOTES TO UNAUDITED PRO FORMA

COMBINED BALANCE SHEET

<TABLE>
<S> <C>
(A) Reflects unaudited historical combined balance sheet of Completed Affiliations
consummated after March 31, 1996.
(B) Reflects (i) distribution of cash by oncology practices to former owners and/or
repayment of notes payable prior to consummation of the Completed Affiliations
($315,000), and (ii) payment by the Company of aggregate cash portion of purchase price
for Completed Affiliations ($23,792,000).
(C) Reflects (i) cash permitted and anticipated to be distributed by oncology practices to
owners or otherwise utilized for debt retirement prior to consummation of the Proposed
Affiliations ($740,000), and (ii) aggregate cash portion of purchase price proposed to
be paid in the Proposed Affiliations ($49,507,000).
(D) Reflects (i) other current assets ($277,313) and property and equipment, net ($148,479)
distributed by oncology practices to former owners prior to consummation of Completed
Affiliations, and (ii) anticipated distribution of short-term investments ($7,756) and
other assets ($199,456) by oncology practices to owners prior to consummation of the
Proposed Affiliations.
(E) Reflects the value of Service Agreements, estimated for purposes of the pro forma
balance sheet as $40,863,325 and $93,521,642 for the Completed and Proposed
Affiliations, respectively. Such estimates are not expected to change materially when
the Company completes its valuations of tangible assets using the purchase method of
accounting for the Completed and Proposed Affiliations.
(F) Reflects (i) additional accounts payable assumed by the Company in connection with the
Completed Affiliations, and (ii) assumption by owners of oncology practices or other
repayment by oncology practices of accounts payable, accrued expenses and current
maturities of notes payable at or prior to consummation of Completed and Proposed
Affiliations.
(G) Reflects (i) issuance of unsecured subordinated promissory notes by the Company as part
of the purchase price for Completed Affiliations ($5,250,000), reduced by (ii)
long-term portion of notes payable of oncology practices either assumed by former
owners or otherwise repaid by oncology practices prior to or upon consummation of
Completed Affiliations ($182,000).
(H) Reflects (i) proposed issuance of unsecured subordinated promissory notes by the
Company as part of the purchase price for Proposed Affiliations ($8,969,000), reduced
by (ii) aggregate long-term portion of notes payable of oncology practices proposed to
be assumed by owners or otherwise repaid by oncology practices prior to or upon
consummation of Proposed Affiliations ($546,000).
(I) Reflects deferred taxes resulting from the excess of the cost of Service Agreements
recorded by the Company under the purchase method of accounting over the income tax
basis of the Service Agreements.
(J) Reflects elimination of interest in real estate partnership proposed to be distributed
by West Clinic prior to consummation of the Proposed Affiliation with that practice.
(K) Reflects (i) value of Common Stock and warrants to purchase Common Stock ($3,766,400)
issued by the Company as part of the purchase price for Completed Affiliations, and
(ii) elimination of historical equity of oncology practices comprising Completed
Affiliations.
(L) Reflects (i) value of Common Stock ($4,654,600) that the Company proposes to issue as
part of the purchase price for the Proposed Affiliations, and (ii) elimination of
historical equity of oncology practices comprising Proposed Affiliations.
(M) Reflects cash portion of the aggregate purchase price of the Completed and Proposed
Affiliations, which funds were provided by (i) the net proceeds ($65,180,000) from the
issuance and sale of 4,700,000 shares of Common Stock at an assumed public offering
price of $15.00 per share, and (ii) additional borrowings under the Credit Facility.
</TABLE>

20
<PAGE> 23

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL --------------------------------------------------------------------
----------------------------------------- COMPLETED PROPOSED FINANCING AND
RESPONSE COMPLETED PROPOSED AFFILIATIONS AFFILIATIONS OFFERING
ONCOLOGY, INC. AFFILIATIONS AFFILIATIONS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS AS ADJUSTED
-------------- ----------- ------------ ------------ ------------ ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue
from
services...... $ 44,297,798 $27,279,686 $ 32,617,203 $(27,279,686)(A) $(35,649,203)(A)(D) $41,265,798
Net revenue
from service
agreements.... 18,203,174(A) 23,614,239(A) 41,817,413
Other income... 282,011 352,353 1,498,669 (352,353)(B) (1,498,669)(B) 282,011
------------ ----------- ------------ ------------ ------------ -----------
Total
revenue... 44,579,809 27,632,039 34,115,872 (9,428,865) (13,533,633) 83,365,222
------------ ----------- ------------ ------------ ------------ -----------
Operating
Expenses:
Operating and
clinic........ 32,892,728 20,844,972 31,365,974 (5,771,640)(C) (15,399,596)(C)(D) 63,932,438
General and
administrative... 5,512,306 5,512,306
Depreciation
and
amortization... 1,736,055 396,580 336,728 1,314,299(E) 2,325,245(E) 6,108,907
Interest....... 16,860 269,114 151,571 478,783(F) 341,301(F) $ 577,314 (F) 1,834,943
Provision for
doubtful
accounts...... 2,105,696 2,105,696
------------ ----------- ------------ ------------ ------------ ------------ -----------
42,263,645 21,510,666 31,854,273 (3,978,558) (12,733,050) 577,314 79,494,290
------------ ----------- ------------ ------------ ------------ ------------ -----------
Earnings before
minority
interest and
income tax
expense....... 2,316,164 6,121,373 2,261,599 (5,450,307) (800,583) (577,314) 3,870,932
Minority
interest in
consolidated
joint
ventures'
earnings...... 1,806 1,806
------------ ----------- ------------ ------------ ------------ ------------ -----------
Earnings before
income tax
expense....... 2,314,358 6,121,373 2,261,599 (5,450,307) (800,583) (577,314) 3,869,126
Income tax
expense
(benefit)..... 262,237 (53,839) (95,572)(G) 416,269(G) (219,366)(G) 309,729
------------ ----------- ------------ ------------ ------------ ------------ -----------
Net earnings... 2,314,358 5,859,136 2,315,438 (5,354,735) (1,216,852) (357,948) 3,559,397
Common stock
dividend to
preferred
stockholders... 3,825 3,825
------------ ----------- ------------ ------------ ------------ ------------ -----------
Net earnings to
common
stockholders.. $ 2,310,533 $ 5,859,136 $ 2,315,438 $ (5,354,735) $ (1,216,852) $ (357,948) $ 3,555,572
============ =========== ============ ============ ============ ============= ===========
Pro forma net
earnings per
share......... $ .28
===========
Number of
shares used in
pro forma net
earnings per
share......... 12,682,618(H)
==========
</TABLE>

See Unaudited Historical Combined Statement of Operations for the year
ended December 31, 1995 and accompanying notes to Unaudited Pro Forma Combined
Statements of Operations.

21
<PAGE> 24

HISTORICAL COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
COMPLETED AFFILIATIONS PROPOSED AFFILIATIONS
-------------------------------------------------------------- ------------------------------------
SOUTHEAST
ONCOLOGY FLORIDA
HEMATOLOGY KNOXVILLE ONCOLOGY WEINREB,
GROUP OF HEMATOLOGY JEFFREY L. HEMATOLOGY TOTAL ROSENBERG WEISBERG
SOUTH ONCOLOGY PAONESSA, GROUP, COMPLETED & KALMAN, WEST CLINIC, & WEISS,
FLORIDA, P.A. ASSOCIATES M.D., P.A. P.A. AFFILIATIONS M.D., P.A. P.C. M.D., P.A.
------------- ---------- ---------- ---------- ----------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue from
services............. $7,933,697 $6,712,255 $7,896,188 $4,737,546 $27,279,686 $4,196,802 $11,559,887 $1,982,441
Other income........... 297,195 55,158 352,353 1,222,195 7,018
---------- ---------- ---------- ---------- ----------- ---------- ----------- ----------
Total revenue... 7,933,697 7,009,450 7,951,346 4,737,546 27,632,039 4,196,802 12,782,082 1,989,459
---------- ---------- ---------- ---------- ----------- ---------- ----------- ----------
Costs and expenses:
Operating and clinic
expenses............. 7,395,423 4,115,554 4,742,455 4,591,540 20,844,972 4,491,377 12,745,495 1,779,217
Depreciation and
amortization.......... 104,534 237,622 40,359 14,065 396,580 22,807 166,091 33,156
Interest............... 24,485 244,629 269,114 118,590
----------- ---------- ---------- ---------- ----------- ---------- ----------- ----------
Total
expenses...... 7,524,442 4,597,805 4,782,814 4,605,605 21,510,666 4,514,184 13,030,176 1,812,373
----------- ---------- ---------- ---------- ----------- ---------- ----------- ----------
Earnings before income
taxes................. 409,255 2,411,645 3,168,532 131,941 6,121,373 (317,382) (248,094) 177,086
Income tax expense
(benefit)............ 210,000 52,237 262,237 (113,092) (45,700) 69,283
----------- ---------- ---------- ---------- ----------- ---------- ----------- ----------
Net earnings (loss).... $ 199,255 $2,411,645 $3,168,532 $ 79,704 $ 5,859,136 $ (204,290) $ (202,394) $ 107,803
=========== ========== =========== ========== =========== ========== ============ ==========

<CAPTION>
PROPOSED AFFILIATIONS
------------------------------------------------------------------------

DRS.
HARAF, HEMATOLOGY (UNAUDITED)
ANTONUCCI, ONCOLOGY THE CENTER FOR LAWRENCE A. TOTAL
MCCORMACK ASSOCIATES OF THE HEMATOLOGY SNETMAN PROPOSED
& KERNS TREASURE COAST ONCOLOGY, P.A. M.D., P.A. AFFILIATIONS
---------- ----------------- -------------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue from servic $4,124,807 $ 4,910,146 $5,285,643 $ 557,477 $ 32,617,203
Other income........... 193,890 75,566 1,498,669
---------- ----------- ---------- --------- ------------
Total revenue... 4,124,807 5,104,036 5,361,209 557,477 34,115,872
---------- ----------- ---------- --------- ------------
Costs and expenses:
Operating and clinic ex 2,402,875 5,011,265 4,532,421 403,324 31,365,974
Depreciation and
amortization.......... 24,631 30,116 33,274 26,653 336,728
Interest............... 7,593 888 7,306 17,194 151,571
---------- ----------- ---------- --------- ------------
Total
expenses...... 2,435,099 5,042,269 4,573,001 447,171 31,854,273
---------- ----------- ---------- --------- ------------
Earnings before income
taxes................. 1,689,708 61,767 788,208 110,306 2,261,599
Income tax expense (ben 35,670 (53,839)
---------- ----------- ---------- --------- ------------
Net earnings (loss).... $1,689,708 $ 26,097 $ 788,208 $ 110,306 $ 2,315,438
========== =========== ========== ========= ============
</TABLE>

22
<PAGE> 25

UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA
-----------------------------------------------------------------
HISTORICAL FINANCING
-------------------------------------------- COMPLETED PROPOSED AND
RESPONSE COMPLETED PROPOSED AFFILIATIONS AFFILIATIONS OFFERING
ONCOLOGY, INC. AFFILIATIONS AFFILIATIONS ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS AS ADJUSTED
-------------- ------------ ------------ ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue from
services....... $ 13,340,885 $5,159,472 $ 10,037,813 $(5,159,472)(A) $(11,071,813)(A)(D) $12,306,885
Net revenue from
service
agreements..... 3,558,581(A) 7,013,852(A) 10,572,433
Other income.... 16,729 80,255 125,682 (80,255)(B) (125,682)(B) 16,729
------------ ---------- ------------ ----------- ------------ ----------- ----------
Total
revenue... 13,357,614 5,239,727 10,163,495 (1,681,146) (4,183,643) 22,896,047
------------ ---------- ------------ ----------- ------------ ----------- ----------
Costs and
Expenses:
Operating and
clinic
expenses....... 10,344,781 3,290,344 7,541,546 (742,976)(C) (3,278,935)(C)(D) 17,154,760
General and
administrative
expenses....... 1,266,840 1,266,840
Depreciation and
amortization... 570,965 75,398 78,039 210,046(E) 581,311(E) 1,515,759
Interest........ 192,281 23,328 48,160 29,547(F) 75,058(F) $ 144,328(F) 512,702
Provision for
doubtful
accounts....... 372,100 372,100
------------ ---------- ------------ ----------- ------------ ----------- ----------
Total
expenses... 12,746,967 3,389,070 7,667,745 (503,383) (2,622,566) 144,328 20,822,161
------------ ---------- ------------ ----------- ------------ ----------- ----------
Earnings before
minority
interest and
income tax
expense........ 610,647 1,850,657 2,495,750 (1,177,763) (1,561,077) (144,328) 2,073,886
Minority
interest....... 94,369 94,369
------------ ---------- ------------ ----------- ------------ ----------- ----------
Earnings before
income taxes... 516,278 1,850,657 2,495,750 (1,177,763) (1,561,077) (144,328) 1,979,517
Income tax
expense........ 19,305 682,908 246,490(G) (314,347)(G) (54,842)(G) 579,514
------------ ---------- ------------ ----------- ------------ ----------- ----------
Net earnings.... $ 516,278 $1,831,352 $ 1,812,842 $(1,424,253) $ (1,246,730) $ (89,486) $1,400,003
============ ========== ============ =========== ============ =========== ==========
Pro forma net
earnings per
share.......... $ .11
==========
Number of shares
used in pro
forma net
earnings per
share.......... 13,180,264(H)
==========
</TABLE>

See Unaudited Historical Combined Statement of Operations for the three
months ended March 31, 1996 and accompanying notes to Unaudited Pro Forma
Combined Statements of Operations.

23
<PAGE> 26

UNAUDITED HISTORICAL COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
COMPLETED AFFILIATIONS PROPOSED AFFILIATIONS
--------------------------------------------------- ------------------------------------
SOUTHEAST
FLORIDA
KNOXVILLE ONCOLOGY WEINREB,
HEMATOLOGY JEFFREY L. HEMATOLOGY TOTAL ROSENBERG WEST WEISBERG
ONCOLOGY PAONESSA, GROUP, COMPLETED & KALMAN, CLINIC, & WEISS,
ASSOCIATES M.D., P.A. P.A. AFFILIATIONS M.D., P.A. P.C. M.D., P.A.
---------- ---------- ---------- ------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenue from services.... $1,566,635 $2,470,571 $1,122,266 $ 5,159,472 $1,298,572 $3,888,691 $ 653,075
Other income................. 50,851 29,404 80,255 89,919 1,291
---------- ---------- ---------- ------------ ---------- ---------- ----------
Total revenue........ 1,617,486 2,499,975 1,122,266 5,239,727 1,298,572 3,978,610 654,366
---------- ---------- ---------- ------------ ---------- ---------- ----------
Costs and expenses:
Operating and clinic
expenses................... 714,758 1,506,324 1,069,262 3,290,344 655,960 3,243,391 552,018
Depreciation and
amortization............... 59,100 13,789 2,509 75,398 5,262 41,523 4,801
Interest..................... 23,328 23,328 38,368
---------- ---------- ---------- ------------ ---------- ---------- ----------
Total expenses....... 797,186 1,520,113 1,071,771 3,389,070 661,222 3,323,282 556,819
---------- ---------- ---------- ------------ ---------- ---------- ----------
Earnings before income
taxes...................... 820,300 979,862 50,495 1,850,657 637,350 655,328 97,547
Income tax expense........... 19,305 19,305 245,214 261,000 37,384
---------- ---------- ---------- ------------ ---------- ---------- ----------
Net earnings................. $ 820,300 $ 979,862 $ 31,190 $ 1,831,352 $ 392,136 $ 394,328 $ 60,163
========== ========== ========== =========== ========== ========== ==========

<CAPTION>
PROPOSED AFFILIATIONS
------------------------------------------------------------------------
HEMATOLOGY
DRS. HARAF ONCOLOGY
ANTONUCCI, ASSOCIATES OF THE CENTER FOR LAWRENCE TOTAL
MCCORMACK THE TREASURE HEMATOLOGY A. SNETMAN PROPOSED
& KERNS COAST ONCOLOGY, P.A. M.D., P.A. AFFILIATIONS
---------- ------------- -------------- ---------- ------------
<S> <C> <C> <C> <C> <C>
Net revenue from services.... $1,015,225 $ 1,430,669 $1,612,212 $ 139,369 $ 10,037,813
Other income................. 34,472 125,682
--------- ----------- ----------- ---------- ------------
Total revenue........ 1,015,225 1,430,669 1,646,684 139,369 10,163,495
--------- ----------- ----------- ---------- ------------
Costs and expenses:
Operating and clinic
expenses................... 548,345 1,075,663 1,365,338 100,831 7,541,546
Depreciation and
amortization............... 6,250 7,498 6,042 6,663 78,039
Interest..................... 1,524 55 3,914 4,299 48,160
--------- ----------- ----------- ---------- ------------
Total expenses....... 556,119 1,083,216 1,375,294 111,793 7,667,745
--------- ----------- ----------- ---------- ------------
Earnings before income
taxes...................... 459,106 347,453 271,390 27,576 2,495,750
Income tax expense........... 139,310 682,908
--------- ----------- ----------- ---------- ------------
Net earnings................. $ 459,106 $ 208,143 $ 271,390 $ 27,576 $ 1,812,842
========= =========== =========== ========== ============
</TABLE>

24
<PAGE> 27

NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS

(A) Reflects (i) elimination of historical net revenue from services of
practices comprising Completed and Proposed Affiliations, and (ii) revenue
to the Company pursuant to the Service Agreements. The Service Agreements
provide for the payment to the Company of a service fee equal to the sum
of clinic expenses plus a percentage of net revenue or net operating
income (defined in the Service Agreement as net revenue less clinic
expenses), or, in the case of one Service Agreement, a fixed amount.
Clinic expenses include all expenses of the practice except physician
compensation, benefits and other direct physician expenses.

(B) Reflects elimination of non-recurring revenue/gains of the affiliated
oncology groups, including $915,000 of non-recurring gain from a real
estate partnership recorded by a Proposed Affiliation for the year ended
December 31, 1995, and interest income on invested assets not acquired by
the Company.

(C) Reflects elimination of physician expenses which are not the
responsibility of the Company pursuant to the Service Agreements.

(D) Reflects elimination of historical revenue and operating expenses for
sales of pharmaceuticals by the Company to The West Clinic.

(E) Reflects additional amortization attributable to the Service Agreements
over the contractual terms of 40 years.

(F) Reflects additional interest cost (i) relative to unsecured subordinated
promissory notes given to sellers in Completed and Proposed Affiliations
($21,670,000 outstanding at December 31, 1995 and $15,710,000 for March
31, 1996), based on the weighted average interest rate of 5.7% per annum
for the year ended December 31, 1995 and 4.5% per annum for the three
months ended March 31, 1996, and (ii) relative to borrowings under the
Credit Facility ($7,636,000 outstanding at March 31, 1996), based on an
average borrowing rate of 8%.

(G) Reflects federal and state income taxes that the Company would have
incurred on pro forma earnings before income taxes at a 38 percent
combined income tax rate, less the effect of net operating loss
carryforwards of $3,054,125 for the year ended December 31, 1995 and
$548,965 for the three months ended March 31, 1996.

(H) The number of shares used in pro forma net earnings per share for the year
ended December 31, 1995 and the three months ended March 31, 1996 are
determined as follows:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1995 MARCH 31, 1996
----------------- --------------
<S> <C> <C>
Weighted average shares of Common Stock and common
stock equivalents outstanding for historical
period............................................ 7,171,459 7,669,105
Shares issued as purchase price consideration for
Completed and Proposed Affiliations............... 726,159 726,159
Shares issuable upon exercise of warrants issued as
purchase price consideration in Completed and
Proposed Affiliations............................. 85,000 85,000
Shares assumed issued pursuant to the offering...... 4,700,000 4,700,000
----------------- --------------
Number of shares used in pro forma earnings per
share............................................. 12,682,618 13,180,264
============= ===========
</TABLE>

25
<PAGE> 28

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

OVERVIEW

In 1990, the Company began development of a network of specialized
IMPACT(R) Centers to provide complex outpatient chemotherapy services under the
direction of practicing oncologists. The majority of the therapies provided at
the IMPACT(R) Centers entail the administration of high dose chemotherapy
coupled with peripheral blood stem cell support of the patient's immune system.
At December 31, 1995, the Company's network consisted of 41 IMPACT(R) Centers,
including 27 wholly owned IMPACT(R) Centers, seven hospital-based managed
IMPACT(R) Centers and seven IMPACT(R) Centers owned and operated in partnership
with a host hospital. Prior to January 1996, the Company derived substantially
all of its revenues from outpatient cancer treatment services through
reimbursements from third party payors on a fee-for-service or discounted
fee-for-service basis.

Commencing with the affiliations with the Miami Practice in January 1996,
the Knoxville Practice in April 1996, the St. Petersburg Practice in June 1996
and the Ft. Lauderdale Practice in July 1996, the Company commenced execution of
its strategy of expanding its comprehensive cancer management services through
affiliations with premier oncology groups. The Company has entered into a
definitive agreement with the West Clinic and has executed letters of intent for
practice management affiliations with six additional oncology practices.
Pursuant to Service Agreements, the Company provides management services that
extend to all non-medical aspects of the operations of affiliated oncology
practices. The Company is responsible for providing facilities, equipment,
supplies, support personnel and management and financial advisory services. The
Company's resulting revenue from Service Agreements includes practice operating
expenses (other than amounts retained by physicians) and a management fee either
fixed in amount or equal to a percentage of each affiliated oncology group's
adjusted net revenue or net operating income. In certain affiliations, the
Company may also be entitled to a performance fee if certain financial criteria
are satisfied. Upon consummation of all Proposed Affiliations, the Company's
practice management relationships will include:

<TABLE>
<S> <C>
Affiliated Oncologists................................................. 44
Affiliated Oncology Groups............................................. 11
Sites of Service....................................................... 18
States................................................................. 2
</TABLE>

RESULTS OF OPERATIONS

Three Months ended March 31, 1996 Compared to Three Months ended March 31,
1995

The Company's net earnings for the first quarter of 1996 were $516,000, or
$.07 per share, compared to net earnings of $828,000, or $.12 per share, for the
comparable period in 1995.

Net revenue for the first quarter of 1996 was $13.3 million as compared to
$11.2 million in the first quarter of 1995, an increase of $2.1 million, or 19%.
The increase was primarily attributable to revenue from the Miami Practice
affiliation, newly established high dose chemotherapy centers in joint ventures
with host hospitals and increased pharmaceutical sales to physicians.

Patient services revenue for the first quarter of 1996 was $8.1 million as
compared to $8.6 million in the first quarter of 1995, a decrease of $500,000,
or 5%. The decrease was due primarily to an unprofitable IMPACT(R) Center which
the Company closed in April 1996.

Operating expenses for the first quarter of 1996 were $10.3 million as
compared to $8.2 million for the first quarter of 1995, an increase of $2.1
million, or 26%. These expenses consist of payroll costs,

26
<PAGE> 29

pharmaceutical and laboratory expenses, medical director fees, rent expense and
other operational expenses. Operating expenses as a percentage of net revenue
were 78% compared to 73% for the comparable period of 1995. This increase was
primarily attributable to the additional expenses incurred in connection with
the Company's diversification into physician practice management and network
development in South Florida, and to a lesser extent, sales of pharmaceuticals
to physicians.

General and administrative costs for the first quarter of 1996 were $1.3
million as compared to $1.2 million for the first quarter of 1995, an increase
of $23,000, or 2%. As a percentage of net revenue, general and administrative
costs were 9% compared to 11% for the comparable period of 1995.

Depreciation and amortization expense for the first quarter of 1996 was
$571,000 as compared to $412,000 for the first quarter of 1995, an increase of
$159,000, or 39%. The increase was attributable to amortization of the cost of
the Service Agreement for the Miami Practice affiliation over the Service
Agreement term (40 years).

Interest expense for the first quarter of 1996 was $192,000 as compared to
$4,000 for the first quarter of 1995, an increase of $188,000. The increase was
attributable to an increase in the average borrowings outstanding under the line
of credit between the periods ended March 31, 1996 and 1995.

The provision for doubtful accounts for the first quarter of 1996 was
$372,000 as compared to $545,000 for the first quarter of 1995, a decrease of
$173,000, or 32%. The provision as a percentage of net revenue was 3% and 5% for
the quarters ended March 31, 1996 and 1995, respectively. The decrease was
attributable to increased managed care contracting and an increase in revenue
from the Miami Practice affiliation, pharmaceutical sales to physicians,
hospital management fees and contract research for which collection is more
certain.

Minority interest of $94,000 was recorded during the period ended March 31,
1996 related to the operations of the Company's majority-owned or controlled
IMPACT(R) Centers in joint ventures with hospitals. The IMPACT(R) Centers were
not operational during the comparable period in 1995.

1995 Compared to 1994

The Company recorded net earnings of $2.3 million for the year ended
December 31, 1995 compared to a loss of $2.3 million for the year ended December
31, 1994. The significant improvement in operations in 1995 compared to 1994 was
attributable to increased revenues from the increased referrals of high dose
chemotherapy patients, including the establishment of additional IMPACT(R)
Centers, principally in joint venture with hospitals, and the further
development of physician investigator studies for the pharmaceutical industry.

Net revenue for 1995 was $44.3 million as compared to $38.3 million for
1994, an increase of $6.0 million, or 16%. In addition to revenue from services
to patients increasing by approximately $2.0 million to $33.6 million in 1995,
sales of pharmaceuticals to physicians increased by $3.3 million to $9.8
million, and revenue from physician investigator studies in 1995, the first year
of significant revenues generated from this source, amounted to $665,000.

Operating expenses for 1995 were $32.9 million as compared to $31.8 million
for 1994, an increase of $1.1 million or 4%. Operating expenses consist
primarily of payroll costs, pharmaceutical and laboratory expenses, medical
director fees, rent expense and other operational costs. These expenses are
expected to display a high degree of variability in proportion to Center
revenues. Operating expenses as a percentage of net revenue were 74% and 83% for
the years ended 1995 and 1994, respectively. This decrease was primarily
attributable to operating efficiencies at higher levels of Center activity and
certain fixed operating expenses being spread over a larger revenue base.

Lab and pharmacy expense, which represents the largest component of
operating expenses, increased $1.7 million, or 10%, from 1994 to 1995. The
increase was primarily due to an increase in patient referrals and
pharmaceutical supply expense related to sales to physicians. A reduction in
medical director fees and other operating expenses of $528,000 was realized
during 1995.

27
<PAGE> 30

General and administrative costs for 1995 were $5.5 million as compared to
$4.3 million for 1994, an increase of $1.2 million or 29%. Salaries and
benefits, which represent the largest component of general and administrative
expenses, were $3.3 million in 1995 and $2.2 million in 1994. The increase was
primarily due to incentive bonuses declared upon achievement of significant
improvement in operations and general increases in salaries and benefits.
General and administrative costs as a percentage of net revenue were 12% and 11%
in 1995 and 1994, respectively.

Depreciation expense decreased $140,000 from 1994 to 1995. The decrease was
primarily attributable to many prior capital expenditures becoming fully
depreciated. Amortization expense decreased $249,000 from 1994 to 1995 due to
the startup costs of many IMPACT(R) Centers being fully amortized after a two
year operational period.

The provision for doubtful accounts was $2.1 million for 1995, as compared
to $2.5 million for 1994, a decrease of $400,000. The provision as a percentage
of net revenue was 5% and 7% for 1995 and 1994, respectively. The decrease was
attributable to increased managed care contracting and increases in revenue from
physician sales, hospital management fees and contract research for which
collection is more certain. The Company's collection experience in 1995 and 1994
may not be indicative of future periods.

Tax net operating loss carryforwards were utilized to fully offset 1995
taxable income.

As of December 31, 1995, the Company had available net operating loss
carryforwards totaling approximately $7 million of which approximately $5.5
million are subject to certain annual limitations due to change in ownership for
tax purposes in 1990. The use of net operating loss carryforwards is also
dependent upon future taxable income. See Note E of Notes to Consolidated
Financial Statements of the Company.

1994 Compared to 1993

The Company reported a net loss of $2.3 million in 1994 compared to net
earnings of $700,000 in 1993.

Several specific factors contributed to the loss in 1994. The Company
treated fewer candidates with metastatic breast cancer, many of whose clinical
profiles indicated that they were not likely to sufficiently benefit from high
dose treatment. Metastatic breast cancer patients have historically comprised a
significant portion of the Company's patient base.

One of the Company's most active centers experienced a temporary downturn
in utilization during the first half of the year. Such undulations in activity
among cancer practices are not uncommon, and operations of the affected
IMPACT(R) Center returned to normal levels during the latter part of the year.

The Company also experienced losses from special situations at several
IMPACT(R) Centers which are not expected to recur. The IMPACT(R) Center in
Dayton, Ohio ceased operations due to an unfavorable Certificate of Need ruling
by the state. The Dayton IMPACT(R) Center had a net loss from operations of
approximately $280,000 during 1994. The IMPACT(R) Center of Atlanta, Georgia was
converted to a hospital managed IMPACT(R) Center during 1994. The operating loss
from this IMPACT(R) Center was approximately $126,000 in 1994. The Company also
realized a loss of $168,000 during the development stage of an IMPACT(R) Center
in Seattle, Washington, which did not open. The loss primarily related to
payroll costs for a nurse coordinator and an operating lease for space. Newer
IMPACT(R) Centers yielded total losses of $91,000 in 1994.

Net revenue for 1994 was $38.3 million as compared to $37.7 million for
1993, an increase of $600,000, or 1%. Patient referrals in 1994 failed to
increase in line with the Company's IMPACT(R) Center capacity due to the
Company's decision to discontinue treatment for certain metastatic breast cancer
patients, resulting in a marginal increase in revenue.

Operating expenses for 1994 were $31.8 million as compared to $29.7 million
for 1993, an increase of $2.1 million, or 7%. Operating expenses as a percentage
of net revenue were 83% and 79% for the years ended 1994 and 1993, respectively.
The increase in 1994 was primarily attributable to increases in pharmaceutical
sales to physicians. The Company provides a wholesaler service to physicians;
therefore, revenue from these sales has a lower margin than IMPACT(R) Center
revenue. Physician sales were $6.5 million in 1994 and $4.3 million in 1993.

28
<PAGE> 31

Lab and pharmacy expense, which represents the largest component of
operating expenses, increased $1.8 million, or 12%, from 1993 to 1994. The
increase was primarily due to pharmaceutical supply expense related to sales to
physicians. In addition, increases in salaries and benefits from the hiring of
IMPACT(R) Center coordinators at hospital affiliate programs and other
operational personnel also contributed to the increase in operating expenses in
1994.

General and administrative costs for 1994 were $4.3 million as compared to
$2.9 million for 1993, an increase of $1.4 million, or 48%. Salaries and
benefits, which represent the largest component of general and administrative
expenses, were $2.2 million in 1994 and $1.6 million in 1993. General and
administrative costs as a percentage of net revenue were 11% and 8% in 1994 and
1993, respectively. The increase in 1994 was due to greater investments in the
corporate infrastructure, primarily medical and scientific management, during a
period of minimal revenue growth.

Depreciation expense increased $371,000 from 1993 to 1994. The increase was
primarily attributable to capital expenditures related to the establishment of
new IMPACT(R) Centers. Amortization expense decreased $163,000 from 1993 to 1994
due to the startup costs of many IMPACT(R) Centers being fully amortized after a
two year operational period.

The provision for doubtful accounts was $2,528,000 for 1994, as compared to
$2,470,000 for 1993, an increase of $58,000. The provision as a percentage of
net revenue was 7% for both periods. Significant bad debt recoveries were also
experienced during 1993. The Company's collection experience in 1994 and 1993
may not be indicative of future periods.

The Company's wholly owned subsidiary, Response Tech Healthcare
Corporation, was an equal partner with Advanced Oncology Services ("AOS"), a
wholly owned subsidiary of another publicly traded company, Cancer Treatment
Holdings, Inc. ("CTHI"), in IMPACT(R) Healthcare Services ("IHS" or the
"Hollywood Center"). During the year ended December 31, 1993, the Company
learned that CTHI and AOS had taken certain actions with respect to the
operations of the partnership which, in the Company's belief, materially
affected the profitability and ongoing operations of the partnership. The
Company filed suit against CTHI and AOS with a binding settlement agreement
reached during the year ended December 31, 1994 between the Company and CTHI and
AOS. CTHI has relinquished its interest in the Hollywood Center to the Company.
The Company's ownership of all of the assets and assumption of the operations of
the Center became effective January 8, 1994 resulting in a gain on net assets of
approximately $54,000.

A loss of $71,000 was recorded for the Company's interest in the
partnership's loss for the twelve months ended December 31, 1993. Beginning in
1994, the results of operations of the Hollywood Center were reported
consistently with the other Centers, rather than by the equity method.

Because the Company had operating losses for both tax and financial
reporting purposes, no provision for income taxes for 1994 was recognized. Tax
net operating loss carryforwards were utilized to fully offset 1993 taxable
income.

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 1996, the Company's working capital was $11.1 million; with
current assets of $22.8 million and current liabilities of $11.7 million.
Working capital as of March 31, 1996 decreased $4.6 million as compared to
December 31, 1995, primarily due to cash consideration paid in connection with
the Miami Practice affiliation in January 1996. Cash and cash equivalents and
short-term investments represent $845,000 of the Company's current assets as of
March 31, 1996.

Net cash provided by operating activities increased $987,000 between the
quarters ended March 31, 1996 and 1995. The increase was primarily due to
consummation of the Miami Practice affiliation.

29
<PAGE> 32

The Company's primary capital requirement is to fund affiliations with
medical oncology practices. Since March 31, 1996, the Company has consummated
the Completed Affiliations and expects to consummate the Proposed Affiliations
for the following aggregate consideration (in thousands):

<TABLE>
<CAPTION>
COMPLETED PROPOSED
AFFILIATIONS AFFILIATIONS
------------ ------------
<S> <C> <C>
Cash........................................................... $ 23,792 $ 49,507
Issuance of notes and other liabilities........................ 5,904 8,969
Issuance of warrants........................................... 550
Issuance of common stock....................................... 3,216 4,655
------------ ------------
$ 33,462 $ 63,131
======== ========
</TABLE>

In May 1996, the Company entered into the $27.5 million Credit Facility
with NationsBank and Union Planters to fund the Company's transaction and
working capital needs and to repay its existing facility with Union Planters.
The Credit Facility is comprised of the $20.0 million Acquisition Facility and
the $7.5 million Working Capital Facility. The Acquisition Facility matures May
31, 1998 and bears interest at a variable rate equal to LIBOR plus a spread of
between 1.5% and 2.625%, depending upon borrowing levels. The Working Capital
Facility matures May 30, 1997, subject to a one year extension at the Company's
election, and bears interest at a variable rate equal to LIBOR plus a spread of
between 1.875% and 2.375%. The Credit Facility is secured by a pledge of common
stock in all of the Company's subsidiaries. In addition, the loan agreement
contains a covenant precluding the encumbrance of the Company's assets without
the consent of NationsBank and certain other affirmative, negative and financial
convents. At July 10, 1996, $18,717,081 aggregate principal amount was
outstanding on the Credit Facility with a current interest rate of approximately
8.2%.

In April 1996, the Company obtained the $10.0 million unsecured Seafield
Note in order to finance the purchase of the Knoxville Practice. The Seafield
Note matures on the earlier of completion of the Offering or December 31, 1998,
bears interest at prime plus 1% and is convertible after August 1, 1996 at the
option of Seafield into shares of the Company's Common Stock at market price at
the time of conversion.

The unused portion of the Credit Facility discussed above, cash flow from
the Company's operations and potential net proceeds from this Offering and any
other new debt or equity offerings will be utilized to fund the Proposed
Affiliations and future affiliations with oncology practices.

30
<PAGE> 33

BUSINESS

OVERVIEW

The Company

The Company is a comprehensive cancer management company. The Company
provides advanced cancer treatment services through outpatient facilities known
as IMPACT(R) Centers under the direction of approximately 350 independent
oncologists, manages the practices of oncologists with whom the Company has
affiliated and conducts clinical cancer research on behalf of pharmaceutical
manufacturers. The Company intends to build on its relationships with
oncologists developed through operation of its IMPACT(R) Centers and on its
expertise in clinical cancer research to rapidly expand the number of oncology
practices it manages.

The Company believes that private and public reforms in the health care
industry emphasizing cost containment and accountability have prompted a trend
among oncologists to expand their traditional practices of two to five
physicians into larger group practices that provide a wider range of services in
an outpatient setting. The Company believes that many of these providers lack
the capital, management capabilities and infrastructure necessary to address
changes in the increasingly competitive and complex health care environment,
characterized by rising business complexity, growing control by payors over
practice patterns and patient flows, substantial investment in medical
technology and information systems and cost pressures on physicians that require
them to seek operating efficiencies. Practice management companies have
increasingly provided the management expertise, bargaining power, capital
resources and general business and medical industry knowledge required by
physicians to effectively contract with hospitals, governmental agencies,
private payors and managed care payors. However, of the approximately 6,000
practicing oncologists in the United States, the Company believes that less than
10% are affiliated with public practice management companies.

The Company believes that there are significant opportunities to
consolidate oncology practices and that an integrated network of oncology care
is an efficient and effective system for the treatment of cancer patients. The
Company believes that its well established network of oncologist relationships
and substantial scientific expertise in the oncologic field, together with its
extensive medical information systems and databases, has strategically
positioned the Company to promote and facilitate the consolidation of oncology
practices into a national cancer care network providing comprehensive,
outpatient oncology services. The Company believes that its integrated system of
practice and disease management (i) produces economies of scale and other
efficiencies, thus reducing the costs of providing healthcare; (ii) positions
the Company to operate effectively in an environment dominated by managed care;
and (iii) allows physicians with whom the Company affiliates to focus on
medicine and research without sacrificing autonomy and control over the medical
aspects of their business.

Completed and Proposed Affiliations

The Company intends to actively seek affiliations with premier oncology
groups throughout the United States. In late 1995, the Company contracted with
an independent physician association (the "South Florida

31
<PAGE> 34

IPA") consisting of over 40 medical oncologists in Palm Beach, Broward, Dade and
Monroe Counties in South Florida for the purpose of marketing the services of
such oncologists to managed care organizations. In the first quarter of 1996,
the Company contracted with an independent physician association in Pinellas
County, Florida consisting of 13 medical oncologists, serving a similar
contracting purpose.

Since December 31, 1995, the Company has consummated the Completed
Affiliations and expects to consummate the Proposed Affiliations as illustrated
by the following chart:

<TABLE>
<CAPTION>
NO. OF
PRACTICE LOCATION PHYSICIANS CLOSING DATE
-------------------------------------- -------------------------- ---------- -----------------------
<S> <C> <C> <C>
COMPLETED AFFILIATIONS:
Oncology Hematology Group of South
Florida............................. Miami, Florida 10 January 2, 1996(1)
Knoxville Hematology
Oncology Associates................. Knoxville, Tennessee 4 April 15, 1996(1)
Jeffrey L. Paonessa, M.D., P.A........ St. Petersburg, Florida 2 June 19, 1996(1)
Rymer Zaravinos and Faig, M.D., P.A.
(d/b/a Southeast Florida Hematology
Oncology Group)..................... Ft. Lauderdale, Florida 4 July 3, 1996(1)
PROPOSED AFFILIATIONS:
Rosenberg & Kalman, M.D., P.A......... Tamarac, Florida 2 September 25, 1996(2)
The West Clinic, P.C.................. Memphis, Tennessee 8 September 25, 1996(3)
Weinreb, Weisberg & Weiss, P.A........ Tamarac, Florida 3 September 25, 1996(2)
Drs. Haraf, Antonucci, McCormack &
Kerns Medical Partnership........... Knoxville, Tennessee 4 September 25, 1996(2)
Hematology Oncology Associates of the
Treasure Coast, P.A................. Port St. Lucie, Florida 3 September 25, 1996(2)
The Center for Hematology Oncology,
P.A................................. Boca Raton, Florida 3 October 1, 1996(2)
Lawrence A. Snetman, M.D., P.A........ Miami, Florida 1 September 25, 1996(2)
--
Total........................ 44
=========
</TABLE>

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

(1) Consummated
(2) Subject to Letter of Intent
(3) Subject to Definitive Acquisition Agreement

An essential element of the Company's success in establishing practice
management affiliations has been its relationships with oncologists developed
through operation of its IMPACT(R) Centers. Of the practices comprising the
Completed Affiliations and Proposed Affiliations, seven have previously
maintained a relationship with the Company through its IMPACT(R) Center network.
See "Risk Factors -- Risks Related to Expansion," "Unaudited Pro Forma Combined
Financial Information" and Consolidated Financial Statements and Notes thereto.

INDUSTRY

Cancer care in the United States continues to constitute an increasing
percentage of health care expenditures. The National Cancer Institute estimates
that total cancer costs (including lost productivity and mortality costs) were
approximately $104 billion in 1994, with direct medical costs constituting
approximately $35 billion of that total. According to the American Cancer
Society, the estimated number of cancer cases diagnosed annually in the United
States (excluding certain skin cancers) was approximately 1.2 million in 1994.
The rising incidence of reported cancer cases is attributable to such factors as
an aging population and exposure to carcinogens. The probability of developing
cancer increases significantly with age, and according to the National Cancer
Institute, people over age 65 are ten times more likely to develop cancer than
those under 65. Furthermore, numerous environmental factors such as tobacco use
and exposure to industrial carcinogens continue to increase the incidence of
cancer. Earlier diagnosis and more effective treatments have increased the
relative five-year survival rate of cancer patients from approximately 39% in
1963 to 53% in

32
<PAGE> 35

1994, and over 8 million Americans alive today have been diagnosed with cancer.
The Company anticipates that these trends will continue and that the number of
cancer patients, and the demand for and cost of oncology services and cancer
treatment, will continue to increase.

Cancer is a group of more than 100 complex diseases characterized by the
uncontrolled growth and spread of abnormal cells. Cancer treatment can involve
chemotherapy, surgery, radiation therapy and immunotherapy. Chemotherapy is
commonly used to destroy cancer cells that have spread beyond the scope of
surgery and radiation therapy and is the principal modality used to destroy
cancer cells which have metastasized. Chemotherapy is usually provided in the
office and under the supervision of a medical oncologist, a physician who
typically trained as an internist and who subsequently specialized in oncology.
Chemotherapy is often complex and requires the management of potential adverse
side effects. Surgery is used in both the diagnosis and the treatment of cancer
with a trend toward less disfiguring surgery and the use of preoperative or
postoperative chemotherapy and radiation. Radiation therapy, which entails the
treatment of cancer with high energy radiation, is commonly used to destroy
localized tumors and to reduce pain and other symptoms. Radiation therapy is
most often administered to patients in whom cancer is localized and has not
metastasized and is provided under the supervision of a radiation oncologist, a
physician who typically trained as a radiologist and who subsequently
specialized in oncology. Radiation therapy is used both to cure cancer by
destroying cancer cells and, where curing the cancer is not possible, as a
palliative treatment to reduce pain and other symptoms associated with cancer.
Immunotherapy, which entails the treatment of cancer by enhancing the patient's
own disease-fighting mechanisms, involves utilization of advanced therapies such
as interferon (a naturally occurring human protein capable of stopping cancer's
growth) and other biologic response modifiers.

Notwithstanding the increasing incidence of cancer and the complexity of
its treatment, there is increasing pressure by third party payors to reduce the
cost of cancer treatment. Growing concern over the rising cost of health care in
the United States, especially regarding Medicare and Medicaid, has led to
numerous initiatives to control the escalation of health care expenditures. As a
result, third party payors have sought to ensure delivery of cost effective
health care through the establishment of managed care programs with
reimbursement limitations and fee schedules. To a significant degree, these
managed care features have the effect of controlling the provision of services.
Certain third party payors, such as HMOs, are increasingly requiring physicians
to assume some or all of the risk of increasing health care costs through
specialty capitation and other fixed or capped reimbursement arrangements.
Capitated payment systems require providers to administer to the health care
needs of a defined population for a predetermined fee, thereby encouraging
providers to reduce the cost of such services. In addition, there are presently
a number of federal and state initiatives seeking to adopt reimbursement systems
similar to capitated or managed care systems for government reimbursed health
care costs.

As a result of these initiatives, oncologists are increasingly abandoning
the traditional small, private fee-for-service practice in favor of affiliation
with larger organizations, such as the Company, which offer greater capital
resources, professional management, contracting expertise and sophisticated
medical information systems and databases. Oncologists require considerable
amounts of information regarding outcomes from prior cancer cases, as well as
access to treatment protocols and therapy options for various types of cancer in
order to effectively treat cancer patients. The development of a clinical trials
program to accumulate and analyze the information necessary for the effective
treatment of cancer requires large amounts of capital and substantial expertise
in capturing and assimilating empirical data. Consequently, the Company believes
that oncologists will seek to affiliate with integrated cancer management
companies in order to gain access to the clinical data, management expertise,
bargaining power, capital resources, and general business and medical industry
knowledge required to effectively treat cancer at a reduced cost to patients but
on a profitable basis for the oncologists. The Company believes that its
relationships with oncologists developed through its IMPACT(R) Centers, together
with its substantial scientific expertise in the oncologic field and its
extensive medical information systems and databases, offer a competitive
advantage for establishing affiliations with premier oncology groups.

33
<PAGE> 36

STRATEGY

The Company's strategy is to expand its comprehensive cancer management
services throughout the United States. The Company seeks to implement its
strategy in the following manner:

Expand Practice Management Affiliations. The Company actively seeks
to affiliate with premier oncology groups throughout the United States.
Through its IMPACT(R) Center network, the Company has relationships with
approximately 350 medical oncologists in 21 states. Of the 44 oncologists
comprising the Completed and Proposed Affiliations, the Company had a
previous relationship with 35 of them through its IMPACT(R) Center Network.
Through managing physicians' complex chemotherapy treatment needs, the
Company believes that it has demonstrated to these physicians its
capabilities in staffing and training, data management, technology
assessment and integration, developmental therapies, quality assessment and
improvement, marketing, reimbursement and other areas essential to
efficient oncology practice management and effective cancer treatment. The
Company believes these existing relationships with oncologists give the
Company an advantage over its competitors in establishing practice
management affiliations with many of these physicians. While the Company
intends to capitalize on its prior relationships with oncologists, the
Company also intends to seek affiliations with oncologists with whom it has
no prior relationship.

Enhance Practices of Affiliated Physicians. In each market where the
Company affiliates with an oncology practice, the Company intends to focus
on increasing market share and reducing costs through operating
efficiencies and economies of scale. The Company believes that providing
affiliated oncologists with access to its medical information systems and
databases will enhance such oncologists' ability to treat and monitor
cancer cases, further strengthening their professional reputations and
increasing their market share. The Company also intends to increase market
share of affiliated practices through the addition or consolidation of
other oncologists or closely allied subspecialists, through the addition of
ancillary services such as diagnostic radiology and radiation therapy, and
through heightened marketing efforts. In instances where a practice did not
previously have an IMPACT(R) Center network relationship with the Company,
the addition of an IMPACT(R) Center may be an appropriate option. In
addition, the Company will seek to maximize the profitability of affiliated
practices through (i) more efficient billing and collection procedures,
(ii) bulk purchasing of supplies and pharmaceuticals, (iii) providing
greater access to capital to fund technological investment, (iv) closely
monitoring treatment costs using the Company's existing medical information
systems and databases and (v) effective negotiation of managed care
contracts.

Form Additional Hospital Joint Ventures. A recent survey among member
hospitals of the Association of Community Cancer Centers reported that over
20% of the respondents are considering the addition of a high dose
chemotherapy program. The Company believes such potential expansion is the
result of third party payors increasingly recognizing high dose
chemotherapy with stem cell support as an effective treatment for certain
cancer types. The Company typically collaborates with hospitals in treating
patients with high dose chemotherapy, and currently is engaged in joint
ventures with 9 hospitals and management contracts with 8 hospitals for the
operation of high dose chemotherapy programs. Such joint ventures have
generally required significantly less capital than Company-owned and
operated IMPACT(R) Centers. The Company intends to pursue additional joint
ventures. The Company believes that its experience in jointly managing high
dose chemotherapy programs with hospitals, together with its data
management and other capabilities, will provide the Company with numerous
opportunities to establish joint ventures with additional hospitals for the
operation of additional IMPACT(R) Centers.

Develop Local Comprehensive Cancer Care Networks. The Company intends
to fully integrate on a local basis its existing IMPACT(R) Centers, whether
wholly or jointly owned, with the cancer diagnosis, treatment and ancillary
services offered by physicians affiliated with the Company in order to
provide an entire disease management program to patients, primary care
physicians and third party payors in those locales. The Company believes
that by providing affiliated oncologists with the knowledgeable, well-
trained staff and comfortable treatment facilities that typify the
Company's IMPACT(R) Centers, such oncologists will be at a competitive
advantage in obtaining referrals of new cancer cases.

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<PAGE> 37

Capitalize on Clinical Expertise and Medical Information
Systems. Over the past six years, the Company has conducted significant
research and clinical trials on high dose chemotherapy with stem cell
support as a treatment for certain types of cancer. The Company maintains a
Scientific Advisory Board to direct its research and scientific efforts.
Members of the Scientific Advisory Board have had articles published in
prominent medical journals. The Company believes that its research and
clinical trials have resulted in a substantial reduction in the cost of
treating cancer with high dose chemotherapy, permitting oncologists to
offer this treatment as a feasible and affordable option to certain cancer
patients. In connection with its management of complex chemotherapy
treatments and its clinical trials program in its IMPACT(R) Center network,
the Company has developed data collection and medical information systems,
and through those systems has accumulated protocol, treatment, outcome and
cost databases which enable the Company to report treatment outcomes to,
and establish case rates and other contractual payment arrangements with,
third party payors. The Company intends to utilize data collection and
medical information systems and research and treatment experience developed
through its high dose chemotherapy program in the diagnosis, treatment and
monitoring of all forms of cancer, allowing the Company to effectively
manage the risk associated with capitated reimbursement contracts and
giving the Company a competitive advantage in contracting with HMOs and
other managed care companies.

Market to Managed Care Companies. Industry analysts believe that
enrollment in managed care plans will continue to grow in the foreseeable
future, and additional enrollees in the Medicare and Medicaid sectors will
choose membership in HMOs. Membership in HMOs currently exceeds 50 million.
The Company believes that third party payors will increasingly prefer to
contract for managed care on a national or regional basis and that the
Company's development of a national network of established oncology groups,
when combined with the Company's medical information systems and databases,
research capabilities and treatment expertise, will provide the Company
with a competitive advantage in securing such contracts on more favorable
terms.

ORGANIZATIONAL STRUCTURE

Cancer Treatment Services. The Company provides advanced cancer treatments
and related services, principally on an outpatient basis, through its IMPACT(R)
(IMPlementing Advanced Cancer Treatments) Centers. Each IMPACT(R) Center
provides oncologists utilizing such facilities with a fully integrated delivery
system for implementation of advanced cancer protocols. As of July 1, 1996, the
Company owned or operated in joint ventures with hospitals 41 IMPACT(R) Centers
in 21 states, providing advanced treatment capabilities and facilities to
approximately 350 medical oncologists.

Each IMPACT(R) Center is staffed by, and makes extensive use of,
experienced oncology nurses, pharmacists, laboratory technologists, and other
support personnel to deliver outpatient services under the direction of
independent medical oncologists. IMPACT(R) Center services include preparation
and collection of stem cells, administration of high dose chemotherapy,
reinfusion of stem cells and delivery of broad-based supportive care. IMPACT(R)
Center personnel extend the support mechanism into the patient's home, further
reducing the dependence on hospitalization. The advantages of this system to the
physician and patient include (i) convenience of the local treatment facility;
(ii) specialized on-site laboratory and pharmacy services, including home
pharmacy support; (iii) access to the Company's Clinical trials program to
provide ongoing evaluation of current cancer treatment; (iv) specially trained
medical and technical staff; (v) patient education and support materials through
computer, video and staff consultation; and (vi) reimbursement assistance.

The Company believes that it has been instrumental in "re-engineering" the
process of bone marrow transplantation through its research and development of
treatment protocols and in reducing by more than 50% the cost of this advanced
cancer therapy by shifting such treatment from an inpatient setting, typically
in a university hospital, to an outpatient setting in close proximity to the
treating oncologist. The Company believes that it is able to perform high dose
chemotherapy with stem cell support in its IMPACT(R) Centers for approximately
80% of the cost charged by university and other hospitals that manage their own
programs.

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High dose chemotherapy is most appropriate for patients with lymphoma,
acute leukemia, multiple myeloma and breast and ovarian cancer. Patients
referred to the Company by the treating oncologist are placed on a treatment
protocol developed from the cumulative analysis of the Company's approximately
3,000 high-dose cases. Protocols conducted at the IMPACT(R) Center begin with a
drug regimen which allows for the collection and cryopreservation of stem cells.
A stem cell is a cell which originates in the bone marrow and is a precursor to
white blood cells. At the appropriate time, stem cells capable of restoring
immune system and bone marrow function are harvested over a two to three day
period. The harvested stem cells are then frozen and stored at the IMPACT(R)
Center, and following confirmation of response to treatment and a satisfactory
stem cell harvest, patients receive high dose chemotherapy followed by
reinfusion of stem cells. Most patients are then admitted to an affiliated
hospital for 10-14 days. After discharge, the patient is monitored in the
oncologist's office.

Since 1989, the Company has conducted a clinical trials program pursuant to
which carefully planned, uniform treatments administered to a substantial number
of patients have been monitored and studied, with the results being collected in
a database and utilized to predict outcomes and determine utilization of high
dose chemotherapy as a treatment. In addition, the Company has recorded outcomes
from over 2,000 cases in which high dose chemotherapy was utilized as a
treatment and has developed and continues to refine treatment pathways, which
forecast the best outcome with the lowest possible cost. Pursuant to agreements
between the Company and the oncologists who supervise their patients' treatment
in IMPACT(R) Centers, such oncologists are obligated to record and monitor
outcomes, collect information and report such information to the Company, for
which the oncologists are paid a fixed fee. The Company believes that the
proprietary databases and the information gathering techniques developed from
the foregoing programs enable practicing oncologists to manage cancer cases cost
effectively. Clinical research conducted by the Company focuses on (i) improving
cancer survival rates; (ii) enhancing the cancer patient's quality of life;
(iii) reducing the costs of cancer care; and (iv) developing new approaches to
cancer diagnosis, treatment and post-treatment monitoring.

IMPACT(R) Centers are electronically linked with each physician's office,
all other IMPACT(R) Centers and the Company's central laboratories and corporate
offices. This network permits immediate dissemination of protocol data, patient
information, analysis of side effects and treatment results. The Company
believes that this sophisticated information network will provide it with a
competitive advantage in forming new physician affiliations with oncology groups
seeking practice management services.

Oncology Practice Management Services. The Company provides management
services that extend to all business aspects of an oncology group's operations.
The Company believes that through provision of administrative services and
information resources, the Company enables affiliated oncologists to focus on
providing high quality medical care.

Pursuant to the Service Agreements, the Company is the sole and exclusive
manager and administrator of all day-to-day business functions connected with
the medical practice of an affiliated physician group. The Company is
responsible for providing facilities, equipment, supplies, support personnel,
and management and financial advisory services. Under the terms of the Service
Agreements in general, the Company (i) prepares annual capital and operating
budgets; (ii) prepares financial statements; (iii) orders and purchases medical
and office inventory and supplies; (iv) bills patients and third party payors;
(v) maintains accounting, billing, medical, and collection records; (vi)
negotiates and administers managed care contracts; (vii) arranges for legal and
accounting services related to practice operations; (viii) recruits, hires and
appoints an executive director to manage and administer all of the day-to-day
business functions of each practice; and (ix) manages all non-physician
professional support and administrative personnel, clerical, secretarial,
bookkeeping and collection personnel. The Company seeks to combine the
purchasing power of numerous physicians to obtain favorable pricing and terms
for equipment, pharmaceuticals and supplies and to obtain favorable contracts
with suppliers.

In addition, the Company provides its outcomes database, treatment
protocols and pathways to affiliated oncologists, permitting these physicians to
more effectively manage cancer cases. The Company utilizes its

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<PAGE> 39

management expertise to conduct utilization review and quality assurance
programs and establish well-defined medical policies for its affiliated
physicians.

In return for its management services and expertise, the Company receives a
service fee based on net revenue or net operating income of the practice.
Pursuant to each Service Agreement, the physicians and the practice agree not to
compete with the Company and the practice. Each Service Agreement has an initial
term of 40 years and, after the initial term, will be automatically extended for
additional five year terms unless either party delivers written notice to the
other party, 180 days prior to the expiration of the preceding term. The Service
Agreement may only be terminated for cause. If the Company terminates the
Service Agreement for cause, the practice is typically obligated to purchase
assets (which typically include intangible assets) and pay liquidated damages,
which are guaranteed by individual physicians for a period of time. Each Service
Agreement provides for the creation of an oversight committee, a majority of
whom are designated by the practice. The oversight committee is responsible for
developing management and administrative policies for the overall operation of
each clinic.

Cancer Research Services. The Company also utilizes its database to
provide various types of data to pharmaceutical companies regarding the use of
their products. The IMPACT(R) Center network and the Company's medical
information systems make the Company ideally suited to this process. The Company
is currently participating in several projects with leading pharmaceutical
manufacturers to furnish data in connection with FDA applications and post-FDA
approval marketing studies. Revenue from these contracts helps to underwrite the
Company's clinical trials expenses. Such relationships with pharmaceutical
companies allow patients and physicians earlier access to drugs and therapies
and ensure access to clinical trials under managed care, which guarantee the
Company's role as a leader in oncological developments.

INFORMATION SERVICES

The Company believes that the use of management information services
technology can improve patient care by improving physician access to treatment
and outcomes information. Each IMPACT(R) Center and affiliated practice is
networked with each physician's office, all other IMPACT(R) Centers and the
Company's central laboratories and corporate offices, which permits immediate
dissemination of protocol data, patient information, analysis of side effects
and treatment results. The Company's medical information system and database is
designed to facilitate the transmittal and coordination of important patient and
operational data. Data are collected and downloaded every 24 hours for analysis
by statisticians and evaluation by the Company's scientific personnel. The
Company regularly publishes other outcomes and treatment information in the
peer-reviewed literature and presents similar information at national meetings.

The Company has developed treatment plans for the administration of high
dose chemotherapy. The Company has also developed treatment protocols covering
standard-dose chemotherapy. Protocol assignment, disease status and resource
utilization are tracked in an electronic database per physician-patient
encounter. The protocol database covers all diagnoses utilized in the treatment
of cancer and cancer-related illnesses. By organizing a system of data
collection and analysis, the Company is able to incorporate these technologies
and data analysis into innovative treatment regimens that can be administered in
a consistent manner throughout its network of specialized outpatient cancer
treatment facilities. The Company believes that this sophisticated information
network will provide it with a competitive advantage in forming new physician
affiliations and contracting with managed care.

COMPETITION

The business of providing health care services generally, and of providing
oncology services specifically, is highly competitive. The Company is aware of
at least three primary competitors specializing in the management of oncology
practices, and several health care companies with established operating
histories and significantly greater resources than the Company are also
providing at least some management services to oncologists. There are certain
other companies, including hospitals, large group practices, and outpatient care
centers, that are expanding their presence in the oncology market and may have
access to greater resources

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than the Company. Furthermore, organizations specializing in home and ambulatory
infusion care, radiation therapy, and group practice management compete in the
oncology market.

The Company's revenue depends on the continued success of its affiliated
physician groups. These physician groups face competition from several sources,
including sole practitioners, single and multi-specialty groups, hospitals and
managed care organizations.

PROPERTIES

The Company leases 36,500 square feet of space at 1775 Moriah Woods Blvd.
in Memphis, Tennessee, where the Company's headquarters are located. The lease
expires in 2002. The Company also leases all facilities housing the Company's
operating facilities.

GOVERNMENT REGULATION

The delivery of healthcare items and services has become one of the most
highly regulated of professional and business endeavors in the United States.
Both the federal government and the individual state governments are responsible
for overseeing the activities of individuals and businesses engaged in the
delivery of healthcare services. Federal law and regulations are based primarily
upon the Medicare program and the Medicaid program, each of which is financed,
at least in part, with federal money. State jurisdiction is based upon the
state's authority to license certain categories of healthcare professionals and
providers, and the state's interest in regulating the quality of healthcare in
the state, regardless of the source of payment.

The Company believes it is in material compliance with applicable laws.
However, the laws applicable to the Company are subject to evolving
interpretations and therefore, there can be no assurance that a review of the
Company's or the affiliated physicians' practices by a court or law enforcement
or regulatory authority will not result in a determination that could adversely
affect the operations of the Company or the affiliated physicians. Furthermore,
there can be no assurance that the laws applicable to the Company will not be
amended in a manner that could adversely affect the Company.

Federal Law

The federal healthcare laws apply in any case in which the Company is
providing an item or service that is reimbursable under Medicare or Medicaid or
is claiming reimbursement from Medicare or Medicaid on behalf of physicians with
whom the Company has a Service Agreement. The principal federal laws include
those that prohibit the filing of false or improper claims with the Medicare or
Medicaid program, those that prohibit unlawful inducements for the referral of
business reimbursable under Medicare or Medicaid and those that prohibit the
provision of certain services by a provider to a patient if the patient was
referred by a physician with which the provider has certain types of financial
relationships.

False and Other Improper Claims. The federal government is authorized to
impose criminal, civil and administrative penalties on any healthcare provider
that files a false claim for reimbursement from Medicare or Medicaid. Criminal
penalties are also available in the case of claims filed with private insurers
if the government can show that the claims constitute mail fraud or wire fraud.
While the criminal statutes are generally reserved for instances evincing an
obviously fraudulent intent, the civil and administrative penalty statutes are
being applied by the government in an increasingly broader range of
circumstances. For example, the government takes the position that a pattern of
claiming reimbursement for unnecessary services violates these statutes if the
claimant should have known that the services were unnecessary. The government
also takes the position that claiming reimbursement for services that are
substandard is a violation of these statutes if the claimant should have known
that the care was substandard.

The Company believes it is in material compliance with such laws, but there
can be no assurance that the Company's activities will not be challenged or
scrutinized by governmental authorities. A determination that the Company had
violated such laws could have a material adverse impact on the Company's
business.

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Anti-Kickback Law. Federal law commonly known as the "Anti-kickback
Amendments" prohibits the offer, solicitation, payment or receipt of anything of
value (direct or indirect, overt or covert, in cash or in kind) which is
intended to induce the referral of Medicare or Medicaid patients, or the
ordering of items or services reimbursable under those programs. The law also
prohibits remuneration that is intended to induce the recommendation of, or the
arranging for, the provision of items or services reimbursable under Medicare
and Medicaid. The law has been broadly interpreted by a number of courts to
prohibit remuneration which is offered or paid for otherwise legitimate purposes
if the circumstances show that one purpose of the arrangement is to induce
referrals. Even bona fide investment interests in a healthcare provider may be
questioned under the Anti-kickback Amendment if the government concludes that
the opportunity to invest was offered as an inducement for referrals. The
penalties for violations of this law include criminal sanctions and exclusion
from the federal healthcare program.

In part to address concerns regarding the implementation of the
Anti-kickback Amendments, the federal government in 1991 published regulations
that provide exceptions, or "safe harbors," for certain transactions that will
not be deemed to violate the Anti-kickback Amendments. Among the safe harbors
included in the regulations were provisions relating to the sale of physician
practices, management and personal services agreements and employee
relationships. Subsequently, regulations were published offering safe harbor
protection to additional activities, including referrals within group practices
consisting of active investors. Proposed amendments to the Anti-kickback
regulations were published in 1994 which, if ultimately adopted, would result in
substantive changes to existing regulations. The failure to qualify under a safe
harbor provision, while potentially subjecting the activity to greater
regulatory scrutiny, does not render the activity illegal per se.

There are several aspects of the Company's relationships with physicians to
which the anti-kickback law may be relevant. In some instances, the Company
itself may become a provider of services for which it will claim reimbursement
from Medicare or Medicaid, and physicians who are investors in the Company may
refer patients to the Company for those services. Furthermore, the government
may construe some of the marketing and managed care contracting activities of
the Company as arranging for the referral of patients to the physicians with
whom the Company has a management contract. Finally, at the request of a
physician or medical practice with which the Company has a contract, the Company
will manage in the physician's office the provision of ancillary services which
the physician desires to make available to his patients. At the present time,
the services provided by the Company in its IMPACT(R) Centers are generally not
reimbursable by Medicare or Medicaid.

Although neither the investments in the Company by physicians nor the
management contracts between the Company and physicians qualify for protection
under the safe harbor regulations, the Company does not believe that these
activities fall within the type of activities the Anti-kickback Amendments were
intended to prohibit. A determination that the Company had violated the
Anti-kickback Amendments would have a material adverse effect on the Company's
business.

The Stark Self-Referral Law. The Stark Self-Referral Law ("Stark Law")
prohibits a physician from referring a patient to a healthcare provider for
certain designated health services reimbursable by Medicare or Medicaid if the
physician has a financial relationship with that provider, including an
investment interest, a loan or debt relationship or a compensation relationship.
The designated services covered by the law include radiology services, infusion
therapy, radiation therapy, outpatient prescription drugs and hospital services,
among others. In addition to the conduct directly prohibited by the law, the
statute also prohibits "circumvention schemes," that are designed to obtain
referrals indirectly that cannot be made directly. The penalties for violating
the law include (i) a refund of any Medicare or Medicaid payments for services
that resulted from an unlawful referral; (ii) civil fines; and (iii) exclusion
from the Medicare and Medicaid programs. The Stark Law contains a number of
exceptions potentially applicable to the Company's operations. These include
exceptions for a physician's ownership of publicly traded securities in a
corporation with stockholders' equity exceeding $75 million as of the end of its
most recent fiscal year, for certain in-office ancillary services and for
certain personal services arrangements.

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The Company is not currently a provider of any designated health service
under the Stark Law for which the Company claims reimbursement from Medicare or
Medicaid. The Company intends to assure that any designated health services
provided by physicians with whom the Company has a management contract will
qualify under the applicable exception in the Stark Law for in-office services.
However, because the Company will provide management services related to those
designated health services, there can be no certainty that the Company will not
be considered as the provider for those services. In that event, the referrals
from the physicians will be permissible only if (i) the Company qualifies for
the exception for publicly-traded corporations and (ii) the management contract
meets the exception in the Stark Law for payments by physicians to a health care
entity. To qualify for such exception, such payments must be set at a fair
market value. The Company intends to structure its arrangements so as to qualify
for applicable exceptions under the Stark Law, however, there can be no
assurance that a review by courts or regulatory authorities would not result in
a contrary determination.

State Law

State Anti-Kickback Laws. Many states have laws that prohibit the payment
of kickbacks in return for the referral of patients. Some of these laws apply
only to services reimbursable under the state Medicaid program. However, a
number of these laws apply to all healthcare services in the state, regardless
of the source of payment for the service. The Company believes, based on the
advice of counsel, that these laws prohibit payments to referral sources only
where a principal purpose for the payment is for the referral. The Company pays
oncologists who supervise their patients' treatment at the IMPACT(R) Centers
fees for collecting and monitoring treatment and outcomes data and reporting
such data to the Company. The Company believes such fees reflect the fair market
value of the services rendered by such physicians to the Company. However, the
laws in most states regarding kickbacks have been subjected to limited judicial
and regulatory interpretation and therefore, no assurances can be given that the
Company's activities will be found to be in compliance. Noncompliance with such
laws could have an adverse effect upon the Company and subject it and such
physicians to penalties and sanctions.

State Self-Referral Laws. A number of states have enacted self-referral
laws that are similar in purpose to the Stark Self-Referral Law. However, each
state law is unique. For example, some states only prohibit referrals where the
physician's financial relationship with a healthcare provider is based upon an
investment interest. Other state laws apply only to a limited number of
designated health services. Finally, some states do not prohibit referrals, but
merely require that a patient be informed of the financial relationship before
the referral is made. The Company believes that it is in compliance with the
self-referral law of any state in which the Company has a financial relationship
with a physician.

Fee-Splitting Laws. Many states prohibit a physician from splitting with a
referral source the fees generated from physician services. Other states have a
broader prohibition against any splitting of a physician's fees, regardless of
whether the other party is a referral source. In most cases, it is not
considered to be fee-splitting when the payment made by the physician is
reasonable reimbursement for services rendered on the physician's behalf.

The Company will be reimbursed by physicians on whose behalf the Company
provides management services. The Company intends to structure the reimbursement
provisions of its management contracts with physicians in order to comply with
applicable state laws relating to fee-splitting. However, there can be no
certainty that, if challenged, the Company and its affiliated physicians will be
found to be in compliance with each state's fee-splitting laws.

Corporate Practice of Medicine. Most states prohibit corporations from
engaging in the practice of medicine. Many of these state doctrines prohibit a
business corporation from employing a physician. However, states differ with
respect to the extent to which a licensed physician can affiliate with corporate
entities for the delivery of medical services. Some states interpret the
"practice of medicine" broadly to include decisions that have an impact on the
practice of medicine, even where the physician is not an employee of the
corporation and the corporation exercises no discretion with respect to the
diagnosis or treatment of a particular patient.

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The Company's standard practice under its management contracts is to avoid
the exercise of any responsibility on behalf of its physicians that could be
construed as affecting the practice of medicine. Accordingly, the Company
believes that it is not in violation of applicable state laws relating to the
corporate practice of medicine. However, because such laws and legal doctrines
have been subjected to only limited judicial and regulatory interpretation,
there can be no assurance that, if challenged, the Company will be adjudicated
to be in compliance with all such laws and doctrines.

Insurance Laws. Laws in all states regulate the business of insurance and
the operation of HMOs. Many states also regulate the establishment and operation
of networks of health care providers. While these laws do not generally apply to
companies that provide management services to networks of physicians, there can
be no assurance that regulatory authorities of the states in which the Company
operates would not apply these laws to require licensure of the Company's
operations as an insurer, as an HMO or as a provider network. The Company
believes that it is in compliance with these laws in the states in which it does
business, but there can be no assurance that future interpretations of insurance
and health care network laws by regulatory authorities in these states or in the
states into which the Company may expand will not require licensure or a
restructuring of some or all of the Company's operations.

State Licensing. The Company's laboratories operated in conjunction with
certain IMPACT(R) Centers are registered with the U.S. Food & Drug
Administration and are certified pursuant to the Clinical Laboratory Improvement
Amendments of 1988. In addition, the Company maintains pharmacy licenses for all
IMPACT(R) Centers having self-contained pharmacies, and state health care
facility licenses, where required.

REIMBURSEMENT AND COST CONTAINMENT

Approximately 50% of the net revenue of the Company's practice management
division and less than five percent of the revenue of the Company's IMPACT(R)
division is derived from payments made by government sponsored health care
programs (principally, Medicare and Medicaid). As a result, any change in
reimbursement regulations, policies, practices, interpretations or statutes
could adversely affect the operations of the Company. In recent years, the
federal government has sought to constrain the growth of spending in the
Medicare and Medicaid programs. Through the Medicare program, the federal
government has implemented a resource-based relative value scale ("RBRVS")
payment methodology for physician services. This methodology went into effect in
1992 and will continue to be implemented in annual increments through December
31, 1996. RBRVS is a fee schedule that, except for certain geographical and
other adjustments, pays similarly situated physicians the same amount for the
same services. The RBRVS is adjusted each year and is subject to increases or
decreases at the discretion of Congress. The implementation of RBRVS may result
in reductions in payment rates for procedures provided by physicians under
current contract with the Company. RBRVS-type payment systems have also been
adopted by certain private third party payors and may become a predominant
payment methodology. A broader implementation of such programs would reduce
payments by private third party payors and could indirectly reduce the Company's
operating margins to the extent that the cost of providing management services
related to such procedures could not be proportionately reduced. To the extent
the Company's costs increase, the Company may not be able to recover such cost
increases from government reimbursement programs. In addition, because of cost
containment measures and market changes in nongovernmental insurance plans, the
Company may not be able to shift cost increases to nongovernmental payors. The
Company expects a reduction from historical levels in per patient Medicare
revenue received by certain of the physician groups with which the Company
contracts; however, the Company does not believe such reductions would, if
implemented, result in a material adverse effect on the Company.

In addition to current governmental regulation, the Clinton Administration
and several members of Congress have proposed legislation for comprehensive
reforms affecting the payment for and availability of health care services.
Aspects of certain of such health care proposals, such as reductions in Medicare
and Medicaid payments, if adopted, could adversely affect the Company. Other
aspects of such proposals, such as universal health insurance coverage and
coverage of certain previously uncovered services, could have a positive impact
on the Company's business. It is not possible at this time to predict what, if
any, reforms will

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be adopted by Congress or state legislatures, or when such reforms would be
adopted and implemented. As health care reform progresses and the regulatory
environment accommodates reform, it is likely that changes in state and federal
regulations will necessitate modifications to the Company's agreements and
operations. While the Company believes it will be able to restructure in
accordance with applicable laws and regulations, the Company cannot assure that
such restructuring in all cases will be possible or profitable.

Rates paid by private third party payors, including those that provide
Medicare supplemental insurance, are based on established physician, clinic and
hospital charges and are generally higher than Medicare payment rates. Changes
in the mix of the Company's patients among the non-governmental payors and
government sponsored health care programs, and among different types of
non-government payor sources, could have a material adverse effect on the
Company.

EMPLOYEES

As of June 1, 1996, the Company employed approximately 380 persons,
approximately 286 of whom were full-time employees. Under the terms of the
service agreements with the affiliated physician groups, the Company is
responsible for the practice compensation and benefits of the groups'
nonphysician medical personnel. No employee of the Company or of any affiliated
physician group is a member of a labor union or subject to a collective
bargaining agreement. The Company believes that its labor relations are good.

LEGAL PROCEEDINGS

No material litigation is currently pending against the Company, and the
Company is not aware of any outstanding claims against any affiliated physician
group that would have a material adverse effect on the Company's financial
condition or results of operations. The Company expects its affiliated physician
groups to be involved in legal proceedings incident to their business, most of
which are expected to involve claims related to the alleged medical malpractice
of its affiliated oncologists.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information concerning the directors
and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------------ --- ------------------------------------------
<S> <C> <C>
William H. West, M.D...................... 49 Chairman of the Board of Directors
Joseph T. Clark........................... 40 President, Chief Executive Officer and
Director
Daryl P. Johnson.......................... 37 Executive Vice President, Chief Financial
Officer and Chief Operating Officer --
Practice Management Division
Charles H. Weaver, M.D.................... 34 Chief Medical Officer
Jeffrey H. Winokur........................ 37 Executive Vice President of Marketing
John A. Good.............................. 38 Executive Vice President, Secretary and
General Counsel
Debbie K. Elliott......................... 29 Chief Accounting Officer
Kenneth L. Scott.......................... 43 Chief Operating Officer -- IMPACT(R)
Division
Jack O. Bovender.......................... 50 Director
Frank M. Bumstead......................... 54 Vice-Chairman of the Board
W. Thomas Grant II........................ 45 Director
P. Anthony Jacobs......................... 54 Director
Leonard A. Kalman, M.D.................... 45 Director
James R. Seward........................... 43 Director
</TABLE>

The following is a biographical summary of the experience of the executive
officers and directors of the Company:

WILLIAM H. WEST, M.D. has been a director of the Company since 1985.
Dr. West is a medical oncologist. He has served as Chairman of the Board of
Directors of the Company since February 1993. Dr. West served as Chief
Executive Officer of the Company from May 1989 to January 1996 and Medical
Director of the Company from 1985 to February 1996. Dr. West served as
President of the Company from May 1989 to February 1993. Dr. West was the
Founder and President of the West Clinic, P.C. Effective in January 1996,
Dr. West divested his interest in the West Clinic and owned no interest
therein at the time of execution of the Company's definitive agreement to
form a practice management affiliation with West Clinic.

JOSEPH T. CLARK has been a director of the Company since 1988. Mr.
Clark has served as the Chief Executive Officer of the Company since
January 1996 and as President of the Company since February 1993. Mr. Clark
was formerly the Executive Vice President and Chief Operating Officer of
the Company from May 1989 to February 1993 and Secretary of the Company
from September 1988 to February 1993. Mr. Clark also served as Chief
Financial Officer of the Company from March 1988 to May 1989. Prior to
joining the Company, Mr. Clark was employed in various capacities by
American Medical International, Inc. from 1982, holding the position of
Regional Director of Finance from January 1986 to March 1988.

DARYL P. JOHNSON has been an officer of the Company since 1990. Mr.
Johnson has served as the Executive Vice President and Chief Financial
Officer of the Company since October 1991 and as the Chief Operating
Officer -- Practice Management Division of the Company since May 1996. From
February 1993 until May 1996 Mr. Johnson served as the Secretary of the
Company and prior to that he

43
<PAGE> 46

was the Assistant Secretary of the Company from October 1990 to February
1993 and the Controller of the Company from June 1990 to October 1991.

CHARLES H. WEAVER, M.D. joined the Company in February 1994 and serves
as the Company's Chief Medical Officer. Dr. Weaver served as the Scientific
Director of the Company until February 1996. Prior to joining the Company,
Dr. Weaver was the Acting Instructor, Department of Internal Medicine, at
the University of Washington from 1991 to 1994. Dr. Weaver earned a
Fellowship in Oncology, Fred Hutchinson Cancer Research Center from 1991 to
1994 and completed his residency in Internal Medicine at the University of
Pennsylvania from 1989 to 1991.

JEFFREY H. WINOKUR joined the Company in February 1996 as its
Executive Vice President of Marketing. Mr. Winokur had served as Vice
President of Managed Care with Medpartners/Mullikin, Inc., a physician
practice management company, since December 1993. From March 1991 until
December 1993, Mr. Winokur served as a consultant for Performance Group, a
health care consulting firm.

JOHN A. GOOD joined the Company in April 1996 as its Executive Vice
President, General Counsel, and was appointed Secretary of the Company in
May 1996. Mr. Good was a corporate/securities partner with the Memphis,
Tennessee law firm of Baker, Donelson, Bearman & Caldwell, P.C. from March
1994 to April 1996. From July 1990 to March 1994, Mr. Good was a
corporate/securities partner in the Memphis law firm of McDonell Boyd (now
Wyatt, Tarrant & Combs, P.L.C.).

DEBBIE K. ELLIOTT has served as Chief Accounting Officer of the
Company since June 1996. Ms. Elliott was formerly the Controller from May
1993 to June 1996 and Financial Reporting Manager from November 1991 to May
1993. Ms. Elliott began her career with Ernst & Young LLP in 1989.

KENNETH L. SCOTT joined the Company in February 1996 as its Chief
Operating Officer -- IMPACT(R) Division. Prior to joining the Company, Mr.
Scott was Chief Executive Officer and President of American Health Care
Management Services, Inc., Ft. Lauderdale, Florida, an oncology health care
management consulting company, from June 1993 to February 1996. From May
1987 to May 1993, Mr. Scott was Chief Executive Officer, President and a
director of Cancer Treatment Holdings, Inc., Ft. Lauderdale, Florida, a
company which provides radiation therapy centers, chemotherapy, home
infusion and home nursing care to cancer patients.

JACK O. BOVENDER has been a director of the Company since 1994 and is
a member of the compensation committee ("Compensation Committee") of the
Board of Directors. Mr. Bovender formerly served as the Chief Operating
Officer of Hospital Corporation of America from December 1992 until his
retirement in March 1994. He was also the President, Eastern Group
Operations, Hospital Corporation of America from June 1987 to December
1992. Mr. Bovender is also a Director of Quorum Health Group.

FRANK M. BUMSTEAD has been a director of the Company since 1985 and is
a member of the Compensation Committee, the audit committee ("Audit
Committee") and executive committee ("Executive Committee") of the Board of
Directors. He has served as the Vice-Chairman of the Board since February
1993. Mr. Bumstead was the Chairman of the Board of the Company from
January 1989 to February 1993. He has been the Chairman and Chief Executive
Officer of FBMS Financial, Inc., a financial management and business
consulting firm, since January 1990. Prior to that, Mr. Bumstead was the
President of Bumstead Co., a financial consulting company, from 1986 to
December 1990. Mr. Bumstead is also a director of First Union National Bank
of Tennessee, and is a director of and serves on the compensation committee
for Nashville Country Club, Inc. and Veritus Music Entertainment, Inc.

LEONARD A. KALMAN, M.D. has been a director of the Company since 1996
and is a member of the Compensation Committee. Dr. Kalman is a practicing
medical oncologist with the Miami Practice.

P. ANTHONY JACOBS has been a director of the Company since 1990 and is
a member of the Audit Committee, Compensation Committee (Chairman) and
Executive Committee. Mr. Jacobs has served as the President of Seafield,
(formerly BMA Corporation) since May 1993 and the Chief Operating Officer

44
<PAGE> 47

of Seafield since August 1990. Mr. Jacobs was the Executive Vice President
of Seafield from August 1990 to May 1993 and has been a Director of
Seafield since 1987. Mr. Jacobs is also a director for Trenwick Group Inc.
and serves on its compensation committee.

W. THOMAS GRANT II has been a director of the Company since 1991 and
is a member of the Compensation Committee. Mr. Grant is the Chief Executive
Officer of Seafield (formerly BMA Corporation) and has served as the
Chairman of the Board of Seafield since May 1993, prior to which time he
served as the President. Mr. Grant serves as a director for Kansas City
Power & Light Company and Commerce Bancshares, Inc.

JAMES R. SEWARD has been a director of the Company since 1990 and is a
member of the Audit Committee, Compensation Committee (Chairman) and
Executive Committee. Mr. Seward has served as the Executive Vice President
of Seafield, (formerly BMA Corporation) since May 1993 and was the Senior
Vice President of Seafield from August 1990 to May 1993. Mr. Seward has
also served as the Chief Financial Officer of Seafield since February 1991.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

The Company has employment agreements with Drs. West and Weaver and Messrs.
Clark and Johnson that expire December 31, 1997, subject to extension for
additional one year periods at the election of the parties. The Company pays
Drs. West and Weaver and Messrs. Clark and Johnson annual minimum base salaries
of $225,000, $218,000, $200,000 and $160,000, respectively, to be reviewed
annually and subject to an increase or decrease according to the policies and
practices adopted by the Board. In addition, each is eligible to receive annual
incentive compensation awards. If any such executive is terminated without cause
with no change in control, the Company will pay such person his base salaries
for the remaining terms of his contract. If the Company experiences a change in
control and any such executive is terminated without cause within one year
thereafter, then the Company will be obligated to pay Dr. West and Mr. Clark up
to 300% of their base salaries and Dr. Weaver and Mr. Johnson 200% of their base
salaries. The named executives are not entitled to any severance payment in the
event they are terminated for "cause," as defined in the employment agreements.
The named executives' employment agreements also contain restrictive covenants
pursuant to which the executives have agreed not to divulge confidential
information of the Company and not to compete with the Company or hire or
solicit employees or clients of the Company during the term of their employment
by the Company and for a period of at least 18 months after their employment
terminates.

45
<PAGE> 48

PRINCIPAL AND SELLING SHAREHOLDERS

The following table sets forth, as of June 1, 1996, certain information
regarding the beneficial ownership of the Common Stock, the Company's only class
of voting securities, with respect to (i) all persons known to the Company to be
holders of 5% or more of such securities, (ii) each of the Company's directors
and executive officers, (iii) each Selling Shareholder, and, (iv) all directors
and officers of the Company as a group. Unless otherwise set forth, all shares
are owned directly by the designated individual or group with sole voting and
dispositive power. Neither the Company's officers or directors are beneficial
owners of any of the Company's Series A Preferred Stock.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO THE OFFERING NUMBER OF SHARES AFTER THE OFFERING
------------------------ TO BE SOLD IN ----------------------
NAME OF BENEFICIAL OWNER SHARES PERCENT(1) THE OFFERING SHARES PERCENT
- ------------------------------------ --------- ---------- ---------------- --------- ----------
<S> <C> <C> <C> <C> <C>
Seafield Capital Corporation(2)..... 4,121,700(2) 55.85 585,787 3,535,913 30.25
Boston Safe Deposit & Trust
Company(3)........................ 100,000 1.36 14,213 85,787 *
William H. West, M.D. .............. 833,760(4) 11.04 7.14
Jack O. Bovender, Jr. .............. 6,000(5) * *
Frank M. Bumstead................... 105,781(6) 1.43 *
Joseph T. Clark..................... 243,040(7) 3.13 2.08
Debbie K. Elliott................... 9,400(8) * *
John A. Good........................ 10,000(9) * *
W. Thomas Grant II.................. 6,400(10) * *
P. Anthony Jacobs................... 10,400(11) * *
Daryl P. Johnson.................... 61,920(12) * *
Leonard A. Kalman, M.D. ............ 108,163(13) 1.44 *
Kenneth L. Scott.................... 14,400(14) * *
James R. Seward..................... 10,400(15) * *
Charles H. Weaver, M.D. ............ 42,000(16) * *
Jeffrey H. Winokur.................. 23,000(17) * *
All directors and officers as a
group (14 persons)................ 1,484,664(18) 18.35 12.72
</TABLE>

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

(1) The percentages shown are based on 7,379,689 shares of Common Stock
outstanding on June 1, 1996 plus, as to each individual and group listed,
the number of shares of Common Stock deemed to be owned by such holder, for
purposes of Rule 13d-3 under the Securities Exchange Act of 1934, assuming
conversion of the Company's Series A Stock and exercise of all options and
warrants held by such holder, which stock, options and warrants may be
converted or exercised within sixty (60) days of June 1, 1996. An asterisk
"*" indicates less than 1% ownership of Common Stock.
(2) Seafield Capital Corporation's address is P.O. Box 410949, Kansas City,
Missouri, 64141. W. Thomas Grant, P. Anthony Jacobs, and James R. Seward,
directors of the Company, are officers and directors of Seafield Capital
Corporation. Each such director disclaims beneficial ownership in the
Common Stock owned by Seafield Capital Corporation.
(3) Boston Safe Deposit & Trust Company's address is One Boston Place, Boston,
Massachusetts 02108.
(4) Includes 173,780 shares of Common Stock which Dr. West has the right to
acquire pursuant to the exercise of options.
(5) Represents shares of Common Stock which Mr. Bovender has the right to
acquire pursuant to the exercise of options.
(6) Includes 6,000 shares of Common Stock which Mr. Bumstead has a right to
acquire pursuant to the exercise of options.
(7) Includes 238,240 shares of Common Stock which Mr. Clark has the right to
acquire pursuant to the exercise of options.
(8) Represents shares of Common Stock which Ms. Elliott has the right to
acquire pursuant to the exercise of options.
(9) Represents shares of Common Stock which Mr. Good has the right to acquire
pursuant to the exercise of options.
(10) Includes 6,000 shares of Common Stock which Mr. Grant has the right to
acquire pursuant to the exercise of options.

46
<PAGE> 49

(11) Includes 6,000 shares of Common Stock which Mr. Jacobs has the right to
acquire pursuant to the exercise of options.
(12) Includes 61,480 shares of Common Stock which Mr. Johnson has the right to
acquire pursuant to the exercise of options.
(13) Includes 108,143 shares of Common Stock which Dr. Kalman has the right to
acquire pursuant to the exercise of convertible debt issued in connection
with the acquisition of the assets of the Miami Practice and the exercise
of options.
(14) Includes 14,000 shares of Common Stock which Mr. Scott has the right to
acquire pursuant to the exercise of options.
(15) Includes 6,000 shares of Common Stock which Mr. Seward has the right to
acquire pursuant to the exercise of options.
(16) Represents shares of Common Stock which Dr. Weaver has the right to acquire
pursuant to the exercise of options.
(17) Represents shares of Common Stock which Mr. Winokur has the right to
acquire pursuant to the exercise of options.
(18) Includes 710,043 shares as to which various officers and directors have
rights to acquire pursuant to the exercise of options.

The following table sets forth, as of June 1, 1996, certain information
regarding the beneficial ownership of common stock of Seafield Capital
Corporation ("Seafield") by each director of the Company and by all directors
and executive officers of the Company as a group. Messrs. Bumstead, Bovender,
Clark, Good, Scott, Weaver, Ms. Elliott and Drs. Kalman and West were not
beneficial owners of any Seafield common stock as of February 15, 1996. Mr.
Johnson owned 500 shares of Seafield common stock on that date.

<TABLE>
<CAPTION>
AMOUNT AND NATURE OF PERCENT OF
NAME BENEFICIAL OWNERSHIP(1) CLASS(2)
- ---------------------------------------------------------------- ----------------------- ----------
<S> <C> <C>
W. Thomas Grant II.............................................. 156,141(3) 2.4%
P. Anthony Jacobs............................................... 49,867(4) *
James R. Seward................................................. 44,940(5) *
All directors and officers as a group (13 persons).............. 251,448 3.9%
</TABLE>

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

(1) With respect to each listed individual and directors and executive officers
as a group, includes shares of Seafield common stock issuable upon the
exercise of options under Seafield's stock option and incentive plans that
were exercisable on or within 60 days of February 15, 1996 as follows: Mr.
Grant, 5,000 shares; Mr. Seward, 5,000 shares; directors and executive
officers as a group (13 persons), 10,000 shares. also includes, with
respect to each listed individual and directors and executive officers as a
group, the following numbers of shares held in their respective accounts
under the Seafield Capital Corporation 401(k) Plan and Trust as of December
31, 1995 (based upon the Plan statement as of that date), as to which
shares of common stock the individual shares investment power, but, except
in the case of Mr. Seward, who shares voting power with respect to all
10,346 shares held in the Plan, does not have voting power; Mr. Grant,
1,066 shares; Mr. Jacobs, 1,786 shares; Mr. Seward, 640 shares (plus an
additional 9,706 shares with respect to which Mr. Seward shares voting
power as a member of the 401(k) Plan Administrative Committee); directors
and executive officers as a group, 10,346 shares.
(2) The percentages shown are based on 6,462,933 shares of Seafield common stock
outstanding on February 15, 1996 plus, as to each individual listed, the
number of shares of Seafield common stock deemed to be owned by such holder
for purposes of Rule 13d-3 under the Securities Exchange Act of 1934,
assuming exercise of all stock options held by such holder(s) which may be
exercised on or within 60 days of February 15, 1996.
(3) Includes 30,293 shares held by Mr. Grant as custodian for his children;
includes 45,000 held in a family trust for which Mr. Grant serves as a
co-trustee, and, in that capacity, shares voting and investment power; and
includes 11,585 shares owned by Mr. Grant's spouse, with respect to which
Mr. Grant disclaims beneficial ownership.
(4) Includes 1,000 shares owned by Mr. Jacob's wife and 200 shares owned by his
son, with respect to which Mr. Jacobs disclaims beneficial ownership.
(5) Includes 1,500 shares held in a family trust of which Mr. Seward serves as a
co-trustee with his mother, and in that capacity shares voting and
investment powers.

47
<PAGE> 50

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 30,000,000 shares of
Common Stock, $.01 par value per share, and 3,000,000 shares of preferred stock,
$1.00 par value per share, issuable in series. As of the date of this
Prospectus, there were 7,712,843 shares of Common Stock issued and outstanding,
and 27,833 shares of preferred stock issued and outstanding. Options to purchase
1,878,100 shares of Common Stock are outstanding and an additional 247,600
shares are reserved for issuance pursuant to employee and director stock option
plans at exercise prices ranging from $1.56 to $23.75 per share. Additionally,
options to purchase an aggregate of 80,000 shares of Common Stock, at an
exercise price of $17.00 per share, were issued in connection with the Miami
Practice affiliation. Additionally, warrants to purchase an aggregate of 85,000
shares of Common Stock, at an average exercise price of $11.75 per share, were
issued in connection with the Knoxville Practice and Ft. Lauderdale Practice
affiliations.

COMMON STOCK

As of the date of this Prospectus, approximately 620 persons were holders
of record of the shares of Common Stock outstanding. Each holder of record of
Common Stock is entitled to one vote for each outstanding share of Common Stock
owned by such holder, is not entitled to cumulate his votes for the election of
directors, and does not have preemptive rights. The issued and outstanding
shares of Common Stock are, and all shares of Common Stock to be issued and to
be sold in the Offering will be, validly issued, fully paid, and nonassessable.
All shares of Common Stock have equal rights and, subject to the rights of the
holders of any series of the preferred stock, are entitled to receive ratably
such dividends, if any, as the Board of Directors may declare from time to time
out of funds legally available therefor. Upon liquidation of the Company, after
payment or provision for payment of all of the Company's debts and obligations
and liquidation payments to holders of outstanding shares of preferred stock, if
any, the holders of the Common Stock will share ratably in the net assets, if
any, available for distribution to holders of Common Stock upon liquidation.

PREFERRED STOCK

The Company's Board of Directors may, without further action by the
Company's shareholders, from time to time direct the issuance of shares of
preferred stock in series and may, at the time of issuance, determine the
rights, preferences, and limitations of each series. The rights of any such
series may include voting and conversion rights that could adversely affect the
voting power of the holders of Common Stock. Satisfaction of any dividend
preferences of outstanding preferred stock could reduce the amount of funds
available, if any, for the payment of dividends on Common Stock. Also, the
holders of preferred stock would normally be entitled to receive a preference
payment in the event of any liquidation, dissolution, or winding-up of the
Company before any payment is made to the holders of the Common Stock.

REGISTRATION RIGHTS

Holders of 4,514,700 shares of Common Stock ("Round One Shares") have
demand and piggyback registration rights with respect to such shares. In
general, Seafield Capital Corporation (which holds 4,121,700 Round One Shares)
or the holders of not less than 50% of the remaining 393,000 Round One Shares
may request that the Company file a registration statement under the Securities
Act of 1933 in respect of the offering and sale of the securities covered
thereby. The Company is not obligated to file and make effective more than two
such registration statements. In addition, such holders shall have the right to
include such shares in a registration statement filed by the Company in respect
of the Company's offering and sale of Common Stock. Such piggyback registration
rights are subject to certain limitations and conditions, including the right of
the underwriters of an offering to limit the number of shares included in such
registration.

In addition, the Company has granted piggyback registration rights with
respect to 196,154 shares of Common Stock issued in connection with a Completed
Affiliation, and demand and piggyback registration rights with respect to shares
of Common Stock issuable upon the exercise of 85,000 warrants issued in a
Completed Affiliation.

The Company is obligated to bear all expenses in connection with the
registration of shares as described above, except underwriting discounts and
commissions.

TRANSFER AGENT

The transfer agent for the Common Stock is SunTrust Bank, Atlanta, Georgia.

48
<PAGE> 51

UNDERWRITING

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date hereof, each Underwriter named below has severally agreed to
purchase, and the Company and the Selling Shareholders have agreed to sell to
such Underwriter, the number of shares of Common Stock set forth opposite the
name of such Underwriter below.

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- --------------------------------------------------------------------------------- ----------
<S> <C>
Smith Barney Inc.................................................................
J.C. Bradford & Co...............................................................

----------
Total....................................................................... 5,300,000
=========
</TABLE>

The Underwriters are obligated to take and pay for all shares of Common
Stock offered hereby (other than those covered by the over-allotment option
described below) if any such shares are taken.

The Underwriters, for whom Smith Barney Inc. and J.C. Bradford & Co. are
acting as Representatives, propose initially to offer part of the shares of
Common Stock directly to the public at the public offering price set forth on
the cover page hereof and part to certain dealers at a price that represents a
concession not in excess of $ per share under the public offering price. The
Underwriters may allow, and such dealers may reallow, a concession not in excess
of $ per share to certain other dealers. After the offering of the shares of
Common Stock, the public offering price and such commissions may be changed by
the Underwriters.

The Selling Shareholders have, severally and not jointly, granted to the
Underwriters an option, exercisable for 30 days from the date of this
Prospectus, to purchase up to 795,000 additional shares of Common Stock at the
price to the public set forth on the cover page of this Prospectus less the
underwriting discounts and commissions. The Underwriters may exercise such
option solely for the purpose of covering over-allotments, if any, in connection
with the sale of the shares offered hereby. To the extent such option is
exercised, each Underwriter will be obligated, subject to certain conditions, to
purchase approximately the same percentage of such additional shares as the
number of shares set forth opposite each Underwriter's name in the preceding
table bears to the total number of shares listed in such table.

The Company, the Selling Shareholders and the Underwriters have agreed to
indemnify each other and their respective controlling persons against certain
liabilities, including liabilities under the Securities Act.

The Company, its executive officers and directors, and Seafield Capital
Corporation have agreed that, for a period of 180 days after the date of this
Prospectus (the "Lock-up Period"), they will not, without the prior written
consent of Smith Barney Inc., offer, sell, contract to sell or otherwise dispose
of any shares of Common Stock of the Company or any securities convertible into
or exercisable or exchangeable for any shares of Common Stock.

The rules of the Commission generally prohibit the Underwriters from making
a market in the Common Stock during the two business day period prior to
commencement of sales in this Offering (the "Cooling Off Period"). The
Commission has, however, adopted Rule 10b-6A ("Rule 10b-6A") which provides an
exemption from such prohibition for certain passive market making transactions.
Such passive market making transactions must comply with applicable price and
volume limits and must be identified as passive market transactions. In general,
pursuant to Rule 10b-6A, a passive market maker may display its bid for a
security at a price not in excess of the highest independent bid for the
security. If all independent bids are lowered below the passive market maker's
bid, however, such bid must then be lowered when certain purchase limits are

49
<PAGE> 52

exceeded. Further, net purchases by a passive market maker's average daily
trading volume in a security during a specified prior period and must be
discontinued when such limit is reached. Pursuant to the exemption provided by
Rule 10b-6A, certain of the Underwriters and selling group members may engage in
passive market making in the Common Stock during the Cooling Off Period. Passive
market making may stabilize the market price of the Common Stock at a level
above that which might otherwise prevail, and if commenced, may be discontinued
at any time.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company and the Selling Shareholders by Baker, Donelson, Bearman &
Caldwell, Memphis, Tennessee, and for the Underwriters by Dewey Ballantine, New
York, New York.

EXPERTS

The financial statements of Response Oncology, Inc. as of December 31, 1995
and 1994, and for each of the years in the three-year period ended December 31,
1995; the financial statements of Oncology Hematology Group of South Florida,
P.A.; Knoxville Hematology Oncology Associates; Jeffrey L. Paonessa, M.D., P.A.;
Hematology Oncology Associates of the Treasure Coast, P.A., Alan S. Collin, M.D.
and Michael S. Wertheim, M.D.; Weinreb, Weisberg & Weiss, P.A.; The Center for
Hematology and Oncology, P.A.; The West Clinic, P.C.; Rosenberg and Kalman,
M.D., P.A. and Drs. Haraf, Antonucci, McCormack and Kerns Medical Partnership as
of December 31, 1995 and for the periods then ended; and the financial
statements of Rymer, Zaravinos and Faig, M.D., P.A. (d/b/a Southeast Florida
Hematology Oncology Group) as of January 31, 1996 and for the year then ended
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.

ADDITIONAL INFORMATION

The Company 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 "SEC"). Copies of such reports, proxy
statements and other information can be obtained, upon payment of the prescribed
fees, from the SEC at 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C.
20549. In addition, such reports, proxy statements and other information can be
inspected at the SEC's facilities referred to above and at the SEC's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
The Company's Common Stock is included for quotation on The Nasdaq Stock
Market's National Market and such reports, proxy statements and other
information concerning the Company should be available for inspection and
copying at the offices of the National Association of Securities Dealers, Inc.,
1735 K Street, N.W., Washington, D.C. 20006. This Prospectus is part of a
Registration Statement on Form S-2 filed and effective under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to the shares of Common
Stock to be issued. This Prospectus, which is a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement and exhibits and schedules thereto. Such additional information may be
obtained from the SEC's principal office in Washington, D.C. and Regional
Offices at the addresses set forth above. Statements contained in this
Prospectus or in any document incorporated by reference in this Prospectus as to
the contents of any contract, agreement or 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 for
a more complete description of the matter involved, and each such statement may
be deemed qualified in its entirety by such reference.

50
<PAGE> 53

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents are incorporated herein by reference:

(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995;

(2) The Company's Quarterly Report on Form 10-Q for the three months
ended March 31, 1996;

(3) The Company's Current Report on Form 8-K dated January 2, 1996;

(4) The Company's Current Report on Form 8-K/A dated January 2, 1996;

(5) The Company's Current Report on Form 8-K dated April 15, 1996;

(6) The Company's Current Report on Form 8-K/A dated April 15, 1996;

(7) The Company's Current Report on Form 8-K dated June 20, 1996.

(8) The Company's Current Report on Form 8-K/A dated June 20, 1996;
and

(9) The Company's Current Report on Form 8-K dated July 3, 1996.

All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering made hereby shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date such documents were filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus. The Company will provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the documents
incorporated by reference herein (other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference in such documents).
Requests for such copies should be directed to John A. Good, Secretary, Response
Oncology, Inc., 1775 Moriah Woods Blvd., Memphis, Tennessee 38117, telephone
number (901) 761-7000.

51
<PAGE> 54

RESPONSE ONCOLOGY, INC.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
REGISTRANT
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-4
Consolidated Balance Sheets -- December 31, 1994 and 1995............................ F-5
Consolidated Statements of Operations -- Years ended December 31, 1993, 1994 and
1995............................................................................... F-6
Consolidated Statements of Stockholders' Equity -- Years ended December 31, 1993,
1994 and 1995...................................................................... F-7
Consolidated Statements of Cash Flows -- Years ended December 31, 1993, 1994 and
1995............................................................................... F-8
Notes to Consolidated Financial Statements........................................... F-9
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES (UNAUDITED)
Condensed Consolidated Balance Sheets at December 31, 1995 and March 31, 1996........ F-16
Condensed Consolidated Statements of Operations for the Three Months Ended March 31,
1995 and 1996...................................................................... F-17
Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31,
1995 and 1996...................................................................... F-18
Notes to Condensed Consolidated Financial Statements................................. F-19
COMPLETED AFFILIATIONS
ONCOLOGY HEMATOLOGY GROUP OF SOUTH FLORIDA, P.A.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-22
Balance Sheet -- December 31, 1995................................................... F-23
Statement of Income -- Year ended December 31, 1995.................................. F-24
Statement of Shareholders' Equity -- Year ended December 31, 1995.................... F-25
Statement of Cash Flows -- Year ended December 31, 1995.............................. F-26
Notes to Financial Statements........................................................ F-27
KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-32
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-33
Statements of Income -- Year ended December 31, 1995 and for the three-month period
ended March 31, 1996 (unaudited)................................................... F-34
Statements of Partners' Equity -- Year ended December 31, 1995 and for the
three-month period ended March 31, 1996 (unaudited)................................ F-35
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-36
Notes to Financial Statements........................................................ F-37
JEFFREY L. PAONESSA, M.D., P.A. (D/B/A PAONESSA AND PETERSON)
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-41
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-42
</TABLE>

F-1
<PAGE> 55
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Statements of Income -- Year ended December 31, 1995 and the three-month period ended
March 31, 1996 (unaudited)......................................................... F-43
Statements of Stockholders' Equity -- Year ended December 31, 1995 and the
three-month period ended March 31, 1996 (unaudited)................................ F-44
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-45
Notes to Financial Statements........................................................ F-46
RYMER, ZARAVINOS AND FAIG, M.D., P.A. (D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY
GROUP, P.A.)
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-49
Balance Sheets -- January 31, 1996 and April 30, 1996 (unaudited).................... F-50
Statements of Operations -- Year ended January 31, 1996 and for the three-month
period ended April 30, 1996 (unaudited)............................................ F-51
Statements of Shareholders' Equity -- Year ended January 31, 1996 and for the
three-month period ended April 30, 1996 (unaudited)................................ F-52
Statements of Cash Flows -- Year ended January 31, 1996 and for the three-month
period ended April 30, 1996 (unaudited)............................................ F-53
Notes to Financial Statements........................................................ F-54
PROPOSED AFFILIATIONS
ROSENBERG AND KALMAN, M.D., P.A.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-58
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-59
Statements of Operations -- December 31, 1995 and for the three-month period ended
March 31, 1996 (unaudited)......................................................... F-60
Statements of Stockholders' Equity -- Year ended December 31, 1995 and for the
three-month period ended March 31, 1996 (unaudited)................................ F-61
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-62
Notes to Financial Statements........................................................ F-63
THE WEST CLINIC, P.C.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-67
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-68
Statements of Income (Loss) -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-69
Statements of Stockholders' Equity -- Year ended December 31, 1995 and for the
three-month period ended March 31, 1996 (unaudited)................................ F-70
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-71
Notes to Financial Statements........................................................ F-72
</TABLE>

F-2
<PAGE> 56
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
WEINREB, WEISBERG & WEISS, P.A.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-78
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-79
Statements of Income -- Year ended December 31, 1995 and for the three-month period
ended March 31, 1996 (unaudited)................................................... F-80
Statements of Stockholders' Equity -- Year ended December 31, 1995 and for the
three-month period ended March 31, 1996 (unaudited)................................ F-81
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-82
Notes to Financial Statements........................................................ F-83
DRS. HARAF, ANTONUCCI, MCCORMACK & KERNS MEDICAL PARTNERSHIP
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-88
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-89
Statements of Income -- Year ended December 31, 1995 and for the three-month period
ended March 31, 1996 (unaudited)................................................... F-90
Statements of Partners Equity -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-91
Statements of Cash Flows -- Year ended December 31, 1995 and for the three-month
period ended March 31, 1996 (unaudited)............................................ F-92
Notes to Financial Statements........................................................ F-93
HEMATOLOGY-ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A., ALAN S. COLLIN, M.D. AND
MICHAEL S. WERTHEIM, M.D.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-96
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-97
Statements of Income -- Year ended December 31, 1995 and the three months ended March
31, 1996 (unaudited)............................................................... F-98
Statements of Stockholders' Equity -- Year ended December 31, 1995 and the three
months ended March 31, 1996 (unaudited)............................................ F-99
Statements of Cash Flows -- Year ended December 31, 1995 and the three months ended
March 31, 1996 (unaudited)......................................................... F-100
Notes to Financial Statements........................................................ F-101
THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.
Report of Independent Auditors -- KPMG Peat Marwick LLP.............................. F-105
Balance Sheets -- December 31, 1995 and March 31, 1996 (unaudited)................... F-106
Statements of Income -- For the period from September 15, 1995 through December 31,
1995 and the three months ended March 31, 1996 (unaudited)......................... F-107
Statements of Shareholders' Equity -- For the period from September 15, 1995 through
December 31, 1995 and the three months ended March 31, 1996 (unaudited)............ F-108
Statements of Cash Flows -- For the period from September 15, 1995 through December
31, 1995 and the three months ended March 31, 1996 (unaudited)..................... F-109
Notes to Financial Statements........................................................ F-110
</TABLE>

F-3
<PAGE> 57

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Response Oncology, Inc.

We have audited the accompanying consolidated balance sheets of Response
Oncology, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity, and cash
flows for each of the years in the three-year period ended December 31, 1995.
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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Response
Oncology, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally accepted
accounting principles..

KPMG PEAT MARWICK LLP

Memphis, Tennessee
January 23, 1996

F-4
<PAGE> 58

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1994 1995
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents....................................... $ 2,922,266 $ 4,204,558
Short-term investments.......................................... 100,000 361,718
Accounts receivable, less allowances for doubtful accounts of
$2,079,788 and $3,934,794.................................... 12,399,569 13,934,810
Supplies........................................................ 941,481 1,119,671
Prepaid expenses................................................ 324,637 550,287
Other current assets............................................ 97,878 465,738
----------- -----------
Total Current Assets.................................... 16,785,831 20,636,782
Property and Equipment -- at cost, less accumulated depreciation
and amortization................................................ 4,020,799 3,822,425
Other Assets:
Deferred charges, less accumulated amortization................. 152,520 186,528
Other assets.................................................... 77,565 119,536
----------- -----------
230,085 306,064
----------- -----------
Total Assets............................................ $21,036,715 $24,765,271
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable................................................ $ 3,249,147 $ 3,690,937
Accrued expenses................................................ 1,023,163 1,134,688
Notes payable................................................... 71,558 --
Capital lease obligations....................................... 157,030 58,501
----------- -----------
Total Current Liabilities............................... 4,500,898 4,884,126
Capital Lease Obligations......................................... 28,878 15,492
Minority Interest................................................. -- 23,056
Stockholders' Equity:
Series A Convertible Preferred Stock, $1.00 par value,
authorized 3,000,000 shares; issued and outstanding 27,833
and 28,333 shares at December 31, 1995 and 1994,
respectively................................................. 28,333 27,833
Common Stock, $.01 par value, authorized 30,000,000 shares;
issued and outstanding 7,371,589 shares and 6,964,431 shares
at December 31, 1995 and 1994, respectively.................. 69,644 73,716
Paid-in capital................................................. 59,036,487 60,054,215
Accumulated deficit............................................. (42,627,525) (40,313,167)
----------- -----------
16,506,939 19,842,597
----------- -----------
Total Liabilities and Stockholders' Equity.............. $21,036,715 $24,765,271
=========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-5
<PAGE> 59

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net revenue......................................... $37,696,594 $38,251,304 $44,297,798
Other income -- principally interest................ 187,979 219,548 282,011
----------- ----------- -----------
37,884,573 38,470,852 44,579,809
Costs and expenses:
Operating......................................... 29,743,675 31,758,314 32,892,728
General and administrative........................ 2,891,150 4,285,810 5,512,306
Depreciation and amortization..................... 1,916,543 2,124,877 1,736,055
Interest.......................................... 92,476 120,653 16,860
Provision for doubtful accounts................... 2,469,968 2,527,685 2,105,696
----------- ----------- -----------
37,113,812 40,817,339 42,263,645
----------- ----------- -----------
Earnings (loss) before minority interest and
equity in earnings (loss) of
unconsolidated affiliate.................. 770,761 (2,346,487) 2,316,164
Minority owners' share of net earnings.............. -- -- (1,806)
Equity in loss of unconsolidated affiliate.......... (71,228) -- --
----------- ----------- -----------
Net earnings (loss).......................... 699,533 (2,346,487) 2,314,358
Common Stock Dividend to Preferred Stockholders..... (2,922) (2,824) (3,825)
----------- ----------- -----------
Net earnings (loss) to common stockholders... $ 696,611 $(2,349,311) $ 2,310,533
=========== =========== ===========
Earnings (loss) per common share............. $ 0.10 $ (0.34) $ .32
=========== =========== ===========
Weighted average number of shares............ 7,166,171 6,953,157 7,171,459
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-6
<PAGE> 60

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
SERIES A CONVERTIBLE
PREFERRED STOCK COMMON STOCK
--------------------- -------------------------
PAR VALUE PAR VALUE
$(1.00 PER $(.01 PER
SHARES SHARE) SHARES SHARE)
------ ---------- ----------- ---------
<S> <C> <C> <C> <C>
Balances at December 31, 1992................... 35,468 $ 35,468 32,410,076 $64,820
Net earnings..................................
Exercise of common stock warrants and
options.................................... 130,000 260
Exercise of common stock rights, net of
offering expenses paid..................... 2,117,887 4,236
Conversion of preferred stock................. (5,900) (5,900) 5,407 11
Dividend on preferred stock................... 1,612 3
------ ------- ----------- -------
Balances at December 31, 1993................... 29,568 29,568 34,664,982 69,330
Net loss......................................
Exercise of common stock warrants and
options.................................... 154,500 309
Conversion of preferred stock................. (1,235) (1,235) 1,130 2
Dividend on preferred stock................... 1,545 3
------ ------- ----------- -------
Balances at December 31, 1994................... 28,333 $ 28,333 34,822,157 $69,644
Net earnings..................................
Exercise of common stock warrants and
options.................................... 497,000 4,068
Conversion of preferred stock................. (500) (500) 458 1
Dividend on preferred stock................... 306 3
One-for-five reverse split.................... (27,948,332)
------ ------- ----------- -------
Balances at December 31, 1995................... 27,833 $ 27,833 7,371,589 $73,716
====== ======= =========== =======
</TABLE>

<TABLE>
<CAPTION>
TOTAL
PAID-IN ACCUMULATED STOCKHOLDERS'
CAPITAL DEFICIT EQUITY
----------- ------------ -------------
<S> <C> <C> <C>
Balances at December 31, 1992...................... $53,132,253 $(40,980,571) $ 12,251,970
Net earnings..................................... 699,533 699,533
Exercise of common stock warrants and options.... 62,240 62,500
Exercise of common stock rights, net of offering
expenses paid................................. 5,761,250 5,765,486
Conversion of preferred stock.................... 5,889 0
Dividend on preferred stock...................... (3) 0
----------- ------------ -----------
Balances at December 31, 1993...................... 58,961,629 (40,281,038) 18,779,489
Net loss......................................... (2,346,487) (2,346,487)
Exercise of common stock warrants and options.... 73,628 73,937
Conversion of preferred stock.................... 1,233 0
Dividend on preferred stock...................... (3) 0
----------- ------------ -----------
Balances at December 31, 1994...................... $59,036,487 $(42,627,525) $ 16,506,939
Net earnings..................................... 2,314,358 2,314,358
Exercise of common stock warrants and options.... 1,017,232 1,021,300
Conversion of preferred stock.................... 499 0
Dividend on preferred stock...................... (3) 0
One-for-five reverse split....................... 0
----------- ------------ -----------
Balances at December 31, 1995...................... $60,054,215 $(40,313,167) $ 19,842,597
=========== ============ ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-7
<PAGE> 61

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31
-------------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss)............................... $ 699,533 $(2,346,487) $ 2,314,358
Adjustments to reconcile net earnings (loss) from
operations:
Depreciation and amortization of property and
equipment.................................... 1,348,446 1,719,693 1,583,901
Amortization of deferred charges and other
assets....................................... 568,097 405,184 152,154
Loss on disposal of equipment.................. 51,000 --
Provision for losses on accounts receivable.... 2,469,968 2,527,685 2,105,696
Equity in loss of unconsolidated affiliate..... 71,228 -- --
Minority owners' share of net income........... -- -- 1,806
Changes in assets and liabilities:
Accounts receivable.......................... (9,982,300) 160,879 (3,640,937)
Supplies, prepaid expenses, and other current
assets.................................... (795,559) 624,343 (771,700)
Deferred charges and other assets............ (388,029) (79,306) (206,883)
Accounts payable and accrued expenses........ 943,146 20,862 553,315
----------- ----------- -----------
Net cash provided by (used in) operating
activities.............................. (5,065,470) 3,083,853 2,091,710
INVESTING ACTIVITIES
Purchase of equipment............................. (1,113,577) (585,637) (1,330,490)
Proceeds from sale of equipment................... 23,541 --
Hollywood Center net assets assumed in excess of
investment basis............................... -- (53,396) --
Distributions from unconsolidated affiliate....... 189,000 -- --
Sale (Purchase) of short-term investments......... 564,043 -- (261,718)
----------- ----------- -----------
Net cash used in investing activities..... (360,534) (615,492) (1,592,208)
FINANCING ACTIVITIES
Proceeds from rights offering, net of expenses
paid........................................... 5,765,486 -- --
Proceeds from exercise of stock options and
warrants....................................... 62,500 73,937 1,021,300
Net (payments on) proceeds from notes payable..... (17,097) 59,420 (71,558)
Net proceeds from (repayment of) line of credit... 1,449,486 (2,419,507) --
Principal payments on capital lease obligations... (495,736) (360,576) (166,952)
----------- ----------- -----------
Net cash provided by (used in) financing
activities.............................. 6,764,639 (2,646,726) 782,790
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents............................. 1,338,635 (178,365) 1,282,292
Cash and cash equivalents at beginning of
period.................................. 1,761,996 3,100,631 2,922,266
----------- ----------- -----------
Cash and cash equivalents at end of
period.................................. $ 3,100,631 $ 2,922,266 $ 4,204,558
=========== =========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-8
<PAGE> 62

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995

NOTE A -- SIGNIFICANT ACCOUNTING POLICIES

Response Oncology is a comprehensive cancer management company which owns
and/or operates a network of outpatient treatment centers or IMPACT Centers,
which provide stem cell supported high-dose chemotherapy and other advanced
cancer treatment services under the direction of practicing oncologists; owns
the assets of and manages oncology practices; and conducts clinical cancer
research on behalf of pharmaceutical manufacturers.

The Company, formerly known as Response Technologies, Inc., changed its
name to Response Oncology, Inc. effective November 2, 1995.

The Company is a subsidiary of Seafield Capital Corporation ("Seafield").
On February 10, 1995, Seafield announced its retention of a financial advisor to
evaluate and recommend steps to enhance the value of Seafield to its
shareholders. Any transaction pursued by Seafield will be likely to result in a
significant change in the Company's ownership.

Principles of Consolidation and Basis of Presentation: The consolidated
financial statements include the accounts of the Company and its wholly owned
subsidiaries and majority-owned or controlled joint ventures. An investment in
an affiliated company in which the Company did not have a controlling interest
was accounted for by the equity method prior to January 8, 1994 (see Note
J -- Investment in Affiliate). All significant intercompany accounts and
transactions have been eliminated in consolidation.

Cash Equivalents: All highly liquid investments with an original maturity
of three months or less when purchased are considered to be cash equivalents.

Short-Term Investments: Short-term investments consist of certificates of
deposit maturing in less than one year. These investments are carried at cost
which approximates market.

Supplies: Supplies are recorded at lower of cost (first-in, first-out) or
market.

Property and Equipment: Property and equipment are stated at cost.
Depreciation and amortization are provided by the straight-line method over the
estimated useful lives which range from three to ten years.

Deferred Charges: Deferred charges consist primarily of startup costs
representing direct and incremental expenses incurred prior to the operational
date of a new IMPACT Center which are capitalized and amortized from the
operational date over a period of two years.

Startup costs of $273,405, $70,546, and $92,826 were incurred for the years
ended December 31, 1993, 1994, and 1995, respectively. Accumulated amortization
of deferred charges was $253,621 and $65,807 at December 31, 1994 and 1995,
respectively.

Net Revenue: Net revenues primarily consist of charges for patient
services rendered at IMPACT(R) Centers based on established billing rates less
allowances and discounts for patients covered by contractual programs. Payments
received under these programs, which are generally based on predetermined rates,
are generally less than the established billing rates and the differences are
recorded as contractual allowances or policy discounts. Net patient service
revenue is net of contractual adjustments and policy discounts of $3,331,765,
$3,893,813, and $4,224,008 for the years ended December 31, 1993, 1994, and
1995, respectively.

Also included in net revenue are sales of pharmaceuticals to physicians of
$4,311,000, $6,479,000, and $9,806,000 for the years ended December 31, 1993,
1994, and 1995, respectively. In addition, net revenue for the year ended
December 31, 1995 includes $665,000 from clinical research activities.

Income Taxes: Under FASB Statement No. 109, "Accounting for Income Taxes",
the liability method is used whereby deferred tax assets and liabilities are
determined based on differences between financial

F-9
<PAGE> 63

reporting and tax bases of assets and liabilities and are measured using the
enacted tax rates and laws that will be in effect when the differences are
expected to reverse.

Net Earnings (Loss) Per Common Share: Net earnings (loss) per common share
has been computed based upon the weighted average number of shares of common
stock outstanding during the period, plus (in periods in which they have a
dilutive effect) common stock equivalents, primarily stock options and warrants.
Fully diluted earnings per share are not disclosed as the effect of assuming the
conversion of the preferred stock is clearly immaterial. All share and per share
amounts have been restated to reflect a one-for-five reverse split effected
November 2, 1995.

Fair Value of Financial Instruments: The carrying amounts of all asset and
liability financial instruments approximate their estimated fair values at
December 31, 1995. Fair value of a financial instrument is defined as the amount
at which the instrument could be exchanged in a current transaction between
willing parties.

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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.

New Accounting Standards: In March and October, 1995, the Financial
Accounting Standards Board issued Statements No. 121 "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
and No. 123, "Accounting for Stock-Based Compensation." Both Statements are
effective in 1996, and neither is currently expected to have a significant
effect on the financial statements of the Company.

NOTE B -- PROPERTY AND EQUIPMENT

Balances of major classes of property and equipment are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
-------------------------
1994 1995
----------- -----------
<S> <C> <C>
Lab and pharmacy equipment.......................... $ 3,486,203 $ 4,213,633
Furniture and office equipment...................... 2,574,752 2,903,692
Equipment under capital leases...................... 1,502,079 1,558,064
Leasehold improvements.............................. 1,109,594 1,382,766
----------- -----------
8,672,628 10,058,155
Less allowances for depreciation and amortization... (4,651,829) (6,235,730)
----------- -----------
$ 4,020,799 $ 3,822,425
=========== ===========
</TABLE>

Purchases of equipment reflected in the "Consolidated Statements of Cash
Flows" of $1,114,000, $586,000, and $1,330,000 for the years ended December 31,
1993, 1994, and 1995, respectively, do not include purchases included in
accounts payable of $32,000, $0, and $24,000 for the respective periods or
property acquired under capital lease transactions of $338,000, $0, and $55,000,
respectively.

NOTE C -- DEBT

The Company had a $2.5 million revolving bank line of credit, secured by
eligible accounts receivable, bearing interest at the bank's prime rate plus one
percent, or 9.5%, at December 31, 1995. The available credit under the line was
increased to $5 million on March 1, 1996. The line, which expires April 1, 1996,
is expected to be renewed for additional one year terms. There were no
borrowings outstanding under the line of credit at December 31, 1994 and 1995.

F-10
<PAGE> 64

Total interest paid by the Company for all debt obligations, including
interest associated with capital lease obligations, was $82,875, $130,253, and
$16,860 during the years ended December 31, 1993, 1994, and 1995, respectively.

NOTE D -- LEASES

The Company leases certain office facilities and equipment under lease
agreements with original terms ranging from one to ten years that generally
provide for one or more renewal options.

Interest has been imputed on capital leases at rates of 6% to 12%.
Accumulated amortization of assets recorded under capital leases totaled
$741,805 and $1,000,565 at December 31, 1994 and 1995, respectively.
Amortization of leased assets is included in depreciation and amortization
expense.

Total rental expense under operating leases amounted to $1,362,161,
$1,791,391, and $1,799,657 for the years ended December 31, 1993, 1994, and
1995, respectively. The Company is generally obligated to the lessors for its
proportionate share of operating expenses of the leased premises. At December
31, 1995, future minimum lease payments under capital and operating leases with
initial terms of one year or more are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
------- ----------
<S> <C> <C>
Fiscal year ended December 31:
1996........................................................ $63,878 $1,367,412
1997........................................................ 13,279 1,000,743
1998........................................................ 2,589 636,454
1999........................................................ -- 522,915
2000........................................................ -- 492,867
Thereafter.................................................... -- 1,092,158
------- ----------
Total minimum payments.............................. 79,746 $5,112,549
=========
Less imputed interest....................................... 5,753
-------
Present value of minimum rental payments...................... $73,993
Less current installments under capital lease obligations..... 58,501
-------
Obligations under capital leases excluding current
installments................................................ $15,492
=======
</TABLE>

NOTE E -- INCOME TAXES

The actual tax expense for the years ended December 31, 1993, 1994 and
1995, respectively, differs from the expected tax expense for those years
(computed by applying the federal corporate tax rate of 34% to earnings before
minority interest and equity in earnings of unconsolidated affiliate) as
follows:

<TABLE>
<CAPTION>
1993 1994 1995
--------- --------- ---------
<S> <C> <C> <C>
Computed expected tax expense (benefit)......... 262,000 (798,000) 787,000
Non-deductible expenses......................... 3,000 10,000 13,000
Utilization of net operating loss
carryforwards................................. (265,000) -- (800,000)
Loss for which no benefit was provided.......... -- 788,000 --
--------- --------- ---------
Actual income tax expense....................... $ 0 $ 0 $ 0
========= ========= =========
</TABLE>

F-11
<PAGE> 65

The approximate tax effects of each type of temporary difference and
carryforward that gives rise to a significant portion of deferred tax assets and
deferred tax liabilities are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
---------------------------
1994 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards........................ $ 2,955,000 $ 2,366,000
Reserve for bad debts................................... 713,000 409,000
Excess book depreciation/amortization................... 423,000 547,000
Excess book expense accruals............................ 92,000 152,000
Other................................................... 8,000 41,000
----------- -----------
Total deferred assets..................................... 4,191,000 3,515,000
Valuation allowance....................................... (4,191,000) (3,515,000)
----------- -----------
Net deferred tax assets................................... $ 0 $ 0
=========== ===========
</TABLE>

The amount of income that the Company may offset in future years by the net
operating loss carryforwards incurred prior to an ownership change in 1990 will
be limited, by the application of the Internal Revenue Code Section 382, to
approximately $475,000 annually through the year 2005. The unused portion of the
net operating losses may be carried forward and realized in future years subject
to this limitation. The net operating loss carryforwards incurred subsequent to
the October 31, 1990 ownership change are available to fully offset future
earnings of the Company and expire in the years 2005 through 2009.

As of December 31, 1995, the Company had available net operating loss
carryforwards totaling approximately $7 million of which approximately $5.5
million are subject to certain annual limitations due to a change in ownership
for tax purposes in 1990. The use of net operating loss carryforwards is also
dependent upon future taxable income.

NOTE F -- COMMON STOCK, CONVERTIBLE PREFERRED STOCK, WARRANTS, AND OPTIONS

Common Stock: On November 1, 1995, an amendment to the Company's charter
was approved at a special meeting of shareholders decreasing the number of
authorized shares from 60,000,000 shares, $.002 par value, to 30,000,000 shares,
$.01 par value, with a corresponding reclassification to which each issued and
outstanding share was reclassified, converted, and changed into one-fifth ( 1/5)
of an issued and outstanding share. The amendment became effective November 2,
1995. The one-for-five reverse split resulted in the reduction of 27,948,332
outstanding shares of common stock. Accordingly, all references in the financial
statements to weighted average shares outstanding, per share amounts and stock
option plan data have been restated to reflect the reverse split.

The Company has reserved 1,012,743 shares of its common stock for issuance
upon the exercise of options or the conversion of Convertible Preferred Stock.

On June 21, 1993, the Company issued 2,117,887 shares of common stock
pursuant to a rights offering to its shareholders of record on March 12, 1993.
Each shareholder as of that date was issued a nontransferable right to purchase
one share of common stock for every ten shares owned. The purchase price was
$2.75 per right, which was equal to 90% of the average closing price of the
common stock for the ten trading days immediately prior to the record date.
Seafield exercised 1,873,500 rights, its proportionate share. In addition,
officers and directors of the Company exercised approximately 108,000 rights.
Proceeds to the Company, net of offering expenses of $66,000, amounted to
$5,758,000.

Additionally, 130,000, 154,500, and 497,000 shares of common stock were
issued pursuant to the exercise of warrants and employee stock options during
the years ended December 31, 1993, 1994, and 1995, respectively. Proceeds to the
Company amounted to $62,500, $73,937, and $1,021,300 for the respective periods.

At December 31, 1995, Seafield's ownership interest in the Company was
approximately 56%.

F-12
<PAGE> 66

Convertible Preferred Stock: The shares of Series A Convertible Preferred
Stock have the following rights and restrictions: (a) a preference in the event
of liquidation equal to $11.00 per share; (b) the right to convert into the
number of shares of common stock equal to the stated value of shares surrendered
$(11.00) divided by the conversion price of $60.00 -- subject to certain
adjustments; (c) the right to receive dividends in the form of common stock at
the rate of .011 share of common stock per annum per share payable annually each
year commencing January 15, 1988; (d) the shares are redeemable at the Company's
option at $11.00 per share; and (e) holders of the preferred stock will not be
entitled to vote. The conversion price and common stock dividend rate have been
adjusted for the effect of the one-for-five reverse split.

During the years ended December 31, 1993, 1994, and 1995, 5,900, 1,235, and
500 shares of Series A Convertible Preferred Stock were converted into 5,407,
1,130, and 458 shares of common stock, respectively. As of December 31, 1995,
27,833 Convertible Preferred Stock shares remain outstanding.

In October 1993, September 1994, and December 1995, the Board of Directors
approved a common stock dividend of 1,612, 1,545, and 306 shares to the holders
of the Series A Convertible Preferred Stock of record as of December 15, 1993,
1994, and 1995 that was paid January 1994, 1995, and 1996, respectively. The
market value of the common stock distributed was approximately $3,000 at each
period. The dividends have been reflected in the "Statement of Operations" and
the weighted average number of common shares in the determination of net
earnings (loss) to common stockholders and the earnings (loss) per common share
calculations. The par value of the common stock distributed was charged to
paid-in capital.

Options: The 1985 Stock Option Plan (the "1985 Plan"), as amended in
fiscal year 1988, allows for granting of incentive stock options, nonqualified
stock options, and stock appreciation rights of up to 122,000 shares of common
stock to eligible officers and key employees of the Company at an exercise price
of not less than the fair market value of the common stock on the date of grant
for an incentive stock option and not less than 85% of the fair market value of
the common stock on the date of grant for a nonqualified stock option. The 1985
Plan expired during the current year; no additional shares are available for
grant.

A summary of transactions under the 1985 Plan is as follows:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ----------------
<S> <C> <C>
Outstanding at December 31, 1992 and December 31, 1993........ 65,160 $1.875 - $23.75
Granted..................................................... 14,600 11.875
Exercised................................................... 3,900 1.875 - 11.875
Expired or cancelled........................................ 500 11.875
Outstanding at December 31, 1994.............................. 75,360
Exercised................................................... 560 1.875 - 11.875
Expired or cancelled........................................ 600 11.875
Outstanding at December 31, 1995.............................. 74,200 $1.875 - $23.75
</TABLE>

At December 31, 1995, 65,820 shares were exercisable under the plan.

The 1990 Nonqualified Stock Option Plan (the "1990 Plan"), as amended in
1995, allows for the granting of nonqualified stock options, up to 1,125,000
options, to eligible officers, directors, key employees, and consultants of the
Company at an exercise price of not less than the market price of the common
stock on the date of grant.

F-13
<PAGE> 67

A summary of transactions under the 1990 Plan is as follows:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ------------------
<S> <C> <C>
Outstanding at December 31, 1992.............................. 255,700 $1.5625 - $23.75
Granted..................................................... 335,800 10.00 - 18.125
Exercised................................................... 2,000 2.50
Expired or cancelled........................................ 157,950 10.625 - 23.75
-------
Outstanding at December 31, 1993.............................. 431,550 1.5625 - 23.75
Granted..................................................... 132,500 9.6875 - 13.4375
Exercised................................................... 4,000 2.50
Expired or cancelled........................................ 500 23.75
-------
Outstanding at December 31, 1994.............................. 559,550
Granted..................................................... 400,900 8.4375 - 16.875
Exercised................................................... 12,800 1.5625 - 10.00
Expired or cancelled........................................ 14,210 10.00 - 13.75
-------
Outstanding at December 31, 1995.............................. 933,440 $1.5625 - $16.875
=======
</TABLE>

At December 31, 1995, 396,210 shares were exercisable and 172,000 shares
were available for future grant under the plan.

NOTE G -- BENEFIT PLAN

The Company established a 401(k) Profit Sharing Plan (the "Plan") which
allows qualifying employees electing membership to defer a portion of their
income on a pretax basis through contributions to the Plan. For each dollar of
employee contributions, the Company makes a discretionary percentage matching
contribution to the Plan. In addition, eligible employees share in any
additional discretionary contributions which are based upon the profitability of
the Company. All contributions made by the Company are determined by the
Company's Board of Directors. For the Plan year ended December 31, 1995, the
approved matching percentage is twenty-five percent (25%) up to a maximum of
$1,000 per employee. The expense recognized for the years ended December 31,
1993, 1994, and 1995 for Company contributions to the Plan totaled $40,885,
$75,572, and $99,265, respectively.

NOTE H -- RELATED PARTY TRANSACTIONS

The West Clinic: The Company's IMPACT(R) Center in Memphis, Tennessee is
located adjacent to The West Clinic, P.C., a private practicing oncology group,
of which the Company's Chairman is a shareholder. Arrangements exist between the
Company and the West Clinic for providing space and other support services to
the Company. During the years ended December 31, 1993, 1994, and 1995, the
Company expensed $166,000, $108,000, and $59,000, respectively, relating to
these arrangements. In addition, during the years ended December 31, 1993, 1994,
and 1995, the Company recognized net revenue of $1,725,000, $2,026,000, and
$3,032,000, respectively, for sales of pharmaceuticals to The West Clinic and,
at December 31, 1994 and 1995, had a related accounts receivable balance of
$281,000 and $636,000. The pricing policy with respect to sales of
pharmaceuticals to the West Clinic is consistent with sales to physicians at
other Centers.

NOTE I -- COMMITMENTS AND CONTINGENCIES

With respect to professional and general liability risks, the Company
currently maintains an insurance policy that provides coverage during the policy
period ending August 1, 1996, on a claims-made basis, for $1,000,000 per claim
in excess of the Company retaining $25,000 per claim, and $3,000,000 in the
aggregate. Costs of defending claims are in addition to the limit of liability.
In addition, the Company maintains a $50,000,000 umbrella policy with respect to
potential general liability claims. Since inception, the Company

F-14
<PAGE> 68

has incurred no professional or general liability losses and as of December 31,
1995 the Company was not aware of any pending professional or general liability
claims.

NOTE J -- INVESTMENT IN AFFILIATE

The Company received capital distributions of $189,000 for the year ended
December 31, 1993.

Beginning in 1994, the financial position and results of operations of the
Hollywood Center are consolidated with the Company.

NOTE K -- SUBSEQUENT EVENT

On January 2, 1996, the Company acquired the assets of, and entered into a
long-term management services agreement with Oncology Hematology Group of South
Florida, P.A. (the "Group"). The total consideration was approximately $12.1
million, approximately $5.3 million of which was paid in cash, approximately
$6.0 million paid in the form of the Registrant's long-term unsecured
interest-bearing amortizing promissory note and the balance being paid over 16
calendar quarters at the rate of $50,000 per quarter. The Group, consisting of
nine physicians, is located on the campus of Baptist Hospital in Miami, Florida.
Under the management services agreement, the Company receives a management fee
to manage the non-medical aspects of the practice and to coordinate practice
enhancement opportunities with the physicians. Improvements are expected through
a professional focus on management and managed care relationships, economies of
scale, and the addition of new services. The Group is the Company's first
physician group under such a practice management relationship.

As of February 15, 1996, the Company had announced the receipt of two
additional non-binding letters of intent for physician practice management
relationships, and that it was in early negotiations with several additional
groups.

F-15
<PAGE> 69

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
------------ ------------
(UNAUDITED) (NOTE)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents..................................... $ 483,191 $ 4,204,558
Short-term investments........................................ 361,718 361,718
Accounts receivable, less allowances for doubtful accounts of
$1,899,384 and $2,079,788.................................. 15,100,543 13,934,810
Supplies...................................................... 1,090,643 1,119,671
Prepaid expenses.............................................. 525,882 550,287
Advances to affiliated physician group........................ 3,112,552 --
Other current assets.......................................... 2,089,590 465,738
------------ ------------
Total Current Assets.................................. 22,764,119 20,636,782
Property and Equipment -- at cost, less allowances for
depreciation and amortization of $6,904,986 and $6,235,730.... 3,695,637 3,822,425
Other Assets:
Deferred charges, less allowances for amortization of $94,222
and $65,807................................................ 325,733 186,528
Intangible assets, less allowances for amortization of
$66,550.................................................... 11,656,558 --
Other assets.................................................. 176,805 119,436
------------ ------------
12,159,096 306,064
------------ ------------
Total Assets.......................................... $ 38,618,852 $ 24,765,271
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable.............................................. $ 5,696,496 $ 3,690,937
Accrued expenses and other liabilities........................ 1,891,482 1,134,688
Notes payable................................................. 3,607,711 --
Capital lease obligations..................................... 57,622 58,501
Current portion of long-term note and other liabilities....... 396,997 --
------------ ------------
Total Current Liabilities............................. 11,650,308 4,884,126
Capital Lease Obligations....................................... -- 15,492
Long-Term Note and Other Liabilities............................ 6,265,369 --
Minority Interest............................................... 261,425 23,056
Stockholders' Equity:
Series A Convertible Preferred Stock, $1.00 par value,
authorized 3,000,000 shares; issued and outstanding 27,833
at each period end......................................... 27,833 27,833
Common Stock, $.01 par value, authorized 30,000,000 shares;
issued and outstanding 7,378,189 and 7,371,589 shares,
respectively............................................... 73,782 73,716
Paid-in capital............................................... 60,137,024 60,054,215
Retained earnings (deficit)................................... (39,796,889) (40,313,167)
------------ ------------
20,441,750 19,842,597
------------ ------------
Total Liabilities and Stockholders' Equity............ $ 38,618,852 $ 24,765,271
============ ============
</TABLE>

- ---------------
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date.

See accompanying notes.

F-16
<PAGE> 70

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
MARCH 31, MARCH 31,
1996 1995
----------- -----------
<S> <C> <C>
Net Revenue..................................................... $13,340,885 $11,200,653
Other Income -- principally interest............................ 16,729 50,714
----------- -----------
13,357,614 11,251,367
Costs and Expenses
Operating..................................................... 10,344,781 8,218,471
General and administrative.................................... 1,266,840 1,244,190
Depreciation and amortization................................. 570,965 411,544
Interest...................................................... 192,281 3,850
Provision for doubtful accounts............................... 372,100 545,103
----------- -----------
12,746,967 10,423,158
----------- -----------
Earnings Before Minority Interest............................... $ 610,647 $ 828,209
Minority interest.......................................... 94,369 --
----------- -----------
Net Earnings.................................................... $ 516,278 $ 828,209
=========== ===========
Net Earnings Per Common Share................................... $ 0.07 $ 0.12
=========== ===========
Weighted Average Number of Common Shares........................ 7,669,105 6,966,762
=========== ===========
</TABLE>

See accompanying notes.

F-17
<PAGE> 71

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------
MARCH 31, MARCH 31,
1996 1995
----------- ----------
<S> <C> <C>
Net Cash Provided By Operating Activities........................ $ 1,656,596 $ 669,802
Investing Activities
Purchases of equipment......................................... (218,095) (308,628)
Advances to affiliated physician group......................... (3,112,552) --
Acquisition of non-medical assets of affiliated physician
group....................................................... (5,343,750) --
----------- ----------
Net Cash Used in Investing Activities....................... (8,674,397) (308,628)
Financing Activities
Proceeds from the exercise of stock options.................... 82,875 21,875
Net proceeds from line of credit............................... 3,528,345 --
Principal payments on notes payable............................ (298,415) --
Principal payments on capital lease obligations................ (16,371) (61,030)
----------- ----------
Net Cash Provided By (Used In) Financing Activities......... 3,296,434 (39,155)
----------- ----------
Increase (Decrease) in Cash and Cash Equivalents............ (3,721,367) 322,019
Cash and cash equivalents at beginning of period............... 4,204,558 2,922,266
----------- ----------
Cash and Cash Equivalents at End of Period..................... $ 483,191 $3,244,285
=========== ==========
</TABLE>

Supplemental disclosures of cash flow information:

Cash paid for interest was $171,735 and $3,850 for the periods ended March
31, 1996 and 1995, respectively.

Non-Cash Investing and Financing Activities: During the quarter ended
March 31, 1996, the Company acquired the assets of, and entered into a long-term
management services agreement with Oncology Hematology Group of South Florida,
P.A. (the "Group"). The total consideration was approximately $12.1 million,
approximately $5.3 million of which was paid in cash, approximately $6.0 million
was paid by delivery of the Company's long-term unsecured interest-bearing
amortizing promissory note and the balance being paid over 16 calendar quarters
at the rate of $50,000 per quarter.

See accompanying notes.

F-18
<PAGE> 72

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Certain 1995 amounts have been reclassified for comparative
purposes with no effect on net earnings. Operating results for the three month
period ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996. For further information,
refer to the consolidated financial statements and footnotes thereto included in
Response Oncology, Inc. and Subsidiaries' annual report on Form 10-K for the
year ended December 31, 1995.

Net Revenue: The following table is a summary of net revenue by source for
the respective periods ended March 31. Patient services revenue is recorded net
of contractual allowances and discounts. Practice management service fees from
the Company's first practice management affiliation are paid pursuant to a
management services agreement with the affiliated practice and are comprised of
the clinic expense portion (which is aggregate practice expenses prior to
physician expenses) and a fixed portion.

<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Patient Services Revenue.................................. $ 8,115,085 $ 8,564,501
Pharmaceutical Sales to Physicians........................ 3,222,145 2,367,153
Practice Management Service Fees.......................... 1,630,155 --
Physician Investigator Studies............................ 373,500 268,999
----------- -----------
$13,340,885 $11,200,653
</TABLE>

Amortization: Intangible assets consist of the costs of purchasing
management services agreements with physician practices. These costs are
amortized over the initial noncancelable 40-year terms of the related management
services agreements. The agreements are noncancelable except for performance
defaults. In the event the Company terminates an agreement for cause, the
practice and individual physicians are required to pay significant liquidated
damages. The carrying value of the management services agreements is reviewed
for impairment at the end of each reporting period.

Net Earnings per Common Share: Net earnings per common share for the
quarters ended March 31, 1996 and 1995 have been computed by dividing net
earnings by the weighted average number of shares of common stock and common
stock equivalents outstanding during the respective periods. Shares issuable
pursuant to the conversion of the long-term note delivered by the Company in its
first practice management affiliation would have been antidilutive in the period
ended March 31, 1996. The weighted average number of common shares and net
earnings per share for the period ended March 31, 1995 have been restated to
reflect a one-for-five reverse split effected November 1, 1995.

NOTE 2 -- PARENT COMPANY

Response Oncology, Inc. is a subsidiary of Seafield Capital Corporation
("Seafield").

On February 10, 1995, Seafield announced its retention of a financial
advisor to evaluate and recommend steps to enhance the value of Seafield to its
shareholders. Any transaction pursued by Seafield will be likely to result in a
significant change in the Company's ownership.

F-19
<PAGE> 73

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

NOTE 3 -- ACQUISITION

On January 2, 1996, the Company acquired certain assets of, and entered
into a long-term management services agreement with Oncology Hematology Group of
South Florida, P.A. (the "Group"). The total consideration was approximately
$12.1 million, approximately $5.3 million of which was paid in cash,
approximately $6.0 million was paid by delivery of the Company's long-term
unsecured interest-bearing amortizing promissory note and the balance being paid
over 16 calendar quarters at the rate of $50,000 per quarter. The Group,
consisting of nine physicians, is located on the campus of Baptist Hospital in
Miami, Florida. Under the management services agreement, the Company receives a
management fee to manage the non-medical aspects of the practice and to
coordinate practice enhancement opportunities with the physicians.

NOTE 4 -- ADVANCES TO AFFILIATED PHYSICIAN GROUPS

Pursuant to the management services agreement between the Company and the
Group, the Company receives a management fee to manage the non-medical aspects
of the Group's practice. The management fee earned during the quarter was
included in Advances to Affiliated Physician Groups at March 31, 1996. In
addition, the Company funded certain working capital needs of the Group which
comprised the balance of the amount due from the Group at March 31, 1996. The
Group repaid approximately $2,500,000 of the advances by May 1996.

NOTE 5 -- NOTES PAYABLE

As of March 31, 1996, the Company had a $5,000,000 revolving bank line of
credit, secured by eligible accounts receivable, bearing interest at the bank's
prime rate plus one percent. Borrowings of $3,528,000 were outstanding under the
line at March 31, 1996 at an interest rate of 9.25%. The current line expires
June 1, 1996 and is subject to renewal at the bank's discretion.

NOTE 6 -- LONG-TERM NOTE AND OTHER LIABILITIES

Long-term notes payable and other liabilities primarily consists of the
Company's long-term unsecured amortizing promissory note bearing interest at 9%
issued as partial consideration for the acquisition of certain assets of the
Group. The quarterly payments of interest and principal under the long-term note
may, at the election of the holders, be paid in shares of common stock of the
Company based on a conversion price in excess of the market price at the closing
date of the acquisition, or $17.50. The unpaid principal amount of the long-term
note was $5,912,366 at March 31, 1996. The remaining balance is attributable to
other acquisition related liabilities.

NOTE 7 -- COMMITMENTS AND CONTINGENCIES

NOTE 8 -- SUBSEQUENT EVENTS

Subsequent to March 31, 1996, the Company announced the completion of its
second practice management affiliation with Knoxville Hematology Oncology
Associates, a medical oncology and hematology

F-20
<PAGE> 74

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

practice in Knoxville, Tennessee. In addition, two non-binding letters of intent
for practice management affiliations have been signed.

The Company also announced subsequent to March 31, 1996 that it had
procured a $10 million loan from Seafield to be used to finance the practice
management affiliation with Knoxville Hematology Oncology Associates. The loan
has a maturity date of December 31, 1996, bears interest at the rate of prime
plus 1%, is unsecured and, after August 1, 1996, is convertible at the option of
Seafield into shares of Response common stock at a conversion price equal to the
market price of the common stock at the time of conversion.

F-21
<PAGE> 75

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Oncology Hematology Group
of South Florida, P.A.:

We have audited the accompanying balance sheet of Oncology Hematology Group
of South Florida, P.A. as of December 31, 1995, and the related statements of
income, shareholders' equity, and cash flows for the year then ended. 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 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 financial statements referred to above present fairly,
in all material respects, the financial position of Oncology Hematology Group of
South Florida, P.A. as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.

KPMG PEAT MARWICK LLP

March 12, 1996
Miami, Florida

F-22
<PAGE> 76

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER
31,
1995
----------
<S> <C>
ASSETS
Current assets:
Cash........................................................................... $ 3,042
Accounts receivables, net of allowance for contractual adjustments and
uncollectible amounts of $716,015........................................... 1,670,701
Due from related parties....................................................... 15,365
Prepaid expenses and other current assets...................................... 73,149
----------
Total current assets................................................... 1,762,257
----------
Property and equipment:
Office equipment............................................................... 160,960
Medical equipment.............................................................. 163,413
----------
324,373
Less accumulated depreciation.................................................. 193,256
----------
131,117
Other assets..................................................................... 5,222
----------
$1,898,596
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt.............................................. 98,435
Due to bank.................................................................... 88,709
Accounts payable and accrued expenses.......................................... 550,623
Accrued payroll................................................................ 20,900
Payroll taxes payable.......................................................... 11,103
Profit-sharing contribution payable............................................ 49,788
Deferred income tax liability.................................................. 354,300
----------
Total current liabilities.............................................. 1,173,858
Long-term debt, less current portion............................................. 181,739
----------
1,355,597
----------
Shareholders' equity:
Common stock, $1 par value. Authorized 5,000 shares; issued and
outstanding 80 shares....................................................... 80
Additional paid-in capital..................................................... 26,140
Retained earnings.............................................................. 516,779
----------
542,999
Commitments and contingencies
----------
$1,898,596
==========
</TABLE>

See accompanying notes to financial statements.

F-23
<PAGE> 77

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Net revenue...................................................................... $7,933,697
Expenses:
Operating expenses............................................................. 7,395,423
Depreciation and amortization.................................................. 104,534
Interest....................................................................... 24,485
----------
7,524,442
----------
Income before income taxes............................................. 409,255
----------
Income tax expense............................................................... 210,000
----------
Net income............................................................. $ 199,255
=========
</TABLE>

See accompanying notes to financial statements.

F-24
<PAGE> 78

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
TOTAL
CAPITAL ADDITIONAL RETAINED SHAREHOLDERS'
STOCK PAID-IN CAPITAL EARNINGS EQUITY
------- --------------- -------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1994.......................... $80 -- 317,524 317,604
Net income................................ -- -- 199,255 199,255
Capital contributions..................... -- 26,140 -- 26,140
------- --------------- -------- -------------
Balance, December 31, 1995.......................... $80 26,140 516,779 542,999
===== ========== ======== =========
</TABLE>

See accompanying notes to financial statements.

F-25
<PAGE> 79

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<S> <C>
Cash flows from operating activities:
Net income..................................................................... $ 199,255
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation................................................................ 104,534
Deferred income taxes....................................................... 210,000
Changes in operating assets and liabilities:
Accounts receivables, net................................................. (638,618)
Prepaid expenses and other current assets................................. 10,427
Due from related parties.................................................. (15,365)
Other assets.............................................................. 21,863
Due to bank............................................................... 70,175
Accounts payable and accrued expenses..................................... 106,445
Accrued payroll........................................................... (33,090)
Payroll taxes payable..................................................... 11,103
Profit-sharing contribution payable....................................... 49,788
---------
Net cash provided by operating activities.............................. 96,517
---------
Cash flows from investing activities:
Expenditures for property and equipment........................................ (143,183)
---------
Net cash used in investing activities.................................. (143,183)
---------
Cash flows from financing activities:
Repayment of long-term debt.................................................... (87,592)
Proceeds from the issuance of debt............................................. 134,769
---------
Net cash provided by financing activities.............................. 47,177
---------
Net increase in cash................................................... 511
Cash, beginning of year.......................................................... 2,531
---------
Cash, end of year................................................................ $ 3,042
=========
Supplemental disclosures of cash flow information:
Cash paid during the year for interest......................................... $ 24,485
=========
Contribution of additional paid-in capital through forgiveness of debt......... $ 26,140
=========
</TABLE>

See accompanying notes to financial statements.

F-26
<PAGE> 80

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

Oncology Hematology Group of South Florida, P.A. (the Company) was
incorporated on March 12, 1993 in the state of Florida. The Company is a medical
group practice whose physicians specialize in providing services to patients
with cancer.

(b) Net Revenue

Net revenue primarily consists of charges for patient services rendered by
the physicians based on established billing rates less allowance and discounts
for patients covered by contractual programs. Payments received under these
programs, which are generally based on predetermined rates, are generally less
than the established billing rates, and the differences are recorded as
contractual allowance or policy discounts. Net patient service revenue is net of
contractual adjustments and policy discounts of approximately $2,297,000 for the
year ended December 31, 1995.

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Company grants credit to patients, substantially all of whom are resident in the
South Florida area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

The majority of the Company's net revenue is derived from third-party
payment programs. At December 31, 1995, approximately 99 percent of total
receivables consists of amounts due from Medicare (26 percent), Medicaid (2
percent), and various commercial plans (71 percent).

(d) Property and Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using an accelerated depreciation method over the estimated useful
lives of the assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
-----------------------
<S> <C>
Office equipment........................................... 5-7 years
Medical equipment.......................................... 5-7 years
</TABLE>

(e) Income Taxes

The Company adopted Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes ("FAS 109") at its inception in 1993. Under FAS 109,
the liability method is used in accounting for income taxes. Under this method,
deferred tax assets and liabilities are determined based on differences between
financial reporting and tax bases of assets and liabilities, and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse.

F-27
<PAGE> 81

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(f) 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of patients' accounts receivable, due from related
parties, current portion of long-term debt, due to bank, due to related parties,
accounts payable, and accrued expenses approximate fair value because of the
short maturity of those instruments.

The fair value of the Company's long-term debt is estimated by discounting
the future cash flows of each instrument at rates currently offered to the
Company for similar debt instruments of comparable maturities by the Company's
bankers.

(3) LONG-TERM DEBT AND DUE TO BANK

Long-term debt consists of the following:

<TABLE>
<S> <C>
Dadeland Bank, interest is variable, (8.75% at December 31, 1995), due
in monthly installments of $2,000 plus interest with the last payment P
due in August 1998;
collateralized by computer and medical equipment...................... $61,970
Dadeland Bank, interest is variable, (8.75% at December 31, 1995), due
in monthly installments of $2,778 plus interest with the last payment `
due in October 1997; collateralized by computer and medical
equipment............................................................. 61,111
Dadeland Bank, 8%, due in monthly installments of $1,533 with the last
payment due in April 1998; collateralized by computer equipment....... 37,907
Dadeland Bank, 10%, due in monthly installments of $1,993 with the last
payment due in February 1998; collateralized by medical equipment..... 46,186
Baptist Medical Arts Building East Tower, Inc., 8%, due in monthly
installments of $886 with the last payment due in December 2005;
collateralized by furniture and equipment............................. 73,000
---------
280,174
Less current portion.................................................... 98,435
---------
$181,739
========
</TABLE>

The maturities of long-term debt and due to bank are as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, AMOUNT
-------------------------------------- --------
<S> <C>
1996.................................. $ 98,435
1997.................................. 96,729
1998.................................. 28,185
1999.................................. 6,310
2000.................................. 6,834
Thereafter through 2005............... 43,681
--------
Total................................. $280,174
========
</TABLE>

F-28
<PAGE> 82

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

All debt to Dadeland Bank was paid off on February 21, 1996.

Due to bank consists of amounts due to Dadeland Bank for checks written in
excess of available cash balances totaling $88,709 as of December 31, 1995.

(4) EMPLOYEE BENEFIT PLANS

Beginning in 1995 the Company maintains a 401(k) Profit Sharing Plan (the
"Plan"), which covers substantially all employees. Employees who complete one
year of service and attain age 21 may participate in the Plan. The Company's
contributions to the Plan are discretionary. Eligible employees ratably vest in
the Company's contribution over seven years. At December 31, 1995 the Company's
discretionary contribution payable to the Plan is $49,788.

(5) INCOME TAXES

Income tax expense attributed to income from continuing operations consists
of:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
-------- -------- --------
<S> <C> <C> <C>
U.S. federal........................................... $ -- $166,000 $166,000
State and local........................................ -- 44,000 44,000
-------- -------- --------
$ -- $210,000 $210,000
======== ======== ========
</TABLE>

F-29
<PAGE> 83

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Income tax expense attributable to income from continuing operations was
$210,000 for the year ended December 31, 1995, and differed from the amounts
computed by applying the U.S. federal income tax rate of 34 percent to pretax
income from continuing operations as a result of the following:

<TABLE>
<S> <C> <C>
Computed "expected" tax expense.................................... $139,000 34.0%
Increase in income taxes resulting from:
Changes in the beginning-of-the year balance of the valuation
allowance for deferred tax assets allocated to income tax
expense....................................................... 51,000 12.5%
State and local income taxes, net of federal income tax
benefit....................................................... 15,000 3.6%
Other, net....................................................... 5,000 1.2%
-------- ----
$210,000 51.3%
======== ====
</TABLE>

The effect of temporary differences that give rise to a significant portion
of the deferred tax assets and deferred tax liabilities at December 31, 1995,
are as follows:

<TABLE>
<S> <C>
Deferred tax assets:
Depreciation........................................................... $ 7,700
Accounts payable....................................................... 205,000
Net operating loss..................................................... 54,000
Accrued payroll........................................................ 8,000
---------
Total gross deferred taxes.......................................... 274,700
Less valuation allowance............................................... --
---------
Net deferred tax assets............................................. 274,700
---------
Deferred tax liabilities:
Accounts receivable.................................................... (629,000)
---------
Total gross deferred tax liability.................................. (629,000)
---------
Net deferred tax liability.......................................... $(354,300)
=========
</TABLE>

Pursuant to FAS 109, a valuation allowance must be established if it is
more likely than not that all or some portion of the deferred tax asset will not
be realized. At December 31, 1995 no valuation allowance was recorded.

(6) COMMITMENTS AND CONTINGENCIES
(a) Leases

The Company, at December 31, 1995, maintained its office space in Baptist
Medical Arts Building in Miami. Such space is subleased from a partnership owned
by four physician shareholders who leased the space from an independent third
party. The lease expires in 2005. Future minimum lease payments under the
noncancelable operating lease (with initial or remaining lease terms in excess
of one year) as of December 31, 1995 are as follows:

F-30
<PAGE> 84

ONCOLOGY HEMATOLOGY GROUP
OF SOUTH FLORIDA, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, AMOUNT
--------------------------- ----------
<S> <C>
1996....................... $ 210,372
1997....................... 210,372
1998....................... 210,372
1999....................... 210,372
2000....................... 210,372
Thereafter through 2005.... 981,736
----------
Total minimum lease
payments................. $2,033,596
=========
</TABLE>

Total rental expense for operating leases was $264,641 for the year ended
December 31, 1995.

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis. Incidents and claims reported during the policy period are anticipated to
be covered by the malpractice carrier.

At December 31, 1995, there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but has yet to
be identified under its incident reporting systems. Accordingly, the Company has
made no accruals at December 31, 1995 for incurred but not reported claims.

(7) SUBSEQUENT EVENTS

On January 2, 1996, the stock of the Company was acquired by Response
Oncology, Inc. ("Response"). Simultaneous with the stock acquisition, the
physicians moved their medical practice to a separate corporation and executed a
service agreement whereby Response will provide the physicians with offices and
facilities, equipment, supplies, support personnel, and management and financial
advisory services. In return for providing the services, Response will receive
service fees from the physician group.

F-31
<PAGE> 85

INDEPENDENT AUDITORS' REPORT

The Partners
Knoxville Hematology Oncology Associates:

We have audited the accompanying balance sheet of Knoxville Hematology
Oncology Associates as of December 31, 1995, and the related statements of
income, partners' equity, and cash flows for the year then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Knoxville Hematology
Oncology Associates as of December 31, 1995, and the results of its operations
and its cash flows for the year then ended in conformity with generally accepted
accounting principles.

KPMG PEAT MARWICK LLP

Nashville, Tennessee
March 22, 1996 except for Note 7
which is as of April 15, 1996

F-32
<PAGE> 86

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................. $ 31,851 $ 166,362
Accounts receivable, less allowance for contractual adjustments
and uncollectible amounts of $570,502 in 1995 and $505,345
(unaudited) in 1996........................................... 1,128,993 998,657
Supplies......................................................... 109,350 109,350
---------- ----------
Total current assets..................................... 1,270,194 1,274,369
Property and equipment, at cost (notes 3 and 4).................... 2,350,593 2,477,603
Less accumulated depreciation...................................... 720,024 779,124
---------- ----------
Net property and equipment............................... 1,630,569 1,698,479
Other assets....................................................... 3,794 --
---------- ----------
$2,904,557 $2,972,848
========== ==========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............................ $ 264,405 $ 245,001
Current portion of long-term debt (note 4)....................... 1,591,646 1,713,757
Current portion of capital lease obligations (note 6)............ 46,947 46,947
---------- ----------
Total current liabilities................................ 1,902,998 2,005,705
Long-term debt, less current portion (note 4)...................... 221,605 23,131
Capital lease obligations, less current portion (note 6)........... 58,865 48,865
---------- ----------
Total liabilities........................................ 2,183,468 2,077,701
Partners' equity................................................... 721,089 895,147
---------- ----------
Commitments and contingencies (notes 5 and 6)
$2,904,557 $2,972,848
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-33
<PAGE> 87

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
1995 1996
---------- ----------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue......................................... $6,712,255 $1,566,635
Other income........................................................ 297,195 50,851
---------- ----------
7,009,450 1,617,486
Expenses:
Operating......................................................... 3,025,441 563,890
General and administrative........................................ 1,090,113 150,868
Depreciation and amortization..................................... 237,622 59,100
Interest and other................................................ 244,629 23,328
---------- ----------
4,597,805 797,186
---------- ----------
Net income to partners.................................... $2,411,645 $ 820,300
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-34
<PAGE> 88

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

STATEMENTS OF PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
GENERAL
PARTNERS
-----------
<S> <C>
Partners' equity, January 1, 1995............................................... $ 634,437
Contributions from partners................................................... 15,100
Distributions to partners..................................................... (2,340,093)
Net income to partners........................................................ 2,411,645
-----------
Partners' equity, December 31, 1995............................................. 721,089
Distributions to partners (unaudited)......................................... (646,242)
Net income to partners (unaudited)............................................ 820,300
-----------
Partners' equity, March 31, 1996 (unaudited).................................... $ 895,147
===========
</TABLE>

See accompanying notes to financial statements.

F-35
<PAGE> 89

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
1995 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income to partners........................................... $ 2,411,645 820,300
Adjustments to reconcile net income to partners to net cash
provided by operating activities:
Depreciation and amortization................................. 237,622 59,100
Management fees............................................... 41,009 --
Loss on sale of furniture, fixtures and equipment............. 19,674 --
Changes in operating assets and liabilities:
Accounts receivable......................................... (4,014) 130,336
Other assets................................................ (3,744) 3,794
Accounts payable and accrued expenses....................... (161,284) (19,404)
----------- ---------
Net cash provided by operating activities................ 2,540,908 994,126
----------- ---------
Cash flows from investing activities-capital expenditures.......... (25,702) (127,010)
----------- ---------
Cash flows from financing activities:
Repayment of long-term debt...................................... (641,148) (76,363)
Proceeds from the issuance of debt............................... 520,000 --
Principal payments on capital lease obligations.................. (38,917) (10,000)
Contributions from partners...................................... 15,100 --
Distributions to partners........................................ (2,340,093) (646,242)
----------- ---------
Net cash used in financing activities......................... (2,485,058) (732,605)
----------- ---------
Net increase in cash............................................... 30,148 134,511
Cash at beginning of the period.................................... 1,703 31,851
----------- ---------
Cash at end of the period.......................................... $ 31,851 166,362
----------- ---------
Supplemental Disclosures:
Interest paid.................................................... $ 146,110 23,328
=========== =========
</TABLE>

1995 disclosures:

The Company originated a $41,009 short-term note payable for management
fees incurred during the year (note 3).
The Company obtained a $33,059 note payable for the purchase of an
automobile (note 3).
The Company originated $127,857 in capital lease obligations for the
purchase of equipment (note 5).

See accompanying notes to financial statements.

F-36
<PAGE> 90

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996 and the statements of income,
partners' equity and cash flows for the three-month period ended March 31, 1996
(1996 interim financial information) have been prepared by Knoxville Hematology
Oncology Associates (the Company) and are unaudited. In the opinion of the
company, the 1996 interim financial information includes all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of the results of the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three-month period ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

Knoxville Hematology Oncology Associates (the Company) was established on
December 10, 1979 in the State of Tennessee and is a general partnership. The
Company's four physician partners do not receive compensation from the Company
other than partnership distributions. Distributions are based on the Company's
operating results. The Company is a medical group practice whose physicians
specialize in providing services to patients with cancer and/or blood diseases.

(b) Net Patient Service Revenue

Net patient service revenue primarily consists of charges for patient
services rendered by the physicians based on established billing rates less
allowance and discounts for patients covered by contractual programs. Payments
received under these programs, which are generally based on predetermined rates,
are generally less than the established billing rates and the differences are
recorded as contractual allowances or policy discounts. Net patient service
revenue is net of contractual adjustments and policy discounts of approximately
$3,030,000 for the year ended December 31, 1995 and approximately $707,200
(unaudited) for the three months ended March 31, 1996.

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Company grants credit to patients, substantially all of whom are resident in the
Knoxville area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies.

(d) Supplies

Supplies are recorded at the lower of cost (first-in, first-out) or market.

(e) Property and Equipment

Property and equipment are stated at cost. Furniture, fixtures and
equipment under capital leases are stated at the lower of the present value of
minimum lease payments at the beginning of the lease term or fair

F-37
<PAGE> 91

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

value at the inception of the lease. Leasehold improvements are amortized over
the lesser of the asset's estimated life or the lease term. Furniture, fixtures
and equipment held under capital leases are amortized on the straight-line
method over the shorter of the respective lease term or estimated useful live of
the asset.

Depreciation for furniture, fixtures and equipment is calculated using the
straight-line method over the estimated useful lives of the assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Furniture, fixtures and equipment............................ 5-7 years
Automobiles.................................................. 5 years
Leasehold improvements....................................... 11-14 years
</TABLE>

(f) Income Taxes

No provision for income taxes has been made in the accompanying financial
statements since, as a partnership, income and losses for income tax purposes
are allocated to the partners for inclusion in their respective income tax
returns.

(g) 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of all asset and liability financial instruments
approximate their estimated fair values at December 31, 1995. Fair value of a
financial instrument is defined as the amount at which the instrument could be
exchanged in a current transaction between willing parties.

(2) PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 1995:

<TABLE>
<S> <C>
Furniture, fixtures and equipment............................ $ 520,705
Automobiles.................................................. 151,742
Leasehold improvements....................................... 1,678,146
----------
2,350,593
Less accumulated depreciation................................ 720,024
----------
$1,630,569
==========
</TABLE>

F-38
<PAGE> 92

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(4) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<S> <C>
Note payable, with interest at 7.625%, payable in monthly installments
of $24,775 including interest, personally guaranteed by partners,
final principal payment due March 1996................................ $ 1,195,997
Note payable, with variable interest rate at prime plus 1/4%, (8.50% at
December 31, 1995) interest payments monthly beginning February 1996
with principal payment due July 1996, personally guaranteed by
partners.............................................................. 200,000
Note payable, with variable interest rate at prime plus 1/2%, (8.75% at
December 31, 1995) interest payments monthly with principal payment
due January 1997, personally guaranteed by partners................... 200,000
Note payable, with variable interest rate at prime plus 1/2%, (8.75% at
December 31, 1995) payable in monthly installments of $11,932
including interest, personally guaranteed by partners, final principal
payment due January 1997.............................................. 147,346
Note payable at 5%, payable in monthly installments of $6,935 including
interest, personally guaranteed by partners, final principal payment
due June 1996......................................................... 41,009
Non-interest bearing note payable, payable in monthly principal payments
of $1,102, secured by automobile, final payment due October 1997...... 23,131
Note payable at 9%, payable in monthly installments of $1,000 with
interest, personally guaranteed by partners, final principal payment
due May 1996.......................................................... 5,768
----------
Total long-term debt.................................................. 1,813,251
Less current installments............................................... (1,591,646)
----------
Long-term debt excluding current installments......................... $ 221,605
==========
</TABLE>

Maturities of long-term debt as of December 31, 1995 are as follows:

(5) EMPLOYEE BENEFIT PLAN

The Company maintains a 401(k) Profit Sharing Plan (the "Plan"), which
covers substantially all employees. Employees who complete one year of service
and attain age 21 may participate in the plan. The Company's contributions to
the Plan are discretionary. Eligible employees ratably vest in the Company's
contributions over six years. The Company's discretionary contribution for the
year ended December 31, 1995 to the Plan was $15,000 and such amount is payable
at December 31, 1995.

(6) COMMITMENTS AND CONTINGENCIES

(a) Leases

The partnership is obligated under various capital leases for laboratory
and office equipment that expire at various dates within the next three years.
The gross amount of capital leases included in furniture, fixtures and equipment
for the year ended December 31, 1995 was $151,036, with related accumulated
depreciation of $34,434.

F-39
<PAGE> 93

KNOXVILLE HEMATOLOGY ONCOLOGY ASSOCIATES

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The partnership also has operating leases for equipment and office space.
The office space lease is with a company in which the Company's physicians have
an ownership interest. Total expense was approximately $150,000 for the year
ended December 31, 1995.

Future minimum lease payments under noncancelable operating leases and the
present value of minimum capital lease payments as of December 31, 1995 are as
follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ---------
<S> <C> <C>
Year ending:
1996........................................................ $ 54,140 140,056
1997........................................................ 54,140 138,355
1998........................................................ 7,930 134,336
1999........................................................ -- 132,485
2000........................................................ -- 121,791
2001 and following.......................................... -- 525,071
-------- ---------
116,210 1,192,094
=========
Less amount representing interest (at an 8.5% rate)........... (10,398)
--------
105,812
Less current installments of obligations under capital
leases...................................................... (46,947)
--------
Obligations under capital leases excluding current
installments................................................ $ 58,865
========
</TABLE>

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis. Incidents and claims reported during the policy period are anticipated to
be covered by the malpractice carrier.

At December 31, 1995, there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but have yet to
be identified under its incident reporting systems. Accordingly, the Company has
made no accruals at December 31, 1995 for incurred but not reported claims.

The Company is involved in a dispute with an insurance company concerning
alleged overpayment by the insurance company. No lawsuit has been filed. The
Company is, however, attempting to negotiate a settlement and repay a portion of
the $102,000 amount claimed. The Company has offered $80,000 as a settlement for
the overpayment. This amount has been accrued in the accompanying financial
statements.

The Company is also involved in a civil action with a former partner in the
partnership for damages and amounts allegedly owed by the Partnership to the
former partner as a result of his termination. The former partner seeks damages
not to exceed $300,000. The Company's position is that the former partner has
been paid all sums to which he is entitled. The Company is vigorously defending
the claim.

(7) SUBSEQUENT EVENTS

On April 15, 1996, all outstanding partnership interests of the Company
were acquired by Response Oncology, Inc. (Response). Simultaneous with the asset
acquisition, the physicians moved their medical practice to a separate limited
liability company and executed a service agreement whereby Response will provide
the physicians with offices and facilities, equipment, supplies, support
personnel, and management of financial advisory services. In turn for providing
the services, Response will receive service fees from the physician group.

F-40
<PAGE> 94

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Jeffrey L. Paonessa, M.D., P.A.
(d/b/a Paonessa and Peterson):

We have audited the accompanying balance sheet of Jeffrey L. Paonessa,
M.D., P.A. (d/b/a Paonessa and Peterson) as of December 31, 1995, and the
related statements of income, stockholder's equity, and cash flows for the year
then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Jeffrey L. Paonessa, M.D.,
P.A. (d/b/a Paonessa and Peterson) as of December 31, 1995, and the results of
its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles.

KPMG PEAT MARWICK LLP

St. Petersburg, Florida
June 4, 1996

F-41
<PAGE> 95

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 965 $ 9,998
Accounts receivables, net of allowance for contractual adjustments
and uncollectible amounts of $707,382 at December 31, 1995 and
$964,348 at March 31, 1996 (unaudited).......................... 864,577 1,178,648
Supplies........................................................... 181,500 139,631
Due from related party (note 4).................................... 271,213 277,313
Prepaid expenses................................................... 6,689 3,875
------------ -----------
Total current assets....................................... 1,324,944 1,609,465
------------ -----------
Property and equipment:
Furniture and fixtures............................................. 184,660 211,708
Medical equipment.................................................. 127,413 127,852
Automobile......................................................... 40,000 40,000
------------ -----------
352,073 379,560
Less accumulated depreciation...................................... 118,279 132,068
------------ -----------
Net property and equipment................................. 233,794 247,492
------------ -----------
$1,558,738 $ 1,856,957
========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $ 337,711 $ 212,986
Accrued employee compensation...................................... 58,690 101,772
------------ -----------
Total current liabilities.................................. 396,401 314,758
------------ -----------
Stockholder's equity:
Common stock, $1 par value. Authorized 10,000 shares; issued and
outstanding 1,000 shares........................................ 1,000 1,000
Retained earnings.................................................. 1,161,337 1,541,199
------------ -----------
Total stockholder's equity................................. 1,162,337 1,542,199
------------ -----------
Commitments and contingencies (notes 3 and 5)........................ $1,558,738 $ 1,856,957
========== =========
</TABLE>

See accompanying notes to financial statements.

F-42
<PAGE> 96

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
THREE-MONTH
PERIOD
YEAR ENDED ENDED MARCH
DECEMBER 31, 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Revenue:
Net patient service revenue........................................ $7,896,188 $2,470,571
Other income....................................................... 55,158 29,404
------------ -----------
Total revenue.............................................. 7,951,346 2,499,975
------------ -----------
Expenses:
Operating.......................................................... 4,374,291 1,356,487
Depreciation....................................................... 40,359 13,789
Other.............................................................. 368,164 149,837
------------ -----------
4,782,814 1,520,113
------------ -----------
Net income................................................. $3,168,532 $ 979,862
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-43
<PAGE> 97

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

STATEMENTS OF STOCKHOLDER'S EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------ ---------- -------------
<S> <C> <C> <C>
Balance, December 31, 1994.................................... $1,000 $1,102,805 $ 1,103,805
Net income.................................................. -- 3,168,532 3,168,532
Stockholder distributions................................... -- (3,110,000) (3,110,000)
------ ---------- -------------
Balance, December 31, 1995.................................... 1,000 1,161,337 1,162,337
Net income (unaudited)...................................... -- 979,862 979,862
Stockholder distributions (unaudited)....................... -- (600,000) (600,000)
------ ---------- -------------
Balance, March 31, 1996 (unaudited)........................... $1,000 $1,541,199 $ 1,542,199
====== ========= =========
</TABLE>

See accompanying notes to financial statements.

F-44
<PAGE> 98

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE-MONTH
PERIOD
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $3,168,532 $ 979,862
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................... 40,359 13,789
Changes in operating assets and liabilities:
Accounts receivables, net..................................... (101,908) (314,071)
Supplies...................................................... 5,530 41,869
Prepaid expenses.............................................. (52,997) 2,814
Accounts payable and accrued expenses......................... 226,832 (124,725)
Accrued employee compensation................................. 5,975 43,082
------------ -----------
Net cash provided by operating activities.................. 3,292,323 642,620
------------ -----------
Cash flows from investing activities:
Expenditures for property and equipment............................ (145,616) (27,487)
Due from related party............................................. (48,438) (6,100)
------------ -----------
Net cash used in investing activities...................... (194,054) (33,587)
------------ -----------
Cash flows from financing activity -- Stockholder distributions...... (3,110,000) (600,000)
------------ -----------
Net increase (decrease) in cash............................ (11,731) 9,033
Cash, beginning of year.............................................. 12,696 965
------------ -----------
Cash, end of year.................................................... $ 965 $ 9,998
========== =========
</TABLE>

See accompanying notes to financial statements.

F-45
<PAGE> 99

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996 and the related statements of
income, shareholder's equity and cash flows for the three-month period ended
March 31, 1996 (1996 interim financial information) have been prepared by
Jeffrey L. Paonessa, M.D., P.A. (d/b/a Paonessa and Peterson) (the "Company")
and are unaudited. In the opinion of the Company, the 1996 interim financial
information includes all adjustments, consisting of only normal recurring
adjustments, necessary for a fair statement of the results of the 1996 interim
period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Company was incorporated on April 11, 1991 in the state of Florida. The
Company is a medical group practice whose physicians specialize in providing
services, including drug therapy, to patients with cancer.

(b) Net Revenue

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Company grants credit to patients, substantially all of whom are resident in the
Tampa Bay area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

The majority of the Company's net revenue and receivables is from
third-party payment programs. As of December 31, 1995 and March 31, 1996
(unaudited), approximately 98 percent of total revenue and receivables consists
of amounts from Medicare (38 percent) and various commercial plans (60 percent).

(d) Supplies

Inventories of supplies consists of pharmaceuticals and medications which
are stated at the lower of cost or market on a first-in, first-out basis.

F-46
<PAGE> 100

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line method over the estimated useful lives of the
assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Office equipment.......................................................... 7 years
Medical equipment......................................................... 5-7 years
Automobile................................................................ 5 years
</TABLE>

(f) Stockholder Distribution

Stockholder distributions are paid and recorded on a monthly basis as
available cash flow permits.

(g) Income Taxes

The Company has elected to be treated as an S-Corporation under the
regulations of the Internal Revenue Code. Under the S-selection, items of
revenue and expense are passed directly to the stockholder. Accordingly, income
tax expense is not reflected in the financial statements.

(h) Use of Estimates

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of patients' accounts receivable, due from related
party, accounts payable, and accrued expenses, and accrued employee compensation
approximate fair value because of the short maturity of those instruments.

(3) EMPLOYEE BENEFIT PLANS

Effective July 15, 1995 the Company adopted a 401(k) Profit Sharing Plan
(the "Plan"), which covers substantially all employees. Employees who complete
one year of service and attain age 21 may participate in the Plan. The Company's
contributions to the Plan are discretionary and include separate components for
annual profit sharing and matching of employee salary deferrals. For the year
ended December 31, 1995 and the three-month period ended March 31, 1996
(unaudited), the Company's expense under the Plan was $26,808 and $7,805,
respectively.

(4) DUE FROM RELATED PARTY

The Company has amounts due from an entity owned by a relative of the
stockholder. The amounts due are evidenced through a secured promissory note
bearing interest at 9% which is payable monthly through April 1, 2003. It is the
intention of the Company and the debtor that the note will be collected in
connection with the reorganization prior to the sale (note 6), accordingly, the
note and accrued interest are reflected as current assets. Interest income
recognized amounted to $21,000 for the year ended December 31, 1995 and $6,100
for the three-month period ended March 31, 1996 (unaudited).

F-47
<PAGE> 101

JEFFREY L. PAONESSA, M.D., P.A.
(D/B/A PAONESSA AND PETERSON)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

During 1995, the Company purchased an automobile from the stockholder with
a cost of $40,000. The Company believes the purchase price was consistent with
that which would be available from an unrelated third party.

(5) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company is obligated under noncancelable operating leases for office
space and an automobile. Future minimum lease payments under the noncancelable
operating leases (with initial or remaining lease terms in excess of one year)
as of December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, AMOUNT
-------------------------------------------------------------------------- --------
<S> <C>
1996...................................................................... $ 95,660
1997...................................................................... 98,010
1998...................................................................... 96,250
1999...................................................................... 83,020
--------
Total minimum lease payments.............................................. $372,940
========
</TABLE>

Total rental expense for operating leases was $104,620 for the year ended
December 31, 1995 and $28,134 for the three-month period ended March 31, 1996
(unaudited).

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis at $1,000,000 per claim and $3,000,000 in the aggregate. Incidents and
claims reported during the policy period are anticipated to be covered by the
malpractice carrier.

At December 31, 1995 and March 31, 1996 (unaudited), there are no asserted
claims against the Company, nor is the Company aware of any incident that would
result in a loss in excess of their insurance coverage. Accordingly, the Company
has made no accruals at December 31, 1995 and March 31, 1996 (unaudited) for
incurred, but not reported, claims.

The Company is obligated under an employment contract with a physician that
extends through September 30, 1999. Minimum compensation to the physician in
1996 under the employment contract is $180,000. Compensation levels under the
employment contract subsequent to 1996 is based on a percentage of accounts
receivable collections.

(6) SUBSEQUENT EVENTS

On May 7, 1996, the Company entered into a letter of intent for the sale of
all issued and outstanding common stock to Response Oncology, Inc. ("Response").
Under the terms of the letter of intent, prior to such sale, a reorganization
will be executed whereby certain assets will be excluded from the purchase.

F-48
<PAGE> 102

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Rymer, Zaravinos and Faig, M.D., P.A.:
(d/b/a Southeast Florida Hematology Oncology Group)

We have audited the accompanying balance sheet of Rymer, Zaravinos and
Faig, M.D., P.A. (d/b/a Southeast Florida Hematology Oncology Group) as of
January 31, 1996, and the related statements of operations, stockholders'
equity, and cash flows for the year then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rymer, Zaravinos and Faig,
M.D., P.A. (d/b/a Southeast Florida Hematology Oncology Group) as of January 31,
1996, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.

KPMG Peat Marwick LLP

Miami, Florida
June 14, 1996

F-49
<PAGE> 103

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

BALANCE SHEETS

<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................. $ 111,737 $ 138,658
Accounts receivable, net of allowance for contractual adjustments and
uncollectible amounts of $932,000 at January 31, 1996, and
$913,000 (unaudited) at April 30, 1996............................ 664,966 770,345
Supplies............................................................. 128,836 60,817
Prepaid expenses..................................................... 19,960 26,557
Deposits............................................................. 17,430 17,430
----------- -----------
Total current assets......................................... 942,929 1,013,807
----------- -----------
Furniture and equipment:
Furniture and fixtures............................................... 154,724 156,414
Medical equipment.................................................... 96,026 96,026
Transportation equipment............................................. 38,546 38,546
----------- -----------
289,296 290,986
Less accumulated depreciation........................................ 268,079 270,588
----------- -----------
Net furniture and equipment.................................. 21,217 20,398
----------- -----------
$ 964,146 $ 1,034,205
======== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses................................ $ 326,089 $ 474,646
Accrued employee compensation........................................ 60,189 4,362
Notes payable........................................................ 250,000 184,065
Due to officers...................................................... 7,730 499
Income taxes payable................................................. 58,574
Deferred income taxes................................................ 69,386 30,117
----------- -----------
Total current liabilities.................................... 713,394 752,263
----------- -----------
Stockholders' equity:
Common stock, $1 par value per share; Class A, 1 share authorized
and issued........................................................ 1 1
Common stock, $1 par value per share; Class B, 500 shares authorized
and issued........................................................ 500 500
Retained earnings.................................................... 250,251 281,441
----------- -----------
Total stockholders' equity................................... 250,752 281,942
Commitments and contingencies
----------- -----------
$ 964,146 $ 1,034,205
======== =========
</TABLE>

See accompanying notes to financial statements.

F-50
<PAGE> 104

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE THREE-
YEAR ENDED MONTH PERIOD
JANUARY 31, ENDED APRIL
1996 30, 1996
----------- --------------
(UNAUDITED)
<S> <C> <C>
Net patient revenue.................................................. $ 4,737,546 $1,122,266
Expenses:
Supplies........................................................... 1,327,112 406,517
Operating.......................................................... 2,397,336 518,795
Salaries and benefits.............................................. 867,092 143,950
Depreciation....................................................... 14,065 2,509
----------- --------------
4,605,605 1,071,771
----------- --------------
Income before income taxes................................. 131,941 50,495
Provision for income taxes........................................... 52,237 19,305
----------- --------------
Net income................................................. $ 79,704 $ 31,190
========= ==========
</TABLE>

See accompanying notes to financial statements.

F-51
<PAGE> 105

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------ -------- -------------
<S> <C> <C> <C>
Balances, January 31, 1995..................................... $501 $170,547 $ 171,048
Net income........................................... -- 79,704 79,704
------ -------- -------------
Balances, January 31, 1996..................................... 501 250,251 250,752
Net income (unaudited)............................... -- 31,190 31,190
------ -------- -------------
Balances, April 30, 1996 (unaudited)........................... $501 $281,441 $ 281,942
====== ======== =========
</TABLE>

See accompanying notes to financial statements.

F-52
<PAGE> 106

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE-
YEAR ENDED MONTH PERIOD
JANUARY 31, ENDED APRIL
1996 30, 1996
----------- --------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income.......................................................... $ 79,704 $ 31,190
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 14,065 2,509
Changes in operating assets and liabilities:
Accounts receivables, net...................................... 136,587 (105,379)
Supplies....................................................... 13,234 68,019
Deferred income taxes.......................................... 29,939 (39,269)
Prepaid expenses............................................... 1,056 (6,597)
Accounts payable and accrued expenses.......................... (361,065) 148,557
Income taxes payable........................................... -- 58,574
Accrued employee compensation.................................. (48,830) (55,827)
----------- --------------
Net cash provided by (used in) operating activities......... (135,310) 101,777
----------- --------------
Cash flows from investing activity:
Expenditures for furniture and equipment............................ (1,063) (1,690)
----------- --------------
Net cash used in investing activity......................... (1,063) (1,690)
----------- --------------
Cash flows from financing activities:
Repayment of notes payable.......................................... (60,000) (65,935)
Proceeds from notes payable......................................... 250,000 --
Repayment of debt -- officers....................................... (19,837) (7,231)
----------- --------------
Net cash provided by (used in) financing activities......... 170,163 (73,166)
----------- --------------
Net increase in cash........................................ 33,790 26,921
Cash, beginning....................................................... 77,947 111,737
----------- --------------
Cash, end............................................................. $ 111,737 $ 138,658
========= ==========
Supplemental disclosure of cash flow information:
Cash payments for interest.......................................... $ 2,550 $ 4,430
========= ==========
Cash payments for taxes............................................. $ 22,298 $ --
========= ==========
</TABLE>

See accompanying notes to financial statements.

F-53
<PAGE> 107

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

NOTES TO FINANCIAL STATEMENTS

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of April 30, 1996 and the related statements of
operations, shareholders' equity and cash flows for the three-month period ended
April 30, 1996 (1996 interim financial information) have been prepared by Rymer,
Zaravinos and Faig, M.D., P.A. (d/b/a Southeast Florida Hematology -- Oncology
Group) (the "Company") and are unaudited. In the opinion of the Company, the
1996 interim financial information includes all adjustments, consisting of only
normal recurring adjustments, necessary for a fair statement of the results of
the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's January 31, 1996 audited financial statements appearing herein. The
results for the three months ended April 30, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Company was incorporated on May 21, 1979 in the state of Florida. The
Company is a medical group practice whose physicians specialize in providing
services to patients with cancer.

(b) Net Revenue

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Company grants credit to patients, substantially all of whom are resident in the
south Florida area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

The majority of the Company's net revenue and receivables is from
third-party payment programs. At January 31, 1995, approximately 97 percent of
total revenue and receivables consists of amounts from Medicare (26 percent),
various commercial plans (37 percent) and private pay patients (34 percent).

(d) Supplies

Supplies consists of pharmaceuticals and medications which are stated at
the lower of cost or market on a first-in, first-out basis.

F-54
<PAGE> 108

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line method over the estimated useful lives of the
assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Furniture and fixtures........................................ 7 years
Medical equipment............................................. 5-7 years
Transportation equipment...................................... 5 years
</TABLE>

(f) Income Taxes

The Company accounts for income taxes under the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Statement 109 requires the
asset and liability method of accounting for income taxes. Under the asset and
liability method of Statement 109, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying accounts of existing assets and liabilities and
their respective tax basis. 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. Under
Statement 109, 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.

(g) Use of Estimates

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of patients' accounts receivable, investments,
accounts payable, notes payable, accrued expenses and accrued employee
compensation approximate fair value because of the short maturity of these
instruments.

(3) EMPLOYEE BENEFIT PLANS

The Company has a Qualified Defined Contribution Pension and A Profit
Sharing Plan, which covers substantially all employees. Employees become
eligible to participate in the plans after one year of full service and have
attained the age of 21 years. Under the Defined Contribution Plan, the Company,
for each plan year, contributes an amount equal to 8 percent of each
participants annual compensation, and 5.7 percent of the participants excess
compensation as defined by the plan agreement. Total company contributions for
year ended January 31, 1996 and the three-month period ended April 30, 1996
(unaudited) were $88,000 and $-0-, respectively.

The contributions to the Profit Sharing Plan are discretionary, which are
established by the board of directors. For the year ended January 31, 1996 and
the three-month period ended April 30, 1996 (unaudited) the Company did not make
any contributions to the Plan.

F-55
<PAGE> 109

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(4) NOTE PAYABLE

The note payable to bank bears interest at a rate of prime plus 1.650
percent and becomes due in January of 1997. The note is secured by the Company's
deposits and bank accounts serviced by the lender.

(5) INCOME TAXES

Income tax expense for the year ended January 31, 1996 and the three-month
period ended April 30, 1996 is summarized as follows:

<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Current:
Federal...................................................... $19,585 $ 50,472
State........................................................ 2,713 8,102
----------- -----------
22,298 58,574
----------- -----------
Deferred:
Federal...................................................... 25,577 (35,634)
State........................................................ 4,362 (3,635)
----------- -----------
29,939 (39,269)
----------- -----------
$52,237 $ 19,305
======== =========
</TABLE>

A reconciliation of the effective income tax rate for the year ended
January 31, 1996 and the three-month period ended April 30, 1996 is as follows:

<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax expense (benefit)...................... 35.00 35.00
State income tax, net of federal benefit....................... 3.44 3.23
----------- -----------
Total................................................ 38.44 38.23
======== =========
</TABLE>

The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities for the year
ended January 31, 1996 and the three-month period ended April 30, 1996 are as
follows:

<TABLE>
<CAPTION>
JANUARY 31, APRIL 30,
1996 1996
----------- -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes.................................................. $69,386 $30,117
======== =========
</TABLE>

(6) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company leases its operating facilities and certain transportation
equipment on a month-to-month basis.

F-56
<PAGE> 110

RYMER, ZARAVINOS AND FAIG, M.D., P.A.
(D/B/A SOUTHEAST FLORIDA HEMATOLOGY ONCOLOGY GROUP)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Total rental expense for operating leases was $68,194 for the year ended
January 31, 1996 and $14,813 for the three-month period ended April 30, 1996
(unaudited).

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis at $500,000 per claim and $1,500,000 in the aggregate. Incidents and
claims reported during the policy period are anticipated to be covered by the
malpractice carrier.

At January 31, 1996 there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but has yet to
be identified under its incident reporting systems. Accordingly, the Company has
made no accruals at January 31, 1996 and April 31, 1996 (unaudited) for
incurred, but not reported, claims.

F-57
<PAGE> 111

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Rosenberg and Kalman, M.D., P.A.:

We have audited the accompanying balance sheet of Rosenberg and Kalman,
M.D., P.A. as of December 31, 1995, and the related statements of operations,
stockholders' equity, and cash flows for the year then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Rosenberg and Kalman, M.D.,
P.A. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

KPMG PEAT MARWICK LLP

Miami, Florida
June 7, 1996

F-58
<PAGE> 112

ROSENBERG AND KALMAN, M.D., P.A.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 744 $ 37,506
Accounts receivable, net of allowance for contractual adjustments
and uncollectible amounts of $534,000 and $320,000 in 1995 and
in 1996 (unaudited), respectively............................... 536,069 763,137
Supplies........................................................... 122,701 97,621
Prepaid expenses................................................... 42,058 43,455
------------ -----------
Total current assets....................................... 701,572 941,719
------------ -----------
Furniture and equipment:
Furniture and fixtures............................................. 183,097 183,097
Medical equipment.................................................. 78,460 78,460
Transportation equipment........................................... 35,841 35,841
------------ -----------
297,398 297,398
Less accumulated depreciation...................................... 219,920 225,182
------------ -----------
Net furniture and equipment..................................... 77,478 72,216
Deferred income taxes................................................ 10,188 --
Other assets......................................................... 7,049 7,049
------------ -----------
$796,287 $ 1,020,984
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $671,076 $ 280,084
Accrued employee compensation...................................... 25,222 15,218
Current portion of long-term debt.................................. 9,990 10,364
Income taxes payable............................................... -- 8,783
------------ -----------
Total current liabilities.................................. 706,288 314,449
------------ -----------
Long-term debt....................................................... 19,981 18,138
Deferred income taxes................................................ -- 226,243
Stockholders' equity:
Common stock, $1 par value. Authorized 1,000 shares; issued and
outstanding 100 shares.......................................... 100 100
Retained earnings.................................................. 69,918 462,054
------------ -----------
Total stockholders' equity................................. 70,018 462,154
Commitments and contingencies
------------ -----------
$796,287 $ 1,020,984
========== =========
</TABLE>

See accompanying notes to financial statements.

F-59
<PAGE> 113

ROSENBERG AND KALMAN, M.D., P.A.

STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE
THREE-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue.......................................... $4,196,802 $ 1,298,572
Expenses:
Operating.......................................................... 4,160,583 582,302
Depreciation....................................................... 22,807 5,262
Other.............................................................. 330,794 73,658
------------ ------------
4,514,184 661,222
------------ ------------
Income (loss) before income taxes.......................... (317,382) 637,350
Income tax provision (benefit)....................................... (113,092) 245,214
------------ ------------
Net income (loss).......................................... $ (204,290) $ 392,136
========== =========
</TABLE>

See accompanying notes to financial statements.

F-60
<PAGE> 114

ROSENBERG AND KALMAN, M.D., P.A.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------ --------- -------------
<S> <C> <C> <C>
Balances, December 31, 1994................................... $100 $ 274,208 $ 274,308
Net loss............................................ -- (204,290) (204,290)
------ --------- -------------
Balances, December 31, 1995................................... 100 69,918 70,018
Net income (unaudited).............................. -- 392,136 392,136
------ --------- -------------
Balances, March 31, 1996 (unaudited).......................... $100 $ 462,054 $ 462,154
====== ========= =========
</TABLE>

See accompanying notes to financial statements.

F-61
<PAGE> 115

ROSENBERG AND KALMAN, M.D., P.A.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
THREE-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................................... $ (204,290) $ 392,136
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 22,807 5,262
Loss on disposition of operating asset........................... 10,372 --
Deferred income taxes............................................ (130,340) 236,431
Changes in operating assets and liabilities:
Accounts receivable, net....................................... (152,152) (227,068)
Supplies....................................................... (3,197) 25,080
Prepaid expenses............................................... (13,069) (1,397)
Accounts payable and accrued expenses.......................... 473,217 (390,992)
Income tax payable............................................. -- 8,783
Accrued employee compensation.................................. 3,906 (10,004)
------------ ------------
Net cash provided by operating activities................... 7,254 38,231
------------ ------------
Cash flows from investing activities:
Expenditures for furniture and equipment............................ (5,870) --
Proceeds from sale of investments................................... 2,282 --
------------ ------------
Net cash used in investing activities....................... (3,588) --
------------ ------------
Cash flows from financing activity:
Repayment of debt................................................... (6,189) (1,469)
------------ ------------
Net cash used in financing activity......................... (6,189) (1,469)
------------ ------------
Net increase (decrease) in cash............................. (2,523) 36,762
Cash at beginning of period........................................... 3,267 744
------------ ------------
Cash at end of period................................................. $ 744 $ 37,506
========== =========
Supplemental disclosure of cash flow information:
Cash payments for interest.......................................... $ 3,203 $ 430
========== =========
Cash payments for taxes............................................. $ 34,635 $ 1,954
========== =========
Supplemental schedule of noncash investing and financing activities:
Acquisition of automobile........................................... $ 35,841 $ --
========== =========
Borrowings incurred in connection with acquisition of automobile.... $ 29,971 $ --
========== =========
</TABLE>

See accompanying notes to financial statements.

F-62
<PAGE> 116

ROSENBERG AND KALMAN, M.D., P.A.

NOTES TO FINANCIAL STATEMENTS

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996 and the related statements of
operations, shareholders' equity and cash flows for the three-month period ended
March 31, 1996 (1996 interim financial information) have been prepared by
Rosenberg and Kalman, M.D., P.A. (the "Company") and are unaudited. In the
opinion of the Company, the 1996 interim financial information includes all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair statement of the results of the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Company was incorporated on November 24, 1982 in the state of Florida.
The Company is a medical group practice whose physicians specialize in providing
services to patients with cancer.

(b) Net Revenue

Net revenue primarily consists of charges for patient services rendered by
the physicians based on established billing rates less allowance and discounts
for patients covered by contractual programs. Payments received under these
programs, which are generally based on predetermined rates, are generally less
than the established billing rates, and the differences are recorded as
contractual allowances or policy discounts. Net patient service revenue is net
of contractual adjustments and policy discounts of approximately $1,100,000 for
the year ended December 31, 1995 and $242,000 for the three-month period ended
March 31, 1996 (unaudited).

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing health care services, the
Company grants credit to patients, substantially all of whom are residents of
the South Florida area. The Company does not generally require collateral or
other security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (such as, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

The majority of the Company's net revenue and receivables is from
third-party payment programs. At December 31, 1995, approximately 97 percent of
total revenue and receivables consists of amounts from Medicare (26 percent),
various commercial plans (37 percent) and private pay patients (34 percent).

(d) Supplies

Supplies consist of pharmaceuticals and medications which are stated at the
lower of cost or market on a first-in, first-out basis.

F-63
<PAGE> 117

ROSENBERG AND KALMAN, M.D., P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line method over the estimated useful lives of the
assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Office equipment.............................................. 7 years
Medical equipment............................................. 5-7 years
Transportation equipment...................................... 5 years
</TABLE>

(f) Income Taxes

The Company accounts for income taxes under the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("Statement 109"). Statement 109 requires the
asset and liability method of accounting for income taxes. Under the asset and
liability method of Statement 109, 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 basis. 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. Under
Statement 109, 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.

(g) Use of Estimates

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

(3) EMPLOYEE BENEFIT PLANS

The Company has a Qualified Pension and Profit Sharing Plan (the "Plan"),
which covers substantially all employees. Employees who complete one year of
service and attain age 21 may participate in the Plan. The Company's
contributions to the Plan are discretionary and include separate components for
annual profit-sharing and retirement benefits. For the year ended December 31,
1995 and the three-month period ended March 31, 1996 (unaudited), the Company
did not make any contributions to the Plan.

F-64
<PAGE> 118

ROSENBERG AND KALMAN, M.D., P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(4) DEBT

Long-term obligation consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Chase Automotive Finance interest is fixed at 8.5% per annum,
due in monthly installments including interest, due December
27, 1998.................................................... $ 29,971 $ 28,502
Less current portion.......................................... (9,990) (10,364)
------------ -----------
$ 19,981 $ 18,138
========== =========
</TABLE>

(5) INCOME TAXES

Income tax (benefit) expense for the year ended December 31, 1995 and the
three-month period ended March 31, 1996 is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current:
Federal..................................................... $ 15,294 $ 7,780
State....................................................... 1,954 1,003
------------ -----------
17,248 8,783
------------ -----------
Deferred:
Federal..................................................... (118,276) 203,216
State....................................................... (12,064) 33,215
------------ -----------
130,340 236,431
------------ -----------
$ (113,092) $ 245,214
========== =========
</TABLE>

The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities at December 31,
1995 and March 31, 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. $ 10,188 $ --
------------ -----------
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. -- (226,243)
------------ -----------
Net deferred tax assets (liabilities)............... $ 10,188 $(226,243)
========== =========
</TABLE>

F-65
<PAGE> 119

ROSENBERG AND KALMAN, M.D., P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the effective income tax rate is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax expense (benefit)..................... (35.00)% 35.00%
State income tax, net of federal benefit...................... (3.57) 3.47
Permanent adjustments......................................... 2.94 --
------------ -----------
(35.63)% 38.47%
========== =========
</TABLE>

(6) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company leases its operating facilities and certain transportation
equipment on a month-to-month basis.

Total rental expense for operating leases was $68,194 for the year ended
December 31, 1995 and $14,813 for the three-month period ended March 31, 1996.

(b) Medical Malpractice and Professional Liability Insurance

At December 31, 1995, there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but has yet to
be identified under its incident-reporting system. Accordingly, the Company has
made no accruals at December 31, 1995 and March 31, 1996 (unaudited) for claims
incurred but not reported.

F-66
<PAGE> 120

INDEPENDENT AUDITORS' REPORT

The Board of Directors
The West Clinic, P.C.:

We have audited the accompanying balance sheet of The West Clinic, P.C. as
of December 31, 1995, and the related statements of loss, stockholders' equity
and cash flows for the year then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The West Clinic, P.C. as of
December 31, 1995, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Memphis, Tennessee
June 7, 1996

F-67
<PAGE> 121

THE WEST CLINIC, P.C.

BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 210,873 $ 410,957
Accounts receivable, less allowance for contractual adjustments and
uncollectible amounts of $900,384 in 1995 and $981,875 in 1996
(unaudited) (note 1)............................................ 2,100,895 2,291,043
Accounts receivable -- other....................................... 20,195 20,000
Due from stockholder (note 9)...................................... 120,000 8,356
------------ -----------
Total current assets....................................... 2,451,963 2,730,356
------------ -----------
Furniture, fixtures and equipment, at cost (notes 3 and 5)........... 2,225,712 2,286,128
Less accumulated depreciation...................................... (912,212) (953,736)
------------ -----------
Net furniture, fixtures and equipment...................... 1,313,500 1,332,392
Other assets......................................................... 44,387 48,926
------------ -----------
$3,809,850 $ 4,111,674
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $ 801,722 $ 741,670
Accrued payroll.................................................... 50,606 20,969
Payroll taxes payable.............................................. 14,265 88
Due to stockholder (notes 5 and 9)................................. 137,800 --
Federal income taxes payable (note 7).............................. -- 176,500
Current portion of long-term debt (note 5)......................... 549,625 492,432
Current portion of capital lease obligations (note 8).............. 160,171 164,006
------------ -----------
Total current liabilities.................................. 1,714,189 1,595,665
Distributions in excess of earnings of unconsolidated affiliates
(note 4)........................................................... 140,175 136,175
Long-term debt, less current portion (note 5)........................ 83,435 71,423
Deferred income taxes (note 7)....................................... 524,600 609,100
Capital lease obligations, less current portion (note 8)............. 760,379 717,911
------------ -----------
Total liabilities.......................................... 3,222,778 3,130,274
------------ -----------
Stockholders' equity:
Common stock, $.01 par value. Authorized 2,000 shares; issued and
outstanding 1,250 shares........................................ 13 13
Additional paid-in capital......................................... 2,035 2,035
Retained earnings.................................................. 585,024 979,352
------------ -----------
587,072 981,400
Commitments and contingencies (note 8)...............................
------------ -----------
$3,809,850 $ 4,111,674
========== =========
</TABLE>

See accompanying notes to financial statements.

F-68
<PAGE> 122

THE WEST CLINIC, P.C.

STATEMENTS OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue (note 1)................................. $ 11,559,887 $ 3,888,691
Other income (note 4)................................................ 1,222,195 89,919
------------ -----------
12,782,082 3,978,610
------------ -----------
Expenses:
Operating.......................................................... 10,480,809 2,687,236
General and administrative......................................... 2,264,686 556,155
Depreciation and amortization...................................... 166,091 41,523
Interest and other................................................. 118,590 38,368
------------ -----------
13,030,176 3,323,282
------------ -----------
Income (loss) before income taxes.......................... (248,094) 655,328
Income tax expense (benefit) (note 7)................................ (45,700) 261,000
------------ -----------
Net income (loss).......................................... $ (202,394) $ 394,328
========== =========
</TABLE>

See accompanying notes to financial statements.

F-69
<PAGE> 123

THE WEST CLINIC, P.C.

STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED STOCKHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ---------- --------- -------------
<S> <C> <C> <C> <C>
Balances at January 1, 1995.......................... $1,000 $1,048 $ 787,418 $ 789,466
Net loss............................................. -- -- (202,394) (202,394)
------ ---------- --------- -------------
Balances at December 31, 1995........................ 1,000 1,048 585,024 587,072
Net income (unaudited)............................... -- -- 394,328 394,328
------ ---------- --------- -------------
Balances at March 31, 1996 (unaudited)............... $1,000 $1,048 $ 979,352 $ 981,400
====== ======= ========= =========
</TABLE>

See accompanying notes to financial statements.

F-70
<PAGE> 124

THE WEST CLINIC, P.C.

STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE THREE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................. $ (202,394) $ 394,328
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization................................... 166,091 41,524
Equity in earnings of unconsolidated affiliates................. (940,832) --
Gain on sale of assets.......................................... (15,145) --
Changes in operating assets and liabilities:
Accounts receivable........................................... (280,793) (190,148)
Accounts receivable -- other.................................. 1,615 195
Due from stockholder.......................................... (20,000) 111,644
Other assets.................................................. (43,842) (4,539)
Accounts payable and accrued expenses......................... 297,494 (60,052)
Accrued payroll............................................... (15,052) (29,637)
Payroll taxes payable......................................... 14,265 (14,177)
Deferred income taxes......................................... (23,800) 84,500
Federal income taxes payable.................................. -- 176,500
------------ -----------
Net cash provided by (used in) operating activities........ (1,062,393) 510,138
------------ -----------
Cash flows from investing activities:
Proceeds from sale of assets....................................... 18,613 --
Capital expenditures............................................... (235,432) (60,416)
Distributions from unconsolidated affiliate........................ 1,066,704 --
Purchases of interest in affiliates................................ (13,000) (4,000)
------------ -----------
Net cash provided by (used in) investing activities........ 836,885 (64,416)
------------ -----------
Cash flows from financing activities:
Repayment of long-term debt........................................ (454,064) (207,005)
Proceeds from the issuance of debt................................. 576,323 --
Principal payments on capital lease obligations.................... (29,489) (38,633)
------------ -----------
Net cash provided by (used in) financing activities........ 92,770 (245,638)
------------ -----------
Net increase (decrease) in cash...................................... (132,738) 200,084
Cash at beginning of the period...................................... 343,611 210,873
------------ -----------
Cash at end of the period............................................ $ 210,873 $ 410,957
========== =========
Supplemental disclosures:
Interest paid...................................................... $ 44,210 $ 29,964
========== =========
The Company originated a $46,500 note payable for the purchase of
an automobile in 1995 (note 4).
The Company originated $941,493 in capital lease obligations for
the purchase of equipment in 1995 (note 7).
In March 1996, the Company paid a $100,000 lawsuit settlement which
will be repaid by stockholders. At December 31, 1995, $100,000
was accrued in accounts payable and a $100,000 receivable due
from stockholders was recorded.
The Company included $29,242 in accounts payable for capital
expenditures at December 31, 1995.
</TABLE>

See accompanying notes to financial statements.

F-71
<PAGE> 125

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996, and the statements of income,
stockholders' equity and cash flows for the three-month period ended March 31,
1996 (1996 interim financial information) have been prepared by The West Clinic,
P.C. (the Company) and are unaudited. In the opinion of the Company, the 1996
interim financial information includes all adjustments, consisting of only
normal recurring adjustments, necessary for a fair statement of the results of
the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The West Clinic, P.C. is incorporated in the State of Tennessee. The
Company is a medical group practice whose physicians specialize in providing
services to patients with cancer and/or blood diseases.

(b) Net Patient Service Revenue

Net patient service revenue primarily consists of charges for patient
services rendered by the physicians based on established billing rates less
allowance and discounts for patients covered by contractual programs. Payments
received under these programs, which are generally based on predetermined rates,
are generally less than the established billing rates and the differences are
recorded as contractual allowances or policy discounts. Net patient service
revenue is net of contractual adjustments and policy discounts of approximately
$4,954,000 and $1,605,000 (unaudited) for the year ended December 31, 1995 and
the three months ended March 31, 1996, respectively. The Company has
historically not maintained records to segregate write-offs of uncollectible
accounts from contractual and other adjustments, and therefore the separate
provision for uncollectible accounts is not determinable.

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Company grants credit to patients, substantially all of whom are resident in the
Mid South area including East Arkansas, Southeast Missouri, North Mississippi
and West Tennessee. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

F-72
<PAGE> 126

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The mix of receivables from patients and third-party payors at December 31,
1995 follows:

<TABLE>
<S> <C>
Medicare........................................................... 42%
Commercial insurance............................................... 35
Other third-party payors........................................... 8
Blue Cross......................................................... 7
Patient............................................................ 5
Medicaid........................................................... 3
---
100%
===
</TABLE>

(d) Furniture, Fixtures and Equipment

Furniture, fixtures and equipment are stated at cost. Furniture, fixtures
and equipment under capital leases are stated at the lower of the present value
of minimum lease payments at the beginning of the lease term or fair value at
the inception of the lease.

Depreciation for furniture, fixtures and equipment is calculated using the
straight-line method over the estimated useful lives of the assets as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
-------------
<S> <C>
Furniture, fixtures and office equipment.................... 5-7 years
Medical and lab equipment................................... 5 years
Automobiles................................................. 5 years
Leasehold improvements...................................... 3-7 years
</TABLE>

Furniture, fixtures and equipment held under capital leases and leasehold
improvements are amortized on the straight-line method over the shorter of the
respective lease term or estimated useful lives of the assets.

(e) Investment in Affiliates

Investment in affiliates is accounted for using the equity method of
accounting.

(f) Income Taxes

The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 109, Accounting for Income Taxes. Under the asset and liability
method of Statement 109, 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 and operating loss and tax credit carryforwards. 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. Under Statement 109, 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.

(g) 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

F-73
<PAGE> 127

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

(3) FURNITURE, FIXTURES AND EQUIPMENT

A summary of furniture, fixtures and equipment at December 31, 1995
follows:

<TABLE>
<S> <C>
Furniture, fixtures and office equipment................................. $1,301,732
Medical and lab equipment................................................ 747,515
Automobiles.............................................................. 46,533
Leasehold improvements................................................... 129,932
----------
2,225,712
Less accumulated depreciation............................................ 912,212
----------
$1,313,500
=========
</TABLE>

(4) INVESTMENT IN AFFILIATES

At December 31, 1995, investment in affiliates primarily represents the
Company's ownership interest in MWO Partnership (MWO) a real estate venture. In
1991, the Company became a 33 1/3% partner in MWO. The Company received capital
distributions of $1,041,404 for the year ended December 31, 1995. The Company's
share of MWO's earnings are included in other income at December 31, 1995. As
the capital distributions were in excess of the Company's share of MWO's income,
the investment in affiliates is shown as a liability at December 31, 1995.

A summary of the unaudited financial statements of MWO at December 31, 1995
is as follows:

<TABLE>
<S> <C>
Total assets............................................................. 3,424,234
=========
Total liabilities........................................................ 3,883,947
=========
Partners equity (deficit)................................................ (459,713)
=========
Revenue from operations.................................................. 312,778
Gain from sale of real estate............................................ 2,436,609
----------
2,749,387
Expenses................................................................. 18,082
----------
Net income..................................................... $2,731,305
=========
</TABLE>

(5) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<S> <C>
Letter of credit, maximum loan amount of $500,000, with interest at
8.75%, personally guaranteed by certain shareholders with principal
payment due July 1996................................................ $ 400,000
Note payable, with interest at 8.25%, payable in monthly installments
of $949 including interest, secured by automobile, final principal
payment due October 1997............................................. 44,598
</TABLE>

F-74
<PAGE> 128

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<S> <C>
Note payable, with interest at 7.38%, payable in monthly installments
of $4,143 including interest, secured by equipment with principal
payment due September 1996........................................... 36,169
Note payable, with interest at 6.96%, payable in monthly installments
of $1,484 including interest, secured by equipment with principal
payment due January 1999............................................. 48,043
Note payable, with interest at 9.54%, payable in monthly installments
of $1,713 including interest, secured by equipment with principal
payment due November 1996............................................ 17,978
Note payable at 9%, payable in monthly installments of $513 including
interest, secured by equipment, with principal payment due May
1998................................................................. 13,262
Non-interest bearing note payable, payable in monthly installments of
$415, secured by equipment, final payment due September 1998......... 8,714
Non-interest bearing note payable, payable in monthly installments of
$519, secured by equipment, final payment due January 1997........... 6,743
Unsecured note payable to stockholder at 9%, payable in monthly
installments of $5,033 with interest, final principal payment due
December 1994........................................................ 57,553
Unsecured note payable to stockholder with interest at 8 1/2% payable
quarterly, and principal payable on demand after March 31, 1996...... 75,000
Unsecured note payable to stockholder with interest at 8 1/2% payable
quarterly, and principal payable on demand after March 31, 1996...... 62,800
---------
Total long-term debt......................................... 770,860
Less current installments, including due from stockholder of
$137,800............................................................. (687,425)
---------
Long-term debt excluding current installments................ $ 83,435
=========
</TABLE>

Maturities of long-term debt as of December 31, 1995 are as follows:

(6) EMPLOYEE BENEFIT PLAN

The Company maintains a 401(k) Profit Sharing Plan (the Plan), which covers
substantially all employees. Employees who complete six months of service after
entry dates, January 1st or July 1st, and attain age 20 may participate in the
plan. The Company's contributions to the Plan are discretionary. Eligible
employees ratably vest in the Company's contributions over six years. The
Company's discretionary contribution to the Plan which was included in general
and administrative expense was $95,380 and $37,330 (unaudited) for the year
ended December 31, 1995 and the three months ended March 31, 1996, respectively.

F-75
<PAGE> 129

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(7) INCOME TAXES

As described in note 1, the Company is a taxable corporation. Income tax
expense (benefit), which relates solely to the Company, consists of the
following for the year ended December 31, 1995 and the three-month period ended
March 31, 1996 (unaudited):

DECEMBER 31, 1995 MARCH 31, 1996
------------------------------ -----------------------------
(UNAUDITED)
CURRENT DEFERRED TOTAL CURRENT DEFERRED TOTAL
-------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
U.S. Federal................ $(18,400) $(21,300) $(39,700) $148,600 $75,700 $224,300
State and local............. (3,500) (2,500) (6,000) 27,900 8,800 36,700
-------- -------- -------- -------- ------- --------
$(21,900) $(23,800) $(45,700) $176,500 $84,500 $261,000
======== ======== ======== ======== ======= ========
</TABLE>

Income tax expense (benefit) for the year ended December 31, 1995 and the
three-month period ended March 31, 1996 (unaudited) differs from the amount
computed by applying the U.S. Federal income tax rate of 34 percent to the
Company's pretax loss as a result of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax (benefit) expense..................... $(83,162) $ 222,812
State and local income taxes, net of Federal income tax
benefit..................................................... (2,310) 18,414
Meals, entertainment, officer's life insurance and other
non-deductible items........................................ 43,610 10,902
Other......................................................... (3,838) 8,872
------------ -----------
$(45,700) $ 261,000
========== =========
</TABLE>

Tax effects of temporary differences that gave rise to deferred tax assets
and liabilities at December 31, 1995 and March 31, 1996 (unaudited) are
presented below.

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Capital lease obligation, due to lease treated as operating lease
for income tax purposes.......................................... $ 1,042 $ 2,083
------------ -----------
Deferred tax liabilities:
Plant and equipment, principally due to differences in
depreciation..................................................... 33,656 37,960
Use of modified cash method for income tax purposes................. 491,986 573,223
------------ -----------
Total deferred tax liabilities.............................. 525,642 611,183
------------ -----------
Net deferred tax liability.................................. $524,600 $ 609,100
========== =========
</TABLE>

(8) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company is obligated under various capital leases for laboratory and
office equipment that expire at various dates within the next three years. The
gross amount of capital leases included in furniture, fixtures and equipment for
the year ended December 31, 1995 was $951,545, with related accumulated
depreciation of $36,717.

F-76
<PAGE> 130

THE WEST CLINIC, P.C.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

The Company also has several noncancelable operating leases, primarily for
office space. Total expense was approximately $251,312 for the year ended
December 31, 1995 and $61,592 (unaudited) for the three months ended March 31,
1996.

Future minimum lease payments under noncancelable operating leases and the
present value of minimum capital lease payments as of December 31, 1995 are as
follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
--------- ---------
<S> <C> <C>
Year ending:
1996.......................................................... $ 240,768 $ 255,135
1997.......................................................... 240,768 255,135
1998.......................................................... 240,073 253,801
1999.......................................................... 235,665 28,432
2000.......................................................... 192,176 --
--------- ---------
1,149,450
Less amount representing interest (at 9.5% rate)................ (228,900) $ 792,503
--------- ========
920,550
Less current installments of obligations under capital leases... (160,171)
--------- ========
Obligations under capital leases excluding current
installments.................................................. $ 760,379
=========
</TABLE>

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a modified
claims-made basis. Incidents and claims reported during the policy period are
anticipated to be covered by the malpractice carrier.

At December 31, 1995, the Company is unaware of any claims or incidents
which would result in any loss in excess of its insurance coverage. Accordingly,
the Company has made no accruals at December 31, 1995 for incurred but not
reported claims.

(9) RELATED PARTY TRANSACTION

As described in note 4, the Company has note payables to three of its
stockholders. The Company also has a receivable from its stockholders of
$120,000. Management believes that these transactions reflect appropriate market
rates and terms for similar transactions between unaffiliated parties.

F-77
<PAGE> 131

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Weinreb, Weisberg & Weiss, P.A.:

We have audited the accompanying balance sheet of Weinreb, Weisberg &
Weiss, P.A. as of December 31, 1995, and the related statements of income,
stockholders' equity and cash flows for the year then ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Weinreb, Weisberg & Weiss,
P.A. as of December 31, 1995, and the results of its operations and its cash
flows for the year then ended in conformity with generally accepted accounting
principles.

KPMG Peat Marwick LLP

Miami, Florida
June 13, 1996

F-78
<PAGE> 132

WEINREB, WEISBERG & WEISS, P.A.

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................ $ 24,144 $ 36,201
Accounts receivable, net of allowance for contractual adjustments
and uncollectible amounts of $94,139 and $141,605 (unaudited) at
December 31, 1995 and March 31, 1996, respectively............... 159,248 239,550
Supplies............................................................ 16,670 25,299
Deferred income taxes............................................... -- 2,249
Prepaid expenses and other assets................................... 18,803 16,544
------------ -----------
Total current assets........................................ 218,865 319,843
Property and equipment:
Medical equipment................................................... 135,668 140,446
Automobile.......................................................... 59,414 59,414
Computer equipment.................................................. 59,904 59,904
Furniture and fixtures.............................................. 51,095 51,095
------------ -----------
306,081 310,859
Less accumulated depreciation and amortization...................... 227,421 232,222
------------ -----------
Net property and equipment.................................. 78,660 78,637
------------ -----------
Total assets................................................ $297,525 $ 398,480
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable (note 2).............................................. $ 3,902 $ 2,230
Current obligations under capital leases (note 3)................... 5,250 4,310
Account payable and accrued expenses................................ 35,645 46,601
Due to stockholders (note 8)........................................ 42,914 34,705
Accrued employee compensation....................................... 15,868 15,194
Deferred income taxes............................................... 52,551 --
Income tax payable.................................................. -- 92,184
------------ -----------
Total current liabilities................................... 156,130 195,224
------------ -----------
Obligations under capital leases, excluding current installments (note
3).................................................................. 14,133 12,600
Stockholders' equity:
Common stock, $1 par value. Authorized and issued 1,200 shares...... 1,200 1,200
Retained earnings................................................... 168,062 228,225
Treasury stock (note 7)............................................. (42,000) (38,769)
------------ -----------
Total stockholders' equity.................................. 127,262 190,656
Commitments and contingencies (notes 3 and 5)
------------ -----------
Total liabilities and stockholders' equity.................. $297,525 $ 398,480
========== =========
</TABLE>

See accompanying notes to financial statements.

F-79
<PAGE> 133

WEINREB, WEISBERG & WEISS, P.A.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE
THREE-MONTH
YEAR ENDED PERIOD ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Net patient service revenue......................................... $1,982,441 $653,075
Other income........................................................ 7,018 1,291
------------ ------------
Total revenue............................................... 1,989,459 654,366
------------ ------------
Expenses:
Operating........................................................... 1,350,556 412,098
Depreciation and amortization....................................... 33,156 4,801
Other............................................................... 428,661 139,920
------------ ------------
1,812,373 556,819
------------ ------------
Income before income taxes.................................. 177,086 97,547
Income taxes.......................................................... 69,283 37,384
------------ ------------
Net income.................................................. $ 107,803 $ 60,163
========== =========
</TABLE>

See accompanying notes to financial statements.

F-80
<PAGE> 134

WEINREB, WEISBERG & WEISS, P.A.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON RETAINED TREASURY STOCKHOLDERS'
STOCK EARNINGS STOCK EQUITY
------ -------- -------- -------------
<S> <C> <C> <C> <C>
Balances, December 31, 1994........................... $1,200 $ 60,259 $(56,000) $ 5,459
Net income.......................................... -- 107,803 -- 107,803
Sale of treasury stock (note 6)..................... -- -- 14,000 14,000
------ -------- -------- -------------
Balances, December 31, 1995........................... 1,200 168,062 (42,000) 127,262
Net income (unaudited).............................. -- 60,163 -- 60,163
Sale of treasury stock (unaudited) (note 7)......... -- -- 3,231 3,231
------ -------- -------- -------------
Balances, March 31, 1996 (unaudited).................. $1,200 $228,225 $(38,769) $ 190,656
====== ======== ======== =========
</TABLE>

See accompanying notes to financial statements.

F-81
<PAGE> 135

WEINREB, WEISBERG & WEISS, P.A.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE THREE-
MONTH PERIOD
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ --------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 107,803 $ 60,163
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization................................... 33,156 4,801
Changes in operating assets and liabilities:
Accounts receivable, net...................................... (131,132) (80,302)
Supplies...................................................... 7,063 (8,629)
Prepaid expenses and other assets............................. (476) 2,259
Accounts payable and accrued expenses......................... (41,549) 10,956
Accrued employee compensation................................. 694 (674)
Deferred income tax, net...................................... 113,261 (54,800)
Income tax payable............................................ -- 92,184
------------ --------------
Net cash provided by operating activities.................. 88,820 25,958
Cash flows from investing activities:
Purchases of property and equipment................................ (32,284) (4,778)
------------ --------------
Net cash used in investing activities...................... (32,284) (4,778)
------------ --------------
Cash flows from financing activities:
Payments of notes payable.......................................... (6,690) (1,672)
Payments on obligations under capital leases....................... (26,193) (2,473)
Sale of treasury stock............................................. 14,000 3,231
Due to stockholders................................................ (22,154) (8,209)
------------ --------------
Net cash used in financing activities...................... (41,037) (9,123)
------------ --------------
Net increase in cash....................................... 15,499 12,057
Cash, beginning of period............................................ 8,645 24,144
------------ --------------
Cash, end of period.................................................. $ 24,144 $ 36,201
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest........................... $ 8,158 $ 1,196
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-82
<PAGE> 136

WEINREB, WEISBERG & WEISS, P.A.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996 and the related statements of
income, shareholders' equity and cash flows for the three-month period ended
March 31, 1996 (1996 interim financial information) have been prepared by
Weinreb, Weisberg and Weiss, P.A. (the "Company") and are unaudited. In the
opinion of the Company, the 1996 interim financial information includes all
adjustments, consisting of only normal recurring adjustments, necessary for a
fair statement of the results of the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Company was incorporated on July 19, 1993 in the state of Florida. The
Company is a medical group practice whose physicians specialize in providing
services, including drug therapy, to patients with cancer.

(b) Net Revenue

Net revenue primarily consists of charges for patient services rendered by
the physicians based on established billing rates less allowance and discounts
for patients covered by contractual programs. Payments received under these
programs, which are generally based on predetermined rates, are generally less
than the established billing rates, and the differences are recorded as
contractual allowances or policy discounts. Net patient service revenue is net
of contractual adjustments and policy discounts of approximately $1,231,800 for
the year ended December 31, 1995 and $438,200 for the three-month period ended
March 31, 1996 (unaudited).

Accounts receivable consist primarily of receivables from patients and
third-party payors. In the course of providing health care services, the Company
grants credit to patients, substantially all of whom are residents in the South
Florida area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (such as Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

The majority of the Company's net patient revenue is derived from
third-party payment programs. At December 31, 1995, accounts receivable consists
of amounts due from Medicare (83 percent) and various commercial plans (17
percent).

(d) Supplies

Supplies, consisting primarily of pharmaceuticals and medical supplies, are
stated at the lower of cost or market on a first-in, first-out basis.

F-83
<PAGE> 137

WEINREB, WEISBERG & WEISS, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation and amortization
for equipment and vehicles are calculated using the straight-line method over
the estimated useful lives of the assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Medical equipment............................................. 5 years
Automobile.................................................... 5 years
Computer equipment............................................ 5 years
Furniture and fixtures........................................ 5-7 years
</TABLE>

(f) Income Taxes

Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to be applied 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.

(g) Use of Estimates

Management of the Company has made a number estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Significant estimates
include, among others, the useful lives of property and equipment, and the
allowance for contractual adjustments. Actual results could differ from those
estimates.

(h) Fair Value of Financial Instruments

The carrying amount of cash, accounts receivable, due to stockholders,
accounts payable and accrued expenses and accrued employee compensation
approximates fair value because of the short maturity of these instruments.

(2) NOTES PAYABLE

Notes payable represents a promissory note payable to NationsBank due on
July 13, 1996, bearing interest at a fixed rate of 7.25 percent, collateralized
by an automobile.

(3) OBLIGATIONS UNDER CAPITAL LEASES

At December 31, 1995 and March 31, 1996, the gross amount of equipment and
related accumulated amortization recorded under capital leases are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Equipment..................................................... $ 59,904 $59,904
Less accumulated amortization................................. 43,785 46,780
------------ -----------
$ 16,119 $13,124
========== =========
</TABLE>

Amortization of assets held under capital leases is included with
depreciation expense.

F-84
<PAGE> 138

WEINREB, WEISBERG & WEISS, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Future minimum capital lease payments as of December 31, 1995 and March 31,
1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
1996........................................................ $ 7,067 $ 3,488
1997........................................................ 6,754 6,754
1998........................................................ 5,763 5,763
1999........................................................ 5,750 5,750
------------ -----------
Total minimum lease payments........................ 25,334 21,755
Less amount representing interest (at 13% annual rate)........ 5,951 4,845
------------ -----------
Present value of net minimum capital lease payments........... 19,383 16,910
Less current installments..................................... 5,250 4,310
------------ -----------
Obligations under capital leases, excluding current
installments................................................ $ 14,133 $12,600
========== =========
</TABLE>

(4) INCOME TAXES

Income tax expense for the year ended December 31, 1995 and for the
three-month period ended March 31, 1996 is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Current:
Federal..................................................... -- $79,290
State....................................................... -- 12,894
------------ -----------
-- 92,184
------------ -----------
Deferred:
Federal..................................................... 62,862 (46,930)
State....................................................... 6,421 (7,870)
------------ -----------
69,283 (54,800)
------------ -----------
Total............................................... $ 69,283 $37,384
========== =========
</TABLE>

The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities at December 31,
1995 and March 31, 1996 (unaudited) and are presented as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax assets:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. $ -- $ 2,249
Net loss carryforward....................................... -- --
------------ -----------
Total deferred tax assets........................... -- 2,249
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. (52,551) --
------------ -----------
Net deferred tax asset (liability).................. $(52,551) $ 2,249
========== =========
</TABLE>

F-85
<PAGE> 139

WEINREB, WEISBERG & WEISS, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the effective income tax rate is as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax expense (benefit)..................... 35.0% 35.0%
State income tax, net of federal benefit...................... 3.6 3.3
Permanent adjustments......................................... .5 --
------------ -----------
Total............................................... 39.1% 38.3%
========== =========
</TABLE>

(5) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company, at December 31, 1995 and March 31, 1996, maintained its main
office space under a noncancelable operating lease that lease expires in 1999.
Monthly rental is $4,095. Future minimum lease payments under the noncancelable
operating lease (with initial or remaining lease terms in excess of one year) as
of December 31, 1995 and March 31, 1996 are as follows:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
1996........................................................ $ 49,136 $ 36,852
1997........................................................ 49,136 49,136
1998........................................................ 49,136 49,136
1999........................................................ 24,568 24,568
------------ -----------
Total minimum lease payments........................ $171,976 $ 159,692
========== =========
</TABLE>

Total rental expense for operating leases was $47,744 for the year ended
December 31, 1995 and $13,021 for the three-month period ended March 31, 1996
(unaudited).

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis at $500,000 per claim and $1,500,000 in the aggregate for each physician.
Incidents and claims reported during the policy period are anticipated to be
covered by the malpractice carrier.

At December 31, 1995 and March 31, 1996, there are no asserted claims
against the Company, nor has the Company identified any incident which may have
occurred but has yet to be identified under its incident-reporting system.
Accordingly, the Company has made no accruals at December 31, 1995 and March 31,
1996 (unaudited) for claims incurred but not reported.

(6) EMPLOYEE BENEFITS PLAN

During fiscal year 1995, the Company terminated its profit-sharing plan. No
contributions were made to the plan for the year ended December 31, 1995. At
December 31, 1995, the Company has no liability to the plan.

(7) TREASURY STOCK

During 1993, the Company bought back 350 of its shares of common stock at
$200 per share. On July 1, 1993, the Company entered into an agreement with a
new shareholder, a physician, to sell the treasury stock

F-86
<PAGE> 140

WEINREB, WEISBERG & WEISS, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

over a period of five years beginning on that date. At December 31, 1995 and
March 31, 1996 (unaudited), 210 and 194 shares of treasury stock remain,
respectively.

(8) DUE TO STOCKHOLDERS

At December 31, 1995 and March 31, 1996 (unaudited), the Company owed to
stockholders $42,914 and $34,705, respectively, related to the purchase of a
certain automobile and for the payment of certain liabilities in prior years.
This amount does not accrue interest, nor does it specify a due date. As such,
the payable amount has been classified as a current liability.

F-87
<PAGE> 141

INDEPENDENT AUDITORS' REPORT

The Partners
Drs. Haraf, Antonucci, McCormack and Kerns Medical Partnership:

We have audited the accompanying balance sheet of Drs. Haraf, Antonucci,
McCormack and Kerns Medical Partnership (d/b/a Medical Oncology and Hemotology
Consultants) as of December 31, 1995, and the related statements of income,
partners' equity, and cash flows for the year then ended. These financial
statements are the responsibility of the Partnership's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Drs. Haraf, Antonucci,
McCormack and Kerns Medical Partnership (d/b/a Medical Oncology and Hemotology
Consultants) as of December 31, 1995, and the results of its operations and its
cash flows for the year then ended in conformity with generally accepted
accounting principles.

Nashville, Tennessee
June 13, 1996

F-88
<PAGE> 142

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

BALANCE SHEETS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................ $ 53,038 38,340
Accounts receivable, less allowance for contractual adjustments and
uncollectible amounts of $354,961 and $372,223, respectively..... 464,790 520,796
Supplies............................................................ 195,000 195,000
Prepaid expenses.................................................... 6,564 3,282
------------ -----------
Total current assets........................................ 719,392 757,418
Property and equipment:
Medical equipment................................................... 125,676 125,676
Furniture and fixtures.............................................. 163,018 163,018
------------ -----------
288,694 288,694
Less accumulated depreciation......................................... 271,987 274,349
------------ -----------
Net property and equipment.................................. 16,707 14,345
Other assets.......................................................... 192,739 188,851
------------ -----------
$928,838 960,614
========== =========
LIABILITIES AND PARTNERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses............................... $ 98,042 55,168
Accrued payroll..................................................... -- 7,353
Profit-sharing contribution payable (note 4)........................ 74,891 29,474
Current portion of long-term debt (note 3).......................... 19,872 20,500
------------ -----------
Total current liabilities................................... 192,805 112,495
Long-term debt, less current portion (note 3)......................... 53,904 48,536
------------ -----------
Total liabilities........................................... 246,709 161,031
Partners' equity...................................................... 682,129 799,583
------------ -----------
Commitments and contingencies (notes 4 and 5)
$928,838 960,614
========== =========
</TABLE>

See accompanying notes to financial statements.

F-89
<PAGE> 143

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue...................................... $4,124,807 $ 1,015,225
Expenses:
Supplies....................................................... 1,641,764 365,230
Salaries and benefits, including benefits related to physicians
of $66,000 in 1995 and $16,500 (unaudited) in 1996.......... 562,205 123,323
Depreciation................................................... 24,631 6,250
Interest....................................................... 7,593 1,524
Other.......................................................... 198,906 59,792
------------ -----------
Total expenses......................................... 2,435,099 556,119
------------ -----------
Net income to partners................................. $1,689,708 $ 459,106
========== =========
</TABLE>

See accompanying notes to financial statements.

F-90
<PAGE> 144

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

STATEMENTS OF PARTNERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

<TABLE>
<S> <C>
Partners' equity, January 1, 1995............................................... $ 783,866
Distributions to partners..................................................... (1,791,445)
Net income to partners........................................................ 1,689,708
-----------
Partners' equity, December 31, 1995............................................. 682,129
Distributions to partners (unaudited)......................................... (341,652)
Net income to partners (unaudited)............................................ 459,106
-----------
Partners' equity, March 31, 1996 (unaudited).................................... $ 799,583
==========
</TABLE>

See accompanying notes to financial statements.

F-91
<PAGE> 145

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1995 AND THE
THREE-MONTH PERIOD ENDED MARCH 31, 1996 (UNAUDITED)

DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income to partners............................................. $ 1,689,708 459,106
Adjustments to reconcile net income to partners to net cash
provided by operating activities:
Depreciation.................................................... 24,631 6,250
Changes in operating assets and liabilities:
Accounts receivable, net...................................... 109,412 (56,006)
Prepaid expenses.............................................. (230) 3,282
Accounts payable and accrued expenses......................... 18,308 (35,521)
Profit-sharing contribution payable........................... 21,777 (45,417)
------------ ------------
Net cash provided by operating activities.................. 1,863,606 331,694
------------ ------------
Cash flows from investing activities -- expenditures for property and
equipment.......................................................... (31,173)
------------ ------------
Cash flows from financing activities:
Distributions to partners.......................................... (1,791,445) (341,652)
Repayment of long-term debt........................................ (23,972) (4,740)
------------ ------------
Net cash used in financing activities...................... (1,815,417) (346,392)
------------ ------------
Net increase (decrease) in cash...................................... 17,016 (14,698)
Cash at beginning of the period...................................... 36,022 53,038
------------ ------------
Cash at end of the period............................................ $ 53,038 38,340
========== =========
Supplemental disclosures:
Interest paid...................................................... $ 7,593 1,524
========== =========
</TABLE>

See accompanying notes to financial statements.

F-92
<PAGE> 146

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as of March 31, 1996 and the statements of income,
partners' equity and cash flows for the three-month period ended March 31, 1996
(1996 interim financial information) have been prepared by Drs. Haraf,
Antonucci, McCormack and Kerns Medical Partnership (the Partnership) and are
unaudited. In the opinion of the Partnership, the 1996 interim financial
information includes all adjustments, consisting of only normal recurring
adjustments, necessary for a fair statement of the results of the 1996 interim
period.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

Drs. Haraf, Antonucci, McCormack and Kerns Medical Partnership (the
Partnership) is a general partnership established on January 1, 1992 in the
State of Tennessee. The Partnership's four physician partners do not receive
compensation from the Partnership other than partnership distributions.
Distributions are based on the Partnership's operating results. The Partnership
is a medical group practice whose physicians specialize in providing services to
patients with cancer and/or blood diseases.

(b) Net Patient Service Revenue

Net patient service revenue primarily consists of charges for patient
services rendered by the physicians based on established billing rates less
allowances and discounts for patients covered by contractual programs. Payments
received under these programs, which are generally based on predetermined rates,
are generally less than the established billing rates and the differences are
recorded as contractual allowances or policy discounts. Net patient service
revenue is net of contractual adjustments and policy discounts of approximately
$1,917,000 for the year ended December 31, 1995 and $491,000 (unaudited) for the
three-month period ended March 31, 1996.

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the normal course of providing healthcare services, the
Partnership grants credit to patients, substantially all of whom are residents
in the Knoxville area. The Partnership does not generally require collateral or
other security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies (for example, Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies).

(d) Supplies

Supplies, primarily comprised of drug inventory, are recorded at the lower
of cost (first-in, first-out) or market.

F-93
<PAGE> 147

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation for property and
equipment is calculated using the straight-line method over the estimated useful
lives of the assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES
---------
<S> <C>
Furniture and equipment......................................... 7 years
Medical equipment............................................... 5 years
</TABLE>

(f) Other Assets

Other assets consist of an investment in a condominium unit which is being
depreciated on a straight-line basis over its useful life of 30 years.
Accumulated depreciation was $113,635 at December 31, 1995 and $115,997
(unaudited) at March 31, 1996.

(g) Income Taxes

(h) 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 reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of all asset and liability financial instruments
approximate their estimated fair values at December 31, 1995 and March 31, 1996.
Fair value of a financial instrument is defined as the amount at which the
instrument could be exchanged in a current transaction between willing parties.

(3) LONG-TERM DEBT

Long-term debt consists of the following:

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Note payable to First Tennessee Bank, bearing interest at
prime (8% at December 31, 1995), payable in equal monthly
installments of $2,088, collateralized by a deed of trust in
the property................................................ $ 73,776 69,036
------------ -----------
Total long-term debt................................ 73,776 69,036
Less current portion.......................................... (19,872) (20,500)
------------ -----------
Long-term debt excluding current portion............ $ 53,904 48,536
========== =========
</TABLE>

F-94
<PAGE> 148

DRS. HARAF, ANTONUCCI, MCCORMACK
AND KERNS MEDICAL PARTNERSHIP
(D/B/A MEDICAL ONCOLOGY AND HEMOTOLOGY CONSULTANTS)

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Maturities of long-term debt as of December 31, 1995 are as follows:

(4) EMPLOYEE BENEFIT PLAN

The Partnership maintains a Profit Sharing Plan (the "Plan"), which covers
substantially all employees. Employees who complete one year of service and
attain age 21 may participate in the plan. The Partnership's contributions to
the Plan are discretionary. Eligible employees ratably vest in the Partnership's
contributions over six years. The Partnership's discretionary contribution to
the Plan was $107,892 and $29,474 (unaudited) for 1995 and the three months
ended March 31, 1996, respectively. The amounts payable as of December 31, 1995
and March 31, 1996 were $74,891 and $29,474 (unaudited), respectively.

(5) COMMITMENTS AND CONTINGENCIES

(a) Leases

The partnership has several year-to-year operating leases. Total expense
was approximately $35,000 for the year ended December 31, 1995 and $9,000 for
the three-month period ended March 31, 1996.

(b) Medical Malpractice and Professional Liability Insurance

The Partnership maintains professional liability insurance on a claims-made
basis. Incidents and claims reported during the policy period are anticipated to
be covered by the malpractice carrier.

At December 31, 1995, there are no asserted claims against the Partnership,
nor has the Partnership identified any incident which may have occurred but have
yet to be identified under its incident reporting systems. Accordingly, the
Partnership has made no accruals at December 31, 1995 for incurred but not
reported claims.

F-95
<PAGE> 149

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Hematology -- Oncology Associates of
the Treasure Coast, P.A.,
Alan S. Collin, M.D. and
Michael S. Wertheim, M.D.:

We have audited the accompanying balance sheet of Hematology Oncology
Associates of the Treasure Coast, P.A., Alan S. Collin, M.D. and Michael S.
Wertheim, M.D. (the "Company") as of December 31, 1995, and the related
statements of income, stockholders' equity and cash flows for the year then
ended. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Hematology Oncology
Associates of the Treasure Coast, P.A., Alan S. Collin, M.D. and Michael S.
Wertheim, M.D. as of December 31, 1995, and the results of its operations and
its cash flows for the year then ended in conformity with generally accepted
accounting principles.

KPMG PEAT MARWICK LLP

Miami, Florida
June 10, 1996

F-96
<PAGE> 150

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

BALANCE SHEETS

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ 4,024 $ 197,771
Accounts receivable, net of allowance for contractual adjustments
of $343,916 and $346,106 (unaudited), at December 31, 1995 and
March 31, 1996, respectively.................................... 497,451 591,137
Supplies........................................................... 166,413 166,413
------------ -----------
Total current assets....................................... 667,888 955,321
Property and equipment:
Automobiles........................................................ 26,243 44,887
Computer equipment................................................. 71,215 71,215
Medical equipment.................................................. 40,813 40,813
Office equipment................................................... 85,010 85,010
Leasehold improvements............................................. 78,742 78,742
------------ -----------
302,023 320,667
Less accumulated depreciation...................................... 253,417 250,578
------------ -----------
Net property and equipment................................. 48,606 70,089
Other assets......................................................... 15,600 32,420
------------ -----------
$732,094 $ 1,057,830
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $117,286 $ 115,515
Note payable -- bank............................................... 2,842 --
Income tax payable................................................. 16,607 96,657
Payroll taxes payable.............................................. 497 --
------------ -----------
Total current liabilities.................................. 137,232 212,172
Deferred tax liability............................................... 196,974 239,627
Stockholders' equity:
Common stock, $1 par value. Authorized 10,000 shares; issued and
outstanding 500 shares.......................................... 500 500
Retained earnings.................................................. 397,388 605,531
------------ -----------
Total stockholders' equity................................. 397,888 606,031
Commitments and contingencies
------------ -----------
$732,094 $ 1,057,830
========== =========
</TABLE>

See accompanying notes to financial statements.

F-97
<PAGE> 151

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

STATEMENTS OF INCOME

THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue.......................................... $4,910,146 $1,430,669
Expenses:
Operating.......................................................... 3,894,134 794,015
Depreciation....................................................... 30,116 7,498
Interest........................................................... 888 55
General and administrative expenses................................ 1,117,131 279,716
------------ ------------
5,042,269 1,081,284
------------ ------------
(Loss) income...................................................... (132,123) 349,385
Other income (expense)............................................... 193,890 (1,932)
------------ ------------
Income before income taxes................................. 61,767 347,453
Provision for income taxes........................................... 35,670 139,310
------------ ------------
Net income................................................. $ 26,097 $ 208,143
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-98
<PAGE> 152

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
CAPITAL RETAINED STOCKHOLDERS'
STOCK EARNINGS EQUITY
------- -------- -------------
<S> <C> <C> <C>
Balances, December 31, 1994..................................... $ 500 $371,291 $ 371,791
Net income............................................ -- 26,097 26,097
------- -------- -------------
Balances, December 31, 1995..................................... 500 397,388 397,888
Net income (unaudited)................................ -- 208,143 208,143
------- -------- -------------
Balances, March 31, 1996 (unaudited)............................ $ 500 $605,531 $ 606,031
===== ======== =========
</TABLE>

See accompanying notes to financial statements.

F-99
<PAGE> 153

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

STATEMENTS OF CASH FLOWS

THREE MONTHS
YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income......................................................... $ 26,097 $208,143
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation.................................................... 30,116 7,498
Deferred taxes.................................................. 19,063 42,653
Changes in operating assets and liabilities:
Accounts receivable........................................... (17,669) (93,686)
Other assets.................................................. 1,475 (16,820)
Accrued pension contribution.................................. (56,189) --
Accounts payable and accrued expenses......................... (46,217) (1,771)
Income tax payable............................................ 16,607 80,050
Payroll taxes payable......................................... 222 (497)
------------ ------------
Net cash provided by (used in) operating activities........ (26,495) 225,570
Cash flows from investing activities:
Expenditures for property and equipment............................ (831) (28,981)
------------ ------------
Net cash used in investing activities...................... (831) (28,981)
------------ ------------
Cash flows from financing activities:
Repayment of note payable -- bank.................................. (9,748) (2,842)
------------ ------------
Net cash used in financing activities...................... (9,748) (2,842)
------------ ------------
Net increase in cash....................................... (37,074) 193,747
Cash, beginning of period............................................ 41,098 4,024
------------ ------------
Cash, end of period.................................................. $ 4,024 197,771
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest........................... $ 888 $ 55
========== ==========
Cash paid during the period for income taxes....................... $ 4,222 $ 17,348
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-100
<PAGE> 154

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet as at March 31, 1996 and the related statements of
income, shareholders' equity and cash flows for the three-month period ended
March 31, 1996 (1996 interim financial information) have been prepared by the
Hematology Oncology Associates of the Treasure Coast, P.A., Alan S. Collin, M.D.
and Michael S. Wertheim, M.D. (the "Company") and are unaudited. In the opinion
of the Company, the 1996 interim financial information includes all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of the results of the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Company was incorporated on June 5, 1986 in the state of Florida. The
Company is a medical group practice whose physicians specialize in providing
services to patients with cancer, including drug therapy in Port St. Lucie,
Stuart and Fort Pierce, Florida.

(b) Net Revenue

Net revenue primarily consists of charges for patient services rendered by
the physicians based on established billing rates less allowance and discounts
for patients covered by contractual programs. Payments received under these
programs, which are generally based on predetermined rates, are generally less
than the established billing rates, and the differences are recorded as
contractual allowances or policy discounts. Net patient service revenue is net
of contractual adjustments and policy discounts of approximately $2,985,000 and
$839,500 for the year ended December 31, 1995 and for the three months ended
March 31, 1996 (unaudited), respectively.

Accounts receivable consist primarily of receivables from patients and
third-party payors. In the course of providing health care services, the Company
grants credit to patients, substantially all of whom are residents in the
Treasure Coast of Florida area. The Company does not generally require
collateral or other security in extending credit to patients; however, it
routinely obtains assignments of (or is otherwise entitled to receive) patients'
benefits payable under their health insurance programs, plans or policies (such
as, Medicare, Medicaid, health maintenance organizations, preferred provider
organizations and commercial insurance policies).

The majority of the Company's net patient revenue is derived from
third-party payment programs. At December 31, 1995, approximately 75 percent of
total receivables consists of amounts due from Medicare (49 percent), and
various commercial plans (26 percent). The remaining 25 percent of net patient
service revenue is derived from self-pay patients.

F-101
<PAGE> 155

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(d) Supplies

Supplies, consisting primarily of pharmaceutical and medical supplies, are
stated at the lower of cost or market on a first-in, first-out basis.

(e) Property and Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using the straight-line depreciation method over the estimated useful
lives of the assets, and leasehold improvements are amortized on a straight-line
basis of over the shorter of the useful life of the improvement of the term of
the lease, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Automobiles................................................... 5 years
Computer equipment............................................ 5 years
Medical equipment............................................. 7 years
Office equipment.............................................. 7 years
Leasehold improvement......................................... 3 years
</TABLE>

(f) Income Taxes

(g) Use of Estimates

(2) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of patients' accounts receivable, accounts payable,
note payable, accounts payable and accrued expenses and payroll taxes payable
approximate fair value because of the short maturity of these instruments.

(3) EMPLOYEE BENEFIT PLANS

F-102
<PAGE> 156

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

sharing and retirement benefits. For the year ended December 31, 1995, and the
three-month period ended March 31, 1996 (unaudited), the Company did not make
any contributions to the Plan.

(4) NET PATIENT SERVICE REVENUE

The Company has agreements with third-party payors that provide for
payments to the Company at amounts different from established rates. A summary
of the payment arrangements with major third-party payors follows:

(a) Medicare

The Medicare program pays the Company for outpatient services rendered
to Medicare patients on the basis of either cost or fee schedules as
determined by regulations of the Medicare program.

(b) Other

The Company has also entered into payment agreements with certain
commercial insurance carriers, health maintenance organizations and
preferred provider organizations. The basis for payments to the Company
under these agreements includes discounts from established charges.

(5) NOTE PAYABLE -- BANK

Note payable -- bank consists of the following at December 31, 1995:

<TABLE>
<S> <C>
Barnett Bank, interest is fixed, (10.75% at December 31, 1995), due
in monthly installments of $886.34 plus interest with the last
payment due in March 29, 1996..................................... $2,842
Less current portion................................................ 2,842
------
$ --
======
</TABLE>

(6) INCOME TAXES

Income tax expense for the year ended December 31, 1995 and the three-month
period ended March 31, 1996 is summarized as follows:

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, 1996
1995 -----------
------------ (UNAUDITED)
<S> <C> <C>
Current:
Federal..................................................... $ 14,489 $ 83,125
State....................................................... 2,118 13,532
------------ -----------
16,607 96,657
------------ -----------
Deferred:
Federal..................................................... 17,298 38,705
State....................................................... 1,765 3,948
------------ -----------
19,063 42,653
------------ -----------
$ 35,670 $ 139,310
========== =========
</TABLE>

F-103
<PAGE> 157

HEMATOLOGY -- ONCOLOGY ASSOCIATES OF THE TREASURE COAST, P.A.,
ALAN S. COLLIN, M.D. AND MICHAEL S. WERTHEIM, M.D.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

A reconciliation of the effective income tax rate for the year ended
December 31, 1995 and the three-month period ended March 31, 1996 is as follows:

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Computed "expected" tax expense (benefit)..................... 35.00% 35.00%
State income tax, net of federal benefit...................... 3.57 3.57
Permanent adjustments......................................... 19.18 .99
------------ -----------
Total............................................... 57.75% 39.56%
========== =========
</TABLE>

The tax effects of temporary differences that give rise to a significant
portion of the deferred tax assets and deferred tax liabilities for the year
ended December 31, 1995 and the three-month period ended March 31, 1996 are as
follows:

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Deferred tax liabilities:
Revenue and expenses recognized for financial reporting
purposes in a different period than for income tax
purposes................................................. $196,974 $ 239,627
========== =========
</TABLE>

(7) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company, at December 31, 1995, maintained offices in Port St. Lucie,
Fort Pierce and Stuart, Florida. Such space is owned by two of the owner-doctors
and leased to the Company. On February 27, 1996, the Company renewed the leases
until December 31, 1999 on all three properties. Monthly rental is $12,298.
Future minimum lease payments under the noncancelable operating leases (with
initial or remaining lease terms in excess of one year) as of December 31, 1995
are as follows:

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, AMOUNT
------------------------------------------------------------------ --------
<S> <C>
1996............................................................ $143,715
1997............................................................ 147,516
1998............................................................ 147,516
1999............................................................ 147,516
--------
Total minimum lease payments...................................... $586,263
========
</TABLE>

Total rental expense for operating leases was $128,691 and $34,990 for the
year ended December 31, 1995 and the three month period ended March 31, 1996
(unaudited).

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis. Incidents and claims reported during the policy period are anticipated to
be covered by the malpractice carrier.

At December 31, 1995 and March 31, 1996 (unaudited), there is one asserted
claim against the Company, which is covered by malpractice insurance. The
Company has not identified any other incidents which may have occurred but have
yet to be identified under its incident-reporting system. Accordingly, the
Company has made no accruals at December 31, 1995 or March 31, 1996 (unaudited)
for claims incurred, but not reported.

F-104
<PAGE> 158

INDEPENDENT AUDITORS' REPORT

The Board of Directors
The Center for Hematology and Oncology, P.A.:

We have audited the accompanying balance sheet of The Center for Hematology
and Oncology, P.A. as of December 31, 1995, and the related statements of
income, shareholders' equity, and cash flows for the period from September 15,
1995 through December 31, 1995. 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 audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Center for Hematology
and Oncology, P.A. as of December 31, 1995, and the results of its operations
and its cash flows for the period from September 15, 1995 through December 31,
1995 in conformity with generally accepted accounting principles.

KPMG PEAT MARWICK LLP

Miami, Florida
May 30, 1996

F-105
<PAGE> 159

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

BALANCE SHEETS

DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash............................................................... $ -- $ 16,784
Patient accounts receivables, net of allowance for contractual
adjustments of $711,838 and $730,373 at December 31, 1995 and
March 31, 1996 (unaudited)...................................... 716,610 826,767
Supplies........................................................... 154,000 204,000
Other.............................................................. 1,793 1,393
------------ -----------
Total current assets....................................... 872,403 1,048,944
------------ -----------
Equipment:
Computer equipment................................................. 22,033 41,415
Medical equipment.................................................. 12,053 12,053
------------ -----------
34,086 53,468
Less accumulated depreciation...................................... 9,705 15,747
------------ -----------
Equipment, net............................................. 24,381 37,721
------------ -----------
$896,784 $ 1,086,665
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses.............................. $593,880 $ 661,896
Bank overdraft..................................................... 50,209 --
Line of credit..................................................... -- 55,606
Current portion of long-term debt.................................. 15,584 15,584
Current portion of obligations under capital leases................ -- 6,800
Payroll taxes payable.............................................. 5,791 171
------------ -----------
Total current liabilities.................................. 665,464 740,057
Obligations under capital leases, less current portion............... -- 9,520
Long-term debt, less current portion................................. 65,166 60,916
------------ -----------
Total liabilities.......................................... 730,630 810,493
Shareholders' equity:
Common stock, $1 par value. Authorized 7,500 shares;
subscribed 300 shares........................................... 300 300
Due from shareholders.............................................. (63,740) (225,112)
Stock subscription receivable...................................... (300) (300)
Retained earnings.................................................. 229,894 501,284
------------ -----------
Total shareholders' equity................................. 166,154 276,172
------------ -----------
Commitment and contingencies
$896,784 $ 1,086,665
========== =========
</TABLE>

See accompanying notes to financial statements.

F-106
<PAGE> 160

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

STATEMENTS OF INCOME

<TABLE>
<CAPTION>
FOR THE PERIOD
FROM
SEPTEMBER 15, THREE MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
-------------- ------------
(UNAUDITED)
<S> <C> <C>
Net patient service revenue......................................... $1,541,646 $1,612,212
Expenses:
Operating......................................................... 823,055 1,098,487
General and administrative expenses............................... 435,934 266,851
Depreciation...................................................... 9,705 6,042
Interest.......................................................... 2,131 3,914
-------------- ------------
1,270,825 1,375,294
-------------- ------------
Operating income.......................................... 270,821 236,918
Other income........................................................ 22,040 34,472
Other expenses...................................................... (62,967) --
-------------- ------------
Net income................................................ $ 229,894 $ 271,390
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-107
<PAGE> 161

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

STATEMENTS OF SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
STOCK DUE TOTAL
CAPITAL SUBSCRIPTION FROM RETAINED SHAREHOLDERS'
STOCK RECEIVABLE SHAREHOLDERS EARNINGS EQUITY
------- ------------ ------------ -------- -------------
<S> <C> <C> <C> <C> <C>
From inception, September 15, 1995......... $ -- $ -- $ -- $ -- $ --
Net income............................... -- -- -- 229,894 229,894
Issuance of common stock from
subscription.......................... 300 (300) -- -- --
Due from shareholders.................... -- -- (63,740) -- (63,740)
------- ------------ ------------ -------- -------------
Balance, December 31, 1995................. 300 (300) (63,740) 229,894 166,154
Net income (unaudited)................... -- -- -- 271,390 271,390
Due from shareholders (unaudited)........ -- -- (161,372) -- (161,372)
------- ------------ ------------ -------- -------------
Balance, March 31, 1996 (unaudited)........ $ 300 $ (300) $ (225,112) $501,284 $ 276,172
===== ========= ========= ======== =========
</TABLE>

See accompanying notes to financial statements.

F-108
<PAGE> 162

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
SEPTEMBER 15, THREE MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income........................................................ $ 229,894 $ 271,390
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation................................................... 9,705 6,042
Write-down of equipment........................................ 62,967 --
Changes in operating assets and liabilities:
Accounts receivable.......................................... (716,610) (110,157)
Other current assets......................................... (1,793) 400
Supplies..................................................... (154,000) (50,000)
Accounts payable and accrued expenses........................ 593,880 68,016
Payroll taxes payable........................................ 5,791 (5,620)
------------- ------------
Total adjustments......................................... (200,060) (91,319)
------------- ------------
Net cash provided by operating activities................. 29,834 180,071
------------- ------------
Cash flows from investing activities:
Expenditures for equipment........................................ (97,053) (3,062)
------------- ------------
Net cash used in investing activities..................... (97,053) (3,062)
------------- ------------
Cash flows from financing activities:
Repayment of long-term debt....................................... (4,250) (4,250)
Proceeds from line of credit...................................... -- 190,261
Repayment of line of credit....................................... -- (134,655)
Proceeds from the issuance of debt................................ 85,000 --
Due from shareholders............................................. (63,740) (161,372)
Bank overdraft.................................................... 50,209 (50,209)
------------- ------------
Net cash provided by (used in) financing activities....... 67,219 (160,225)
------------- ------------
Net increase in cash...................................... -- 16,784
Cash, beginning of period........................................... -- --
------------- ------------
Cash, end of period................................................. $ -- $ 16,784
========== ==========
Supplemental disclosures of cash flow information:
Cash paid for interest............................................ $ 2,131 $ 3,914
========== ==========
Supplemental disclosures of noncash investing and financing
activities:
Capital lease obligations......................................... $ -- $ 16,320
========== ==========
Receipt of subscription receivable for issuance of common stock... $ 300 $ 300
========== ==========
</TABLE>

See accompanying notes to financial statements.

F-109
<PAGE> 163

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND MARCH 31, 1996 (UNAUDITED)

UNAUDITED INTERIM FINANCIAL INFORMATION

The balance sheet at March 31, 1996 and the related statements of income,
shareholders' equity and cash flows for the three-month period ended March 31,
1996 (1996 interim financial information) have been prepared by the Center for
Hematology and Oncology, P.A. (the "Company") and are unaudited. In the opinion
of the Company, the 1996 interim financial information includes all adjustments,
consisting of only normal recurring adjustments, necessary for a fair statement
of the results of the 1996 interim period.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted from the 1996 interim financial information. The
1996 interim financial information should be read in conjunction with the
Company's December 31, 1995 audited financial statements appearing herein. The
results for the three months ended March 31, 1996 may not be indicative of
operating results for the full year.

(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND PRACTICES

(a) Description of Business

The Center for Hematology and Oncology, P.A. (the "Company") was
incorporated on July 21, 1995 in the state of Florida and operations commenced
on September 15, 1995. The Company is a medical group practice whose physicians
specialize in providing services, including drug therapy, to patients with
cancer.

(b) Net Revenue

Accounts receivable consists primarily of receivables from patients and
third-party payors. In the course of providing health care services, the Company
grants credit to patients, substantially all of whom are residents in the South
Florida area. The Company does not generally require collateral or other
security in extending credit to patients; however, it routinely obtains
assignments of (or is otherwise entitled to receive) patients' benefits payable
under their health insurance programs, plans or policies such as Medicare,
Medicaid, health maintenance organizations, preferred provider organizations and
commercial insurance policies.

The majority of the Company's net patient revenue is derived from
third-party payment programs. At December 31, 1995, approximately 97 percent of
total receivables consists of amounts due from Medicare (70 percent) and various
commercial plans (27 percent). The remaining 3 percent of net patient service
revenue is derived from self-pay patients.

(d) Supplies

Supplies, consisting primarily of pharmaceutical and medical supplies, are
stated at the lower of cost or market.

F-110
<PAGE> 164

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(e) Equipment

Property and equipment are stated at cost. Depreciation for equipment is
calculated using an accelerated depreciation method over the estimated useful
lives of the assets, as follows:

<TABLE>
<CAPTION>
ESTIMATED
USEFUL LIVES
------------
<S> <C>
Computer equipment............................................ 5 years
Medical equipment............................................. 7 years
</TABLE>

(f) Income Taxes

The Company has elected to be taxed under subchapter "S" of the Internal
Revenue Code. Accordingly, there is no provision for income taxes since they are
the responsibility of the shareholders.

(g) Fair Value of Financial Instruments

The carrying amounts of patients' accounts receivable, accounts payable,
accrued expenses, payroll taxes payable and other assets approximate fair value
because of their short-term nature.

(h) Use of Estimates

(2) NET PATIENT SERVICE REVENUE

(a) Medicare

The Medicare program pays the Company for outpatient services rendered to
Medicare patients on the basis of either cost or fee schedules as determined by
regulations of the Medicare program.

(b) Other

The Company has also entered into payment agreements with certain
commercial insurance carriers, health maintenance organizations and preferred
provider organizations. The basis for payments to the Company under these
agreements includes discounts from established charges.

F-111
<PAGE> 165

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

(3) LONG-TERM DEBT AND DUE TO BANK

Long-term debt consists of the following:

<TABLE>
<CAPTION>
FOR THE
PERIOD FROM
SEPTEMBER THREE
15, MONTHS
1995 THROUGH ENDED
DECEMBER 31, MARCH 31,
1995 1996
------------ -----------
(UNAUDITED)
<S> <C> <C>
Note payable, interest is fixed (9.6% at December 31, 1995),
due in monthly installments of $1,417 plus interest with the
last payment due October 1, 2000............................ $ 80,750 $76,500
Less current portion.......................................... 15,584 15,584
------------ -----------
$ 65,166 $60,916
========== =========
</TABLE>

Maturities for the next five fiscal years are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- ------------ -------
<S> <C> <C>
1996............................................................. $15,584
1997............................................................. 17,000
1998............................................................. 17,000
1999............................................................. 17,000
2000............................................................. 14,166
-------
Total.................................................. $80,750
=======
</TABLE>

(4) BORROWINGS UNDER LINE OF CREDIT

At December 31, 1995, the Company has a $300,000 line of credit agreement.
Interest is charged at the rate of one percent over the prime rate. The
agreement is collateralized by all accounts, chattel paper, contract rights,
inventory, equipment, fixtures, intangibles and deposit accounts of the Company.
No balance was drawn as of December 31, 1995 and $55,606 was drawn as of March
31, 1996 (unaudited).

(5) COMMITMENTS AND CONTINGENCIES

(a) Leases

At December 31, 1995, the Company maintained its main office space in
Delray Beach, Florida. Such space is owned by an area hospital, for which the
practice has paid no rent. The Company also leases space in the West Boca Raton
area. Such space is leased on a month-to-month basis per verbal agreement with
an independent physician who owns the space. Future minimum lease payments under
the noncancelable operating leases (with initial or remaining lease terms in
excess of one year) as of December 31, 1995 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31, AMOUNT
- ------------ --------
<S> <C> <C>
1996............................................................ $ 51,336
1997............................................................ 51,336
1998............................................................ 51,336
1999............................................................ 47,224
2000............................................................ 12,400
--------
Total minimum lease payments.......................... $213,632
========
</TABLE>

F-112
<PAGE> 166

THE CENTER FOR HEMATOLOGY AND ONCOLOGY, P.A.

NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)

Total rental expense for operating leases was $39,000 for the period from
September 15, 1995 through December 31, 1995 and $13,500 for the three-month
period ended March 31, 1996.

(b) Medical Malpractice and Professional Liability Insurance

The Company maintains professional liability insurance on a claims-made
basis at $1,000,000 per claim and $1,000,000 in the aggregate. Incidents and
claims reported during the policy period are anticipated to be covered by the
malpractice carrier.

At December 31, 1995 and March 31, 1996 (unaudited), there are no asserted
claims against the Company, nor has the Company identified any incident which
may have occurred but has yet to be identified under its incident-reporting
system. Accordingly, the Company has made no accruals at December 31, 1995 and
March 31, 1996 (unaudited) for incurred but not reported claims.

(6) SUBSEQUENT EVENTS

In May 1996, the Company entered into a purchase agreement to acquire
computer software which replaced the existing software. As a result, the
existing software was written down by approximately $63,000 at December 31,
1995.

(6) COMMITMENTS AND CONTINGENCIES

(a) Leases

The Company leases its operating facilities and certain transportation
equipment on a month-to-month basis.

Total rental expense for operating leases was $68,194 for the year ended
January 31, 1996 and $14,813 for the three-month period ended April 30, 1996.

(b) Medical Malpractice and Professional Liability Insurance

At January 31, 1995, there are no asserted claims against the Company, nor
has the Company identified any incident which may have occurred but has yet to
be identified under its incident reporting systems. Accordingly, the Company has
made no accruals at January 31, 1995 and April 31, 1996 (unaudited) for
incurred, but not reported, claims.

F-113
<PAGE> 167

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

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY UNDERWRITER. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO, OR SOLICITATION OF, ANY PERSON
IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 3
Risk Factors.......................... 7
Use of Proceeds....................... 12
Price Range of Common Stock........... 13
Dividend Policy....................... 13
Capitalization........................ 14
Selected Consolidated Financial
Data................................ 15
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 26
Business.............................. 31
Management............................ 43
Principal and Selling Shareholders.... 46
Description of Capital Stock.......... 48
Underwriting.......................... 49
Legal Matters......................... 50
Experts............................... 50
Additional Information................ 50
Incorporation of Certain Documents by
Reference........................... 51
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
5,300,000 SHARES

RESPONSE ONCOLOGY, INC.

COMMON STOCK
------------

PROSPECTUS

, 1996

------------
SMITH BARNEY INC.

J.C. BRADFORD & CO.
------------------------------------------------------
------------------------------------------------------
<PAGE> 168

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following fees and expenses shall be borne by the Company in connection
with this offering. All fees and expenses other than the SEC, NASD and Nasdaq
Stock Market fees are estimated.

<TABLE>
<S> <C>
SEC Registration Fee................................................................ $ 31,526
NASD Filing Fee..................................................................... 8,957
Nasdaq Stock Market Filing Fee...................................................... 17,500
Blue Sky fees and expenses, including legal fees.................................... 20,000
Transfer Agent's Fee................................................................ 5,000
Printing and Engraving.............................................................. 125,000
Accounting Fees and Expenses........................................................ 325,000
Legal Fees and Expenses............................................................. 100,000
Miscellaneous....................................................................... 17,017
--------
Total..................................................................... $650,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The following summary is qualified in its entirety by reference to the
complete text of the statute, Charter and Bylaws referred to below.

The Tennessee Business Corporation Act permits a corporation to indemnify a
director or officer of the corporation (and certain other persons serving at the
request of the corporation in related capacities), if such person shall have
acted in good faith and in a manner he reasonably believed to be in the best
interest of the corporation, and in any criminal proceeding, if such person had
no reasonable cause to believe his conduct was unlawful; provided that, in the
case of actions brought by or in the right of the corporation, no
indemnification may be made with respect to any matter as to which such director
or officer shall have been adjudged to have breached his duty to the
corporation.

Article Eight of the Company's Charter provides that the directors of the
Company shall not be personally liable to the Company or to its stockholders for
monetary damages for breach of fiduciary duty as a director. Article IX of the
Company's Bylaws provides for indemnification to the directors and officers of
the Company to the full extent authorized or permitted by the Tennessee Business
Corporation Act.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Not Applicable.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS:

<TABLE>
<C> <S> <C>
1* -- Underwriting Agreement
2(a) -- Stock Purchase Agreement between the Registrant and stockholders of Oncology
Hematology Group of South Florida (filed as Exhibit 10(m) to Registrant's Form
8-K filed January 17, 1996 (File No. 0-15416) and incorporated herein by
reference)
2(b) -- Purchase and Sale Agreement between the Registrant, Knoxville Hematology Oncology
Associates and Partners of Knoxville Hematology Oncology Associates (filed as
Exhibit 10(q) to Registrant's Form 8-K filed April 15, 1996 (File No. 0-15416)
and incorporated herein by reference)
</TABLE>

II-1
<PAGE> 169

<TABLE>
<C> <S> <C>
2(c) -- Stock Purchase Agreement between the Registrant and stockholders of Jeffrey L.
Paonessa, M.D., P.A. (filed as Exhibit 10(s) to Registrant's Form 8-K filed July
5, 1996 (File No. 0-15416) and incorporated herein by reference)
2(d) -- Stock Purchase Agreement between the Registrant and stockholders of Southeast
Florida Hematology Oncology Group, P.A. (filed as Exhibit 2(d) to Registrant's
Form 8-K filed July 15, 1996 (File No. 0-15416) and incorporated herein by
reference)
3(a) -- Charter (1)
3(b) -- Bylaws (1)
4(a) -- Specimen Common Stock Certificate (1)
4(b)* -- Agreement Restricting Sale of Stock between underwriters and certain of
Registrant's Stockholders
4(c) -- Trust Indenture, Deed of Trust and Security Agreement dated April 3, 1990 (3)
5* -- Opinion and Consent of Baker, Donelson, Bearman & Caldwell
10(a) -- Registrant's 1985 Stock Option Plan, as amended (4)
10(b) -- Standard Commercial Sales Contract, dated May 24, 1990, among Equisouth, Inc.,
The Gradd Company and the Registrant (3)
10(c) -- Deed of Trust Note dated June 12, 1990 due from Equisouth, Inc. regarding
purchase money mortgage in Sale Contract listed in 10(b) above (5)
10(d) -- Partnership Agreement of Impact Healthcare Services, a Florida general
partnership, dated December 13, 1989, between Advance Oncology Consultants, Inc.
and Response Tech Healthcare Corporation, a wholly-owned subsidiary of the
Registrant, as amended by an Addendum dated February 15, 1990 (3)
10(e) -- Partnership Agreement and Agreement Among Friends Health Services, a Florida
general partnership, dated January 1990, among Advanced Oncology Services, Inc.,
Friends Health Services, Inc. and Response Tech Healthcare Corporation, a
wholly-owned Subsidiary of the Registrant (3)
10(f) -- Contract for Sale of Real Estate dated August 8, 1990, to Bruce Callahan d.b.a.
Landmark Distributors for real estate located at 316 Eddy Lane, Franklin,
Tennessee (5)
10(g) -- Agreement for sale of assets of the Registrant's Newport Beach, California
satellite laboratory to Hoag Memorial Hospital/Presbyterian, dated September 14,
1990 (5)
10(h) -- Securities Purchase Agreement dated September 26, 1990 between the Registrant and
Investor (5)
10(i) -- Amendment to Securities Purchase Agreement dated July 25, 1991 (reference 10(h)
above) (5)
10(j)** -- Registrant's 1990 Non-Qualified Stock Option Plan, as amended*** (6)
10(k)* -- Employment agreement between the Registrant and William H. West, M.D. dated July
1, 1995**
10(l)* -- Employment agreement between the Registrant and Joseph T. Clark dated July 1,
1995*** (7)
10(l)* -- Employment agreement between the Registrant and Daryl P. Johnson dated July 1,
1995***
10(m) -- Stock Purchase Agreement between the Registrant and stockholders of Oncology
Hematology Group of South Florida (filed as Exhibit 10(m) to Registrant's Form
8-K filed January 17, 1996 (File No. 0-15416) and incorporated herein by
reference)
10(n) -- Service Agreement between the Registrant and stockholders of Oncology Hematology
Group of South Florida (filed as Exhibit 10(n) to Registrant's Form 8-K filed
January 17, 1996 (File No. 0-15416) and incorporated herein by reference)
10(o)*** -- Amendment to 1990 Registrant's Non-Qualified Stock Option Plan adopted April 20,
1995 (7)
10(p)* -- Employment agreement between the Registrant and Charles H. Weaver, M.D. dated
July 1, 1995*** (7)
10(q) -- Purchase and Sale Agreement by and among Response Oncology, Inc., Knoxville
Hematology Oncology Associates and Partners of Knoxville Hematology Oncology
Associates dated April 12, 1996 (filed as Exhibit 10(q) to Registrant's Form 8-K
filed April 30, 1996 (File No. 0-15416) and incorporated herein by reference)
</TABLE>

II-2
<PAGE> 170

<TABLE>
<C> <S> <C>
10(r) -- Service Agreement between Response Oncology, Inc., Knoxville Hematology Oncology
Associates, P.L.L.C. and Members of Knoxville Hematology Oncology Associates,
P.L.L.C. dated April 12, 1996 (filed as Exhibit 10(r) to Registrant's Form 8-K
filed April 30, 1996 (File No. 0-15416) and incorporated herein by reference)
10(s) -- Stock Purchase Agreement among Registrant, Jeffrey L. Paonessa, M.D. and J.
Paonessa, M.D., P.A. (filed as Exhibit 10(s) to Registrant's Form 8-K filed July
5, 1996 (File No. 0-15416) and incorporated herein by reference)
10(t) -- Service Agreement between the Registrant and stockholders of Jeffrey L. Paonessa,
M.D., P.A. (filed as Exhibit 10(t) to Registrant's Form 8-K filed July 5, 1996
(File No. 0-15416) and incorporated herein by reference)
10(u) -- Service Agreement between the Registrant and stockholders of Southeast Florida
Hematology Oncology Group, P.A. (filed as Exhibit 10(u) to Registrant's Form 8-K
filed July 15, 1996 (File No. 0-15416) and incorporated herein by reference)
10(v)* -- Loan Agreement dated May 31, 1996 between Registrant, NationsBank of Tennessee,
N.A. and Union Planters National Bank
10(w)* -- Subordination Agreement dated June 18, 1996, by and among Registrant, NationsBank
of Tennessee, N.A., Union Planters National Bank and Seafield Capital Corporation
10(x)* -- Adjustable Rate Convertible Note made by Registrant payable to Seafield Capital
Corporation dated April 12, 1996
11* -- Statement re Computation of Per Share Earnings.
13 -- Annual Report to Stockholders for the year ended December 31, 1995 (7)
15* -- Letter re: Unaudited interim financial information
24(a)* -- Consent of Baker, Donelson, Bearman & Caldwell (included in their opinion filed
as Exhibit 5 to this Registration Statement)
24(b) -- Consent of KPMG Peat Marwick LLP
24(c) -- Consent of KPMG Peat Marwick LLP
24(d) -- Consent of KPMG Peat Marwick LLP
24(e) -- Consent of KPMG Peat Marwick LLP
24(f) -- Consent of KPMG Peat Marwick LLP
24(g) -- Consent of KPMG Peat Marwick LLP
24(h) -- Consent of KPMG Peat Marwick LLP
24(i) -- Consent of KPMG Peat Marwick LLP
24(j) -- Consent of KPMG Peat Marwick LLP
24(k) -- Consent of KPMG Peat Marwick LLP
24(l) -- Consent of KPMG Peat Marwick LLP
25 -- Power of Attorney (included in the Signature Page hereof)
</TABLE>

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

* To be filed by amendment
** These documents may be obtained by stockholders of Registrant upon written
request to: Response Oncology, Inc., 1775 Moriah Woods Blvd., Memphis,
Tennessee 38117
*** Management Compensatory Plan
(1) Incorporated by reference to the Registrant's 1989 10-K, dated July 31, 1989
(2) Incorporated by reference to the Registrant's Registration Statement on Form
S-1 under the Securities Act of 1933 (File No. 33-5016) effective April 21,
1986
(3) Incorporated by reference in the initial filing of the Registrant's 1990
10-K, dated July 18, 1990, filed July 20, 1990 and amended on September 19,
1990
(4) Incorporated by reference to the Registrant's Registration Statement on Form
S-8 under the Securities Act of 1933 (File No. 33-21333) effective April
26, 1988
(5) Incorporated by reference to the Registrant's 1991 10-K, dated July 26, 1991
(6) Incorporated by reference to the Registrant's Registration Statement on Form
S-8 under the Securities Act of 1933 (File No. 33-45616) effective February
11, 1992
(7) Incorporated by reference to the Registrant's 1995 10-K, dated March 29,
1996

II-3
<PAGE> 171

ITEM 17. UNDERTAKINGS

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions set forth in response to
Item 15 hereof, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.

The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be part of the registration
statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-4
<PAGE> 172

SIGNATURES

Pursuant to the requirement of the Securities Act of 1933, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Memphis,
State of Tennessee, on July 10, 1996.

RESPONSE ONCOLOGY, INC.

By: JOSEPH T. CLARK
------------------------------------
Joseph T. Clark,
President and Chief Executive
Officer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below hereby constitute and appoints John A. Good or Debbie K. Elliott, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments to this Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------- -------------
<C> <S> <C>
JOSEPH T. CLARK President and Chief Executive July 10, 1996
- --------------------------------------------- Officer (Principal Executive
Joseph T. Clark Officer)

WILLIAM H. WEST, M.D. Chairman of the Board July 10, 1996
- ----------------------------------------------
William H. West, M.D.

DARYL P. JOHNSON Executive Vice President and July 11, 1996
- --------------------------------------------- Chief Financial Officer
Daryl P. Johnson (Principal Financial Officer)

DEBBIE K. ELLIOTT Chief Accounting Officer July 10, 1996
- --------------------------------------------- (Principal Accounting Officer)
Debbie K. Elliott

JACK O. BOVENDER Director July 10, 1996
- ---------------------------------------------
Jack O. Bovender

FRANK M. BUMSTEAD Director July 10, 1996
- ---------------------------------------------
Frank M. Bumstead

W. THOMAS GRANT II Director July 10, 1996
- ---------------------------------------------
W. Thomas Grant II
</TABLE>

II-5
<PAGE> 173

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- --------------------------------- -------------
<C> <S> <C>
P. ANTHONY JACOBS Director July 10, 1996
- ---------------------------------------------
P. Anthony Jacobs

Director
- ---------------------------------------------
Leonard A. Kalman, M.D.

JAMES R. SEWARD Director July 10, 1996
- ---------------------------------------------
James R. Seward
</TABLE>

II-6
<PAGE> 174

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --- ------------------------------------------------------------------------ ------------
<C> <S> <C> <C>
1* -- Underwriting Agreement
2(a) -- Stock Purchase Agreement between the Registrant and stockholders of
Oncology Hematology Group of South Florida (filed as Exhibit 10(m) to
Registrant's Form 8-K filed January 17, 1996 (File No. 0-15416) and
incorporated herein by reference).......................................
2(b) -- Purchase and Sale Agreement between the Registrant, Knoxville Hematology
Oncology Associates and Partners of Knoxville Hematology Oncology
Associates (filed as Exhibit 10(q) to Registrant's Form 8-K filed April
15, 1996 (File No. 0-15416) and incorporated herein by reference).......
2(c) -- Stock Purchase Agreement between the Registrant and stockholders of
Jeffrey L. Paonessa, M.D., P.A. (filed as Exhibit 10(s) to Registrant's
Form 8-K filed July 5, 1996 (File No. 0-15416) and incorporated herein
by reference)...........................................................
2(d) -- Stock Purchase Agreement between the Registrant and stockholders of
Southeast Florida Hematology Oncology Group, P.A. (filed as Exhibit 2(d)
to Registrant's Form 8-K filed July 15, 1996 (File No. 0-15416) and
incorporated herein by reference).......................................
3(a) -- Charter (1).............................................................
3(b) -- Bylaws (1)..............................................................
4(a) -- Specimen Common Stock Certificate (1)...................................
4(b)* -- Agreement Restricting Sale of Stock between underwriters and certain of
Registrant's Stockholders...............................................
4(c) -- Trust Indenture, Deed of Trust and Security Agreement dated April 3,
1990 (3)................................................................
5* -- Opinion and Consent of Baker, Donelson, Bearman & Caldwell..............
10(a) -- Registrant's 1985 Stock Option Plan, as amended (4).....................
10(b) -- Standard Commercial Sales Contract, dated May 24, 1990, among Equisouth,
Inc., The Gradd Company and the Registrant (3)..........................
10(c) -- Deed of Trust Note dated June 12, 1990 due from Equisouth, Inc.
regarding purchase money mortgage in Sale Contract listed in 10(b) above
(5).....................................................................
10(d) -- Partnership Agreement of Impact Healthcare Services, a Florida general
partnership, dated December 13, 1989, between Advance Oncology
Consultants, Inc. and Response Tech Healthcare Corporation, a
wholly-owned subsidiary of the Registrant, as amended by an Addendum
dated February 15, 1990 (3).............................................
10(e) -- Partnership Agreement and Agreement Among Friends Health Services, a
Florida general partnership, dated January 1990, among Advanced Oncology
Services, Inc., Friends Health Services, Inc. and Response Tech
Healthcare Corporation, a wholly-owned Subsidiary of the Registrant
(3).....................................................................
10(f) -- Contract for Sale of Real Estate dated August 8, 1990, to Bruce Callahan
d.b.a. Landmark Distributors for real estate located at 316 Eddy Lane,
Franklin, Tennessee (5).................................................
10(g) -- Agreement for sale of assets of the Registrant's Newport Beach,
California satellite laboratory to Hoag Memorial Hospital/Presbyterian, `
dated September 14, 1990 (5)............................................
10(h) -- Securities Purchase Agreement dated September 26, 1990 between the
Registrant and Investor (5).............................................
10(i) -- Amendment to Securities Purchase Agreement dated July 25, 1991
(reference 10(h) above) (5).............................................
10(j)** -- Registrant's 1990 Non-Qualified Stock Option Plan, as amended*** (6)....
10(k)* -- Employment agreement between the Registrant and William H. West, M.D.
dated July 1, 1995**....................................................
10(l)* -- Employment agreement between the Registrant and Joseph T. Clark dated
July 1, 1995*** (7).....................................................
10(l)* -- Employment agreement between the Registrant and Daryl P. Johnson dated
July 1, 1995***.........................................................
10(m) -- Stock Purchase Agreement between the Registrant and stockholders of
Oncology Hematology Group of South Florida (filed as Exhibit 10(m) to
Registrant's Form 8-K filed January 17, 1996 (File No. 0-15416) and
incorporated herein by reference).......................................
</TABLE>
<PAGE> 175

<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGE
- --- ------------------------------------------------------------------------ ------------
<C> <S> <C> <C>
10(n) -- Service Agreement between the Registrant and stockholders of Oncology
Hematology Group of South Florida (filed as Exhibit 10(n) to
Registrant's Form 8-K filed January 17, 1996 (File No. 0-15416) and
incorporated herein by reference).......................................
10(o)*** -- Amendment to 1990 Registrant's Non-Qualified Stock Option Plan adopted
April 20, 1995 (7)......................................................
10(p)* -- Employment agreement between the Registrant and Charles H. Weaver, M.D.
dated July 1, 1995*** (7)...............................................
10(q) -- Purchase and Sale Agreement by and among Response Oncology, Inc.,
Knoxville Hematology Oncology Associates and Partners of Knoxville
Hematology Oncology Associates dated April 12, 1996 (filed as Exhibit
10(q) to Registrant's Form 8-K filed April 30, 1996 (File No. 0-15416)
and incorporated herein by reference)...................................
10(r) -- Service Agreement between Response Oncology, Inc., Knoxville Hematology
Oncology Associates, P.L.L.C. and Members of Knoxville Hematology
Oncology Associates, P.L.L.C. dated April 12, 1996 (filed as Exhibit
10(r) to Registrant's Form 8-K filed April 30, 1996 (File No. 0-15416)
and incorporated herein by reference)...................................
10(s) -- Stock Purchase Agreement among Registrant, Jeffrey L. Paonessa, M.D. and
J. Paonessa, M.D., P.A. (filed as Exhibit 10(s) to Registrant's Form 8-K
filed July 5, 1996 (File No. 0-15416) and incorporated herein by
reference)..............................................................
10(t) -- Service Agreement between the Registrant and stockholders of Jeffrey L.
Paonessa, M.D., P.A. (filed as Exhibit 10(t) to Registrant's Form 8-K
filed July 5, 1996 (File No. 0-15416) and incorporated herein by
reference)..............................................................
10(u) -- Service Agreement between the Registrant and stockholders of Southeast
Florida Hematology Oncology Group, P.A. (filed as Exhibit 10(u) to
Registrant's Form 8-K filed July 15, 1996 (File No. 0-15416) and
incorporated herein by reference).......................................
10(v)* -- Loan Agreement dated May 31, 1996 between Registrant, NationsBank of
Tennessee, N.A. and Union Planters National Bank........................
10(w)* -- Subordination Agreement dated June 18, 1996, by and among Registrant,
NationsBank of Tennessee, N.A., Union Planters National Bank and
Seafield Capital Corporation............................................
10(x)* -- Adjustable Rate Convertible Note made by Registrant payable to Seafield
Capital Corporation dated April 12, 1996................................
11* -- Statement re Computation of Per Share Earnings..........................
13 -- Annual Report to Stockholders for the year ended December 31, 1995
(7).....................................................................
15* -- Letter re: Unaudited interim financial information......................
24(a)* -- Consent of Baker, Donelson, Bearman & Caldwell (included in their
opinion filed as Exhibit 5 to this Registration Statement)..............
24(b) -- Consent of KPMG Peat Marwick LLP........................................
24(c) -- Consent of KPMG Peat Marwick LLP........................................
24(d) -- Consent of KPMG Peat Marwick LLP........................................
24(e) -- Consent of KPMG Peat Marwick LLP........................................
24(f) -- Consent of KPMG Peat Marwick LLP........................................
24(g) -- Consent of KPMG Peat Marwick LLP........................................
24(h) -- Consent of KPMG Peat Marwick LLP........................................
24(i) -- Consent of KPMG Peat Marwick LLP........................................
24(j) -- Consent of KPMG Peat Marwick LLP........................................
24(k) -- Consent of KPMG Peat Marwick LLP........................................
24(l) -- Consent of KPMG Peat Marwick LLP........................................
25 -- Power of Attorney (included in the Signature Page hereof)...............
</TABLE>

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

(2) Incorporated by reference to the Registrant's Registration Statement on Form
S-1 under the Securities Act of 1933 (File No. 33-5016) effective April 21,
1986
(3) Incorporated by reference in the initial filing of the Registrant's 1990
10-K, dated July 18, 1990, filed July 20, 1990 and amended on September 19,
1990
(4) Incorporated by reference to the Registrant's Registration Statement on Form
S-8 under the Securities Act of 1933 (File No. 33-21333) effective April
26, 1988
(5) Incorporated by reference to the Registrant's 1991 10-K, dated July 26, 1991
(6) Incorporated by reference to the Registrant's Registration Statement on Form
S-8 under the Securities Act of 1933 (File No. 33-45616) effective February
11, 1992
(7) Incorporated by reference to the Registrant's 1995 10-K, dated March 29,
1996

<PAGE> 1

EXHIBIT 24(B)

The Board of Directors
Response Oncology, Inc.:

The audits referred to in our report dated January 23, 1996, included the
related financial statement schedules as of December 31, 1995, and for each of
the years in the three-year period ended December 31, 1995, included in the
registration statement. These financial statement schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statement schedules based on our audits. In our
opinion, such financial statement schedules, when considered in relation to the
consolidated financial statements taken as a whole, present fairly in all
material respects the information set forth therein.

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus and incorporated
herein by reference.

KPMG PEAT MARWICK LLP

Memphis, Tennessee
July 16, 1996

<PAGE> 1

EXHIBIT 24(C)

The Board of Directors
Oncology Hematology Group of South Florida:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(D)

The Partners
Knoxville Hematology Oncology Associates:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Nashville, Tennessee
July 16, 1996

<PAGE> 1

EXHIBIT 24(E)

The Board of Directors
Jeffrey L. Paonessa, M.D., P.A.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

St. Petersburg, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(F)

The Board of Directors
Rosenberg and Kalman, M.D., P.A.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(G)

The Board of Directors
Rymer, Zaravinos and Faig, M.D., P.A.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(H)

The Board of Directors
The West Clinic, P.C.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Memphis, Tennessee
July 16, 1996

<PAGE> 1

EXHIBIT 24(I)

The Board of Directors
Weinreb, Weisberg, & Weiss, P.A.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(J)

The Partners
Drs. Haraf, Antonucci, McCormick and Kerns Medical Partnership:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Nashville, Tennessee
July 16, 1996

<PAGE> 1

EXHIBIT 24(K)

The Board of Directors
Hematology-Oncology Associates of the Treasure Coast, P.A.,
Alan S. Collin, M.D. and Michael S. Wertheim, M.D.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996

<PAGE> 1

EXHIBIT 24(L)

The Board of Directors
The Center for Hematology and Oncology, P.A.:

We consent to the use of our reports included herein and to the reference
to our firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Miami, Florida
July 16, 1996