United American Healthcare Corp · 10-K · For 6/30/97

Filed On 10/14/97   ·   SEC File 1-11638   ·   Accession Number 950124-97-5311

Annual Report   ·   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K        Annual Report                                         79    361K 
 2: EX-10.33    Material Contract                                     27    127K 
 3: EX-10.34    Material Contract                                      1      7K 
 4: EX-21       Subsidiaries of the Registrant                         1      4K 
 5: EX-27       Financial Data Schedule                                1      9K 

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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549    
_______________________________   

FORM 10-K   
ANNUAL REPORT PURSUANT TO SECTION 13 OR   
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
FOR THE FISCAL YEAR ENDED JUNE 30, 1997   
Commission File Number:  000-18839    
_______________________________   

UNITED AMERICAN HEALTHCARE CORPORATION    
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)    
_______________________________   

Michigan                          38-2526913        
(State or other jurisdiction             (I.R.S. Employer         
of incorporation or organization)        Identification No.)      

1155 Brewery Park Boulevard, Suite 200    
Detroit, Michigan 48207   
(313) 393-0200    
(Address, including zip code, and telephone number,   
including area code of registrant's principal executive offices)    
________________________________    

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

Securities registered pursuant to Section 12(g) of the Act:   
Common Shares, No Par Value   
(Title of Class)    

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

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

State the aggregate market value of the voting stock held by non-affiliates of  
the registrant.  The aggregate market value shall be computed by reference to   
the price at which the stock was sold, or the average bid and asked prices of   
such stock, as of a specified date within 60 days prior to the date of the      
filing.                                                                         

$44,403,903   
(Based upon the closing price of the registrant's   
common shares on the NYSE on September 19, 1997)    

Indicate the number of shares outstanding of each of the registrant's classes   
of common stock, as of the latest practicable date.                             

As of September 19, 1997, there were    
6,578,356 Common Shares outstanding   

DOCUMENTS INCORPORATED BY REFERENCE:  NOT APPLICABLE                            

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UNITED AMERICAN HEALTHCARE CORPORATION    

FORM 10-K   

TABLE OF CONTENTS   

                                                        · Enlarge/Download Table
                                                                                                      
PART I                                                                                               1
   Item 1.  Business                                                                                 1
   Item 2.  Properties                                                                              18
   Item 3.  Legal Proceedings                                                                       18
   Item 4.  Submission Of Matters To A Vote Of Security Holders                                     19

PART II                                                                                             19
   Item 5.  Market For The Registrant's Common Equity And Related                                     
            Stockholder Matters                                                                     19
   Item 6.  Selected Financial Data                                                                 20
   Item 7.  Management's Discussion And Analysis Of Financial Condition And Results Of Operations   20
   Item 8.  Financial Statements                                                                    32
   Item 9.  Changes In And Disagreements With Accountants On Accounting And Financial Disclosure    33

PART III                                                                                            33
   Item 10. Directors And Executive Officers Of The Registrant                                      33
   Item 11. Executive Compensation                                                                  37
   Item 12. Security Ownership of Certain Beneficial Owners and Management                          40
   Item 13. Certain Relationships And Related Transactions                                          41

PART IV                                                                                             44
   Item 14. Exhibits And Reports on Form 8-K                                                        44

FINANCIAL STATEMENTS                                                                               F-1


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PART I  

FORWARD-LOOKING STATEMENTS                                                      

In addition to historical information, this report contains           
forward-looking statements.  The Private Securities Litigation Reform Act of    
1995 provides a "safe harbor" for forward-looking statements to encourage       
management to provide prospective information about their companies without fear
of litigation so long as those statements are identified as forward-looking and 
are accompanied by meaningful cautionary statements identifying important       
factors that could cause actual results to differ materially from those         
projected in the statements.  The Company desires to take advantage of this     
"safe harbor" and, accordingly, hereby IDENTIFIES FORWARD-LOOKING STATEMENTS    
THROUGH THE BOLD ITALIC TEXT WITHIN THE BODY OF THIS DOCUMENT.  Also see "Item  
1-Business - Cautionary Statement Regarding Forward-Looking Statements".        

THE COMPANY                                                                     

    United American Healthcare Corporation (the "Company") was incorporated in
Michigan on December 1, 1983 and commenced operations in May 1985.  Unless the  
context otherwise requires, all references to the Company indicated herein      
shall mean United American Healthcare Corporation and its consolidated          
subsidiaries.  The Company's executive offices are located at 1155 Brewery Park 
Blvd., Suite 200, Detroit, Michigan 48207 and its telephone number is (313)     
393-0200.                                                                       

ITEM 1. BUSINESS                                                                

GENERAL                                                                         

  The Company provides comprehensive management and consulting services to
managed care organizations, some of which are health maintenance organizations  
owned by the Company and located in Michigan, Tennessee, Florida, Pennsylvania, 
and Louisiana.  The Company also arranges for the financing of health care      
services and delivery of these services by primary care physicians and          
specialists, hospitals, pharmacies and other ancillary providers to commercial  
employer groups and government sponsored populations. Management and consulting 
services provided by the Company are generally to health maintenance            
organizations with a targeted mix of Medicaid and non-Medicaid/commercial       
enrollment.  As of August 1, 1997, there were approximately 160,000 enrollees   
in the managed care organizations either owned and/or managed by the Company.   

Management and consulting services provided by the Company include    
feasibility studies for licensure, strategic planning, corporate governance,    
management information systems, human resources, marketing, precertification,   
utilization review programs, individual case management, budgeting, provider    
network services, accreditation preparation, enrollment processing, claims      
processing, member services and cost containment programs.                      

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In 1985, the Company became one of the pioneers in arranging for the  
financing and delivery of health care services to Medicaid recipients utilizing 
managed care programs.  Management believes the Company has gained substantial  
expertise in understanding and serving the particular needs of the Medicaid     
population.  As of August 1, 1997, there were approximately 91,000 Medicaid     
enrollees in the managed care organizations owned or managed by the Company     
(the "Managed Plans").  The Company complements its Medicaid focus by targeting 
non-Medicaid/commercial business in the same geographic markets.  As of August  
1, 1997, there were approximately 69,000 non-Medicaid/commercial enrollees in   
the Managed Plans.                                                              

 The Company has entered into an Agreement of Purchase and Sale of Stock
with CHF Acquisition, Inc., a related party, dated September 12, 1997, pursuant 
to which the Company has agreed to sell CHF for $30 million in cash, contingent 
upon the buyer securing financing.  See "Business - Self Funded Benefit Plans"  
and "Management's Discussion and Analysis of Financial Condition and Results of 
Operations-Liquidity and Capital Resources".  CHF designs customized,           
cost-effective employee welfare plan arrangements for self-funded employers and 
provides marketing, management and administrative services to self-funded       
employers generally.  As of August 1, 1997, CHF's client base included          
approximately 300 accounts in 47 states, with an estimated 547,000 covered      
lives.                                                                          

INDUSTRY                                                                        

In an effort to control costs while assuring the delivery of quality  
health care services, the public and private sectors have, in recent years,     
increasingly turned to managed care solutions. As a result, the managed care    
industry, which includes HMO, POS, PPO and prepaid health service plans, has    
grown substantially.                                                            

While the trend toward managed care solutions has traditionally been  
pursued most aggressively by the private sector, the public sector has recently 
embraced the trend in an effort to control the costs of health care provided to 
Medicaid recipients. Consequently, many states are promoting managed care       
initiatives to contain these rising costs and supporting programs that          
encourage or mandate Medicaid beneficiaries to enroll in managed care plans.    

STRATEGY                                                                        

   The Company continually evaluates the results of its current products and
opportunities to expand its business.  Its ongoing strategy is to strengthen    
its position as a multi-state provider of effective and innovative managed care 
solutions to the health care industry.  The key elements of the Company's       
strategy are as follows:                                                        

   INTERNAL GROWTH IN MANAGED PLANS. The Company intends to achieve internal
growth by increasing non-Medicaid/commercial and Medicaid enrollment in the     
Managed Plans through: (i) the development of new managed care products; (ii)   
introduction of a Medicare risk product, and (iii) continued testing and        
integration of a proprietary client/server information system to manage plan    
operations. The Company believes that this client/server information system     
will allow it to                                                                

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increase efficiency and overall ability to control costs for its clients and    
their products. See "Business - Management Information System". As the Company  
pursues additional commercial business, the Company believes it will be able to 
use its established provider networks, on-site management information systems   
and administrative staff to compete more effectively.                           

CAPITALIZE ON MANAGED CARE MEDICAID EXPERTISE. The Company intends to 
capitalize on its substantial Medicaid managed care expertise by entering new   
markets in major metropolitan areas with large Medicaid populations,            
particularly in states with mandatory enrollment initiatives. The Company       
intends to establish strategic alliances with local participants in such        
markets in order to enhance the likelihood of successful market penetration.    
The Company also intends to acquire or create managed care plans in its         
targeted markets. In such new markets, the Company's objective is to enter into 
long-term management agreements with, and to realize benefits associated with   
equity ownership in, the managed care plans.                                    

The Company believes that its practice of initially focusing on the   
Medicaid market segment allows it to more rapidly develop an enrollment base,   
accelerate its realization of management fees and generate sufficient cash      
flows to fund the managed plan's expansion into commercial markets. Central to  
the Company's long-term strategy is the development of managed care plans with  
a targeted mix of Medicaid and non-Medicaid/commercial business, which allows   
the Company to benefit from the inherent strengths of each market, while        
lessening the risks of operating in either market exclusively.                  

 SPIN-OFF OF BUSINESS SEGMENTS.  As part of management's reassessment of
its strategic goals, it recently concluded that the Company would be best       
served by concentrating on its primary business segment and, as a result of     
this assessment, in September 1997 entered into an agreement to sell CHF and    
its subsidiaries to CHF Acquisition, Inc., a related party, for $30 million in  
cash, contingent upon the buyer securing financing.  The Company intends        
to use the proceeds from the sale to reduce its long-term debt as well as to    
expand the business of its current clients.  See "Management's Discussion and   
Analysis of Financial Condition and Results of Operations - Liquidity and       
Capital Resources".                                                             

 Additionally, management assessed that ChoiceOne, the Company's PPO, is
not a core business segment and has decided to sell the operation.  A letter of 
intent was entered into with a prospective buyer and the sale should be         
consummated in the Company's second quarter of fiscal 1998.  The Company        
expects $240,000 in proceeds from this proposed stock sale.  Terms of the sale  
are subject to change.  There are no assurances that this transaction will be   
consummated.                                                                    

    The Company believes that its combined management/equity strategy enhances
its ability to penetrate new markets and diversify its primary business         
opportunities.  In particular, the Company believes the continued               
implementation of this strategy will allow it to: (i) respond rapidly to        
multiple state-sponsored Medicaid managed care initiatives, (ii) capitalize on  
its Medicaid expertise within the managed care industry, and  (iii) increase    
its enrollment in non-Medicaid markets.                                         

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MANAGED CARE PRODUCTS AND SERVICES                                              

   The Company has an ownership interest in four HMOs: OmniCare Health Plan,
Inc. in Tennessee ("OmniCare-TN"), UltraMedix Healthcare Systems, Inc. in       
Florida ("UltraMedix"), PhilCare Health Systems, Inc. in Pennsylvania           
("PhilCare") and OmniCare Health Plan, Inc. in Louisiana ("OmniCare-LA"). The   
Company has decided not to fully launch OmniCare-LA pending the outcome of the  
City of New Orleans' request for proposal, and then to re-evaluate the capital  
needs of the Plan.  PhilCare, after declining to participate in Pennsylvania's  
Medicaid managed care program because of program requirements that would have   
made the Company's participation in the program unprofitable, currently has no  
membership.  However, the Plan is pursuing other business opportunities.  The   
Company also manages the operations of an HMO in which it has no ownership      
interest, Michigan Health Maintenance Organization Plans, Inc., d/b/a OmniCare  
Health Plan, in Michigan, ("OmniCare-MI").  The Company previously managed the  
operations of Personal Physician Care Inc., in Ohio ("PPC") under a long-term   
management agreement that was terminated pursuant to binding arbitration,       
effective May 31, 1997, based in part on a dispute between the parties with     
respect to the payment of non-emergent transportation costs for enrollees as a  
marketing expense to be incurred under the management agreement.                

   The following table shows the membership in the Managed Plans serviced by
the Company as of August 1, 1997:                                               

                    Non-
                   Medicaid/
                    Medicaid      Commercial         Total
                    ----------  ----------------     -----
Managed Plans                                         
-------------                                         
Owned :                                               
     OmniCare-TN         33,314         9,415*          42,729
     UltraMedix           9,816         10,119          19,935
                      ---------         ------          ------
                         43,130         19,534          62,664
Operated:                                             
     OmniCare-MI         47,856         49,620          97,476
                      ----------------------------------------
                         90,986         69,154         160,140
                      ========================================

-----------------------------                                                   
* Represents Working Uninsured and Uninsurable, categorized as Non-Medicaid.    

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The following table sets forth data with respect to the Company's     
principal revenue sources in dollar amounts and as a percentage of the          
Company's total revenues for the periods indicated. Such data is not indicative 
of the relative contributions to the Company's net earnings:                    

                                                        · Enlarge/Download Table

                                               Year ended June 30,                           
                             ----------------------------------------------------------------
                             1997                 1996                  1995                 
                             ----                 ----                  ----                 
                                          (in thousands, except percentages)                 
                                                                                             
MANAGED PLANS                                                                                
OmniCare-TN............... $56,508        50%    $42,717        46%    $15,681         26%   
OmniCare-MI...............  28,865        26      30,275        33      30,563         51    
UltraMedix................  13,922        12       9,003        10       5,020          8    

   A substantial portion of the Company's gross revenues are derived through
its management agreement with OmniCare-MI.  This management agreement is        
long-term in nature, subject to review every five years with either automatic   
continuation or elective termination.  There can be no assurance that such      
agreement will remain in effect or continue substantially under the same terms  
and conditions.                                                                 

MANAGED PLANS                                                                   

The Company has entered into long-term management agreements with the 
Managed Plans, either directly or through its subsidiaries.  Pursuant to the    
management agreements with the Managed Plans, the Company provides management   
and consulting services associated with the financing and delivery of health    
care services.  The Company seeks to enter into similar arrangements for other  
managed care organizations.  Table A summarizes the terms of the management     
agreements.                                                                     

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Table A- Summary of Terms of Management Agreements with the Managed Plans       

                                                        · Enlarge/Download Table

                                                                           Managed Plans                             
                                                  ----------------------------------------------------------------   
Terms                                                 OmniCare-MI           OmniCare-TN            UltraMedix        
-----                                             --------------------  --------------------  --------------------   
                                                                                                                     
(1) Duration:                                                                                                        
    (a) Effective dates:                                                                                             
        (i)  Commencement                                  May 1, 1985         February 1, 1994      February 1, 1994
        (ii) Expiration                              December 31, 2010         February 1, 1999      February 1, 1999
    (b) Extension:                                                                                                   
        (i) Automatically renewable                                 No       Yes - 4 successive    Yes - 4 successive
                                                                                 5 year periods        5 year periods
        (ii) Terms of renewal/continuation           Subject to review                  5 years               5 years
                                                         every 5 years                                               
        (iii) Next review period                           May 1, 2000         February 1, 1999      February 1, 1999
    (c) Termination:                                                                                                 
        (i)  Without cause by the Plan at such                                                                       
             reviews                                               Yes                      Yes                   Yes
        (ii)  Either party with cause                              Yes                      Yes                   Yes
(2) Fees paid to the Company:                                                                                        
    (a) Percentage of revenues                                     Yes                      Yes                   Yes
    (b) Reimbursement of cost incurred to manage                                                                     
         the Plan                                                   No                       No                   Yes
(3) Expenses incurred by the Company:                                                                                
(a) All administrative expenses necessary to                                                                         
      carry out and perform the functions of the                                                                     
      Plan, excluding:                                                                                               
        (i)   Audit                                                Yes                       No                   Yes
        (ii)  Legal                                                 No                       No                   Yes
        (iii) Marketing                                             No                       No                   Yes
        (iv)  Certain other                                        Yes                       No                   Yes

Services provided to the Managed Plans include strategic planning;    
corporate governance; human resource functions; provider network services;      
provider profiling and credentialing; premium rate setting and review;          
marketing services (group and individual); accounting and budgeting functions;  
deposit, disbursement and investment of funds; enrollment functions; collection 
of accounts; claims processing; management information systems; utilization     
review; and quality management.                                                 

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Managed Plans Owned By the Company                                              

  OMNICARE-TN.     OmniCare-TN was organized as a Tennessee corporation in
October 1993, and is headquartered in Memphis, Tennessee.  The Company was      
active in the development of OmniCare-TN and, through its wholly owned          
subsidiary, United American Healthcare of Tennessee ("UA-TN"), owns a 75%       
equity interest in OmniCare-TN.  A local partner owns the remaining 25%.        
OmniCare-TN began as a PPO contractor in the TennCare program  and operated as  
a full-risk prepaid health services plan until it obtained its TennCare HMO     
license in March 1996.  The Plan's TennCare HMO contract was executed in        
October 1996, retroactive to the date of licensure.  The Plan's application for 
a commercial HMO license is pending. PLAN MANAGEMENT HAS BEEN IN CONSTANT       
COMMUNICATION WITH THE STATE TO ELIMINATE ANY FURTHER PROCESSING DELAYS OF THE  
APPLICATION AND EXPECTS THE ISSUANCE OF THE LICENSE IN THE SECOND QUARTER OF    
FISCAL 1998.  However, there can be no assurances that the license will be      
issued within this time period.                                                 

  In November 1993, OmniCare-TN entered into a PPO contract with the State
of Tennessee pursuant to the State's mandatory health care program, TennCare,   
to arrange for the financing and delivery of health care services on a          
capitated basis to Medicaid eligibles and the Working Uninsured and Uninsurable 
("Non-Medicaid") individuals who lack access to private or employer sponsored   
health insurance or to another government health plan.  The TennCare Bureau     
placed an indefinite moratorium on Working Uninsured enrollment in December     
1994; however, such action did not affect persons enrolled in a plan prior to   
the moratorium.  In April 1997, enrollment was expanded to include the children 
of the Working Uninsured up to age 18.  THIS ANNUALLY RENEWABLE CONTRACT WILL   
NEXT BE REVIEWED ON OR BEFORE JULY 1, 1998, AND MANAGEMENT EXPECTS RENEWAL FOR  
AN ADDITIONAL 12-MONTH TERM.                                                    

OmniCare-TN currently serves Shelby and Davidson counties in Tennessee
(which include the cities of Memphis and Nashville).  As of August 1, 1997,     
total enrollment was approximately 42,729 members, of which 33,314 (78%) and    
9,415 (22%) represent Medicaid and Working Uninsured and Uninsurable enrollees, 
respectively.  The greatest opportunity for enrollment gains is during the      
30-day open enrollment change period for all TennCare eligibles, which occurs   
once a year in October.  Management projects that there could be an increase in 
its TennCare membership during the current change period.  ADDITIONALLY,        
MANAGEMENT BELIEVES THAT THE RECEIPT OF THE COMMERCIAL LICENSE AND THE PLAN'S   
EFFORTS TO EXPAND ITS PROVIDER NETWORK TO THE SOUTHWESTERN AREA OF TENNESSEE    
WILL GIVE OMNICARE-TN THE ABILITY TO INCREASE ITS ENROLLMENT BY MARKETING ITS   
MANAGED CARE PRODUCTS TO THE VARIOUS EMPLOYER GROUPS IN THE REGIONS SERVED.     

ULTRAMEDIX.  UltraMedix, a network model HMO headquartered in Tampa,  
Florida, was founded as a Florida corporation in May 1992. Through its majority 
owned subsidiary, United American Healthcare of Florida ("UA-FL"), the Company  
owns 51% of UltraMedix.  The remaining 49% of the Plan is owned by local        
shareholders.  UltraMedix was in the development stage through August 1993, at  
which time the Plan entered into a contract with the Florida Agency for Health  
Care Administration ("AHCA") to arrange for the financing and delivery of       
health care services to the Medicaid population in west-central Florida on a    
capitated basis.  As                                                            

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of July 1997, upon the Agency's renewal of the contract, UltraMedix was         
operating in 10 counties located in the central and southwestern area of the    
State of Florida.  The current AHCA contract provides for the Plan's service    
area to include 23 counties located in the central and southeastern areas of the
State of Florida. UltraMedix is proceeding with plans to initiate operations in 
additional counties by the end of calendar year 1997. THE CONTRACT WILL NEXT BE 
REVIEWED ON OR BEFORE JUNE 30, 1998, AND MANAGEMENT EXPECTS RENEWAL FOR AN      
ADDITIONAL 12- MONTH TERM.                                                      

 UltraMedix's application with the Florida Department of Insurance for a
Certificate of Authority to operate as an HMO was approved in October 1995 and  
enables UltraMedix to pursue HMO business in the commercial market.  Prior to   
this approval, UltraMedix operated as prepaid health plan serving the Medicaid  
population exclusively.  Additionally, UA-FL received a license to operate as a 
Third Party Administrator in October 1995.                                      

The AHCA moratorium on Medicaid enrollment instituted in July 1996 to 
assure compliance with regulatory requirements of a 75/25                       
Medicaid-to-commercial enrollment mix, was removed in October 1996.  During the 
moratorium, the Plan experienced a decrease in Medicaid membership, primarily   
because of attrition.  Upon the recommencement of Medicaid marketing,           
membership increased approximately 10% between October 1996 and March 1997.     

    To develop its commercial membership, UltraMedix is aggressively marketing
an individual plan, a small group plan through and independently of the State   
of Florida's Community Health Purchasing Alliances ("CHPAs"), and a large group 
plan to commercial subscribers in its service areas. To support its commercial  
growth objectives, the Plan entered into agreements with broker agencies to     
market its commercial products, and with the largest CHPA membership broker in  
the State of Florida to market its CHPA products.  In October 1996, the Plan    
received approval from AHCA to expand its commercial service area to include    
the counties of Sarasota, DeSoto, Charlotte, Osceola and Seminole, and expects  
to add the five counties in the greater Jacksonville area by the third quarter  
of fiscal 1998.                                                                 

     The Plan is also developing a point of service product, for introduction in
the third quarter of fiscal year 1998.  As of August 1, 1997, total enrollment  
was approximately 19,935 members, of which 9,816 (49%) were Medicaid members    
and 10,119 (51%) were commercial members.                                       

  In February 1997, UltraMedix was selected to participate in the State of
Florida's initiative to mandate the enrollment of Medicaid eligibles into       
managed care plans.  The award service area covered 14 counties and would have  
capped UltraMedix's Medicaid enrollment, including existing members, at         
approximately 48,000 during the contract period.  Legal challenges from         
unsuccessful bidders to the State's request for proposal have halted the        
initiative indefinitely.                                                        

    THE RECENT RAPID GROWTH IN COMMERCIAL MEMBERSHIP, CONTINUED INTEGRATION OF
THE CLIENT/SERVER SYSTEM TECHNOLOGY, PREPARATION FOR AN ACCREDITATION           
DESIGNATION FROM THE NATIONAL COMMITTEE FOR QUALITY ASSURANCE SCHEDULED FOR     
DECEMBER 1997, EXPANSION OF THE PROVIDER NETWORK TO SUPPORT COMMERCIAL AND      
MEDICAID GROWTH AND RENEGOTIATION OF PROVIDER CONTRACTS TO                      

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DECREASE MEDICAL LOSS RATIOS ARE ALL FACTORS THAT SUPPORT MANAGEMENT'S BELIEF   
THAT THE PLAN WILL BE COMPETITIVE AND SUCCESSFUL IN ITS INITIATIVE TO GROW      
MEMBERSHIP AND REDUCE MEDICAL COSTS.                                            

Managed Plan Operated By the Company                                            

OMNICARE-MI.   OmniCare-MI is a not-for-profit, tax-exempt corporation
headquartered in Detroit, Michigan, serving the southeastern section of the     
state operating in Wayne, Oakland, Macomb, Monroe and Washtenaw counties.       

Enrollment is through the 145 companies that offer the Plan to its    
employees and their family members, individual enrollment that is open once a   
year for a 30-day period, and through the State's Medicaid program, pursuant to 
an agreement with the Michigan Department of Community Health, which makes HMO  
coverage available to eligibles in certain counties and mandatory in others.    
This agreement, which must be renewed annually, was extended by mutual          
agreement for an additional six months from July 1, 1997 to December 31, 1997.  
MANAGEMENT EXPECTS THAT THE CONTRACT WILL BE RENEWED FOR AN ADDITIONAL 12-MONTH 
TERM FOR 1998.  As of August 1, 1997, total enrollment in OmniCare-MI was       
approximately 97,476, of which 49,620 (51%) represent commercial members,       
including approximately 6,757 point of service members and approximately 47,856 
(49%) represent Medicaid members.                                               

 Among the major employers that offer OmniCare-MI, ranked by enrollment,
are: the City of Detroit, the Federal Government, Ford Motor Company, the State 
of Michigan, the Detroit Board of Education, General Motors Corporation,        
Chrysler Corporation, Detroit Edison, Wayne County and Comerica Bank, the       
largest of which represents approximately 7% of OmniCare-MI's total enrollment. 
No other group exceeds 5% of the Plan's total enrollment.                       

 HMO growth in the State of Michigan has remained fairly static over the
last several years.  HMO enrollment penetration has remained in the 20% range   
during that period.  HOWEVER, MANAGEMENT BELIEVES THAT THIS DORMANCY WILL NOT   
CONTINUE AS PUBLIC ACCEPTANCE OF HMOS IS GROWING AND EMPLOYER ENCOURAGEMENT IS  
INCREASING AS THEY REALIZE THAT HMOS COST LESS AND PROVIDE QUALITY CARE.        

OmniCare-MI operates in an extremely competitive environment.  As a   
result, rate increases are carefully applied, forcing more aggressive           
contracting with providers and greater efficiency in operations.  OMNICARE-MI   
ANTICIPATES THAT IT WILL INCREASE ENROLLMENT BY CONTINUING TO EMPHASIZE QUALITY 
OF BOTH CARE AND SERVICE.  The Plan also intends to introduce a new point of    
service product during the year.  MANAGEMENT BELIEVES THAT THIS POINT OF        
SERVICE PRODUCT WILL MAKE THE PLAN MORE ATTRACTIVE TO SMALLER AND MID-SIZE      
COMPANIES THAT HAVE TRADITIONALLY OBTAINED COVERAGE THROUGH INDEMNITY           
COMPANIES. The Plan had expected to roll out its Medicare risk product in       
mid-1997 in response to a national trend to enroll Medicare recipients in       
managed care.  OmniCare-MI is currently in the process of refiling its Medicare 
application with the Health Care Financing Administration ("HCFA"), and         
management expects to begin marketing the product in early 1999.                

The State of Michigan, in an effort to reduce the cost of its Medicaid
program,                                                                        

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competitively bid its Medicaid contracts, for an effective date of July 1997.   
The affected southeastern Michigan counties include a significant portion of the
Plan's Medicaid enrollment.  In May 1997, OmniCare-MI was notified that it had  
been selected to participate in the State's program. Unsuccessful bidders to the
State's request for proposal legally challenged the initiative and, as a result,
the State did not assign the Medicaid eligibles to plans that were awarded      
contracts, but did, however, institute the rate reduction component of the new  
program effective July 1997.  With the indefinite delay of the assignment of    
approximately 90,000 eligible recipients to the selected plans, and the         
implementation of the rate reductions of 10% to 15%, the operating revenues of  
OmniCare-MI and the resulting management fees to the Company will be affected in
1998.  There can be no assurances that OmniCare-MI can control health care costs
at the rate of the premium reductions.                                          

Management believes that the history of OmniCare-MI has been one of   
innovation.  It was the first network model HMO in the country and the first to 
capitate physician services in an IPA model HMO. OmniCare-MI also created and   
implemented the first known mental health carve out in 1983.  These are but a   
few of the ideas that have not only been successful for OmniCare-MI, but have   
been adopted by and proven successful for the industry.  Such innovation and    
creativity are what management believes will continue to make OmniCare-MI       
successful.                                                                     

Other Managed Plan Ventures                                                     

  UNITED/HEALTHSCOPE, INC. ("UHI").  In March 1993, the Company reached an
agreement with New York-based HealthScope Administrative Services Corporation,  
now known as HealthScope/United, Inc. ("HealthScope"), to form a health care    
management company to gain access to one of the largest Medicaid eligible       
populations in the United States.  Pursuant to the agreement, HealthScope       
became a wholly owned subsidiary of UHI.  UHI was organized to engage in        
development, consulting and contract management services for publicly funded    
managed care programs in the metropolitan New York area.                        

In 1995, New York City officials announced a four-year initiative to  
enroll over 1.7 million Medicaid recipients residing in New York City in        
managed care plans.  The staggered enrollment aspect of the program was         
necessitated by an insufficient capacity to enroll all such recipients. This    
mandated initiative began to roll out in early 1997. UHI management anticipates 
the phase-in for its service areas in early 1998. Currently, UHI has management 
agreements with three health plans, with enrollment of approximately 10,000     
members.                                                                        

In May 1996, UHI initiated a private placement memorandum seeking     
potential equity investors to fund future cash flow needs. The delayed rollout  
of State's initiative adversely affected UHI financial resources. A private     
investment firm expressed an interest in making a significant equity investment 
in UHI and, in September 1996, advanced $.4 million of a $1.5 million line of   
credit. The balance was drawn in October 1996.  In April and May 1997, the      
venture capital firm infused an additional $.3 million and $2.2 million,        
respectively. The venture capital firm has indicated its commitment to fund     
UHI's future short-term capital needs.                                          

    Through May 1997, outstanding amounts owed to the Company from UHI totaled

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approximately $4.9 million.  In May 1997, UHI's outstanding debt and preferred  
stock were restructured to attract other investors.  The Company converted its  
interest in UHI, including advances, accrued interest and the value of warrants 
held by the Company, to one million shares of non-voting preferred stock of the 
restructured UHI in the amount of $4 million, and a warrant to purchase 3,310   
shares of UHI common stock, exercisable at any time at a nominal price,         
representing approximately 3% of UHI's common shares on a fully diluted basis.  
At this time the venture capital firm also converted its debt to preferred stock
and warrants to purchase common shares.  The Company's ability to recover the   
value of its preferred stock is significantly dependent upon additional         
financing by third party investors, the phase-in of the Medicaid initiative     
and/or the attraction of additional clients. A valuation allowance of           
approximately $1.1 million, had been established as of June 30, 1996. The       
conversion of the Company's loans to UHI to preferred stock was treated as a    
"troubled debt restructuring" and the investment was recorded at its estimated  
fair value at the date of the restructuring. This resulted in bad debt expense  
of $.7 million for the year ended June 30, 1997.                                

   A valuation allowance of approximately $1.1 million, had been established
as of June 30, 1996. The conversion of the Company's loans to UHI to preferred  
stock was treated as a "troubled debt restructuring" and the investment was     
recorded at its estimated fair value at the date of the restructuring. This     
resulted in bad debt expense of $.7 million for the year ended June 30, 1997.   

PHILCARE. PhilCare, a network model HMO headquartered in Philadelphia,
Pennsylvania, was organized as a Pennsylvania corporation in May 1994, and is   
49% owned by the Company's wholly owned subsidiary, United American Healthcare  
of Pennsylvania ("UA-PA"), with the remaining 51% owned by local participants.  
In June 1996, PhilCare obtained its HMO license, with the Company funding       
PhilCare's applicable statutory reserve and net worth requirements of $2.1      
million through cash deposited at a Pennsylvania bank.                          

The initial thrust into this market was an intended participation in  
Pennsylvania's mandatory Medicaid pilot program, HealthChoices, which required  
the mandatory enrollment of approximately 540,000 Medicaid recipients in five   
metropolitan Philadelphia counties into HMOs. In October 1996, the Company      
announced its decision to withdraw its support of PhilCare's participation in   
the HealthChoices program because existing program requirements would have made 
the Company's participation in the program unprofitable.  However, the Company  
continues to explore other potential business opportunities in this market. The 
Company cannot provide assurances that PhilCare will enter into a formal        
relationship with any interested parties.                                       

OMNICARE-LA.   OmniCare-LA, a network model HMO headquartered in New  
Orleans, Louisiana, was organized as a Louisiana corporation in November 1994,  
and is 100% owned by the Company's wholly owned subsidiary United American of   
Louisiana ("UA-LA").  The Plan was granted an HMO license by the Louisiana      
Department of Insurance in June 1996.  In connection therewith, the Company     
funded OmniCare-LA's applicable statutory reserve and net worth requirements    
through a $1.0 million letter of credit and $1.0 million in cash deposited in   
accounts at state banks in Louisiana.  It is anticipated that HMO ownership     
will be offered to other investors. The Plan is currently in a pre-operational  
phase. UA-LA was also granted a TPA license in 1996.                            

 The Louisiana managed care market is still in its infancy.  Overall HMO
penetration is 7% in the State and 14% in metropolitan New Orleans, while       
national figures for HMO penetration are higher.  Small businesses dominate the 
market, and employers are exploring the savings potential of managed care. The  
Company's primary intent is to pursue opportunities in New Orleans in the       
commercial and Medicaid HMO markets, and to pursue third party administration   
business.  Although Louisiana does not currently have a mandatory Medicaid      
program, a waiver request to HCFA is being considered.                          

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In August 1997, the Company submitted its response to the City of New 
Orleans (the "City")/Transit Management of Southeast Louisiana ("TMSEL")        
Cooperative Endeavor (the "Endeavor") request for proposals.  The Endeavor      
seeks entities to provide utilization review, claim administration services     
(medical/prescription drugs, dental and vision) and provider networks (medical, 
managed mental health/substance abuse, prescription drugs, dental and vision)   
for the 11,200 employees and retirees of the City and TMSEL.                    

   OmniCare-LA is a finalist in the bid process.  Selection criteria include
management structure and experience, questionnaire responses, program           
administration and cost, geographic penetration/network access, enrollment and  
eligibility assistance and others.  The Mayor of New Orleans and a selection    
committee will make the final determination. The Company anticipates            
notification of its status in late 1997.  Management cannot provide assurances  
that it will be the successful bidder for this contract. Management             
anticipates that it will provide proposals for two additional programs in the   
New Orleans area, similar to the Endeavor, during fiscal 1998.                  

  OTHER VENTURES. In fiscal 1995, the Company, in anticipation of business
opportunities in several states, incorporated the subsidiaries United American  
Healthcare of Georgia, Inc. ("UA-GA") and United American Healthcare of         
Illinois, Inc. ("UA-IL").  In October 1996, the Company withdrew its HMO license
application in Georgia and the $4.1 million in funding related to the statutory 
reserve requirements.  Currently, the Company has ceased activities related to  
its UA-IL and UA-GA subsidiaries and has no operational plans related to these  
sites in the near future, due primarily to cash flow considerations and delays  
in initiating the proposed programs.                                            

SELF-FUNDED BENEFIT PLANS                                                       

In 1993, the Company acquired Corporate Health Care Financing, Inc.,  
("CHF") for approximately $4.7 million in cash, $3.0 million of the Company's   
common stock (310,481 shares), and a $6.6 million contingent promissory note.   
The entire balance of the contingent note has been paid or accrued through June 
30, 1997.   Management believed that its acquisition of CHF represented an      
opportunity to expand its traditional business into the self-funded market that 
comprises a majority of the private sector employers. A self-funded health      
benefits plan is one in which an employer directly assumes the financial risk   
for its employees' health care costs by paying for employees' medical claims    
out of a separate fund consisting of employee and/or employer contributions.    

In September 1997, the Company entered into an agreement to sell CHF  
and its subsidiaries to CHF Acquisition, Inc., a related party, for $30 million 
in cash, contingent upon the buyer securing financing. The agreement requires   
that certain contingencies and conditions be satisfied prior to closing         
including a condition that the buyer must have a financing commitment on or     
before December 11, 1997, and that the closing must occur on or before January  
10, 1998.  CHF Acquisition, Inc. is owned by certain principal employees of     
CHF.  The transaction requires, as a condition prior to the Company's           
obligation to close the sale that Keith Sullivan and Louis Nicholas each        
terminate their employment agreements with CHF and the Company, respectively.   
There can be no assurances that the sale will be consummated.  As of August 1,  
1997, CHF's client base included approximately 300 accounts in 47 states, with  
an estimated 547,000 covered lives.                                             

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OTHER VENTURE AND PRODUCT                                                       

  CHOICEONE.  ChoiceOne, a national PPO and wholly owned subsidiary of the
Company, was created in 1993.  ChoiceOne directly contracts in 16 states and    
leases access to existing provider networks in 32 states. The national network  
consists of approximately 3,000 hospitals, and 230,000 physicians and ancillary 
providers. ChoiceOne is compensated by receiving either a per member access fee 
or a percentage of the savings realized from accessing the ChoiceOne network.   
As of August 1, 1997, ChoiceOne had approximately 228,000 members representing  
154 payors.  After re-evaluating its strategic objectives, the Company has      
assessed that ChoiceOne is not a core business segment and has decided to sell  
the operation.  A letter of intent was entered into with a prospective buyer    
and the sale should be consummated in the Company's second quarter of fiscal    
1998.  The Company expects $.2 million in proceeds from this proposed stock     
sale.  Terms of the sale are subject to change.  There are no assurances that   
this transaction will be consummated.                                           

GOVERNMENT REGULATION                                                           

The Company is subject to extensive federal and state health care and 
insurance regulations designed primarily to protect enrollees in the Managed    
Plans, particularly with respect to government sponsored enrollees.  Such       
regulations govern many aspects of the Company's business affairs and typically 
empower state agencies to review management agreements with health care plans   
for, among other things, reasonableness of charges.  Among the other areas      
regulated by federal and state law are licensure requirements, premium rate     
increases, new product offerings, procedures for quality assurance, enrollment  
requirements, covered benefits, service area expansion, provider relationships  
and the financial condition of the owned/managed plans, including cash reserve  
requirements and dividend restrictions. There can be no assurances that the     
Company or its Managed Plans will be granted the necessary approvals for new    
products or will  maintain federal qualifications or state licensure.           

The licensing and operation of OmniCare-MI, OmniCare-TN, UltraMedix,  
PhilCare and OmniCare-LA are governed by the respective states' statutes and    
regulations applicable to health maintenance organizations.  The Managed Plans' 
licenses are subject to denial, limitation, suspension or revocation if there   
is a determination that the plans are operating out of compliance with the      
states' HMO statutes, failing to provide quality health services, establishing  
rates that are unfair or unreasonable, failing to fulfill obligations under     
outstanding agreements or operating on an unsound fiscal basis. Except for      
OmniCare-MI, the  plans are not federally-qualified HMOs and, therefore, are    
not subject to the federal HMO Act.                                             

Federal and state regulation  of health care plans and managed care   
products is subject to frequent change, varies from jurisdiction to             
jurisdiction and generally gives responsible administrative agencies broad      
discretion. Laws and regulations relating to the Company's business are subject 
to amendment and/or interpretation in each jurisdiction. In particular,         
legislation mandating managed care for Medicaid recipients is often subject to  
change and may not initially be accompanied by administrative rules and         
guidelines. Changes in federal or state governmental regulation could affect    
the Company's operations, profitability and business                            

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prospects.  While the Company is unable to predict what additional government   
regulations, if any, affecting its business may be enacted in the future or how 
existing or future regulations may be interpreted, regulatory revisions may have
a material adverse effect on the Company.                                       

INSURANCE                                                                       

  The Company presently carries comprehensive general liability, directors
and officers liability, property, business automobile, and workers'             
compensation insurance. Management believes that coverage levels under these    
policies are adequate in view of the risks associated with the Company's        
business. The management agreements with OmniCare-MI, OmniCare-TN and           
UltraMedix each require the respective Managed Plan to maintain general         
liability insurance, naming the Company as an additional insured. The Company   
or the Managed Plan is required to pay the insurance premiums under the terms   
of the respective management agreements. In addition, the Managed Plans have    
professional liability insurance that may cover liability claims arising from   
medical malpractice, with the Company named as an additional insured. No        
assurance can be given, however, as to the future availability or cost of such  
insurance, or that the Company's business risks will be maintained within the   
limits of such insurance coverage.                                              

COMPETITION                                                                     

The managed care industry is highly competitive. The Company directly 
competes with other entities that provide health care plan management services, 
some of which are nonprofit corporations and others which have significantly    
greater financial and administrative resources. The Company primarily competes  
on the basis of fee arrangements, cost effectiveness and the range and quality  
of services offered to prospective health care clients. While the Company       
believes that its experience gives it certain competitive advantages over       
existing and potential new competitors, there can be no assurance that the      
Company will be able to compete effectively in the future.                      

  The Company competes with other HMOs, PPOs and insurance companies.  The
level of this competition may affect, among other things, the operating         
revenues of the Managed Plans, and therefore, the revenues of the Company. The  
predominant competitors in southeastern Michigan are Blue Cross/Blue Shield of  
Michigan, The Wellness Plan, Total Health Plan and Health Alliance Plan. The    
predominant competitors in central and southwestern Tennessee are Access-Med    
Plus and Blue Cross/Blue Shield. The predominant competitors in central and     
southeastern Florida are PCA Century Medical, CAC Ramsay, Physician's Care Plan 
and Stay Well.  The Company's Managed Plans primarily compete on the basis of   
enrollee premiums, covered benefits, provider networks, utilization             
limitations, enrollee co-payments and other related plan features and criteria. 
Management believes that the Company's existing clients are able to compete     
effectively with their primary market competitors in these areas.               

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EMPLOYEES                                                                       

   The Company's ability to maintain its competitive position and expand its
business into new markets depends, in significant part, upon the maintenance of 
its relationships with various existing senior officers, as well as its ability 
to attract and retain qualified health care management professionals. Although  
the Company has employment agreements with several senior executives, it does   
not have, nor does it intend to pursue, employment agreements with all of its   
key personnel. Accordingly, there is no assurance that the Company will be able 
to maintain such relationships or attract such professionals.                   

 As of August 1, 1997, the Company had 427 full and part-time employees.
The Company's employees do not belong to a collective bargaining unit and       
management considers its relations with employees to be good.                   

MANAGEMENT INFORMATION SYSTEM                                                   

   Management believes that timely and relevant information is critical to a
managed care operation and utilizes its management information system to        
process claims; analyze health care utilization; support provider, member and   
employer requirements; and control administrative costs.                        

The Company has initiated a systems implementation plan to enhance its
operations, reduce costs, and improve customer service with the development of  
a proprietary client/server information system, along with a select set of      
complementary automation products that include claims scanning, claims imaging, 
electronic data interchange and various select technologies for enterprise-wide 
installation.  Functional enhancements from the existing system include premium 
invoicing, claims review and processing, case management, provider              
credentialing, financial reporting, and process re-engineering.  The emphasis   
has been the migration to open architectures that facilitate the exchange of    
information with clients and vendors, flexibility to meet and introduce         
industry trends, shortened staff training cycles, and increased overall         
operational efficiencies. Management believes that its proprietary management   
information system, when fully developed, will enable the Company to have       
highly efficient claims processing and information retrieval capabilities.      

 In January and November 1996, this proprietary system and the Company's
client/server financial system were rolled out for extensive testing at         
OmniCare-TN and UltraMedix, respectively.  Testing of new modules,              
enhancements, upgrades and integration with other software applications are     
ongoing at both locations.  Management expects to leverage the knowledge and    
resources gained from the installation of this product in Tennessee and Florida 
when it installs this product at OmniCare-MI in early 1998 and at future sites  
to maximize synergy among its operations.                                       

  The development of this client/server information technology has created
an opportunity to explore its commercial appeal.  However, until the system is  
completely functional at all of the Company's current client sites, management  
does not intend to sell this product externally. The                            

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Company's management information system operation was relocated to a separate   
site in early 1997 to facilitate a company-wide disaster recovery plan and      
establishment of a technical education facility.                                

CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS                       

The Private Securities Litigation Reform Act of 1995 provides a "safe 
harbor" for forward-looking statements to encourage management to provide       
prospective information about their companies without fear of litigation so     
long as those statements are identified as forward-looking and are accompanied  
by meaningful cautionary statements identifying important factors that could    
cause actual results to differ materially from those projected in the           
statements.  The Company desires to take advantage of this "safe harbor" and,   
accordingly, hereby identifies the following important factors which could      
cause the Company's actual financial and enrollment results to differ           
materially from any such results that might be projected, forecasted, estimated 
or budgeted by the Company in forward-looking statements.                       

1.   Inability to increase premiums and prospective or retroactive  
        reductions in premium rates commensurate with increases in medical
        costs due to utilization, government regulation, or other factors.

2.   Discontinaution of, limitations upon or restructuring of       
government-funded programs.                               

3.   Increases in medical costs, including increases in             
          utilization and costs of medical services and the effects of actions
by competitors or groups of providers.                    

4.   Adverse state and federal legislation and initiatives,         
   including limitations upon or reductions in premium payments;
      prohibition or limitation of capitated arrangements or financial
 incentives to providers; federal and state benefit mandates
       (including mandatory length of stay and emergency room coverage);
        limitations on the ability to manage care and utilization; and any
willing provider or pharmacy laws.                        

5.   The shift of employers from insured to self-funded coverage,   
resulting in reduced margins to the Company.              

6.   Failure to obtain new customer bases, retain existing          
       customer bases or reductions in work force by existing customers;
        failure to sustain commercial enrollment to maintain an enrollment
mix required by government programs.                      

7.   Termination of management agreements by the Managed Plans.     

8.   Increased competition between current organizations and the    
         entrance of new competitors and the introduction of new products by
new and existing competitors.                             

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9.   Adverse publicity and media coverage.                          

10.  Inability to carry out marketing and sales plans.              

11.  Loss or retirement of key executives.                          

12.  Governmental financial assessments or taxes to subsidize       
       uncompensated care, other insurance carriers, or academic medical
institutions.                                             

13.  Termination of provider contracts or renegotiations at less    
cost-effective rates or terms of payment.                 

14.  The selection by employers and individuals of higher           
   co-payment/deductible/coinsurance plans with relatively lower
premiums or margins.                                      

15.  The impact upon the Company's medical loss ratio of greater    
        net enrollment in higher medical loss ratio lines of business such
as Medicare and Medicaid.                                 

16.  Adverse regulatory determinations resulting in loss or         
limitations of licensure, certification or contracts with 
governmental payors.                                      

17.  Higher sales, administrative or general expenses occasioned    
        by the need for additional advertising, marketing, administrative,
or management information systems expenditures.           

18.  Increases by regulatory authorities of minimum capital,        
reserve and other financial solvency requirements.        

19.  Denial of accreditation by quality accrediting agencies,       
e.g., the National Committee for Quality Assurance (NCQA).

20.  Adverse results from significant litigation matters.           

21.  Interest rates causing a reduction of investment income, or    
 in the market value of interest rate sensitive investments.

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ITEM 2. PROPERTIES                                                              

  The Company has leased an aggregate of approximately 167,000 square feet
from which it conducts its principal operations.  The Company has leased space  
in Michigan, Tennessee, Florida, Pennsylvania, and Louisiana.  The principal    
offices of the Company are located at 1155 Brewery Park Boulevard, Suite 200,   
Detroit, Michigan, where it has leased approximately 64,000 square feet of      
office space. The Company has also leased 16,000 square feet of leased office   
space in the Renaissance Center, Detroit, Michigan, to house its management     
information system operations.  The Company has subleased approximately 44,000  
of the 67,000 square feet it leased in Philadelphia, Pennsylvania in            
anticipation of its participation in the HealthChoices program to third         
parties, and expects the facility to be fully subleased in the next fiscal      
year.  The Company intends to retain a portion of leased space to pursue        
business opportunities.  There can be no assurances that the Company will be    
successful in subleasing that portion of the facility it does not intend to use.

   The Company believes that its current facilities provide sufficient space
suitable for all of the Company's planned activities and that sufficient        
additional space will be available on reasonable terms, if needed.              

ITEM 3. LEGAL PROCEEDINGS                                                       

As previously reported by the Company, certain senior officers and the
Company were named defendants in two shareholder lawsuits filed in the United   
States District Court for the Eastern District of Michigan (the "Court") on     
August 23 and August 24, 1995.  In September 1996, these lawsuits were          
consolidated by the Court into a single cause of action.  The consolidated      
action alleged that certain senior officers and the Company issued reports and  
statements that violated federal securities laws. The Company and the officers  
contend that all material facts were disclosed during the period in question    
and that certain material facts alleged not to have been disclosed were already 
available in the financial marketplace.                                         

Nevertheless, management concluded that continued defense of the      
litigation was depleting the available insurance pool and that an unfavorable   
outcome in excess of insurance policy limits potentially could have an adverse  
impact on the Company's financial position.  Continuation of this litigation    
would have also diverted management's focus from operations.  Based on these    
facts, management pursued settlement with the plaintiff. In September 1997, the 
parties agreed to a proposed settlement requiring the release of all claims and 
damages sought by the plaintiff and payment by the Company of  $3.25 million,   
of which the Company anticipates $2.1 million to be paid by the insurance       
carrier.  The pending settlement is subject to federal court approval.  The     
Company has agreed to indemnify the named officers from monetary exposure in    
connection with the lawsuit, subject to reimbursement by any named officer, in  
the event he is found not to be entitled to such indemnification.               

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

There were no matters submitted to a vote of the Company's holders of 
common shares (the Company's only voting securities) during the fourth quarter  
of the fiscal year ended June 30, 1997.                                         

PART II 

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

The Common Shares are traded on the NYSE under the symbol "UAH". The  
following table sets forth, for the periods indicated, the high and low closing 
prices for the Common Shares on the NYSE, as reported by the NYSE for each      
quarter since July 1, 1995:                                                     

                                               HIGH        LOW
                                               ----        ---
FISCAL YEAR 1996
----------------
                         First Quarter          18 7/8      11 1/8
                         Second Quarter         11 5/8       9 1/4
                         Third Quarter          14 7/8       9 3/4
                         Fourth Quarter         15 1/8          10

FISCAL YEAR 1997
----------------
                         First Quarter          11 5/8       8 1/4
                         Second Quarter          7 5/8       5 7/8
                         Third Quarter           6 1/8       4 1/4
                         Fourth Quarter          6 3/8           4

 As of September 19, 1997, the closing price of the Common Shares on the
NYSE was $6 3/4 per share and there were approximately 196 record holders of    
the Common Shares.                                                              

The Company has not paid any cash dividends since its initial public  
offering in the fourth quarter of fiscal 1991, retaining all earnings to        
support its growth strategy. The Company currently anticipates that it will     
retain all of its earnings for use in the operation and expansion of its        
business for the foreseeable future.                                            

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ITEM 6. SELECTED FINANCIAL DATA                                                 

 The following table sets forth selected consolidated financial data for
the periods indicated:                                                          

                                                        · Enlarge/Download Table

                                                    1997       1996       1995      1994      1993  
                                                  ---------  ---------  --------  --------  --------
                                                        (in thousands, except per share data)       
                                                                                                    
OPERATING DATA (YEAR ENDED JUNE 30):                                                                
Operating revenues                                $112,549    $92,379    $59,790   $38,435   $28,286
(Loss) earnings from continuing operations        $ (5,260)   $(3,657)   $ 6,229   $ 6,470   $ 4,588
Discontinued operations, net of income taxes      $  1,845    $   909    $   367   $   912   $    71
Net (loss) earnings                               $ (3,415)   $(2,748)   $ 6,596   $ 7,382   $ 4,659
(Loss) earnings per common share from continuing                                                    
  operations                                      $  (0.80)   $ (0.56)   $  0.95   $  0.99   $  0.72
Net (loss) earnings Per Common  Share             $  (0.52)   $ (0.42)   $  1.01   $  1.13   $  0.73
Weighted average Common Shares outstanding           6,553      6,561      6,561     6,561     6,363

BALANCE SHEET DATA (JUNE 30):                                                                       
Cash and investments                              $ 17,442    $30,930    $17,537   $20,136   $18,097
Intangible assets, net                              10,557     11,546          -         -         -
Net assets of discontinued operations               19,746     14,703     10,542     9,150     8,297
Total assets                                        79,662     93,239     57,614    44,778    32,798
Medical claims and benefits payable                  8,735     25,678          -         -         -
Debt                                                23,868     21,654     10,474     5,833     2,500
Shareholders' equity                                34,406     37,822     40,508    34,189    26,806

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

RESULTS OF OPERATIONS                                                           

OVERVIEW                                                              

 In fiscal 1996, the Company acquired additional ownership in previously
unconsolidated affiliates that affect the year-to-date comparability of its     
consolidated results of operations.  In late January 1996, the Company          
purchased an additional 20.6% and 25% of the voting common stock of UltraMedix  
and OmniCare-TN, respectively.  This increased the Company's ownership in       
UltraMedix to 51% and in OmniCare-TN to 75%.  Accordingly, these majority-owned 
affiliates are included in the Company's consolidated financial results         
effective February 1996.  In September 1997, the Company announced its plans to 
sell the stock of its subsidiary, CHF.  The sale is expected to be completed in 
January 1998, but is contingent upon the buyer obtaining financing. In          
accordance with accounting literature, CHF results are reported as discontinued 
operations in the consolidated financial statements for all periods presented.  
Also, see Note 3 to the Consolidated Financial Statements. The proposed sale    
for $30 million in cash will result in an                                       

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estimated gain to the Company in 1998 of approximately $6.5 million or $1.00    
earnings per share after closing costs and income taxes, and will provide cash  
flow to reduce debt and support enhancements in existing operations.  There can 
be no assurances that this sale will be consummated.                            

Consolidated losses from continuing operations totaled $5.3 million in
1997, compared to losses of $3.7 million in 1996 and earnings of $6.2 million   
in 1995, or losses per share of $.80 in 1997 and $.56 in 1996 and earnings per  
share of $.95 in 1995.  Including discontinued operations, consolidated losses  
totaled $3.4 million in 1997 and $2.7 million in 1996 and earnings of $6.6      
million in 1995, or losses per share of $.52 in 1997 and $.42 in 1996 and       
earnings per share of $1.01 in 1995.                                            

   Results for 1997 include the pending settlement of the consolidated class
action shareholder lawsuit for $3.25 million, of which $1.15 million            
approximates the Company's expense, net of insurance coverage limits.  The      
pending settlement is subject to federal court approval.  The Company also      
established a bad debt expense in the amount of $1.1 million related to the     
valuation of an account receivable of OmniCare-TN from a third  party           
administrator and $.7 million for its investment in HealthScope. Valuation      
reserves of $1.0 million and $.1 million related to this investment  were also  
established in 1996 and 1995, respectively. Management intends to vigorously    
pursue the collection of the account receivable and, based on the rollout of    
the State of New York's mandatory Medicaid enrollment initiative, hopes to      
recover the HealthScope investment.  Additionally, in 1997 a $.3 million rent   
expense estimate was established for the difference between the Company's       
lease obligation and the expected sub-lease rental income for the remaining     
life of the Company's lease in Pennsylvania. The fiscal 1997 after-tax effect   
of these non-recurring items totaled a $.39 loss per share.                     

Net losses in the Company's Florida operations also impacted the 1997 
results in the amount of $.50 per share.  The constantly changing governmental  
environment in Florida has required the Company to change its marketing         
strategy to a commercial market focus. WITH THE REALIGNMENT OF THE MEMBERSHIP   
MIX, CONTINUED INCREASED ENROLLMENT AND OPERATIONAL IMPROVEMENTS, PARTICULARLY  
RELATED TO THE COMPLETE INTEGRATION AND TESTING OF THE CLIENT/SERVER            
INFORMATION SYSTEM, PROVIDER CONTRACTING AND UTILIZATION AND CASE MANAGEMENT    
PRACTICES, MANAGEMENT BELIEVES IT CAN REVERSE THE CURRENT LOSS TREND            
EXPERIENCED BY THE FLORIDA HMO.  The Company's fiscal 1998 results will greatly 
depend on its ability to successfully implement these goals in Florida.         

 Effective May 31, 1997, the Company's management agreement with PPC was
terminated. Earnings per share related to the Company's management of this      
contract were $.12 in 1997.  Historically, the earning contributions from this  
management agreement had been nominal.                                          

Management fee revenue in 1996 was affected by an agreement reached in
June 1996 between the Company and OmniCare-TN, pursuant to which OmniCare-TN    
agreed to reimburse the Company approximately $8.7 million for start-up costs   
and other expenses incurred for the period January 1994 through September 1995. 

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   The contract settlement expense recorded in December 1995 of $9.7 million
represented a one-time adjustment to management fee revenues and its effect on  
other related accounts based on the provisions of the revised management        
agreement between UA-TN and OmniCare-TN as approved by the State of Tennessee   
in November 1995, retroactive to January 1994. Despite the fact that the        
Company and OmniCare-TN took certain actions related to the costs reimbursed    
under the agreement, the transaction was not sufficiently documented to allow   
recognition of the same on the Company's financial statements in December 1995. 

YEAR ENDED JUNE 30, 1997 COMPARED TO YEAR ENDED JUNE 30, 1996         

  Total revenues from continuing operations increased $20.1 million (22%),
from $92.4 million in 1996 to $112.5 million in 1997.                           

Medical premium revenues were $70.4 million in 1997, of which $56.5   
million related to OmniCare-TN and $13.9 million to UltraMedix, an increase of  
$35.9 million (104%) over medical premium revenues of $34.5 million in 1996.    
Medical premiums for OmniCare-TN increased $27.8 million (97%), from $28.7      
million in 1996 to $56.5 million in 1997.  The net increase is due to 12 months 
of activity in 1997 compared to 5 months in 1996, offset by a net decrease in   
member months resulting from enrollment adjustments.  The enrollment at         
OmniCare-TN was approximately 40,100 at June 30, 1997, compared to              
approximately 48,200 at June 30, 1996, a decrease of 8,100 members or 17%.      
The State of Tennessee's disenrollment of approximately 7,000 members in the    
quarter ending December 1996 was the primary reason for the decrease.  This     
action was taken by the State based upon the return of undeliverable            
questionnaires mailed to members, which the State requested for continued       
participation.  OmniCare-TN has contested the validity of this method of        
determining the continued eligibility of the Medicaid recipients and has        
contacted approximately 3,000 of these disenrolled members to request that they 
contact the State to regain their eligibility, retroactive from the date of     
disenrollment.  The outcome of this effort is pending.                          

  Medical premiums for UltraMedix increased $8.1 million (140%), from $5.8
million in 1996 to $13.9 million in 1997.  The net increase is due to 12 months 
of activity in 1997 compared to 5 months in 1996.  UltraMedix's enrollment at   
June 30, 1997 was approximately 18,100, an increase of 7,000 (63%) from the     
June 30, 1996 enrollment of approximately 11,100 members.  UltraMedix has made  
significant enrollment gains in the commercial market since approval of its HMO 
license in October 1995.  The increase in the commercial market was due in part 
to the State of Florida's unsuccessful initiative to mandate the enrollment of  
Medicaid eligibles into managed care.  UltraMedix was selected to participate   
in this program and the contract award would have capped UltraMedix's Medicaid  
enrollment, including existing members, at approximately 48,000 during the      
contract period.  Because of legal challenges from unsuccessful bidders to the  
State's request for proposal, the initiative has been halted indefinitely.      

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To minimize the uncertainty related to rate reductions contemplated by the      
initiative, UltraMedix has retargeted its marketing efforts to expand its       
commercial business.  This has contributed to the change in UltraMedix's        
enrollment mix from 98%:2% (Medicaid-to-commercial) as of June 1996, to 53%:47% 
as of June 1997. As of September 1997, the mix was 46%:54%.                     

The average per member per month ("PMPM") premium rate in 1997 for    
OmniCare-TN was $110 and for UltraMedix $98.  BASED ON CURRENT TRENDS AND       
HISTORICAL CONTRACT ADJUSTMENTS BY THE RESPECTIVE STATE AGENCIES, MANAGEMENT    
EXPECTS A 3% TO 4% RATE INCREASE FOR THE EXISTING OMNICARE-TN MEDICAID MEMBERS  
AND 7% TO 11% INCREASE IN THE ULTRAMEDIX MEDICAID RATES. MANAGEMENT EXPECTS     
THAT THE ULTRAMEDIX PMPM ALSO WILL BE AFFECTED BY THE CHANGE IN THE MEMBERSHIP  
MIX, REFLECTING HIGHER COMMERCIAL RATES.                                        

 Management fees were $40.0 million in 1997, a decrease of $15.9 million
(28%) from fees of $55.9 million in fiscal 1996. $8.5 million of the decrease   
was due to the purchase of majority ownership interests in UltraMedix and       
OmniCare-TN in January 1996, resulting in the consolidation of these entities,  
including the elimination of inter-company management fees. $8.7 million of the 
decrease was due to an agreement reached in June 1996 between the Company and   
OmniCare-TN, pursuant to which OmniCare-TN agreed to reimburse the Company      
approximately $8.7 million for start-up costs and other expenses incurred for   
the period January 1994 through September 1995.                                 

    Operating revenues of OmniCare-MI decreased in 1997 due primarily to a net
decrease in enrollment rates of approximately 2%, which resulted in decreased   
management fees to the Company of approximately $1.4 million.  These decreases  
were offset by a $2.0 million increase in management fees from PPC,             
attributable primarily to increased PPC enrollment of approximately 52%, offset 
by a decrease in premium rates of approximately 15% and 11 months of management 
fees in 1997 compared to 12 months in 1996.                                     

The Company's management agreement with PPC was terminated pursuant to
binding arbitration, effective May 31, 1997, based in part on a dispute between 
the parties with respect to the payment of non-emergent transportation costs    
for enrollees as a marketing expense to be incurred under the management        
agreement.                                                                      

OmniCare-MI was notified in May 1997 that it had been selected to     
participate in the State of Michigan's initiative to mandate Medicaid           
enrollment into managed care organizations.  Similar to the initiative in       
Florida, the State's initiative was legally challenged by unsuccessful bidders  
responding to the State's request for proposal.  Because of these legal         
challenges, the State did not assign the Medicaid eligibles to plans that were  
awarded contracts in the bid process, but did, however, institute the rate      
reduction component of this new program effective July 1997.  With the          
indefinite delay in the assignment of approximately 90,000 eligible recipients  
and the implementation of the rate reductions of 10% to 15%, the operating      
revenues of OmniCare-MI and the resulting management fees to the Company are    
likely to be affected in 1998.  There can be no assurances that OmniCare-MI can 
control health care costs at the rate of the premium reductions.                

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Total expenses before income taxes from continuing operations totaled 
$119.0 million in 1997, compared to $95.8 million in 1996, an increase of $23.2 
million or 24%.                                                                 

Of the total medical service expenses of $57.8 million in 1997, $45.4 
million relates to OmniCare-TN and $12.4 million to UltraMedix, an increase of  
$27.9 million (93%) over medical service expenses of $29.9 million in 1996.  The
percentage of medical service expenses to medical premium revenues, or the      
medical loss ratio ("MLR"), was 80% for OmniCare-TN and 88% for UltraMedix in   
1997.  The OmniCare-TN MLR for 1997 was positively affected by the State of     
Tennessee's $2.4 million settlement to adjust the amount of claims saving paid  
and/or accrued to the State of Tennessee prior to the Plan obtaining its        
TennCare HMO license and the recognition of duplicate claims paid to providers. 

 EXCLUDING THESE NON-RECURRING ADJUSTMENTS, MANAGEMENT BELIEVES THAT THE
MLR FOR OMNICARE-TN COULD INCREASE 3% TO 6% OVER THE NEXT SEVERAL QUARTERS.     
This increase could be offset by an anticipated enrollment increase as a result 
of the Plan obtaining its commercial HMO license and expanding its service      
area.  The Company also recently implemented a claims scanning system at        
OmniCare-TN. Management believes this new capability will greatly enhance the   
Plan's ability to improve operating efficiencies related to claims processing.  

    MANAGEMENT ALSO EXPECTS A 4% TO 7% DECREASE IN THE MLR FOR ULTRAMEDIX AS A
RESULT OF AN EXPECTED INCREASE IN THE COMMERCIAL MEMBERSHIP BASE, RENEGOTIATION 
OF PROVIDER CONTRACTS, NEW SYSTEMS IMPLEMENTATION AND OTHER CORRECTIVE ACTIONS  
TO IMPROVE UTILIZATION AND CASE MANAGEMENT PRACTICES.  Some of these actions    
will also be instituted at OmniCare-TN.                                         

Marketing, general and administrative expenses ("MG&A") increased $2.7
million (5%), from $50.1 million in 1996 to $52.8 million in 1997, due to the   
following: (i) MG&A for the Company's operation of PPC increased $1.0 million,  
but PPC-related MG&A as a percentage of management fee revenues decreased 9%    
from 95% in 1996 to 86% in 1997, due primarily to the mandated Medicaid         
initiative that increased enrollment without a corresponding marketing effort;  
(ii) MG&A for corporate headquarters, including the cost to operate             
OmniCare-MI, increased $1.9 million, and MG&A as a percentage of management fee 
revenues increased 9%, from 93% in 1996 to 102% in 1997, due to several         
factors, including: a) a $1.4 million decrease in management fees from          
OmniCare-MI; b) an average 5% salary rate increase, and c) a $.3 million        
adjustment to increase rent expense in 1997 calculated as the difference        
between the lease obligations of the Company and the estimated rental income    
from sub-tenants for the remaining life of the Company's lease in Pennsylvania; 
and (iii) a net decrease of approximately $200,000 related to the Company's     
Florida and Tennessee operations.                                               

   Equity in net losses of unconsolidated affiliates decreased approximately
$.7 million, from $.7 million in 1996 to zero in 1997, due to the Company's     
acquisition of a majority interest in OmniCare-TN and UltraMedix in January     
1996.                                                                           

  Depreciation and amortization in 1997 was $4.1 million, compared to $3.4
million in 1996, an increase of $.7 million (21%).  The increase was due        
primarily to the amortization of goodwill related to acquisitions and computer  
software.                                                                       

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Interest expense increased approximately $.3 million (27%), from $1.1 
million in 1996 to $1.4 million in 1997, due to increased borrowings against    
the line of credit.                                                             

    Of the bad debt expense of $1.8 million in 1997, $1.1 million relates to a
valuation reserve established to estimate the net recovery of $1.2 million in   
refundable advances made by OmniCare-TN to a third party administrator. The     
third party administrator has denied the obligation and, as a result, the       
Company is pursuing legal action to collect the receivable.  The balance of the 
1997 bad debt expense is due to an additional write-down of approximately $.7   
million recorded to reduce the Company's $4.0 million investment in             
HealthScope.  Prior year reserves totaled $1.1 million.  As the investment was  
capital in nature, no tax credits have been taken against the cumulative        
reserve of $1.8 million.  MANAGEMENT BELIEVES THAT THE CONTINUED OPERATIONAL    
IMPROVEMENTS MADE BY THE NEW MANAGEMENT OF HEALTHSCOPE, THE REDUCTION OF        
MONTHLY OPERATING COST, CLIENT GROWTH AND THE ANNOUNCED ROLLOUT OF THE STATE OF 
NEW YORK'S MANDATORY MEDICAID INITIATIVE IN EARLY 1998, ARE ALL CRITICAL        
FACTORS IN DETERMINING THE ULTIMATE RECOVERABILITY OF THIS INVESTMENT.          

   The contract settlement expense recorded in December 1995 of $9.7 million
represented a one-time adjustment to management fee revenues and its effect on  
other related accounts based on the provisions of the revised management        
agreement between UA-TN and OmniCare-TN, as approved by the State of Tennessee  
in November 1995, retroactive to January 1994. Despite the fact that            
OmniCare-TN agreed to reimburse the Company approximately $8.7 million in June  
1996 for the start-up and other costs incurred by the Company between January   
1994 and September 1995, the transaction was not sufficiently documented to     
allow recognition of the same on the Company's financial statements in December 
1995.                                                                           

The estimated Company expense related to the pending shareholder class
action lawsuit settlement, net of insurance coverage, is $1.15 million.  The    
pending settlement is subject to federal court approval.  See also - "Legal     
Proceedings".                                                                   

As a result of the foregoing, the Company recognized losses from      
continuing operations before income taxes of $6.5 million in 1997, compared to  
losses from continuing operations before income taxes of $3.4 million in 1996,  
a $3.1 million change. The federal statutory tax rate for continuing operations 
for 1997 and 1996 was approximately 34%.  Goodwill amortization related to      
equity investments, equity losses from unconsolidated affliates and losses      
related to capital investments not deductible for tax purposes resulted in an   
effective tax rate of approximately 19% in 1997.  These differences resulted in 
a tax expense on the 1996 losses.  Net losses from continuing operations in     
1997 were $5.3 million, compared to net losses from continuing operations of    
$3.7 million in 1996, a change of $1.6 million.                                 

Earnings from discontinued operations, net of income taxes, was $1.8  
million in 1997, compared to $.9 million in 1996, an increase of $.9 million.   
This change is due primarily to a contract entered in June 1996 with the State  
of Maryland's workers' compensation insurance fund.                             

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YEAR ENDED JUNE 30, 1996 COMPARED TO YEAR ENDED JUNE 30, 1995         

  Total revenues from continuing operations increased $32.6 million (55%),
from $59.8 million in 1995 to $92.4 million in 1996.                            

Medical premium revenues were $34.5 million in 1996, of which $28.7   
million related to OmniCare-TN and $5.8 million to UltraMedix.  The average     
1996 PMPM for OmniCare-TN was $105 and for UltraMedix $98.                      

   Management fees decreased $2.0 million (3%) to $55.9 million in 1996 from
$57.9 million in 1995.  The change was attributable to a decrease in management 
fees from the owned Managed Plans of $3.5 million, from $20.7 million in 1995   
to $17.2 million in 1996, offset by an increase from the operated Managed Plans 
of $1.5 million, from $37.2 million in 1995 to $38.7 million in 1996.  Of the   
$3.5 million decrease in management fees from the owned Managed Plans, $1.8     
million and $1.7 million were from UltraMedix and OmniCare-TN, respectively.    
The approximate $1.8 million decrease in management fees from UltraMedix was    
due to increased cost reimbursement of $1.0 million, offset by the elimination  
of management fees due, to post-acquisition consolidation of $2.8 million.      

The decrease in management fees from OmniCare-TN of approximately $1.7
million (12%) was due to: (i) a 29% decrease in enrollment from approximately   
62,800 members at June 30, 1995 to approximately 48,200 members at June 30,     
1996 as a result of the Bureau of TennCare's decisions to terminate coverage    
for Working Uninsured who were delinquent in the payment of premiums            
to the State under the TennCare program and to terminate approximately 3,400    
members in April 1996 from whom questionnaires sent by TennCare were returned   
undeliverable.  The net effect of these enrollment adjustments was a decrease   
in management fees of  $4.6 million;  (ii) the change in the net management fee 
percentage charged to the Plan decreased the management fees due to the Company 
by approximately $4.3 million, and (iii) a $3.4 million decrease in management  
fee due to post-acquisition consolidation; offset by (a) an approximate $1.9    
million increase in management fees due to TennCare's increase in premium       
rates, and (b) the Plan's decision to reimburse the Company approximately $8.7  
million in June 1996 for the start-up and other costs incurred by the Company   
between January 1994 and September 1995.                                        

   Of the $1.5 million increase in management fees from the operated Managed
Plans, increased operating revenues of PPC due to increased enrollment of       
approximately 26% resulted in increased management fees of approximately $1.8   
million, offset by a net decrease in management fees from OmniCare-MI of        
approximately $.3 million. The Company's management agreement with PPC was      
terminated effective May 31, 1997.                                              

Total expenses before income taxes from continuing operations totaled 
$95.8 million in 1996, compared to $49.0 million in 1995, an increase of $46.8  
million or 96%.                                                                 

Of the total medical service expenses of $29.9 million in 1996, $24.6 
million relates to                                                              

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OmniCare-TN and $5.3 million to UltraMedix.  The MLR was 86% for OmniCare-TN    
and 93% for UltraMedix.                                                         

MG&A increased $6.4 million (15%), from $43.7 million in 1995 to $50.1
million in 1996, due to the following: (i) MG&A for the Company's operation of  
PPC increased $1.6 million, but PPC - related MG&A as a percentage of           
management fee revenues remained constant at 95% for 1996 and 1995, due         
primarily to the mandated Medicaid initiative that increased enrollment without 
the corresponding marketing effort; (ii) MG&A for corporate headquarters,       
including the cost to operate OmniCare-MI, increased $4.8 million, and MG&A as  
a percentage of management fee revenues increased 21%, from 77% in 1995 to 93%  
in 1996, due to several factors, including: a) increased payroll and            
promotional efforts to expand the provider network, product development and     
preparation for NCQA accreditation reviews, and b) an approximately $.5 million 
increase related to the Company's development costs in Pennsylvania, Louisiana, 
Georgia and  Illinois, and (iii) a net decrease of approximately $.1 million    
related to the Company's Florida and Tennessee operations.                      

   Equity in net losses of unconsolidated affiliates decreased $2.1 million,
from $2.8 million in 1995 to $.7 million in 1996, due to the Company's          
recognition of its share of the losses as a shareholder of OmniCare-TN (50%)    
and UltraMedix (30.4%) through January 1996, at which time the Company acquired 
a majority interest in these Plans.                                             

  Depreciation and amortization in 1996 was $3.4 million, compared to $1.9
million in 1995, an increase of $1.5 million (79%).  The increase was due       
primarily to the amortization of goodwill related to acquisitions and computer  
software.                                                                       

The approximate $.6 million (120%) increase in interest expense, from 
approximately $.5 million in 1995 to $1.1 million in 1996, was due to increased 
borrowings against the line of credit.                                          

 Bad debt expense of $1.0 million in 1996 relates to a valuation reserve
established to estimate the net recoverability of the Company's $4.0 million    
investment in HealthScope.  Bad debt expense of approximately $.1 million       
related to this investment was also established in 1995.                        

   The contract settlement expense recorded in December 1995 of $9.7 million
represented a one-time adjustment to management fee revenues, and its effect on 
other related accounts, based on the provisions of the revised management       
agreement between UA-TN and OmniCare-TN, as approved by the State of Tennessee  
in November 1995, retroactive to January 1994. The effect on management fee     
revenues for the period January 1, 1994 to September 30, 1995, as adjusted in   
December 1995, represents a reduction in management fees of approximately $11.7 
million, offset by a decrease in goodwill of approximately $.6 million related  
to the Company's 50% equity ownership in OmniCare-TN at the time. Additionally, 
the contract settlement charge was reduced by the $1.4 million reversal of the  
valuation allowance established in June 1995, representing a charge to adjust   
the carrying value of the Company's investments, advances and notes receivable  
from and related to OmniCare-TN to their estimated fair values as of June 30,   
1995.                                                                           

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As a result of the foregoing, the Company recognized losses from      
continuing operations before income taxes of $3.4 million in 1996, compared to  
earnings from continuing operations before income taxes of $10.8 million in     
1995, a $14.2 million change. The federal statutory tax rate for continuing     
operations for 1996 and 1995 was approximately 34% and 35%, respectively.       
Goodwill amortization related to equity investments, equity losses from         
unconsolidated affliates and losses related to capital investments not          
deductible for tax purposes resulted in an effective tax rate of zero in 1996   
and approximately 42% in 1995.  Net losses from continuing operations in 1996   
were $3.7 million, compared to net earnings from continuing operations of $6.2  
million in 1995, a change of $9.9 million.                                      

Earnings from discontinued operations, net of income taxes, was       
approximately $.9 million in 1996, compared to approximately $.4 million in     
1995, an increase of $.5 million.  This change is due primarily to the number   
of new contracts entered into during the year.                                  

YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994         

  Total revenues from continuing operations increased $21.4 million (56%),
from $38.4 million in 1994 to $59.8 million in 1995.                            

  Management fees were $57.9 million in 1995, an increase of $20.6 million
(55%) over fees of $37.3 million in 1994, due in part to: (i) increased         
operating revenues of OmniCare-MI, due primarily to increased enrollment and    
premium rates of 8% and 4%, respectively, that resulted in increased management 
fees of approximately $2.8 million; (ii) increased operating revenues of PPC,   
due primarily to increased enrollment offset by a decrease in premium rates of  
22% and 2%, respectively, that resulted in increased management fees of         
approximately $1.2 million; (iii) a net decrease in management fees of          
approximately $.1 million, due to OmniCare-MI's recognition of retroactive rate 
adjustments in 1994, and (iv) an increase in management fees of $1.2 million,   
from approximately $.7 million in 1994 to $1.9 million in 1995, related to the  
Company's administration of OmniCare-MI's COB program.                          

    The Company's management of UltraMedix also contributed to the increase in
management fees. Under the UltraMedix management agreement, which became        
effective February 1, 1994, the Company was reimbursed the administrative cost  
to manage the Plan, plus a percentage of the Plan's income before income taxes  
and extraordinary expenses.  Effective February 1995, the management agreement  
was amended to provide the Company with reimbursement of the administrative     
cost to manage the Plan, plus 3/4 of 1% of the Plan's gross revenues.  In 1995, 
the Company recognized $5.0 million in management fees compared to $1.3 million 
in 1994, an increase of $3.7 million.                                           

  The Company's management of OmniCare-TN also contributed to the increase
in management fees.  Management fees in 1995 were $15.6 million, an increase of 
$11.8 million over fees of $3.8 million in 1994.  The OmniCare-TN management    
agreement with UA-TN was effective for five months in 1994, compared to 12      
months in 1995.  In November 1994, the TennCare Bureau notified the Company     
that management fees charged under the original                                 

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management agreement, effective February 1, 1994, exceeded the guidelines of    
the TennCare contract.  In April 1995, the Company submitted a revised          
management agreement to the TennCare Bureau.  In June 1995, the State notified  
the Company of its rejection of the revised agreement.  The Company submitted a 
second revised management agreement that was approved by the State in November  
1995, retroactive to January 1994.                                              

The Company proposed to the Board of Directors of OmniCare-TN that a  
second Promissory Note payable solely from future non-TennCare related revenues 
to UA-TN be issued for the amount of any accrued management fees not otherwise  
payable under the second revised management agreement, or from interest         
earnings and OmniCare-TN's share of savings not required to be returned to the  
State of Tennessee under TennCare regulations.  On October 5, 1995, the Board   
of Directors of OmniCare-TN approved such additional Promissory Note up to an   
aggregate principal amount of $6.0 million, to be repaid solely from future     
non-TennCare related revenues.                                                  

Interest and other income in 1995 were $1.9 million, an increase of   
approximately $.7 million (58%) over income of $1.2 million in 1994.            
Approximately $.3 million (43%) of the increase was due to interest income on   
notes due from OmniCare-TN and UltraMedix.                                      

Total expenses before income taxes from continuing operations totaled 
$49.0 million in 1995, compared to $28.7 million in 1994, an increase of $20.3  
million or 71%.                                                                 

 MG&A increased $16.2 million (59%), from $27.5 million in 1994 to $43.7
million in 1995, and represented approximately 74% and 75% as a percentage of   
management fees in 1994 and 1995, respectively.  The Company's activities in    
Tennessee and Florida represented approximately $10.7 million of the increase,  
due primarily to 12 months of operations in 1995 compared to approximately 5    
months in 1994. Included in the MG&A increase for Tennessee and Florida was $.5 
million representing a charge to earnings in connection with an estimate of the 
effect of potential OmniCare-TN enrollment adjustments and $1.8 million         
representing a charge to adjust the carrying value of the Company's             
investments, advances and notes receivable from related parties to their        
estimated fair value at June 30, 1995.                                          

   The MG&A increase related to operations of the Corporate headquarters and
PPC was $4.0 million and $1.5 million, respectively.  Included in the Corporate 
headquarters increase was $1.3 million related to the Company's development     
costs in Pennsylvania and Louisiana.                                            

   Equity in net losses of unconsolidated affiliates of $2.8 million in 1995
was due to the Company's recognition of its share of the losses as a            
shareholder of OmniCare-TN (50%) and UltraMedix (30.4%) of $2.6 million and     
approximately $.2 million, respectively.  Net equity losses in 1994 were        
approximately $.1 million and related to the Company's investment in UltraMedix.
The effective dates of the Company's investments in UltraMedix and OmniCare-TN  
were March 1994 and July 1994, respectively.  In January 1996, the Company      
acquired a majority interest in these entities.                                 

 The $1.1 million (138%) increase in depreciation and amortization, from
approximately                                                                   

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$.8 million in 1994 to $1.9 million in 1995, was due to depreciation taken on   
furniture and equipment acquired over the past 24 months and the amortization   
of goodwill related to investments in affiliates.                               

The approximate $.2 million (67%) increase in interest expense, from  
approximately $.3 million in 1994 to approximately $.5 million in 1995, was due 
primarily to interest costs on the term loan agreement entered into in August   
1993, and increased borrowings against the line of credit.                      

Bad debt expense of approximately $.1 million in 1995 represents a    
valuation reserve on the Company's investment in HealthScope.                   

As a result of the foregoing, the Company recognized earnings from    
continuing operations before income taxes of $10.8 million in 1995, compared to 
earnings from continuing operations before income taxes of $9.8 million in      
1994, a $1.0 million change. The federal statutory tax rate for continuing      
operations for 1995 and 1994 was approximately 35%. Goodwill amortization       
related to equity investments and equity losses from unconsolidated affliates   
not deductible for tax purposes resulted in an effective tax rate of 42% in     
1995 and 34% in 1994.  Net earnings from continuing operations in 1995 were     
$6.2 million, compared to net earnings from continuing operations of $6.5       
million in 1994, a change of $.3 million.                                       

Earnings from discontinued operations, net of income taxes, was       
approximately $.4 million in 1995, compared to approximately $.9 million in     
1994, a change of $.5 million.                                                  

RECENTLY ENACTED PRONOUNCEMENTS                                                 

Effective July 1, 1996, the Company adopted Statement of Financial    
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived      
Assets and for Long-Lived Assets to be Disposed Of".                            

In February 1997, the Financial Accounting Standards Board issued     
Statement of Financial Accounting Standard No. 128 ("SFAS 128"), Earnings Per   
Share, which (1) replaces the presentation of primary earnings per share (EPS)  
with a presentation of basic EPS; (2) requires dual presentation of basic and   
diluted EPS on the face of the consolidated statements of operations regardless 
of whether basic and diluted EPS are the same; and (3) requires a               
reconciliation of the numerator and denominator used in computing basic and     
diluted EPS.  Basic EPS excludes dilution and is computed by dividing income    
available to common stockholders by the weighted-average number of common       
shares outstanding for the period.  Diluted EPS reflects the potential dilution 
that could occur if securities or other contracts to issue common stock were    
exercised or converted into common stock or resulted in the issuance of common  
stock that then shared in the earnings of the entity.  Diluted EPS is computed  
similarly to fully diluted EPS pursuant to Accounting Principles Board Opinion  
15.  SFAS 128 is effective for financial statements issued for periods ending   
after December 15, 1997, including interim periods; earlier application is not  
permitted. SFAS 128 requires restatement of all prior period EPS data           
presented.  The Company does not expect the effects of applying SFAS 128 to be  
significant.                                                                    

    Statement of Financial Accounting Standards No. 123, "Accounting for Stock
Based Compensation" ("SFAS 123"), is effective for fiscal years beginning after 
December 15, 1995.                                                              

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Management has elected to follow the provisions of Accounting Principles Board  
Opinion No. 25, as allowed under SFAS 123.  The adoption of SFAS 123 has not    
had a material effect on the Company's consolidated financial                   
statements.                                                                     

LIQUIDITY AND CAPITAL RESOURCES                                                 

At June 30, 1997, the Company had (i) cash and cash equivalents and   
short-term marketable securities of $17.4 million, compared to $30.9 million at 
June 30, 1996, (ii) working capital of negative $13.0 million, compared to $6.9 
million at June 30, 1996, and (iii) a current assets-to-current-liabilities     
ratio of .67-to-1 and 1.2-to-1 at June 30, 1997 and June 30, 1996, respectively.
The principal sources of funds for the Company during the 12 months ended       
June 30, 1997 were long-term borrowings of $5.1 million,  proceeds from the     
sale of furniture and equipment of approximately $.4 million, investments       
and advances to affiliates of approximately $.1 million, offset by $9.8 million 
used in net operating activities, net purchase of marketable securities of $.4  
million, furniture and equipment additions of $3.3 million, investing cash used 
in discontinued operations of $3.2 million, $2.9 million to repay long-term     
debt and repurchase of common stock of approximately $.1 million.               

In November 1995, the Company entered into an agreement with a bank   
amending an earlier loan agreement that increased the line of credit facility   
and converted prior borrowings of $6.1 million under a line of credit to a term 
loan.  Based on the revised agreement, the Company has a $20 million unsecured  
line-of-credit commitment that expires in February 1998, and bears interest at  
prime, or 1% over the one, two, three or six-month LIBOR rate.  The Company's   
outstanding line of credit borrowings at June 30, 1997 were $19.4 million. The  
$6.1 million term loan bears interest at prime, or 1.25% over the one, two,     
three or six-month LIBOR rate. The monthly principal payable is approximately   
$126,000, with the loan due in November 1999.  The outstanding balance at June  
30, 1997 is $3.5 million.                                                       

In August 1993, the Company entered into a $7.0 million bank term loan
agreement.  The term loan bears interest at prime, or 1.5% over one, three, or  
six-month LIBOR rate, not to exceed a total rate of 5% per annum.  The monthly  
principal payable is approximately $117,000, with the loan due in August 1998.  
Covenants of the term loan agreement provide for certain net worth and          
financial ratio requirements.  At June 30, 1997, the Company was in violation   
of a covenant that set a floor on a debt service coverage ratio.  The Company   
obtained a waiver for this provision from the lending institution.  The loan is 
collateralized by all of the assets of the Company. The Company's outstanding   
borrowings at June 30, 1997 were approximately $1.0 million.                    

In previous fiscal years, the Company provided a $1 million letter of 
credit on behalf of                                                             

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OmniCare-LA and a $1.0 million capital contribution to OmniCare-LA, and a $2.1  
million capital contribution to PhilCare, in satisfaction of applicable         
statutory requirements. In addition, the Company funded $4.1 million on behalf  
of OmniCare of Georgia, Inc. in satisfaction of applicable reserve and net      
worth requirements. The foregoing funds were provided by the Company from the   
line of credit arrangement.  In October 1996, the Company withdrew its HMO      
licensure application from Georgia, along with the $4.1 million used to fund    
the statutory reserve requirements. The Company anticipates additional funding  
requirements for its initiatives in Louisiana and Pennsylvania to approximate   
an aggregate amount of $7 million, and to be applied toward the establishment   
of statutory reserves and payment of operational costs.  There can be no        
assurance that the Company will fund these requirements.  The source for these  
funding requirements is anticipated from third party investors and borrowings.  

   The Company anticipates that additional cash flow and working capital may
be necessitated by business expansion needs (including potential acquisitions)  
and new marketing program requirements. The Company has submitted and expects   
to continue to submit proposals to governmental, quasi-governmental and private 
entities to provide managed care services. Management believes that as it       
continues to pursue other contractual relationships, the Company's cash         
reserves, marketable securities, future cash flows from operations and proceeds 
from borrowings and the sale of CHF  will be sufficient to enable the Company   
to continue to develop its operations, support its anticipated business         
expansion and satisfy its working capital needs for the foreseeable future.     
The proposed sale of CHF for $30 million in cash is expected to reduce debt by  
approximately $16 million and to provide adequate cash for other Company        
pursuits.                                                                       

RECENT INITIATIVES                                                              

    In May 1997, the Company responded to a request for proposals from a North
Carolina-based organization (the "NCO") to provide HMO management services.     
The NCO conducted a site visit during July 1997.  The Company is one of two     
finalists for a management and development contract.  It is anticipated that    
final negotiations will be completed by the NCO with the final decision to be   
made during the third quarter of fiscal 1998.                                   

EFFECTS OF INFLATION                                                            

Management believes that the Company's cost controls, risk management 
programs and related procedures will allow the Company to substantially         
mitigate the effects of any inflation.                                          

ITEM 8. FINANCIAL STATEMENTS                                                    

The consolidated financial statements, notes and the report of the    
independent certified public accountants thereon are presented beginning at     
page F-1 of this Form 10-K and are hereby incorporated by reference into this   
Item 8.                                                                         

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

Not applicable                                                  
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT                     

Identification of Directors and Executive Officers.  Information      
concerning the directors and executive officers of the Company set forth below  
is as of September 19, 1997:                                                    

                                                                · Download Table

           NAME             AGE                     POSITION HELD                   
           ----             ---                     -------------                   
                                                                                    
Julius V. Combs, M.D.       66   Chairman and Chief Executive Officer               
Ronald R. Dobbins           62   President and Chief Operating Officer              
Anita C. R. Gorham          56   Secretary                                          
Osbie Howard                54   Senior Vice President, UA-Tennessee                
Louis J. Nicholas           58   Senior Vice President, Chief Executive Officer, CHF
Jagannathan Vanaharam       56   Senior Vice President, Finance and Treasurer       
John S. Zaleskie            55   Senior Vice President, UA-Florida                  
Gail Pabarue Bennett        41   Vice President, Legal Affairs                      
Danny H. McNeal             36   Vice President, Planning and Development           
Francisco Ramos             40   Vice President, Management Information Systems     
William C. Sharp, M.D.      47   Vice President, Medical Services                   
William C. Brooks           67   Director                                           
Vivian L. Carpenter, Ph.D.  44   Director (1)                                       
William B. Fitzgerald, Esq. 55   Director                                           
Harcourt G. Harris, M.D.    69   Director                                           
Ronald M. Horwitz, Ph.D.    59   Director (1)                                       
Emmett S. Moten, Jr.        53   Director (1)                                       

(1)  As required by Michigan law, directors Carpenter, Horwitz and  
       Moten, have been designated "independent directors" by the Board.

There are no family relationships among executive officers or other   
significant employees.  None of the executive officers, except as described     
below, is a party to or otherwise involved in any legal proceedings adverse to  
the Company or its subsidiaries.  Dr. Combs, Mr. Dobbins and Mr. Vanaharam were 
named as defendants in the shareholder class action lawsuit                     

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recently settled by the Company. See also "Legal Proceedings."  The following   
information indicates the business experience of each officer and director      
during the prior five years:                                                    

Julius V. Combs, M.D. has been the Company's Chairman of the Board and
Chief Executive Officer, as well as a director of the Company since its         
inception. His current term as a director expires at the Annual Meeting of      
Shareholders to be held in 1999. He is Chairman of the Board's Executive        
Committee and is a member of the Board's Compensation and Finance, Investment   
and Planning Committees. Dr. Combs is also a director and Chairman of           
UltraMedix, Chairman Emeritus of the Board of Trustees of OmniCare-MI, and      
President and director of OmniCare-TN.  Dr. Combs was in private medical        
practice from 1964 to 1995.                                                     

   Ronald R. Dobbins has been President and Chief Operating Officer, as well
as a director of the Company since its inception. His current term expires at   
the Annual Meeting of Shareholders to be held in 1999. Mr. Dobbins is Chairman  
of the Board's Finance, Investment and Planning Committee and a member of the   
Board's Executive and Compensation Committees. Mr. Dobbins is also President of 
OmniCare-MI, as well as a member of its Board of Trustees. He is also a         
director of UltraMedix and OmniCare-TN.  He is a member of the Board of         
Directors of Michigan National Bank/Michigan National Corporation, Golden State 
Mutual Life Insurance Company and a member of the governing board of the        
American Association of Health Plans.                                           

 Anita C. R. Gorham has been the Secretary and a director of the Company
since 1984. Her current term expires at the Annual Meeting of Shareholders to   
be held in 1998. She is Chairwoman of the Board's Compensation Committee and a  
member of its Executive and Nominating Committees.  Ms. Gorham is also a member 
of the Board of Trustees of OmniCare-MI.  Ms. Gorham has been employed by       
Central Michigan University, Troy, Michigan, since 1987.  She has served as     
Academic Advisor and Regional Manager for Academic Services.  She is currently  
Associate Director for Professional Development and a faculty member.  Ms.      
Gorham is also a faculty member at Detroit College of Business.                 

Osbie Howard joined OmniCare-TN in June 1995 as Executive Director of 
OmniCare-TN and, in November 1995, was appointed Senior Vice President of the   
Company.  Mr. Howard previously served as Treasurer of the City of Memphis, a   
position he had held since January 1992.  From June 1979 to April 1988, Mr.     
Howard was executive vice president of the Tennessee Valley Center for Minority 
Economic Development and from April 1988 to January 1992, he was an officer     
with a real estate development, property management and financial services      
concern.                                                                        

Louis J. Nicholas joined the Company in May 1993 as a Senior Vice     
President and director following the Company's acquisition of CHF-HPM Limited   
Partnership. His current term expires at the Annual Meeting of Shareholders to  
be held in 1997. He is a member of the Board's Compensation Committee.  Mr.     
Nicholas is also the Chairman, President and Chief Executive Officer and a      
director of CHF. He was formerly the sole shareholder of CHF, Inc., the general 
partner of CHF-HPM Limited Partnership.  Mr. Nicholas founded CHF, Inc. in      
1988.                                                                           

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   Jagannathan Vanaharam became Senior Vice President of Finance in 1991 and
Treasurer in 1990. From 1985 to 1990, Mr. Vanaharam was the Vice President of   
Finance. From 1976 to 1985, Mr. Vanaharam served in various accounting          
capacities with OmniCare-MI and is currently a director and treasurer of        
OmniCare-TN and UltraMedix.                                                     

John S. Zaleskie joined the Company in September 1995 as Executive    
Director/CEO of UltraMedix.  In November 1995, Mr. Zaleskie was appointed       
Senior Vice President of the Company. From March 1993 to February 1994, Mr.     
Zaleskie previously served UltraMedix as Vice President of Corporate            
Administration, Personnel and Management Information Systems before joining     
Information Network Corporation, a provider of administrative and claims        
systems support for managed care organizations, as director of sales and        
marketing.  Prior to this, Mr. Zaleskie served in a variety of marketing and    
management positions with IBM Corporation over a 33-year period.  Mr. Zaleskie  
is also a member of the Board of Directors of UltraMedix.                       

Gail Pabarue Bennett was appointed Vice President of Legal Affairs in 
August 1997.  Prior to joining the Company, Ms. Bennett was a partner at        
Bodman, Longley & Dahling, LLP, a law firm based in Detroit, Michigan from 1993 
to 1997.   From 1991 to 1993 Ms. Bennett was a partner at Kitch, Drutchas,      
Wagner & Kenny, P.C..  Ms. Bennett serves on the Board of Directors of the      
Michigan Society of Health Care Attorneys, and has been a member of the State   
Bar of Michigan since 1985.                                                     

  Danny H. McNeal was appointed Vice President of Planning and Development
in August 1997.  He was Assistant Vice President of Planning and Development    
from July 1994 to August 1997, and Director of New Business Development and     
Research and Development Analyst from 1992 to 1994.  Mr. McNeal had been        
Business Controller for Corning Incorporated prior to joining the Company.  Mr. 
McNeal is a CPA and an Administrative Services Manager.                         

 Francisco Ramos joined the Company in 1992 as Chief Information Officer
and became Vice President of Management Information Services in 1994. He was    
formerly employed by Information Associates, a subsidiary of Dun & Bradstreet   
Software, after 10 years with Young and Rubicam. Mr. Ramos has served in        
various management capacities of corporate technology and possesses over 17     
years of information systems experience.                                        

    William C. Sharp, M.D. joined the Company in May 1993 as Vice President of
Medical Services. From 1990 to 1993 he was the Medical Director for the         
Company's CountyCare and TPA/PPO programs on a consulting basis. Dr. Sharp has  
also been involved in the private practice of medicine for 19 years,            
specializing in internal medicine. He is also an Assistant Professor at Wayne   
State University Medical School, Department of Internal Medicine. Dr. Sharp is  
also a Fellow of the American College of Physicians and of the American College 
of Medical Quality.                                                             

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William C. Brooks was appointed to the Board of Directors in September
1997.  His current term expires at the Annual Meeting of Shareholders to be     
held in 1998.  He is a member of the Board's Finance, Investment and Planning   
Committee.  Mr. Brooks retired in 1997 from General Motors Corporation,         
Detroit, Michigan, as Vice President, Corporate Affairs, after serving in       
various executive positions beginning in 1973.  He is a member of the Board of  
Directors of the Louisiana-Pacific, DTE Energy Company and Detroit Edison       
Company and Chairman of Entech Human Resources Consulting Services, Inc.        

Vivian L. Carpenter, Ph.D. was appointed to the Board of Directors in 
April 1997.  Her current term expires at the Annual Meeting of Shareholders to  
be held in 1998.  She is a member of the Board's Audit, Executive and Nominating
Committees.  Dr. Carpenter is Assistant Dean and Associate Professor of         
Accounting at Florida A & M University's School of Business and Industry,       
Tallahassee, Florida, where she has served in that capacity since June 1995.    
Prior to that, Dr. Carpenter served as Associate Professor and Director of      
Academic Programs at Florida A & M from August 1992.                            

William B. Fitzgerald, Esq. was appointed to the Board of Directors in
April 1997.  His current term expires at the Annual Meeting of Shareholders to  
be held in 1997.  He is a member of the Board's Finance, Investment and         
Planning Committee.  From 1989 to the present, Mr. Fitzgerald has been a        
principal of Fund Administration Services in Grosse Pointe Farms, Michigan,     
providing management and consulting services to self-funded insurance programs. 
Since 1990, he has also been an attorney at the law firm of Timmis and Inman    
in Detroit, Michigan. Mr. Fitzgerald is also on the Board of Trustees of        
OmniCare-MI.                                                                    

 Harcourt G. Harris, M.D. has been a director of the Company since 1985.
His current term expires at the Annual Meeting of Shareholders to be held in    
1998. He is the Chairman of the Board's Nominating Committee and a member of    
the Board's Executive Committee. He is also Chairman of the Board of Trustees   
of OmniCare-MI. Dr. Harris, now retired, was involved in the private practice   
of medicine for 30 years, specializing in internal medicine.                    

   Ronald M. Horwitz, Ph.D. was appointed to the Board of Directors in April
1997. His current term expires at the Annual Meeting of Shareholders to be held 
in 1998.  He is a member of the Board's Audit and Finance, Investment and       
Planning Committees.  Dr. Horwitz is a Professor of Finance at Oakland          
University School of Business Administration, in Rochester, Michigan, where he  
has served in that capacity since 1991.  From 1979 to 1990, Dr. Horwitz was the 
Dean of the School of Business Administration at Oakland University.  Dr.       
Horwitz is also the Principal of Ronald M. Horwitz and Assoc., Financial        
Consultants, and a director of Providence Hospital and Medical Centers.         

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 Emmett S. Moten, Jr. has been a director of the Company since 1988. His
current term expires at the Annual Meeting of Shareholders to be held in 1997.  
He is the Chairman of the Board's Audit Committee and a member of the Board's   
Compensation and Finance, Investment and Planning Committees. Since October     
1996, Mr. Moten has been the President of Moten Associates, a real estate       
development and consulting company.  From July 1988 to October 1996, he was     
Vice President of Development for Little Caesar Enterprises, Inc., a national   
fast food franchise concern. Prior to assuming that position, Mr. Moten was     
Director of the Community & Economic Development Department for the City of     
Detroit for nearly 10 years.                                                    

   The following officers and directors failed to file Form 3 or Form 4 with
the Securities and Exchange Commission for the periods indicated: Dr. Julius V. 
Combs (October 1996 and May 1997), Ronald R. Dobbins (January 1997), William B. 
Fitzgerald (April 1997) and Emmett S. Moten, Jr. (October 1996).  All of the    
foregoing directors subsequently filed the appropriate form with the SEC for    
the periods indicated.                                                          

ITEM 11. EXECUTIVE COMPENSATION                                                 

Each of the Directors of the Company receives $250 for each Board of  
Directors' and committee meeting attended.  In addition, each director who is   
not also an employee of the Company receives an annual stipend of $15,000 as    
compensation for director services.  Directors are also entitled to             
reimbursement for reasonable out-of-pocket expenses incurred when on Company    
business in their capacities as directors.                                      

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The following Summary Compensation Table sets forth the annual salary,
bonus and all other compensation awarded to the Company's Chief Executive       
Officer and its four most highly compensated executive officers whose           
respective salary and bonus exceeded $100,000.                                  

                                                        · Enlarge/Download Table

                                                                                           LONG TERM COMPENSATION            
                                                                                  ----------------------------------------   
                                             ANNUAL COMPENSATION                              AWARDS              PAYOUTS    
                               -------------------------------------------------------------------------------------------   
                                                                  OTHER                                                  ALL 
                                                                  ANNUAL                                                OTHER
                                                                  COMPEN         RESTRICTED                           COMPEN-
NAME AND PRINCIPAL                 SALARY       BONUS             -SATION         STOCK        OPTIONS    LTIP/        SATION
      POSITION           YEAR       ($)          ($)                ($)           AWARDS         /SARS    PAYOUTS      ($)(1)

                                                                                                                             
JULIUS V. COMBS, M.D.    1997      327,957          --                                                                       
Chairman of the Board,   1996      295,392     176,800               --              --        --        --           7,500  
Chief Executive Officer  1995      292,712          --               --              --        --        --           7,500  
and Director                                                         --              --        --        --           7,997  

RONALD R. DOBBINS        1997      327,957          --                                                                       
President, Chief         1996      295,392     163,200               --              --        --        --           7,500  
Operating Officer        1995      292,712          --               --              --        --        --           7,500  
and Director                                                         --              --        --        --           8,377  

LOUIS J. NICHOLAS        1997      476,316          --                                                                       
Senior Vice President,   1996      426,556          --                                                                       
Chief Executive Officer, 1995      384,760          --               --              --        --        --           7,500  
CHF and Director                                    --               --              --        --        --           7,500  
                                                                     --              --        --        --           7,500  

JAGANNATHAN              1997      197,134          --               --              --        --        --           7,500  
VANAHARAM                1996      170,434                                                                                   
Senior Vice President,   1995      158,045          --               --              --        --        --           7,500  
Finance and Treasurer                               --               --              --        --        --           7,233  

WILLIAM C. SHARP, M.D.   1997      196,064          --               --              --        --        --           7,500  
Vice President,          1996      178,651          --               --              --        --        --           7,500  
Medical Services         1995      182,484                           --              --        --        --           4,375  

(1)  Represents the Company's annual contribution to the 401(K)     
Savings Plan.                                             

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STOCK OPTION PLANS                                                              

The Company has adopted a stock option plan (the "Plan"), under which 
331,250 common shares are presently reserved for issuance upon exercise of      
options granted under the Plan.  No options have been granted under the Plan.   
Under the Plan, incentive stock options may be granted to employees, and        
non-incentive stock options may be granted to employees, directors and such     
other persons as the Board of Directors (or a committee appointed by the Board) 
determines will contribute to the Company's success, at exercise prices equal   
to at least 100% of the fair market value of the common shares on the date of   
grant.  In addition to administering the Plan, the Board (or the committee)     
determines the number of common shares subject to each option, the term of each 
non-incentive stock option, and the time or times when the non-incentive stock  
option becomes exercisable, though in no event may the option be exercisable    
prior to one year after the date of grant.  Incentive stock options are granted 
for a term of five years, and are exercisable cumulatively at the rate of 25%   
per year commencing one year after the date of grant.                           

The Company's Employee Stock Purchase Plan ("ESPP"), which became     
effective October 1996, enables all eligible employees of the Company to        
subscribe for shares of common stock on an annual offering date at a purchase   
price which is the lesser of 85% of the fair market value of the shares on the  
first day or the last day of the annual period.  Employee contributions to the  
ESPP for 1997 were approximately $.2 million. 200,000 common shares were        
reserved for issuance.  Pursuant to the ESPP, 42,415 shares were issued         
subsequent to year end for the period ended June 30, 1997.                      

401(K) SAVINGS PLAN                                                             

The Company sponsors a retirement plan intended to be qualified under 
Section 401(k) of the Internal Revenue Code of 1986, as amended.  All employees 
over age 21, other than non-resident aliens, are eligible to participate in the 
plan.  Employees may contribute to the plan on a tax-deferred basis up to 15%   
of their total salary.  Under the plan, the Company makes matching              
contributions on each employee's behalf up to a maximum of 5% of each           
employee's total salary. As of June 30, 1997, 227 employees had elected to      
participate in the plan.  For the fiscal year ended June 30, 1997, the Company  
contributed approximately $.6 million to the plan.                              

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT         

 The following table sets forth certain information, as of September 19,
1997, concerning the beneficial ownership of Common Shares held by (i) each     
shareholder known by the Company to own more than 5% of the Common Shares, (ii) 
each director of the Company, (iii) each principal officer of the Company, and  
(iv) all directors and officers as a group.  Except as otherwise noted, each of 
the persons named below possesses sole voting and investment power with respect 
to all shares set forth opposite his or her name.                               

                                                                · Download Table

                                         COMMON SHARES   
                                       BENEFICIALLY OWNED
 NAME OF                                                 
 BENEFICIAL OWNER                      NUMBER    PERCENT 
-----------------                     ---------  ------- 
                                                         
Julius V. Combs, M.D. (3)(5)(8)         434,143    6.6%  
Ronald R. Dobbins (3)(5)                264,405     4.0  
Louis J. Nicholas (3)(5)(7)             162,720     2.5  
Harcourt G. Harris, M.D. (1)             30,907      *   
William B. Fitzgerald (1)                33,346      *   
Anita C. R. Gorham (3)                   23,436      *   
Vivian L. Carpenter, Ph.D. (1)           10,000      *   
Ronald M.  Horwitz, Ph.D. (1)               500      *   
Jagannathan Vanaharam (2)               107,777     1.6  
John S. Zaleskie (2)                      4,668      *   
William C. Sharp, M.D. (2)                6,185      *   
Osbie Howard (2)                          1,918      *   
Danny H. McNeal (2)(9)                      462      *   
Francisco Ramos (2 )(9)                     407      *   
All directors and officers as a                          
group (17 persons)                    1,080,874    16.4  
Richard M. Brown, M.D. (4)(6)           411,727     6.3  

-------------                                                                   
*    Percentage of common shares beneficially owned does not        
exceed 1% of the total common shares outstanding.         

(1)  Beneficial owner is a director of the Company.                 
(2)  Beneficial owner is an officer of the Company.                 
(3)  Beneficial owner is a director and an officer of the Company.  
(4)  Dr. Brown's address is 1200 Ardmoor, Birmingham, Michigan      
48010.                                                    
(5)  The address for the listed person is 1155 Brewery Park         
Boulevard, Suite 200, Detroit, Michigan 48207.            
(6)  Reflects all shares held of record in the name of a trust      
having as its Trustee the shareholder indicated.          
(7)  47,545 common shares are held of record in the name of         
     CHF-HPM Limited Partnership, a Maryland limited partnership, of
which Phase V, Inc., a Maryland                           

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corporation, is the General Partner.                      
    Louis J. Nicholas is the sole shareholder of Phase V, Inc. Mr.
       Nicholas disclaims beneficial ownership in such common shares for
          purposes of Section 16 under the Exchange Act. The remaining 112,643
shares are held by Mr. Nicholas directly.                 
(8)  13,692 Common Shares are held in the name of a trust having    
Dr. Combs as its Trustee.                                 
(9)  Not a reporting person for the purposes of Section 16 of the   
Securities Exchange Act of 1934.                          

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                         

The ownership, operation and management of the Company involve various
potential conflicts of interest, including the relationships and transactions   
described below. Management of the Company believes that these agreements and   
transactions have been on terms that are as fair to the Company as could have   
been obtained from unaffiliated parties.                                        

 COMMON OFFICERS AND DIRECTORS. As indicated in the chart below, certain
officers and directors of the Company are also members of the Board of          
Trustees/Directors and officers of OmniCare-MI, OmniCare-TN, and UltraMedix.    
Consequently, such individuals are likely to influence the operation of the     
Company and negotiations and arrangements between the Company and these         
entities, including the respective management agreements. Conflicts of interest 
may arise relating to matters that are presented to the Company's Board of      
Directors for consideration and with respect to which the Company and           
OmniCare-MI, OmniCare-TN and UltraMedix may have differing interests, including 
matters relating to the management agreements.                                  

                                                                · Download Table

          NAME               UAHC      OMNICARE-MI  OMNICARE-TN  ULTRAMEDIX
------------------------  -----------  -----------  -----------  ----------
                                                                           
Julius V. Combs, M.D.     Chairman,    Chairman     President,   Chairman, 
                          CEO,         Emeritus,    Director     Director  
                          Director     Trustee                             
Ronald R. Dobbins         President,   President,   Director     Director  
                          COO,         Trustee                             
                          Director                                         
Harcourt G. Harris, M.D.  Director     Chairman,        --           --    
                                       Trustee                             
Anita C.R. Gorham         Secretary,   Trustee          --           --    
                          Director                                         
Jagannathan Vanaharam     Senior Vice      --       Director,    Director, 
                          President                 Treasurer    Treasurer 

MANAGEMENT AGREEMENTS. The Company's management agreements with the   
Managed Plans were negotiated between related entities.  However, the           
management agreements were                                                      

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reviewed, revised and approved by the respective Managed Plans' full Boards.    
Evaluation of the Company's activities under the OmniCare-MI management         
agreement are made by the Management Review Committee composed of members of the
OmniCare-MI Board. No Board member of OmniCare-MI with any interest in the      
Company is permitted to sit on the Management Review Committee. There presently 
is no comparable committee that reviews the Company's performance under the     
other Managed Plans' management agreements.                                     

   COMMON OWNERSHIP. The Company has an ownership interest in certain of the
Managed Plans, namely OmniCare-TN and UltraMedix. As of  June 30, 1997, the     
Company owned a 75% interest in OmniCare-TN and a 51% interest in UltraMedix.   
In addition, the Company currently owns a 49% interest in PhilCare and a 100%   
interest in OmniCare-LA.                                                        

AFFILIATIONS WITH PRIMARY CARE PROVIDER.  Dr. Sharp, Vice President of
Medical Services and an officer of the Company, is also affiliated with M.C.    
Physicians Association, P.C., a primary care provider contracting with          
OmniCare-MI.                                                                    

   HEALTH INSURANCE BENEFITS FOR COMPANY EMPLOYEES. Health care benefits for
some employees of the Company are provided through OmniCare-MI, UltraMedix and, 
formerly, PPC. For the fiscal year ended June 30, 1997, the Company paid        
premiums of approximately $1.6 million for such benefits.                       

EMPLOYMENT AGREEMENTS. The Company entered into five year employment  
agreements with Dr. Combs, Chief Executive Officer, and Mr. Dobbins, President  
and Chief Operating Officer, expiring March 1996, subject to automatic renewal  
for successive one-year terms, unless terminated by the Company or the          
executive upon 90 days' notice prior to the end of the initial term or the      
renewal terms, as the case may be.  Under their respective employment           
agreements, Dr. Combs and Mr. Dobbins currently receive an annual base salary   
of $327,957, plus an annual bonus to be based upon performance specifications   
and/or goals to be agreed upon by the Company and the executive, with the bonus 
payable to Dr. Combs for any year of employment to be not less than 30%, nor    
more than 60%, of his base salary for such year, and the bonus payable  to Mr.  
Dobbins to be not less than 25%, nor more than 50%, of his base salary for such 
year.  No bonus is payable to the executive for any year in which he is         
employed by the Company for fewer than six months and any bonus will be         
pro-rated to the extent the executive is employed less than the full year.  Dr. 
Combs and Mr. Dobbins have waived any bonus for the fiscal year ended June 30,  
1997.                                                                           

 Under each employment agreement, the executive may, upon giving 30 days
written notice, terminate the agreement in the event there is a change of       
control or ownership (as defined in the employment agreement) of the Company    
and the executive's powers and duties significantly change or the executive has 
good reason (as defined in the employment agreement) to terminate or, as a      
result of the change of control or ownership, the executive is unable to        
exercise or perform his powers, functions and duties.  In the event of such     
termination, the executive will receive (i) all monies earned under any Company 
long-term incentive plan, (ii) a lump sum severance payment equal to his base   
salary for 36 months at the rate payable at the time notice of termination was  
given, and (iii) the bonus that he would otherwise be entitled to               

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for the year in which his employment is terminated.  Based upon the executive's 
current base salary, the Company estimates that the lump sum severance payment  
payable to each Dr. Combs and Mr. Dobbins under this provision would be         
approximately $1.1 million.                                                     

 In the event the executive terminates his employment due to a breach of
his employment agreement by the Company, he will receive earned and unpaid      
salary accrued to the date of termination, together with any bonus that would   
otherwise be payable to him for the year in which the agreement is terminated.  

    In the event the executive's employment is terminated without cause by the
Company, the executive will receive his base salary until the last day of the   
24th full calendar month immediately following such termination, but in no      
event will the executive be entitled to such payments following his normal      
retirement date, defined as the August 31st nearest to the date on which the    
executive attains the age of 65.                                                

   In the event the executive's employment is terminated for cause, death or
disability, the executive (or his estate) will receive earned and unpaid salary 
accrued to the date of termination but shall not be entitled to any bonus which 
might otherwise be payable to the executive for the year in which his           
employment is terminated.                                                       

  Dr. Combs and Mr. Dobbins have each agreed that for the longer of (i) 12
months from the date of termination of his employment agreement, or (ii) the    
period during which the executive receives payments under his employment        
agreement, plus the 12 months immediately following expiration of such period,  
he will not engage in the development of a managed health care product or       
service nor render services similar or related to those which he rendered as an 
employee of the Company in any county in which the Company provides any managed 
health care product or service or within any contiguous county.                 

 The Company is also party to an employment agreement by and between CHF
and Louis J. Nicholas (the "Executive") dated as May 7, 1993, pursuant to which 
it agreed to:  (i) refrain from impeding the Executive's ability to operate CHF 
in a prudent manner consistent with maximizing a return for purposes of the     
Contingent Promissory Note; (ii) elect the Executive to its Board of Directors  
and as a Senior Vice President; (iii) pay liquidated damages if the Executive   
is terminated without good cause or good reason, as those terms are defined     
therein; and (iv) provide Board of Directors' review of a termination of the    
Executive for good cause by CHF.  In addition, the employment agreement         
provides the Company with the right to cease payments under the Contingent      
Promissory Note in the event of a material breach of the agreement by the       
Executive. Under the Agreement of Purchase and Sale of Stock to sell CHF, Mr.   
Nicholas must release the Company from its employment obligations effective     
as of the closing date of the proposed CHF sale as a condition of the Company's 
obligation to close the transaction.  Mr. Nicholas, if elected at the Company's 
Annual Shareholders Meeting in 1997, will continue to serve on the Company's    
Board of Directors.                                                             

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    CHARITABLE FOUNDATION. For the fiscal year June 30, 1997, the Company made
$150,000 in contributions to United American Healthcare Foundation, a Michigan  
nonprofit corporation that assists minority organizations involved in the       
promotion of health and education. Dr. Combs, Mr. Dobbins, Dr. Francis Kornegay 
and Mr. Milton Watson, shareholders of the Company, are directors of the        
foundation.  Dr. Combs and Mr. Dobbins are not compensated for their services   
as directors of the Foundation.                                                 

PART IV 

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K                                       

    (a) (1) & (2) The financial statements listed in the accompanying Index to
Consolidated Financial Statements at page F-1 are filed as part of this Form    
10-K report.                                                                    

(3) The Exhibit Index lists the exhibits required by Item 601         
of Regulation S-K to be filed as a part of this Form 10-K report.  The Exhibit  
Index identifies those documents which are exhibits filed herewith or           
incorporated by reference to (i) the Company's Form S-1 Registration Statement  
under the Securities Act of 1933, as amended, declared effective on April 23,   
1991 (Commission File No. 33-36760), (ii) the Company's Form 10-K for its       
fiscal years ended June 30, 1992, 1993, 1994, 1995 and 1996, (iii) the          
Company's Form 8-K filed with the Commission August 8, 1991, (iv) the Company's 
Form 8-K filed with the Commission April 23, 1993, (v) the Company's Form 8-K   
filed with the Commission May 24, 1993, (vi) the Company's Form 8-K/A filed     
with the Commission July 21, 1993, (vii) the Company's Form 8-K filed with the  
Commission January 29, 1996, (viii) the Company's Form 8-K filed with the       
Commission April 19, 1996, (ix) the Company's Form 10-Q for its quarter ended   
March 31, 1996, (x) ) the Company's Form 10-Q for its quarter ended September   
30, 1996, or (xi) the Company's Form 10-Q for its quarter ended March 31, 1997. 
The Exhibit Index is hereby incorporated by reference into this Item 14.        

(b) No reports on Form 8-K were filed with respect to the last three  
months of fiscal 1997.                                                          

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS                            
                                                                          Page

Report of Independent Certified Public                                          
Accountants........................................................        F-2  

Consolidated Balance Sheets as of June 30, 1997 and                             
1996...............................................................        F-3  

Consolidated Statements of Operations for each of the three                     
years in the period ended June 30,                                    
1997...............................................................        F-4  

Consolidated Statements of Cash Flows for each of the three                     
   years in the period ended June 30, 1997.......................        F-5

Consolidated Statements of Shareholders' Equity for each                        
   of the three years in the period ended June 30, 1997..........        F-7

Notes to Consolidated Financial Statements.........................        F-8  

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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS    

BOARD OF DIRECTORS                                                              
UNITED AMERICAN HEALTHCARE CORPORATION                                          

We have audited the accompanying consolidated balance sheets of United
American Healthcare Corporation (a Michigan corporation) and Subsidiaries as of 
June 30, 1997 and 1996, and the related consolidated statements of operations,  
shareholders' equity and cash flows for each of the three years in the period   
ended June 30, 1997.  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 did not audit the financial       
statements of OmniCare Health Plan, Inc. of Tennessee, a 75%-owned subsidiary,  
which statements reflect total assets of $12,751,000 and $25,902,000 as of June 
30, 1997 and 1996, respectively, and total revenues of $57,384,000 and          
$29,247,000 for the periods then ended. These statements were audited by other  
independent auditors whose reports thereon have been furnished to us, and our   
opinion expressed herein, insofar as it relates to the amounts included for     
OmniCare Health Plan, Inc. of Tennessee, is based solely on the reports of the  
other independent auditors.                                                     

We conducted our audits in accordance with generally accepted auditing
standards.  Those standards require that we plan and perform the audits 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 and the report of other     
auditors provide a reasonable basis for our opinion.                            

     In our opinion, based on our audits and the aforementioned reports of other
independent auditors, the consolidated financial statements referred to above   
present fairly, in all material respects, the consolidated financial position   
of United American Healthcare Corporation and Subsidiaries as of June 30, 1997  
and 1996 and the results of their operations and their cash flows for each of   
the three years in the period ended June 30, 1997 in conformity with generally  
accepted accounting principles.                                                 

/s/ GRANT THORNTON LLP                                                          

Detroit, Michigan                                                               
September 30, 1997                                                              

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES   

CONSOLIDATED BALANCE SHEETS   
(IN THOUSANDS, EXCEPT SHARE DATA)   

                                                                · Download Table


                                                                 JUNE 30,       
                                                           ---------------------
                                                             1997       1996    
                                                           --------  -----------
                                                                                
ASSETS                                                                          
------                                                                          
Current assets                                                                  
 Cash and cash equivalents                                  $ 9,582     $23,679 
 Marketable securities                                        7,860       7,251 
 Premium, commission and service fees receivable              5,275       4,860 
 Other receivables                                            2,441       2,099 
 Refundable federal income taxes                                115       1,522 
 Prepaid expenses and other                                     587         624 
 Deferred income taxes                                          746         351 
                                                            -------   --------- 
  Total current assets                                       26,606      40,386 

 Property and equipment, net                                 10,100      10,301 
 Intangible assets, net                                      10,557      11,546 
 Investments in and advances to affiliates                    4,400       5,236 
 Statutory reserves                                           3,937       7,863 
 Deferred income taxes                                        2,376       1,156 
 Other assets                                                 1,940       2,048 
 Net assets of discontinued operations                       19,746      14,703 
                                                            -------   --------- 
                                                            $79,662     $93,239 
                                                            =======   ========= 
LIABILITIES AND SHAREHOLDERS' EQUITY                                            
------------------------------------                                            
Current liabilities                                                             
 Current portion of long-term debt                                              
   Line of credit                                           $19,356     $     - 
   Term loans                                                 2,495       2,912 
 Medical claims payable                                       8,735      25,678 
 Accounts payable and accrued expenses                        6,539       2,976 
 Accrued compensation and related benefits                    2,098       1,941 
 Other current liabilities                                      380           - 
                                                            -------   --------- 
 Total current liabilities                                   39,603      33,507 

Long-term debt, less current portion                          2,017      18,742 
Accrued rent                                                  1,599       1,211 
Deferred income taxes                                         2,037       1,957 

Shareholders' equity                                                            
 Preferred, 5,000,000 shares authorized; none issued              -           - 
 Common, 15,000,000 shares authorized; 6,535,941                                
   and 6,560,941 issued and  outstanding in                                     
   1997 and 1996                                             10,498      10,625 
Retained earnings                                            23,996      27,411 
Unrealized net holding losses on marketable securities          (88)       (214)
                                                            -------   --------- 
                                                             34,406      37,822 
                                                            -------   --------- 
                                                            $79,662     $93,239 
                                                            =======   ========= 


See accompanying notes to the financial statements.         

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF OPERATIONS 
       (IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                                · Download Table

                                                      YEAR ENDED JUNE 30,        
                                              -----------------------------------
                                                 1997        1996          1995  
                                              ---------   ---------     ---------
                                                                                 
REVENUES                                                                         
 Medical premiums                              $ 70,430    $34,523        $     -
 Management fees from related parties            40,033     55,906         57,940
 Interest and other income                        2,086      1,950          1,850
                                              ---------   ---------     ---------

    Total revenues                              112,549     92,379         59,790

EXPENSES                                                                         
 Medical services                                57,832     29,901              -
 Marketing, general and administrative           52,755     50,077         43,662
 Depreciation and amortization                    4,069      3,370          1,905
 Equity in net losses of unconsolidated                                          
 affiliates                                           -        652          2,816
 Interest expense                                 1,360      1,087            480
 Bad debt expense                                 1,844        980            100
 Contract settlement                                  -      9,685              -
 Shareholder lawsuit settlement                   1,150          -              -
                                              ---------   ---------     ---------

    Total expenses                              119,010     95,752         48,963
                                              ---------   ---------     ---------
(Loss) earnings from continuing operations                                       
  before income tax expense                      (6,461)    (3,373)        10,827
Income tax expense (credit)                      (1,201)       284          4,598
                                              ---------   ---------     ---------

(Loss) earnings from continuing operations       (5,260)    (3,657)         6,229
Discontinued operations, net of income taxes      1,845        909            367
                                              ---------   ---------     ---------

    NET (LOSS) EARNINGS                        $ (3,415)   $(2,748)       $ 6,596
                                              =========   =========     =========
NET (LOSS) EARNINGS PER COMMON SHARE:                                            

   (LOSS) EARNINGS PER COMMON SHARE FROM                                         
   CONTINUING OPERATIONS                       $  (0.80)   $ (0.56)       $  0.95
  NET (LOSS) EARNINGS PER COMMON SHARE         $  (0.52)   $ (0.42)       $  1.01
                                              =========   =========     =========


See accompanying notes to the financial statements.                   

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS 
(IN THOUSANDS)

                                                        · Enlarge/Download Table

                                                                                        YEAR ENDED JUNE 30,         
                                                                             ---------------------------------------
                                                                               1997            1996           1995  
                                                                             ---------       --------       --------
                                                                                                                    
OPERATING ACTIVITIES                                                                                                
Net (loss) earnings                                                          $  (3,415)      $ (2,748)     $  6,596 
Adjustments to reconcile net (loss) earnings to net cash                                                            
(used in) provided by operating activities:                                                                         
  Discontinued operations                                                       (1,845)          (909)         (367)
  Bad debt expense                                                               1,844            980           100 
  Loss on disposal of assets                                                       (11)           (23)            - 
  Depreciation and amortization                                                  4,069          3,370         1,905 
  Accrued rent                                                                     388            155           265 
  Contract settlement                                                                -          9,685             - 
  Deferred income taxes (credit)                                                (1,604)           656          (372)
  Equity in net losses of unconsolidated affiliates                                  -            652         2,816 
  Changes in assets and liabilities net of effects from                                                             
   acquisitions in 1997 and 1996                                                                                    
   (Increase) decrease in premiums, commissions and service fees receivable     (1,531)           716           (36)
   (Increase) decrease in other receivables                                       (342)          (469)        2,629 
   Decrease (increase) in refundable income taxes                                1,407            649        (2,592)
   Decrease (increase) in prepaid expenses and other                                37           (123)         (339)
   Decrease (increase) in statutory reserves                                     3,926            (81)       (5,100)
   Decrease in other assets                                                        108              -             - 
   Decrease in medical claims payable                                         (16,943)         (2,625)            - 
   Increase (decrease) in accounts payable and accrued expenses                  3,563           (203)        1,137 
   Increase (decrease) in accrued compensation and related benefits                157            484          (246)
   Increase (decrease) in other current liabilities                                380           (254)           51 
                                                                             ---------       --------      -------- 
   Total adjustments                                                            (6,397)        12,660          (149)
                                                                             ---------       --------      -------- 
   Net cash (used in) provided by operating activities                          (9,812)         9,912         6,447 

INVESTING ACTIVITIES                                                                                                
Acquisition of businesses, net of cash acquired                                      -         10,664             - 
Net (purchases of) proceeds from marketable securities                            (414)         4,183         5,197 
Proceeds from the sale of furniture and equipment                                  400              -             - 
Purchase of furniture and equipment                                             (3,276)        (4,839)       (5,474)
Investments in and advances to affiliates                                          108         (8,267)       (4,227)
Decrease in intangible assets                                                        8              -             - 
Increase in other assets                                                             -           (336)         (345)
Decrease (increase) in long-term notes receivable                                    -         (1,764)       (3,184)
Cash used in discontinued operations                                            (3,198)        (3,252)          (32)
                                                                             ---------       --------      -------- 
   Net cash used in investing activities                                        (6,372)        (3,611)       (8,065)

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF CASH FLOWS-CONTINUED 
(IN THOUSANDS)

                                                                · Download Table

                                                           YEAR ENDED JUNE 30,     
                                                      ---------------------------- 
                                                        1997      1996      1995   
                                                      --------  --------  -------- 
                                                                                   
FINANCING ACTIVITIES                                                               
Borrowings under line of credit agreement                5,117    13,588     6,041 
Payments made on long-term debt                         (2,903)   (2,408)   (1,400)
Repurchase of common stock                                (127)        -         - 
                                                      --------  --------  -------- 
Net cash provided by financing activities                2,087    11,180     4,641 
                                                      --------  --------  -------- 
Net (decrease) increase in cash and cash equivalents  (14,097)    17,481     3,023 
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR          23,679     6,198     3,175 
                                                      --------  --------  -------- 
CASH AND CASH EQUIVALENTS AT END OF YEAR              $  9,582  $ 23,679  $  6,198 
                                                      ========  ========  ======== 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                                  
Interest paid                                         $  1,673  $    989  $    524 
                                                      ========  ========  ======== 
Income taxes paid                                     $  1,150  $    815  $  3,594 
                                                      ========  ========  ======== 

Supplemental schedule of noncash investing activities for fiscal 1997     
represents the acquisition of certain contract rights, assets and         
assumed liabilities of Spectera, Inc., and is included with net cash      
flows used in investing activities of discontinued operations; and for    
1996 represents the acquisition of majority interests in OmniCare         
Health Plan, Inc. of Tennessee and UltraMedix Healthcare Systems, Inc.    
as follows:                                                               

                                                                · Download Table
                                                           
Fair value of assets acquired  $(1,765)  $(33,174)  $     -
Cash acquired                         -     20,327        -
Liabilities assumed                 750     23,511        -
                               --------  --------  --------
                               $(1,015)  $  10,664  $     -
                               ========  ========  ========

See accompanying notes to the financial statements.                         

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 
(IN THOUSANDS)

                                                                · Download Table

                                                            Unrealized net          
                             Number of                       holding loss           
                              common     Common   Retained  on marketable           
                              shares     shares   earnings    securities     Total  
                             -------     ------   --------  ------------     -----  
                                                                                    
Balance at June 30, 1994        6,561   $10,625   $23,563       $    -      $34,188 

Net earnings                        -         -     6,596            -        6,596 
Unrealized net holding loss                                                         
 on marketable securities           -         -         -         (276)        (276)
                             --------   -------   -------       ------      ------- 
Balance at June 30, 1995        6,561    10,625    30,159         (276)      40,508 
Net loss                            -         -    (2,748)           -       (2,748)
Unrealized net holding gain                                                         
 on marketable securities           -         -         -           62           62 
                             --------   -------   -------       ------      ------- 
Balance at June 30, 1996        6,561    10,625    27,411         (214)      37,822 
Net loss                            -         -    (3,415)           -       (3,415)
Unrealized net holding gain                                                         
 on marketable securities           -         -         -          126          126 

Purchase of common stock          (25)     (127)        -            -         (127)
                             --------   -------   -------       ------      ------- 
Balance at June 30, 1997        6,536   $10,498   $23,996       $  (88)     $34,406 
                             ========   =======   =======       ======      ======= 


See accompanying notes to the financial statements                              

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 1 - ORGANIZATION                                                           
---------------------                                                           

       BUSINESS.  The Company is a multi-state provider of health care
services, including consulting services to managed care 
  organizations and the provision of health care services in
        Tennessee and Florida. The Company operates in a single segment.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES                             
---------------------------------------------------                             

A.   PRINCIPLES OF CONSOLIDATION.  The consolidated financial       
   statements include the accounts of United American Healthcare
       Corporation, and all of its majority-owned subsidiaries, together
  referred to as (the "Company"). All significant intercompany
      transactions and balances have been eliminated in consolidation.
 Interest of other investors in the Company's majority-owned
         subsidiaries are accounted for as minority interests.  Non-majority
      investments in affiliates in which management has the ability to
       exercise significant influence are recorded on the equity method.
      As discussed in Note 3, Corporate Healthcare Financing, Inc. and
         Subsidiaries is presented as discontinued operations.  Accordingly,
prior years' amounts have been restated.                  

B.   REVENUE RECOGNITION.  Medical premium revenues are recognized  
       in the month in which members are entitled to receive health care
      services.  Medical premiums collected in advance are recorded as
       deferred revenues.  Management fee revenues are recognized in the
period the related services are performed.                

C.   MEDICAL SERVICES EXPENSE RECOGNITION.  The Company contracts   
     with various health care providers for the provision of certain
     medical services to its members and generally compensates those
     providers on a capitated and fee for service basis. The Company
         provides for medical claims incurred but unreported and the cost of
      adjudicating claims based primarily on past experience, together
        with current factors, using accepted actuarial methods.  Estimates
         are adjusted as changes in these factors occur and such adjustments
      are reported in the year of determination. Although considerable
         variability is inherent in such estimates, management believes that
these reserves are adequate.                              

D.   REINSURANCE.  Reinsurance premiums are reported as medical     
    services expense, while the related reinsurance recoveries are
reported as deductions from medical services expense.     

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

E.   MARKETABLE SECURITIES.  The Company's securities are           
      classified in the available for sale category, which consists of
          those securities which the Company intends to hold for an indefinite
        period of time but not necessarily to maturity, and are carried at
  estimated fair value. Unrealized gains and losses related to
        securities available for sale, net of applicable income taxes, are
reported as a separate component of shareholders' equity. 

F.   PROPERTY AND EQUIPMENT.  Property and equipment are stated at  
        cost less accumulated depreciation and amortization.  Depreciation
       and amortization are provided using the straight-line method over
      the estimated useful lives of the respective assets, which range
         from 5 to 13 years. The Company uses accelerated methods for income
   tax purposes. The Company has internally developed customized
      software, and has capitalized the related costs. During the year
 ended June 30, 1997, approximately $322,000 of interest was
     capitalized in connection with the development of this computer
   software.  Property and equipment consist of the following at
June 30 (in thousands):                                   

                              1997      1996
                             ------     ------
Furniture and fixtures           $ 2,092   $ 1,859    
Equipment                          9,185     8,812    
Computer software                  6,402     5,018    
                             -------   -------
                              17,679    15,689
Less accumulated depreciation                         
and amortization                  (7,579)   (5,388)   
                             -------   -------
                             $10,100   $10,301
                             =======   =======

G.   INTANGIBLE ASSETS.  Intangible assets resulting from business  
        acquisitions are carried at cost and are currently being amortized
      on a straight-line basis over their estimated useful lives of 10
        years.   Intangible assets consist of the following at June 30 (in
thousands):                                               

                                            1997      1996
                                           -------   -------
         Goodwill                          $11,987   $11,995
          Less accumulated amortization      (1,430)     (449)
                                 -------
                                           $10,557   $11,546
                                           =======   =======

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

H.   LONG-LIVED ASSETS.  Effective July 1, 1996, the Company        
  adopted Statement of Financial Accounting Standards No. 121,
 "Accounting for the Impairment of Long-Lived Assets and for
         Long-Lived Assets to be Disposed of" (SFAS No. 121).  Following the
       criteria set forth in SFAS No. 121, long-lived assets and certain
        identifiable intangibles are reviewed by the Company for events or
      changes in circumstances, which would indicate that the carrying
      value may not be recoverable.  In making this determination, the
       Company considers a number of factors, including estimated future
       undiscounted cash flows associated with long-lived assets.  Based
         upon its most recent analysis, the Company believes that long-lived
assets are recorded at their net recoverable values.      

I.   CASH AND CASH EQUIVALENTS.  The Company considers all highly   
    liquid instruments purchased with original maturities of three
months or less to be cash equivalents.                    

J.   NET (LOSS) EARNINGS PER COMMON SHARE.  Net (loss) earnings     
        per common share is based on the weighted-average number of common
          shares outstanding during each period.  The number of shares used in
          the computation of (loss) earnings per common share is 6,553,297 for
         the year ended June 30, 1997 and 6,560,941 for the years ended June
30, 1996 and 1995.                                        

K.   INCOME TAXES.  The Company accounts for income taxes in        
          accordance with the provisions of SFAS No. 109.  Deferred income tax
       assets and liabilities are recognized for differences between the
          financial statement and tax bases of assets and liabilities based on
       enacted tax rates and laws.  Valuation allowances are established
         when necessary to reduce deferred tax assets to the amount expected
to be realized.                                           

         The deferred income tax provision or benefit generally reflects the
         net change in deferred income tax assets and liabilities during the
year.  The current income tax provision reflects the tax  
consequences of revenues and expenses currently taxable or
deductible for the period.                                

L.   STOCK PURCHASE AND OPTION PLANS.  The Company follows the      
          provisions of Accounting Principles Board Opinion No. 25, Accounting
 for Stock Issued to Employees.  Should options be issued to
         non-employees, the Company would follow the provisions of Statement
       of Financial Accounting Standard No. 123 ("SFAS 123"), Accounting
for Stock-Based Compensation.                             

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

M.   RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARD.  In February    
        1997, the Financial Accounting Standards Board issued Statement of
      Financial Accounting Standard No. 128 ("SFAS 128"), Earnings Per
        Share, which (1) replaces the presentation of primary earnings per
     share (EPS) with a presentation of basic EPS; (2) requires dual
presentation of basic and diluted EPS on the face of the  
       consolidated statements of operations regardless of whether basic
        and diluted EPS are the same; and (3) requires a reconciliation of
       the numerator and denominator used in computing basic and diluted
          EPS.  Basic EPS excludes dilution and is computed by dividing income
        available to common stockholders by the weighted-average number of
         common shares outstanding for the period.  Diluted EPS reflects the
          potential dilution that could occur if securities or other contracts
         to issue common stock were exercised or converted into common stock
         or resulted in the issuance of common stock that then shared in the
earnings of the entity.                                   

        Diluted EPS is computed similarly to fully diluted EPS
      pursuant to Accounting Principles Board Opinion 15.  SFAS 128 is
        effective for financial statements issued for periods ending after
       December 15, 1997, including interim periods; earlier application
         is not permitted. SFAS 128 requires restatement of all prior period
     EPS data presented.  The Company does not expect the effects of
applying SFAS 128 to be significant.                      

N.   USE OF ESTIMATES.  The accompanying consolidated financial     
         statements have been prepared in conformity with generally accepted
       accounting principles which 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. Actual results could differ
        from those estimates as more information becomes available and any
such difference could be significant.                     

O.   RECLASSIFICATIONS.  Certain reclassifications have been made   
    to prior years' financial statements amounts to conform to the
current period classifications.                           

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 3 - ACQUISITIONS AND DISPOSITIONS                                          
--------------------------------------                                          

ACQUISITIONS                                                        

CORPORATE HEALTHCARE FINANCING, INC. ("CHF")                        

      On May 7, 1993, CHF acquired substantially all of the assets and
assumed certain liabilities of a Maryland limited partnership, in a 
   business combination accounted for as a purchase.  The cost at the time
  of the acquisition was approximately $9.6 million and is included with
    net assets of discontinued operations in the accompanying balance sheet.

         Through June 30, 1997 and 1996, the purchase price was cumulatively
  increased to $6.6 million and $4.5 million respectively, pursuant to a
contingent promissory note that, depending upon CHF's earnings (as  
 defined in the agreement) over seven years from the acquisition date,
  could increase the purchase price by a maximum amount of $6.6 million.
   At June 30, 1997, approximately $.5 million remained payable  under the
terms of this note.                                                 

OMNICARE HEALTH PLAN, INC. OF TENNESSEE-TN ("OMNICARE-TN")          

         In February 1994, the Company entered into a long-term agreement to
     manage OmniCare-TN and effective July 1994 acquired a 50% equity interest
     in OmniCare-TN for approximately $1.3 million in cash.  The excess of the
  purchase price over the Company's equity interest in the net assets at
    the effective date of acquisition of approximately $4.1 million is being
amortized over ten years on a straight-line basis.                  

         Effective January 31, 1996, the Company purchased an additional 25%
of the voting common stock, and 100% of the preferred stock, of     
     OmniCare-TN.  This increased the Company's ownership in the voting common
stock of OmniCare-TN to 75%.  The purchase price for the additional 
     common stock and preferred stock of OmniCare-TN was $.1 million and $10.9
million, respectively, of which $8.7 million was the conversion of  
    OmniCare-TN debt to the Company to equity and $2.3 million in cash.  The
  acquisition was accounted for under the purchase method of accounting.
Results of operations are included in the accompanying financial    
 statements effective with the date of purchase of the majority common
     stock ownership interest.  The excess of the purchase price over the fair
   value of the net assets acquired of approximately $3.3 million has been
recorded as goodwill, and is being amortized over ten years on a    
      straight-line basis.  Goodwill is reduced by the subsequent utilization of
OmniCare-TN's net operating losses.                                 

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

ULTRAMEDIX HEALTHCARE SYSTEMS, INC. ("ULTRAMEDIX")                  

         In February 1994, the Company entered into a long-term agreement to
    manage UltraMedix and acquired a 30.4% equity interest for approximately
     $1.4 million in cash. The excess of the purchase price over the Company's
equity interest in the net assets of UltraMedix at the date of      
    acquisition of approximately $1.7 million has been recorded as goodwill,
and is being amortized over ten years on a straight-line basis.     

     Effective January 29, 1996, the Company purchased an additional
 20.6% of the voting common stock, and 100% of the preferred stock, of
    UltraMedix.  This increased the Company's ownership in the voting common
    stock of UltraMedix to 51%. The purchase price for the additional common
     stock and preferred stock of UltraMedix was approximately $1.9 million in
 cash.  The acquisition was accounted for under the purchase method of
accounting.  Results of operations are included in the accompanying 
    financial statements effective with the date of purchase of the majority
   common stock ownership interest.  The excess of the purchase price over
   the fair value of the net assets acquired of approximately $2.9 million
     has been recorded as goodwill, and is being amortized over ten years on a
straight-line basis.                                                

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  
SPECTERA, INC.                                                      

        Effective December 31, 1996, CHF acquired certain contract rights,
assets and assumed certain liabilities of Spectera, Inc. for        
   approximately $1.8 million in cash and debt.  The excess purchase price
  over the fair market value of the net assets acquired of approximately
$1.0 million has been charged to goodwill, and is included with net 
assets of discontinued operations in the accompanying balance sheet.

DISPOSITION                                                         

         On September 12, 1997 the Company's Board of Directors approved the
     proposed stock sale of CHF and Subsidiaries for $30 million in cash to an
entity related to the Company via common shareholders. CHF provides 
 administrative services to self-funded employers and employee welfare
   plans, including health benefit plan design and development of workers'
compensation and unemployment benefit programs.                     

         The sale, which is contingent upon the buyer securing financing, is
expected to close in the Company's third quarter of fiscal 1998.  In
  anticipation of this sale, the results of CHF and its subsidiaries are
reported as discontinued operations in the consolidated financial   
    statements for all periods presented.  The assets and liabilities of CHF
    and its subsidiaries have been reported in the accompanying consolidated
    balance sheets as net assets of discontinued operations, except for cash
   and cash equivalents of $.8 million and $.7 million, which are included
   with cash and cash equivalents in the accompanying consolidated balance
sheets as of June 30, 1997 and 1996, respectively.                  

Discontinued operations are summarized as follows:        

                                                                · Download Table

                                              YEAR ENDED JUNE 30,    
                                           --------------------------
                                            1997      1996     1995  
                                           -------  --------  -------
                                                                     
                                                 (IN THOUSANDS)      
Total revenues                             $18,803   $10,661   $8,797
Total expenses                              16,958     9,752    8,430
Earnings from discontinued operations (1)  $ 1,845   $   909   $  367
                                           =======  ========  =======

  (1) Net of income taxes of $1,164, $766 and $852 in 1997, 1996 and 1996,
respectively.                                                                   

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

    CHF and Subsidiaries balance sheets are summarized as follows:

                                                                · Download Table

                                                                JUNE 30,            
                                                       ---------------------------- 
                                                         1997                1996   
                                                       ---------          --------- 
                                                             (IN THOUSANDS)         
ASSETS                                                                              
------                                                                              
                                                                                    
  Cash and cash equivalents                                $   804           $   700
  Commission, service fees and other receivables, net        9,927             6,057
  Property and equipment, net                                2,126               992
  Intangible assets, net                                     9,217             7,995
  Other assets                                                 982               720
                                                         ---------         ---------
                                                           $23,056           $16,464
                                                         =========         =========
LIABILITIES AND SHAREHOLDER'S EQUITY                                                
------------------------------------                                                
  Accounts payable and accrued expenses                     $1,221           $   667
  Accrued compensation and related benefits                    628               395
  Payable to parent                                          2,201               330
  Debt payable within one year                                 197                 -
  Long-term debt                                               461                 -
                                                         ---------         ---------
                                                             4,708             1,392
  Shareholder's equity                                      18,348            15,072
                                                         ---------         ---------
                                                           $23,056           $16,464
                                                         =========         =========

PRO FORMA EFFECTS OF THE CHF SALE                         

      On a pro forma basis, the CHF sale would have decreased the 1997
     loss from continuing operations by approximately $1.3 million ($2 million
pretax), or $0.20 per share.  Approximately $.5 million represents  
     investment income on invested net proceeds, and approximately $.8 million
      represents a reduction of interest expense resulting from the repayment of
     debt.  On a pro forma basis, the impact on the June 30, 1997 Consolidated
     Balance Sheet would be to increase marketable securities by approximately
     $10 million, representing the net proceeds from the sale after payment of
    income taxes of approximately $3.8 million, and the reduction of debt by
approximately $16 million.                                          

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 4 - MARKETABLE SECURITIES                                                  
------------------------------                                                  

  Following is a summary of available-for-sale marketable securities as of
June 30 (in thousands):                                                         

                                                        · Enlarge/Download Table

                                AMORTIZED      GROSS UNREALIZED  GROSS UNREALIZED       FAIR       
                                  COST         HOLDING GAINS     HOLDING LOSSES        VALUE       
                             ----------------  ----------------  ----------------  ----------------
                                                                                                   
1997:                                                                                              
Municipal tax-exempt bonds       $6,935            $41               $   -             $6,976      
U.S. Government obligations         532              3                   -                535      
Obligations of foreign                                                                             
governments                          25              -                   -                 25      
Equity securities                   504              -               (180)                324      
                             ----------------  ----------------  ----------------  ----------------
                                 $7,996            $44               $(180)            $7,860      
                             ================  ================  ================  ================
1996:                                                                                              
Municipal tax-exempt bonds       $7,304            $ -               $(165)            $7,139      
U.S. Government obligations           -              -                    -                 -      
Obligations of foreign                                                                             
governments                          25              -                    -                25      
Equity securities                   254              -                (167)                87      
                             ----------------  ----------------  ----------------  ----------------
                                 $7,583            $ -               $(332)            $7,251      
                             ================  ================  ================  ================

   As of June 30, 1997, investments in debt securities mature as follows (in
thousands):                                                                     

                                                        · Enlarge/Download Table

                              WITHIN 1 YEAR       1- 5 YEARS       5-10 YEARS       AFTER 10 YEARS 
                             ----------------  ----------------  ----------------  ----------------
                                                                                                   
AT AMORTIZED COST:                                                                                 
Municipal tax-exempt bonds      $3,269             $2,916            $    -            $  750      
U.S. Government obligations          -                532                 -                 -      
Obligations of foreign                                                                             
governments                          -                 25                 -                 -      
                             ----------------  ----------------  ----------------  ----------------
                                $3,269             $3,473            $    -            $  750      
                             ================  ================  ================  ================
AT FAIR VALUE:                                                                                     
Municipal tax-exempt bonds      $3,319             $2,907            $    -            $  750      
U.S. Government obligations          -                535                 -                 -      
Obligations of foreign                                                                             
governments                          -                 25                 -                 -      
                             ----------------  ----------------  ----------------  ----------------
                                $3,319             $3,467            $    -            $  750      
                             ================  ================  ================  ================


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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

NOTE 5 - STATUTORY RESERVES                                                     
---------------------------                                                     

  Certain of the Company's subsidiaries are obligated by state
     regulations to maintain a specified level of escrowed funds to assure the
provision of healthcare services to enrollees.  To fulfill these    
statutory requirements, the Company maintains funds in highly liquid
escrowed investments.                                               

NOTE 6 - CONCENTRATION OF RISK                                                  
------------------------------                                                  

  During the year ended June 30, 1997 approximately 50% of the
     Company's revenues were derived from a single customer, TennCare, a State
of Tennessee program which provides medical benefits to Medicaid and
 Working Uninsured recipients. TennCare withholds 10% of the Company's
     monthly capitation payment.  TennCare remits the monthly withhold amounts
    to the Company when certain informational filing requirements are met by
  the Company.  Amounts withheld by TennCare as of June 30, 1997 totaled
    approximately $1.8 million.  This amount was paid subsequent to June 30,
     1997.  The Company has recorded a receivable of approximately $.8 million
     from the State of Tennessee TennCare program adverse selection pool.  The
   receivable is based on tentative information provided to the Company by
the State of Tennessee.                                             

NOTE 7 - INVESTMENTS IN AND ADVANCES TO AFFILIATES                              
--------------------------------------------------                              

    Investments in and advances to affiliates are comprised of the following
(in thousands):                                                     

                            JUNE 30,
                            ------------------
                            1997      1996
                           ---------  --------
PhilCare                       $2,100   $ 2,100   
HealthScope                     2,300     4,209   
Less valuation allowance            -    (1,073)  
                          --------   -------
                            $4,400   $ 5,236
                          ========   =======

  In May 1994, the Company acquired at book value a 49% equity
     interest in PhilCare Health Systems, Inc. ("PhilCare"), a start up HMO in
Philadelphia, Pennsylvania for approximately $1,000 in cash. In     
    connection therewith, the Company funded PhilCare's applicable statutory
    reserve and net worth requirements of $2.1 million in cash. PhilCare has
had deminimus revenue and expense activity since inception.         

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

     United/HealthScope, Inc. ("UHI") was organized in March 1993 to
  engage in development, consulting and contract management services for
    publicly-funded managed care programs in the metropolitan New York area.
Through May 1997, outstanding amounts owed to the Company from UHI  
    totaled approximately $4.9 million.  In May 1997, UHI's outstanding debt
and preferred stock were restructured.  The Company converted its   
  interest in UHI, including advances, accrued interest and the value of
warrants held by the Company to one million shares of non-voting    
  preferred stock of the restructured UHI with a par value of $4 million
   and a warrant to purchase 3,310 shares of UHI common stock, exercisable
at any time at a nominal price.                                     

   A valuation allowance of approximately $1.1 million, had been
   established as of June 30, 1996.  The conversion of the Company's loans
    to UHI to preferred stock was treated as a "troubled debt restructuring"
   and the investment was recorded at its estimated fair value at the date
   of the restructuring.  This resulted in bad debt expense of $.7 million
for the year ended June 30, 1997.                                   

NOTE 8 - RELATED PARTY TRANSACTIONS                                             
-----------------------------------                                             

       The Company has entered into long-term management agreements with
 Michigan Health Maintenance Organization Plans, Inc., dba as OmniCare
     Health Plan, Inc. ("OmniCare-MI"), OmniCare-TN, and UltraMedix, hereafter
referred to as the "Managed Plans". Pursuant to the management      
  agreements, the Company provides management and consulting services to
the Managed Plans.  Since August 1987, the Company had a management 
 agreement with Personal Physician Care, Inc. ("PPC"), an entity doing
business in Ohio and related through common officers and directors. 
   Effective May 31, 1997, the Company's management agreement with PPC was
terminated, based in part, upon a dispute between the parties with  
     respect to the payment of non-emergent transportation costs for enrollees
 as a marketing expense to be incurred under the management agreement.
The Managed Plans are related via common officers and directors.    

The commencement and expiration dates of these agreements follows:  

       COMMENCEMENT           EXPIRATION
        -------------        ---------------
OmniCare-MI       May 1985         December  2010     
OmniCare-TN  February 1994         February  1999     
UltraMedix   February 1994         February  1999     

          All of the agreements are subject to review every five years and can
be terminated without cause by the Managed Plans at the time of the 
review or by either party with cause.                               

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996, AND 1995   

         Pursuant to the management agreements the Company is generally paid
 a percentage of revenues and/or reimbursed the administrative cost to
   manage the Plans. The Company is required to pay certain administrative
   expenses associated with its activity on behalf of these Managed Plans.
   All costs associated with the management of these Plans are expensed as
    incurred.  Under the terms of the management agreement through May 1997,
the Company occupied space that was leased and paid for by PPC.     

       The following table shows management fee revenue from the Managed
Plans as a percentage of the Company's total revenues.              

                                   YEAR ENDED JUNE 30,
                                    --------------------------------------------
                                   1997           1996            1995
                                --------        -------          -------
                 OmniCare-MI     26%             33%             51%
                OmniCare-TN      -              15              26
                UltraMedix       -               3               8

     Management fees from PPC as a percentage of the Company's total
revenues                                                            
was 9% in 1997 and 1996 and 11% in 1995.                            

          Health insurance for some of the Company's employees was provided by
 the Managed Plans.  This expense was approximately $1.6 million, $1.5
 million and, $1.1 million for the years ended June 30, 1997, 1996 and
1995, respectively.                                                 

         A director of the Company also served as a director and shareholder
    of the Company's legal counsel until December 1995.  Legal costs to this
    law firm through December 1995 totaled approximately $.6 million and was
     $.7 million for the year ended June 30, 1995.  Pursuant to the management
 agreement, certain of these legal expenses were incurred on behalf of
OmniCare-MI.                                                        

NOTE 9 - BENEFIT AND OPTION PLANS                                               
---------------------------------                                               

         The Company offers a 401(K) retirement and savings plan that covers
substantially all of its employees.  The Company's maximum matching 
    contribution is 5% of compensation.  Company contributions to the 401(K)
    plan were approximately $.6 million, $.5 million and $.4 million for the
years ended June 30, 1997, 1996 and 1995, respectively.             

    The Company has a stock option plan with 331,250 common shares
 reserved for issuance upon exercise of options.  No options have been
granted through June 30, 1997.                                      

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

     The Company has reserved 200,000 common shares for its Employee
  Stock Purchase Plan ("ESPP"), which became effective October 1996, and
    enables all eligible employees of the Company to subscribe for shares of
    common stock on an annual offering date at a purchase price which is the
   lesser of 85% of the fair market value on the first day or the last day
   of the annual period.  Employee contributions to the ESPP for 1997 were
   $.2 million.   Had compensation cost for the ESPP been determined based
   on the fair value at the measurement date consistent with SFAS 123, for
the year ended June 30, 1997 the Company's net loss and net loss per
common share would have been $3.4 million and $0.52, respectively.  

NOTE 10 - INCOME TAXES                                                          
----------------------                                                          

  The components of income tax expense (credit) are as follows
(in thousands):                                           

                                                                · Download Table

                                               YEAR ENDED JUNE 30,    
                                             ------------------------ 
                                            1997       1996      1995 
                                         ---------  ---------  -------
                                                                      
Continuing operations                                                 
Current                                   $   403    $(372)    $4,970 
Deferred                                   (1,604)     656       (372)
                                          -------    -----     ------ 
                                          $(1,201)   $ 284     $4,598 
                                          =======    =====     ====== 
Discoutinued operations                   $ 1,164    $ 766     $  852 
                                          =======    =====     ====== 

    A reconciliation of the provision for ince taxes omfollows (in
thousands):                                                         

                                                                · Download Table

                                              YEAR ENDED JUNE 30,   
                                        ----------------------------
                                          1997       1996     1995  
                                        ---------  --------  -------
                                                                    
Income tax expense (credit) at the                                  
 statutory tax rate                      $(2,197)  $(1,147)  $3,681 
State and city income tax                    115        99      261 
Tax-exempt interest on municipal bonds      (138)     (165)    (221)
Non-deductible goodwill amortization         334       235      221 
Other, net                                   (28)      136       99 
NOL reduction of goodwill                     (8)        -        - 
Valuation allowance                          721     1,126      557 
                                        --------   -------   ------ 
                                         $(1,201)  $   284   $4,598 
                                        ========   =======   ====== 

         A valuation allowance was provided on that portion of the equity in
net losses in affiliates which reduces the Company's investment. The
Company believes it is more likely than not that if a tax deductible
 event occurs, the result will be a capital loss.  The capital loss is
  able to be offset only by capital gains currently not generated by the
Company.                                                            

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

         Components of the Company's deferred tax assets and liabilities are
as follows at June 30 (in thousands):                               

                                                                · Download Table

                                                                1997        1996  
                                                              --------    ------- 
                                                                                  
Deferred tax assets:                                                              
   Shareholder lawsuit settlement                              $   391     $    - 
   Losses in unconsolidated affiliates                           3,629      1,882 
   Rent                                                            395        263 
   Bad debt expense                                                734        694 
   Compensation                                                    331        236 
   Net unrealized holding loss                                      46        115 
   Net operating loss carryforward of purchased subsidiaries     5,529      5,537 
                                                               -------   -------- 
Total gross deferred tax assets                                 11,055      8,727 
Valuation allowance                                             (7,933)    (7,220)
                                                               -------   -------- 
Total net deferred tax assets                                    3,122      1,507 
                                                               -------   -------- 
Deferred tax liabilities:                                                         
   Depreciation and amortization                                  (348)      (357)
   Software development                                         (1,422)    (1,430)
   Licensure costs                                                (267)      (170)
   Total gross deferred tax liabilities                         (2,037)    (1,957)
                                                               -------   -------- 
Net deferred tax asset (liability)                            $ 1,085     $ (450) 
                                                              =======   ========  

          The valuation allowance balance at June 30, 1997 includes allowances
relating to net loss carryforwards ("NOLs") of OmniCare-TN and      
   UltraMedix, entities which are consolidated as of June 30, 1997.  As of
June 30, 1997, these subsidiaries have NOLs for federal income tax  
     purposes of approximately $5.5 million that expire through the year 2011.

       Activity in the valuation allowance is as follows (in thousands):

                                                                · Download Table
                                              
Balance at July 1, 1995                $    - 
Change in valuation                       557 
                                       ------ 
Balance at June 30, 1995               $  557 
Change in valuation                     1,126 
NOLs of purchased subsidiaries          5,537 
                                       ------ 
Balance at June 30, 1996                7,220 
Change in valuation                       721 
Use of NOLs of purchased subsidiaries      (8)
                                       ------ 
Balance at June 30, 1997               $7,933 
                                       ====== 

      The portion of the valuation allowance attributable to NOLs that
     are subsequently utilized will reduce goodwill of the acquired companies.

F-21  

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 11 - LEASES                                                                
----------------                                                                

 The Company leases its facilities and various furniture and
  equipment under operating leases expiring at various dates through May
  2005.  Terms of the facility leases generally provide that the Company
  pay its pro rata share of all operating expenses, including insurance,
property taxes and maintenance.                                     

     Rent expense charged to operations for the years ended June 30,
     1997, 1996 and 1995 totaled approximately $3.5 million, $3.0 million, and
$2.4 million, respectively. Additionally, in 1997 a $.3 million rent
accrual was recorded for the difference between the Company's lease 
  obligation and the expected sub-lease rental income over the remaining
life of the lease related to the Company's lease in Pennsylvania.   

       Minimum future rental payments under all noncancellable operating
    leases having remaining terms in excess of one year as of June 30, 1997,
   net of sublease rentals, total $12.5 million as follows (in thousands):
1998- $2,276; 1999-$2,121; 2000-$2,099; 2001-$1,645; 2002-$1,369;   
thereafter $2,974.                                                  

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 12 - LONG TERM DEBT                                                        
------------------------                                                        

Debt at June 30 is as follows (in thousands):                                   

                                                                · Download Table

                                                         1997             1996  
                                                       ---------       ---------
                                                                                
Maximum $20 million unsecured line of credit,                                   
expiring in February 1998, bearing interest at prime                            
or 1% over the one, two, three or six-month LIBOR                               
rate.                                                  $ 19,356          $13,579

Term loan requiring monthly principal payments of                               
approximately $126,000, with the final due date in                              
November 1999, and bearing interest at prime or                                 
1.25% over the one, two, three or six-month LIBOR                               
rate.                                                     3,529            5,042

Term loan requiring monthly principal payments of                               
approximately $117,000, with final due date in                                  
August 1998, and bearing interest at prime or 1.5%                              
over the six-month LIBOR rate.  The loan is                                     
collateralized by all assets of the Company.                                    
Covenants of the loan agreement provide for certain                             
net worth and financial ratio requirements. The                                 
Company has entered into an agreement that caps the                             
loan's interest rate at 5% per annum.  The $122,000                             
cost of the cap is being amortized over the term of                             
the loan.                                                   983           3,033 
                                                       --------         ------- 
                                                         23,868          21,654 
Less term debt payable within one year                   (2,495)         (2,912)
Less line of credit payable within one year             (19,356)              - 
                                                       --------         ------- 
Long-term debt, less current portion                   $  2,017         $18,742 
                                                       ========         ======= 

        Long-term debt at June 30, 1997 matures as follows (in thousands):
1998- $21,851; 1999- $1,513; 2000- $504.                            

       At June 30, 1997, the Company was in violation of a covenant that
  sets a floor on a debt service coverage ratio.  The Company obtained a
waiver for this provision from the lending institution.             

         The Company has provided a $1 million letter of credit on behalf of
 its wholly owned subsidiary, United American Healthcare of Louisiana,
     Inc. and Subsidiary in satisfaction of applicable statutory requirements.

F-23  

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

NOTE 13 - MANAGED PLAN                                                          
----------------------                                                          

 The following table sets forth summarized financial data of
OmniCare-MI.  This information was derived from audited financial   
statements, as of its respective year-ends (in thousands).          

                                                                · Download Table

                                  YEAR ENDED DECEMBER 31,       
                           -------------------------------------
                              1996         1995         1994    
                           -----------  -----------  -----------
                                                                
Current assets                $ 32,521     $ 39,160     $ 45,528
Noncurrent assets                1,047        1,621        2,040
Current liabilities             16,955       24,347       31,336
Unrestricted net assets         16,613       16,434       16,232
Revenues                       170,897      172,574      159,546
Expenses                       170,666      172,371      158,241
Other expense-net                   52            -            -
Revenues over expenses             179          203        1,305


NOTE 14 - UNAUDITED SELECTED QUARTERLY FINANCIAL DATA                           
-----------------------------------------------------                           

  The following table presents selected quarterly financial data for the
     years ended June 30, 1997 and 1996 (in thousands, except per share data):

                                                                · Download Table

                                                     QUARTERS ENDED                
                                      ---------------------------------------------
                                      JUNE 30   MARCH 31  DECEMBER 31  SEPTEMBER 30
                                                                                   
1997:                                                                              
Revenues                              $29,573   $28,030      $26,457       $28,489 
(Loss) earnings from continuing                                                    
operations                             (3,660)      (17)      (1,033)         (550)
Net (loss) earnings                    (3,953)      416          114             8 
Net (loss) earnings per common share    (0.60)     0.06         0.02          0.00 

1996:                                                                              
Revenues                              $40,127   $24,639      $12,965       $14,648 
(Loss) earnings from continuing                                                    
operations                             (1,378)   (1,034)      (2,275)        1,030 
Net (loss) earnings                    (1,059)     (834)      (2,275)        1,420 
Net (loss) earnings per common share    (0.16)    (0.13)       (0.35)         0.22 

F-24  

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

     In the quarter ended June 1997 the Company recorded a tentative
     settlement of the consolidated class action shareholder lawsuit for $1.15
  million. The Company also recorded a bad debt expense in the amount of
$1.1 million related to the valuation of an account receivable of   
OmniCare-TN and $.7 million for its investment in HealthScope.      
     Additionally, during the quarter, a $.3 million rent expense estimate was
     established for the difference between the Company's lease obligation and
     the expected sub-lease rental income over the remaining life of the lease
   related to the Company's lease in Pennsylvania. Also during the quarter
   the Company increased the incurred but not reported medical liabilities
for UltraMedix and OmniCare-TN by $1.4 million.                     

          Management fees to UA-TN were impacted during the quarter ended June
  1996 by an agreement reached between UA-TN and OmniCare-TN during that
quarter, but effective November 1995, pursuant to which OmniCare-TN 
   agreed to reimburse UA-TN approximately $8.7 million for start-up costs
     and other expenses incurred for the period January 1994 through September
  1995 which were unrelated to OmniCare-TN's TennCare business and which
   were over and above the amounts which OmniCare-TN could reimburse UA-TN
     out of the capitation payments received by OmniCare-TN under the TennCare
contract.  Further, UA-TN agreed to convert its claim for these     
     additional amounts owed to it by OmniCare-TN into approximately 8,680,000
     shares of preferred stock of OmniCare-TN as complete and final settlement
of such obligation.                                                 

         Also during the quarter ended June 30, 1996, the Company provided a
    valuation allowance of approximately $.8 million to reflect its estimate
   of the fair value of notes receivable from HealthScope at June 30, 1996
and increased the incurred but not reported medical liabilities for 
UltraMedix and OmniCare-TN by $2.3 million.                         

NOTE 15 - CONTINGENCIES                                                         
-----------------------                                                         

          As previously reported by the Company, certain senior officers and the

 Company are named defendants in two shareholder lawsuits filed in the
  United States District Court for the Eastern District of Michigan (the
"Court") on August 23 and August 24, 1995.  In September 1996, these
  lawsuits were consolidated by the Court into a single cause of action.
The consolidated action alleged that certain senior officers and the
  Company issued reports and statements that violated federal securities
   laws. The Company and the officers contend that all material facts were
     disclosed during the alleged period in question and that certain material
   facts alleged to have not been disclosed, were already available in the
financial market place.                                             

F-25  

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UNITED AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES-CONTINUED   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
JUNE 30, 1997, 1996 AND 1995  

          Nevertheless, management concluded that continued defense of the
litigation was depleting the available insurance pool and that an   
unfavorable outcome in excess of insurance policy limits could      
   potentially have an adverse impact on the Company's financial position.
 Continuation of this litigation would have also diverted management's
focus from operations.  Based on these facts, management pursued    
 settlement with the plaintiff.  The parties have agreed to a proposed
    settlement requiring the release of all claims and damages sought by the
plaintiff and payment by the Company of  $3.25 million, of which the
     Company anticipates $2.1 million to be paid by the insurance carrier. The
Company has recorded expense of $1.15 million in the accompanying   
  statement of operations in the year ended June 30, 1997.   The pending
    settlement is subject to federal court approval.  The Company has agreed
     to indemnify the named officers from monetary exposure in connection with
    the lawsuit, subject to reimbursement by any named officer, in the event
he is found not to be entitled to such indemnification.             

F-26  

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SIGNATURES                                                                      

Pursuant to the requirements of Section 13 or 15(d) of the Securities 
Exchange Act of 1934, the registrant has duly caused this report to be signed   
on its behalf by the undersigned, thereunto duly authorized on the 14th day of  
October 1997.                                                                   
By:  /s/ Jagannathan Vanaharam      
     -------------------------------
Jagannathan Vanaharam     
     Senior Vice President-Treasurer

 Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons in the capacities and on the     
date indicated.                                                                 

                                                                · Download Table
                                                                           
/s/JULIUS V. COMBS, M.D.  Chief Executive Officer          October 14, 1997
------------------------  (Principal Executive Officer)                    
Julius V. Combs, M.D.                                                      

/s/ANITA C.R. GORHAM      Secretary                        October 14, 1997
--------------------                                                       
Anita C.R. Gorham                                                          

/s/JAGANNATHAN VANAHARAM  Senior Vice President-Treasurer  October 14, 1997
------------------------  (Principal Financial Officer)                    
Jagannathan Vanaharam                                                      

/s/PAUL G. SAMUELS        Corporate Controller             October 14, 1997
------------------        (Principal Accounting Officer)                   
Paul G. Samuels                                                            

/s/JULIUS V. COMBS, M.D.  Director                         October 14, 1997
------------------------                                                   
Julius V. Combs, M.D.                                                      

/s/RONALD R. DOBBINS      Director                         October 14, 1997
--------------------                                                       
Ronald R. Dobbins                                                          

/s/WILLIAM C. BROOKS.     Director                         October 14, 1997
---------------------                                                      
William C. Brooks                                                          


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                                                                · Download Table
                                                          
/s/VIVIAN L. CARPENTER, Ph.D.   Director  October 14, 1997
-----------------------------                             
Vivian L. Carpenter, Ph.D.                                

/s/WILLIAM B. FITZGERALD, ESQ.  Director  October 14, 1997
------------------------------                            
William B.  Fitzgerald, Esq.                              

/s/ANITA C.R. GORHAM            Director  October 14, 1997
--------------------                                      
Anita C.R. Gorham                                         

/s/HARCOURT G. HARRIS, M.D.     Director  October 14, 1997
---------------------------                               
Harcourt G. Harris, M.D.                                  

/s/RONALD M. HORWITZ, Ph.D.     Director  October 14, 1997
---------------------------                               
Ronald M. Horwitz, Ph.D.                                  

/s/EMMETT S. MOTEN, JR.         Director  October 14, 1997
-----------------------                                   
Emmett S. Moten, Jr.                                      

                                Director                  
--------------------                                      
Louis J. Nicholas                                         

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EXHIBIT INDEX 

EXHIBIT                             INCORPORATED HEREIN BY          FILED       
NUMBER   DESCRIPTION OF DOCUMENT    REFERENCE TO                   HEREWITH     
-------  -----------------------    ----------------------        ----------    

3.1      Restated Articles of       Exhibit 3.1 to the                          
Incorporation of           Registrant's Form S-1              
Registrant.                Registration Statement under       
                      the Securities Act of 1933, as
                      amended, declared effective on
                   April 23, 1991 ("1991 S-1")

3.1(a)   Certificate of Amendment   Exhibit 3.1(a) to 1991 S-1                  
to the Articles of                                            
Incorporation of                                              
Registrant.                                                   

3.2      Amended and Restated       Exhibit 3.2 to the                          
Bylaws of Registrant.      Registrant's 1993 10-K             

4.1      Incentive and              Exhibit 4.1 to the                          
Non-Incentive Stock        Registrant's 1995 10-K             
Option Plan of                                                
Registrant effective                                          
March 25, 1991, as                                            
amended.                                                      

4.2      Form of Common Share       Exhibit 4.2 to the                          
Certificate.               Registrant's 1995 10-K             

10.1     Employees' Retirement      Exhibit 10.1 to 1991 S-1                    
Plan for Registrant                                           
dated May 1, 1985, with                                       
First Amendment thereto                                       
and Summary Plan                                              
Description therefor.                                         

10.2     Management Agreement       Exhibit 10.2 to 1991 S-1                    
between Michigan Health                                       
Maintenance Organization                                      
Plans, Inc. and                                               
Registrant dated March                                        
15, 1985, as amended                                          
June 12, 1985.                                                

10.3     Management Agreement       Exhibit 10.3 to 1991 S-1                    
between U.A. Health Care                                      
Corporation and Personal                                      
Physician Care, Inc.                                          
dated March 18, 1987.                                         

10.4     Amendment dated February   Exhibit 10.5 to the                         
16, 1993 to Management     Registrant's 1995 10-K             
Agreement between United                                      
American Healthcare                                           
Corporation and Personal                                      
Physician Care, Inc.                                          
dated March 18, 1987.                                         

10.5     Amendment dated June 16,   Exhibit 10.4 to the                         
1994 to Management         Registrant's 1994 10-K             
Agreement between U.A.                                        
Health Care Corporation                                       
and Personal Physician                                        
Care, Inc. dated March                                        
18, 1987.                                                     

10.6     Management Agreement       Exhibit 10.5 to Registrant's                
between OmniCare Health    1994 Form 10-K                     
Plan, Inc. and United                                         
American of Tennessee,                                        
Inc. dated February 2,                                        
1994.                                                         

10.7     Management Agreement       Exhibit 10.6 to Registrant's                
between UltraMedix         1994 Form 10-K                     
Health Care Systems,                                          
Inc. and United American                                      
of Florida, Inc. dated                                        
February 1, 1994.                                             

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EXHIBIT                             INCORPORATED HEREIN BY          FILED       
NUMBER   DESCRIPTION OF DOCUMENT    REFERENCE TO                   HEREWITH     
-------  -----------------------    ----------------------        ----------    

10.8     Amendment dated            Exhibit 10.9 to the                         
September 4, 1995 to       Registrant's 1995 10-K             
Management Agreement                                          
between UltraMedix                                            
Healthcare Systems, Inc.                                      
and United American of                                        
Florida, Inc. dated                                           
February 1, 1995.                                             

10.9     Amendment dated            Exhibit 10.10 to Registrant's               
September 20, 1995 to      1995 10-K                          
Management Agreement                                          
between UltraMedix                                            
Health Care Systems,                                          
Inc. and United American                                      
of Florida, Inc. dated                                        
February 1, 1995.                                             

10.10    Lease Agreement between    Form 8-K filed August 8, 1991               
1155 Brewery Park                                             
Limited Partnership and                                       
Registrant dated July                                         
24, 1991, effective May                                       
1, 1992.                                                      

10.11    Amendment dated December   Exhibit 10.8 to the                         
8, 1993 to Lease           Registrant's 1994 10-K             
agreement between 1155                                        
Brewery Park Limited                                          
Partnership and                                               
Registrant dated July                                         
24, 1991.                                                     

10.12    Amendment dated April      Exhibit 10.13 to Registrant's               
15, 1993 to Lease          1995 10-K                          
Agreement between 1155                                        
Brewery Park Limited                                          
Partnership and                                               
Registrant dated July                                         
24, 1991.                                                     

10.13    Lease Agreement between    Exhibit 10.7 to the                         
Baltimore Center           Registrant's 1993 10-K             
Associates Limited                                            
Partnership and                                               
Corporate Healthcare                                          
Financing, Inc. dated                                         
August 24, 1988, as                                           
amended April 12, 1993,                                       
effective the later of                                        
May 1, 1993 or the date                                       
premises are ready for                                        

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EXHIBIT                             INCORPORATED HEREIN BY          FILED       
NUMBER   DESCRIPTION OF DOCUMENT    REFERENCE TO                   HEREWITH     
-------  -----------------------    ----------------------        ----------    

occupancy.                                                    

10.14    Amendment dated May 11,    Exhibit 10.11 to the                        
1994 (effective June 30,   Registrant's 1994 10-K             
1994) to Lease agreement                                      
between Baltimore Center                                      
Associates Limited                                            
Partnership and                                               
Corporate Healthcare                                          
Financing, Inc.                                               

10.15    Lease Agreement between    Exhibit 10.2 to Registrant's                
CLW Realty Asset Group,    1994 Form 10-K                     
Inc., as agent for The                                        
Prudential Insurance                                          
Company of America and                                        
United American of                                            
Florida dated May 31,                                         
1994, effective June 1,                                       
1994.                                                         

10.16    Lease Agreement between    Exhibit 10.3 to Registrant's                
Fleming Companies, Inc.    1994 Form 10-K                     
and United American of                                        
Tennessee dated June 30,                                      
1994, effective the date                                      
premises are ready for                                        
occupancy.                                                    

10.17    Lease Agreement between    Exhibit 10.19 to Registrant's               
International Business     1995 10-K                          
Machines Corporation and                                      
Registrant dated August                                       
29, 1994.                                                     

10.18    Amended and Restated       Exhibit 10.20 to Registrant's               
Line of Credit Facility    1995 10-K                          
Agreement between                                             
Michigan National Bank                                        
and Registrant dated                                          
March 14, 1995.                                               

10.19    Promissory notes between   Exhibit 10.9 to the                         
Michigan National Bank     Registrant's 1993 10-K             
and Registrant dated                                          
August 26, 1993.                                              

10.20    Asset Purchase Agreement   Form 8-K filed May 24, 1993                 
between CHF, Inc.,         and Form 8-K/A filed July 21,      
Healthcare Plan            1993                               
Management, Inc.,                                             
CHF-                                                          

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EXHIBIT                             INCORPORATED HEREIN BY          FILED       
NUMBER   DESCRIPTION OF DOCUMENT    REFERENCE TO                   HEREWITH     
-------  -----------------------    ----------------------        ----------    

HPM Limited                                                   
Partnership, Louis J.                                         
Nicholas and Keith B.                                         
Sullivan and Registrant                                       
dated May 7, 1993.                                            

10.21    Loan and Security          Exhibit 10.18 to Registrant's               
Agreement between          1994 Form 10-K                     
UltraMedix Health Care                                        
Systems, Inc. and United                                      
American of Florida                                           
dated February 1, 1994.                                       

10.22    Amendment dated June 13,   Exhibit 10.26 to Registrant's               
1995 to the Loan and       1995 10-K                          
Security Agreement                                            
between UltraMedix Care                                       
Systems, Inc. and United                                      
American of Florida,                                          
Inc. dated February 1,                                        
1994.                                                         

10.23    Form of Stock Transfer     Exhibit 10.19 to Registrant's               
Services Agreement         1994 Form 10-K                     
between Huntington                                            
National Bank and                                             
Registrant.                                                   

10.24    Employment Agreement       Exhibit 10.15 to 1991 S-1                   
between Julius V. Combs,                                      
M.D. and Registrant                                           
dated March 15, 1991.                                         

10.25    Employment Agreement       Exhibit 10.16 to 1991 S-1                   
between Ronald R.                                             
Dobbins and Registrant                                        
dated March 15, 1991.                                         

10.26    Employment Agreement       Exhibit 10.22 to Registrant's               
between Louis J.           1994 Form 10-K                     
Nicholas and Corporate                                        
Healthcare Financing,                                         
Inc. dated May 7, 1993.                                       

10.27    First Amendment to         Form 10-Q for the Quarter                   
Contingent Note            Ended March 31, 1996, filed        
Promissory Note between    May 14, 1996                       
CHF-HPM Limited                                               
Partnership and the                                           
Registrant                                                    

10.28    Acquisition of majority    Form 8-K filed April 19, 1996               
interest                                                      

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EXHIBIT                             INCORPORATED HEREIN BY          FILED       
NUMBER   DESCRIPTION OF DOCUMENT    REFERENCE TO                   HEREWITH     
-------  -----------------------    ----------------------        ----------    

in OmniCare                                                   
Health Plan, Inc. of                                          
Tennessee and UltraMedix                                      
Healthcare Systems, Inc.                                      

10.29    Injured Workers'           Form 10-K/A filed October 14,               
Insurance Fund Contract    1996, as amended                   
No. IWIF 9-96 Managed                                         
Care Contract with                                            
Statutory Benefits                                            
Management Corporation                                        
dated June 19, 1996.                                          

10.30    Ernst & Young LLP Report   Form 10-K/A filed October 14,               
of Independent Auditors    1996, as amended                   
as of June 30, 1996                                           

10.31    Renaissance Center         Form 10-Q for the Quarter                   
Office Lease               Ended September 30, 1996,          
               filed November 13, 1996
10.32    Purchase Agreement         Form 10-Q for the Quarter                   
between Statutory          Ended December 31, 1996, filed     
Benefits Management        February 10, 1997                  
Corporation and                                               
Spectera, Inc.                                                

10.33    Agreement of Purchase                                         *        
and Sale of Stock, dated                                      
September 12, 1997                                            
between CHF Acquisition,                                      
Inc. and the Registrant                                       

10.34    Ernst & Young LLP Report                                      *        
of Independent Auditors                                       
as of June 30, 1997                                           

21    Subsidiaries of the Registrant                                      

27    Financial Data Schedule                                       *     

Dates Referenced Herein   and   Documents Incorporated By Reference

				Referenced-On Page
This 10-K Filing		Date		First		Last			Other Filings
		5/1/92		76
		6/30/92		46
		4/12/93		76
		4/23/93		46
		5/1/93		76
		5/7/93		45		78
		5/24/93		46		77
		6/30/93		46
		7/21/93		46
		8/26/93		77
		1/1/94		29
		2/1/94		8		78
		2/2/94		75
		5/31/94		77
		6/1/94		77
		6/30/94		30		77
		8/29/94		77
		2/1/95		76
		3/14/95		77
		6/30/95		28		72
		7/1/95		21		67
		8/24/95		20		71
		9/4/95		76
		9/20/95		76
		9/30/95		29
		10/5/95		31					SC 13G/A
		12/15/95		32
		1/29/96		46		59
		1/31/96		58
		3/31/96		46		78			10-Q
		4/19/96		46		78
		5/14/96		78					10-Q
		6/19/96		79
		6/30/96		13		79			10-K, 10-K/A, NT 10-K
		7/1/96		32		56
		9/30/96		46		79			10-Q, NT 10-K
		12/31/96		60		79			10-Q
		2/10/97		79
		3/31/97		46					10-Q
		5/31/97		6		64
For The Period Ended		6/30/97		1		79			NT 10-K, NT 10-K/A
		7/1/97		11
		8/1/97		3		17
		9/12/97		4		79
		9/19/97		1		42
		9/30/97		48					10-Q, NT 10-K/A
Filed On / Filed As Of		10/14/97		73		74
		12/11/97		14
		12/15/97		32		57
		12/31/97		11					10-Q
		1/10/98		14
		6/30/98		10					10-K
		7/1/98		9
		2/1/99		8
		5/1/0		8
		12/31/10		8
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