FPA Medical Management announces record 1996 fourth quarter and year end results.

SAN DIEGO--(BUSINESS WIRE)--Feb. 27, 1997--

Earns 60 cents per share for the year

FPA Medical Management Inc. (NASDAQ:FPAM) today announced revenues and earnings for the fourth quarter and year ended Dec. 31, 1996.

Operating revenues for the fourth quarter ended Dec. 31, 1996 increased 166% to $151.0 million compared to $56.8 million in the same period last year, including the operations of Sterling Healthcare Group Inc., accounted for as a pooling of interests. Net income for the fourth quarter was $4.2 million or 18 cents per share, (excluding non-recurring charges of $36.3 million related to transaction costs associated with the acquisition of the Foundation Health affiliated medical centers in Arizona and California, Sterling Healthcare Group, and certain restucturing charges) compared to net income of $677,000 or 4 cents per share for the same period last year. Including the charges, the company reported a net loss of $23.5 million or $1.01 per share. Weighted average shares outstanding were 23,199,195 and 16,961,698 for the fourth quarters of 1996 and 1995, respectively, with shares outstanding including the effect of the Sterling pooling.

For the year ended Dec. 31, 1996, operating revenue increased 161% to $440.3 million compared to $168.4 million for the same period last year. Excluding the non-recurring charges, net income for the year was $13.0 million or 60 cents per share on weighted average shares outstanding of 21,702,786 compared to net income of $3.8 million or 28 cents per share on 13,693,193 weighted shares outstanding for the same period in the prior year. Including non-recurring charges of $38.0 million, FPA reported a loss of $15.7 million or 72 cents per share.

Commenting on the results, Dr. Seth Flam, President and Chief Executive Officer stated, "1996 was a year of significant achievement for FPA. During the year we successfully executed our growth strategy by entering into new geographic regions. Through the merger with Sterling Healthcare Group we now have operations in 25 states. We remain optimistic about our long-term prospects and have built a solid foundation for growth both internally and through strategic acquisitions."

Dr. Sol Lizerbram, Chairman added, "In 1996 we successfully attracted new payors into the FPA network and will continue to build upon these relationships as we expand into new regions across the country."

Steven Lash, Executive Vice President and Chief Financial Officer stated, "We are pleased with the strong revenue and earnings growth achieved during 1996. This growth continues to be driven by HMO enrollment contributed from new primary care physicians in the FPA network. At the end of 1996, the FPA network consisted of over 4,400 primary care physicians providing healthcare services to more than 623,000 HMO members."

FPA Medical Management Inc. is a national healthcare management service organization which organizes and manages primary care physician networks and provides contract management services to hospital based emergency departments.

Certain statements contained in this release are forward looking. Although FPA Medical Management Inc. believes that their expectations are based on reasonable assumptions within the bounds of their knowledge of their business and operations, there can be no assurance that actual results will not differ materially from their expectations. Factors that could cause actual results to differ from expectations include the difficulty in controlling healthcare costs and the possible negative effects of prospective healthcare reform. For other important factors that may cause actual results to differ materially from expectations and underlying assumptions, see reports by FPA Medical Management Inc. filed with the Securities and Exchange Commission.

            FPA Medical Management Inc. and Subsidiaries
                Consolidated Statements of Operations

                       Three months ended          Year ended
                      12/31/96     12/31/95    12/31/96    12/31/95

Operating revenues $151,047,589 $56,760,426  $440,318,613 $168,351,482
Medical services
 expense            103,910,891  38,648,335   313,706,608  113,742,878
Gross profit         47,136,698  18,112,090   126,612,005   54,608,604
General and
 administrative
 expense             73,469,215  16,574,082   137,201,187   46,482,673
Income (loss) from
 operations         (26,332,517)  1,538,008   (10,589,182)   8,125,931
Other expense - net  (2,788,850)   (307,282)   (5,127,244)  (1,568,646)
Income (loss) before
 tax                (29,121,367)  1,230,726   (15,716,426)   6,557,285
Income tax (expense)
 benefit              5,612,049    (553,887)           --   (2,723,320)
Net income (loss) $ (23,509,318) $  676,839  $(15,716,426) $ 3,833,965
Net income (loss)
 per share ()    $       (1.01) $      .04  $       (.72) $       .28
Weighted average
 shares
 outstanding (a)     23,199,195  16,961,698    21,702,786   13,693,193
Depreciation and
 amortization included
 in general and
 administrative
 expense         $    3,796,071 $ 1,318,064   $10,036,151  $ 3,413,725

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

CONTACT: FPA Medical Management Inc.

Steven M. Lash, 619/453-1000

or

Morgen-Walke Associates

Robert P. Jones, Jill Ruja

Miriam Adler, 212/850-5600