FPA Medical Management, Inc. announces record third quarter results.

SAN DIEGO--(BUSINESS WIRE)--October 29, 1996--FPA Medical Management, Inc. (Nasdaq:FPAM) today announced record revenues and earnings for the third quarter ended September 30, 1996.

Operating revenues for the third quarter ended September 30, 1996 increased significantly to $89.7 million compared to $14.4 million in the same period last year. Net income for the third quarter was $1.9 million or $0.14 per share, compared to net income of $354,231 or $0.05 per share for the same period last year. Weighted average shares outstanding were 13,772,066 and 7,225,936 for the third quarter of 1996 and 1995, respectively.

For the nine months ended September 30, 1996, operating revenue increased to $188.5 million compared to $30.1 million for the same period last year. Net income for the nine months was $4.3 million or $0.34 per share on a weighted average shares outstanding of 12,613,385 compared to net income of $358,140 or $0.05 per share on 7,131,410 weighted shares outstanding for the same period in the prior year.

Steven Lash, Executive Vice President and Chief Financial Officer, stated, "We achieved strong revenues and earnings during the quarter fueled by the growth of our HMO enrollment. During the quarter, we expanded our primary care network with the addition of approximately 200 physicians providing care to approximately 40,000 new HMO enrollees. Currently, we are now affiliated with over 2,800 primary care physicians servicing over 370,000 lives."

Commenting on the results, Dr. Seth Flam, Chief Executive Officer stated, "The success of the FPA model is reflected in our ability to effectively integrate newer practices into our existing network. We believe that continued leveraging of our existing infrastructure will create greater operating efficiencies as we expand into new geographic regions."

Dr. Sol Lizerbram, Chairman and President added, "We continue to capitalize on the healthcare industry's response to cost containment as managed care providers focus on cost reduction. We believe that this, coupled with physicians need to more efficiently manage their practice, will enable us to operate successfully in a capitated environment. With the anticipated addition of Sterling Healthcare Group (Nasdaq:STER) and Foundation Health's (NYSE:FH) medical groups, we remain optimistic about our long-term growth."

In connection with the proposed merger with Sterling Healthcare Group, Inc., FPA also announced that the Sterling Board of Directors approved an exchange ratio of .951 of one FPA share for every Sterling share held. This exchange ratio is based on FPA's average closing price of $24.1958 during the measurement period. The FPA and Sterling special shareholders meetings will be held on October 31, 1996.

FPA also announced it expects to file within the next several weeks a registration statement with the Securities and Exchange Commission for a proposed public offering of approximately $100 million of its common stock. The company anticipates that an undetermined portion may be sold by selling security holders pursuant to previously granted registration rights. The offering shall be made only by means of a prospectus.

FPA Medical Management, Inc. is a national healthcare management service organization that organizes and manages primary care physician networks to contract with HMOs and other prepaid health insurance plans to provide physician and related healthcare services. Certain statements contained in this release are forward looking. Although FPA Medical Management, Inc. believes that its expectations are based on reasonable assumptions within the bounds of its knowledge of its business and operations, there can be no assurance that actual results will not differ materially from its expectations. Factors that could cause actual results to differ from expectations include the difficulty in controlling healthcare costs, increasing and managing growth in the number of new enrollees in the FPA Network and the possible negative effects of prospective healthcare reform. For other important factors that may cause FPA Medical Management, Inc.'s actual results to differ materially from expectations and underlying assumptions, see reports filed by FPA Medical Management, Inc. with the Securities and Exchange Commission.

         FPA MEDICAL MANAGEMENT, INC. AND SUBSIDIARIES
              Consolidated Statements of Operations

                             Three Months Ended    Nine Months Ended
                              9/30/96  9/30/95      9/30/96       9/30/95


Capitation revenue         $77,836,117 $12,486,696 $166,180,018  $26,738,940
Shared risk revenue          3,256,779   1,381,773    7,872,018    2,288,321
Net fee-for-service revenue  8,587,218     534,148   14,469,169    1,120,162
Total operating revenue     89,680,114  14,402,617  188,521,205   30,147,423
Medical services expense    67,617,764  10,264,901  140,110,800   22,194,283
                            22,062,350   4,137,716   48,410,405    7,953,140
General and administrative
 expense                    17,829,697   3,490,970   39,015,517    7,490,420
Income from operations       4,232,653     646,746    9,394,888      462,720
Other income (expense), net   (799,284)      7,758   (1,688,477)     199,853
Income before tax            3,433,369     654,504    7,706,411      662,573
Income tax expense           1,493,758     300,273    3,378,492      304,433
 Net income                 $1,939,611  $  354,231   $4,327,919  $   358,140
Net income per share (a)    $      .14  $      .05   $      .34  $       .05

Weighted average shares
 outstanding (a)            13,772,066   7,225,936   12,613,385    7,131,410

Depreciation and amortization
 included in general and
 administrative expense     $1,643,759  $  221,898    $3,897,497  $  515,942

(a) Reflects a two-for-one stock split effective April 3, 1995 to stockholders of record on March 1, 1995.

CONTACT: FPA Medical Management, Inc.

Investor: Steven M. Lash, 619/295-7005

or

Morgen-Walke Associates

Robert P. Jones\ Jill Ruja

Media: Miriam Adler, 212-850-5600