CORE INC, S-1/A, 1996-07-11

CORE INC
S-1/A, 1996-07-11
INSURANCE AGENTS, BROKERS & SERVICE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 11, 1996

REGISTRATION NO. 333 -03639
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

----------------
CORE, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

MASSACHUSETTS 8099 04-2828817
(STATE OR JURISDICTION (PRIMARY STANDARD (I.R.S. EMPLOYER
OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

18881 VON KARMAN AVENUE, SUITE 1750
IRVINE, CALIFORNIA 92715
(714) 442-2100
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

GEORGE C. CARPENTER IV
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
CORE, INC.
18881 VON KARMAN AVENUE, SUITE 1750
IRVINE, CALIFORNIA 92715
(714) 442-2100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPIES OF ALL COMMUNICATIONS TO:

STEPHEN M. KANE, ESQ. FREDERICK W. KANNER, ESQ.
RICH, MAY, BILODEAU & FLAHERTY, P.C. DEWEY BALLANTINE
294 WASHINGTON STREET 1301 AVENUE OF THE AMERICAS
BOSTON, MASSACHUSETTS 02108 NEW YORK, NEW YORK 10019
(617) 482-1360 (212) 259-8000

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

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

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, 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. [_]

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

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 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>

CORE, INC.

CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF
INFORMATION REQUIRED BY ITEMS IN PART I OF FORM S-1

<TABLE>
<CAPTION>
FORM S-
1 ITEM NUMBER AND HEADING CAPTION IN PROSPECTUS
------------------------- ---------------------
<C> <S> <C>
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus..... Outside Front Cover Page
2. Inside Front and Outside Back Inside Front Cover Page; Outside Back Cover
Cover Pages of Prospectus.... Page
3. Summary Information, Risk
Factors and Ratio of Earnings
to Fixed Charges............. Prospectus Summary; Risk Factors
4. Use of Proceeds.............. Use of Proceeds
5. Determination of Offering Outside Front Cover Page; Price Range of
Price........................ Common Stock
6. Dilution..................... Dilution
7. Selling Security Holders..... Principal and Selling Stockholders
8. Plan of Distribution......... Outside and Inside Front Cover Page;
Underwriting; Outside Back Cover Page
9. Description of Securities to Price Range of Common Stock; Dividend
be Registered................ Policy; Capitalization; Description of
Capital Stock
10. Interests of Named Experts
and Counsel.................. Legal Matters; Experts
11. Information with Respect to Outside Front Cover Page; Prospectus
the Registrant............... Summary; Risk Factors; The Company; Recent
Developments; Price Range of Common Stock;
Dividend Policy; Capitalization; Pro Forma
Combined Condensed Financial Data
(Unaudited); Selected Consolidated
Financial Data; Management's Discussion
and Analysis of Financial Condition and
Results of Operations; Business;
Management; Principal and Selling
Stockholders; Description of Capital
Stock; Shares Eligible for Future Sales;
Financial Statements; Available
Information
12. Disclosure of Commission
Position on Indemnification
for Securities Act
Liabilities.................. Not Applicable
</TABLE>
<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+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 11, 1996

PROSPECTUS

2,500,000 SHARES

[CORE DYNAMO SYMBOL APPEARS HERE]

COMMON STOCK

--------

All of the shares of Common Stock offered hereby are being sold by CORE, INC.
("CORE" or the "Company").

The Common Stock of the Company is traded on the Nasdaq National Market under
the symbol "CORE." On July 9, 1996, the last sale price of the Common Stock as
reported by Nasdaq was $12 7/8 per share.

SEE "RISK FACTORS" ON PAGE 6 OF THIS PROSPECTUS 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>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------
<S> <C> <C> <C>
Per Share $ $ $
- -------------------------------------------------
Total(3) $ $ $
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(1) The Company and the Selling Stockholders named under "Principal and Selling
Stockholders" have agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting estimated expenses of the offering of $600,000 payable by
the Company.
(3) The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to 375,000 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, Proceeds to Company and
Proceeds to Selling Stockholders 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 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. COWEN & COMPANY

, 1996
<PAGE>

[ARTWORK APPEARS HERE INCLUDING FOUR PHOTOGRAPHS OF PERSONS IN OFFICES AND
HEALTHCARE ENVIRONMENTS, AND THE FOLLOWING COPY DISPLAYED IN GRAPHIC FORMS]

CORE's services are focused on the management and measurement
of the clinical events that drive disability costs.

CUSTOMERS

FORTUNE 500 COMPANIES
INSURANCE CARRIERS
SELF INSURED EMPLOYERS

$260 BILLION* (FOOTNOTE)

WORKABILITY(R)

because the most effective disability management begins on Day 1.

CLAIMS
DURATION MEDICAL JOB PAYMENTS PEER BILL ANALYSIS &
MANAGEMENT MANAGEMENT ACCOMMODATION ADVICE REVIEW REVIEW REPORTING

MANAGED DISABILITY SERVICE CONTINUUM

NETWORK SERVICES

PROVIDERS
Primary Care Physicians

Preferred Provider Networks

Independent Medical Exams

Occupational Health Clinics

The foundation of the WorkAbility(R) program is an extensive experience base of
clinical event reviews used to derive duration guidelines and management
protocols. This information technology focus, combined with our peer review
panel of over 230 Board Certified physicians, makes CORE the clinically credible
choice for disability management services.

CORE's comprehensive services position the company to manage workplace absence
for an employer's entire workforce, including sick time, short term disability
(STD), long term disability (LTD), workers' compensation, wage continuance and
Family Medical Leave Act (FMLA) absences.

(FOOTNOTE)
* The company estimates that the total U.S. costs due to injury and illness
related workplace absence are approximately $260 billion per year.

[END OF DESCRIPTION OF ART WORK]

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK 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 MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK ON
NASDAQ IN ACCORDANCE WITH RULE 10b-6A UNDER THE SECURITIES EXCHANGE ACT OF 1934.
SEE "UNDERWRITING."

<PAGE>

PROSPECTUS SUMMARY

The following information is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. See "Risk Factors" for a discussion of certain
factors to be considered by prospective investors.

THE COMPANY

CORE, INC. is a national provider of managed disability and health care
benefits management services to Fortune 500 companies and other self-insured
employers, third-party administrators and insurance carriers. The Company's
services include managed disability services using CORE's proprietary
WorkAbility(R) disability management software, specialty physician and
behavioral health review services and health care benefits utilization review
and case management services. With the AmHealth Acquisition discussed below,
CORE will also manage a network of nine occupational health clinics and on-site
medical facilities, which render occupational and industrial medical services.
The Company's services are designed to assist its clients monitor and control
disability and health care benefits costs without compromising the quality of
health care services provided to the patient.

CORE's managed disability services include monitoring the appropriateness of
disability durations under short and long-term disability plans and workers'
compensation programs in order to reduce unnecessary absenteeism and its
related costs of wage replacement, hiring and training replacement personnel
and lost productivity. These services are based on CORE's WorkAbility program,
a proprietary software program developed over a ten-year period through the
statistical analysis of disability utilization data. CORE's WorkAbility managed
disability program provides an objective, medically based method for
recommending and monitoring employee's return-to-work dates. The WorkAbility
program is designed to obtain and analyze relevant medical and work-related
information with the initial onset of the employee's absence and thus assure
that the employee, attending physician and employer all have reasonable and
consistent expectations as to the projected return-to-work date.

CORE's independent physician review programs provide pre-certification,
concurrent and appellate physician review services for use with utilization
management programs of the Company's insurance company and self-insured
corporate clients. The Company believes its more than 230 Board certified
physician reviewers comprise the largest independent physician review service
in the country. CORE's behavioral health review program provides comparable
review services by psychiatric specialists in sub-specialties such as adult and
child psychiatry, alcoholism and chemical dependency. The Company also provides
utilization review services designed to evaluate the medical necessity and
appropriateness of health care services prescribed for participants in health
care and medical plans. In cases of high cost injuries or illness, CORE also
renders case management services for individual cases to assure that cost-
effective treatment alternatives are utilized.

In recent years, large corporations have begun to recognize the magnitude of
the annual cost of occupational and non-occupational injuries and illnesses,
which according to a 1991 publication exceeded $2,200 per employee, or 8% of
total payroll costs. These expenses present a significant challenge to
corporate productivity. The Company estimates that total U.S. costs due to
injury and illness-related workplace absence are approximately $260 billion per
year.

According to an industry source, workers' compensation expenditures grew at
an average annual rate of over 10% from 1982 through 1991, and the Company
believes this growth is continuing. The Company estimates that workers'
compensation costs were approximately $60 billion in 1994. Despite the general
awareness of this high level of workers' compensation costs, expenditures for
group disability (including short-term disability and long-term disability
plans), sick pay and family leave represent a far larger share of total
expenditures at approximately $200 billion in 1994. Two driving factors behind
the increase in group disability and workers' compensation expenditures are
workplace and legislative changes. Work-related changes that have contributed
to rising benefits costs include the aging of the active workforce, increased
volatility in hiring and layoffs (which often results in increased benefits
utilization) and increased diagnoses of repetitive stress-related injuries.
Also contributing to rising disability benefit costs and awareness are
legislative changes such as the Family Medical

3
<PAGE>

Leave Act and the Americans with Disabilities Act, which mandate accommodation
for family circumstances and disabled workers, which both have a growing impact
on accommodation and lost time issues. Until recently, recognition and
management of these productivity costs have been impaired by their difficulty
in measurement, the fragmentation of responsibilities for disability programs
within human resources and risk management departments of most corporations and
the historical focus on group health managed care.

While a small group of companies is emerging that are applying managed care
principles to the workers' compensation industry, historically there have been
few, if any, companies focusing on the provision of managed care techniques to
the broader disabilities market. With the support of its analytic and physician
services, CORE's products provide employers with an integrated and
comprehensive approach to disability benefits management.

CORE intends to expand its position as a leading provider of managed
disability benefits services by utilizing its proprietary WorkAbility program
and related services to assist its clients in reducing the direct costs of
short and long-term disability and workers' compensation benefits and improving
employee productivity. The Company believes that the combination of its health
care and disability management tools and its strong information technology
foundation provide an effective management platform that can be tailored to
meet the needs of self-insured employers and third-party payors. The principal
elements of the Company's strategy for achieving its objectives are (i) to
market aggressively its WorkAbility program in order to achieve greater
penetration into the managed disability market; (ii) to pursue disability
management outsourcing contracts with large employers; (iii) to make selective
acquisitions of businesses that can provide service line extensions and cross-
selling synergies in the managed disability market; (iv) to utilize its
WorkAbility program as a technology platform in developing managed disability
networks in certain geographical markets; and (v) to establish through the
WorkAbility program the capability to enter into capitated or other "at risk"
arrangements with payors in the managed disability market.

RECENT DEVELOPMENTS

On May 10, 1996, CORE entered into an Asset Purchase Agreement with AmHealth,
Inc. ("AmHealth"), a management services organization that manages nine
occupational health clinics and additional on-site medical facilities. These
operations offer employers industrial and occupational medical services for
employees, including initial diagnosis and treatment of work-related injuries
and illnesses as well as physical therapy and physical rehabilitation. The
purchase price payable by CORE in this acquisition (the "AmHealth Acquisition")
is $15.7 million, subject to certain closing adjustments, which is payable in
cash and which the Company intends to finance with the proceeds of this
offering. The closing of the AmHealth Acquisition is contingent upon the
closing of this offering and satisfaction of certain other conditions, and the
closing of this offering is conditioned on the closing of the AmHealth
Acquisition. See "Recent Developments," "Use of Proceeds," "Business--The
AmHealth Acquisition" and Financial Statements of AmHealth.

THE OFFERING

<TABLE>
<S> <C>
Common Stock being offered........... 2,500,000 shares(1)
Common Stock outstanding after the
offering............................ 7,342,271 shares(1)(2)
Use of Proceeds...................... To finance the AmHealth Acquisition, to
expand operating capacity and for other
working capital and general corporate
purposes
Nasdaq National Market Symbol........ CORE
</TABLE>
- --------
(1) Excludes up to 375,000 shares of Common Stock that may be sold by the
Company and the Selling Stockholders pursuant to the Underwriters' over-
allotment option. See "Underwriting."

(2) Based on the number of shares of Common Stock outstanding as of May 31,
1996. Excludes 1,535,979 shares of Common Stock issuable upon exercise of
stock options and warrants outstanding at such date. See "Management."

4
<PAGE>

SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
--------------------------------------- ----------------------------
1993 1994 1995 1995 1996
------- ------- --------------------- ------- -------------------
ACTUAL PRO FORMA(2) ACTUAL PRO FORMA(3)
------- ------------ ------ ------------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $16,316 $16,746 $20,769 $39,245 $ 4,729 $6,584 $9,947
Cost of services........ 10,714 11,305 12,839 22,683 3,117 3,939 6,045
------- ------- ------- ------- ------- ------ ------
Gross profit.......... 5,602 5,441 7,930 16,562 1,612 2,645 3,902
Total operating ex-
penses................. 9,295 10,151 8,185 17,836 2,791 2,151 3,912
------- ------- ------- ------- ------- ------ ------
Income (loss) from
operations(1).......... (3,693) (4,710) (255) (1,274) (1,179) 494 (10)
Other income, net....... 317 11 176 58 27 41 35
------- ------- ------- ------- ------- ------ ------
Net income (loss)....... $(3,376) $(4,699) $ (79) $(1,216) $(1,152) $ 535 $ 25
======= ======= ======= ======= ======= ====== ======
Net income (loss) per
common share........... $ (0.73) $ (1.01) $ (0.02) $ (.20) $ (.24) $ .10 $ .00
======= ======= ======= ======= ======= ====== ======
Weighted average number
of common shares
outstanding............ 4,611 4,668 4,755 6,019 4,740 5,532 6,776
======= ======= ======= ======= ======= ====== ======
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1996
------------------------
PRO FORMA
ACTUAL AS ADJUSTED(4)
-------- --------------
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 2,850 $ 15,807
Total assets........................................... 12,866 40,056
Long-term obligations.................................. 427 427
Accumulated deficit.................................... (10,329) (10,989)
Stockholders' equity................................... 8,213 35,295
</TABLE>
- --------
(1) Includes the write-off of goodwill in the amount of $2,294,000 and merger
related costs and expenses of $1,114,000 in 1994 and merger related costs
and expenses of $994,000 in 1995. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
(2) Gives effect to the AmHealth Acquisition, the CRS Acquisition (as defined
herein) and the sale of 1,264,000 shares of Common Stock in this offering
(the number of shares that would need to be sold to generate net proceeds
sufficient to finance the AmHealth Acquisition), assuming a public offering
price of $12.125 per share and after deducting underwriting discounts and
commissions and a pro rata portion of estimated offering expenses, as if
such transactions had been completed as of January 1, 1995. See "Pro Forma
Combined Condensed Financial Data (Unaudited)."
(3) Gives effect to the AmHealth Acquisition and the sale of 1,244,000 shares
of Common Stock in this offering (the number of shares that would need to
be sold to generate net proceeds sufficient to finance the AmHealth
Acquisition), assuming a public offering price of $12.125 per share and
after deducting underwriting discounts and commissions and a pro rata
portion of estimated offering expenses, as if such transactions had been
completed as of January 1, 1995. See "Pro Forma Combined Condensed
Financial Data (Unaudited)."
(4) Gives effect to the AmHealth Acquisition and the sale of the shares of
Common Stock offered hereby (based on an assumed public offering price of
$12.125 per share) and the application of the estimated net proceeds
therefrom as described under "Use of Proceeds" as if such transactions had
occurred as of March 31, 1996. See "Pro Forma Combined Condensed Financial
Data (Unaudited)."

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

Except as otherwise indicated herein, information in this Prospectus assumes
no exercise of the Underwriters' option to purchase from the Company and the
Selling Stockholders up to an aggregate of 375,000 shares of Common Stock to
cover over-allotments, if any. See "Underwriting."

5
<PAGE>

RISK FACTORS

An investment in the shares being offered hereby involves a high degree of
risk. Prospective investors should carefully consider the following risk
factors, in addition to the other information contained in this Prospectus, in
evaluating an investment in the shares of Common Stock offered hereby. In
particular, prospective investors are cautioned that this Prospectus contains
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and that actual results could differ materially
from those contemplated by such statements. Such statements reflect
management's current views, are based on many assumptions and are subject to
risks and uncertainties. The factors listed below represent certain important
factors the Company believes could cause such results to differ. These factors
are not intended to represent a complete list of the general or specific risks
that may affect the Company. It should be recognized that other risks may be
significant, presently or in the future, and the risks set forth below may
affect the Company to a greater extent than indicated.

HISTORY OF LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY

The Company has recorded net losses of $253,000 for 1991, $2,014,000 for
1992, $3,376,000 for 1993, $4,699,000 for 1994 and $79,000 for 1995. The
Company's losses have resulted in an accumulated deficit of approximately
$10.3 million at March 31, 1996. There can be no assurance that the Company
will become profitable, or if profitable, that profitability will be
maintained on a quarterly or annual basis. Moreover, if profitability is
achieved, the level of profitability cannot be accurately predicted. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RECENT AND PROPOSED ACQUISITIONS; RISKS OF INTEGRATION; NEW BUSINESS LINES

The Company's operations have expanded significantly as a result of the
March 1995 merger with Core Management, Inc. ("CMI") and October 1995
acquisition of Cost Review Services, Inc. ("CRS"). The proposed acquisition of
assets of AmHealth will cause a further major increase in operations. See "The
Company," "Recent Developments" and "Business--The AmHealth Acquisition." In
addition, the Company intends to continue to pursue the growth of its business
through the acquisition of other businesses complementary to its existing
businesses. See "Business--Strategy."

The merger with CMI and the acquisition of CRS have resulted in the Company
becoming much larger, more complex and more operationally and geographically
diverse, presenting challenges for the Company's management and potentially
detracting attention of management from the day-to-day operations of CORE.
These challenges will increase by reason of the proposed AmHealth Acquisition
and other possible future acquisitions. In light of this recent and potential
future growth, the success of the Company's efforts to integrate acquired
operations and streamline overlapping business and administrative functions
will be crucial in order for the Company to be profitable. The various systems
and procedures of the Company's operations will have to be coordinated and
integrated with those of previously acquired companies as well as the AmHealth
business and any other businesses which may be acquired in the future. There
can be no assurance that the process of integrating the businesses acquired
through the CMI merger and CRS acquisition and to be acquired through the
proposed AmHealth Acquisition and other possible future acquisitions will be
successful. Furthermore, the successful integration of acquired operations may
require significant expenditures and involve substantial unanticipated costs.

AmHealth provides management services to occupational health clinics and on-
site industrial medical facilities. The Company does not currently provide,
and has no experience providing, these types of services. Additionally, the
nine clinics subject to the AmHealth Acquisition have recorded losses from
operations of approximately $1,215,000 for the year ended June 30, 1994,
approximately $1,977,000 for the year ended June 30, 1995 and approximately
$1,167,000 for the nine months ended March 31, 1996, and have an accumulated
deficit of approximately $6,801,000 as of March 31, 1996. In addition, the
audit report accompanying the AmHealth financial statements identifies matters
that raise doubt regarding AmHealth's ability to continue as a going concern.
There can be no assurance that the Company will be able to manage successfully
the operations to be acquired in the AmHealth Acquisition, utilize these
operations in the implementation of the Company's network strategy or realize
any of the anticipated benefits from this acquisition. See "Business--
Strategy."

6
<PAGE>

RELIANCE ON WORKABILITY(R) PROGRAM

The Company's strategy involves focusing its growth efforts on, and
consequently committing significant management, marketing and other resources
to expanding, its managed disability services, and in particular its
WorkAbility disability management program. However, revenue derived from this
area of operations represented only 26% of the Company's total revenue for the
year ended December 31, 1995 and 36% for the three months ended March 31,
1996. There can be no assurance that the Company's focus on its managed
disability services will ultimately be profitable for the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and "Business--Strategy."

The Company's managed disability services are dependent upon the WorkAbility
computer software. The Company's success in deriving revenue from its
WorkAbility software is dependent upon its maintaining the proprietary and
confidential nature of this software. The Company relies on a combination of
database size, trade secret, copyright, trademark and contractual protections
to establish and protect its proprietary rights to the WorkAbility software.
There can be no assurance, however, that the precautions taken by the Company
will be adequate to prevent misappropriation or re-creation of the Company's
database. In addition, these protections and precautions will not prevent
development by independent third parties of competitive technology or
products, and some companies have developed products which, to some extent,
perform functions similar to those performed by the WorkAbility software.

DEPENDENCE ON KEY CLIENTS

The Company has contracts with several key clients which account for a
substantial portion of its revenues. During the years ended December 31, 1994
and 1995 and the three months ended March 31, 1996, the Company's five largest
clients represented 36.5%, 30.1% and 31.2%, respectively, of total revenue,
and its ten largest clients represented 45.0%, 51.0% and 51.0%, respectively,
of total revenue. The majority of the Company's contracts with its clients,
including those with its major clients, permit cancellation by the client upon
60 to 90 days' notice, while certain other of the Company's contracts permit
immediate cancellation under certain circumstances. Additionally, with a few
exceptions, the Company's contracts with its customers do not require minimum
payments or purchase of minimum levels of services. The failure to renew, or
the exercise of cancellation rights contained in the Company's contracts with
its clients, or a significant reduction in the volume of services requested by
the Company's clients, could have a material adverse effect on the Company.
See "Business--Clients and Marketing" and Note 15 to the Audited Consolidated
Financial Statements of the Company.

RISKS RELATED TO GROWTH STRATEGY

The Company's strategy is to continue its internal growth and, as strategic
opportunities arise in the managed disability services market, to pursue
acquisitions of, or relationships with, other companies in related lines of
business. As a result, the Company is subject to certain growth-related risks,
including the risks that it will be unable to retain personnel or acquire
other resources necessary to service such growth adequately. Expenses arising
from the Company's efforts to increase its market penetration may have a
negative impact on operating results. In addition, there can be no assurance
that any suitable opportunities for strategic acquisitions or relationships
will arise or, if they do arise, that the transactions contemplated thereby
could be completed. See "Business--Strategy."

EXPOSURE TO PROFESSIONAL LIABILITY

The Company, through its managed care services, makes recommendations
regarding benefit plan coverage and work absence periods based upon judgments
of the appropriateness of proposed medical treatment plans and length of
absence, and in certain instances CORE has the discretion to determine or deny
such benefit plan coverage and work absence periods. Consequently, the Company
has from time to time and may in the future become subject to claims related
to adverse medical consequences or for the costs of services denied and
claims, such as malpractice, arising from the errors or omissions of health
care professionals. A successful claim against

7
<PAGE>

the Company could have a material adverse effect on the Company's financial
position and results of operations. Furthermore, claims against the Company,
regardless of their merit or eventual outcome, may involve substantial defense
costs. There can be no assurance that procedures implemented by the Company to
limit its liability have been or will be effective or that litigation to which
the Company is or may become subject will not adversely affect its financial
position or results of operations. The Company maintains professional
liability insurance and such other coverages as the Company believes are
reasonable in light of the Company's experience to date. However, there can be
no assurance that such insurance will be sufficient to protect the Company
from liability which might adversely affect the Company's business, operating
results or financial condition or will continue to be available to the Company
at reasonable cost or at all.

With the proposed AmHealth Acquisition, the Company will provide management
services to a professional corporation rendering medical services in the
occupational health field (the "Medical Group"). The provision of medical
services entails an inherent risk of professional liability and similar
claims. The most significant source of potential liability to which the
Company will be exposed in providing such services will likely be the
negligence of those physicians or the Medical Group to which the Company will
provide its services. The Company intends to perform only administrative
services for the Medical Group. However, the Company could become subject to
claims for malpractice of physicians under various theories, including
theories that a physician is an employee or agent of the Company or that the
Company was negligent in contracting for such physician's services. There can
be no assurance that a future claim or claims will not be successful or if
successful will not exceed the limits of available insurance coverage or that
such coverage will continue to be available at acceptable costs or at all. See
"Business--The AmHealth Acquisition" and "--Professional Liabilities; Legal
Proceedings."

GOVERNMENT REGULATION; REIMBURSEMENT; HEALTH CARE REFORM

The health care industry is subject to extensive federal and state
regulation relating to licensure, conduct of operations and prices for
services. A number of states, including several of those in which the Company
transacts business, have extensive licensing and other regulatory requirements
applicable to the Company's business, including utilization review, physician
practice management and workers' compensation. These requirements include
compliance with federal and state prohibitions on the offer or receipt of
remuneration for the referral of patients or other items or services.
Additionally, the Company's clients, including insurance companies, are
subject to regulations which indirectly affect the Company. Regulation in the
health care field is constantly evolving. The Company is unable to predict
what additional government regulations, if any, directly or indirectly
affecting its business may be promulgated. Although the Company believes that
it is in material compliance with applicable statutes, licensing requirements
and regulations in those states in which it is subject to regulation, the
Company's business could be adversely affected by a revocation of or failure
to obtain required licenses and governmental approvals, a failure to comply
with applicable statutes or regulations or significant changes in regulations
applicable to its clients. See "Business--Government Regulation;
Reimbursement; Health Care Reform."

In addition to existing government health care regulation, there have been
numerous initiatives at the federal and state levels, as well as by private
third-party payors, for comprehensive reforms affecting the payment for and
availability of health care services. The Company believes that such
initiatives will continue during the foreseeable future. The Company is unable
to predict what, if any, reform initiatives may be adopted, or what effect, if
any, their adoption may have on the Company.

RELIANCE ON DATA PROCESSING CAPABILITIES

The Company's business in general, and its WorkAbility disability management
program in particular, is dependent upon the ability to continuously store,
retrieve, process and manage data. Interruption of data processing
capabilities for any extended length of time, loss of stored data, programming
errors or other computer problems could have a material adverse effect on the
business of the Company.

8
<PAGE>

COMPETITION

The markets in which the Company is engaged are highly competitive. In
addition to other utilization management and disability management companies,
the Company competes with insurance companies, third party administrators and
preferred provider organizations. Many of the Company's competitors are larger
and have greater financial and other resources than the Company. The
occupational health care industry in which AmHealth competes is also highly
fragmented and competitive. The AmHealth operations and the Medical Group
compete with sole practitioners, small medical groups, hospitals and a few
larger organizations which may have greater resources and knowledge of the
industrial medical market. There can be no assurance that competitive factors
in the Company's markets will not have an adverse effect on the Company. See
"Business--Competition."

DEPENDENCE ON KEY PERSONNEL

The Company's success will depend to a significant extent upon the skills of
a number of key employees, including Mr. George C. Carpenter IV, the Company's
Chairman of the Board and Chief Executive Officer, Craig C. Horton, the
Company's President and Chief Operating Officer and William E. Nixon, the
Company's Executive Vice President and Chief Financial Officer. The Company
does not have employment agreements with Mr. Carpenter or Mr. Horton. See
"Management--Employment Contracts and Termination of Employment and Change in
Control Arrangements." In addition, the Company's success will depend to an
extent on its ability to recruit credentialed physicians for the Company's
peer review activities. The AmHealth business will also depend on a continuing
relationship with its affiliated Medical Group and on the ability of the
Medical Group to recruit qualified physicians in the occupational health
field. The future loss of the services of one or more key persons, the
termination of the relationship with the Medical Group or the inability to
continue to recruit qualified physicians could adversely affect the Company.

CONTROL BY OFFICERS AND DIRECTORS

Upon completion of this offering and excluding sales by Selling Stockholders
in the over-allotment, if any, the Company's executive officers and directors
will beneficially own (including options exercisable as of May 31, 1996)
approximately 19.2% of the Common Stock (approximately 21.9% if all options
granted to such officers and directors become vested and are exercised). As a
result, the executive officers and directors of the Company acting together
would be able to exert considerable influence over the election of the
Company's directors and the outcome of most corporate actions requiring
stockholder approval. Such concentration of ownership may have the effect of
delaying or preventing a change in control of the Company, which could
adversely affect the market price for the Common Stock. See "Principal and
Selling Stockholders."

DILUTION; OUTSTANDING OPTIONS

Purchasers of shares in this offering will experience an immediate dilution
of $9.445 per share (based on an assumed public offering price of $12.125 per
share and after deducting the estimated offering expenses and underwriting
discounts). On May 31, 1996, there were outstanding options and warrants to
purchase 1,535,979 shares of Common Stock at a weighted average exercise price
of $6.03 per share. The exercise of these options would result in significant
book value and earnings dilution to purchasers of shares of Common Stock in
this offering. See "Dilution" and "Management."

ANTI-TAKEOVER CONSIDERATIONS

Certain provisions of the Company's certificate of incorporation and by-laws
and Massachusetts law could discourage potential acquisition proposals, delay
or prevent a change in control of the Company and, consequently, limit the
price that investors might be willing to pay in the future for shares of
Common Stock. These provisions include a classified board of directors and the
ability to issue, without further stockholder approval, shares of preferred
stock with rights and privileges senior to the Common Stock. The Company is
also

9
<PAGE>

subject to Chapters 110F and 110D of the Massachusetts General Laws, which, in
general, prohibit a corporation with sufficient ties to Massachusetts from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date of the transaction in which the person
becomes an interested stockholder, subject to certain exceptions. For purposes
of the statute, an "interested stockholder" is defined as a person who,
together with affiliates and associates, owns (or, if an affiliate of the
Company, owned at any time within the prior three years) 5% or more of the
corporation's voting stock. As of May 31, 1996, the following persons met the
statutory definition of an "interested stockholder" of the Company: Fiduciary
Trust Company International, John Pappajohn, Craig C. Horton, George C.
Carpenter IV and James Franklin. See "Management--Directors and Executive
Officers," "Principal and Selling Stockholders" and "Description of Capital
Stock."

POTENTIAL VOLATILITY OF STOCK PRICE

The market prices for the Common Stock and the securities of certain other
companies in the health care industry have had a history of significant
volatility. The trading price of the Common Stock could continue to be subject
to significant fluctuations due to uncertainties regarding the consolidation
of the businesses of the Company, announcements or actions by competitors,
developments involving the Company's relationships with key clients,
government regulation, developments involving the AmHealth Acquisition,
fluctuations in quarterly results and other factors. These broad market
fluctuations, as well as general economic conditions and the financial
performance of the Company, may adversely affect the market price of the
Common Stock. See "Price Range of Common Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of substantial amounts of the Common Stock in the public market
could adversely affect prevailing market prices and could impair the Company's
ability to raise additional capital through the sale of its equity securities.
The Company is unable to make any prediction as to the effect, if any, that
future sales of Common Stock or the availability of Common Stock for sale may
have on the market price of the Common Stock prevailing from time to time. See
"Shares Eligible for Future Sale."

THE COMPANY

The Company was incorporated in Massachusetts in April 1984 under the name
Peer Review Analysis, Inc. ("PRA") to provide physician-intensive utilization
management services to commercial insurance companies and self-insured
employers. PRA became a publicly-held entity in December 1991 with the
completion of an initial public offering.

In March 1995, PRA completed its merger (the "CMI/PRA Merger") involving
Core Management, Inc., a Delaware corporation ("CMI"). CMI offers a broad
range of disability management, health care utilization review and analysis
and consulting services, and CMI's Integrated Behavioral Health Division
("IBH") specializes in utilization review of and case management services with
respect to mental health and substance abuse cases. CMI was incorporated in
1990 to acquire the health and disability cost management services business
(including the WorkAbility program) of Health Data Institute, Inc., a
subsidiary of Baxter International, Inc. IBH became a subsidiary of CMI in a
March 1993 acquisition. The CMI/PRA Merger was treated as a pooling of
interests for accounting purposes. The description herein of the business of
the Company includes the operations of both PRA and CMI from the inception of
both companies.

In July 1995, the Company changed its name from Peer Review Analysis, Inc.
to CORE, INC. On October 2, 1995, CORE acquired all the capital stock of Cost
Review Services, Inc., a workers' compensation bill audit firm. The Company's
executive offices are located at 18881 Von Karman Avenue, Suite 1750, Irvine,
California 92715, and its telephone number at that address is (714) 442-2100.

WorkAbility is a registered trademark of the Company.

10
<PAGE>

RECENT DEVELOPMENTS

On May 10, 1996, CORE entered into an Asset Purchase Agreement to acquire
substantially all of the assets and operations of AmHealth (excluding its
accounts receivable). AmHealth is a management services organization that
manages occupational health clinics and on-site industrial medical facilities
in California. The assets and operations to be acquired by the Company relate
to nine occupational health clinics and a medical services division that
provides on-site occupational health and industrial medical services to
approximately 11 employers. These clinics and the on-site medical services
operations provide initial diagnosis and treatment of work-related injuries
and illnesses that traditionally have been provided by hospitals and family
practice and other primary care physicians. The purchase price for AmHealth's
assets is $15.7 million (subject to certain closing adjustments based on the
net book value of the assets transferred and liabilities assumed on the
closing date) which is payable in cash and which the Company intends to
finance with the proceeds of this offering. The closing of the AmHealth
Acquisition and this offering are mutually dependent. See "Business--The
AmHealth Acquisition."

On April 8, 1996, CORE announced that it had been selected (subject to
negotiation of a definitive service agreement) by Bell Atlantic Corporation to
provide managed disability services, including utilization of CORE's
WorkAbility program, for approximately 57,000 employees, beginning August 1,
1996. The Company and Bell Atlantic are currently negotiating the agreement.

On April 29, 1996, in connection with the Company's hiring of Peter P.
Greaney, M.D. as the Company's Chief Medical Officer, CORE entered into an
agreement with Dr. Greaney, pursuant to which the Company has been granted an
irrevocable option, exercisable through December 31, 1996, to purchase Greaney
Medical Group. GMG Workcare(TM), a division of Greaney Medical Group, is a
national consulting organization specializing in all aspects of occupational
medicine, including managed occupational health care and outsourcing of
occupational health programs for national employers. The exercise price of the
option is estimated to be approximately $8.1 million payable in shares of
Common Stock. The option exercise price is equal to a multiple of 1996
estimated operating after-tax net income adjusted for certain non-recurring
items but not less than $8 million or more than $10 million. The multiple
represents what the Company believes to be an appropriate discount from price-
earnings multiples of publicly-traded companies in similar businesses to
Greaney Medical Group. The Company will elect whether to exercise its option
to purchase Greaney Medical Group based on several contingencies, including
Greaney Medical Group's financial performance in 1996 and whether the
acquisition will qualify for accounting purposes as a pooling of interests
transaction. Because of these contingencies, CORE can not conclude at this
time that exercise of its option to purchase Greaney Medical Group is
probable.

On April 30, 1996, the Company announced its negotiations with respect to
the Company's providing long-term administrative and managerial service to
Continental FirstCare, an MSO which is affiliated with an independent practice
association ("IPA") of approximately 75 occupational health facilities in
California. These services are expected to commence during the summer of 1996.

USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be approximately $27.7 million ($29.3 million
if the Underwriters' over-allotment option is exercised in full), assuming a
public offering price of $12.125 per share and after deducting underwriting
discounts and commissions and estimated offering expenses.

The Company expects to use approximately $15.7 million of the net proceeds
of the offering to finance the AmHealth Acquisition. The purchase price is
subject to downward adjustment for any shortfall between $1,750,000 and the
net book value of the assets acquired and the liabilities assumed on the
closing date. Following the AmHealth Acquisition, the Company plans to use
approximately $1.2 million from this offering to invest in the operating
infrastructure of AmHealth, including the purchase of a new software operating
system, various leasehold improvements, medical equipment and other purchases
designed to improve capacity, efficiency and the delivery of services. The
Company will also use funds from the offering for investments in its operating
capacity, including costs and expenses in establishing a Maryland office to
service the Company's anticipated contract with Bell

11
<PAGE>

Atlantic Corporation (with respect to which a contract is currently under
negotiation) and significant expansion and upgrades to the Company's
information systems. The remainder of the net proceeds will be used for other
working capital and general corporate purposes. A portion of the net proceeds
could also be used for acquisitions of new products, services or businesses
complementary to the Company's business. However, other than the AmHealth
Acquisition and the Company's option to purchase the occupational health
business presently owned by Peter P. Greaney, M.D. and discussions with
Continental FirstCare, the Company has no present definitive agreements or
letters of intent with respect to any such transactions. See "Recent
Developments" and "Business--The AmHealth Acquisition."

Pending such uses, the Company intends to invest the net proceeds from the
offering in short-term, investment-grade, interest-bearing securities. The
Company will not receive any of the proceeds from the sale of shares by the
Selling Stockholders in the event that the Underwriters' over-allotment option
is exercised.

PRICE RANGE OF COMMON STOCK

The Common Stock is quoted on the Nasdaq National Market System ("Nasdaq-
NMS") under the symbol "CORE." Prior to July 31, 1995, the Company's Nasdaq-
NMS symbol was "PRAI." The following table shows the range of high and low
sales prices per share for the shares of Common Stock on the Nasdaq-NMS for
the calendar quarters indicated as reported by Nasdaq. Over-the-counter market
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and do not necessarily represent actual transactions.

<TABLE>
<CAPTION>
HIGH LOW
-------- ------
<S> <C> <C>
1994
First quarter........................................... $5 3/8 $3 3/8
Second quarter.......................................... 4 1/8 2 1/4
Third quarter........................................... 3 15/16 2 3/8
Fourth quarter.......................................... 3 13/16 2 1/8
1995
First quarter........................................... 4 1/2 2 7/8
Second quarter.......................................... 4 2 3/8
Third quarter........................................... 8 1/2 2 7/8
Fourth quarter.......................................... 10 3/8 7 3/8
1996
First quarter........................................... 13 3/8 8 3/8
Second quarter.......................................... 17 1/4 11
Third quarter (through July 9).......................... 15 1/2 12 7/8
</TABLE>

On July 9, 1996, the last sale price of the Common Stock as reported by
Nasdaq was $12 7/8 per share. As of May 31, 1996, there were approximately 141
record holders of the Common Stock.

DIVIDEND POLICY

The Company has never paid a cash dividend. Inasmuch as the Company intends
to retain earnings for the operation and expansion of its business, the
Company does not intend to pay dividends on its Common Stock for the
foreseeable future. The Company's bank credit line prohibits the payment of
dividends on the Common Stock. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Future dividend policy will be
determined by the Company's Board of Directors in light of the then prevailing
financial condition of the Company and other relevant factors.

12
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company as of March
31, 1996 and as adjusted to give pro forma effect to the AmHealth Acquisition
and to the sale of the shares of Common Stock offered hereby (at an assumed
public offering price of $12.125 per share) and the application of the net
proceeds therefrom as described under "Use of Proceeds."

<TABLE>
<CAPTION>
MARCH 31, 1996
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
------------ ------------ ------------
<S> <C> <C> <C>
Current maturities of long-term
obligations......................... $ 559,373 $ 559,373 $ 559,373
============ ============ ============
Long-term obligations, less current
maturities.......................... $ 426,713 $ 426,713 $ 426,713
------------ ------------ ------------
Stockholders' equity:
Preferred Stock, no par value,
500,000 shares authorized; no
shares issued or outstanding...... -- -- --
Common Stock, par value $0.10 per
share; 10,000,000 shares
authorized; 4,815,781 shares
issued and outstanding, actual and
pro forma; and 7,315,781 shares
issued and outstanding, pro forma
as adjusted(1).................... 481,578 481,578 731,578
Additional paid-in capital......... 18,104,718 18,104,718 45,596,906
Deferred compensation.............. (51,120) (51,120) (51,120)
Cumulative unrealized gain on
investments
available-for-sale................ 6,778 6,778 6,778
Accumulated deficit................ (10,328,620) (10,989,070) (10,989,070)
------------ ------------ ------------
Net stockholders' equity......... 8,213,334 7,552,884 35,295,072
------------ ------------ ------------
Total capitalization................. $ 8,640,047 $ 7,979,597 $ 35,721,785
============ ============ ============
</TABLE>
- --------
(1) Excludes 1,510,475 shares of common stock issuable upon the exercise of
outstanding options and warrants. See "Management."

13
<PAGE>

DILUTION

The net tangible book value of the Company at March 31, 1996, was
approximately $5,887,000, or $1.22 per share. Net tangible book value per
share represents the amount of total tangible assets less total liabilities,
divided by the number of shares of Common Stock outstanding as of such date.
Without taking into account any changes in net tangible book value after March
31, 1996, other than to give pro forma effect to the completion of the
AmHealth Acquisition and the sale of the shares of Common Stock offered hereby
(assuming a public offering price of $12.125 per share) and after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, the pro forma net tangible book value of the Company at March
31, 1996, would have been approximately $19,596,000, or $2.68 per share. This
represents an immediate net increase in net tangible book value of $1.46 per
share to existing stockholders and an immediate dilution in net tangible book
value of $9.445 per share to purchasers of Common Stock in this offering. The
following table illustrates this dilution:

<TABLE>
<S> <C> <C>
Assumed public offering price per share...................... $12.125
Net tangible book value per share as of March 31, 1996..... $1.22
Net increase per share attributable to the offering and the
AmHealth Acquisition...................................... 1.46
-----
Pro forma net tangible book value per share after the
offering and the AmHealth Acquisition....................... 2.68
------
Dilution per share to new investors.......................... $9.445
======
</TABLE>

The foregoing table does not take into account the exercise of outstanding
stock options and warrants after March 31, 1996. As of such date, there were
outstanding stock options and warrants to purchase an aggregate of 1,510,475
additional shares of Common Stock at a weighted average exercise price of
$5.82 per share. To the extent that these options and warrants are exercised,
there will be further dilution to new investors. See "Management."

14
<PAGE>

PRO FORMA COMBINED CONDENSED FINANCIAL DATA (UNAUDITED)

The unaudited pro forma combined condensed financial data set forth below
are based on the consolidated historical financial statements of the Company
included elsewhere herein after giving effect to the transactions described
below. The unaudited pro forma combined condensed balance sheet as of March
31, 1996 gives effect to the AmHealth Acquisition and the sale of the
2,500,000 shares of Common Stock offered hereby, assuming a public offering
price of $12.125 per share and after deducting underwriting discounts and
commissions and estimated offering expenses, as if such transactions had
occurred on that date. The unaudited pro forma combined condensed statement of
operations for the year ended December 31, 1995 and the three months ended
March 31, 1996 gives effect to (i) the AmHealth Acquisition, (ii) the CRS
Acquisition (as to the 1995 period) and (iii) the sale of 1,264,000 and
1,244,000 shares, respectively, of Common Stock in this offering (the number
of shares that would need to be sold to generate net proceeds sufficient to
finance the AmHealth Acquisition), assuming a public offering price of $12.125
per share and after deducting underwriting discounts and commissions and a pro
rata portion of estimated offering expenses, as if such transactions had
occurred on January 1, 1995. The unaudited pro forma combined condensed
financial data set forth below do not purport to represent what the Company's
financial position or results of operations would have been had the
transactions described above occurred on the dates indicated, or to project
the Company's financial position or results of operations for any future
period or date, nor does it give effect to any matters other than those
described in the notes thereto. The unaudited pro forma combined condensed
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Position and Results of Operations," the Consolidated
Financial Statements of the Company and the Financial Statements of AmHealth
appearing elsewhere in this Prospectus.

15
<PAGE>

PRO FORMA COMBINED CONDENSED BALANCE SHEET (UNAUDITED)
MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA AFTER
AMHEALTH AFTER THE THE AMHEALTH
ACQUISITION AMHEALTH OFFERING ACQUISITION AND
CORE AMHEALTH ADJUSTMENTS ACQUISITION ADJUSTMENTS(2) THIS OFFERING
------------ ----------- ------------ ------------ -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents........... $ 18,332 $ 69,482 $(14,825,056)(1c) $(13,737,242) $13,825,056 $ 87,814
1,000,000 (ld)
Cash pledged as
collateral and
customer advances..... 332,050 332,050 332,050
Investments available-
for-sale.............. 437,009 437,009 13,917,132 14,354,141
Accounts receivable,
net of allowance for
doubtful accounts..... 4,301,040 2,476,711 (2,476,711)(1a) 4,301,040 4,301,040
Prepaid expenses and
other current assets.. 531,912 299,511 (141,000)(1c) 627,784 627,784
(62,639)(1b)
Notes receivable from
affilliates........... 1,041,450 (1,016,450)(1d) 25,000 25,000
------------ ----------- ------------ ------------ ----------- -----------
Total current assets... 6,661,793 2,845,704 (17,521,856) (8,014,359) 27,742,188 19,727,829
Property and equipment,
net.................... 3,527,849 802,935 (254,372)(1a) 4,076,412 4,076,412
Cash pledged as
collateral............. 192,000 192,000 192,000
Deposits and other 298,479 22,759 (22,759)(1a) 361,118 361,118
assets................. 62,639 (1b)
Goodwill, net of
accumulated
amortization of $34,600
actual and $88,600 pro
forma.................. 1,918,780 (54,000)(1e) 1,864,780 1,864,780
Goodwill, net of
accumulated
amortization of
$590,000 pro forma..... 13,567,500 (1c) 13,567,500 13,567,500
Goodwill, net of
accumulated
amortization of
$1,178,752............. 4,316,480 (4,316,480)(1a)
Intangibles, net........ 266,781 266,781 266,781
------------ ----------- ------------ ------------ ----------- -----------
Total assets........... $ 12,865,682 $ 7,987,878 $ (8,539,328) $ 12,314,232 $27,742,188 $40,056,420
============ =========== ============ ============ =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Cash overdraft......... $ 234,040 $ (234,040)(1a)
Accounts payable and
accrued expenses...... $ 3,183,824 3,034,534 (3,034,534)(1a) $ 3,292,824 $ 3,292,824
109,000 (1c)
Deferred income taxes.. 68,316 68,316 68,316
Notes payable to bank.. 222,300 (222,300)(1a)
Notes payable.......... 91,995 6,842,600 (6,842,600)(1a) 91,995 91,995
Current portion of long
term debt............. 2,720,595 (2,720,595)(1a)
Current portion of
obligations to former
shareholders.......... 384,484 384,484 384,484
Current portion of
capital lease
payments.............. 82,894 33,377 (33,377)(1a) 82,894 82,894
------------ ----------- ------------ ------------ ----------- -----------
Total current
liabilities........... 3,811,513 13,087,446 (12,978,446) 3,920,513 3,920,513
Long-term obligations to
former shareholders,
net of current
portion................ 366,824 366,824 366,824
Capital lease
obligations, net of
current portion........ 59,889 59,889 59,889
Deferred rent, net of
current portion........ 264,622 264,622 264,622
Deferred income taxes... 149,500 149,500 149,500
Redeemable preferred
stock.................. 2,500,000 (2,500,000)(1a)
Stockholders' equity
(deficit):
Common stock, $0.10 par
value per share;
authorized 10,000,000
shares; issued and
outstanding 4,815,781
shares actual and
7,315,781 adjusted for
this offering......... 481,578 481,578 $ 250,000 731,578
Additional paid-in
capital............... 18,104,718 18,104,718 27,492,188 45,596,906
Deferred compensation.. (51,120) (51,120) (51,120)
Investment by and
advances from
AmHealth, Inc......... (798,269) 798,269 (1a)
Cumulative unrealized
gain on investments
available-for-sale.... 6,778 6,778 6,778
Accumulated deficit.... (10,328,620) (6,801,299) 6,801,299 (1a) (10,989,070) (10,989,070)
(590,000)(1c)
(54,000)(1e)
(16,450)(1d)
------------ ----------- ------------ ------------ ----------- -----------
Total stockholders'
equity (deficit)...... 8,213,334 (7,599,568) 6,939,118 7,552,884 27,742,188 35,295,072
------------ ----------- ------------ ------------ ----------- -----------
Total liabilities and
stockholders' equity.. $ 12,865,682 $ 7,987,878 $ (8,539,328) $ 12,314,232 $27,742,188 $40,056,420
============ =========== ============ ============ =========== ===========
</TABLE>

See accompanying notes.

16
<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
PRO FORMA
COST PRO FORMA AFTER THE
REVIEW CRS AFTER THE AMHEALTH CRS AND
SERVICES, ACQUISITION CRS ACQUISITION AMHEALTH
CORE(5) INC.(5) ADJUSTMENTS ACQUISITION AMHEALTH(5) ADJUSTMENTS ACQUISITION
----------- ---------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues......... $20,768,521 $4,078,677 $24,847,198 $14,398,404 $39,245,602
Cost of servic-
es.............. 12,838,971 $1,512,798 (1f) 14,351,769 $8,331,593 (1f) 22,683,362
----------- ---------- ---------- ----------- ----------- ---------- -----------
Gross profit.... 7,929,550 4,078,677 (1,512,798) 10,495,429 14,398,404 (8,331,593) 16,562,240
Operating ex-
penses:
Sales and
marketing...... 1,499,120 937,832 (1f) 2,436,952 428,120 (1f) 2,865,072
General and
administrative.. 4,787,238 1,012,624 (69,946)(1f) 5,729,916 2,894,027 3,533,418 (1f) 12,157,361
Salaries and
benefits....... 2,380,684 (2,380,684)(1f) 8,367,839 (8,367,839)(1f)
Contract
services....... 865,505 (865,505)(1f)
Equipment and
facilities
rent........... 1,232,412 (1,232,412)(1f)
Corporate over-
head........... 1,827,375 (1,827,375)(1f)
Corporate
relocation/
reorganization
expense........ 993,619 993,619 993,619
Disposal of
clinic
operations..... 263,810 263,810
Depreciation and
amortization... 904,900 51,816 54,000 (1e) 1,010,716 973,624 (783,780)(1h) 1,556,560
472,000 (1c)
(116,000)(1l)
----------- ---------- ---------- ----------- ----------- ---------- -----------
Total operating
expenses........ 8,184,877 3,445,124 (1,458,798) 10,171,203 16,424,592 (8,759,373) 17,836,422
Loss from
operations...... (255,327) 633,553 (54,000) 324,226 (2,026,188) 427,780 (1,274,182)
Other income (ex-
pense):
Interest
income......... 239,590 13,837 (92,250)(1i) 161,177 161,177
Interest ex-
pense.......... (83,410) (26,883) (57,000)(1j) (167,293) (1,482,712) 1,482,712 (1g) (167,293)
Other........... 19,974 19,974 44,223 64,197
----------- ---------- ---------- ----------- ----------- ---------- -----------
176,154 (13,046) (149,250) 13,858 (1,438,489) 1,482,712 58,081
----------- ---------- ---------- ----------- ----------- ---------- -----------
Income(loss) be-
fore income
taxes......... (79,173) 620,507 (203,250) 338,084 (3,464,677) 1,910,492 (1,216,101)
Provision for
income taxes... 138,425 (138,425)(1k)
----------- ---------- ---------- ----------- ----------- ---------- -----------
Net income
(loss)......... $ (79,173) $ 482,082 $ (64,825) $ 338,084 $(3,464,677) $1,910,492 $(1,216,101)
=========== ========== ========== =========== =========== ========== ===========
Net loss per
common share... $ (0.02) $ (0.26)
=========== ===========
Weighted average
number
of
common shares
outstanding... 4,755,000 4,755,000
=========== ===========
<CAPTION>
PRO FORMA
AFTER THE
AMHEALTH
ACQUISITION
OFFERING AND THIS
ADJUSTMENTS(3) OFFERING
-------------- ------------
<S> <C> <C>
Revenues......... $39,245,602
Cost of servic-
es.............. 22,683,362
------------
Gross profit.... 16,562,240
Operating ex-
penses:
Sales and
marketing...... 2,865,072
General and
administrative.. 12,157,361
Salaries and
benefits.......
Contract
services.......
Equipment and
facilities
rent...........
Corporate over-
head...........
Corporate
relocation/
reorganization
expense........ 993,619
Disposal of
clinic
operations..... 263,810
Depreciation and
amortization... 1,556,560
------------
Total operating
expenses........ 17,836,422
Loss from
operations...... (1,274,182)
Other income (ex-
pense):
Interest
income......... 161,177
Interest ex-
pense.......... (167,293)
Other........... 64,197
------------
58,081
------------
Income(loss) be-
fore income
taxes......... (1,216,101)
Provision for
income taxes...
------------
Net income
(loss)......... $(1,216,101)
============
Net loss per
common share... $ (0.20)
============
Weighted average
number
of
common shares
outstanding... 1,264,000 6,019,000
============== ============
</TABLE>

See accompanying notes.

17
<PAGE>

PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 1996

<TABLE>
<CAPTION>
PRO FORMA
AFTER THE
PRO FORMA AMHEALTH
AMHEALTH AFTER THE ACQUISITION
ACQUISITION AMHEALTH OFFERING AND THIS
CORE AMHEALTH ADJUSTMENTS ACQUISITION ADJUSTMENTS(4) OFFERING
---------- ---------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues................ $6,583,562 $3,363,971 $9,947,533 $9,947,533
Cost of services........ 3,938,910 $ 2,106,348 (1f) 6,045,258 6,045,258
---------- ---------- ----------- ---------- ----------
Gross profit........... 2,644,652 3,363,971 (2,106,348) 3,902,275 3,902,275
Operating expenses:
Sales and marketing.... 470,234 113,391 (1f) 583,625 583,625
General and
administrative........ 1,403,074 694,693 714,296 (1f) 2,812,063 2,812,063
Salaries and benefits.. 2,119,448 (2,119,448)(1f)
Contract services...... 228,163 (228,163)(1f)
Equipment and
facilities rent....... 222,272 (222,272)(1f)
Corporate overhead..... 364,152 (364,152)(1f)
Disposal of clinic
operations............ 84,334 84,334 84,334
Depreciation and
amortization.......... 277,911 216,597 (150,981)(1h) 432,527 432,527
118,000 (1c)
(29,000)(1l)
---------- ---------- ----------- ---------- ----------
Total operating ex-
penses................. 2,151,219 3,929,659 (2,168,329) 3,912,549 3,912,549
Income (loss) from
operations............. 493,433 (565,688) 61,981 (10,274) (10,274)
Other income (expense):
Interest income........ 45,366 10,500 (16,450)(1d) 39,416 39,416
Interest expense....... (18,451) (258,748) 258,748 (1g) (18,451) (18,451)
Other.................. 14,617 (91,406) 91,406 (1m) 14,617 14,617
---------- ---------- ----------- ---------- ----------
41,532 (339,654) 333,704 35,582 35,582
---------- ---------- ----------- ---------- ----------
Net income (loss)....... $ 534,965 $ (905,342) $ 395,685 $ 25,308 $ 25,308
========== ========== =========== ========== ==========
Net income per common
share.................. $ 0.10 $ 0.00 $ 0.00
========== ========== ==========
Weighted average number
of common shares
outstanding............ 5,532,000 5,532,000 1,244,000 6,776,000
========== ========== ========= ==========
</TABLE>

See accompanying notes.

18
<PAGE>

NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

(1.) The Cost Review Services ("CRS") and AmHealth Acquisition adjustments
consist of the following and represent:

(a). The elimination of assets and liabilities of AmHealth not acquired as
of the closing date.

(b). The reclassification of certain of AmHealth's assets to be consistent
with CORE's asset classifications.

(c). Adjustments to account for the acquisition of AmHealth as a purchase
pursuant to APB Opinion No. 16, "Business Combinations." The purchase
cost has been allocated to the assets and liabilities of AmHealth
based on their relative fair values. Such allocations are subject to
final determination based on valuations and other studies. The final
values may differ from those set forth below:

<TABLE>
<CAPTION>
<S> <C>
Goodwill:
Agreed-upon purchase price.................................. $15,657,500
Short-fall in net assets to be acquired..................... (832,500)
-----------
Net purchase cost........................................... 14,825,000
Professional fees and other liabilities..................... 250,000
Estimated fair value of net assets to be purchased.......... (917,500)
-----------
Excess of purchase cost over fair value..................... $14,157,500
===========
</TABLE>

The pro forma amortization expense of goodwill, valued at $14,157,500,
is being amortized on a straight-line basis over 30 years and results
in an increase to amortization expense of $472,000 and $118,000 for the
year ended December 31, 1995 and the three months ended March 31, 1996,
respectively.

(d). The elimination of the note receivable from AmHealth of $1,016,450
including principal and interest. Under the terms of the note,
payment is due on the earliest of the following dates:

(i) the date of the closing of the AmHealth Acquisition.

(ii) the date six months after the termination of the AmHealth
Acquisition Agreement.

(iii) the date of an occurrence of a significant transaction (a merger,
sale or transfer of a significant portion of AmHealth's assets or
stock directly or indirectly).

See Note 16 to the Audited Financial Statements of CORE, INC. for a
description of the nature and terms of this note.

(e). An increase in amortization to reflect the pro forma effect of the CRS
purchase as of January 1, 1995 of the excess of purchase price over
the estimated fair value of the acquired net tangible and intangible
assets relating to CRS valued at $1,950,000, which is being amortized
on a straight-line basis over 27.5 years.

(f). The reclassifications of certain of CRS's and AmHealth's expenses to
be consistent with CORE's expense classifications. The
reclassifications have no impact on income (loss) from operations.
Expenses reclassified include salaries and benefits, contract services
and equipment and facilities rent and result in the reclassification
of a portion of CRS's and AmHealth's general and administrative
expenses to cost of services and sales and marketing.

(g). The elimination of interest expense of $1,482,712 and $258,748 for the
year ended December 31, 1995 and the three months ended March 31,
1996, respectively, associated with debt not acquired as of the
closing date. See Notes 5 and 6 to the Audited Financial Statements of
the Nine Clinics of AmHealth.

(h). The elimination of amortization expense of $783,780 and $150,981 for
the year ended December 31, 1995 and the three months ended March 31,
1996, respectively, related to AmHealth's goodwill not acquired as of
the closing date.

(i). The decrease in investment income resulting from the reduction of
short-term investments used to fund the purchase of CRS.

19
<PAGE>

NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)--
(CONTINUED)

(j). The increase in interest expense relating to the long-term obligations
to former shareholders' of CRS incurred in connection with the
purchase of CRS.

(k). Decrease in tax provision as a result of the pro forma adjustments.
The pro forma provision for income taxes has been computed assuming
the Company's pro forma results of operations had been included in a
consolidated federal income tax return. The Company has elected to
file consolidated income tax returns in the future which will include
all subsidiaries.

(l). Decrease in depreciation expense relating to certain fixed assets of
AmHealth not acquired by CORE.

(m). The elimination of redeemable preferred stock penalties of $91,406 for
the three months ended March 31, 1996 associated with the redeemable
preferred stock not acquired as of the closing date.

(2.) The pro forma combined condensed balance sheet offering adjustments
represent the issuance of 2,500,000 shares of CORE stock at an assumed
price of $12.125 per share, as reduced by the underwriter's fees (6.5% of
the offering proceeds) and the estimated offering expenses.

(3.) The pro forma combined condensed statement of operations for the year
ended December 31, 1995 offering adjustments represent the issuance of
1,264,000 shares of CORE stock at an assumed price of $12.125 per share,
as reduced by the underwriter's fees (6.5% of the offering proceeds) and
a pro rata portion of estimated offering expenses. The offering
adjustments do not give effect to the sale of the additional 1,236,000
shares of Common Stock offered hereby.

(4.) The pro forma combined condensed statement of operations for the three
months ended March 31, 1996 offering adjustments represent the issuance
of 1,244,000 shares of CORE stock at an assumed price of $12.125 per
share, as reduced by the underwriter's fees (6.5% of the offering
proceeds) and a pro rata portion of estimated offering expenses. The
offering adjustments do not give effect to the sale of the additional
1,256,000 shares of Common Stock offered hereby.

(5.) The pro forma combined condensed statement of operations for the year
ended December 31, 1995 reflects CORE and CRS results for their years
ended December 31, 1995 and AmHealth results for its six months ended
December 31, 1995 and six months ended June 30, 1995.

20
<PAGE>

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data are derived from the
consolidated financial statements of the Company. The financial statements for
the years ended December 31, 1991, 1992, 1993, 1994 and 1995, have been
audited by Ernst & Young LLP, independent auditors. The financial data for the
three month periods ended March 31, 1995 and 1996 are derived from unaudited
financial statements. The unaudited financial statements include all
adjustments, consisting of normal recurring accruals which the Company
considers necessary for a fair presentation of the financial position and
results of operations for these periods. The data should be read in
conjunction with "Management's Discussion and Analysis of Financial Condition
and Results of Operations," the consolidated financial statements and related
notes and other financial information included elsewhere herein.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------- ----------------------
1991 1992 1993 1994 1995 1995 1996
------- ------- ------- ------- ------- --------- -----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Revenues................ $14,671 $16,415 $16,316 $16,746 $20,769 $ 4,729 $ 6,584
Cost of services........ 9,374 10,371 10,714 11,305 12,839 3,117 3,939
------- ------- ------- ------- ------- --------- --------
Gross profit........ 5,297 6,044 5,602 5,441 7,930 1,612 2,645
Operating expenses:
General and
administrative....... 3,491 4,875 5,096 4,265 4,787 1,191 1,403
Sales and marketing... 1,604 2,272 1,787 1,563 1,499 382 470
Restructuring costs... 558 558
Merger costs and
expenses............. 215 1,182 1,114 436 428
Corporate relocation.. 394 163
Depreciation and
amortization......... 500 637 1,067 915 905 232 278
Write-off of
goodwill............. 2,294
------- ------- ------- ------- ------- --------- --------
Total operating
expenses........... 5,595 8,393 9,295 10,151 8,185 2,791 2,151
Income (loss) from
operations............. (298) (2,349) (3,693) (4,710) (255) (1,179) 494
Other income (expense):
Interest income
(expense), net....... (41) 337 288 138 157 26 27
Other income
(expense)............ 29 (127) 19 1 14
------- ------- ------- ------- ------- --------- --------
(41) 337 317 11 176 27 41
Income (loss) before
income taxes and
extraordinary item..... (339) (2,012) (3,376) (4,699) (79) (1,152) 535
Provision for income
taxes.................. (33) 2
------- ------- ------- ------- ------- --------- --------
Income (loss) before
extraordinary item..... (306) (2,014) (3,376) (4,699) (79) (1,152) 535
Extraordinary item--
benefit of federal
income tax loss
carryforwards.......... 53
------- ------- ------- ------- ------- --------- --------
Net income (loss)....... $ (253) $(2,014) $(3,376) $(4,699) $ (79) $ (1,152) $ 535
======= ======= ======= ======= ======= ========= ========
Net income (loss) per
common share:
Income (loss) before
extraordinary item... $ (0.12) $ (0.54) $ (0.73) $ (1.01) $ (0.02) $ (0.24) $ 0.10
Extraordinary item.... 0.02
------- ------- ------- ------- ------- --------- --------
Net income (loss)
per common share... $ (0.10) $ (0.54) $ (0.73) $ (1.01) $ (0.02) $ (0.24) $ 0.10
======= ======= ======= ======= ======= ========= ========
Weighted average number
of common shares
outstanding............ 2,577 3,751 4,611 4,668 4,755 4,740 5,532
======= ======= ======= ======= ======= ========= ========
<CAPTION>
DECEMBER 31,
------------------------------------------- MARCH 31,
1991 1992 1993 1994 1995 1996
------- ------- ------- ------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......... $ 9,772 $ 7,659 $ 6,597 $ 4,612 $ 3,152 $ 2,850
Total assets............ 14,033 16,934 15,972 12,504 12,195 12,866
Long-term obligations... 237 270 223 121 817 427
Accumulated deficit..... 695 2,709 6,085 10,784 10,864 10,329
Stockholders' equity.... 11,216 11,481 12,237 7,553 7,648 8,213
</TABLE>

21
<PAGE>

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

OVERVIEW

CORE is a national provider of managed disability and health care benefits
management services. The Company was incorporated in 1984 under the name Peer
Review Analysis, Inc. to provide physician-intensive utilization management
services to commercial insurance companies and self-insured employers. PRA
became a publicly-held entity in December 1991 with the completion of an
initial public offering. In March 1995 PRA completed the CMI/PRA Merger. CMI
provides managed disability services, including benefits analysis and
consulting services and health care benefits utilization review and case
management services. CMI's utilization review and case management services
with respect to mental health and substance abuse cases were acquired in an
acquisition in March 1993. The CMI/PRA Merger has been accounted for as a
pooling of interests, and consequently the financial statements of the Company
have been retroactively restated to include the financial position and results
of operations of CMI for all periods presented. In July 1995, the Company
changed its name to CORE, INC., and in October 1995, the Company acquired Cost
Review Services, Inc., a provider of bill audit and case management services
in the workers' compensation market.

The Company has entered into a definitive agreement to acquire substantially
all of the assets and operations of AmHealth, Inc. (excluding its accounts
receivable). AmHealth is a management services organization that manages
occupational health clinics and on-site industrial medical facilities in
California. The purchase price in the AmHealth Acquisition is $15.7 million
(subject to certain closing adjustments based on the net book value of the
assets transferred and liabilities assumed on the closing date) which is
payable in cash and which the Company intends to finance with the proceeds of
this offering. The completion of the AmHealth Acquisition is a condition to
the completion of this offering.

The Company's pro forma operating results after the acquisition of AmHealth
will be impacted significantly. The Company will record approximately $14.2
million of goodwill in conjunction with the acquisition. The Company plans to
amortize this goodwill over 30 years. Accordingly, amortization expense,
relative to this transaction, will increase by $472,000 a year. AmHealth
clinics and employer services provide for the treatment and rehabilitation of
work-related injuries and illnesses. Quarterly operating results for AmHealth
may vary depending upon the seasonal nature of demand for such services (which
is lower during the period between Thanksgiving and New Year's Day).
Additionally, the Company anticipates that AmHealth's cost of services as a
percentage of revenue will be slightly higher than that of CORE's current
lines of service, however this is not expected to adversely affect the
Company's financial condition or results of operations due to expected
reductions in general and administrative expenses as a percentage of revenue
following the combination of executive and operating functions of AmHealth
with those of the Company. The Company further expects that the AmHealth
Acquisition will not have a significant impact on sales and marketing expenses
as a percentage of revenue. The Company does not expect to incur significant
restructuring costs during the next twelve months as a result of the AmHealth
Acquisition. However, the foregoing are forward-looking statements, and while
they reflect management's current views they are based on many assumptions and
are subject to risks and uncertainties, including the ability of the Company
to integrate various operational, marketing and administrative functions of
AmHealth with those of the Company and to cut costs and achieve profitability
of the AmHealth operations.

In addition, the Company has entered into an agreement pursuant to which it
has been granted an option (the "Greaney Option") to purchase Greaney Medical
Group, which includes a national consulting organization specializing in all
aspects of occupational health care. The exercise price of the Greaney Option
is approximately $8.1 million payable in shares of Common Stock. See "Risk
Factors--Recent and Proposed Acquisitions; Risks of Integration; New Business
Lines" and "--Risks Related to Growth Strategy" and "Recent Developments."

The Company provides managed disability services (which consist of the
Company's WorkAbility program as well as its bill audit and analytic
consulting services), specialty physician and behavioral health review

22
<PAGE>

services and health care benefits utilization review and case management
services. These services are provided principally to self-insured employers,
third-party administrators and insurance carriers, and the Company is
typically compensated for these services either on a per review (i.e., per
case), hourly or, to a lesser extent, per enrollee basis. In a limited number
of cases, the Company's compensation varies with cost savings realized by the
client as a result of the Company's services. A significant portion of the
Company's revenues have historically been derived from a limited number of key
clients. See "Risk Factors--Dependence on Key Clients" and Note 15 to the
Audited Consolidated Financial Statements of the Company. Also included in
managed disability services revenue is a limited amount (3% of revenue in
1995) of licensing revenue attributable to license grants by the Company of
the medical protocol portion of the WorkAbility software program. In addition,
upon completion of the AmHealth Acquisition, the Company will manage a network
of nine occupational health clinics and on-site industrial medical facilities
in exchange for management fees to be paid by the related Medical Group.

CORE's quarterly operating results may vary depending on factors such as the
addition or loss of key clients and the seasonal nature of the demand for
elective medical services (which is lower in the summer months and between
Thanksgiving and New Year's Day). CORE's expenses are based, in part, on its
expectations regarding future demand for its services, insofar as the Company
typically hires and trains additional personnel to service new clients or new
programs in advance of the receipt of revenues from such clients and programs.

RESULTS OF OPERATIONS

The following table sets forth certain statement of operations data for the
periods indicated expressed as a percentage of revenues:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------- --------------------
1993 1994 1995 1995 1996
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Revenue................. 100.0% 100.0% 100.0% 100.0% 100.0%
Costs of services....... 65.7 67.5 61.8 65.9 59.8
Gross profit............ 34.3 32.5 38.2 34.1 40.2
General and
administrative
expense................ 31.2 25.5 23.0 25.2 21.3
Sales and marketing
expense................ 11.0 9.3 7.2 8.1 7.1
</TABLE>

The following table sets forth the contribution to total revenues of each of
the Company's principal service lines for the periods indicated:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, THREE MONTHS ENDED MARCH 31,
----------------------------------------------- -----------------------------
1993 1994 1995 1995 1996
--------------- --------------- --------------- -------------- --------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------- ------- ------- ------- ------- ------- ------ ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Specialty physician and
behavioral health
review................. $ 7,564 46.3% $ 7,425 44.3% $ 8,845 42.6% $2,259 47.8% $2,325 35.3%
Utilization review and
case management........ 5,604 34.3 6,069 36.2 6,448 31.0 1,568 33.1 1,909 29.0
Managed disability
(including WorkAbility,
analytic and bill
audit)................. 3,148 19.4 3,252 19.5 5,476 26.4 902 19.1 2,350 35.7
------- ----- ------- ----- ------- ----- ------ ----- ------ -----
$16,316 100.0% $16,746 100.0% $20,769 100.0% $4,729 100.0% $6,584 100.0%
======= ===== ======= ===== ======= ===== ====== ===== ====== =====
</TABLE>

THREE MONTHS ENDED MARCH 31, 1996 AND 1995

Revenues increased by $1,855,000 (39%) from $4,729,000 in 1995 to $6,584,000
in 1996. This increase can be attributed to continued growth in the volume of
reviews being processed by the Company from existing clients in each of its
principal service lines as well as the addition of new clients. Approximately
$1,448,000

23
<PAGE>

(78%) of the Company's increase in revenues during the first quarter of 1996
came from managed disability services. The majority of this increase resulted
from the addition in 1995 of Hughes Electronics Corporation and Champion
International as key WorkAbility clients, increased services to smaller
corporate clients under the Company's distribution relationship with CIGNA
Insurance and the acquisition of CRS in October 1995 giving CORE the ability
to service the workers' compensation market with bill audit services.

During the first quarter of 1996, the Company's top five clients represented
31% of revenues compared to 33% during the first quarter of 1995. No single
client represented more than 10% of total revenues in the quarter ended March
31, 1996. Chrysler Corporation accounted for 10% of the Company's total
revenue in the quarter ended March 31, 1995. No other single client
represented more than 10% of total revenues during the quarter ended March 31,
1995.

Cost of services for the Company include direct expenses associated with the
delivery of its review and managed care services, including salaries for
professional, clerical and license support staff, the cost of physician
reviewer consultants and telephone expense. Cost of services increased by
$822,000 (26%) from $3,117,000 for the three months ended March 31, 1995 to
$3,939,000 for the three months ended March 31, 1996. The increase is
primarily the result of additional payroll associated with processing a higher
volume of referrals and increased staffing levels required to service new and
growing WorkAbility clients. Gross profit performance improved from 34% for
the quarter ended March 31, 1995 to 40% for the quarter ended March 31, 1996
due primarily to the efficiencies obtained from the restructuring of
operations following the CMI/PRA Merger (March 1995), including a
consolidation of management staff and the companies' benefit plans, and
greater economies of scale related to higher revenues.

General and administrative expenses include the cost of executive,
administrative and information services personnel, rent and other overhead
items. General and administrative expenses increased $212,000 (18%) from
$1,191,000 or 25% of revenues for the quarter ended March 31, 1995 to
$1,403,000 or 21% of revenues for the quarter ended March 31, 1996. Expenses
increased due to additional staffing in the accounting and information
services areas to support the growth of the Company's sales. Additionally,
rent and other general and administrative expenses have increased due to the
purchase of CRS. The improvement as a percentage of revenue is generally due
to efficiencies obtained as a result of the CMI/PRA Merger and the greater
economies of scale related to higher revenues.

Sales and marketing expenses include salaries for sales and account
management and travel expense. Sales and marketing expenses also include costs
designed to increase revenues, such as participation in and attendance at
industry trade shows and conferences. Sales and marketing expenses increased
$88,000 (23%) from $382,000 for the quarter ended March 31, 1995 to $470,000
for the quarter ended March 31, 1996. The increase is primarily due to
increased travel expenses. The Company's sales and marketing strategy focuses
the efforts of an industry known senior management team and a smaller sales
and marketing staff on fewer but significantly larger sales prospects.

Years Ended December 31, 1995 and 1994

Revenues increased by $4,023,000 (24%), from $16,746,000 in 1994 to
$20,769,000 in 1995. The volume of reviews processed in each of the Company's
three principal service lines increased. These increases were primarily
attributable to the addition of new clients and an increase in review volume
from existing clients. Approximately $2,224,000 (55%) of the Company's
increase in revenues during 1995 came from growth in managed disability
services, including WorkAbility, analytic and bill audit services. During
1995, CORE added Hughes Electronics Corporation as a key WorkAbility client
and increased its services to smaller corporate clients under the Company's
distribution relationship with CIGNA Insurance. Additionally, with the
acquisition of Cost Review Services, Inc. ("CRS") in October 1995, CORE
expanded its ability to service the workers' compensation market with bill
audit services. CRS revenues represented 21% of the Company's 1995 increase in
revenues. CORE's specialty physician and behavioral health review services
grew by $1,420,000 (19%) in 1995. This growth was due primarily to increased
demand for specialty-matched physician reviews across a broad range of
markets, including but not limited to the group health, workers' compensation
and disability management markets. During 1995 the

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Company's top five clients represented 30% of revenues, compared to 37% during
1994. No single client represented more than 10% of total revenues in 1995.

Cost of services increased by $1,534,000 (14%), from $11,305,000 for 1994 to
$12,839,000 for 1995. This increase is primarily the result of additional
payroll and physician review costs associated with processing a higher volume
of referrals and increased staffing levels required to service new and growing
WorkAbility clients. During 1995, CORE's cost of services increased by only
14% to service a 24% increase in revenue. Accordingly, gross profit
performance improved from 33% in 1994 to 38% in 1995. This improvement is
generally due to efficiencies obtained as the result of the CMI/PRA Merger,
which included a consolidation of facilities and management staff, a
consolidation of the companies' benefit plans and greater economies of scale
related to higher revenues.

General and administrative expenses increased $522,000 (12%), from
$4,265,000 for 1994 to $4,787,000 for 1995, due principally to higher costs
associated with additional staffing in the information services area to
support the growth of the Company. General and administrative expenses as a
percentage of revenue decreased from 25% in 1994 to 23% in 1995. This
improvement is generally due to efficiencies obtained as the result of the
CMI/PRA Merger, which included a consolidation of facilities and management
staff, a consolidation of the previously separate companies' benefit plans and
greater economies of scale related to higher revenues.

Sales and marketing expenses also include costs designed to increase
revenues, such as participation in and attendance at industry trade shows and
conferences. Sales and marketing expenses decreased $64,000 (4%), from
$1,563,000 in 1994 to $1,499,000 in 1995. This decrease was due to the net
effect of a reduction in the Company's sales staff and associated expenses
during 1995 as a result of the CMI/PRA Merger and increased marketing related
expenditures such as hosting and co-hosting a number of conferences across the
country that addressed various market-specific issues that the Company's
clients and prospective clients are facing.

Merger costs and expenses of $436,000 recorded during 1995 consist primarily
of professional fees, investment advisor services and printing expenses
associated with the completed CMI/PRA Merger. This was a $678,000 decrease
from the $1,114,000 recorded during 1994.

Restructuring costs of $558,000 consist of charges for the Company's plan of
termination and exit plan. In conjunction with the CMI/PRA Merger completed on
March 24, 1995, the Company reduced its workforce where overlapping functions
existed. The Company also reduced its sales and marketing workforce to better
address the marketing strategy of the Company. The termination of employees as
a result of these actions caused the recognition of severance and outplacement
costs for the quarter ended March 31, 1995. The Company also abandoned excess
leased space at its Burlington, Massachusetts location, and a charge was
recorded for the cost of future rental expense on the abandoned space.

Other income consists primarily of interest income, which represents amounts
earned by the Company on investments held, as reduced by interest expense,
which primarily relates to borrowings under lines of credit. During 1995,
other income increased $166,000, from $10,000 in 1994 to $176,000 in 1995.
This increase was due primarily to the Company using more of its invested
funds and significantly reducing its use of its lines of credit.

Years Ended December 31, 1994 and 1993

Revenues increased by $430,000 (3%), from $16,316,000 in 1993 to $16,746,000
in 1994. This increase in revenue is primarily attributable to growth in the
Company's managed disability and utilization review and case management
service lines, including WorkAbility revenues from new clients such as General
Electric and Hoechst Celanese Corporation and the initiation of disability
review services to Northwestern National Life (now known as Reliastar
Financial Corp.). Licensing of CORE's software, including WorkAbility On-Line
Medical Protocols ("WOMP"), a product developed in late 1993, increased 1994
licensing revenues to nearly 5% of total revenues, a significant increase over
1993. While revenues in the Company's specialty physician and behavioral
health review service line remained constant during 1994, the Company handled
a decreased volume of reviews. The Company helped sustain revenues in this
service line by enhancing its services and implementing

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service sensitive pricing during 1994 which increased the average price
charged per review. These revenue increases were offset in significant part by
a decreased number of referrals in 1994 compared to the prior year and the
loss of revenues from Digital Equipment Corporation ("DEC") effective December
31, 1993. DEC revenues were $1,202,000 for 1993. In 1994, the Company's top
five clients represented 37% of revenue compared to 39% during 1993. During
1994, Northwestern National Life represented 12% of revenues. No other client
represented more than 10% of total revenue in 1994.

Cost of services increased by $591,000 (6%), from $10,714,000 in 1993 to
$11,305,000 in 1994. This increase resulted from the creation of a customer
service department in Physician Review Services ("PRS"); the addition of
management personnel to quality assurance efforts; and the hiring of
additional nurse reviewers to better process more clinically and
administratively complex physician reviews. In the fourth quarter of 1993, the
PRS unit implemented a "team" structure approach to processing physician
reviews. Staff reductions attendant with the loss of DEC in December 1993 were
offset in part by increased staffing required to service start-up units for
CIGNA Insurance and General Electric Corporation. The Company also hired and
trained new personnel and implemented a new case management program to service
anticipated new business in advance of the initial receipt of program
revenues. These factors adversely impacted the Company's gross profit
performance, which decreased slightly, from 34% in 1993 to 33% in 1994.

General and administrative expenses decreased $831,000 (16%), from
$5,096,000 in 1993 to $4,265,000 in 1994. This decrease was due primarily to
the Company's ability to reduce its overhead expenses by consolidating the
operations of three Orange County, California offices into a single facility
in Irvine, California and consolidating the executive and operating functions
in anticipation of the CMI/PRA Merger. The Company also reduced its
expenditures for legal and investment banking services during 1994. The
actions taken during 1994 significantly reduced general and administrative
expense as a percentage of revenue from 31% in 1993 to 25% in 1994.

Sales and marketing expenses decreased by $224,000 (13%), from $1,787,000
for 1993 to $1,563,000 for 1994. The Company reduced its sales and marketing
activity during 1993 and 1994 in response to a declining revenue base in some
of its lines of business. The change in strategy, from aggressively pursuing
new client revenue toward better servicing of and increased marketing to its
current client base prompted the Company to move many of its marketing efforts
in-house. The Company also made reductions in certain sales personnel in
California in anticipation of a consolidated sales organization under the
CMI/PRA Merger.

Merger costs and expenses of $1,114,000 consist primarily of professional
fees, investment advisor services and printing expenses associated with the
completed CMI/PRA Merger. Merger costs and expenses decreased by $68,000 for
1994 over 1993, in which expenses incurred were related to both the CMI/PRA
Merger and the March 1993 purchase of Integrated Behavioral Health.

Depreciation and amortization expenses decreased by $153,000 (14%), from
$1,067,000 in 1993 to $914,000 in 1994. This decrease was primarily due to the
write-off of goodwill related to the IBH purchase and to the accelerated
amortization of a portion of the value assigned to customer contracts
associated with the June 1992 acquisition of Interventions, a Chicago
behavioral health plan, during 1993, due to the loss at that time of one of
the unit's larger customers.

Other income decreased by $307,000 (97%), from $317,000 in 1993 to $10,000
in 1994. This decrease was due largely to a realized loss of $158,000 incurred
on the sale of investments, fewer dollars available for investment and a
decline in interest rates.

LIQUIDITY AND CAPITAL RESOURCES

For the year ended December 31, 1995, the Company's cash and cash
equivalents increased by $1,006,000. For this period, operating activities
provided $439,000. The Company's investing activities provided $1,995,000 of
cash, primarily due to the net sale of available-for-sale securities of
$4,406,000 as reduced by $1,510,000 for the purchase of Cost Review Services,
Inc. and $1,279,000 for the funding of equipment and furniture purchases and
for leasehold improvements. The Company's financing activities used $1,428,000
for this period. During the year the Company paid off CMI's line of credit of
$1,200,000 and notes payable to officers of $200,000.

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<PAGE>

For the three months ended March 31, 1996, the Company's cash and cash
equivalents decreased by $987,000. For this period, operating activities used
$141,000 due primarily to an increase of $1,314,000 in accounts receivable,
offset by income for the quarter of $535,000 and an increase in accounts
payable and accrued expenses of $482,000. The increase in accounts receivable
can be attributed to continued revenue growth while the increase in accounts
payable and accrued expenses relates to the timing of payments. The net cash
used in investing activities of $658,000 is essentially related to the use of
$635,000 of cash to fund software development and leasehold improvements at
the Company's Burlington office. In addition, the Company issued notes
receivable to AmHealth in connection with the AmHealth Acquisition and to
Continental FirstCare in connection with the Company's proposed relationship
with Continental FirstCare in the aggregate amount of $1,041,000, using cash
provided from the sale of investments available-for-sale of $1,085,000. The
Company's financing activities used $188,000 for payments due on contractual
obligations, notes payable and capital leases.

During the first quarter of 1996, the Company increased its available line
of credit by $1,000,000 up to $2,500,000, subject to certain limitations based
on the Company's accounts receivable. The line of credit prohibits the payment
of dividends on Common Stock without the prior written consent of the banking
institution. Additionally, the Company must obtain the written consent of the
banking institution before entering into certain other transactions, including
any loans to third parties and acquisitions, mergers or other consolidations
which exceed certain size thresholds. The Company expects to utilize this line
of credit to meet short-term demands for cash that fluctuate based on the
timing of collections on accounts receivable.

During the first quarter of 1996, in conjunction with CORE's proposed
acquisition of AmHealth, the Company loaned $1,000,000 to AmHealth, under
lines of credit agreements. See "Business--The AmHealth Acquisition." The
Company plans to use funds from this offering to invest in the operating
infrastructure of AmHealth. The initial investment of approximately $1.2
million will include the purchase of a new software operating system, various
leasehold improvements (at most of the clinic sites), medical equipment and
other purchases designed to improve capacity, efficiency and the delivery of
services.

The Company leases its facilities and certain office equipment. Lease
commitments, which relate substantially to space rental, for the years ended
December 31, 1996 and December 31, 1997 are approximately $1.5 million and
$1.3 million, respectively. All obligations held by the Company under lease
commitments expire on various dates through the end of the year 2001 and total
$5.7 million as of December 31, 1995.

In connection with the Company's acquisition of AmHealth, it will assume
lease commitments related to certain purchased assets of approximately $2.3
million which expire on various dates through the end of the year 2000. For
the years ended 1996 and 1997, lease obligations are approximately $450,000
and $400,000, respectively.

The Company has net operating loss carryforwards for income tax purposes of
approximately $9 million as of December 31, 1995, which can be used to reduce
the cash flow necessary to pay taxes. The amount of net operating loss
carryforwards that can be utilized in any future year may be limited due to
"equity structure shifts" and "owner shifts" involving "5% shareholders" (as
these terms are defined in Section 382 of the Internal Revenue Code), which
resulted in a more than 50 percentage point change in ownership. The
utilization of these NOL carryforwards may be subject to further limitation
provided by the Internal Revenue Code of 1986 and similar state provisions.
See Note 11 of Notes to Consolidated Financial Statements of the Company.

The Company plans to finance its operations and working capital requirements
with the proceeds of this offering, earnings from operations, investments on
hand and other sources of available funds, including the Company's available
line of credit of $2,500,000. The Company presently believes that these
resources will be sufficient to meet its liquidity and funding requirements
through at least the year 1997.

PENDING ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued SFAS No. 123 "Accounting
for Stock-Based Compensation." SFAS No. 123 is effective for fiscal years
beginning after December 15, 1995 and will not have a material impact on the
Company's statement of operations or financial position.

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BUSINESS

CORE is a national provider of managed disability and health care benefits
management services to Fortune 500 companies and other self-insured employers,
third-party administrators and insurance carriers. The Company's services
include managed disability services using CORE's proprietary WorkAbility
disability management software, specialty physician and behavioral health
review services and health care benefits utilization review and case
management services. With the AmHealth Acquisition discussed below, CORE will
also manage a network of nine occupational health clinics and on-site medical
facilities, which render occupational and industrial medical services. The
Company's services are designed to assist its clients monitor and control
disability and health care benefits costs without compromising the quality of
health care services provided to the patient.

CORE's managed disability services include monitoring the appropriateness of
disability durations under short and long-term disability plans and workers'
compensation programs in order to reduce unnecessary absenteeism and its
related costs of wage replacement, hiring and training replacement personnel
and lost productivity. These services are based on CORE's WorkAbility program,
a proprietary software program developed over a ten-year period through the
statistical analysis of disability utilization data. CORE's WorkAbility
managed disability program provides an objective, medically based method for
recommending and monitoring employee's return-to-work dates. The WorkAbility
program is designed to obtain and analyze relevant medical and work-related
information with the initial onset of the employee's absence and thus assure
that the employee, attending physician and employer all have reasonable and
consistent expectations as to the projected return-to-work date.

CORE's independent physician review programs provide pre-certification,
concurrent and appellate physician review services for use with utilization
management programs of the Company's insurance company and self-insured
corporate clients. The Company believes its more than 230 Board certified
physician reviewers comprise the largest independent physician review service
in the country. CORE's behavioral health review program provides comparable
review service by psychiatric specialists in sub-specialties such as adult and
child psychiatry, alcoholism and chemical dependency. The Company also
provides utilization review services designed to evaluate the medical
necessity and appropriateness of health care services prescribed for
participants in health care and medical plans. In cases of high cost injuries
or illness, CORE also renders case management services for individual cases to
assure that cost-effective treatment alternatives are utilized.

INDUSTRY OVERVIEW

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In response to these rising costs, a variety of insurance companies, managed
care organizations and self-insured employers have used various cost reduction
techniques, often borrowed from group health managed care, including securing
pricing concessions from providers, using case management tools, and
implementing "gatekeepers" as a means to control utilization. However, these
managed care initiatives focus almost entirely on medical costs generated
after a disability claim is received, not on the more significant productivity
(lost-time) impacts of employee ill health. Furthermore, work absence
duration, and consequently disability payments, have traditionally been driven
by the decision of the treating physician. While workers' compensation cases
are typically attended by an occupational specialist, employees with non-
occupational disabilities tend to utilize their own primary care physician who
have little or no interaction with the employer and limited sensitivity to
productivity (lost time) issues.

As traditional managed care tools become standard industrywide, they are
generating diminishing marginal savings for employers, who must find more
aggressive and sophisticated utilization review mechanisms to yield further
savings. In addition, the new-found awareness of the additional costs
associated with workplace absence has brought with it an increasing demand for
cost saving strategies that address both health care expenditures and the
productivity impact of an employee's ill health. Corporate downsizing and
global competition have focused Corporate America on achieving real
productivity gains. With the importance of each remaining job magnified,
employers are actively looking for new tools to help control workplace
absence. Until recently, recognition and management of these productivity
costs have been impaired by their difficulty in measurement, the fragmentation
of responsibilities for disability programs within human resources and risk
management departments of most corporations and the historical focus on group
health managed care.

While a small group of companies is emerging that are applying managed care
principles to the workers' compensation industry, historically there have been
few, if any, companies focusing on the provision of managed care techniques to
the broader disabilities market. With the support of its analytic and
physician services, CORE's products provide employers with an integrated and
comprehensive approach to disability benefits management.

STRATEGY

CORE intends to expand its position as a leading provider of managed
disability services by utilizing its proprietary WorkAbility program and
related services to reduce the direct costs of group disability and workers'
compensation benefits and to improve employee productivity. The Company
believes that the combination of its health care and disability management
tools and its strong information technology foundation provides an effective
management platform that can be tailored to meet the needs of employers and
managed care organizations. The principal elements of the Company's strategy
for achieving its objective are as follows:

EXPAND WORKABILITY CLIENT BASE. The Company intends to aggressively market
its WorkAbility program to achieve greater penetration into the managed
disability market through direct sales to large employers, sales to small
employers through distribution agreements with insurance companies and
licensing arrangements with selected domestic and international third
parties.

PURSUE OUTSOURCING OPPORTUNITIES. In response to the increasing demand by
large employers for outsourcing their disability management activities,
CORE intends to actively pursue contracts to provide comprehensive managed
disability services on an outsourced basis. In addition to the WorkAbility
program, these services can include development of analytic databases,
management of related vendor contracts, establishment and review of
occupational health networks and provision of onsite occupational health
services. In April 1996, Bell Atlantic Corporation selected the Company to
provide comprehensive disability management services.

ACQUIRE COMPLEMENTARY SERVICES. The managed disability industry is highly
fragmented and in an early stage of development. The evolution of this
marketplace may present opportunities for the Company to complement its
managed disability services by obtaining service line extensions and cross-
selling synergies

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through strategic acquisitions. The Company's October 1995 acquisition of
Cost Review Services, Inc., a workers' compensation bill audit firm, and
the proposed AmHealth Acquisition (see "Business--The AmHealth
Acquisition") are examples of acquisitions which meet the Company's
criteria.

DEVELOP DISABILITY MANAGED CARE NETWORKS. CORE intends to use the
WorkAbility program as the technological platform to develop integrated
networks of disability managed care services. With the AmHealth clinics and
on-site operations as a base, the Company plans to continue developing
managed disability networks in certain geographical markets which support
the local needs of CORE's clients.

ESTABLISH CAPABILITY FOR RISK SHARING ARRANGEMENTS. The Company believes
that the disability management market will evolve toward a risk sharing
model similar to other segments of the health care industry, and that the
WorkAbility program and related database will provide CORE with a
significant advantage in assessing and managing risk. The Company
ultimately intends to be in a position to utilize the WorkAbility program
and its regional clinical networks to enter into capitated or other "at
risk" arrangements with payors.

SERVICES AND PRODUCTS

CORE offers services and products designed to assist the Company's clients
control and monitor disability, workers' compensation and health care costs
without compromising the quality of care or services available to patients.
The Company's services include: (i) managed disability services using CORE's
WorkAbility products and services, (ii) specialty physician and behavioral
health review services using more than 230 CORE-affiliated board certified
physicians and (iii) utilization review ("UR") and case management services.
With the proposed AmHealth Acquisition, CORE will also manage a network of
nine occupational health clinics and an employer services division which
render occupational and industrial medical services.

For the year ended December 31, 1995 and the three months ended March 31,
1996, managed disability services accounted for approximately 26% and 36%,
respectively, of CORE's revenue, specialty physician and behavioral health
review services represented 43% and 35%, respectively, of revenue and UR and
case management services represented 31% and 29%, respectively, of revenue.
Managed disability services, which include the Company's WorkAbility program
as well as its bill audit and analytic consulting services, accounted for more
than 50% of the Company's 1995 total revenue increase and more than 75% of the
Company's revenue increase for the first quarter of 1996 as compared to the
first quarter of 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

MANAGED DISABILITY SERVICES

The Company estimates that total direct and indirect disability expenditures
are approximately $260 billion annually, of which approximately $60 billion is
attributable to workers' compensation costs. CORE's managed disability
services include monitoring of the appropriateness of disability durations
under short and long-term disability plans and workers' compensation programs
in order to reduce unnecessary absenteeism and the costs associated with such
absences. The cost of absenteeism includes wage replacement, the costs of
hiring and training replacement personnel and lost productivity. The Company's
managed disability services are based on the WorkAbility program, a
proprietary software program developed and maintained through the statistical
analysis of disability utilization data. CORE's WorkAbility program provides
an objective, medically based method for managing disability and employees'
return-to-work dates. The WorkAbility program is designed to obtain and
analyze relevant medical and work-related information with the initial onset
of the employee's absence and thus assure that the employee, attending
physician and employer all have reasonable and consistent expectations as to
the projected return-to-work date.

Among the characteristics of CORE's WorkAbility program which differentiate
it from other disability review programs are the following:

DAY ONE INTERVENTION. Unlike retrospective disability review which is
triggered only after an extended employee absence or after significant
costs have been incurred, the WorkAbility program is designed to

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interact with the treating physician immediately upon occurrence of the
disability event. Early intervention permits establishment of an
appropriate return-to-work date prior to a significant absence.

PROPRIETARY DATABASE. CORE began developing its WorkAbility program in
1986. The program uses a database of more than 265,000 disability and
workers' compensation cases collected by CORE over ten years. From this
data base, the Company has developed protocols with over 10,000 clinical
endpoints. As a result, the WorkAbility protocols and projected return-to-
work dates are in most instances based on an historical record of similarly
situated patients rather than theoretical models. As the WorkAbility
program is utilized, the database is growing.

CLINICAL CREDIBILITY. WorkAbility assists the Company in establishing
clinical credibility with the attending physician by comparing CORE's
database of similar medical episodes with the patient's medical and job
profile. This information can be shared with the attending physician to
assist in the development of an effective treatment plan and in determining
the appropriate return-to-work schedule. The WorkAbility program, supported
by the Company's more than 230 Board certified physicians, allows a
treating physician to talk to a CORE physician specialist for peer review
of complex diagnoses and treatment plans.

CONCURRENT REVIEW. In addition to the initial recommendation of an
appropriate return-to-work date, WorkAbility services include ongoing
review of patient status to assure the expected date remains accurate. At
these intervals, new information may be gathered about the treatment or the
illness or injury requiring an adjustment to the return-to-work date.

COMPLETE WORKFORCE COVERAGE. The WorkAbility program is designed to cover
all workplace absences, not just the longer term and more costly absences.
The program also provides consistent return-to-work dates for clinical
conditions whether the condition causing the absence is a result of a
workers' compensation workplace injury or an injury outside of the
workplace covered by a disability plan.

The WorkAbility program is operated primarily by registered nurse reviewers
using an automated review system to assess each disability claim in the early
stages of an employee's absence. Under the WorkAbility program, the attending
physician or office staff (depending on the severity of the case) uses a toll-
free number to contact CORE and speaks to a trained WorkAbility program nurse
reviewer who enters information on the diagnosis and severity of the condition
into CORE's proprietary WorkAbility system. Each case is then reviewed by the
nurse using the WorkAbility program's computerized medical protocols, which
consider such factors as the employee's age and general health, job
requirements, symptoms and severity of the condition, diagnosis of the
attending physician, treatment plan, medical procedure(s) performed and
comorbid factors which may affect the duration of the disability.

Using the WorkAbility program, the nurse reviewer considers these various
factors and recommends an appropriate length of disability duration based on
the specifics of the case. To assure consistency, reviews are guided by
program standards based on both statistical and clinical analysis and, in
certain circumstances, are referred to physicians for further review. The
WorkAbility program can assign specific lengths of disability for more than
10,000 clinical descriptions, or "endpoints." If CORE and the attending
physician agree with respect to the anticipated disability duration, a letter
stating the expected return-to-work date is sent to the employee and physician
on the date the review is completed. The employer is notified of the return-
to-work date electronically. If the employee's physician disagrees with the
suggested length of disability assigned by CORE's nurse reviewer (as occurs in
less than 15% of the cases), the case is referred to a WorkAbility physician
advisor who will discuss the case with the treating physician. In the event
that they cannot reach agreement, the case is referred to the employer for
consultation to determine whether or not an independent medical examination
should be requested. If the employee's condition or medical treatment changes
during the absence or the employee is not ready to return to work on the
expected date, a request for an extension of the disability leave is reviewed
on a case by case basis using the WorkAbility program and additional
information provided by the attending physician or patient.

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The Company's WorkAbility program includes return-to-work case management
for high intensity, potentially high cost disability cases. This service is
focused on returning the patient to work as soon as clinically appropriate
through intensive involvement by a dedicated nurse case manager with the
patient, the health care providers and the workplace. Depending on the
client's benefits structure, the Company's return-to-work case managers can
negotiate services, coordinate on-site activities and channel the patient to
appropriate treatments or providers.

The WorkAbility program has the capability to collect and report information
relating to the ongoing disability claims history of each employee and
documents all case reviews, thus allowing the identification of employee
disability patterns and physician treatment patterns. The WorkAbility program
is also able to identify prospective high cost disability events which can be
monitored in more detail through return-to-work case management. In addition,
the Company believes that the data transfer capabilities of the WorkAbility
program can also substantially improve the efficiency of its clients' claims
administration function. Electronic transfer of data required by the employer
or disability program administrator can minimize errors and reduce paperwork,
allowing faster processing of disability payments to employees.

The WorkAbility On-line Medical Protocols ("WOMP") were developed and are
maintained by CORE and are licensed by the Company to third parties as a
separate product. These WorkAbility protocols are updated annually to, among
other things, reflect recent advancements in medical technology and procedures
and to update the recommended disability durations using the collective
experiential data collected by CORE through its services to clients. The
WorkAbility system automatically provides to the Company's clients monthly and
quarterly management reports which monitor disability benefits utilization
trends and identify potential problem areas.

In general, CORE's WorkAbility services are advisory only. The attending
physician and the patient remain responsible for determining the work-absence
period and all other aspects of the plan of treatment, while the employer or
other payor is responsible for making all decisions with respect to the
payment or denial of benefits under the applicable benefits plan. See "Risk
Factors--Exposure to Professional Liability."

In order to assist employers identify and quantify the direct and indirect
costs associated with disability benefits and, to a lesser extent, health care
benefits, CORE also provides data analysis and consulting services to large
corporate clients. These services include in-depth customized information
concerning their disability and health care costs and utilization experience.
Health care costs, disability costs and workers' compensation costs are often
under separate departments in a large employer (human resources, benefits and
risk management) which has historically impaired corporations' ability to
recognize the magnitude of, and to manage, these costs. The basic objectives
of CORE's analytic services are to help employers and insurers obtain better
value for their disability, workers' compensation and health care expenditures
with a company's specific goals in mind. CORE assists in identifying the best
means to reduce the total costs of these benefits or slow the rate of
increase, enhance the appropriateness and quality of care, predict future
benefit costs and increase the return on investment from managed care
programs. CORE's consulting service can coordinate and analyze information on
a company-wide basis and use the client's information and CORE's proprietary
disability and medical cost data analysis methodologies to simulate changes in
a benefit plan's structure and the resulting impacts on overall benefit
program cost. For example, CORE serves as a data partner to several Fortune
500 companies and provides quarterly "CORE Impact Reports" on integrated
claims experience of the client covering disability, workers' compensation and
group health benefits.

The Company's worker's compensation bill audit services involve auditing
medical bills, pharmacy bills and hospital bills for medical services or
products received by the client which are subject to applicable state fee
schedules. The bills are audited to determine whether the services or products
which are the subject of the medical bill are from legitimate medical
providers, contain the proper procedural codes and are billed accurately based
on the procedure codes. Finally, an audit report is prepared stating the
result of such audit with a recommendation for payment.

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SPECIALTY PHYSICIAN AND BEHAVIORAL HEALTH REVIEW

CORE's independent physician review programs provide pre-certification,
concurrent and appellate physician review services for use with existing
utilization management programs of clients, including insurance carriers that
service the group health, disability and workers' compensation markets, and
other managed care companies. The Company believes its more than 230 Board
certified physician reviewers comprise the largest independent physician
review organization in the country. The Company's consulting relationship with
this large base of physicians has positioned the Company to offer an appeal
review service, which is mandated under several state laws and generally
requires specialty-matched reviews. The Company believes that appellate review
is one of the few growing sectors of the otherwise mature utilization
management industry.

When a client's nurse reviewer determines that a case does not meet the
client's established criteria, the nurse reviewer will forward a referral to
CORE's physician reviewer. The referral describes the principal diagnosis of
the patient and the reason for referral for physician review. In most
instances the reason for referral is based upon a question of medical
necessity or therapeutic benefit of a proposed treatment plan. CORE's
independent physician reviews the case information, which will have been
previously entered into CORE's data processing systems, and then telephones
the attending physician to ascertain any additional clinical data, the
attending physician's rationale for the proposed treatment plan or the
proposed length of hospital stay. Based on discussions with the attending
physician, including, when appropriate, discussions of possible alternative
treatment plans, and using clinical judgment as well as criteria based on
national norms, CORE's physician makes a recommendation concerning the
appropriateness of the proposed or revised treatment plan.

CORE then notifies its client of its recommendation regarding the medical
necessity or appropriateness under the client's health care benefit plan of
the proposed treatment plan, hospitalization or length of stay. If the
proposed hospitalization is not certifiable as such under the plan, the payor
typically denies or reduces the payment of benefits for the proposed
hospitalization. The decision of the payor may be appealed by the patient or
the attending physician. In such event a second Company physician of the same
specialty who was not involved in the original decision will review the case
on the merits of the clinical criteria or any additional information.

Reviews under the Company's specialty physician review program are managed
from CORE's offices, and the majority of all review decisions are completed
within 24 hours of referral. In most instances, CORE's services are advisory
in nature. Determinations as to the payment or denial of benefits are
typically made by the third party payor, and decisions as to the patient's
medical treatment are made by the patient and the attending physician. See
"Risk Factors--Exposure to Professional Liability."

CORE's behavioral health review program provides review services similar to
the Company's specialty physician review services by psychiatrists who are
supported by a team of multi-specialty physicians. CORE's independent
psychiatrists include specialists in various psychiatric sub-specialties such
as adult psychiatry, child psychiatry and addictionology, including alcoholism
and chemical dependency. CORE believes that its multi-specialty psychiatrists
(including those in its Integrated Behavioral Health Division) and CORE's
emphasis on intensive specialty review distinguish it from psychiatric review
performed by other utilization management firms and better addresses the more
subjective nature of many behavioral health reviews.

The Company is certified by the Utilization Review Accreditation Commission
("URAC") to perform various utilization review functions. URAC is a nationally
recognized organization that has developed standards to encourage the
availability of effective, efficient and consistent utilization review of
health care services throughout the United States. One of URAC's key
objectives is to establish standards for the procedures used to process
appeals of utilization review determinations. Many of the Company's clients
rely on CORE's specialty physician and behavioral health review services to
comply with URAC's appellate procedures.

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<PAGE>

UTILIZATION REVIEW AND CASE MANAGEMENT

The Company provides medical and behavioral health utilization review and
case management services to Fortune 500 companies and other self-insured
employers, third-party administrators ("TPAs") and an insurance carrier. The
Company's services are designed to evaluate the medical necessity and
appropriateness of health care services prescribed for participants in health
care benefits plans, including hospital admissions, proposed length of
hospital stay, use of outpatient facilities and other treatment alternatives.
In cases of high cost diseases, conditions or catastrophic illnesses, CORE may
also render case management services of individual cases in order to assure
that cost-effective treatment alternatives are utilized. Clients may elect to
contract for all of the services offered under the programs or, in the
alternative, may elect to contract for only certain portions of services
offered.

CORE provides its utilization review services and case management services
through a staff consisting primarily of registered nurses and physicians.
Clients which utilize CORE's utilization review programs advise their
participants of review requirements including the requirement to contact CORE
within a specified period of time. From these contacts, CORE's medical and
behavioral health review staff gathers the necessary personal and medical
information and enters this information into CORE's review system. Based on
this information and using CORE's review criteria, CORE conducts its review.

CORE's review criteria and procedures are structured so that a nurse
reviewer or nurse case manager can initially review the majority of cases
presented. If a hospital admission or outpatient service fails to meet
established criteria, a CORE employed or retained physician (or other doctoral
level practitioner such as a Doctor of Chiropractic or Doctor of Psychology)
reviews the case and may contact the patient's doctor to obtain additional
information or otherwise discuss the proposed treatment plan. Upon completion
of the medical review, CORE notifies the participant, the attending physician
and other affected providers of the outcome of such review. CORE also notifies
its client as to whether the proposed hospitalization and length of stay or
outpatient service appears to be medically necessary and appropriate under the
terms of the benefit plan. CORE provides both an expedited and standard
appeals process to patients or plan members in instances where a non-
certification determination is made by CORE. CORE's UR appellate process
utilizes the Company's relationships with more than 230 Board certified
physicians to provide specialty matched physician review.

For many of its programs, CORE charges its clients a "capitated fee," i.e.,
a fixed per employee per month fee. The amount of this fee varies depending on
the size of the client and the number and type of review programs selected by
the client. For other services, including case management, CORE charges fees
on an hourly rather than a capitated basis. In most cases, CORE's services are
advisory in nature. Notwithstanding the outcome of CORE's review, decisions as
to the payment or denial of benefits and eligibility or coverage under the
benefit plan are typically made by the administrator of the participant's
health care plan, not by CORE. Decisions as to the patient's medical treatment
are made by the patient and the attending physician, not by CORE. See "Risk
Factors--Exposure to Professional Liability."

CLIENTS AND MARKETING

CORE has over 200 customers across the country, including 36 Fortune 500
companies. Revenues from Fortune 500 companies accounted for approximately 40%
of total revenues in 1995 and 1994. The following is a selected list of CORE's
clients which, the Company believes, is representative of its overall client
base:

Chrysler Motor Corporation Hughes Electronics Corporation
Reliastar Financial Corp. (owned by General Motors)
(formerly known as Northwestern Champion International Corporation
National Life) Blue Cross/Blue Shield of Texas
Lockheed Martin Corporation Liberty Mutual Insurance Company,
Aetna Life Insurance Company Inc.
General Electric Corporation Health Plans, Inc.

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<PAGE>

CORE markets its services primarily to national, direct accounts, including
self-insured employers, and through group health and disability insurance
carriers and third party administrators. The Company's marketing strategy is
to use its senior management team and a small sales and marketing staff to
focus on potential sales to a limited number of large sales prospects. The
Company has also entered into distribution agreements with Reliastar Financial
Corp., CIGNA and other insurance companies pursuant to which these companies
offer CORE's WorkAbility services to their customers. For providing
WorkAbility services, the Company is paid fees by the insurance companies.
Also, the Company is active in conferences addressing disability management
issues the Company's clients and prospective clients face, including acting as
a host or a co-host to several conferences in 1995.

The Company recognized 50% of its revenues in 1995 from self-insured
employers, as compared to 46% in 1994. Revenues from insurance carriers
represented approximately 37% and 43% of total revenues in 1995 and 1994,
respectively. The remaining 13% and 11% of total revenues in 1995 and 1994,
respectively, were recognized from other clients, including managed care
companies. During 1995, no client represented 10% or more of revenues. During
1994, Northwestern National Life Insurance (now known as Reliastar Financial
Corp.) represented approximately 12% of revenues. During the years ended
December 31, 1994 and 1995, the Company's five largest clients represented
36.5% and 30.1%, respectively, of total revenue, and its ten largest clients
represented 45.0% and 51.0%, respectively, of total revenue.

CORE typically enters into service agreements with its clients. These
agreements have automatically renewable successive terms of between one and
three years, but are generally terminable upon 60 to 90 days notice. They do
not generally provide for minimum payments and are usually non-exclusive.
Certain contracts include provisions that the fees payable to CORE can vary
based upon CORE's performance and the savings achieved by the client under the
contract.

THE AMHEALTH ACQUISITION

On May 10, 1996, CORE entered into an agreement providing for the
acquisition of substantially all the assets and operations of AmHealth
(excluding its accounts receivable) for a purchase price of $15.7 million
subject to certain closing adjustments based on the net book value of the
assets transferred and liabilities assumed on the closing date. The closing of
the AmHealth Acquisition is a condition to the completion of this offering.

In determining the purchase price, CORE reviewed the historical operating
results of the clinics adjusted to reduce debt service and general and
administrative expenses which would not be assumed by CORE. Under this
analysis, the Company believed that the clinics could produce a profit.
Additionally, CORE believed that additional operating efficiencies and revenue
growth opportunities could be achieved with the acquisition, including
referral of business from CORE's WorkAbility program and improved group
purchasing and financial operations. CORE then multiplied the range of
profitability by a discounted multiple of price to earnings ratios of
publicly-traded companies in the same field as AmHealth to determine an
appropriate purchase price.

AmHealth is a management services organization ("MSO") that manages
occupational health clinics and on-site industrial medical facilities in
California. The assets and operations to be acquired by the Company relate to
nine occupational health clinics and a medical services division that provides
on-site occupational health and industrial medical services to approximately
11 employers. Of the nine clinics, five are located in the greater Los Angeles
area (and were acquired by AmHealth in September 1994 from Occu-Care, Inc., a
wholly-owned subsidiary of TriCare, Inc.) and four are located in the greater
San Francisco area. These clinics and the on-site medical services operations
provide initial diagnosis and treatment of work-related injuries and illnesses
that traditionally have been provided by hospitals and family practice and
other primary care physicians, as well as physical therapy and rehabilitation.
AmHealth's operations also provide diagnostic services, pre-employment medical
assessment and testing, functional capacity assessment and drug testing.

The occupational health clinics are located in industrial parks centrally
located to large concentrations of employers. The clinics include examination
rooms, X-ray facilities, ancillary testing areas, suites appropriate for

35
<PAGE>

minor surgical procedures, physical rehabilitation equipment and orthopedic
treatment areas. The on-site medical services division manages on-site
occupational health departments for large employers, typically after the
employer has elected to outsource management of first aid and industrial
medicine at its plant or facility. The on-site facilities are typically
smaller than AmHealth's managed occupational health clinics.

The operations to be acquired from AmHealth also include WorkComtrol, a
medical review organization utilizing certified medical officers who assist
employers to comply with employee health requirements of the federal
Occupational Safety and Health Administration, the Environmental Protection
Agency and the Department of Transportation. Services provided by WorkComtrol
include review of test procedures, analysis of test results and assessment of
medical compliance and rehabilitation. WorkComtrol also conducts hearing,
respiratory, asbestos and other workplace surveillance examinations.

AmHealth's clients include large manufacturers, utilities, transportation
companies, distribution centers, cities, schools and correctional
institutions. AmHealth currently provides services to Pacific Gas and
Electric, U.S. Steel, AC Transit, OK Trucking, United Parcel Service, Lucky
Distribution Center, Chevron, Kentfield Hospital, Diablo Canyon Nuclear Power
Plant Medical Facility, Sandia National Laboratory and the U.S. Post Office.

The physicians, nurses and other medical personnel of the clinics and the
on-site employer services division will be employed by or under contract with
a medical group (the "Medical Group") to which the Company's AmHealth Division
will provide management services. The affiliated Medical Group will provide
all medical services, develop professional standards, policies and procedures
and determine fees for medical services. Pursuant to the management agreement
to be entered into by the Company and the affiliated Medical Group, the
Company will provide the Medical Group with all facilities, non-medical
personnel and administrative services support in return for a management fee
based on cash receipts from all medical services generated by the Medical
Group. The Medical Group's accounts receivables for medical services rendered
are assigned for collection to the Company. The Company advances funds for
payment of the Medical Group's expenses, including physician fees, certain
other expenses, and loans on an as-needed basis for additional working capital
purposes.

The financial success of the AmHealth operations to be acquired by the
Company will depend in part on the continued relationship between the Company
and the Medical Group. The future loss of the services of one or more key
physicians or termination of the relationship with the Medical Group could
adversely affect the Company.

The services of the clinics and employer services division for treatment and
rehabilitation of work-related injuries and illnesses are billed directly to
the client employer or its insurance company. Fees for services such as pre-
employment physical examinations, surveillance exams and drug screening which
do not involve workers' compensation injuries are generally paid by the
employer and are not regulated by workers' compensation regulation or fee
schedules. Reimbursement for medical services related to workers' compensation
injuries or illnesses is governed by the California Official Medical Treatment
Fee Schedule implemented March 1, 1994. There are no assurances as to the
future increases or decreases in reimbursement levels in the State of
California. Historically, California's fee schedule for workers' compensation
has not kept pace with inflation and there can be no assurance that approved
fee schedules will keep pace with inflation and rising health care costs or
that other legislative changes will be enacted that will not adversely affect
the AmHealth business.

The purchase price for the acquisition of the AmHealth business is
$15,657,500, subject to adjustment based on the net book value of the assets
acquired and liabilities assumed on the closing date, payable in cash which
the Company intends to finance with the proceeds of this offering. AmHealth
has agreed to indemnify the Company in connection with losses or claims
arising from certain acts and omissions of AmHealth occurring prior to the
closing of the acquisition. AmHealth has agreed to place $390,000 in escrow
for six months for the settlement of any claims and certain closing
adjustments. The closing of the AmHealth Acquisition is contingent upon the
closing of this offering and satisfaction of certain other conditions. The
AmHealth Acquisition will be accounted for by CORE as an asset purchase under
the purchase method of accounting.

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<PAGE>

INFORMATION SYSTEMS

CORE's key products and services--the WorkAbility program, utilization
review and case management programs and physician review services--are
supported by administrative software that was developed and is maintained by
in-house staff. Each of these software programs incorporates E-mail and other
external data exchange features for client and remote user communications.
These software programs were developed at different times and, although
designed with similar features and on similar platforms, are not yet fully
integrated.

CORE has begun two major initiatives in its information systems development.
First is the upgrade and expansion of its wide area network (WAN) to expand
capability in multiple office operation of its computer and telephone systems
and to expand direct computer connections with clients and remote users.
Second, is the redesign of the WorkAbility product to allow integration of UR
and physician review services functionality into a single operational
software.

The WorkAbility system has recently undergone significant architecture
redesign to allow for client server operation and rapid feature development.
The enhanced product, "WorkAbility Plus," utilizes software architecture that
provides maximum flexibility in attaching industry-standard databases to
support growth and varying client needs. The Company believes that this new
architecture will support the integration of UR and physician review services
into a single software centered around the WorkAbility system. Concurrent with
this planned integration is the development of new medical necessity protocols
focused on common occupational injuries and disease.

In conjunction with the AmHealth Acquisition and occupational health network
expansion, the WorkAbility system is also being developed as a reference
source and data capture tool designed to operate on the physician's desk top.
The extension of the WorkAbility system to the physician's desk top is
designed to facilitate collection of data and management of the case.

Funding for the development of CORE's WorkAbility software was provided by
Chrysler Motor Corporation ("Chrysler") in exchange for a perpetual, non-
exclusive, non-transferable license to use such software. Ownership of the
WorkAbility software has been retained by CORE, which has the exclusive right
to market the software to others. Pursuant to the terms of its agreement with
Chrysler, CORE is paying Chrysler 25% of certain licensing fees paid to CORE
with respect to the WorkAbility software until the total of such payments
equal 140% of the development costs (approximately $2.8 million). Only limited
payments have been paid by CORE through March 31, 1996. In addition, in the
event that CORE fails to attempt to market the software to third parties,
Chrysler will have certain rights to market and license the software
independently.

GOVERNMENT REGULATION; REIMBURSEMENT; HEALTH CARE REFORM

A number of states, including several of those in which the Company
transacts business, have extensive licensing and other requirements applicable
to the Company's business. Additionally, the Company's clients, including
insurance companies, are subject to regulations that indirectly affect the
Company.

Utilization Review/Case Management. The laws of many states regulate the
provision of health care utilization management services. These regulations
generally require the provider of utilization management services to be
reasonably accessible by telephone to doctors and patients, to have adequately
qualified personnel, to provide physicians and patients a procedure to appeal
determinations of non-reimbursement, and to maintain the confidentiality of
patient records. Other states regulate the provision of claims administration
services and preferred provider organizations which may indirectly affect
CORE. CORE believes it is in compliance with all applicable regulations
governing the provision of managed health care services in the states where
CORE is subject to such regulations, as currently in force and as currently
interpreted.

Physician Practice Management. The laws of most states, including
California, prohibit physicians from splitting fees with non-physicians and
prohibit non-physician entities from practicing medicine. These laws vary

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<PAGE>

from state to state, have been subject to limited judicial and regulatory
interpretation, and are enforced by the courts and by regulatory authorities
with broad discretion. Pursuant to the management services agreement to be
entered into by the Company and the Medical Group at the closing of the
AmHealth Acquisition, the Company will perform the non-medical functions of
the business and the Medical Group will perform the medical services. Although
the Company believes its proposed operations comply with applicable laws,
there can be no assurance that the Company's future operations will not be
successfully challenged as violating, or determined to have violated, such
laws, or that the enforceability of the provisions of agreements governing
such operations will not be limited. Any such result could have a material
adverse effect on the Company.

Federal law prohibits the offer, payment, solicitation or receipt of any
form of remuneration in return for, or in order to induce, (i) the referral of
a person, (ii) the furnishing or arranging for the furnishing of items or
services reimbursable under Medicare or Medicaid programs or (iii) the
purchase, lease or order or arranging or recommending purchasing, leasing or
ordering of any item or service reimbursable under Medicare or Medicaid. The
applicability of these provisions to many business transactions in the health
care industry has been subject to only limited judicial and regulatory
interpretation. Noncompliance with the federal anti-kickback legislation can
result in exclusion from Medicare and Medicaid programs and civil and criminal
penalties. The Company believes its operations are in compliance with these
statutes.

California law prohibits payment for patient referrals regardless of the
source of payment. The Company believes that, under California law, fees paid
for the use or management of medical facilities and for providing non-
physician services, such as those to be provided by the Company's AmHealth
Division to the Medical Group, do not constitute remuneration for patient
referrals if the fees, under all the facts and circumstances, will not be
excessive compensation for the facilities, management and services provided.
The Company believes that charges by the Company to the Medical Group will be
reasonable.

Workers' Compensation. The Company's AmHealth business will be subject to
California workers' compensation regulation with respect to pricing, billing
and other aspects of the delivery of medical services to injured covered
workers. The Company and the Medical Group have attempted to structure their
respective operations to comply with these regulations. In California,
reimbursement for medical services related to workers' compensation injuries
or illnesses is governed by a state-established fee schedule. Historically,
California's fee schedule for workers' compensation has not kept pace with
inflation in medical care costs. There can be no assurance that the fee
schedule will in the future keep pace with inflation in medical care costs or
that failure to do so will not adversely affect the AmHealth business.

Other. CORE's operations depend upon its continued good standing under
applicable laws and regulations. To date, the cost of compliance has not been
material. Such laws and regulations, however, are subject to amendment or new
interpretation by authorities in each jurisdiction. If amended regulations or
new interpretations of federal or state laws or regulations arise, CORE, may
have difficulty complying without significant expense or changes in
operations. The Company is unable to predict what additional government
regulations, if any, directly or indirectly affecting its business may be
promulgated. Although the Company believes that it is currently in compliance
with applicable regulations in those states in which it is subject to
regulation, the Company's business could be adversely affected by a revocation
of or failure to obtain required licenses and governmental approvals, a
failure to comply with applicable regulations or significant changes in
regulations applicable to its clients.

In addition to existing government health care regulation, there have been
numerous initiatives at the federal and state levels, as well as by third-
party payors, for comprehensive reforms affecting the payment for and
availability of health care services. The Company believes that such
initiatives will continue during the foreseeable future. The Company is unable
to predict what, if any, reform initiatives may be adopted, or what effect, if
any, their adoption may have on the Company.

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<PAGE>

COMPETITION

CORE presently competes in two different markets: (i) health care
utilization management and (ii) managed disability and workers' compensation.
The managed health care market is fragmented but is consolidating rapidly as
national health care reform and other forces drive independent utilization
review and cost management firms into niche markets or to consolidation with
large insurance carriers and provider groups.

The health care utilization management market is highly competitive.
Competitors include large established insurance carriers and large managed
care organizations. Some of the competitors are significantly larger and have
greater financial and marketing resources than CORE. CORE competes on the
basis of quality, cost effectiveness and service.

The managed disability and workers' compensation market is a developing
market which is also competitive. Competitors include both new companies
focused solely on the workers' compensation market and established disability
insurance carriers who have traditionally dealt with disability from an
underwriting rather than an employee productivity perspective. CORE competes
on the basis of quality and cost-effectiveness in this market, and the Company
believes that its proprietary disability management protocols and database of
clinically defined disability episodes give it a significant competitive
advantage.

The occupational health care industry in which CORE and its affiliated
Medical Group will compete following the AmHealth Acquisition is highly
competitive. CORE believes that the competition for AmHealth and its
affiliated managed medical group consists primarily of sole practitioners,
small medical groups and hospitals as well as a few larger organizations, some
of which may have greater resources and knowledge of the industrial medical
market than CORE. The Company's AmHealth Division and its affiliated Medical
Group will compete primarily on the basis of the quality of physicians, its
range of services, network of locations, technical expertise and overall costs
to employers.

EMPLOYEES AND PHYSICIAN CONSULTANTS

In addition to its available staff of approximately 280 physician
consultants (230 of whom are Board certified) covering the major medical
specialties, CORE had approximately 300 employees as of May 31, 1996.
Generally, CORE's physician consultants are paid by CORE on a per case review
or per hour basis. Almost all of CORE's physicians are retained by the Company
as independent contractors and also maintain active practices. The majority of
the Company's physicians work between five and 20 hours per week for the
Company. Compensation to CORE's reviewers is not related to any cost savings
achieved by CORE's clients.

In connection with the AmHealth Acquisition, CORE will be hiring
approximately 85 employees from AmHealth (exclusive of the 27 physician
employees, 37 part time physicians, and approximately 110 other non-physician
medical personnel of the affiliated Medical Group).

PROPERTIES

The Company occupies its executive headquarters in Irvine, California
pursuant to a lease for approximately 14,000 sq. feet which expires in
September 2000. The Company also leases facilities of approximately 18,000 sq.
feet in Boston, Massachusetts under a lease that expires in May 2000, and
approximately 15,000 sq. feet in Burlington, Massachusetts under a lease that
expires in December 2001. Additionally, the Company leases a facility of
approximately 16,000 sq. feet in Los Angeles, California under a lease that
expires in June 1998, as well as approximately 18,000 sq. feet in Silver
Spring, Maryland under a lease that expires in June 2001, approximately 1,300
sq. feet in Chicago, Illinois under a lease that expires in May 1998,
approximately 10,000 sq. feet in Austin, Texas under leases that expire in
September 1996 and approximately 2,400 sq. feet in Forth Worth, Texas under a
lease that expires in July 1998.

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<PAGE>

In connection with the AmHealth Acquisition, the Company will be assuming
real estate leases for occupational health clinics covering an aggregate of
approximately 60,000 square feet of space. The leases are in the following
California cities: Pomona (5,000 sq. feet, expires October 1996), San Leandro
(12,600 sq. feet, expires April 2000), Oakland (7,700 sq. feet, expires August
2001), Del Amo (10,000 sq. feet, expires September 1999), Ontario (3,000 sq.
feet, expires December 1997), Riverside (8,800 sq. feet, expires January
2001), Richmond (3,800 sq. feet, expires September 1996 and 2,500 sq. feet on
a month to month basis) and City of Industry (7,200 sq. feet, expires March
2001). The employer services division of AmHealth does not lease the space it
occupies at the employers' on-site facilities.

PROFESSIONAL LIABILITIES; LEGAL PROCEEDINGS

The Company is not currently a party to or aware of any material pending
litigation or material legal proceedings.

The review services provided by the Company are advisory in nature, and
final determination as to payment or nonpayment of benefits are not made by
the Company. Determinations as to the medical care provided to a patient are
made by the patient or the attending physician. However, due to the
significant number of claims in the medical malpractice field in general, it
is possible that a patient may assert claims against the Company for damages
due to adverse medical consequences. New or existing legal theories by which
patients or physicians may attempt to assert liability against the Company or
other companies engaged in the industry are developing and are expected to
continue to develop. Although the Company believes that its procedures result
in reasonable and accurate determinations of coverage, there can be no
assurance that claims will not be made or that the Company's procedures for
limiting liability will be effective. The Company maintains professional
liability insurance and such other coverages as the Company believes are
reasonable in light of the Company's experience to date. However, there can be
no assurance that such insurance will be sufficient to protect the Company
from liability which might adversely affect the Company's business, operating
results or financial condition or will continue to be available to the Company
at reasonable cost or at all.

With the proposed AmHealth Acquisition, the Company will provide management
services to a professional corporation rendering medical services in the
occupational health fields. The provision of medical services entails an
inherent risk of professional liability and similar claims. The most
significant source of potential liability to which the Company will be exposed
in providing such services will likely be the negligence of those physicians
or the Medical Group. The Company intends to perform only administrative
services for the Medical Group. However, the Company could become subject to
claims for malpractice of Medical Group physicians under various theories,
including theories that a physician is an employee or agent of the Company or
that the Company was negligent in contracting for such physicians' services.
There can be no assurance that a future claim or claims will not be successful
or if successful will not exceed the limits of available insurance coverage or
that such coverage will continue to be available at acceptable costs or at
all.

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MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth certain information with respect to the
directors and executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
George C. Carpenter IV...... 38 Chairman of the Board of Directors and Chief Executive Officer
Craig C. Horton............. 41 Director, President and Chief Operating Officer
William E. Nixon............ 35 Executive Vice President, Chief Financial Officer,
Treasurer and Clerk
Fredric L. Sattler.......... 52 Executive Vice President
Ophelia Galindo............. 38 Corporate Vice President, Product Management and
Technical Development
Leslie Alexandre,
Dr.P.H.(1)................. 38 Director
Stephen C. Caulfield(1)..... 55 Director
Richard H. Egdahl, M.D.(2).. 69 Director
John Pappajohn(1)(2)........ 67 Director
</TABLE>
- --------
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.

George C. Carpenter IV was appointed a Class III Director, and was elected
Chairman of the Board of Directors and Chief Executive Officer of the Company
by the Board effective with the Company's March 24, 1995 merger involving Core
Management, Inc. Mr. Carpenter served as the Chief Executive Officer and a
Director of Core Management, Inc., a Delaware corporation ("CMI") and now a
wholly-owned subsidiary of the Company, since its formation in 1990. In
addition, Mr. Carpenter served as the Chairman, Chief Executive Officer,
Secretary and a Director of Core Management, Inc., a California corporation
and wholly-owned subsidiary of CMI ("CMI-California"), from its formation in
1990. As a result of the reorganization of CMI-California and Integrated
Behavioral Health, a California corporation and wholly-owned subsidiary of CMI
("IBH") in March 1993, Mr. Carpenter was appointed as a director of IBH. From
1988 to 1990, Mr. Carpenter served as a Vice President, Operations of The
Health Data Institute, Inc., a provider of utilization review, case management
and analytic services and a developer of related software, a subsidiary of
Baxter International, Inc.

Craig C. Horton was appointed a Class III Director in March 1995 effective
with the CMI/PRA Merger, and was elected President and Chief Operating Officer
of the Company by the Board on March 30, 1995. Mr. Horton served as the
President and a Director of CMI and CMI-California from their respective
formations in 1990, and also served as the acting Chief Financial Officer of
CMI from 1994 to 1995. In December 1994, Mr. Horton was named as a Director
and Chief Executive Officer of IBH. From 1988 to 1990, Mr. Horton was a Vice
President, Operations of The Health Data Institute, Inc., a subsidiary of
Baxter International, Inc.

William E. Nixon is the Executive Vice President, Chief Financial Officer,
Treasurer and Clerk of the Company. Mr. Nixon joined the Company in December
1988 as Controller. In June 1989, Mr. Nixon became Assistant Treasurer; in
September 1990, he was elected Vice President, Finance and Administration; in
September 1991, he assumed his present position as Treasurer. In December
1993, Mr. Nixon was elected Chief Financial Officer of the Company. In
December 1994, Mr. Nixon was elected Executive Vice President and in March
1995, he was elected Clerk. Prior to his employment with the Company, from
1985 to 1988, Mr. Nixon served as a Senior Accountant at Gray, Gray and Gray,
a public accounting firm.

Fredric L. Sattler became an Executive Vice President of the Company in
January 1996. Prior to his employment with the Company, Mr. Sattler was
employed as Vice President of National Benefit Resources of Minneapolis,
Minnesota in 1995 and as Vice President of NovaCare of King of Prussia,
Pennsylvania from 1994

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<PAGE>

to 1995. From 1981 to 1994 Mr. Sattler held various offices with Northwestern
National Life Insurance Co. (now known as Reliastar Financial Corp.) and its
affiliates, including Vice President of Health Care Management (1987 to 1994)
and President and Chief Executive Officer (1991 to 1994) of NWNL Health
Management Corp., a health management organization (HMO) management company,
wholly-owned by Northwestern National Life Insurance Co.

Ophelia Galindo was elected the Corporate Vice President, Product Management
and Technical Development of the Company by the Board on March 30, 1995.
Formerly, Ms. Galindo was employed by CMI, beginning in February 1986 as a
senior consultant; in June 1994, Ms. Galindo was promoted by CMI to be its
Vice President, Disability Analysis.

Leslie Alexandre, Dr.P.H. was appointed a Class I Director in March 1995,
effective with the CMI/PRA Merger, and was elected a Class I Director by the
Company's stockholders in July 1995. Formerly, Dr. Alexandre served as a
director of CMI from 1993 to 1995. Since February 1995, Dr. Alexandre has been
the Vice President, Corporate Affairs for OncorMed, Inc., a provider of
genetic testing and information services for the early detection and
management of cancer. From 1992 to 1995, Dr. Alexandre was employed as
Government Affairs Representative, Health Policy for EDS, Inc., an information
technology company and subsidiary of General Motors. Prior to joining EDS in
1992, Dr. Alexandre was Senior Health Legislative Assistant for United States
Senator David Durenberger. From January 1990 until the death of U.S. Senator
John Heinz in April 1991, she served as Professional Staff on the Senate
Special Committee on Aging. Prior to 1990, Dr. Alexandre was an independent
health care consultant.

Stephen C. Caulfield was appointed a Class I Director by the Board effective
December 1994, and was elected a Class I Director by the Company's
stockholders in July 1995. Mr. Caulfield is a Managing Director of William M.
Mercer, Incorporated, a management consulting firm, where he has specialized
in health care issues since 1987. Mr. Caulfield has more than 30 years of
experience in the health care field, having previously been employed as a
faculty member and Assistant Dean of the Albert Einstein College of Medicine
in New York, as the Director of Health Affairs and Regional Operations for the
United Mine Workers Multi-Employer Trust, and as the President and Chief
Executive Officer of Government Research Corporation, a consulting firm
previously located in Washington, D.C. (subsequently acquired by Hill and
Knowlton).

Richard H. Egdahl, M.D. has been a director since 1985, and was classified a
Class II Director in 1995 effective with the CMI/PRA Merger. Since 1973, Dr.
Egdahl has been the Director of the Medical Center of Boston University and
Academic Vice President for Health Affairs at Boston University; since 1976,
Dr. Egdahl has been the Director of The Health Policy Institute at Boston
University. Dr. Egdahl was also a practicing surgeon through 1989. Dr. Egdahl
is a trustee of the Pioneer Group of Mutual Funds, a director of HPR, Inc. (a
developer of health care software and database products) and a member of the
Institute of Medicine of the National Academy of Sciences.

John Pappajohn was appointed a Class II Director in March 1995 effective
with the CMI/PRA Merger. Formerly, Mr. Pappajohn was a director of CMI from
its formation in 1990 to 1995; Mr. Pappajohn served on the Board of Directors
of Integrated Behavioral Health, a California corporation ("IBH"), from 1991
to the time of its acquisition by CMI in 1993. Since 1969, Mr. Pappajohn has
been the sole owner of Pappajohn Capital Resources, a venture capital fund,
and President of Equity Dynamics, Inc., a financial consulting firm in
Des Moines, Iowa. Mr. Pappajohn serves as a Director of the following public
companies: BioCryst Pharmaceuticals, Inc., Drug Screening Systems, Inc., Fuisz
Technologies Ltd., GalaGen, Inc., OncorMed, Inc., PACE Health Management
Systems, Inc., and United Systems Technologies, Inc.

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

The Company's Board of Directors is divided into three classes, each of
whose members serve for staggered three-year terms. The term of the Class I
Directors (presently Dr. Alexandre and Mr. Caulfield) expires in 1998; the
term of the Class II Directors (presently Dr. Egdahl and Mr. Pappajohn)
expires in 1996; and the term of the Class III Directors (presently Mr.
Carpenter and Mr. Horton) expires in 1997. At each annual meeting of
stockholders, directors are elected for a three-year term to succeed the
directors of the same class whose terms are then expiring.

42
<PAGE>

Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve at the discretion of the Board of Directors.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth information concerning the compensation paid
or accrued by the Company and its subsidiaries to each of its officers who was
either the chief executive officer, or an executive officer whose aggregate
salary and bonus exceeded $100,000 in the most recent fiscal year (the "Named
Executive Officers") during the fiscal years ending December 31, 1995, 1994
and 1993. Although only principal capacities are listed, the compensation
figures include all compensation received in any capacity, for services
rendered during the fiscal years indicated.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------------ ------------
AWARDS
------------
SECURITIES
OTHER ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($) OPTIONS(#) COMPENSATION($)
- --------------------------- ------- --------- -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
George C. Carpenter IV.. 1995(1) 146,249 -- -- 95,000 --
Chairman of the Board 1994(1) 112,028 -- 9,433(5) -- 1,541
of Directors and Chief 1993(1) 94,000 -- 89,547(6) -- 35,044(4)
Executive Officer
Craig C. Horton......... 1995(1) 136,342 -- -- 95,000 --
Director, President and 1994(1) 108,821 -- 7,718(5) -- 156
Chief Operating Officer 1993(1) 94,000 -- -- -- 34,619(4)
William E. Nixon........ 1995 127,000 -- -- 56,750 --
Executive Vice 1994 82,271 6,000 -- -- --
President, Chief 1993 76,599 -- -- 5,750 --
Financial Officer, and
Treasurer
Alfred B. Lewis(2)...... 1995 31,250 -- -- -- 114,845(3)
Chairman and President 1994 119,503 -- -- -- --
1993 66,281 -- -- 50,000 --
</TABLE>
- --------
(1) Prior to the March 1995 CMI/PRA Merger, Mr. Carpenter and Mr. Horton were
officers and employees of Core Management, Inc. The compensation amounts
for Mr. Carpenter and Mr. Horton in this table for the periods prior to
the CMI/PRA Merger were paid by Core Management, Inc.
(2) Mr. Lewis joined the Company as its President on May 17, 1993 and became
Chairman of the Board of Directors on December 29, 1993. Mr. Lewis
resigned as a director and as Chairman of the Board effective March 24,
1995.
(3) Mr. Lewis received severance payments of $114,845 in 1995 pursuant to his
employment contract with the Company.

(4) Includes $33,333 of compensation income charged (but not paid) to the
named executive officer as a result of a change in the accounting
treatment of certain loans made by the named executive officer to CMI or
its subsidiaries.
(5) Represents interest paid to the named executive officer with respect to
certain loans made by the named executive officer to CMI or its
subsidiaries.

(6) Represents payments of $68,449 for relocation expenses incurred as well as
$21,098 paid to Mr. Carpenter to reimburse him for income taxes payable by
him with respect to such relocation expenses.

43
<PAGE>

OPTION GRANTS IN 1995

The following table presents information regarding 1995 grants of options to
purchase shares of Common Stock for each of the Named Executive Officers:
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
----------------------------------------------
POTENTIAL
REALIZABLE VALUE
NUMBER OF % OF AT ASSUMED ANNUAL
SECURITIES TOTAL RATES OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION
OPTIONS GRANTED TO EXERCISE FOR OPTION TERM (3)
GRANTED EMPLOYEES IN PRICE EXPIRATION --------------------
NAME (#) FISCAL YEAR(1) ($/SH) DATE 5%($) 10%($)
---- ---------- -------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
George C. Carpenter IV............. 95,000 14.1% $3.13 4/27/2000 82,152 181,535
Craig C. Horton.................... 95,000 14.1% $3.13 4/27/2000 82,152 181,535
William E. Nixon................... 50,000 7.4% $3.13 4/27/2000 43,238 95,545
1,000(2) * $2.94 12/31/96 240 486
5,750(2) * $2.94 5/17/99 3,643 7,846
Alfred B. Lewis.................... -- -- -- -- -- --
</TABLE>
- --------
(1) The Company granted a total of 673,684 options to its employees and
consultants in 1995 (including repricing of 18,250 options and excluding
option grants to non-employee directors). See "Compensation of Non-
Employee Directors" and "Certain Transactions."
(2) Repricing of existing options.
(3) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. These gains
are based on assumed rates of stock price appreciation of 5% and 10%
compounded annually from the date the respective options were granted to
their expiration date. These assumptions are not intended to forecast
future appreciation of the Company's stock price. The potential realizable
value computation does not take into account federal or state income tax
consequences of option exercises or sales of appreciated stock. This table
does not take into account any appreciation in the price of the Common
Stock to date.
* Less than one (1%) percent.

AGGREGATED OPTION EXERCISES IN 1995 AND YEAR-END OPTION VALUES

The following table presents information regarding options exercised in 1995
and the value of options outstanding at December 31, 1995 for each of the
Named Executive Officers:

<TABLE>
<CAPTION>
NUMBER OF
SECURITIES VALUE OF
UNDERLYING UNEXERCISED
UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
YEAR END (#) YEAR END ($)(1)
------------- -----------------
SHARES ACQUIRED EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE(#) VALUE REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- --------------- ----------------- ------------- -----------------
<S> <C> <C> <C> <C>
George C. Carpenter IV.......... 0 N/A 19,000/76,000 $102,030/$408,120
Craig C. Horton................. 0 N/A 19,000/76,000 $102,030/$408,120
William E. Nixon................ 0 N/A 28,600/28,650 $154,486/$154,544
Alfred B. Lewis................. 0 N/A 0/0
</TABLE>
- --------
(1) Based upon the closing price of $8.50 per share for the Company's Common
Stock as quoted by Nasdaq--National Market System on December 29, 1995.

44
<PAGE>

COMPENSATION OF NON-EMPLOYEE DIRECTORS

The Company's stockholders voted to amend the 1991 Stock Option Plan with
respect to the compensation of non-employee directors at the March 1995
Special Stockholders Meeting. Effective in March 1995, each non-employee
director is granted, at three-year intervals, 19,500 options to purchase
Common Stock which vest quarterly, over three years, subject to continued
service as a director. Effective in November 1995, the Company's Board of
Directors voted to increase the number of options vesting quarterly over three
years from 1,625 per quarter to 3,000 per quarter.

Mr. Pappajohn and Dr. Egdahl also received options from the Company for
other services rendered in 1995. See "Certain Transactions" below.

EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE IN CONTROL
ARRANGEMENTS

The Company entered into an employment agreement with Alfred B. Lewis,
effective as of May 17, 1993, pursuant to which the Company agreed to employ
Mr. Lewis as the President of the Company. Under the terms of his employment
agreement, Mr. Lewis was entitled to receive compensation and fringe benefits
provided for thereunder for a period of one year should his employment be
terminated by the Company following any change of control of the Company. Mr.
Lewis' employment with the Company was terminated on March 27, 1995. Mr. Lewis
received severance compensation, including certain fringe benefits, from the
Company.

The Company entered into an employment agreement with William E. Nixon, the
Company's Executive Vice President and Chief Financial Officer, effective as
of November 19, 1993, which has an initial one year term and is automatically
renewed on an annual basis unless written notice of non-renewal is delivered
prior to the scheduled renewal date. Pursuant to the agreement, Mr. Nixon is
entitled to receive compensation and fringe benefits for a period of six
months if his employment is terminated without cause by the Company, and for a
period of nine months if his employment is terminated by the Company within
one year of any change of control of the Company.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Leslie Alexandre, Stephen C. Caulfield and John Pappajohn were members of
the Board of Directors' Compensation Committee in fiscal 1995. In 1994, Mr.
Pappajohn provided additional security for certain loans made by a financial
institution to a predecessor of the Company, Core Management, Inc., and in
return was granted a warrant to purchase shares of such predecessor's common
stock (now shares of the Company's Common Stock pursuant to the Company's
merger with Core Management, Inc.). The Board of Directors also has granted
Mr. Pappajohn an option to purchase 100,000 shares of the Company's common
stock pursuant to a consulting arrangement between Mr. Pappajohn and the
Company. See "Certain Transactions."

45
<PAGE>

CERTAIN TRANSACTIONS

In February 1994, John Pappajohn, formerly a director and shareholder of
Core Management, Inc., ("CMI") and a current director and stockholder of the
Company, provided a $200,000 letter of credit as additional collateral for
CMI's obligations for loans to CMI by Silicon Valley Bank. In August 1994,
Mr. Pappajohn provided an additional letter of credit in the amount of
$250,000 as further collateral for such loans. In May 1994, Mr. Pappajohn
agreed, upon CMI's written request, to contribute $300,000 to CMI in the form
of an equity contribution or a subordinated loan. Mr. Pappajohn's obligation
for this contribution terminated on March 24, 1995 (the effective date of the
CMI/PRA Merger). In connection with a $500,000 line of credit extended by the
Company to CMI pursuant to the CMI/PRA Merger, in December, 1994, the Company
pledged $210,000 as collateral to Silicon Valley Bank, which replaced the
$250,000 letter of credit previously provided to Silicon Valley Bank by Mr.
Pappajohn, as described above. In exchange for these pledges and his financial
commitment to CMI, the Board of Directors of CMI granted Mr. Pappajohn a
warrant to purchase shares of common stock of CMI. Such warrant expires three
years from the date of the grant. In connection with the CMI/PRA Merger, the
warrant was converted to cover 26,800 shares of Common Stock at an exercise
price of $3.36 per share.

Pursuant to a consulting arrangement between Mr. Pappajohn and the Company,
the Board of Directors granted Mr. Pappajohn an option to purchase 100,000
shares of the Common Stock in April 1995. This option was vested 50% at the
date of grant, and became fully vested in April 1996, based upon Mr.
Pappajohn's provision of consulting services to the Company during such one-
year period. The option has a five-year term and an exercise price of $3.13
per share (the fair market value of the Common Stock as quoted on the Nasdaq
National Market System on the date of grant).

Prior to the CMI/PRA Merger, George Carpenter and Craig Horton loaned CMI a
total of $200,000, which was used as security for CMI's line of credit with
Silicon Valley Bank. The loans from Mr. Carpenter and Mr. Horton were made
pursuant to unsecured promissory notes which bore interest at a rate of 10%
per annum and were paid in full in April 1995.

In April 1995, Richard H. Egdahl, a director of the Company, was granted an
option for the purchase of 5,000 shares of the Common Stock for services to be
rendered with respect to the Company's strategic planning committee. The
option has a five-year term and an exercise price of $3.13 per share (the fair
market value of the Common Stock as quoted on the Nasdaq National Market
System on the date of grant).

In March 1996, Stephen Caulfield and John Pappajohn, directors of the
Company, were each granted an option to purchase 40,000 shares of the Common
Stock for consulting services. The options have a five-year term and an
exercise price of $12.25 per share (the fair market value of the Common Stock
as quoted on the Nasdaq National Market System on the date of grant).

46
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of the Common Stock as of May 31, 1996 and as adjusted to reflect
the sale of shares of Common Stock offered hereby by (i) each person who is
known by the Company to own beneficially more than five percent of the Common
Stock; (ii) each director of the Company; (iii) each Named Executive Officer;
and (iv) all directors and executive officers of the Company as a group.
Unless otherwise indicated, the address of the persons listed below is in care
of CORE, INC., 18881 Von Karman Avenue, Suite 1750, Irvine, California 92715.

<TABLE>
<CAPTION>
PERCENT OWNED
------------------------
SHARES BEFORE THE AFTER THE
NAME BENEFICIALLY OWNED (1) OFFERING OFFERING (11)
- ---- ---------------------- ---------- -------------
<S> <C> <C> <C>
Fiduciary Trust Company 545,500(2) 11.3% 7.4%
International.................
Two World Trade Center
New York, N.Y. 10048
John Pappajohn................ 471,969(3) 9.4 6.3
Craig C. Horton............... 437,264(4) 8.8 5.8
George C. Carpenter IV........ 401,595(5) 8.1 5.4
James Franklin................ 293,264 6.1 4.0
6 Downing Circle
Downington, Pennsylvania 19335
Richard H. Egdahl, M.D........ 151,826(6) 3.1 2.1
Stephen C. Caulfield.......... 104,776(7) 2.2 1.4
William E. Nixon.............. 81,441(8) 1.7 1.1
Leslie Alexandre.............. 38,575(9) * *
All directors and executive 1,792,836(10) 31.6 21.9
officers as a group (9
individuals)..................
</TABLE>
- --------
* Less than one percent.
(1) Except as otherwise indicated, represents sole voting and investment
power.
(2) Based on Schedule 13G, dated March 14, 1996. Includes 379,500 shares with
shared voting power and 15,000 shares with shared disposition power.
(3) Includes 70,200 shares owned by Mr. Pappajohn's wife, 40,200 shares owned
by an entity owned by Mr. Pappajohn's wife (Mr. Pappajohn disclaims
beneficial ownership of such 110,400 shares); also includes 26,800 shares
issuable pursuant to a warrant held by Mr. Pappajohn and 178,575 shares
issuable to Mr. Pappajohn pursuant to options (18,000 of which remain
subject to future vesting).
(4) Includes 1,000 shares held by Mr. Horton as custodian for Mr. Horton's
son and 145,000 shares issuable to Mr. Horton pursuant to options (97,000
of which remain subject to future vesting).
(5) Includes 145,000 shares issuable to Mr. Carpenter pursuant to options
(97,000 of which remain subject to future vesting).
(6) Includes 63,075 shares issuable to Dr. Egdahl pursuant to options (18,000
of which remain subject to future vesting).

(7) Includes 15,000 shares owned by Mr. Caulfield's wife, 2,500 shares held
in a trust for the benefit of Mr. Caulfield's son (Mr. Caulfield
disclaims beneficial ownership of such 2,500 shares) and 72,275 shares
issuable to Mr. Caulfield pursuant to options (18,000 of which remain
subject to future vesting).
(8) Includes 81,250 shares issuable to Mr. Nixon pursuant to options (39,200
of which remain subject to future vesting).
(9) Includes 38,575 shares issuable to Dr. Alexandre pursuant to options
(18,000 of which remain subject to future vesting).
(10) Includes 849,550 shares issuable pursuant to a warrant and options
(382,000 of which remain subject to future vesting).
(11) Excludes any sales to the Underwriters by Selling Stockholders.

47
<PAGE>

The Company and the persons listed in the table below (the "Selling
Stockholders") have granted to the Underwriters an option to purchase up to an
aggregate of 375,000 shares of Common Stock solely to cover over-allotments,
if any, incurred in connection with the sale of the shares offered hereby. See
"Underwriting." The following table sets forth certain information regarding
the beneficial ownership of the Common Stock by each of the Selling
Stockholders as of May 31, 1996 and as adjusted to reflect the sale of shares
of Common Stock offered hereby and exercise in full of the Underwriters' over-
allotment option.

<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY BENEFICIALLY
OWNED BEFORE NUMBER OF OWNED AFTER
THE OFFERING SHARES THE OFFERING
--------------- SUBJECT ---------------
NAME NUMBER PERCENT TO SALE NUMBER PERCENT
- ---- ------- ------- --------- ------- -------
<S> <C> <C> <C> <C> <C>
George C. Carpenter IV(1)............. 401,595 8.1% 40,000 361,595 4.9%
James Franklin(2)..................... 293,264 6.1 20,000 273,264 3.7
Stephen Gerson(3)..................... 6,289 * 1,000 5,289 *
Craig C. Horton(4).................... 437,264 8.8 40,000 397,264 5.4
Victoria Lowe(5)...................... 8,972 * 8,972 0 0
William E. Nixon(6)................... 81,441 1.7 15,000 66,441 *
Ann Pappajohn(7)...................... 26,800 * 26,800 0 0
J.C. Sargeant(8)...................... 4,486 * 4,486 0 0
Derace Lan Schaffer(9)................ 47,592 * 29,072 18,520 *
Dermott Whalen(10).................... 20,158 * 20,158 0 0
Thomas Yankoff(11).................... 29,072 * 29,072 0 0
</TABLE>
- --------

*Less than one percent.
(1) Mr. Carpenter is Chairman of the Board and Chief Executive Officer of the
Company. See "Management." Includes 145,000 shares issuable to Mr.
Carpenter pursuant to options (97,000 of which remain subject to future
vesting).

(2) Mr. Franklin is an employee of the Company.

(3) Dr. Gerson is an employee of the Company. Includes 5,289 shares issuable
to Dr. Gerson pursuant to options.

(4) Mr. Horton is a Director and the President of the Company. See
"Management." Includes 1,000 shares held by Mr. Horton as custodian for
Mr. Horton's son and 145,000 shares issuable to Mr. Horton pursuant to
options (97,000 of which remain subject to future vesting).

(5) Ms. Lowe is a former employee of the Company. Includes 8,972 shares
issuable to Ms. Lowe pursuant to options.

(6) Mr. Nixon is Executive Vice President, Chief Financial Officer, Treasurer
and Clerk of the Company. See "Management." Includes 81,250 shares
issuable to Mr. Nixon pursuant to options (39,200 of which remain subject
to future vesting).

(7) Ann Pappajohn is the daughter of John Pappajohn, a Director and
stockholder of the Company. See "Management."

(8) Mr. Sargeant is a former consultant to the Company.

(9) Dr. Schaffer is a former Director of the Company. Includes 29,072 shares
issuable to Dr. Schaffer pursuant to options, 7,500 shares owned by Dr.
Schaffer's wife and 2,000 shares owned by Dr. Schaffer's children.

(10) Mr. Whalen is a former Director of a subsidiary of the Company. Includes
6,700 shares issuable to Mr. Whalen pursuant to options.

(11) Mr. Yankoff is a former Director of the Company. Includes 29,072 shares
issuable to Mr. Yankoff pursuant to options.

48
<PAGE>

DESCRIPTION OF CAPITAL STOCK

The Company is authorized to issue 10,000,000 shares of Common Stock, par
value $0.10 per share, and 500,000 shares of Preferred Stock, no par value.

Common Stock. Each holder of Common Stock is entitled to one vote per share
on all matters submitted to a vote of stockholders. The holders of Common
Stock are entitled to share ratably in such dividends as may be declared by
the Board of Directors out of funds legally available therefor, and upon
dissolution or liquidation, to share ratably in the net assets available for
distribution to stockholders, all subject to any rights of holders of
Preferred Stock. Holders of Common Stock have no conversion, preemptive,
cumulative voting or subscription rights, and shares of Common Stock are not
subject to redemption. The shares of Common Stock presently issued and
outstanding are, and the Common Stock to be issued in connection with this
offering will be, fully paid and nonassessable.

As of May 31, 1996, there were 4,842,271 shares of Common Stock outstanding,
held of record by approximately 141 stockholders.

Preferred Stock. The Board of Directors is authorized to issue Preferred
Stock in one or more series and to designate the number of shares constituting
any such series and the terms thereof, including dividend, conversion and
voting rights, terms of redemption, liquidation preferences and sinking fund
provisions.

The purpose of authorizing the Board of Directors to issue Preferred Stock
and to determine its rights, terms and preferences is to eliminate delays
associated with a stockholder vote on specific issuances. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of the outstanding voting stock of the
Company.

No shares of the Company's Preferred Stock have been issued and the Company
has no present intention to issue shares of Preferred Stock.

Massachusetts Law and Charter and By-Laws Provisions. The Company is subject
to the provisions of Chapter 110F of the Massachusetts General Law, an anti-
takeover statute. In general, this statute prohibits a publicly-held
Massachusetts corporation with sufficient ties to Massachusetts from engaging
in a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person becomes an
interested stockholder, unless either (i) the interested stockholder obtains
the approval of the Board of Directors prior to becoming an interested
stockholder, (ii) the interested stockholder acquires 90% of the outstanding
voting stock of the corporation (excluding shares held by certain affiliates
of the corporation) at the time he or she becomes an interested stockholder,
or (iii) the business combination is approved by both the Board of Directors
and two-thirds of the outstanding voting stock of the corporation (excluding
shares held by the interested stockholder). For purposes of the statute, an
"interested stockholder" is a person who, together with affiliates and
associates, owns (or at any time within the prior three years did own) 5% or
more of the corporation's voting stock. A "business combination" includes
mergers, stock and asset sales and other transactions resulting in a financial
benefit to the stockholder.

The Company is also subject to Massachusetts General Laws Chapter 110D,
entitled "Regulation of Control Share Acquisitions" which provides, in
general, that any stockholder of a corporation subject to this statute who
acquires 20% or more of the outstanding voting stock of a corporation may not
vote such stock unless the stockholders of the corporation so authorize.

The Company's restated Articles of Organization provide for the Board to be
divided into three classes, as nearly equal in number as possible, serving
staggered three-year terms. Under the Company's By-laws, directors may be
removed only for cause by a majority of directors or by a majority of shares
of the Common Stock outstanding and entitled to vote pursuant to Massachusetts
General Law Chapter 156B. Such provisions could

49
<PAGE>

have the effect of discouraging a potential acquirer from making a tender
offer or otherwise attempting to obtain control of the Company and could
increase the likelihood that incumbent directors will retain their positions.

Limitation of Directors' Liability. The Company's Articles of Organization
contain provisions limiting the liability of directors to the fullest extent
permitted by Massachusetts law as currently or hereinafter in effect.
Massachusetts law currently permits the elimination of personal liability of a
director for monetary damages for breach of fiduciary duty as a director,
notwithstanding any provision of law imposing such liability, except for (i)
breach of the director's duty of loyalty to the corporation or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unauthorized
distributions to stockholders or loans to insiders or (iv) any transaction
from which the director derived an improper personal benefit.

Indemnification of Directors and Officers. The Company's Articles of
Organization also provide for the indemnification of its officers and
directors to the extent legally permissible against all liabilities and
expenses (including judgments, fines, penalties and attorneys' fees and, under
certain circumstances, all amounts paid in compromise and settlement)
reasonably incurred by any officer or director in connection with any action,
suit or proceeding in which any such director or officer is a defendant or
with which he or she may be threatened or otherwise involved, by reason of his
or her being or having been a director or officer of the Company, except in
relation to matters as to which such director or officer shall be finally
adjudged, other than by consent, in such action, suit or proceeding not to
have acted in the best interests of the corporation.

Additionally, the Company has purchased a directors and officers insurance
policy which, subject to a $250,000 deductible for certain claims, provides
$5,000,000 of coverage.

The Company has entered into separate indemnification agreements with each
of its directors and executive officers providing for indemnification of such
persons to the extent permitted by law.

Transfer Agent; Registrar and Exchange Agent. The transfer agent and
registrar for the Common Stock is State Street Bank and Trust Company, Boston,
Massachusetts.

SHARES ELIGIBLE FOR FUTURE SALES

Future sales of substantial amounts of Common Stock could adversely affect
market prices. Upon completion of this offering, the Company will have
7,342,271 shares of Common Stock outstanding. Of these shares, the 2,500,000
shares sold in this offering, the 1,150,000 shares sold in the Company's
initial public offering of its Common Stock in 1991, the 1,980,105 shares
issued in the CMI/PRA Merger, and 222,916 shares registered on Form S-8 under
the Securities Act which were issued as of May 31, 1996, upon the exercise of
stock options held by employees, directors or consultants, will be freely
transferable without restriction, except for any shares purchased by an
existing "affiliate" of the Company, as that term is defined in Rule 144
("Rule 144") promulgated under the Securities Act ("Affiliate"), or shares
subject to the Lock-Up Agreement.

An additional 314,284 shares of Common Stock have been registered on Form S-
8 under the Securities Act for future sale to employees, directors or
consultants upon exercise of stock options.

The officers and directors of the Company, collectively holding 959,774
shares of Common Stock, have agreed (the "Lock-Up Agreement") not to offer,
sell or otherwise dispose of Common Stock during the 120-day period following
the date of this Prospectus, without the prior written consent of Smith Barney
Inc.

In addition to the employee stock option shares which have been registered
on Form S-8, there are 1,221,695 shares subject to outstanding employee or
director stock options and warrants, which have not been registered under the
Securities Act. Unless these shares are subsequently registered for resale
under the Securities Act, they will, upon exercise of the related options, or
warrants, be restricted securities within the meaning of Rule 144 ("Restricted
Shares").

50
<PAGE>

Sales of shares held by Affiliates, regardless of whether they are
Restricted Shares, must be made in compliance with the requirements of Rule
144.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated), who has beneficially owned Restricted Shares for
at least two years is entitled to sell within any three-month period a number
of shares that does not exceed the greater of: (i) 1% of the then outstanding
shares of the Company's Common Stock (approximately 73,422 shares immediately
after this offering); or (ii) the average weekly trading volume of the
Company's Common Stock in the Nasdaq National Market during the four calendar
weeks preceding the date on which notice of the sale is filed with the
Commission, or if no notice is required, the date of receipt of the order to
execute the transaction. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of current
public information about the Company. Any person (or persons whose shares are
aggregated) who is not deemed to be an Affiliate at any time during the 90
days preceding a sale, and who owns Restricted Shares that were purchased from
the Company (or any Affiliate) at least three years previously, is entitled to
sell such shares under Rule 144(k) (subject to the foregoing Lock-Up
Agreement, if applicable) without regard to the volume limitations, manner of
sale provisions, public information requirements or notice requirements.

The Securities and Exchange Commission has recently proposed amendments to
Rule 144 that would permit resales of Restricted Shares under Rule 144 after a
one-year rather than a two-year holding period, subject to compliance with the
other provisions of Rule 144, and would permit resale of Restricted Shares by
non-Affiliates under Rule 144(k) after a two year, rather than a three year,
holding period. Adoption of such amendments could result in resales of
Restricted Shares sooner than would be the case under Rule 144 as currently in
effect.

51
<PAGE>

UNDERWRITING

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

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ----------- ---------
<S> <C>
Smith Barney Inc.................................................................
Cowen & Company..................................................................
---------
Total........................................................................ 2,500,000
=========
</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 Cowen & Company 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 other Underwriters or to certain other dealers.
After the public offering, the public offering price and such concessions may
be changed by the Underwriter.

The Company and the Selling Stockholders have granted to the Underwriters an
option, exercisable for 30 days from the date of this Prospectus, to purchase
up to 375,000 additional shares of Common Stock (the "Additional Shares") at
the public offering price set forth on the cover page hereof less underwriting
discounts and commissions. See "Principal and Selling Stockholders." Of the
375,000 Additional Shares, up to 140,440 shares are subject to sale by the
Company and up to 234,560 shares are subject to sale by the Selling
Stockholders. In the event that fewer than all of the Additional Shares are
sold, those Additional Shares being offered by Selling Stockholders will be
sold before any Additional Shares of the Company are sold. The Underwriters
may exercise such option solely for the purpose of covering over-allotments,
if any, incurred in connection with the sale of the shares offered hereby. To
the extent such option is exercised, each Underwriter will become obligated,
subject to certain conditions, to purchase approximately the same percentage
of such Additional Shares as the number of shares set forth next to such
Underwriter's name in the preceding table bears to the total number of shares
listed in such table.

The Company, the Selling Stockholders and the Underwriters have agreed to
indemnify each other against certain liabilities, including liabilities under
the Securities Act.

The Company and its directors and officers, holding in the aggregate 959,774
shares of Common Stock, have agreed that, for a period of 120 days after the
date of this Prospectus, 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 or any securities convertible into or exercisable or
exchangeable for any shares of Common Stock, except, in the case of the
Company, in certain limited circumstances.

52
<PAGE>

The Underwriters and certain selling group members that currently act as
market makers for the Common Stock in accordance with Rule 10b-6A under the
Securities Exchange Act of 1934, as amended (the "1934 Act"), may engage in
"passive market making" in the Common Stock in accordance with Rule 10b-6A.
Rule 10b-6A permits, upon the satisfaction of certain conditions, underwriters
and selling group members participating in a distribution that are also market
makers in the security being distributed to engage in limited market making
transactions during the period when Rule 10b-6 under the Exchange Act would
otherwise prohibit such activity. In general, under Rule 10b-6A, any
Underwriter or selling group member engaged in passive market making in the
Common Stock (i) may not effect transactions in, or display bids for, the
Common Stock at a price that exceeds the highest bid for the Common Stock
displayed by a market maker that is not participating in the distribution of
the Common Stock, (ii) may not have net daily purchases of the Common Stock
that exceed 30% of its average daily trading volume in such stock for the two
full consecutive calendar months immediately preceding the filing date of the
registration statement of which this Prospectus forms a part and (iii) must
identify its bids as bids made by a passive market maker.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Rich, May, Bilodeau & Flaherty, P.C.,
Boston, Massachusetts. Certain legal matters will be passed upon for the
Underwriters by Dewey Ballantine, New York, New York.

EXPERTS

The consolidated financial statements of CORE, INC. at December 31, 1995 and
1994 and for each of the three years in the period ended December 31, 1995,
appearing in this Prospectus and Registration Statement, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

The financial statements of Nine Clinics of AmHealth (a wholly-owned
business of AmHealth, Inc.) as of March 31, 1996 and June 30, 1995, and for
the nine-month period ended March 31, 1996, the year ended June 30, 1995, and
the period ended June 30, 1994, have been included herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, appearing elsewhere herein, and upon
the authority of said firm as experts in accounting and auditing.

The reports of KPMG Peat Marwick LLP covering the March 31, 1996, June 30,
1995 and June 30, 1994 financial statements contains an explanatory paragraph
that states that AmHealth, Inc.'s recurring losses from operations, defaults
on its debt obligations, and net capital deficiency, all of which raise
substantial doubt about the entity's ability to continue as a going concern.
The financial statements do not include any adjustments that might result from
the outcome of that uncertainty.

The combined financial statements of Occu-Care Inc. and Affiliates included
in this Prospectus and elsewhere in the Registration Statement have been
audited by Arthur Andersen LLP, independent public accountants, as indicated
in their report thereto and are included herein in reliance upon the authority
of said firm as experts in giving said report.

53
<PAGE>

AVAILABLE 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 "Commission"). Reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at its
principal office at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and at the regional offices of the Commission: located at Seven World
Trade Center, 13th Floor, New York, New York, 10048 and 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Copies of all or any part of such
material may be obtained from the Public Reference Section of the Commission,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
upon payment of prescribed fees. The Company's Common Stock is listed on the
Nasdaq Stock Market's National Market, and material filed by the Company can
be inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.

The Company has filed with the Commission a Registration Statement on Form
S-1 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
are omitted in accordance with the rules and regulations of the Commission.
Statements contained in this Prospectus as to the contents of any contract or
other document are not necessarily complete, and in each instance reference is
made to the copy of such contract or other document filed or incorporated by
reference as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference and the exhibits and the
schedules thereto. For further information pertaining to the Company and the
Common Stock offered hereby, reference is hereby made to the Registration
Statement and the exhibits and schedules thereto which may be inspected
without charge and copies thereof may be obtained at prescribed rates from,
the Public Reference Branch of the Commission at 450 Fifth Street, N.W.
Washington, D.C. 20549.

The Company furnishes to its stockholders annual reports containing
consolidated financial statements audited by its independent auditors and
makes available copies of quarterly reports for the first three quarters of
each fiscal year containing unaudited financial information.

54
<PAGE>

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS OF CORE, INC.
CORE AUDITED FINANCIAL STATEMENTS
Report of Independent Auditors............................................ F-2
Consolidated Balance Sheets--December 31, 1994 and 1995................... F-3
Consolidated Statements of Operations--Years ended December 31, 1993, 1994
and 1995................................................................. F-4
Consolidated Statements of Stockholders' Equity--Years ended December 31,
1993, 1994 and 1995...................................................... F-5
Consolidated Statements of Cash Flows--Years ended December 31, 1993, 1994
and 1995................................................................. F-6
Notes to Consolidated Financial Statements................................ F-7
CORE UNAUDITED FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheet--March 31, 1996...................... F-16
Consolidated Condensed Statements of Operations--Three month periods ended
March 31, 1995
and 1996................................................................. F-17
Consolidated Condensed Statements of Cash Flows--Three month periods ended
March 31, 1995
and 1996................................................................. F-18
Notes to Consolidated Condensed Financial Statements (unaudited).......... F-19
FINANCIAL STATEMENTS OF AMHEALTH, INC.
Independent Auditors' Report.............................................. F-20
Balance Sheets--June 30, 1995 and March 31, 1996.......................... F-21
Statements of Loss--Year ended June 30, 1995 and nine month periods ended
March 31, 1996 and March 31, 1995 (Unaudited) ........................... F-22
Statements of Owner's Deficit--Year ended June 30, 1995 and nine month pe-
riod ended March 31, 1996 ............................................... F-23
Statements of Cash Flows--Year ended June 30, 1995 and nine month periods
ended March 31, 1996 and March 31, 1995 (Unaudited) ..................... F-24
Notes to Financial Statements............................................. F-25
Independent Auditors' Report.............................................. F-35
Statement of Loss--Period ended June 30, 1994............................. F-36
Statement of Owner's Deficit--Period ended June 30, 1994.................. F-37
Statement of Cash Flows--Period ended June 30, 1994....................... F-38
Notes to Financial Statements............................................. F-39
FINANCIAL STATEMENTS OF OCCU-CARE, INC.
Report of Independent Public Accountants.................................. F-44
Combined Statements of Operations--Period ended September 16, 1994 and
year ended
May 31, 1994............................................................. F-45
Combined Statements of Stockholder's Deficit--Period ended September 16,
1994 and year ended May 31, 1994......................................... F-46
Combined Statements of Cash Flows--Period ended September 16, 1994 and
year ended
May 31, 1994............................................................. F-47
Notes to Combined Financial Statements.................................... F-48
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders CORE, INC.

We have audited the accompanying consolidated balance sheets of CORE, INC.
as of December 31, 1994 and 1995, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the three years
in the 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 consolidated financial position
of CORE, INC. at December 31, 1994 and 1995, and the consolidated results of
its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles.

ERNST & YOUNG LLP

Boston, Massachusetts
February 14, 1996

F-2
<PAGE>

CORE, INC.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1994 1995
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 1,005,807
Cash pledged as collateral........................ $ 205,247 106,000
Customer advances................................. 173,764 286,550
Investments available-for-sale.................... 5,858,518 1,531,610
Accounts receivable, net of allowance for doubtful
accounts of $181,629 in 1994 and $170,337 in
1995............................................. 2,082,217 2,987,356
Notes receivable from officers.................... 12,000 35,507
Claims receivable................................. 369,100 44,845
Prepaid expenses and other current assets......... 388,892 455,076
------------ ------------
Total current assets.............................. 9,089,738 6,452,751
Property and equipment, net........................ 2,526,228 3,155,234
Cash pledged as collateral......................... 557,637 192,000
Deposits and other assets.......................... 142,927 178,402
Goodwill, net of accumulated amortization of
$17,000 in 1995................................... 1,929,885
Non-compete contracts, net of accumulated amortiza-
tion of $10,000 in 1995........................... 140,000
Customer contracts, net of accumulated amortization
of $310,819 in 1994 and $331,063 in 1995.......... 149,181 128,937
Organization costs, net of accumulated amortization
of $87,223 in 1994 and $107,563 in 1995........... 38,330 17,990
------------ ------------
Total assets...................................... $ 12,504,041 $ 12,195,199
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Advances under revolving line of credit........... $ 1,200,000
Cash overdraft.................................... 301,367
Accounts payable.................................. 778,366 $ 846,156
Accrued expenses.................................. 691,777 822,694
Accrued payroll................................... 223,661 184,795
Accrued vacation.................................. 269,000 376,561
Accrued restructuring costs....................... 130,498
Deferred income taxes............................. 68,316
Claims payable.................................... 542,864 326,368
Notes payable to officers......................... 200,000
Current portion of notes payable.................. 184,082 155,994
Current portion of obligations to former
shareholders..................................... 298,509
Current portion of capital lease obligations...... 86,479 91,159
------------ ------------
Total current liabilities......................... 4,477,596 3,301,050
Long-term obligations to former shareholders, net
of current portion................................ 645,106
Amounts due to former shareholders under non-com-
pete agreements................................... 100,000
Capital lease obligations, net of current portion.. 120,601 71,969
Deferred rent, net of current portion.............. 353,151 279,317
Deferred income taxes.............................. 149,500
Commitments and contingencies
Stockholders' equity:
Preferred stock, no par value, authorized 500,000
shares; no shares issued and outstanding
Common stock, $0.10 par value per share;
authorized 10,000,000 shares; issued and
outstanding 4,739,943 and 4,794,403 shares at
December 31, 1994 and 1995, respectively......... 473,994 479,440
Additional paid-in capital........................ 17,902,519 18,052,547
Deferred compensation............................. (51,120)
Cumulative unrealized gain (loss) on investments
available-for-sale............................... (39,408) 30,975
Accumulated deficit............................... (10,784,412) (10,863,585)
------------ ------------
Total stockholders' equity........................ 7,552,693 7,648,257
------------ ------------
Total liabilities and stockholders' equity........ $ 12,504,041 $ 12,195,199
============ ============
</TABLE>

See accompanying notes.

F-3
<PAGE>

CORE, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Revenues................................ $16,316,016 $16,746,290 $20,768,521
Cost of services........................ 10,713,523 11,305,323 12,838,971
----------- ----------- -----------
Gross profit............................ 5,602,493 5,440,967 7,929,550
Operating expenses:
General and administrative............ 5,028,868 4,182,206 4,772,863
Sales and marketing................... 1,786,820 1,562,823 1,499,120
Restructuring costs................... 557,515
Merger costs and expenses............. 1,182,373 1,114,406 436,104
Provision for doubtful accounts....... 67,245 83,050 14,375
Depreciation and amortization......... 1,066,900 914,480 904,900
Corporate relocation.................. 163,340
Write-off of goodwill................. 2,294,150
----------- ----------- -----------
Total operating expenses............ 9,295,546 10,151,115 8,184,877
Loss from operations.................... (3,693,053) (4,710,148) (255,327)
Other income (expense):
Interest income....................... 396,528 296,218 239,590
Interest expense...................... (108,336) (158,362) (83,410)
Realized gain (loss) on sale of in-
vestments available-for-sale......... (157,774) 9,123
Other income.......................... 29,284 30,480 10,851
----------- ----------- -----------
317,476 10,562 176,154
----------- ----------- -----------
Net loss................................ $(3,375,577) $(4,699,586) $ (79,173)
=========== =========== ===========
Net loss per common share............... $ (.73) $ (1.01) $ (0.02)
=========== =========== ===========
Weighted average number of common shares
outstanding............................ 4,611,000 4,668,000 4,755,000
=========== =========== ===========
</TABLE>

See accompanying notes.

F-4
<PAGE>

CORE, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL DEFERRED STOCK UNREALIZED TOTAL
------------------- PAID-IN COMPEN- SUBSCRIPTIONS GAIN (LOSS) ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL SATION RECEIVABLE INVESTMENTS DEFICIT EQUITY
--------- -------- ----------- -------- ------------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31,
1992................... 4,517,628 $451,763 $17,214,792 $(3,312,500) $ (2,709,249) $11,644,806
Exercise of stock
options (net of
dissenter's rights for
496 shares)........... 123,573 12,357 313,777 326,134
Stock subscription
paid.................. 3,312,500 3,312,500
Payments to repurchase
common stock.......... (556) (56) (1,196) (1,252)
Stockholders'
contribution.......... 330,000 330,000
Net loss............... (3,375,577) (3,375,577)
--------- -------- ----------- -------- ----------- -------- ------------ -----------
Balance at December 31,
1993................... 4,640,645 464,064 17,857,373 (6,084,826) 12,236,611
Exercise of stock
options............... 99,298 9,930 45,146 55,076
Unrealized loss on
investments available-
for-sale.............. $(39,408) (39,408)
Net loss............... (4,699,586) (4,699,586)
--------- -------- ----------- -------- ----------- -------- ------------ -----------
Balance at December 31,
1994................... 4,739,943 473,994 17,902,519 (39,408) (10,784,412) 7,552,693
Exercise of stock
options............... 54,460 5,446 85,628 91,074
Deferred compensation
related to stock
options issued........ 64,400 $(64,400)
Amortization of
deferred
compensation.......... 13,280 13,280
Unrealized gain on
investments available-
for-sale.............. 70,383 70,383
Net loss............... (79,173) (79,173)
--------- -------- ----------- -------- ----------- -------- ------------ -----------
Balance at December 31,
1995................... 4,794,403 $479,440 $18,052,547 $(51,120) $ -- $ 30,975 $(10,863,585) $ 7,648,257
========= ======== =========== ======== =========== ======== ============ ===========
</TABLE>

See accompanying notes.

F-5
<PAGE>

CORE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Operating activities:
Net loss............................... $(3,375,577) $(4,699,586) $ (79,173)
Adjustments to reconcile net loss to
net cash provided by (used in) operat-
ing activities:
Depreciation and amortization........ 1,066,900 979,627 986,152
Write-off of goodwill................ 2,294,150
Provision for doubtful accounts...... 67,245 83,050 14,375
(Gain) loss on sale/disposal of
equipment........................... 66,382 (29,174)
Realized loss on permanent decline in
fair market value of investments.... 157,774
Realized gain on sale of investments
available-for-sale.................. (9,123)
Compensation expense related to issu-
ance of stock options............... 409,345 28,078 13,280
Changes in operating assets and lia-
bilities:
(Increase) decrease in accounts re-
ceivable.......................... 400,033 (446,157) 258,269
(Increase) decrease in prepaid ex-
penses and other current assets... 185,625 (72,045) 277,357
Increase in customer advances...... (47,764) (112,786)
(Decrease) increase in cash over-
draft............................. (101,384) 301,367 (301,367)
Decrease in accounts payable and
accrued expenses.................. (733,914) (514,692) (607,675)
----------- ----------- -----------
Net cash provided by (used in) operat-
ing activities........................ (2,063,109) (1,917,608) 439,309
Investing activities:
Additions to property and equipment... (2,257,260) (539,521) (1,278,720)
Disposals of property and equipment... 6,400 2,432 4,688
Decrease (increase) in cash pledged as
collateral........................... (466,069) (296,815) 464,884
Refunds of (additions to) deposits.... (43,439) 23,168 (19,056)
Increase to notes receivable from of-
ficers............................... (12,000) (23,507)
Cash received upon business acquisi-
tion, net of cash paid............... 279,713
Non-compete payments.................. (50,000)
Purchase of Cost Review Services,
Inc., net of cash acquired........... (1,510,024)
Purchases of investments available-
for-sale............................. (317,570) (248,204) (3,985,892)
Sales of investments available-for-
sale................................. 4,204,434 8,392,306
----------- ----------- -----------
Net cash provided by (used in) invest-
ing activities........................ 1,406,209 (1,070,940) 1,994,679
Financing activities:
Net (repayments) borrowings under re-
volving line of credit............... (1,210,654) 1,200,000 (1,200,000)
Proceeds from issuance of officer's
notes................................ 200,000
Payments on officer's notes........... (200,000)
Issuance of notes payable............. 59,022 133,754 179,997
Payments on notes payable............. (59,022) (199,373) (208,085)
Payments on capital lease obliga-
tions................................ (69,038) (56,319) (91,167)
Payments to repurchase stock.......... (1,252)
Receipt of stock subscription......... 3,312,500
Exercise of dissenters' rights........ (1,043)
Issuance of common stock upon exercise
of stock options and warrants........ 262,177 26,998 91,074
----------- ----------- -----------
Net cash (used in) provided by financ-
ing activities........................ 2,292,690 1,305,060 (1,428,181)
----------- ----------- -----------
Net increase (decrease) in cash and
cash equivalents...................... 1,635,790 (1,683,488) 1,005,807
Cash and cash equivalents at beginning
of year............................... 47,698 1,683,488 --
----------- ----------- -----------
Cash and cash equivalents at end of
year.................................. $ 1,683,488 $ -- $ 1,005,807
=========== =========== ===========
Supplemental disclosure of cash flow
information:
Interest paid.......................... $ 72,307 $ 147,543 $ 83,322
=========== =========== ===========
Income taxes paid...................... $ 1,900
===========
Noncash investing activities:
Capital lease obligation incurred...... $ 25,266
===========
</TABLE>
See accompanying notes.

F-6
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995

(1) ORGANIZATION AND PURPOSE

CORE, INC. ("CORE" or the "Company") is a national provider of disability
and workers' compensation management services, physician-intensive health care
cost containment and health care utilization management services and programs
to large employers, commercial health and accident insurance companies, third-
party administrators of health insurance programs, self-insured employers and
other groups.

On March 24, 1995, the Company issued approximately 1,928,000 shares of its
common stock in exchange for all of the outstanding common stock of Core
Management, Inc. ("CMI"). In addition, outstanding employee stock options to
purchase CMI stock were converted into options to purchase approximately
160,000 shares of CORE. CMI is an independent provider of disability, medical
and behavioral health services which are designed to help its clients monitor
and control health care, workers' compensation and disability costs incurred
both in the aggregate and on a case by case basis without sacrificing the
quality of care or services available to patients. The merger has been
accounted for as a pooling of interests and accordingly, the Company's
consolidated financial statements have been restated to include the accounts
and operations of CMI for all periods prior to the merger. In connection with
the merger, the Company adopted a plan to restructure management to eliminate
redundant positions and to abandon excess lease space. In connection with
certain elements of the restructuring plan, the Company recorded a
restructuring charge of $557,515 which included approximately $438,000 for
severance costs and $120,000 for abandoned lease space. The restructuring
charge was added to an existing accrual for severance costs of approximately
$58,000 as of December 31, 1994. In accordance with Emerging Issues Task Force
Issue No. 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred
in a Restructuring), prior period financials were not restated. The
restructuring plan eliminated 11 employees in the regional operations, general
and administrative, sales and marketing and account management departments.
During 1995, severance payments charged against the liability for 10
terminated employees amounted to approximately $424,000 and lease payments for
abandoned lease space charged against the liability amounted to $120,000. Of
the initial restructuring charges, approximately $72,000 of severance payments
remained in accrued restructuring costs at December 31, 1995. Separate net
sales, net income and related per share amounts of the merged entities are
presented in the following table. In addition, the table includes pro forma
net income and net income per share amounts which reflect the elimination of
the nonrecurring merger costs and expenses in 1993, 1994 and 1995.

<TABLE>
<CAPTION>
1993 1994 1995
----------- ----------- -----------
<S> <C> <C> <C>
Net sales:
CORE............................. $ 7,627,283 $ 7,959,834 $10,401,801
CMI.............................. 8,688,733 8,786,456 10,366,720
----------- ----------- -----------
Total net sales................ $16,316,016 $16,746,290 $20,768,521
=========== =========== ===========
Net income (loss):
CORE............................. $(1,080,759) $ (691,185) $ 1,046,258
CMI.............................. (1,112,445) (2,893,995) (131,812)
----------- ----------- -----------
Pro forma net income (loss)........ (2,193,204) (3,585,180) 914,446
Merger cost and expenses........... 1,182,373 1,114,406 993,619
----------- ----------- -----------
Net loss as reported............... $(3,375,577) $(4,699,586) $ (79,173)
=========== =========== ===========
Net income (loss) per share
Pro forma........................ $(0.48) $(0.77) $ 0.19
=========== =========== ===========
As reported...................... $(0.73) $(1.01) $(0.02)
=========== =========== ===========
</TABLE>

F-7
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

On October 2, 1995, the Company acquired all of the outstanding shares of
Cost Review Services, Inc. ("CRS") for approximately $2,790,000 payable in
cash plus contingent consideration. CRS provides workers' compensation medical
cost containment and case management services and programs to commercial
workers' compensation insurance companies and third-party administrators of
workers' compensation programs. The acquisition was accounted for as a
purchase and the acquisition cost consisted of the following:

<TABLE>
<S> <C>
Cash paid to former CRS shareholders........ $1,640,000
Issuance of notes payable to former CRS
shareholders............................... 1,150,000
Acquisition costs incurred.................. 200,000
----------
$2,990,000
==========
</TABLE>

The contingent consideration of $1,150,000 is payable in cash and will be
computed based on agreed upon net revenue targets from January 1996 through
December 1998, and is subject to downward adjustment based on certain earnings
before interest and taxes percentages. The contingent consideration will be
payable beginning in March 1997. The contingent consideration is not included
in the acquisition cost total above and will be accounted for as period
expense when the future earnings requirements have been met. The purchase
resulted in goodwill of approximately $1,950,000 which is being amortized on a
straight-line basis over 27.5 years. Amortization of goodwill during 1995
amounted to $17,000. The notes due to the CRS shareholders include imputed
interest and are payable on a monthly basis commencing in January 1996 and
continue through 1998. The Company also agreed to pay the former CRS
shareholders $150,000 in installments of $50,000 in 1995, 1997 and 1998 in
exchange for covenants not-to-compete. These payments are being amortized over
the three year term of the agreements.

Acquisition costs include $100,000 pertaining to administrative costs and
$100,000 pertaining to restructure costs. In connection with the purchase, the
Company adopted a plan to restructure the accounting and administrative
departments of CRS and consolidate the functions within the Company's Boston,
Massachusetts office. In connection with certain elements of the restructuring
plan, the Company adjusted its purchase price by $100,000 to reflect an
accrual for facility consolidation costs of $25,000 and severance costs of
$75,000. The restructuring plan eliminated 4 employees in the accounting and
administrative departments. During 1995, severance payments charged against
the liability for the employees amounted to approximately $42,000. Of the
initial restructuring charges, $33,000 of severance payments and $25,000 for
payments on abandoned lease space remained in accrued restructuring costs at
December 31, 1995.

The consolidated financial statements include the operating results of CRS
from the date of acquisition. The following pro forma information has been
prepared assuming that this acquisition had taken place at the beginning of
1994. The proforma information includes adjustments of $57,000 for interest
expense that would have been incurred to finance the purchase, $92,000 to
decrease interest income due to having fewer dollars to invest as a result of
the purchase, $54,000 for the amortization of intangibles arising from the
transaction and $138,000 to eliminate the provision for income taxes due to
the filing of a consolidated tax return. Such pro forma amounts are not
necessarily indicative of what the actual consolidated results of operations
might have been if the acquisition had been effective at the beginning of
fiscal 1994.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995
----------- -----------
<S> <C> <C>
Net sales.................... $20,680,000 $24,847,000
Net earnings (loss).......... $(4,670,000) $ 338,000
Net earnings (loss) per
common share................ $ (1.00) $ 0.07
</TABLE>

F-8
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(2) ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany transactions
have been eliminated in consolidation.

RISKS AND UNCERTAINTIES

Concentration of Credit Risk

Financial instruments which potentially subject the Company to
concentrations of credit risk principally consist of cash and cash
equivalents, investments available-for-sale, and trade receivables.

The Company considers all highly liquid investments with a maturity of three
months or less at the date of purchase to be cash equivalents. Investments
available-for-sale represents the investment of excess cash in treasury
securities issued by the United States Government.

The Company provides its services to companies throughout the United States
in various industries, including, but not limited to the healthcare industry.
Management does not believe significant credit risk exists at December 31,
1995.

Significant Estimates and Assumptions

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.

INVESTMENTS

Effective January 1, 1994, the Company adopted Financial Accounting
Standards Board issued Statement of Financial Accounting Standards No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." The
adoption of Statement No. 115 had no material effect on the Company's
financial position at January 1, 1994 as all investments at that date were
recorded at cost which approximated market value. Under the new rules, debt
securities that the Company has both the positive intent and ability to hold
to maturity are classified as held-to-maturity securities and are carried at
amortized cost. Debt securities that the Company does not have the positive
intent or ability to hold to maturity and equity securities are classified as
available-for-sale and are carried at fair market value. Increases or declines
in fair market value of available-for-sale securities judged to be other than
temporary are recorded as a component of other income. Temporary declines are
reported as a separate component of shareholder's equity.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Major additions and betterments
are capitalized while repairs and maintenance expenditures which do not
improve or extend the life of the respective assets are expensed when
incurred.

DEPRECIATION AND AMORTIZATION

Leasehold improvements are depreciated using the straight-line method.
Computer equipment is depreciated using the 150% declining balance method. For
office furniture and equipment placed in service prior to fiscal 1993,
depreciation is computed using the 150% declining balance method. Effective
January 1, 1993, the Company began depreciating newly-acquired office
furniture and equipment using the straight-line method. The effect of the
change was not material to the 1993 financial results. The estimated useful
lives of the related assets are as follows:

<TABLE>
<CAPTION>
<S> <C>
Computer and office equipment....... 3-7 years
Software............................ 3-5 years
Furniture and fixtures.............. 7 years
Leasehold improvements.............. Shorter of lease term or estimated useful life
</TABLE>

F-9
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

SOFTWARE DEVELOPMENT COSTS

Certain costs of software, developed for internal use, are capitalized
subsequent to the favorable assessment of technological feasibility. Costs
incurred for maintenance and customer support are charged to expense as
incurred. The Company capitalized software development costs of $130,471 and
$180,000 during the years ended December 31, 1994 and 1995 respectively. The
software was placed in use during 1994 and 1995, and amortization in the
amount of $65,147, and $81,252 is included in cost of services for the years
ended December 31, 1994 and 1995, respectively. Software development costs are
amortized using the straight-line method.

GOODWILL, CUSTOMER CONTRACTS AND ORGANIZATION COSTS

Customer contracts and organization costs are amortized using the straight
line method over ten years and five years, respectively. Recoverability of all
intangible assets, including goodwill arising from business acquisitions, is
reviewed annually or sooner if events or changes in circumstances indicate
that the carrying amount may exceed fair value.

REVENUE RECOGNITION

Revenue is recognized on a capitated (fixed per employee per month), hourly
or per case basis, in accordance with the specific terms of each contract.
Typically, revenue is recognized during the contract period as services are
provided. Licensing fees are primarily based on use by the customer and are
recognized as revenue when they are earned. Deferred revenue represents
amounts received on contracts in advance of services being performed.

The majority of the contracts with clients permit cancellation upon 60 to 90
days' notice.

INCOME TAXES

The Company provides for income taxes under the liability method prescribed
by Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes." Under this method, deferred income taxes are recognized for the future
tax consequences of differences between the tax and financial accounting of
assets and liabilities at each year end. Deferred income taxes are based on
enacted tax laws and statutory tax rates applicable to the periods in which
the differences are expected to effect taxable income. Valuation allowances
are established when necessary to reduce deferred tax assets to the amounts
expected to be realized.

LOSS PER COMMON SHARE

Loss per common share data are computed using the weighted average number of
shares of common stock outstanding and dilutive common equivalent shares from
stock options, using the treasury stock method.

(3) CASH MANAGEMENT SYSTEM

Daily, under the Company's cash management system, the bank notifies the
Company of checks presented for payment against imprest operating accounts.
The Company utilizes available funds and, if necessary, transfers funds from
other sources, such as short-term investments or available lines of credit, to
cover the checks presented for payment. At December 31, 1994, the Company
reflects a book cash overdraft as a result of the checks outstanding.

F-10
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(4) INVESTMENTS

At December 31, 1994 and 1995, the Company had no securities that qualified
as trading or held-to- maturity. The following is a summary of available-for-
sale securities at December 31, 1994 and 1995:

<TABLE>
<CAPTION>
UNREALIZED REALIZED
AMORTIZED GAIN GAIN ESTIMATED
COST (LOSS) (LOSS) FAIR VALUE
---------- ---------- --------- ----------
<S> <C> <C> <C> <C>
December 31, 1994:
Fund investing in U.S.
Treasury Securities...... $6,055,700 $(39,408) $(157,774) $5,858,518
December 31, 1995:
U.S. Treasury Securities
maturing in 1 to 5
years.................... $1,500,635 $ 30,975 $ 9,123 $1,531,610
</TABLE>

For the year ended December 31, 1994, no sales were made of available-for-
sale securities. Subsequent to December 31, 1994, the Company sold available-
for-sale securities with a fair value on the date of sale of $5,750,000. The
realized loss of $157,774 on this sale has been recognized in the financial
statements for the year ended December 31, 1994 as the decline in market value
has been determined to be a permanent decline in value. The net unrealized
loss on available-for-sale securities of $39,408 has been included as a
separate component of stockholders' equity as of December 31, 1994.

During 1994, the Company had purchases and maturities of held-to-maturity
securities of approximately $10.1 million which were considered to be cash
equivalents and thus excluded from the statement of cash flows for the year
ended December 31, 1994.

For the year ended December 31, 1995, the Company sold available-for-sale
securities with a fair value on the date of sale of $8,392,306 (including
securities with a fair market value of $5,750,000 discussed below). The cost
of available-for-sale investments that were sold was based on specific
identification in determining realized gains and losses. The realized gain of
$9,123 on these sales has been recognized in the financial statements for the
year ended December 31, 1995. The net unrealized gain on available-for-sale
securities of $30,975 has been included as a separate component of
stockholders' equity as of December 31, 1995.

(5) CLAIMS RECEIVABLE AND CLAIMS PAYABLE

Claims receivable and claims payable include claims processed by the Company
but not yet billed to the Company's customers and estimated services provided
by the Company's provider network for which claims have not yet been submitted
to the Company or rebilled to the Company's customers. The Company has
estimated provider service costs incurred based upon its provider service cost
experience to date and current rate schedules negotiated with its provider
network.

At December 31, 1994, and 1995, the Company held customer advances of
$173,764 and $286,550, respectively, representing monies received to pay
provider claims on behalf of certain customers.

(6) PROPERTY AND EQUIPMENT

Property and equipment consist of the following at December 31:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Computer and office equipment................. $ 2,718,929 $ 3,353,569
Software...................................... 1,216,160 1,532,061
Furniture and fixtures........................ 538,986 932,619
Leasehold improvements........................ 905,883 1,109,122
----------- -----------
5,379,958 6,927,371
Less accumulated depreciation and amortiza-
tion......................................... (2,853,730) (3,772,137)
----------- -----------
$ 2,526,228 $ 3,155,234
=========== ===========
</TABLE>

F-11
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

(7) ADVANCES UNDER REVOLVING LINE OF CREDIT AND LETTERS OF CREDIT

In November 1995, the Company obtained a $1,500,000 revolving line of credit
with a bank, which expires on December 31, 1996. There was no outstanding
balance as of December 31, 1995. Interest is payable at a rate of prime plus
1% (9.5% at December 31, 1995). In May 1995, the Company entered into an
arrangement with a bank whereby the bank would issue letters of credit
amounting to $283,000 on behalf of the Company. These letters of credit are to
be maintained as security for payments under a furniture lease agreement and
an office space lease agreement.

(8) NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

<TABLE>
<CAPTION>
1994 1995
--------- ----------
<S> <C> <C>
Capital lease obligations, payable to various leasing
companies, bearing interest rates ranging from 9% to
16.83%, including interest............................ $ 207,080 $ 163,128
Notes payable to officers, paid in full during 1995.... 200,000
Note payable to seller pursuant to an asset acquisi-
tion, paid in full during 1995........................ 44,424
Notes payable to former shareholders................... 943,615
Other--insurance financing............................. 139,657 155,994
--------- ----------
591,161 1,262,737
Less current maturities................................ (470,560) (545,662)
--------- ----------
$ 120,601 $ 717,075
========= ==========
</TABLE>

The fair value of notes payable and capital lease obligations approximates
the carrying value. Principal maturities of notes payable, capital lease
obligations, and acquisition price payable are as follows:

<TABLE>
<CAPTION>
<S> <C>
1996.......................................................... $ 641,562
1997.......................................................... 438,006
1998.......................................................... 366,177
1999.......................................................... 4,963
----------
1,450,708
Less imputed interest......................................... (187,971)
----------
Present value of obligations.................................. $1,262,737
==========
</TABLE>

The Company has recorded the balance of the notes payable insurance
financing of $110,290 and $155,994 at December 31, 1994 and 1995,
respectively, as prepaid expenses; therefore, these amounts have been excluded
from the operating and financing activities disclosed in the statement of cash
flows for the year ended December 31, 1994 and 1995.

(9) COMMON STOCK WARRANTS

In connection with the Company's initial public offering in 1991, a warrant
to purchase 11,500 shares of common stock was issued to the Company's
underwriter with an exercise price of $12.60 per share and an expiration date
of June 12, 1995. On June 12, 1995, the warrant expired.

(10) STOCK OPTIONS PLANS

The Company has reserved 737,500 shares of common stock for issuance under
stock option plans established in 1986 and 1991. The Company has also granted
524,536 non-plan stock options (including grants for the converted CMI options
discussed in Note 1) of which 58,000, 68,000 and 110,944 have been exercised
as of December 31, 1993, 1994 and 1995, respectively. Other than the remaining
413,592 non-plan stock options

F-12
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
outstanding at December 31, 1995 no shares have been reserved for non-plan
stock options. Plan and non-plan stock options granted to employees and
directors are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------------------
1993 1994 1995
------------ ------------ ------------
<S> <C> <C> <C>
Outstanding at beginning of year..... 449,598 441,315 377,038
Granted............................ 143,086 68,552 1,004,509
Canceled........................... (27,300) (33,531) (59,234)
Exercised.......................... (124,069) (99,298) (54,460)
------------ ------------ ------------
Outstanding at end of year........... 441,315 377,038 1,267,853
============ ============ ============
Price range of outstanding options... $0.11-$15.24 $0.11-$15.24 $2.10-$12.08
============ ============ ============
Price range of options exercised..... $0.11-$ 4.50 $0.11-$ 3.73 $0.11-$ 4.80
============ ============ ============
Exercisable at end of year........... 368,565 307,938 594,925
============ ============ ============
Available for grant at end of year... 246,248 232,348 --
============ ============ ============
</TABLE>

Stock options will expire on various dates through December 2001.

(11) INCOME TAXES

The approximate effect of temporary differences and carryforwards that give
rise to deferred tax assets and liabilities as of December 31 are as follows:

<TABLE>
<CAPTION>
1994 1995
----------- -----------
<S> <C> <C>
Deferred tax assets:
Bad debt reserve............................... $ 73,000 $ 69,000
Expense accruals............................... 217,000 264,000
Unrealized loss on investments................. 63,000
Net operating loss carryforwards............... 3,060,000 2,860,000
Valuation allowance............................ (3,294,000) (3,078,000)
----------- -----------
119,000 115,000
Deferred tax liabilities:
Change in accounting method from cash to accru-
al............................................ (40,000) (204,000)
Depreciation................................... (79,000) (129,000)
----------- -----------
(119,000) (333,000)
----------- -----------
Net deferred tax liability....................... $ -- $ (218,000)
=========== ===========
</TABLE>

At December 31, 1995, the Company has available for federal and state income
tax purposes NOL carryforwards of approximately $9 million which expire
through 2010. The amount of NOL carryforwards that can be utilized in any
future year may be limited due to "equity structure shifts" and "owner shifts"
involving "5% shareholders" (as these terms are defined in Section 382 of the
Internal Revenue Code), which resulted in a more than 50 percentage point
change in ownership. The utilization of these NOL carryforwards may be subject
to further limitation provided by the Internal Revenue Code of 1986 and
similar state provisions.

During 1992, the Company changed from the cash receipts and disbursements
method to the accrual method of accounting for federal income taxes. As such,
the excess of accrual basis income over cash basis income earned in prior
years of $400,000 was taxable over the four year period ended December 31,
1995.

F-13
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

State excise taxes have been included in general and administrative expenses
in the consolidated statements of operations.

The following is a summary of the items which cause the effective federal
tax expense to differ from the statutory federal tax expense:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
1993 1994 1995
----------- ----------- ---------
<S> <C> <C> <C>
Statutory federal tax (benefit)....... $(1,148,000) $(1,598,000) $ (27,000)
State income taxes, net of federal
benefit.............................. (212,000) (296,000) (3,000)
Effect of nondeductible reorganization
costs................................ 480,000 381,000 404,000
Effect of goodwill write-off.......... 780,000
Other................................. 23,000 (126,000)
Effect (utilization) of net operating
loss carryforward.................... 880,000 710,000 (248,000)
----------- ----------- ---------
Effective federal tax................. $ -- $ -- $ --
=========== =========== =========
</TABLE>

(12) LEASES

The Company leases its facilities and certain office equipment under
noncancelable operating leases which expire at various dates through December
2001.

The terms of the lease agreements at the Boston location, scheduled to
expire in May 2000, and the Irvine location, scheduled to expire in September
2000 include base rent increases over the term of the leases and an option to
renew for one five-year term at the then prevailing rental rate. The total
amount of the base rent payments is being charged to expense on the straight-
line method over the term of the lease. The Company has recorded a deferred
credit to reflect the excess of rent expense over cash payments since
inception of the lease.

The Company received free rent concessions under terms of lease agreements
at the Boston, Burlington and Los Angeles locations. Total lease payments
under these agreements are amortized on a straight-line basis over the terms
of the related leases. The excess of the expense incurred over the cash paid
is included as deferred rent in the accompanying balance sheets.

At December 31, 1995, future minimum annual rental commitments under all of
the lease agreements described above are as follows:

<TABLE>
<S> <C>
1996........................................ $1,475,480
1997........................................ 1,274,170
1998........................................ 1,089,953
1999........................................ 935,885
2000........................................ 644,703
Thereafter.................................. 278,712
----------
$5,698,903
==========
</TABLE>

Total rent expense amounted to $1,119,963, $1,039,283 and $1,199,153 for the
years ended December 31, 1993, 1994 and 1995, respectively.

(13) COMMITMENTS AND CONTINGENCIES

Certain of the Company's service agreement contracts have provisions which
allow clients to audit the Company's performance under the contracts.

F-14
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The funding for CORE's WorkAbility software was provided by Chrysler
Corporation in exchange for a perpetual license to use such software and
repayment of 140% of the development costs (approximately $2.8 million). The
agreement states that repayment of such development costs is contingent upon
CORE's collection of certain licensing fees. During 1994 and 1995, licensing
fees of $156,000 and $37,000, respectively, were collected. No licensing fees
were earned prior to 1994. Royalties of $7,720 are accrued and payable to
Chrysler at December 31, 1995. No payments of royalties were made during 1994
or 1995.

The Company has several 401(k) profit sharing plans covering all employees
meeting certain service requirements. The Plans provide for discretionary
contributions by the Company. Matching contributions for the years ended
December 31, 1993, 1994 and 1995 were $32,525, and $23,229 and $54,017,
respectively, and are included in general and administrative expenses in the
accompanying statements of operations.

(14) RELATED PARTIES

The notes receivable from officers are due in February and April, 1996 and
accrue interest at current market rates.

(15) SIGNIFICANT CUSTOMERS

The Company has a contract with a major customer which accounted for
approximately 13% and 12% of total revenues for the years ended December 31,
1993 and 1994, respectively. No other client represented 10% or more of
revenue during these periods or the period ended December 31, 1995.

(16) SUBSEQUENT EVENT

In January 1996, CORE signed a letter of intent to acquire a majority of the
assets of AmHealth, Inc. ("AmHealth"), a management services organization that
manages nine occupational health clinics in Southern and Northern California
with a net book value of approximately $1,750,000. The proposed transaction is
subject to satisfactory completion of due diligence, negotiation of a
definitive agreement, and satisfaction of other conditions.

As part of the proposed transaction, CORE has agreed to guarantee or provide
lines of credit to AmHealth totaling up to $1,000,000 for working capital
purposes and additionally up to $500,000 for capital investment purposes.
AmHealth's use of funds under this line of credit agreement is subject to
CORE's approval. In connection with the guarantee of debt and the line of
credit, AmHealth granted CORE acceptable security interests in AmHealth
assets. To date, under this agreement CORE has provided $1,000,000 to
AmHealth. Interest on this line accrues at prime plus 2%. There were no
amounts outstanding under this agreement at December 31, 1995. It is not
practicable to estimate the fair value of the above guarantees, however, the
Company does not expect to incur losses as a result of these guarantees.

In the first quarter of 1996, the Company's line of credit facility was
increased to $2,500,000.

(17) FOURTH QUARTER ADJUSTMENTS (UNAUDITED)

During the fourth quarters of 1993 and 1994, the Company recognized the
following unusual or infrequently occurring items:

<TABLE>
<CAPTION>
1993 1994
-------- --------
<S> <C> <C>
Reorganization costs..................................... $385,645 $335,423
Realized loss on permanent decline in fair market value
of investments.......................................... 157,774
Severance accrual........................................ 57,130
Increase in allowance for doubtful accounts.............. 50,000
-------- --------
$385,645 $600,327
======== ========
</TABLE>

There were no unusual or infrequently occurring items during the fourth
quarter of 1995.

F-15
<PAGE>

CORE, INC.

CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)

<TABLE>
<CAPTION>
MARCH 31,
1996
------------
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents...................................... $ 18,332
Cash pledged as collateral..................................... 45,500
Customer advances.............................................. 286,550
Investments available-for-sale................................. 437,009
Accounts receivable, net of allowance for doubtful accounts of
$170,337...................................................... 4,301,040
Notes receivable from officers................................. 36,169
Notes receivable from affiliates............................... 1,041,450
Prepaid expenses and other current assets...................... 495,743
------------
Total current assets......................................... 6,661,793
Property and equipment, net...................................... 3,527,849
Cash pledged as collateral....................................... 192,000
Deposits and other assets........................................ 298,479
Goodwill, net of accumulated amortization of $34,600............. 1,918,780
Intangibles, net................................................. 266,781
------------
Total assets................................................. $ 12,865,682
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............................................... $ 1,252,284
Accrued expenses............................................... 1,416,499
Accrued payroll................................................ 455,343
Accrued restructuring costs.................................... 59,698
Deferred income taxes.......................................... 68,316
Current portion of notes payable............................... 91,995
Current portion of obligations to former shareholders.......... 384,484
Current portion of capital lease obligations................... 82,894
------------
Total current liabilities.................................... 3,811,513
Long-term obligations to former shareholders, net of current
portion......................................................... 366,824
Capital lease obligations, net of current portion................ 59,889
Deferred rent, net of current portion............................ 264,622
Deferred income taxes............................................ 149,500
Stockholders' equity:
Preferred stock, no par value, authorized 500,000 shares; no
shares issued and outstanding.................................
Common stock, $0.10 par value per share; authorized 10,000,000
shares; issued and outstanding 4,815,781 shares............... 481,578
Additional paid-in capital..................................... 18,104,718
Deferred compensation.......................................... (51,120)
Cumulative unrealized gain on investments available-for-sale... 6,778
Accumulated deficit............................................ (10,328,620)
------------
Total stockholders' equity................................... 8,213,334
------------
Total liabilities and stockholders' equity................... $ 12,865,682
============
</TABLE>
See accompanying notes.

F-16
<PAGE>

CORE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31,
-----------------------
1995 1996
----------- ----------
<S> <C> <C>
Revenues.............................................. $ 4,728,653 $6,583,562
Cost of services...................................... 3,116,938 3,938,910
----------- ----------
Gross profit.......................................... 1,611,715 2,644,652
Operating expenses:
General and administrative.......................... 1,190,608 1,403,074
Sales and marketing................................. 382,033 470,234
Restructuring costs................................. 557,515
Merger costs and expenses........................... 427,950
Depreciation and amortization....................... 232,562 277,911
----------- ----------
Total operating expenses.......................... 2,790,668 2,151,219
Income (loss) from operations......................... (1,178,953) 493,433
Other income (expense):
Interest income..................................... 77,483 45,366
Interest expense.................................... (51,339) (18,451)
Realized gain (loss) on sale of investments
available-for-sale................................. (1,663) 14,617
Other income........................................ 2,760
----------- ----------
27,241 41,532
----------- ----------
Net income (loss)..................................... $(1,151,712) $ 534,965
=========== ==========
Net income (loss) per common share.................... $ (0.24) $ 0.10
=========== ==========
Weighted average number of common shares outstanding.. 4,739,930 5,532,000
=========== ==========
</TABLE>

See accompanying notes.

F-17
<PAGE>

CORE, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)................................... $(1,151,712) $ 534,965
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Depreciation and amortization..................... 250,963 300,006
Provision for doubtful accounts................... 15,000
Realized gain on sale of investments available-
for-sale......................................... (14,617)
Decrease in obligations to former shareholders.... (134,000)
Changes in operating assets and liabilities:
Increase in accounts receivable................. (187,085) (1,313,684)
Decrease in prepaid expenses and other current
assets......................................... 145,679 4,178
Decrease in cash overdraft...................... (301,367)
Increase in accounts payable and accrued
expenses....................................... 581,843 482,057
----------- -----------
Net cash used in operating activities............... (646,679) (141,095)
INVESTING ACTIVITIES
Additions to property and equipment................. (186,719) (634,875)
Additions to goodwill............................... (6,495)
Decrease (increase) in cash pledged as collateral... (167,098) 60,500
Increase to notes receivable from officers.......... (662)
Advances to affiliates.............................. (1,041,450)
Increase in deposits and other assets............... (120,077)
Purchases of investments available-for-sale......... (3,989,302)
Sales of investments available-for-sale............. 7,879,679 1,085,021
----------- -----------
Net cash provided by (used in) investing
activities......................................... 3,536,560 (658,038)
FINANCING ACTIVITIES
Net repayments under revolving line of credit....... (1,200,000)
Payments on officers' notes payable................. (200,000)
Payments on notes payable........................... (92,454) (63,999)
Payments on capital lease obligations............... (21,175) (20,345)
Payments on obligations to former shareholders...... (158,307)
Issuance of common stock upon exercise of stock
options and warrants............................... 54,309
----------- -----------
Net cash used in financing activities............... (1,513,629) (188,342)
----------- -----------
Net increase (decrease) in cash and cash
equivalents........................................ 1,376,252 (987,475)
Cash and cash equivalents at beginning of period.... -- 1,005,807
----------- -----------
Cash and cash equivalents at end of period.......... $ 1,376,252 $ 18,332
=========== ===========
Supplemental disclosure of cash flow information....
Interest paid....................................... $ 54,354 $ 45,603
=========== ===========
</TABLE>

See accompanying notes.

F-18
<PAGE>

CORE, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

MARCH 31, 1996

(1) BASIS OF PRESENTATION

The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations of the
Securities and Exchange Commission, but 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 only normal
recurring adjustments) considered necessary for a fair presentation have been
included. 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 ended December 31, 1996. For further information, refer to the
consolidated financial statements for the year ended December 31, 1995
contained in the Company's annual report filed on Form 10-K (File #0-19600)
with the Securities and Exchange Commission on April 1, 1996.

(2) INVESTMENTS

At March 31, 1996, the Company had no securities that qualified as trading
or held-to-maturity. The following is a summary of available-for-sale
securities at March 31, 1996:

<TABLE>
<CAPTION>
AMORTIZED UNREALIZED ESTIMATED
COST GAIN FAIR VALUE
--------- ---------- ----------
<S> <C> <C> <C>
U.S. Treasury Securities $430,231 $6,778 $437,009
</TABLE>

For the three months ended March 31, 1996, the Company sold available-for-
sale securities with a fair value on the date of sale of $1,085,021. A
realized gain of $14,617 on these sales was recognized in the three months
ended March 31, 1996. The net unrealized gain of $6,778 on these securities
has been included as a separate component of stockholders' equity as of March
31, 1996.

(3) IMPAIRMENT OF LONG-LIVED ASSETS

In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets to be Disposed Of, the Company records impairment losses on
long-lived assets used in operations when events and circumstances indicate
that the assets might be impaired and the undiscounted cash flows estimated to
be generated by those assets are less than the carrying amounts of those
assets. During the quarter ended March 31, 1996, events and circumstances
indicated that approximately $120,000 of intangible assets related to the
Integrated Behavioral Health division might be impaired. However, the
Company's estimate of undiscounted cash flows indicated that such carrying
amounts were expected to be recovered. Nonetheless, it is reasonably possible
that the estimate of undiscounted cash flows may change in the near term
resulting in the need to write-down those assets to fair value.

F-19
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors AmHealth, Inc.:

We have audited the accompanying balance sheets of Nine Clinics of AmHealth
(a wholly owned business of AmHealth, Inc.) as of June 30, 1995 and March 31,
1996, and the related statements of loss, owner's deficit, and cash flows for
the year ended June 30, 1995 and nine months ended March 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Nine Clinics of AmHealth
(a wholly owned business of AmHealth, Inc.) at June 30, 1995 and March 31,
1996, and the results of its combined operations and its cash flows for the
year ended June 30, 1995 and nine months ended March 31, 1996 in conformity
with generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that Nine
Clinics of AmHealth's parent will continue as a going concern. As discussed in
note 1 to the financial statements, the Company has suffered recurring losses
from operations, has defaulted on its debt obligations, and has a net capital
deficiency that raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also
described in note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

KPMG Peat Marwick LLP
Atlanta, Georgia
May 31, 1996, except as to
Note 13 which is as of
June 17, 1996

F-20
<PAGE>

NINE CLINICS OF AMHEALTH (A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

BALANCE SHEETS JUNE 30, 1995 AND MARCH 31, 1996

<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
ASSETS ----------- -----------
<S> <C> <C>
Current assets:
Cash......................................... $ 62,307 $ 69,482
Trade receivables, net of allowance for
contractual adjustments and doubtful
accounts of $1,615,147 and $1,443,297,
respectively.............................. 2,648,777 2,476,711
Other receivables............................ 500
Prepaid expenses and other assets............ 288,522 299,511
----------- -----------
Total current assets....................... 3,000,106 2,845,704
Property and equipment, net (note 4)........... 1,235,501 802,935
Goodwill, net of accumulated amortization of
$735,992 and $1,178,752, respectively......... 5,313,318 4,316,480
Other assets................................... 221,475 22,759
----------- -----------
$ 9,770,400 $ 7,987,878
=========== ===========
LIABILITIES AND OWNER'S DEFICIT
Current liabilities:
Bank overdrafts.............................. $ 408,080 $ 234,040
Notes payable to banks (notes 5 and 10)...... 58,000 222,300
Notes payable (notes 5 and 10)............... 5,205,666 6,842,600
Accounts payable............................. 914,814 845,642
Accrued expenses (notes 9 and 10)............ 1,520,904 1,680,902
Accrued salaries............................. 389,664 507,990
Long-term debt (notes 6 and 10).............. 3,471,600 2,720,595
Capital lease obligation (note 7)............ 57,326 33,377
Other liabilities............................ 79,886
----------- -----------
Total current liabilities.................. 12,105,940 13,087,446
----------- -----------
Redeemable preferred stock--$.01 par value;
authorized 5,000,000 shares; issued and
outstanding 2,500,000 shares (note 9)......... 2,500,000 2,500,000
Owner's deficit:
Investment by and (advances to) AmHealth,
Inc............................................ (262,980) (798,269)
Accumulated deficit.......................... (4,572,560) (6,801,299)
Commitments and contingencies (notes 6, 7, 10
and 12)
----------- -----------
Total owner's deficit...................... (4,835,540) (7,599,568)
----------- -----------
$ 9,770,400 $ 7,987,878
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-21
<PAGE>

NINE CLINICS OF AMHEALTH (A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENTS OF LOSS YEAR ENDED JUNE 30, 1995 AND NINE MONTHS ENDED MARCH 31,
1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED MARCH 31,
JUNE 30, --------------------------------
1995 1996 1995
----------- ------------- -----------------
(UNAUDITED)
(NOTE 14)
<S> <C> <C> <C>
Net revenues....................... $12,722,746 $10,628,111 $ 9,064,535
Operating expenses:
Clinic salaries and benefits..... 7,553,601 6,329,690 5,525,901
Other clinic services............ 2,098,036 1,720,479 1,454,522
Equipment and facilities rent.... 1,110,784 666,292 530,064
Depreciation and amortization.... 843,416 670,473 402,706
General and administrative
expenses........................... 3,093,725 2,408,236 2,374,256
----------- ------------- -------------
Total operating expenses....... 14,699,562 11,795,170 10,287,449
----------- ------------- -------------
Loss from operations............... (1,976,816) (1,167,059) (1,222,914)
Interest expense................... 1,125,534 889,024 810,970
Preferred stock dividends.......... 81,250 172,656 40,625
----------- ------------- -------------
Net loss........................... $(3,183,600) $(2,228,739) $(2,074,509)
=========== ============= =============
</TABLE>

See accompanying notes to financial statements.

F-22
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENTS OF OWNER'S DEFICIT
YEAR ENDED JUNE 30, 1995 AND
NINE MONTHS ENDED MARCH 31, 1996

<S> <C>
Balance at June 30, 1994.......................................... $(1,192,022)
Net loss.......................................................... (3,183,600)
Net transfers to AmHealth, Inc.................................... (459,918)
-----------
Balance at June 30, 1995.......................................... (4,835,540)
Net loss.......................................................... (2,228,739)
Net transfers to AmHealth, Inc.................................... (535,289)
-----------
Balance at March 31, 1996......................................... $(7,599,568)
===========
</TABLE>

See accompanying notes to financial statements.

F-23
<PAGE>

NINE CLINICS OF AMHEALTH (A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENTS OF CASH FLOWS YEAR ENDED JUNE 30, 1995 AND NINE MONTHS ENDED MARCH
31, 1996 AND 1995 (UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
YEAR ENDED MARCH 31,
JUNE 30, ------------------------
1995 1996 1995
----------- ----------- -----------
(UNAUDITED)
(NOTE 14)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss from operations.............. $(3,183,600) $(2,228,739) $(2,074,509)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization........ 843,416 670,473 402,706
Provision for contractual allowances
and uncollectible accounts............. 1,241,101 1,148,254 741,020
(Increase) decrease in:
Accounts receivable................. (1,121,552) (976,188) (719,095)
Prepaid expenses and other assets... (39,099) (10,989) (67,187)
Other assets........................ (68,451) 198,716 (101,760)
Increase (decrease) in:
Accounts payable.................... (87,924) (69,172) 634,930
Accrued expenses.................... 768,604 470,706 392,277
Other............................... 111,970 38,940 488,695
----------- ----------- -----------
Net cash used in operating activities.. (1,535,535) (757,999) (1,572,783)
----------- ----------- -----------
Cash flows from investing activities:
Disposal (purchase) of equipment...... (349,862) 232,400 (321,895)
Acquisitions of businesses, net of
cash acquired (note 3)................. (1,479,441) (1,479,441)
----------- ----------- -----------
Net cash provided by (used in)
investing activities................... (1,829,303) 232,400 (1,801,336)
----------- ----------- -----------
Cash flows from financing activities:
Increase (decrease) in bank
overdrafts............................. 96,473 (174,040) 150,834
Net transfers to AmHealth, Inc........ (459,918) (535,289) (38,614)
Principal payments on notes payable
and long-term debt..................... (314,695) (535,182) (30,083)
Proceeds from issuance of notes
payable and long-term debt............. 4,029,947 1,801,234 3,294,619
Payments of capital lease
obligations............................ (23,949)
----------- ----------- -----------
Net cash provided by financing
activities............................. 3,351,807 532,774 3,376,756
----------- ----------- -----------
Increase (decrease) in cash and cash
equivalents............................ (13,031) 7,175 2,637
Cash and cash equivalents at beginning
of period.............................. 75,338 62,307 75,338
----------- ----------- -----------
Cash and cash equivalents at end of
period................................. $ 62,307 $ 69,482 $ 77,975
=========== =========== ===========
Supplemental disclosure of cash flow
information--cash paid during the
period for interest................... $ 986,142 $ 404,236 $ 703,188
=========== =========== ===========
Schedule of noncash investing and
financing activities--acquisitions of
companies:
Fair value of assets acquired........ $ 4,700,000 $ 4,700,000
Liabilities assumed.................. (700,000) (700,000)
Notes payable issued................. (2,500,000) (2,500,000)
----------- ----------- -----------
Total cash paid for net assets
acquired............................... $ 1,500,000 $ -- 1,500,000
=========== =========== ===========
Debt converted to redeemable preferred
stock.................................. $ 2,500,000 $ 2,500,000
Renegotiations of notes payable issued
in connection with acquisitions
resulting in a reduction of principal
and related goodwill.................. $ 526,581
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-24
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996

(1) ORGANIZATION

BASIS OF PRESENTATION

AmHealth, Inc. provides occupational health, outpatient physical therapy,
and physical rehabilitation services to individuals who sustain work-related
injuries.

The Company is comprised of eight clinics of AmHealth, Inc., an employer
services division and a business consisting of a management services agreement
with California Pacific Medical Center in San Francisco, California (CPMC
division). The eight clinics were acquired by AmHealth, Inc. (the Parent) in
business combinations accounted for as purchases on various dates as listed
below. The Employer Services Division was formed from the combination of two
occupational health care networks acquired in business combinations. The CPMC
division began operations in June 1995 and operates under a management
services agreement with California Pacific Medical Center in San Francisco,
California. The operations of each of the eight clinics and the employer
services division are included in the accompanying financial statements
subsequent to each acquisition date by AmHealth, Inc. (note 3).

<TABLE>
<CAPTION>
SELLING PARTY OPERATIONS ACQUIRED MONTH ACQUIRED
------------- ------------------- --------------
<S> <C> <C>
Worksite Partners, Inc. Two clinics in Oakland, CA(a) January 1994
Dr. Richard H. Shoop One clinic and an occupational health March 1994
care network both
located in San Francisco, CA
Richmond Occupational One clinic in Richmond, CA March 1994
Medicine Associates
Hallet A. Lewis, MD Occupational health practice in May 1994
Oakland, CA
TriCare, Inc. Five clinics located in Rancho September 1994
Dominique; City of Industry; Ontario;
Pomona; and Riverside, CA
</TABLE>
- --------
(a) One of the clinics was closed immediately after acquisition.

The Parent's operations also included three physical therapy centers in
metropolitan Minneapolis, Minnesota, an exercise and health center located in
Hermantown, Minnesota, and a clinic in Sacramento, California, acquired in
March 1994 from Dr. Shoop, which was sold in February 1996. The Hermantown
operations were closed in late 1993 and the Minneapolis clinics were closed in
August 1995.

The accompanying financial statements include the assets and liabilities,
statements of operations, and cash flows for the eight acquired clinics, the
Employer Services Division, and the CPMC division listed above and excludes
the assets and liabilities, revenues and expenses, and cash flows attributable
to the Minnesota clinics and the Sacramento clinic (the excluded clinics).

The accompanying financial statements have been prepared as if the eight
clinics, the Employer Services Division, and the CPMC division had operated as
a stand-alone entity for all periods presented. Such statements include the
assets, liabilities, revenues, and expenses that are directly related to the
Company's operations. They also include an allocation of certain assets,
liabilities, and general corporate expenses of AmHealth, Inc., such as
executive payroll, interest, and other corporate overhead which are related to
the Company. Amounts were allocated on a specific identification method where
appropriate and on a pro rata basis otherwise. Management believes the
allocation methods used are reasonable.

F-25
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
AmHealth, Inc. has experienced recurring losses since inception and has a
net capital deficiency of $11,233,254 as of March 31, 1996. In addition,
AmHealth, Inc. has defaulted on substantially all of its notes payable and on
certain vendor obligations.

AmHealth, Inc. has negotiated various settlement agreements with debt
holders and vendors in which forbearance has been obtained until an
appropriate sale of assets can be consummated to satisfy such obligations.

Management has entered into agreements to sell its operating clinics at an
amount that in its opinion would generate sufficient value to satisfy all of
its outstanding debt obligations in either cash or stock. This sale is
contingent upon certain conditions (note 12). The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) CASH EQUIVALENTS

Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents. Cash equivalents
at each balance sheet date consist of a certificate of deposit.

(B) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost and depreciated using the
straight-line method over estimated useful lives, ranging from five to ten
years. Equipment purchased under capital leases is stated at the present
value of the minimum lease payments. Equipment under capital leases and
leasehold improvements are amortized on the straight-line basis over the
shorter of the lease term or estimated useful life of the asset.

Patient service revenue is recorded in the period in which services are
rendered to the patient, at the Company's established rates.

Services relating to workers' compensation claims are subject to fee
schedules mandated by the State of California. Net patient revenues are
reported net of contractual allowances and bad debt expense. Contractual
allowances and bad debts expense were $988,026 and $1,148,254 for the year
ended June 30, 1995 and the nine months ended March 31, 1996, respectively.

(D) GOODWILL

Goodwill, which represents the excess of purchase price over fair value
of net assets acquired, is amortized on a straight-line basis over the
expected periods to be benefited, generally 10 years. The Company assesses
the recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be
recovered through undiscounted future operating cash flows of the acquired
operation. The amount of goodwill impairment, if any, is measured based on
projected discounted future operating cash flows using a discount rate
reflecting the Company's average cost of funds. The assessment of the
recoverability of goodwill will be impacted if estimated future operating
cash flows are not achieved. In management's estimation, the remaining
amount of goodwill has continuing value.

(E) INCOME TAXES

F-26
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Statement of Financial Accounting Standards No. 109, deferred tax assets
and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amount of existing
assets and liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using the enacted tax rates expected to apply
to taxable income in the years in which these 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. Income taxes have
not been allocated to the Company due to the losses incurred by both
AmHealth, Inc. and the Company.

(F) USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions
relating to the reporting of assets and liabilities and the disclosure of
contingent liabilities to prepare these financial statements in conformity
with generally accepted accounting principles. Actual results could differ
from those estimates.

(G) RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In March 1995, Statement of Financial Accounting Standards No. 121,
"Accounting for the Impairment of Long-Lived Assets to be Disposed of"
("SFAS 121") was issued. SFAS 121 is effective for fiscal years beginning
January 1, 1996. SFAS 121 establishes accounting standards for the
impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets to be held and used and for long-lived
assets and certain identifiable intangibles to be disposed of. The Company
does not believe the adoption of SFAS 121 will have a material impact on
the Company's financial condition or results of operations.

(3) ACQUISITIONS

The following table summarizes each of the clinics and network acquisitions
as described in note 1.

<TABLE>
<CAPTION>
ACQUIREE
-------------------------------------------------------------
RICHMOND
WORKSITE DR. OCCUPATIONAL
PARTNERS, RICHARD H. MEDICINE HALLET A.
INC. SHOOP ASSOCIATES LEWIS, MD TRI-CARE, INC.
---------- ---------- ------------ ---------- --------------
<S> <C> <C> <C> <C> <C>
Cash paid............... $ 113,000 $ -- $ 65,000 $125,000 $1,500,000
Acquisition costs....... 8,000 63,000 3,000 165,000 --
Debt assumed............ 40,000 45,000 28,000 -- --
Other liabilities
assumed................. 7,000 187,000 89,000 -- 700,000
Notes payable issued.... 1,350,000 800,000 935,000 394,000 2,500,000
Fair value of assets
acquired................ (163,000) (403,000) (201,000) (301,000) (2,625,000)
---------- -------- -------- -------- ----------
Excess of cost over
fair value
of assets acquired... $1,355,000 $692,000 $919,000 $383,000 $2,075,000
========== ======== ======== ======== ==========
</TABLE>

One of the two clinics acquired from Worksite Partners, Inc. was closed
immediately upon acquisition.

F-27
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(4) PROPERTY AND EQUIPMENT

Property and equipment consists of the following:
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
---------- ----------
<S> <C> <C>
Furniture and equipment................................. $1,207,517 $ 734,179
Leasehold improvements.................................. 526,277 413,630
---------- ----------
1,733,794 1,147,809
Accumulated depreciation and amortization............... (498,293) (344,874)
---------- ----------
$1,235,501 $ 802,935
========== ==========
</TABLE>

The net book value of property and equipment under capitalized leases
amounted to $108,229 and $54,861 at June 30, 1995 and March 31, 1996,
respectively.

(5) NOTES PAYABLE

Notes payable to bank and notes payable consist of the following:
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
---------- ----------
<S> <C> <C>
Notes payable to bank:
Note payable to bank for the assumption of a prior
officer and stockholder's note guaranteed by the
Company. Interest is payable quarterly beginning March
4, 1996 at 9.75%. Principal and interest is due in full
June 4, 1996............................................ $ -- $ 164,300
Note payable to bank with an interest rate of 1.5%
above the prime rate. Interest is payable monthly
through August 1994, with principal and any unpaid
interest payable August 23, 1994........................ 58,000 58,000
---------- ----------
$ 58,000 $ 222,300
========== ==========
Notes payable:
Line of credit with an interest rate of prime + 3%
with a floor of 10%, plus a monthly service fee of 1%.
Note was initially secured by a second mortgage on the
personal residence of a prior officer of the Company and
an assignment of note and accounts receivable. In 1995,
the line was renegotiated with an interest rate of 12%
and the prior security interest was replaced by a first
priority security interest in certain accounts
receivable, contract rights, and certain equipment...... $4,771,871 $5,058,805
Line of credit, with an interest rate of 12%. Note was
secured by first priority protected security interest in
all borrowers' accounts receivables, contract rights,
equipment, etc., except to the extent Dr. Shoop's prior
security interest in San Leandro Clinic and other assets
as to which lender holds second priority interest....... 350,000
Note payable, with an interest rate of 10%. Existing
collateral includes 119,472 shares of Medicode, Inc.
common stock pledged by a Board member.................. 300,000 300,000
</TABLE>

F-28
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
----------- -----------
<S> <C> <C>
Convertible notes:
Notes payable with an interest rate of 15%.
Interest is due in quarterly installments through
December 31, 1995. Principal was due in full at
December 31, 1995................................... $ 915,000 $ 915,000
Notes payable with an interest rate of 12%.
Interest is due in quarterly installments through
May 1, 1996. Principal is due in full on the earlier
of the Company's obtaining mezzanine financing or
May 1, 1996. The note holders were issued warrants
for which $1.00 of principal may be converted to one
share of stock until May 1, 1996.................... 445,000 445,000
Note payable with an interest rate of 10%.
Interest and principal are payable on demand of the
holder. Note holder may convert the note to common
stock at a conversion rate of one share for each
$1.00 of principal.................................. 50,000 50,000
Note payable to CORE, INC. with interest rate of
prime rate +2%......................................
Principal is due on the earliest of the following
dates:
(a) the date of the closing (as that term is
defined in certain letter agreement, dated January
9, 1996 by and between AmHealth, Inc. and CORE (the
"Letter Agreement").................................
(b) the date six months after the termination of
the Letter Agreement................................
(c) the date of the occurrence of a significant
transaction (as that term is defined in the Letter
Agreement)..........................................
The note is collateralized by all of the
Company's assets.................................... 1,000,000
Less debt allocated to the excluded clinics....... (1,276,205) (1,276,205)
----------- -----------
$ 5,205,666 $ 6,842,600
=========== ===========
</TABLE>

Except for the revolving lines of credit, at March 31, 1996 and June 30,
1995, notes payable to banks and notes payable were in default due to the
Company's inability to meet principal and interest payment requirements and
violation of restrictive covenants contained with each note. Accordingly, in
accordance with the terms of the notes, such note payable balances are due on
demand; and therefore, have been classified as current (note 10). There were
$44,626 of available borrowings under the lines of credit at March 31, 1996.

(6) LONG-TERM DEBT

Long-term debt consists of the following:

<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
---------- ----------
<S> <C> <C>
Note payable to bank with an interest rate of 7.05%.
Interest and principal
are due in monthly installments of $1,102 through April
1, 1999, with any
unpaid interest and principal payable on April 1, 1999.. $ 44,303 $ 10,107
Notes payable issued in connection with acquisitions with
interest rates
ranging from 8% to 15% (note 3)......................... 3,341,578 2,632,366
Miscellaneous vendor agreements for outstanding balances
due in monthly installments............................. 85,719 78,122
---------- ----------
$3,471,600 $2,720,595
========== ==========
</TABLE>

F-29
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The notes payable contain restrictive covenants requiring, among other
items, periodic principal and interest payments. The Company defaulted on the
periodic principal and interest payments and other covenants during the year
ended June 30, 1995 and the nine months ended March 31, 1996. The Company has
also defaulted on payments to miscellaneous vendors relating to notes
outstanding. Under the terms of the respective note agreements, the balances
are due on demand; and therefore, have been reflected as current.

In January and February of 1996, the Company negotiated certain settlements
relating to notes payable issued in connection with acquisitions. The effect
net of these settlements was a reduction in principal of $526,531 and a
corresponding reduction to goodwill. Certain of the notes payable issued in
connection with acquisitions contain adjustment provisions which were being
disputed by the parties. (See note 10(c)). The settlement agreements are
contingent upon the sale of assets to CORE.

(7) LEASES

The Company has certain facilities under noncancelable lease agreements
expiring through 1999. The Company also leases certain equipment under capital
lease agreements at effective rates ranging from 14% to 21%.

Future minimum lease commitments as of March 31, 1996 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING JUNE 30, LEASES LEASES
- -------------------- ------- ----------
<S> <C> <C>
1996...................................................... $37,461 $ 170,703
1997...................................................... 546,564
1998...................................................... 477,029
1999...................................................... 447,400
2000...................................................... 420,534
Thereafter................................................ 239,340
------- ----------
Total minimum lease payments............................ 37,461 2,301,570
Less amounts representing interest........................ 4,085
------- ----------
Net minimum lease payments.............................. $33,376 $2,301,570
======= ==========
</TABLE>

Rent expense was $749,450 for the year ended June 30, 1995 and $666,292 for
the nine months ended March 31, 1996.

(8) RETIREMENT PLAN

AmHealth, Inc. sponsors a retirement savings plan (savings plan) pursuant to
Section 401(k) of the Internal Revenue Code. Contributions to the savings plan
may be used to purchase shares in a variety of mutual funds. Employees are
eligible to participate after completing six months of service. Eligible
participants may make a contribution ranging from 1% to 15% of their base pay.
AmHealth, Inc. matches 25% on the first 6% of the participant's contribution.
Participants are immediately 100% vested in their own contributions and vest
at a rate of 20% per year, beginning after one year of participation, up to
100% after six years of participation in the contributions made by the
Company. During the year ended June 30, 1995 and the nine months ended March
31, 1996, AmHealth, Inc. contributed $33,975 and $81,092, respectively, to the
savings plan on behalf of eligible participants.

F-30
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(9) REDEEMABLE PREFERRED STOCK

In connection with the TriCare acquisition, the Company issued two
promissory notes in the amounts of $1,500,000 and $1,000,000, respectively.
The notes had an interest rate of 8% and interest was to be paid quarterly.
The principal was due in full on the first to occur of December 1, 1995 or the
first day of the month following a mezzanine financing.

Pursuant to a letter agreement, on December 31, 1994, the note holders and
the Company agreed to exchange the above two promissory notes for $2,500,000
of Series A Convertible Redeemable Preferred Stock. The terms of the letter
provided for cumulative dividends of 6 1/2% per share to be payable quarterly
with each share of preferred stock to be converted at the option of the holder
into common stock at any time from and after either (i) the entry into an
underwriting agreement in connection with a public offering, or (ii) the
registration of the common stock of the Company pursuant to the Securities
Exchange Act of 1934.

All outstanding unconverted shares of Preferred Stock were to be redeemed by
the Company at the original price per share, plus any accrued but unpaid
dividends as follows:

(i)1,500,000 shares shall be redeemed on December 1, 1995.

(ii)The balance shall be redeemed in 19 equal quarterly installments
commencing on December 1, 1995.

In the event the Company failed to make a redemption payment as required,
the Company is required to pay a late charge of 5% of the amount overdue
(including accrued dividends). In the event a redemption payment shall not
have been paid within 30 days, the dividend rate was to be increased to 14.65%
on the redemption amount plus accrued but unpaid dividends. The Company did
not make the required payment at December 31, 1995 and has accrued $82,448 in
penalties at March 31, 1996. Penalties are included in general and
administrative expenses.

In the event of any liquidation, dissolution, or winding up of the Company,
either voluntarily or involuntarily, the holders of preferred stock shall be
entitled to receive, prior and in preference to, any distribution of any of
the assets or surplus funds of the Company before the holders of the common
stock.

(10) COMMITMENTS AND CONTINGENCIES

(A) LEGAL

1. During 1995, AmHealth, Inc. defaulted on its obligations to a bank under
a note which the Company carried an outstanding principal balance of
$304,133 plus accrued interest of $14,359 at March 31, 1996. On August
23, 1995, the bank made a formal demand upon AmHealth, Inc. to surrender
the assets securing its loan, and on August 24, 1995, filed suit in a
Minnesota state court against the Company. The Company has retained
counsel and has filed defensive pleadings asserting that judgment should
not be entered against it until all of the bank's collateral is
liquidated and a correct deficiency can be ascertained. The Company
estimates that the bank may recover a deficiency claim of $150,000 to
$200,000. However, the ultimate resolution of this matter cannot be
determined at this time.

2. December 6, 1995, the landlord of one of the Company's former Minnesota
clinics filed suit against AmHealth, Inc. in a state court in Minnesota
alleging AmHealth owes them $79,324. AmHealth, Inc. has retained counsel
and is defending the suit seeking a settlement that would give AmHealth,
Inc. sufficient time to satisfy its obligation. The ultimate resolution
of this matter cannot be determined at this time.

F-31
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

3. On December 26, 1995, holders of a Convertible Note in the principal
amount of $25,000 filed suit against the Company in a state court in
Richmond, Virginia. AmHealth, Inc. has defaulted on its obligations
under the note. AmHealth, Inc. has retained counsel and is defending the
suit on the grounds of lack of proper jurisdiction and venue. AmHealth,
Inc.'s efforts to effect a successful settlement cannot be determined at
this time.

4. During 1995, AmHealth, Inc. defaulted on a purchase money note payable
relating to the purchase of a company vehicle. In addition, the Company
assumed notes payable to the same bank under a guarantee on behalf of
the Company's former Chairman. AmHealth, Inc. restructured the
indebtedness into a single note for $164,000 which matures June 4, 1996.

(B) INTERNAL REVENUE SERVICE

During the first and second quarter of 1995, AmHealth, Inc. was
delinquent in its filing of payroll tax remittances. The total liability,
including interest, relating to these delinquent remittances was
approximately $600,000 at June 30, 1995.

In November 1995, the Internal Revenue Service (IRS) filed Federal tax
liens against the Company. In December 1995, the Company filed an offer in
compromise for the settlement of the remaining liability. On January 11,
1996, the IRS levied the bank accounts owned by the Company. On January 25,
1996, the Company settled its liability with the IRS by paying the IRS
$250,000 and executing an installment note due March 16, 1996 for the
remaining $233,993 liability outstanding. On March 19, 1996, the Company
paid the note of $233,993 to the IRS in full.

During 1995 and 1994, a portion of the clinic acquisitions was financed
by the sellers. Various promissory notes were issued to these sellers
requiring periodic interest and principal payments as required by the
agreements. During 1995, AmHealth, Inc. defaulted on the required principal
and interest payment for all of the sellers' notes. Each note holder and
AmHealth, Inc. have executed settlement agreements whereby AmHealth, Inc.'s
liability to the note holders has been adjusted. A summary of these
adjustments is as follows:

<TABLE>
<CAPTION>
DR. RICHARD H.
SHOOP AND
RICHMOND
OCCUPATIONAL
WORKSITE MEDICINE
PARTNERS, INC. ASSOCIATES
-------------- --------------
<S> <C> <C>
Original amount financed by
seller/noteholder........................... $1,350,000 $1,735,000
========== ==========
Principal amount outstanding on date of
settlement.................................. $1,350,000 $1,735,000
========== ==========
Accrued interest on date of settlement....... $ 108,749 $ 310,708
========== ==========
Amount of settlement agreement............... $ 700,000 $2,600,000
========== ==========
</TABLE>

The $2,600,000 settlement agreement is contingent upon a satisfactory sale
of assets to CORE, INC. (note 12). The original notes underlying this
settlement agreement contain certain adjustment provisions which are being
disputed by the parties. The ultimate resolution of this dispute cannot be
determined at this time, however, in management's opinion, such amount, if
any, would not have a material effect on the financial statements.

F-32
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS --(CONTINUED)

(D) MISCELLANEOUS VENDOR NOTES

During 1995, AmHealth executed various promissory notes with vendors
relating to outstanding payables balances. During 1995, AmHealth, Inc.
defaulted on its required periodic payments. AmHealth, Inc. has
subsequently satisfied a large portion of the outstanding balance and is
currently negotiating further settlements and extension agreements with
these vendors. As of March 31, 1996, AmHealth, Inc. was current or in
compliance with settlement and extension agreements on substantially all of
its indebtedness owed its vendors. The outstanding balances of the notes
were $85,719 and $78,122 at June 30, 1995 and March 31, 1996, respectively.
The notes are payable in monthly installments.

(E) FORMER EXECUTIVE

A former executive has asserted that AmHealth, Inc. owes him certain sums
relating to contractual agreements. AmHealth, Inc. has vigorously denied
owing the former executive any sums. AmHealth, Inc. and the former
executive have orally agreed to a settlement of their dispute whereby
AmHealth, Inc. and the former executive will exchange mutual releases and
AmHealth, Inc. will assume an obligation to a bank owed by the former
executive (note 10(a)(4)). The ultimate resolution of this matter is not
expected to have a material effect upon the financial position or results
of operations of AmHealth, Inc.

(11) ALLOWANCE FOR CONTRACTUAL ADJUSTMENTS AND DOUBTFUL ACCOUNTS

Summaries of activity in the allowance for contractual adjustments and
doubtful accounts during the year ended June 30, 1995 and the nine months
ended March 31, 1996:

<TABLE>
<CAPTION>
JUNE 30, MARCH 31,
1995 1996
---------- ----------
<S> <C> <C>
Beginning balance........................................ $ 232,195 $1,615,147
Acquisitions............................................. 1,464,899
Write-offs............................................... 1,069,973 1,320,104
Provision................................................ 988,026 1,148,254
---------- ----------
Allowance at the end of the period....................... $1,615,147 $1,443,297
========== ==========
</TABLE>

(12) SALE OF ASSETS

(a) AmHealth, Inc. has signed an agreement dated May 10, 1996 for the sale
of the Company to CORE, INC. ("CORE").

The consideration paid by CORE to AmHealth, Inc. for the assets, as defined
in the Agreement shall be $15,657,500 payable in cash. AmHealth is committed
to deliver to CORE $1,750,000 in assets at closing. If the assets are less
than $1,750,000, the purchase price will be adjusted downward accordingly.

The sale is subject to numerous conditions, including (but not limited to)
the following:

1. Approval of the Board of Directors of CORE and AmHealth, Inc.;

2. That at or immediately prior to closing, CORE shall have completed a
public offering of an additional 2,500,000 shares of its common stock;
and

3. Satisfactory completion of a due diligence investigation with respect to
the Company's business.

F-33
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

In the event CORE and AmHealth do not consummate the transaction described
above and before January 9, 1998, AmHealth, Inc. (or AmHealth, Inc.'s
stockholders or creditors) is involved in (i) a bankruptcy or assignment for
benefit of creditors or (ii) a merger, sale, or transfer of a significant
portion of AmHealth's assets or stock, directly or indirectly (a "Significant
Transaction"), and such Significant Transaction involves a valuation of
AmHealth, Inc. of $13,500,000 or more, then in such event, AmHealth, Inc.
shall pay to CORE a fee of $1,000,000; provided, the $1,000,000 fee shall not
be due if failure to consummate the transaction is due solely to CORE's
inability to consummate a public offering of its common stock or CORE's breach
of the Agreement.

In the event CORE and AmHealth do not consummate the transactions described
above before January 9, 1998, AmHealth, Inc. (or AmHealth, Inc.'s stockholders
or creditors) is planning to or will be involved in a Significant Transaction
and such Significant Transaction involves a valuation of AmHealth of less than
$13,500,000, then AmHealth must notify CORE 30 days prior to such transaction
and grant CORE a right of first refusal concerning such proposed Significant
Transaction, provided CORE has the option to pay the consideration for the
proposed Significant Transaction in shares of CORE common stock with demand
registration rights.

(13) SUBSEQUENT EVENT

On June 17, 1996, AmHealth, Inc. entered into a settlement agreement with
Transcend Services, Inc. ("Transcend"), the successor in interest to TriCare,
Inc. and holder of the preferred stock, whereby AmHealth agreed to pay
Transcend $2,050,000 plus $5,287 of attorney's fees in satisfaction of all
obligations if full payment is made by July 31, 1996. The book value of
AmHealth's obligations on the date of the agreement amounted to $2,888,007.
Pursuant to this settlement agreement, the unsecured notes were reinstated.

(14) UNAUDITED NOTE TO CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim statements of loss and cash flow have
been prepared in accordance with generally accepted accounting principles
applicable to interim financial statements. Accordingly, they do not include
all of the information and notes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments and reclassifications considered necessary for a fair and
comparable presentation have been included and are of a normal recurring
nature. Operating results for the nine-month period ended March 31, 1995 are
not necessarily indicative of the results that may be expected for the year
ended June 30, 1995.

F-34
<PAGE>

INDEPENDENT AUDITOR'S REPORT

The Board of Directors AmHealth, Inc.:

We have audited the accompanying statements of loss, owner's deficit, and
cash flows of Nine Clinics of AmHealth (a wholly owned business of AmHealth,
Inc.) for the period ended June 30, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our 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 results of operations and cash flows of Nine
Clinics of AmHealth (a wholly owned business of AmHealth, Inc.) for the period
ended June 30, 1994 in conformity with generally accepted accounting
principles.

The accompanying financial statements have been prepared assuming that Nine
Clinics of AmHealth's parent will continue as a going concern. As discussed in
note 1 to the financial statements, AmHealth, Inc. has suffered recurring
losses from operations, has defaulted on its debt obligations, and has a net
capital deficiency that raises substantial doubt about its ability to continue
as a going concern. Management's plans in regard to these matters are also
described in note 1. The financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

KPMG Peat Marwick LLP

Atlanta, Georgia
March 1, 1996, except as
to Note 6 which is as of
May 10, 1996

F-35
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENT OF LOSS
PERIOD ENDED JUNE 30, 1994 (NOTE 1)

<TABLE>
<S> <C>
Net revenues........................................................ $1,701,037
Operating expenses:
Clinic salaries and benefits...................................... 1,408,232
Other clinic services............................................. 232,244
Equipment and facilities rent..................................... 523,734
Depreciation and amortization..................................... 238,641
General and administrative expenses............................... 513,308
----------
Total operating expenses........................................ 2,916,159
----------
Loss from operations................................................ 1,215,122
Interest expense.................................................... 173,838
----------
Net loss............................................................ $1,388,960
==========
</TABLE>

See accompanying notes to financial statements.

F-36
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENT OF OWNER'S DEFICIT
PERIOD ENDED JUNE 30, 1994 (NOTE 1)

<TABLE>
<S> <C>
Balance at beginning of period.................................... $ 0
Net loss.......................................................... (1,388,960)
Net transfers from AmHealth, Inc.................................. 196,938
-----------
Balance at June 30, 1994.......................................... $(1,192,022)
===========
</TABLE>

See accompanying notes to financial statements.

F-37
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

STATEMENT OF CASH FLOWS
PERIOD ENDED JUNE 30, 1994

<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities:
Net loss from operations....................................... $(1,388,960)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization................................ 199,483
Provision for contractual adjustments and uncollectible
accounts.................................................... 125,260
(Increase) decrease in:
Accounts receivable........................................ (141,928)
Prepaid expenses and other assets.......................... (126,059)
Increase (decrease) in:
Accounts payable........................................... 498,469
Accrued expenses........................................... 498,583
Other...................................................... (79,382)
-----------
Net cash used in operating activities............................ (414,534)
-----------
Cash flows from investing activites:
Purchase of equipment.......................................... (112,364)
Acquisitions of businesses, net of cash acquired............... (220,872)
-----------
Net cash used in investing activities............................ (333,236)
-----------
Cash flows from financing activities:
Increase in bank overdraft..................................... 311,607
Net transfers from AmHealth, Inc. ............................. 196,938
Principal payments on notes payable and long-term debt......... (325,000)
Proceeds from issuance of long-term debt....................... 642,975
Payments of capital lease obligations.......................... (3,412)
-----------
Net cash provided by financing activities........................ 823,108
-----------
Increase in cash and cash equivalents............................ 75,338
Cash and cash equivalents at beginning of period.................
-----------
Cash and cash equivalents at end of period....................... $ 75,338
===========
Supplemental disclosure of cash flow information:
Cash paid for interest expense................................... $ 86,538
===========
Schedule of noncash investing and financing activities--
acquisitions of companies:
Fair value of assets acquired.................................. $ 4,584,000
Liabilities assumed............................................ (327,000)
Debt assumed................................................... (151,000)
Notes payable issued........................................... (3,803,000)
-----------
Total cash paid for net assets acquired.......................... $ 303,000
===========
</TABLE>

See accompanying notes to financial statements.

F-38
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1994

(1) ORGANIZATION

Basis of Presentation

Nine Clinics of AmHealth (The Company) provides occupational health,
outpatient physical therapy, and physical rehabilitation services to
individuals who sustain work-related injuries. The accompanying statement of
loss and cash flow present the combined operations and cash flows from the
respective date of acquisition by AmHealth, Inc.

The Company, at June 30, 1994, is comprised of four clinics of AmHealth,
Inc. and an employer services division. The four clinics were acquired by
AmHealth, Inc. (the Parent) in business combinations accounted for as
purchases on various dates as listed below. The Employer Services Division was
formed from the combination of two occupational health care networks acquired
in business combinations. The operations of each of the four clinics and the
Employer Services Division are included in the accompanying financial
statements subsequent to each acquisition date by AmHealth, Inc. (note 3).

<TABLE>
<CAPTION>
SELLING PARTY OPERATIONS ACQUIRED MONTH ACQUIRED
- ------------- ------------------- --------------
<S> <C> <C>
Worksite Two clinics in Oakland, CA(a) January 1994
Partners,
Inc.
Dr. Richard One clinic and an occupational health care network March 1994
H. Shoop both located in San Francisco, CA
Richmond Oc- One clinic in Richmond, CA March 1994
cupational
Medicine As-
sociates
Hallet A. Occupational health practice in Oakland, CA May 1994
Lewis, MD
</TABLE>
- --------
(a)One of the clinics was closed immediately after acquisition.

The accompanying financial statements include the assets and liabilities,
statements of operations, and cash flows for the four acquired clinics and the
Employer Services Division listed above and excludes the assets and
liabilities, revenues and expenses, and cash flows attributable to the
Minnesota clinics and the Sacramento clinic (the excluded clinics).

The accompanying financial statements have been prepared as if the four
clinics and the employer services division had operated as a stand-alone
entity from the date acquired. Such statements include the assets,
liabilities, revenues, and expenses that are directly related to the Company's
operations. They also include an allocation of certain assets, liabilities,
and general corporate expenses of AmHealth, Inc., such as executive payroll,
interest, and other corporate overhead which are related to the Company.
Amounts were allocated on a specific identification method where appropriate
and on a pro rata basis otherwise. Management believes the allocation methods
used are reasonable.

AmHealth, Inc. has experienced recurring losses since inception and has a
net capital deficiency of $8,632,006 as of December 31, 1995. In addition,
AmHealth, Inc. has defaulted on substantially all of its notes payable and on
certain vendor obligations.

F-39
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Management has entered into agreements to sell its operating clinics at an
amount that in its opinion would generate sufficient value to satisfy all of
its outstanding debt obligations in either cash or stock. This sale is
contingent upon certain conditions (note 10). The financial statements do not
include any adjustments that might result from the outcome of this
uncertainty.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Cash Equivalents

Highly liquid investments with a maturity of three months or less when
purchased are generally considered to be cash equivalents. Cash equivalents at
each balance sheet date consist of a certificate of deposit.

(b) Property and Equipment

Property and equipment are stated at cost and depreciated using the
straight-line method over estimated useful lives, ranging from five to ten
years. Equipment purchased under capital leases is stated at the present value
of the minimum lease payments. Equipment under capital leases and leasehold
improvements are amortized on the straight-line basis over the shorter of the
lease term or estimated useful life of the asset.

Patient service revenue is recorded in the period in which services are
rendered to the patient, at the Company's established rates.

(d) Goodwill

Goodwill, which represents the excess of purchase price over fair value of
net assets acquired, is amortized on a straight-line basis over the expected
periods to be benefited, generally 10 years. The Company assesses the
recoverability of this intangible asset by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted future operating cash flows of the acquired operation.
The amount of goodwill impairment, if any, is measured based on projected
discounted future operating cash flows using a discount rate reflecting the
Company's average cost of funds. The assessment of the recoverability of
goodwill will be impacted if estimated future operating cash flows are not
achieved. In management's estimation, the remaining amount of goodwill has
continuing value.

(e) Income Taxes

The Company's income taxes are included in the income tax returns of
AmHealth, Inc. The Company accounts for income taxes under the asset and
liability method. Under the asset and liability method under Statement of
Financial Accounting Standards No. 109, deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences
between the financial statement carrying amount of existing assets and
liabilities and their respective tax bases. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to
taxable income in the years in which these 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. Income taxes have not been allocated
to the Company due to the losses incurred by both AmHealth, Inc. and the
Company.

F-40
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(f) Use of Estimates

(g) Recently Issued Accounting Pronouncements

In March 1995, Statement of Financial Accounting Standards No. 121,
Accounting for the Impairment of Long-Lived Assets to be Disposed of (SFAS
121) was issued. SFAS 121 is effective for fiscal years beginning January 1,
1996. SFAS 121 establishes accounting standards for the impairment of long-
lived assets, certain identifiable intangibles and goodwill related to those
assets to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. The Company does not believe the adoption of
SFAS 121 will have a material impact on the Company's financial condition or
results of operations.

(3) LEASES

Future minimum lease commitments as of June 30, 1994 are as follows:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING JUNE 30, LEASES LEASES
-------------------- ------- ----------
<S> <C> <C>
1995................................................. $30,839 $ 682,000
1996................................................. 13,662 479,000
1997................................................. 452,000
1998................................................. 244,000
1999................................................. 199,000
Thereafter........................................... 215,000
------- ----------
Total minimum lease payments....................... 44,501 2,271,000
Less amounts representing interest................... 7,576
------- ----------
Net minimum lease payments......................... 36,925 $2,271,000
==========
Less current portion of capital lease obligation..... 22,820
-------
Long-term portion of capital lease obligation...... $14,105
=======
</TABLE>

Rent expense was $269,000 for the period ended June 30, 1994.

(4) RETIREMENT PLAN

AmHealth, Inc. sponsors a retirement savings plan (savings plan) pursuant to
Section 401(k) of the Internal Revenue Code. Contributions to the savings plan
may be used to purchase shares in a variety of mutual funds. Employees are
eligible to participate after completing six months of service. Eligible
participants may make a contribution ranging from 1% to 15% of their base pay.
AmHealth, Inc. matches 25% on the first 6% of the participant's contribution.
Participants are immediately 100% vested in their own contributions and vest
at a rate of 20% per year, beginning after one year of participation, up to
100% after six years of participation in the contributions made by the
Company. During the period ended June 30, 1994, AmHealth, Inc. contributed
$10,142 to the savings plan on behalf of the eligible participants.

F-41
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(5) COMMITMENTS AND CONTINGENCIES

(a) Legal

1. During 1995, AmHealth, Inc. defaulted on its obligations to a bank
under a note which the Company carried an outstanding principal balance of
$307,194 plus accrued interest of $46,014 at December 31, 1995. On August
23, 1995, the bank made a formal demand upon AmHealth, Inc. to surrender
the assets securing its loan, and on August 24, 1995, filed suit in a
Minnesota state court against the Company. The Company has retained counsel
and has filed defensive pleadings asserting that judgment should not be
entered against it until all of the bank's collateral is liquidated and a
correct deficiency can be ascertained. The Company estimates that the bank
may recover a deficiency claim of $150,000 to $200,000. However, the
ultimate resolution of this matter cannot be determined at this time.

2. On December 6, 1995, the landlord of one of the Company's former
Minnesota clinics filed suit against AmHealth, Inc. in a state court in
Minnesota alleging AmHealth owes them $79,324. AmHealth, Inc. has retained
counsel and is defending the suit seeking a settlement that would give
AmHealth, Inc. sufficient time to satisfy its obligation. The ultimate
resolution of this matter cannot be determined at this time.

3. On December 26, 1995, holders of a Convertible Note in the principal
amount of $25,000 filed suit against the Company in a state court in
Richmond, Virginia. AmHealth, Inc. has defaulted on its obligations under
the note. AmHealth, Inc. has retained counsel and is defending the suit on
the grounds of lack of proper jurisdiction and venue. AmHealth, Inc.'s
efforts to effect a successful settlement cannot be determined at this
time.

4. During 1995, AmHealth, Inc. defaulted on a purchase money note payable
relating to the purchase of a company vehicle. In addition, the Company
assumed notes payable to the same bank under a guarantee on behalf of the
Company's former Chairman. AmHealth, Inc. restructured the indebtedness
into a single note for $164,000 which matures June 4, 1996.

(b) Internal Revenue Service

During the first and second quarter of 1995, AmHealth, Inc. was delinquent
in its filing of payroll tax remittances. The total liability, including
interest, relating to these delinquent remittances was approximately $600,000
at June 30, 1995.

In November 1995, the Internal Revenue Service (IRS) filed Federal tax liens
against the Company. In December 1995, the Company paid the IRS $50,000
relating to the liability and filed an offer in compromise for the settlement
of the remaining liability. On January 11, 1996, the IRS levied the bank
accounts owned by the Company. On January 25, 1996, the Company settled its
liability with the IRS by paying the IRS $250,000 and executing an installment
note due March 16, 1996 for the remaining $233,993 liability outstanding.

During 1995 and 1994, a portion of the clinic acquisitions was financed by
the sellers. Various promissory notes were issued to these sellers requiring
periodic interest and principal payments as required by the agreements. During
1995, AmHealth, Inc. defaulted on the required principal and interest payment
for all of the sellers notes. Each note holder and AmHealth, Inc. have
executed settlement agreements whereby, the note holders have and agreed to
reduce AmHealth, Inc.'s liability to the note holders. Such agreements are
contingent upon a satisfactory sale of assets to CORE, INC. (note 10)

F-42
<PAGE>

NINE CLINICS OF AMHEALTH
(A WHOLLY OWNED BUSINESS OF AMHEALTH, INC.)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

(d) Miscellaneous Vendor Notes

During 1995, AmHealth executed various promissory notes with vendors
relating to outstanding payables balances. During 1995, AmHealth, Inc.
defaulted on its required periodic payments. AmHealth, Inc. has subsequently
satisfied a large portion of the outstanding balance and is currently
negotiating further settlements and extension agreements with these vendors.
As of December 31, 1995, AmHealth, Inc. was current or in compliance with
settlement and extension agreements on substantially all of its indebtedness
owed its vendors.

(e) Former Executive

A former executive has asserted that AmHealth, Inc. owes him certain sums
relating to contractual agreements. AmHealth, Inc. has vigorously denied owing
the former executive any sums. AmHealth, Inc. and the former executive have
orally agreed to a settlement of their dispute whereby AmHealth, Inc. and the
former executive will exchange mutual releases and AmHealth, Inc. will assume
an obligation to a bank owed by the former executive (note 9(a)4). The
ultimate resolution of this matter is not expected to have a material effect
upon the financial position or results of operations of AmHealth, Inc.

(6) SUBSEQUENT EVENTS

(a) AmHealth, Inc. has signed an agreement dated May 10, 1996 for the sale
of the Company to CORE, INC. ("CORE").

The consideration paid by CORE to AmHealth, Inc. for the assets as defined
in the agreement shall be $15,657,500 payable in cash. AmHealth, Inc. is
committed to deliver CORE, INC. $1,750,000 in assets at closing. If the assets
delivered are less than $1,750,000, the purchase price will be adjusted
downward accordingly.

The sale is subject to numerous conditions, including (but not limited to)
the following:

1. Approval of the Board of Directors of CORE and AmHealth, Inc.;

2. That at or immediately prior to closing, CORE shall have completed a
public offering of an additional 2,500,000 shares of its common stock;
and

3. Satisfactory completion of a due diligence investigation with respect
to the Company's business.

F-43
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
TriCare, Inc.:

We have audited the accompanying combined statements of operations,
stockholder's deficit, and cash flows of OCCU-CARE, INC. AND AFFILIATES (a
California corporation) for the period from June 1, 1994 to September 16, 1994
and for the year ended May 31, 1994. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the results of operations and cash flows of
Occu-Care, Inc. and affiliates for the period from June 1, 1994 to September
16, 1994 and for the year ended May 31, 1994 in conformity with generally
accepted accounting principles.

Arthur Andersen LLP

Atlanta, Georgia
February 17, 1995

F-44
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

COMBINED STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM JUNE 1, 1994 TO SEPTEMBER 16, 1994
AND FOR THE YEAR ENDED MAY 31, 1994

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 16, MAY 31,
1994 1994
------------- ----------
<S> <C> <C>
Net revenues......................................... $2,521,655 $8,616,812
Operating expenses:
Compensation and benefits.......................... 1,092,060 3,968,989
Physician fees..................................... 512,650 2,203,227
General, administrative, and other................. 852,285 3,341,544
---------- ----------
Total operating expenses......................... 2,456,995 9,513,760
---------- ----------
Income (loss) from operations........................ 64,660 (896,948)
Provision (benefit) for income taxes................. 33,500 (333,899)
---------- ----------
Net income (loss).................................... $ 31,160 $ (563,049)
========== ==========
</TABLE>

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

F-45
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

COMBINED STATEMENTS OF STOCKHOLDER'S DEFICIT
FOR THE PERIOD FROM JUNE 1, 1994 TO SEPTEMBER 16, 1994
AND FOR THE YEAR ENDED MAY 31, 1994

<TABLE>
<CAPTION>
ACCUMULATED
CAPITAL DEFICIT TOTAL
------- ----------- -----------
<S> <C> <C> <C>
Balance at May 31, 1993...................... 200 $(5,834,760) $(5,834,560)
Share repurchase........................... (63,000) (63,000)
Net loss for the year...................... (563,049) (563,049)
---- ----------- -----------
Balance at May 31, 1994...................... 200 (6,460,809) (6,460,609)
Net income for the period.................. 31,160 31,160
---- ----------- -----------
Balance at September 16, 1994................ $200 $(6,429,649) $(6,429,449)
==== =========== ===========
</TABLE>

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

F-46
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

COMBINED STATEMENTS OF CASH FLOWS
FOR THE PERIOD FROM JUNE 1, 1994 TO SEPTEMBER 16, 1994
AND FOR THE YEAR ENDED MAY 31, 1994

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 16, MAY 31,
1994 1994
------------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss)................................... $ 31,160 $(563,049)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization..................... 75,412 279,312
Changes in assets and liabilities:
Accounts receivable............................. (73,857) 1,452,058
Inventory....................................... (1,157)
Other assets.................................... (23,098) 9,682
Accounts payable................................ 60,300 (55,326)
Other liabilities............................... (49,278) (431,324)
-------- ---------
Total adjustments............................. (10,521) 1,253,245
-------- ---------
Net cash provided by operating activities............. 20,639 690,196
-------- ---------
Cash flows from investing activities:
Capital expenditures................................ (29,662) (122,907)
-------- ---------
Cash flows from financing activities:
Change in capital lease obligation.................. (2,606) 22,548
Change in intercompany balance...................... 13,179 (557,391)
Repurchase of shares................................ (63,000)
-------- ---------
Net cash provided by (used in) financing activities... 10,573 (597,843)
-------- ---------
Net increase (decrease) in cash....................... 1,550 (30,554)
Cash, beginning of period............................. 30,554
-------- ---------
Cash, end of period................................... $ 1,550 $ --
======== =========
</TABLE>

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

F-47
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS
SEPTEMBER 16, 1994 AND MAY 31, 1994

(1) BUSINESS AND BASIS OF PRESENTATION

Occu-Care, Inc. and affiliates ("Occu-Care" or the "Company") is a wholly
owned subsidiary of TriCare, Inc. (a Delaware corporation). Occu-Care is a
healthcare services company specializing in the industrial and occupational
medical business. Laws regarding the corporate practices of medicine in
California necessitate the separate operation of the Company, which handles
the nonmedical functions of the business, from the companies whose physicians
provide all medical services. As a result, medical groups were established
(professional corporations wholly owned by the physicians) to provide such
medical services. Occu-Care has management agreements with such medical
groups. The medical groups provide all medical aspects of the Company's
services, develop professional standards, policies and procedures and
determine fees, locations, and marketing policies. The Company provides all
administrative services, support personnel, facilities, and nonmedical
services to these medical groups. The Company provides services primarily to
injured workers through a network of six clinics in the greater Los Angeles
area.

Due to the related business activities and mutual dependence of the Company
and the medical groups, combined financial statements are presented because
they are more meaningful than the presentation of separate financial
statements.

On March 1, 1992, Occu-Care acquired all of the outstanding stock of
Industrial Plus Health Network ("IPHN"). The purchase price was $5,617,000 and
has been accounted for under the purchase method of accounting. IPHN has been
consolidated and all intercompany accounts and transactions have been
eliminated.

As described in Note 8, substantially all of the assets and certain
liabilities of the Company were sold on September 16, 1994.

(2) SIGNIFICANT ACCOUNTING POLICIES

Cash Management System

The Company's parent utilizes a centralized cash management system to
provide financing for its operations, including the Company's operations. The
majority of the Company's cash requirements have been financed by the
Company's Parent.

Net Revenues

The Company derives substantially all of its revenue from medical services
provided to injured workers. The medical groups' charges for services are
billed by the Company and are paid directly to the Company by insurance
carriers or self-insured employers. Net revenues are recorded on the date
service is rendered and are equal to billed charges, less a provision for
administrative discounts. Such discounts arise when fee reductions are
negotiated with the payers.

Supplies

Supplies are stated at cost and are charged to expense as used.

Equipment and Leasehold Improvements

Equipment and leasehold improvements are stated at cost, net of accumulated
depreciation and amortization. Expenditures for renewals and improvements
which increase the useful lives or capacity of equipment are capitalized.
Expenditures for repairs and maintenance are charged directly to operating
expenses as incurred. Cost and related accumulated depreciation and
amortization of equipment and leasehold improvements, old or otherwise
disposed of, are eliminated from the accounts, and any gains or losses
resulting from such dispositions are recognized in the statements of
operations.

F-48
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 16, 1994 AND MAY 31, 1994

The Company provides depreciation and amortization for financial statement
purposes using the straight-line method over the estimated useful lives as
follows:

<TABLE>
<S> <C>
Equipment................................ 3 to 5 years
Leasehold improvements................... Term of lease
</TABLE>

Intangible Assets

Intangible assets consist primarily of goodwill which is being amortized
over 40 years. The Company periodically evaluates the carrying amount of its
intangibles assets. Due to the discontinuation of certain of the Company's
parent's subsidiaries during fiscal 1993, the recoverability of the intangible
assets was determined to have been impaired. Discontinuing these businesses
has increased the allocation of overhead expenses to Occu-Care and has caused
a decrease in the estimated discounted net income over the remaining life of
its goodwill. The Company determined the net realizable value to be
approximately $2,300,000 as of April 30, 1993, resulting in a write-down of
the intangible assets (primarily goodwill) in the amount of $7,115,000 during
fiscal 1993. Amortization expense was $18,200, $62,800, and $161,800 for the
period ended September 16, 1994 and for the years ended May 31, 1994 and 1993,
respectively.

(3) RELATED-PARTY TRANSACTIONS

In March 1994, a stockholder sold his interest back to the medical group for
$63,000. This amount has been treated as an adjustment to stockholder's
deficit.

The Company's Parent financed certain cash flow requirements through
noninterest bearing advances.

(4) COMMITMENTS AND CONTINGENCIES

The Company leases general and medical office space under noncancelable
operating leases which expire at various dates through 1998. The following is
a schedule of future minimum lease payments under noncancelable operating
leases:

<TABLE>
<S> <C>
Fiscal years ending May 31:
1995......................................................... $ 334,000
1996......................................................... 452,200
1997......................................................... 240,000
1998......................................................... 84,800
----------
$1,111,000
==========
</TABLE>

Rent expense was $139,483 for the period ended September 16, 1994 and
$525,969 for the year ended May 31, 1994.

(5) INCOME TAXES

The Company is included in the consolidated federal income tax return of its
parent (Note 1). The income tax provision (benefit) is computed on a separate-
company (stand-alone) basis. The Company does not have a formal tax-sharing
arrangement with its parent. The Company settles its total tax obligation
(both current and deferred) on an annual basis with its Parent.

F-49
<PAGE>

OCCU-CARE, INC. AND AFFILIATES

NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
SEPTEMBER 16, 1994 AND MAY 31, 1994 AND 1993

The Company's parent adopted Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes," which requires the use of the liability
method in accounting for income taxes. Deferred taxes are determined based on
the estimated future tax effects of differences between the financial
statements and tax basis of assets and liabilities given the provisions of the
enacted tax laws.

A reconciliation from the federal statutory rate to the total provision
(benefit) for income taxes is as follows:

<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
SEPTEMBER 16, MAY 31,
1994 1994
------------- ----------
<S> <C> <C>
Tax at statutory rate........................... $21,984 $(304,962)
State income taxes, net of federal taxes........ 3,879 (53,817)
Intangible amortization......................... 7,248 25,120
Other, net...................................... 389 (240)
------- ---------
$33,500 $(333,899)
======= =========
</TABLE>

The principal differences between financial statement and taxable reporting
bases are due to the medical groups' use of the cash method of accounting for
income tax reporting purposes and the resulting effect of recognizing various
income and expense items in different financial reporting periods.

(6) SALE OF THE COMPANY

On September 16, 1994, substantially all of the assets and certain
liabilities (not including Due to Parent) of the Company were sold by the
Parent to AmHealth, Inc. with no gain or loss recognized.

F-50
<PAGE>

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

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT 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. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SE-
CURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAW-
FUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICA-
TION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT
TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
The Company.............................................................. 10
Recent Developments...................................................... 11
Use of Proceeds.......................................................... 11
Price Range of Common Stock.............................................. 12
Dividend Policy.......................................................... 12
Capitalization........................................................... 13
Dilution................................................................. 14
Pro Forma Combined Condensed Financial Data (Unaudited).................. 15
Selected Consolidated Financial Data..................................... 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 28
Management............................................................... 41
Certain Transactions..................................................... 46
Principal and Selling Stockholders....................................... 47
Description of Capital Stock............................................. 49
Shares Eligible for Future Sale.......................................... 50
Underwriting............................................................. 52
Legal Matters............................................................ 53
Experts.................................................................. 53
Available Information.................................................... 54
Index to Financial Statements............................................ F-1
</TABLE>

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

2,500,000 SHARES

[CORE DYNAMO LOGO APPEARS HERE]

COMMON STOCK

--------

PROSPECTUS

, 1996

--------

SMITH BARNEY INC.

COWEN & COMPANY

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by the Company
in connection with the sale of the Common Stock being registered hereby. All
the amounts shown are estimated, except the SEC registration fee and the NASD
filing fee.

<TABLE>
<CAPTION>
<S> <C>
SEC registration fee............................................... $ 14,871
NASD filing........................................................ 4,831
Nasdaq listing fee................................................. 17,500
Blue Sky fee and expenses.......................................... 20,000
Printing and engraving expenses.................................... 125,000
Legal fees and expenses............................................ 250,000
Auditors' accounting fees and expenses............................. 100,000
Transfer Agent and Registrar fees.................................. 3,000
Miscellaneous expenses............................................. 64,798
--------
Total............................................................ $600,000
========
</TABLE>

ITEM 14. INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Restated Articles of Organization contain provisions limiting
the liability of directors to the fullest extent permitted by Massachusetts
law as currently or hereinafter in effect. Massachusetts law currently permits
the elimination of personal liability of a director for monetary damages for
breach of fiduciary duty as a director notwithstanding any provision of law
imposing such liability, except for (i) breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (iii) unauthorized distributions to stockholders or loans to insiders, or
(iv) any transactions from which the director derived an improper personal
benefit.

The Company's Restated Articles of Organization also provide for the
indemnification of officers and directors of the Company, to the extent
legally permissible, against all liabilities and expenses (including
judgments, fines, penalties and attorneys' fees and under certain
circumstances, all amounts paid in compromise and settlement) reasonably
incurred by such officer or director in connection with any action, suit or
proceeding in which any such director or officer is a defendant or with which
he or she may be threatened or otherwise involved, by reason of his or her
being or having been a director or officer of the Company, except in relation
to matters as to which such director or officer shall be finally adjudged,
other than by consent, in such action, suit or proceeding, not to have acted
in the best interests of the Company.

The Company has entered into separate indemnification agreements with each
of its directors and executive officers providing for indemnification of such
persons to the extent permitted by law.

Additionally, the Company has purchased a directors and officers insurance
policy which, subject to a $250,000 deductible for certain claims, provides
$5,000,000 of coverage.

Pursuant to the Company's recent merger with Core Management, Inc. ("CMI"),
the Company agreed not to amend its Restated Articles of Organization or By-
Laws to reduce or limit the right of indemnity afforded to present and former
directors and officers of the Company and CMI or otherwise hinder the rights
of indemnity to such persons for a period of four years following such merger.
The Company and CMI also each agreed to indemnify to the fullest extent
possible under their respective charters and by-laws present and former
directors, officers, employees and agents of the Company and CMI and to
maintain all insurance policies in effect on December 19, 1994 (the date of
the Reorganization Agreement between the Company and CMI).

II-1
<PAGE>

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since May 1, 1993, the Company has sold the following shares of Common Stock
which were not registered under Securities Act. Such shares were sold to
present and former employees or consultants upon the exercise of stock
options.

<TABLE>
<CAPTION>
NUMBER OF PURCHASE PRICE
DATE SECURITY PURCHASER SHARES PER SHARE
------- ------------ ------------- --------- --------------
<S> <C> <C> <C> <C>
6/3/95 Common Stock J.C. Sergeant 4,486 $0.11
10/4/95 Common Stock D. Whalen 13,458 $0.11
4/4/96 Common Stock S. Gerson 1,000 $3.13
5/8/96 Common Stock K. Masters 3,216 $7.46
6/4/96 Common Stock W. Kaczor 6,700 $3.73
6/6/96 Common Stock W. Butler 6,700 $3.73
6/10/96 Common Stock K. Masters 4,824 $3.73
</TABLE>

The foregoing shares of Common Stock were not registered under the
Securities Act in reliance upon the exemption contained in Section 4(2) of the
Securities Act for transactions by an issuer not involving any public
offering.

Pursuant to the terms of the Agreement and Plan of Reorganization dated as
of December 19, 1994, between the Company and Core Management, Inc. ("CMI"),
the Company on March 24, 1995 (the effective date of the CMI/PRA Merger)
assumed (i) a warrant to purchase stock of CMI issued by CMI on June 1, 1994
to John Pappajohn, a director of the Company, and (ii) a warrant to purchase
stock of CMI issued by CMI on February 24, 1994 to Silicon Valley Bank. The
warrant dated June 1, 1994 was issued by CMI to Mr. Pappajohn in consideration
of his furnishing to Silicon Valley Bank, as security for CMI's undebtedness
to that bank, letters of credit aggregating $450,000 and his agreement, made
at the request of CMI, to contribute $300,000 to CMI as an equity investment
or as a subordinated loan. The warrant dated February 24, 1994 was issued to
Silicon Valley Bank in consideration of the bank's entering into a $1,000,000
line of credit agreement with CMI.

Pursuant to the terms of the CMI/PRA Merger, Mr. Pappajohn's CMI warrant was
converted into a warrant, expiring on June 1, 1997, to purchase 26,800 shares
of Common Stock of the Company at a price of $3.36 per share; and the Silicon
Valley Bank's CMI warrant was converted into a warrant, expiring on February
28, 1999, to purchase 8,801 shares of Common Stock of the Company at a price
of $5.68 per share.

The foregoing warrants were not registered under the Securities Act, in
reliance upon the exemption contained in Section 4(2) of the Securities Act
for transactions by an issuer not involving any public offering.

II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(A) EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement by and among the Company, the Selling
Stockholders and the Underwriters.
2.1 Second Agreement and Plan or Reorganization by and between Core
Management, Inc., Registrant and PRA Sub, Inc. dated as of December
19, 1994. Filed as Appendix I to Prospectus and Joint Proxy Statement
in Amendment No. 5 to Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed February 14, 1995, and incorporated
herein by reference.
2.2 Capital Stock Purchase Agreement, by and between Registrant, Cost
Review Services, Inc., Larry Bertrand Wallace and Leigh B. Goodwin,
dated October 2, 1995 (without exhibits). Filed as exhibit 2.1 to
Company's Current Report on Form 8-K, filed October 16, 1995, and
incorporated herein by reference.
2.3 Registrant's January 9, 1995 letter to AmHealth, Inc. concerning a
proposed acquisition of assets. Filed as exhibit no. 2.3 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
2.4 Asset Purchase Agreement, dated May 10, 1996, by and among Registrant,
AmHealth Clinics Corp. and AmHealth, Inc. (including Schedules 1.2,
2.8 and 2.10 and excluding other Exhibits and Schedules).
2.5 Option to Purchase Business Agreement, dated April, 1996, between
Registrant and Peter P. Greaney, M.D.
3.1 Restated Articles of Organization of the Registrant, dated November
22, 1991, as further amended by Articles of Amendment, dated March 24,
1995, and as further amended by Articles of Amendment, dated July 28,
1995. Filed as Exhibit No. 3.1 to Registrant's Quarterly Report on
Form 10-Q, filed November 14, 1995, and incorporated herein by
reference.
3.2 By-Laws of the Registrant, as amended. Filed as exhibit no. 3.2 to
Company's Annual Report on Form 10-K, filed March 30, 1993, and
incorporated herein by reference.
4.1 Specimen Common Stock certificate. Filed as exhibit no. 4.1 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
5.1** Opinion of Rich, May, Bilodeau & Flaherty, P.C., as to the legality of
the shares being registered.
10.1 Software License Agreement, dated August 26, 1986, between Chrysler
Corporation ("Chrysler") and The Health Data Institute ("HDI"). Filed
as exhibit no. 10.59 to the Company's Registration Statement on Form
S-4 (Registration No. 33-73906), filed January 10, 1994, and
incorporated herein by reference.
10.2 Amendment No. 1 to Software License Agreement, dated December 23,
1987, between Chrysler and HDI. Filed as exhibit no. 10.60 to the
Company's Registration Statement on Form S-4 (Registration No. 33-
73906), filed January 10, 1994, and incorporated herein by reference.
10.3 Technical Service Agreement, dated April 13, 1987, between Chrysler
and HDI. Filed as exhibit no. 10.61 to the Company's Registration
Statement on Form S-4 (Registration No. 33-73906), filed January 10,
1994, and incorporated herein by reference.
10.4 Technical Service Agreement, dated May 1, 1987, between Blue Cross and
Blue Shield of Michigan and HDI. Filed as exhibit no. 10.62 to the
Company's Registration Statement on Form S-4 (Registration No. 33-
73906), filed January 10, 1994, and incorporated herein by reference.
</TABLE>

II-3
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.5 Medical Care Management Agreement, dated January 1, 1989, between
Hoechst Cleanese Corporation and HDI (without Exhibits) and Addendum
to Managed Care Agreement, effective August 1, 1989, and Amendment to
Agreement, effective December 1, 1991. Filed as exhibit no. 10.5 to
the Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
10.6 Amended and Restated Agreement for Utilization Management Services,
dated as of November 1, 1991, between Core Management, Inc., a
California corporation ("Core-California") and Northwestern National
Life Insurance Company (without schedules and exhibits). Filed as
exhibit no. 10.58 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and incorporated
herein by reference.
10.7 Management Services Agreement, dated as of September 1, 1994, between
Integrated Behavioral Health, CMI and Behavioral Care of America, Inc.
(without Exhibits). Filed as exhibit no. 10.90 to Amendment No. 3 to
the Company's Registration Statement on Form S-4 (Registration
No. 33-73906), filed February 2, 1995, and incorporated herein by
reference.
10.8 Registrant's Amended and Restated 1986 Stock Option Plan. Filed as
exhibit no. 10.11 to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and incorporated
herein by reference.
10.9 Amendment to Amended and Restated 1986 Stock Option Plan. Filed as
exhibit no. 19.1 to the Company's Quarterly Report on Form 10-Q, filed
November 16, 1992, and incorporated herein by reference.
10.10 Registrant's 1991 Stock Option Plan. Filed as exhibit no. 10.12 to the
Company's Registration Statement on Form S-1 (Registration No. 33-
43418), filed October 18, 1991, and incorporated herein by reference.
10.11 First Amendment to 1991 Stock Option Plan. Filed as exhibit no. 19.2
to the Company's Quarterly Report on Form 10-Q, filed November 16,
1992, and incorporated herein by reference.
10.12 Second Amendment to 1991 Stock Option Plan. Filed as Exhibit No. 10.2
to Registrant's Quarterly Report on Form 10-Q, filed May 16, 1994, and
incorporated herein by reference. [Superseded by Third Amendment to
Stock Option Plan].
10.13 Third Amendment to 1991 Stock Option Plan. Filed as Exhibit No. 10.105
to Amendment No. 2 to Registrant's Registration Statement on Form S-4,
filed December 27, 1994, and incorporated by reference herein.
10.14 Form of Stock Option Agreement, granted February 12, 1990. Filed as
exhibit no. 10.23 to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and incorporated
herein by reference.
10.15 Form of Stock Option Agreement, granted May 14, 1990, to non-employee
directors. Filed as exhibit no. 10.24 to the Company's Registration
Statement on Form S-1 (Registration No. 33-43418), filed October 18,
1991, and incorporated herein by reference.
10.16 Form of Amendment, dated January 21, 1991, to Stock Option Agreement
granted May 14, 1990 to non-employee directors. Filed as exhibit no.
10.26 to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and incorporated
herein by reference.
10.17 Form of Stock Option Agreement, granted January 21, 1991. Filed as
exhibit no. 10.25 to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and incorporated
herein by reference.
10.18 Form of Stock Option Agreement, granted February 11, 1991, to non-
employee directors.Filed as exhibit no. 10.27 to the Company's
Registration Statement on Form S-1 (Registration No. 33-43418), filed
October 18, 1991, and incorporated herein by reference.
</TABLE>

II-4
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.19 Form of Stock Option Agreement, granted January 13, 1992, to non-
employee directors. Filed as exhibit no. 19.1 to the Company's
Quarterly Report on Form 10-Q, filed May 15, 1992, and incorporated
herein by reference.
10.20 Form of Stock Option Agreement, granted March 17, 1992, to certain
employees. Filed as exhibit no. 19.2 to the Company's Quarterly Report
on Form 10-Q, filed May 15, 1992, and incorporated herein by
reference.
10.21 Form of Stock Option Agreement, granted December 14, 1992, to non-
employee directors. Filed as exhibit no. 19.3 to Company's Annual
Report on Form 10-K, filed March 30, 1993, and incorporated herein by
reference.
10.22 Form of Stock Option Agreement, dated as of May 17, 1993, between
Registrant and William E. Nixon. Filed as exhibit no. 10.5 to
Company's Quarterly Report on Form 10-Q, filed June 30, 1993, and
incorporated herein by reference.
10.23 Form of Stock Option Agreement, granted January 16, 1994, to non-
employee directors. Filed as exhibit no. 10.45 to the Company's Annual
Report on Form 10-K, filed March 31, 1994, and incorporated herein by
reference.
10.24 Form of Stock Option Agreement, granted March 23, 1995, to non-
employee directors for services in 1994 and through March 23, 1995,
including schedule of optionees. Filed as Exhibit No. 10.1 to
Registrant's Quarterly Report on Form 10-Q, filed November 14, 1995,
and incorporated herein by reference.
10.25 Form of Stock Option Agreement for 19,500 shares to vest quarterly
over three years granted March 24, 1995, to non-employee directors,
including schedule of optionees. Filed as Exhibit No. 10.2 to
Registrant's Quarterly Report on Form 10-Q, filed November 14, 1995,
and incorporated herein by reference.
10.26 Form of Stock Option Agreement for 4,875 shares, granted March 24,
1995 to non-employee directors, including schedule of optionees. Filed
as Exhibit No. 10.3 to Registrant's Quarterly Report on Form 10-Q,
filed November 14, 1995, and incorporated herein by reference.
10.27 Form of Stock Option Agreement, granted April 27, 1995, to executive
officers, including schedule of executive officer optionees. Filed as
Exhibit No. 10.4 to Registrant's Quarterly Report on Form 10-Q, filed
November 14, 1995, and incorporated herein by reference.
10.28 Form of Stock Option Agreement, granted April 27, 1995, for consulting
and other services, including schedule of optionees. Filed as Exhibit
No. 10.5 to Registrant's Quarterly Report on Form 10-Q, filed November
14, 1995, and incorporated herein by reference.
10.29 Form of Stock Option Agreement for 12,375 shares of Registrant's
common stock granted November 8, 1995 to four non-employee directors.
Filed as exhibit no. 10.58 to the Registrant's Annual Report on Form
10-K, filed April 1, 1996, and incorporated herein by reference.
10.30 Incentive Stock Option Agreement, dated December 8, 1995, between
Registrant and Fredric L. Sattler. Filed as exhibit no. 10.50 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
10.31 Form of Stock Option Agreement, granted March 29, 1996, to officers,
including schedule of officer optionees.
10.32 Form of Stock Option Agreement, granted March 29, 1996, for consulting
services, including schedule of optionees.
10.33 Core Management, Inc. Employee Stock Option Plan. Filed as exhibit no.
10.65 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and incorporated
herein by reference.
</TABLE>

II-5
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.34 Forms of Stock Option Agreement under Core Management, Inc. Employee
Stock Option Plan. Filed as exhibit no. 10.66 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906), filed
January 10, 1994, and incorporated herein by reference.
10.35 Form of Non-Employee Director Stock Option Agreement of Core
Management, Inc. Filed as exhibit no. 10.67 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906), filed
January 10, 1994, and incorporated herein by reference.
10.36 Warrant to Purchase Stock of CMI, dated February 23, 1994, in favor of
Silicon Valley Bank. Filed as exhibit no. 10.75 to Amendment No. 1 to
the Company's Registration Statement on Form S-4 (Registration No. 33-
73906), filed June 8, 1994, and incorporated herein by reference.
10.37 Registration Rights Agreement, dated February 23, 1994, between CMI
and Silicon Valley Bank. Filed as exhibit no. 10.81 to Amendment No. 1
to the Company's Registration Statement on Form S-4 (Registration No.
33-73906), filed June 8, 1994, and incorporated herein by reference.
10.38 Form of Warrant Agreement, dated June 1, 1994, between CMI and John
Pappajohn. Filed as exhibit no. 10.83 to Amendment No. 1 to the
Company's Registration Statement on Form S-4 (Registration No. 33-
73906), filed June 8, 1994, and incorporated herein by reference.
10.39 Agreement to Provide Equity or Subordinated Debt, dated May 27, 1994,
between John Pappajohn and CMI. Filed as exhibit no. 10.82 to
Amendment No. 1 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed June 8, 1994, and incorporated
herein by reference.
10.40 Letter Agreement regarding collateral, dated August 26, 1994, to
Silicon Valley Bank from John Pappajohn. Filed as exhibit no. 10.88 to
Amendment No. 2 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed December 27, 1994, and incorporated
herein by reference.
10.41 Modification Letter Agreement regarding collateral, dated December 12,
1994 to Silicon Valley Bank from John Pappajohn. Filed as exhibit no.
10.93 to Amendment No. 2 to the Company's Registration Statement on
Form S-4 (Registration No. 33-73906), filed December 27, 1994, and
incorporated herein by reference.
10.42 Employment Agreement, dated May 17, 1993, between the Registrant and
Alfred B. Lewis. Filed as exhibit no. 10.1 to Company's Quarterly
Report on Form 10-Q, filed June 30, 1993, and incorporated herein by
reference.
10.43 Employment Agreement, dated November 19, 1993, between the Registrant
and William E. Nixon. Filed as exhibit no. 10.49 to Company's
Registration Statement on Form S-4 (Registration No. 33-73906), filed
January 10, 1994, and incorporated herein by reference.
10.44 Employment Agreement, dated December 1, 1995, between Registrant and
Fredric L. Sattler. Filed as exhibit no. 10.49 to the Registrant's
Annual Report on Form 10-K, filed April 1, 1996, and incorporated
herein by reference.
10.45 Employment Agreement, dated April, 1996, between Registrant and Peter
P. Greaney, M.D.
10.46 401(k) Plan. Filed as exhibit no. 10.34 to the Company's Registration
Statement on Form S-1 (Registration No. 33-43418), filed October 18,
1991, and incorporated herein by reference.
10.47 Form of Indemnification Agreement. Filed as exhibit no. 10.35 to the
Company's Registration Statement on Form S-1 (Registration No. 33-
43418), filed October 18, 1991, and incorporated herein by reference.
10.48 Office Lease, dated December 30, 1992, between Registrant and Copley
Place Associates Nominee Corporation (without exhibits). Filed as
exhibit no. 19.5 to Company's Annual Report on Form 10-K, filed March
30, 1993, and incorporated herein by reference.
</TABLE>

II-6
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
10.49 First Amendment to Office Lease, dated June 3, 1993, between the
Registrant and Copley Place Associates Nominee Corporation. Filed as
exhibit no. 10.2 to Company's Quarterly Report on Form 10-Q, filed
November 10, 1993, and incorporated herein by reference.
10.50 Agreement of Sublease, dated April 1, 1993, between Eastman Kodak
Company and Core-California. Filed as exhibit no. 10.53 to the
Company's Registration Statement on Form S-4 (Registration No. 33-
73906), filed January 10, 1994, and incorporated herein by reference.
10.51 Second Amendment to Agreement of Sublease, dated May 17, 1995, between
Eastern Kodak Company and Core-California. Filed as exhibit no. 10.45
to the Registrant's Annual Report on Form 10-K, filed April 1, 1996,
and incorporated herein by reference.
10.52 Lease, dated January 1, 1991, between Core-California and One Wheeler
Road Associates. Filed as exhibit no. 10.55 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906), filed
January 10, 1994, and incorporated herein by reference.
10.53 First Amendment to Lease, dated November 28, 1995, between Core-
California and One Wheeler Road Associates (without Exhibit). Filed as
exhibit no. 10.47 to the Registrant's Annual Report on Form 10-K,
filed April 1, 1996, and incorporated herein by reference.
10.54 Office Building Lease, dated September 21, 1995, by and between
McDonnell Douglas Realty Company and Registrant, including Exhibits
and including Addendum to Lease Agreement. Filed as exhibit no. 10.48
to the Registrant's Annual Report on Form 10-K, filed April 1, 1996,
and incorporated herein by reference.
10.55 Loan and Security Agreement, dated December 29, 1995, by and among
Registrant, Core Management, Inc., a Delaware corporation ("CMI") and
Cost Review Services, Inc., as borrowers, and Silicon Valley Bank
("SVB"), including Schedule to Loan and Security Agreement. Filed as
exhibit no. 10.51 to the Registrant's Annual Report on Form 10-K,
filed April 1, 1996, and incorporated herein by reference.
10.56 Amendment to Loan Agreement, dated March 25, 1996, by and among
Registrant, Core Management, Inc., a Delaware corporation, and Cost
Review Services, Inc., as borrowers, and Silicon Valley Bank.
10.57 Collateral Assignment, Patent Mortgage and Security Agreement, dated
December 29, 1995, by and between Registrant and SVB (without
Exhibits). Filed as exhibit no. 10.52 to the Registrant's Annual
Report on Form 10-K, filed April 1, 1996, and incorporated herein by
reference.
10.58 Cross-Corporate Continuing Guaranty of Registrant, CMI and CRS, dated
December 29, 1995 in favor of SVB. Filed as exhibit no. 10.53 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
10.59 Continuing Guaranty of Integrated Behavioral Health and Core-
California, dated December 29, 1995, in favor of SVB. Filed as exhibit
no. 10.54 to the Registrant's Annual Report on Form 10-K, filed April
1, 1996, and incorporated herein by reference.
10.60 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $500,000, dated January 10, 1996, payable to
Registrant. Filed as exhibit no. 10.55 to the Registrant's Annual
Report on Form 10-K, filed April 1, 1996, and incorporated herein by
reference.
10.61 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $250,000, dated February 9, 1996, payable to
Registrant. Filed as exhibit no. 10.56 to the Registrant's Annual
Report on Form 10-K, filed April 1, 1996, and incorporated herein by
reference.
10.62 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $250,000, dated March 15, 1996, payable to
Registrant. Filed as exhibit no. 10.57 to the Registrant's Annual
Report on Form 10-K, filed April 1, 1996, and incorporated herein by
reference.
</TABLE>

II-7
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
11.1 Statement regarding computation of earnings per share.
21.1 Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of KPMG Peat Marwick, LLP, independent public accountants.
23.3* Consent of Arthur Andersen, LLP, independent public accountants.

23.4** Consent of Rich, May, Bilodeau & Flaherty, P.C. (included in Exhibit
5.1).
25.1 Power of Attorney (contained on the signature page of the Registration
Statement on Form S-1 filed on May 13, 1996).
27.1 Financial Data Schedule
99.1 Valuation and Qualifing Accounts of CORE, INC.
</TABLE>
- --------
* Filed herewith
** To be filed by amendment.

(B) FINANCIAL STATEMENT SCHEDULES

Schedule II--Valuation and Qualifying Accounts (See Exhibit 99.1)

ITEM 17. UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions (described in Item 20, above),
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 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 Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities Act
of 1933, 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-8
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF IRVINE, CALIFORNIA, ON
THIS 11TH DAY OF JULY, 1996.

Core, Inc.

/s/ George C. Carpenter IV
By __________________________________
GEORGE C. CARPENTER IV
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

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
11TH DAY OF JULY, 1996.

SIGNATURE TITLE

/s/ George C. Carpenter IV Chairman of the Board of Directors
- ------------------------------------- and Chief Executive Officer
GEORGE C. CARPENTER IV

/s/ William E. Nixon Chief Financial Officer, Executive
- ------------------------------------- Vice President and Treasurer
WILLIAM E. NIXON

/s/ Pamela Ochs-Piasecki Chief Accounting Officer
- -------------------------------------
PAMELA OCHS-PIASECKI

President and Director
*/s/ Craig C. Horton
- -------------------------------------
CRAIG C. HORTON

*/s/ Leslie Alexandre Director
- -------------------------------------
LESLIE ALEXANDRE

*/s/ Stephen C. Caulfield Director
- -------------------------------------
STEPHEN C. CAULFIELD

*/s/ Richard H. Egdahl, M.D. Director
- -------------------------------------
RICHARD H. EGDAHL, M.D.

*/s/ John Pappajohn Director
- -------------------------------------
JOHN PAPPAJOHN

/s/ William E. Nixon
*By _________________________________
WILLIAM E. NIXONATTORNEY-IN-FACT

II-9
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
1.1 Form of Underwriting Agreement by and among the Company, the
Selling Stockholders and the Underwriters.
2.1 Second Agreement and Plan or Reorganization by and between Core
Management, Inc., Registrant and PRA Sub, Inc. dated as of
December 19, 1994. Filed as Appendix I to Prospectus and Joint
Proxy Statement in Amendment No. 5 to Company's Registration
Statement on Form S-4 (Registration No. 33-73906), filed
February 14, 1995, and incorporated herein by reference.
2.2 Capital Stock Purchase Agreement, by and between Registrant,
Cost Review Services, Inc., Larry Bertrand Wallace and Leigh B.
Goodwin, dated October 2, 1995 (without exhibits). Filed as
exhibit 2.1 to Company's Current Report on Form 8-K, filed
October 16, 1995, and incorporated herein by reference.
2.3 Registrant's January 9, 1995 letter to AmHealth, Inc.
concerning a proposed acquisition of assets. Filed as exhibit
no. 2.3 to the Registrant's Annual Report on Form 10-K, filed
April 1, 1996, and incorporated herein by reference.
2.4 Asset Purchase Agreement, dated May 10, 1996, by and among
Registrant, AmHealth Clinics Corp. and AmHealth, Inc.
(including Schedules 1.2, 2.8 and 2.10 and excluding other
Exhibits and Schedules).
2.5 Option to Purchase Business Agreement, dated April, 1996,
between Registrant and Peter P. Greaney, M.D.
3.1 Restated Articles of Organization of the Registrant, dated
November 22, 1991, as further amended by Articles of Amendment,
dated March 24, 1995, and as further amended by Articles of
Amendment, dated July 28, 1995. Filed as Exhibit No. 3.1 to
Registrant's Quarterly Report on Form 10-Q, filed November 14,
1995, and incorporated herein by reference.
3.2 By-Laws of the Registrant, as amended. Filed as exhibit no. 3.2
to Company's Annual Report on Form 10-K, filed March 30, 1993,
and incorporated herein by reference.
4.1 Specimen Common Stock certificate. Filed as exhibit no. 4.1 to
the Registrant's Annual Report on Form 10-K, filed April 1,
1996, and incorporated herein by reference.
5.1** Opinion of Rich, May, Bilodeau & Flaherty, P.C., as to the
legality of the shares being registered.
10.1 Software License Agreement, dated August 26, 1986, between
Chrysler Corporation ("Chrysler") and The Health Data Institute
("HDI"). Filed as exhibit no. 10.59 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906),
filed January 10, 1994, and incorporated herein by reference.
10.2 Amendment No. 1 to Software License Agreement, dated December
23, 1987, between Chrysler and HDI. Filed as exhibit no. 10.60
to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and
incorporated herein by reference.
10.3 Technical Service Agreement, dated April 13, 1987, between
Chrysler and HDI. Filed as exhibit no. 10.61 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906),
filed January 10, 1994, and incorporated herein by reference.
10.4 Technical Service Agreement, dated May 1, 1987, between Blue
Cross and Blue Shield of Michigan and HDI. Filed as exhibit no.
10.62 to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and
incorporated herein by reference.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
10.5 Medical Care Management Agreement, dated January 1, 1989,
between Hoechst Cleanese Corporation and HDI (without Exhibits)
and Addendum to Managed Care Agreement, effective August 1,
1989, and Amendment to Agreement, effective December 1, 1991.
Filed as exhibit no. 10.5 to the Registrant's Annual Report on
Form 10-K, filed April 1, 1996, and incorporated herein by
reference.
10.6 Amended and Restated Agreement for Utilization Management
Services, dated as of November 1, 1991, between Core
Management, Inc., a California corporation ("Core-California")
and Northwestern National Life Insurance Company (without
schedules and exhibits). Filed as exhibit no. 10.58 to the
Company's Registration Statement on Form S-4 (Registration No.
33-73906), filed January 10, 1994, and incorporated herein by
reference.
10.7 Management Services Agreement, dated as of September 1, 1994,
between Integrated Behavioral Health, CMI and Behavioral Care
of America, Inc. (without Exhibits). Filed as exhibit no. 10.90
to Amendment No. 3 to the Company's Registration Statement on
Form S-4 (Registration No. 33-73906), filed February 2, 1995,
and incorporated herein by reference.
10.8 Registrant's Amended and Restated 1986 Stock Option Plan. Filed
as exhibit no. 10.11 to the Company's Registration Statement on
Form S-1 (Registration No. 33-43418), filed October 18, 1991,
and incorporated herein by reference.
10.9 Amendment to Amended and Restated 1986 Stock Option Plan. Filed
as exhibit no. 19.1 to the Company's Quarterly Report on Form
10-Q, filed November 16, 1992, and incorporated herein by
reference.
10.10 Registrant's 1991 Stock Option Plan. Filed as exhibit no. 10.12
to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and
incorporated herein by reference.
10.11 First Amendment to 1991 Stock Option Plan. Filed as exhibit no.
19.2 to the Company's Quarterly Report on Form 10-Q, filed
November 16, 1992, and incorporated herein by reference.
10.12 Second Amendment to 1991 Stock Option Plan. Filed as Exhibit
No. 10.2 to Registrant's Quarterly Report on Form 10-Q, filed
May 16, 1994, and incorporated herein by reference. [Superseded
by Third Amendment to Stock Option Plan].
10.13 Third Amendment to 1991 Stock Option Plan. Filed as Exhibit No.
10.105 to Amendment No. 2 to Registrant's Registration
Statement on Form S-4, filed December 27, 1994, and
incorporated by reference herein.
10.14 Form of Stock Option Agreement, granted February 12, 1990.
Filed as exhibit no. 10.23 to the Company's Registration
Statement on Form S-1 (Registration No. 33-43418), filed
October 18, 1991, and incorporated herein by reference.
10.15 Form of Stock Option Agreement, granted May 14, 1990, to non-
employee directors. Filed as exhibit no. 10.24 to the Company's
Registration Statement on Form S-1 (Registration No. 33-43418),
filed October 18, 1991, and incorporated herein by reference.
10.16 Form of Amendment, dated January 21, 1991, to Stock Option
Agreement granted May 14, 1990 to non-employee directors. Filed
as exhibit no. 10.26 to the Company's Registration Statement on
Form S-1 (Registration No. 33-43418), filed October 18, 1991,
and incorporated herein by reference.
10.17 Form of Stock Option Agreement, granted January 21, 1991. Filed
as exhibit no. 10.25 to the Company's Registration Statement on
Form S-1 (Registration No. 33-43418), filed October 18, 1991,
and incorporated herein by reference.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
------- ----------- ----
<C> <S> <C>
10.18 Form of Stock Option Agreement, granted February 11, 1991, to
non-employee directors. Filed as exhibit no. 10.27 to the
Company's Registration Statement on Form S-1 (Registration No.
33-43418), filed October 18, 1991, and incorporated herein by
reference.
10.19 Form of Stock Option Agreement, granted January 13, 1992, to
non-employee directors. Filed as exhibit no. 19.1 to the
Company's Quarterly Report on Form 10-Q, filed May 15, 1992,
and incorporated herein by reference.
10.20 Form of Stock Option Agreement, granted March 17, 1992, to
certain employees. Filed as exhibit no. 19.2 to the Company's
Quarterly Report on Form 10-Q, filed May 15, 1992, and
incorporated herein by reference.
10.21 Form of Stock Option Agreement, granted December 14, 1992, to
non-employee directors. Filed as exhibit no. 19.3 to Company's
Annual Report on Form 10-K, filed March 30, 1993, and
incorporated herein by reference.
10.22 Form of Stock Option Agreement, dated as of May 17, 1993,
between Registrant and William E. Nixon. Filed as exhibit no.
10.5 to Company's Quarterly Report on Form 10-Q, filed June 30,
1993, and incorporated herein by reference.
10.23 Form of Stock Option Agreement, granted January 16, 1994, to
non-employee directors. Filed as exhibit no. 10.45 to the
Company's Annual Report on Form 10-K, filed March 31, 1994, and
incorporated herein by reference.
10.24 Form of Stock Option Agreement, granted March 23, 1995, to non-
employee directors for services in 1994 and through March 23,
1995, including schedule of optionees. Filed as Exhibit No.
10.1 to Registrant's Quarterly Report on Form 10-Q, filed
November 14, 1995, and incorporated herein by reference.
10.25 Form of Stock Option Agreement for 19,500 shares to vest
quarterly over three years granted March 24, 1995, to non-
employee directors, including schedule of optionees. Filed as
Exhibit No. 10.2 to Registrant's Quarterly Report on Form 10-Q,
filed November 14, 1995, and incorporated herein by reference.
10.26 Form of Stock Option Agreement for 4,875 shares, granted March
24, 1995 to non-employee directors, including schedule of
optionees. Filed as Exhibit No. 10.3 to Registrant's Quarterly
Report on Form 10-Q, filed November 14, 1995, and incorporated
herein by reference.
10.27 Form of Stock Option Agreement, granted April 27, 1995, to
executive officers, including schedule of executive officer
optionees. Filed as Exhibit No. 10.4 to Registrant's Quarterly
Report on Form 10-Q, filed November 14, 1995, and incorporated
herein by reference.
10.28 Form of Stock Option Agreement, granted April 27, 1995, for
consulting and other services, including schedule of optionees.
Filed as Exhibit No. 10.5 to Registrant's Quarterly Report on
Form 10-Q, filed November 14, 1995, and incorporated herein by
reference.
10.29 Form of Stock Option Agreement for 12,375 shares of
Registrant's common stock granted November 8, 1995 to four non-
employee directors. Filed as exhibit no. 10.58 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996,
and incorporated herein by reference.
10.30 Incentive Stock Option Agreement, dated December 8, 1995,
between Registrant and Fredric L. Sattler. Filed as exhibit no.
10.50 to the Registrant's Annual Report on Form 10-K, filed
April 1, 1996, and incorporated herein by reference.
10.31 Form of Stock Option Agreement, granted March 29, 1996, to
officers, including schedule of officer optionees.
10.32 Form of Stock Option Agreement, granted March 29, 1996, for
consulting services, including schedule of optionees.
</TABLE>

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10.33 Core Management, Inc. Employee Stock Option Plan. Filed as
exhibit no. 10.65 to the Company's Registration Statement on
Form S-4 (Registration No. 33-73906), filed January 10, 1994,
and incorporated herein by reference.
10.34 Forms of Stock Option Agreement under Core Management, Inc.
Employee Stock Option Plan. Filed as exhibit no. 10.66 to the
Company's Registration Statement on Form S-4 (Registration
No. 33-73906), filed January 10, 1994, and incorporated herein
by reference.
10.35 Form of Non-Employee Director Stock Option Agreement of Core
Management, Inc. Filed as exhibit no. 10.67 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906),
filed January 10, 1994, and incorporated herein by reference.
10.36 Warrant to Purchase Stock of CMI, dated February 23, 1994, in
favor of Silicon Valley Bank. Filed as exhibit no. 10.75 to
Amendment No. 1 to the Company's Registration Statement on Form
S-4 (Registration No. 33-73906), filed June 8, 1994, and
incorporated herein by reference.
10.37 Registration Rights Agreement, dated February 23, 1994, between
CMI and Silicon Valley Bank. Filed as exhibit no. 10.81 to
Amendment No. 1 to the Company's Registration Statement on
Form S-4 (Registration No. 33-73906), filed June 8, 1994, and
incorporated herein by reference.
10.38 Form of Warrant Agreement, dated June 1, 1994, between CMI and
John Pappajohn. Filed as exhibit no. 10.83 to Amendment No. 1
to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed June 8, 1994, and
incorporated herein by reference.
10.39 Agreement to Provide Equity or Subordinated Debt, dated May 27,
1994, between John Pappajohn and CMI. Filed as exhibit no.
10.82 to Amendment No. 1 to the Company's Registration
Statement on Form S-4 (Registration No. 33-73906), filed June
8, 1994, and incorporated herein by reference.
10.40 Letter Agreement regarding collateral, dated August 26, 1994,
to Silicon Valley Bank from John Pappajohn. Filed as exhibit
no. 10.88 to Amendment No. 2 to the Company's Registration
Statement on Form S-4 (Registration No. 33-73906), filed
December 27, 1994, and incorporated herein by reference.
10.41 Modification Letter Agreement regarding collateral, dated
December 12, 1994 to Silicon Valley Bank from John Pappajohn.
Filed as exhibit no. 10.93 to Amendment No. 2 to the Company's
Registration Statement on Form S-4 (Registration No. 33-73906),
filed December 27, 1994, and incorporated herein by reference.
10.42 Employment Agreement, dated May 17, 1993, between the
Registrant and Alfred B. Lewis. Filed as exhibit no. 10.1 to
Company's Quarterly Report on Form 10-Q, filed June 30, 1993,
and incorporated herein by reference.
10.43 Employment Agreement, dated November 19, 1993, between the
Registrant and William E. Nixon. Filed as exhibit no. 10.49 to
Company's Registration Statement on Form S-4 (Registration
No. 33-73906), filed January 10, 1994, and incorporated herein
by reference.
10.44 Employment Agreement, dated December 1, 1995, between
Registrant and Fredric L. Sattler. Filed as exhibit no. 10.49
to the Registrant's Annual Report on Form 10-K, filed April 1,
1996, and incorporated herein by reference.
10.45 Employment Agreement, dated April, 1996, between Registrant and
Peter P. Greaney, M.D.
10.46 401(k) Plan. Filed as exhibit no. 10.34 to the Company's
Registration Statement on Form S-1 (Registration No. 33-43418),
filed October 18, 1991, and incorporated herein by reference.
</TABLE>

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<TABLE>
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EXHIBIT
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10.47 Form of Indemnification Agreement. Filed as exhibit no. 10.35
to the Company's Registration Statement on Form S-1
(Registration No. 33-43418), filed October 18, 1991, and
incorporated herein by reference.
10.48 Office Lease, dated December 30, 1992, between Registrant and
Copley Place Associates Nominee Corporation (without exhibits).
Filed as exhibit no. 19.5 to Company's Annual Report on
Form 10-K, filed March 30, 1993, and incorporated herein by
reference.
10.49 First Amendment to Office Lease, dated June 3, 1993, between
the Registrant and Copley Place Associates Nominee Corporation.
Filed as exhibit no. 10.2 to Company's Quarterly Report on
Form 10-Q, filed November 10, 1993, and incorporated herein by
reference.
10.50 Agreement of Sublease, dated April 1, 1993, between Eastman
Kodak Company and Core-California. Filed as exhibit no. 10.53
to the Company's Registration Statement on Form S-4
(Registration No. 33-73906), filed January 10, 1994, and
incorporated herein by reference.
10.51 Second Amendment to Agreement of Sublease, dated May 17, 1995,
between Eastern Kodak Company and Core-California. Filed as
exhibit no. 10.45 to the Registrant's Annual Report on Form 10-
K, filed April 1, 1996, and incorporated herein by reference.
10.52 Lease, dated January 1, 1991, between Core-California and One
Wheeler Road Associates. Filed as exhibit no. 10.55 to the
Company's Registration Statement on Form S-4 (Registration No.
33-73906), filed January 10, 1994, and incorporated herein by
reference.
10.53 First Amendment to Lease, dated November 28, 1995, between
Core-California and One Wheeler Road Associates (without
Exhibit). Filed as exhibit no. 10.47 to the Registrant's Annual
Report on Form 10-K, filed April 1, 1996, and incorporated
herein by reference.
10.54 Office Building Lease, dated September 21, 1995, by and between
McDonnell Douglas Realty Company and Registrant, including
Exhibits and including Addendum to Lease Agreement. Filed as
exhibit no. 10.48 to the Registrant's Annual Report on Form 10-
K, filed April 1, 1996, and incorporated herein by reference.
10.55 Loan and Security Agreement, dated December 29, 1995, by and
among Registrant, Core Management, Inc., a Delaware corporation
("CMI") and Cost Review Services, Inc., as borrowers, and
Silicon Valley Bank ("SVB"), including Schedule to Loan and
Security Agreement. Filed as exhibit no. 10.51 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996,
and incorporated herein by reference.
10.56 Amendment to Loan Agreement, dated March 25, 1996, by and among
Registrant, Core Management, Inc., a Delaware corporation, and
Cost Review Services, Inc., as borrowers, and Silicon Valley
Bank.
10.57 Collateral Assignment, Patent Mortgage and Security Agreement,
dated December 29, 1995, by and between Registrant and SVB
(without Exhibits). Filed as exhibit no. 10.52 to the
Registrant's Annual Report on Form 10-K, filed April 1, 1996,
and incorporated herein by reference.
10.58 Cross-Corporate Continuing Guaranty of Registrant, CMI and CRS,
dated December 29, 1995 in favor of SVB. Filed as exhibit no.
10.53 to the Registrant's Annual Report on Form 10-K, filed
April 1, 1996, and incorporated herein by reference.
10.59 Continuing Guaranty of Integrated Behavioral Health and Core-
California, dated December 29, 1995, in favor of SVB. Filed as
exhibit no. 10.54 to the Registrant's Annual Report on Form 10-
K, filed April 1, 1996, and incorporated herein by reference.
10.60 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $500,000, dated January 10, 1996, payable
to Registrant. Filed as exhibit no. 10.55 to the Registrant's
Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
</TABLE>

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10.61 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $250,000, dated February 9, 1996, payable
to Registrant. Filed as exhibit no. 10.56 to the Registrant's
Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
10.62 AmHealth, Inc.'s Secured Floating Rate Promissory Note, in the
principal amount of $250,000, dated March 15, 1996, payable to
Registrant. Filed as exhibit no. 10.57 to the Registrant's
Annual Report on Form 10-K, filed April 1, 1996, and
incorporated herein by reference.
11.1 Statement regarding computation of earnings per share.
21.1 Subsidiaries of the Registrant.
23.1* Consent of Ernst & Young LLP, independent auditors.
23.2* Consent of KPMG Peat Marwick, LLP, independent public
accountants.
23.3* Consent of Arthur Andersen, LLP, independent public
accountants.

23.4** Consent of Rich, May, Bilodeau & Flaherty, P.C. (included in
Exhibit 5.1).
27.1 Financial Data Schedule.
99.1 Valuation and Qualifing Accounts of CORE, INC.
</TABLE>
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* Filed herewith
** To be filed by amendment.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the captions "Experts" and
"Selected Consolidated Financial Data" and to the use of our report dated
February 14, 1996 in Amendment No. 2 to the Registration Statement on Form S-1
and the related Prospectus of CORE, INC. for the registration of 2,875,000
shares of its Common Stock.

Our audits also included the financial statement schedule of CORE, INC.
listed in Exhibit 99.1. This schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

Ernst & Young LLP

Boston, Massachusetts
July 10, 1996

<PAGE>

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

The Board of Directors
AmHealth, Inc.

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

Our reports, dated May 31, 1996, except as to note 13 for the March 31, 1996
and June 30, 1995 financial statements, and note 6 for the June 30, 1994
financial statements, which are as of June 17, 1996 and May 10, 1996,
respectively, contain an explanatory paragraph that states that the Company's
owner, AmHealth, Inc., has suffered recurring losses from operations, has
defaulted on its debt obligations and has a net capital deficiency, all of
which raise substantial doubt about its ability to continue as a going
concern. The financial statements do not include any adjustments that might
result from the outcome of that uncertainty.

KPMG Peat Marwick LLP

Atlanta, Georgia

July 10, 1996

<PAGE>

EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our
report dated February 17, 1995 on the financial statements of Occu-Care, Inc.
and affiliates and to all references to our firm included in or made a part of
this registration statement.

Arthur Andersen LLP

Atlanta, Georgia

July 10, 1996