Form 10-K405 Response Oncology Inc

10-K405 - Annual report [Sections 13 and 15(d), S-K Item 405]

Published: 2001-04-17 00:00:00
Submitted: 2001-04-17
Period Ending In: 2000-12-31
g68543e10-k405.txt RESPONSE ONCOLOGY, INC.
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<TYPE>10-K405
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<FILENAME>g68543e10-k405.txt
<DESCRIPTION>RESPONSE ONCOLOGY, INC.
<TEXT>

<PAGE>   1
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K

(Mark One)

[X]    Annual Report Pursuant to Section 13 or 15(d) of Securities Exchange Act
       of 1934

       for the fiscal year ended December 31, 2000

[ ]    Transition Report Pursuant to Section 13 or 15(d) of the Securities
       Exchange Act of 1934

       For the Transition Period:
                                 -----------------
       Commission File Number:
                              --------------------

                             RESPONSE ONCOLOGY, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

       TENNESSEE                                             62-1212264
------------------------                               ------------------------
(State of incorporation)                               (I.R.S. Employer ID No.)

  1805 MORIAH WOODS BLVD., MEMPHIS, TN                                 38117
----------------------------------------                            ----------
(Address of principal executive offices)                            (Zip Code)

       Registrant's telephone number, including area code: (901) 761-7000
          Securities registered pursuant to Section 12(b) of the Act:

                                                          NAME OF EACH EXCHANGE
TITLE OF EACH CLASS                                        ON WHICH REGISTERED
---------------------------                               ---------------------

Common Stock, par value $.01 per share......................OTC Bulletin Board

           Securities registered pursuant to Section 12(g) of the Act:

                                      NONE

Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months 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 amendment to this
Form 10-K. [X]

As of March 9, 2001, 12,290,764 shares of Common Stock of Response Oncology,
Inc. were outstanding and the aggregate market value of such Common Stock held
by non-affiliates was $1,674,731 based on the closing sale price of $0.156 as of
that date.

Portions of registrant's Proxy Statement for use in connection with the Annual
Meeting of Shareholders to be held on July 10, 2001 are incorporated by
reference into Part III of this report, to the extent set forth therein, if such
Proxy Statement is filed with the Securities and Exchange Commission on or
before May 1, 2001. If such Proxy Statement is not filed by such date, the
information required to be presented in Part III will be filed as an amendment
to this report under cover of a Form 8. The exhibits for this Form 10-K are
listed on Page 21.


<PAGE>   2


                                     PART I

ITEM 1.  BUSINESS

THE COMPANY

Response Oncology, Inc. and its wholly-owned subsidiaries (the "Company") is a
comprehensive cancer management company. The Company provides advanced cancer
treatment services through outpatient facilities known as IMPACT(R) Centers
under the direction of practicing oncologists; owns the assets of and manages
the nonmedical aspects of oncology practices; compounds and dispenses
pharmaceuticals to certain oncologists for a fixed or cost plus fee; and
conducts outcomes research on behalf of pharmaceutical manufacturers.
Approximately 300 medical oncologists are associated with the Company through
these programs.

As further discussed throughout this document, the Company sees important
threats and opportunities for its businesses which will require management's
focused attention over the near-term. The material decline in the Company's
IMPACT Center volumes, coupled with continuing contractual issues in its
physician practice management segment, have required and will continue to
require significant and rapid strategic and operational responses to facilitate
the Company's continued viability. The Company's focused business plan is
currently being modified to not only incorporate such responses, but also to
explore management's plans to exploit key opportunity areas and more effectively
leverage important Company assets, including possibilities to expand and enhance
the Company's pharmaceutical services.

On March 29, 2001, the Company filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code and began operating its
business as a debtor-in-possession under the supervision of the Bankruptcy Court
for the Western District of Tennessee. A statutory creditors committee will be
appointed in the Chapter 11 case, and substantially all of the Company's
liabilities as of the filing date ("prepetition liabilities") are subject to
settlement under a plan of reorganization. Generally, actions to enforce or
otherwise effect repayment of all prepetition liabilities as well as all pending
litigation against the Company are stayed while the Company continues to operate
its business as debtor-in-possession. Schedules will be filed by the Company
with the Bankruptcy Court setting forth its assets and liabilities as of the
filing date as reflected in the Company's accounting records. Differences
between amounts reflected in such schedules and claims filed by creditors will
be investigated and either amicably resolved or subsequently adjudicated before
the Bankruptcy Court. The ultimate amount and settlement terms for such
liabilities are subject to a plan of reorganization, and accordingly, are not
presently determinable.

IMPACT SERVICES The Company presently operates 23 IMPACT Centers in 13 states
which provide high dose chemotherapy with stem cell support to cancer patients
on an outpatient basis. Through its IMPACT Centers, the Company has developed
extensive medical information systems and databases containing clinical and
patient information, analysis of treatment results and side effects and clinical
care pathways. These systems and databases support the Company's clinical trials
program, which involves carefully planned, uniform treatment regimens
administered to a significant group of patients together with the monitoring of
outcomes and side effects of these treatments. The clinical trials program
allows the Company to develop a rational means of improving future treatment
regimens by predicting which patients are most likely to benefit from different
treatments.

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

High dose chemotherapy is most appropriate for patients with lymphoma, acute
leukemia, multiple myeloma and breast and ovarian cancer. Patients referred to
the Company by the treating oncologists are placed on a treatment protocol



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developed from the cumulative analysis of the Company's approximately 4,000 high
dose cases. Cases conducted at the IMPACT Center begin with a drug regimen which
allows for the collection and cryopreservation of stem cells. A stem cell is a
cell which originates in the bone marrow and is a precursor to white blood
cells. At the appropriate time, stem cells capable of restoring immune system
and bone marrow functions are harvested over a two to three day period. The
harvested stem cells are then frozen and stored at the IMPACT Center, and
following confirmation of response to treatment and a satisfactory stem cell
harvest, patients receive high dose chemotherapy followed by reinfusion of stem
cells. Most patients are then admitted to an affiliated hospital for
approximately 8-12 days. After discharge, the patient is monitored in the
oncologist's office. The Company believes that the proprietary databases and the
information gathering techniques developed from the foregoing programs enable
practicing oncologists to cost effectively manage cancer cases while ensuring
quality. Clinical research conducted by the Company focuses on (i) improving
cancer survival rates; (ii) enhancing the cancer patient's quality of life;
(iii) reducing the costs of cancer care; and (iv) developing new approaches to
cancer diagnosis, treatment and post-treatment monitoring.

In May of 1999, the results of certain breast cancer studies were released at
the meeting of the American Society of Clinical Oncology (ASCO). These studies,
involving the use of high dose chemotherapy, sparked controversy among
oncologists, and, in the aggregate, caused confusion among patients, third-party
payers, and physicians about the role of high dose chemotherapy in the treatment
of breast cancer. Since the release of these data, the Company's high dose
business has slowed significantly, as evidenced by a 49% decrease in high dose
procedures in 2000 as compared to 1999 and a 64% decrease as compared to 1998.
High dose procedures in the Company's wholly owned IMPACT Centers decreased 54%
in 2000 as compared to 1999, while procedures in the Company's managed and joint
venture Centers decreased 43% and 34%, respectively. The Company closed 12
marginal IMPACT Centers in 1999 due to decreased patient volumes and 19
additional IMPACT Centers in 2000. On an ongoing basis, the Company evaluates
the economic feasibility of the centers in its IMPACT network. The Company is
generally able to re-deploy related assets throughout the IMPACT Center network.

While additional data presented at the 2000 ASCO annual meeting appeared to
somewhat clarify the role of high dose therapies for breast cancer and indicated
favorable preliminary results, the Company has not experienced an increase in
referrals for breast cancer patients nor does the Company expect this trend to
reverse in the foreseeable future. Because of the significance of this negative
trend to the Company's IMPACT Center volumes, the Company is actively evaluating
the best fashion in which to leverage the IMPACT Center network. This evaluation
includes the exploration of opportunities to deliver high dose therapies against
diseases other than breast cancer; however, there can be no assurance that other
such diseases and related treatment protocols can be identified, implemented,
and/or effectively managed through the existing network. Continuing declines in
high dose therapy volumes and/or an inability to develop new referral lines or
treatment options for the network that result in increased non-breast cancer
volumes will adversely affect the financial results of this line of business.
Such adverse results would likely require that the Company evaluate potential
additional closures of individual IMPACT Centers in the network.

During the first quarter of 2000, the Company decided to expand into the
specialty pharmaceutical business and began to put in place certain of the
resources necessary for this expansion. The Company intends to leverage its
expertise and resources in the delivery of complex pharmaceuticals to cancer
patients into the delivery of specialty drugs to patients with a wide range of
chronic, costly and complex diseases. Specifically, this will include the
distribution of new drugs with special handling requirements, and is expected to
involve the use of the Company's regional network of specialized pharmaceutical
centers. In addition, the Company intends to use its national network of IMPACT
Centers and its highly trained healthcare professionals to administer the most
fragile compounds to the expanded patient population. The Company has hired an
expert consultant to assist in the development of the business plan. In
addition, the Company recruited a chief medical officer and a vice president of
operations in the third quarter of 2000. These individuals have operating
responsibilities over the existing business segments and for the development of
the specialty pharmacutical business. The Company has also engaged in
discussions with potential strategic partners, including certain pharmaceutical
manufacturers, partner hospitals, and affiliated physicians. Various clinical
and marketing materials have also been developed. To date, these services have
been marketed to select physicians and third-party payers in existing locations
within the IMPACT Center network, but no patients utilizing such specialty drugs
have been treated by the Company. Although the Company is still pursuing this
strategy, given its current financial and operating constraints, there can be no
assurances that this plan will be successfully implemented.



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PHARMACEUTICAL SALES TO PHYSICIANS The Company also provides pharmacy
management services for certain medical oncology practices through its IMPACT
Center pharmacies. These services include compounding and dispensing
pharmaceuticals for a fixed or cost plus fee.

ONCOLOGY PRACTICE MANAGEMENT SERVICES During 1996, the Company adopted a
strategy of diversification into physician practice management and ultimately
consummated affiliations with 12 medical oncology practices, including 43
medical oncologists in Florida and Tennessee. Pursuant to management service
agreements ("Service Agreements"), the Company provides management services that
extend to all nonmedical aspects of the operations of the affiliated practices.
As described below, the Company has recognized deterioration in the value of
certain Service Agreements through financial charges and termination and
modification negotiations.

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

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

In February 1999 and March 1999, respectively, the Company announced that it had
terminated its Service Agreements with Knoxville Hematology Oncology Associates,
PLLC, and Southeast Florida Hematology Oncology Group, P.A., two of the
Company's three underperforming net revenue model relationships. Since these
were not "for cause" terminations initiated by the Company, the affiliated
practices were not responsible for liquidated damages. In 1998, the Company
recorded an impairment charge related to the three Service Agreements in
accordance with Financial Accounting Standards Board Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed Of" ("SFAS No. 121"). The structure of these contracts failed over
time to align the physician and Company incentives, producing deteriorating
returns and/or negative cash flows to the Company. The Company currently has no
plans to terminate the Service Agreement with the third physician group.

In the fourth quarter of 1999, the Company terminated its Service Agreement with
one single-physician practice in Florida. This termination was initiated on a
"for cause" basis and the Company is seeking recovery of liquidated damages and
other amounts owed. This dispute is scheduled for binding arbitration in the
second quarter of 2001. During the same period, the Company began negotiations
to terminate another Service Agreement with a single-physician practice. Since
this was not a "for cause" termination initiated by the Company, the affiliated
practice was not responsible for liquidated damages. The Company experienced
deteriorating returns on this particular Service Agreement and concluded that
continuing the relationship was not economically feasible. At December 31, 1999,
the Company recorded an impairment charge related to both Service Agreements and
associated assets. The Company terminated the second Service Agreement in April
of 2000.



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In the fourth quarter of 2000, the Company began negotiating, in response to
certain contract disuptes, to sell the assets of Oncology/Hematology Group of
South Florida, P.A. ("the OHG Group") to the existing physician group.
Concurrent with the sale of the assets, the Service Agreement was terminated,
and the parties signed a pharmacy management agreement for the Company to
provide turnkey pharmacy management services to the practice. The sale and
pharmacy management agreement were completed and effective February 1, 2001. At
December 31, 2000, the Company adjusted the Service Agreement and associated
assets to their net realizable value as measured by the termination and sale
agreement.

In the first quarter of 2001, the Company began negotiating the termination of a
three-physician practice in Florida. These negotiations resulted from several
contractual disagreements between the practice and the Company. Although the
termination is probable, the financial terms have not been agreed upon and
therefore, the financial impact of any potential termination is not currently
estimable.

CANCER RESEARCH SERVICES Since 1989, the Company has conducted a clinical trials
program pursuant to which carefully planned, uniform treatments administered to
a substantial number of IMPACT Center patients have been monitored and studied,
with the results being collected in a database and utilized to predict outcomes
and determine utilization of high dose chemotherapy as a treatment. In addition,
the Company has recorded outcomes from over 4,000 cases in which high dose
chemotherapy was utilized as a treatment and has developed and continues to
refine treatment pathways, which forecast the best outcome with the lowest
possible cost. Pursuant to agreements between the Company and the oncologists
who supervise their patients' treatment in IMPACT Centers, such oncologists are
obligated to record and monitor outcomes, collect information and report such
information to the Company.

The Company also utilizes its outcomes database to provide various types of data
to pharmaceutical companies regarding the use of their products. The IMPACT
Center network and the Company's medical information systems make the Company
favorably suited to this process. The Company is currently participating in
several projects with leading pharmaceutical manufacturers to furnish data in
connection with FDA applications and post-FDA approval marketing studies.
Revenue from these contracts helps to underwrite the Company's clinical trials
expenses. Such relationships with pharmaceutical companies allow patients and
physicians earlier access to drugs and therapies which enhances the Company's
role as a participant in oncological developments. The Company has been very
deliberate in the selection of new clinical trials in which it participates and
is currently evaluating the viability of this segment.

Certain financial information relating to each of the Company's reportable
segments is included in Note L of the Company's consolidated financial
statements.

COMPETITION

Most community hospitals with a commitment to cancer treatment are evaluating
their need to provide high dose treatments, and other entities are competing
with the Company in providing high dose services similar to those offered by the
Company. Such competition has long been contemplated by the Company, and is
indicative of the evolution of this field. While the Company believes that the
demand for high dose chemotherapy services is sufficiently large to support
several significant providers of these services, the Company is subject to
increasing competitive risks from these entities.

In addition, the Company is aware of at least two competitors specializing in
the management of oncology practices and two other physician management
companies that manage at least one oncology practice. Several health care
companies with established operating histories and significantly greater
resources than the Company are also providing at least some management services
to oncologists. There are certain other companies, including hospitals, large
group practices, and outpatient care centers, that are expanding their presence
in the oncology market and may have access to greater resources than the
Company. Furthermore, organizations specializing in home and ambulatory infusion
care, radiation therapy, and group practice management compete in the oncology
market.

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



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GOVERNMENT REGULATION

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

The Company believes it is in material compliance with applicable healthcare
laws. During 1999, the Company adopted a formal compliance program and, as part
of such program, continues to monitor ongoing developments in healthcare laws
and regulations. However, the laws and regulations applicable to the Company are
subject to significant change and evolving interpretations and, therefore, there
can be no assurance that a review of the Company's or the affiliated physicians'
practices by a court or law enforcement or regulatory authority will not result
in a determination that could materially adversely affect the operations of the
Company or the affiliated physicians. Furthermore, there can be no assurance
that the laws applicable to the Company will not be amended in a manner that
could adversely affect the Company, its permissible activities, the relative
costs associated with doing business, and the amount of reimbursement by
government and other third-party payers.

FEDERAL LAW

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

FALSE AND OTHER IMPROPER CLAIMS The federal government is authorized to impose
criminal, civil and administrative penalties on any person or entity that files
a false claim for reimbursement from any of the Federal Reimbursement Programs.
Criminal penalties are also available in the case of claims filed with private
insurers if the government can show that the claims constitute mail fraud or
wire fraud or violate state false claims prohibitions. While the criminal
statutes are generally reserved for instances involving fraudulent intent, the
civil and administrative penalty statutes are being applied by the government in
an increasingly broader range of circumstances. By way of example, the federal
government recently has brought suits which maintain that a pattern of claiming
reimbursement for unnecessary services where the claimant should have known that
the services were unnecessary, and that claiming reimbursement for substandard
services where the claimant knows the care was substandard, are actionable
claims. In addition, at least one federal appellate court has affirmed a finding
of liability under the false claims statutes based upon reckless disregard of
the factual basis of claims submitted, falling short of actual knowledge. Severe
sanctions under these statutes, including exclusion from Federal Reimbursement
Programs, have been levied even in situations not resulting in criminal
convictions. The Company believes that its billing activities on behalf of
affiliated practices through Service Agreements are in material compliance with
such laws, but there can be no assurance that the Company's activities will not
be challenged or scrutinized by governmental authorities. A determination that
the Company or any affiliated practice has violated such laws could have a
material adverse effect on the Company.

ANTI-KICKBACK LAW Federal law commonly known as the "Anti-kickback Statute"
prohibits the knowing or willful offer, solicitation, payment or receipt of
anything of value (direct or indirect, overt or covert, in cash or in kind)
which is intended to induce the referral of patients covered by Federal
Reimbursement Programs, or the ordering of items or services reimbursable under
those programs. The law also prohibits remuneration that is intended to induce
the recommendation of, or furnishing, or the arranging for, the provision of
items or services reimbursable under Federal Reimbursement Programs. The law has
been broadly interpreted by a number of courts to prohibit remuneration which is
offered or paid for otherwise legitimate purposes if the circumstances show that
one purpose of the arrangement is to induce referrals. Even bona fide investment
interests in a healthcare provider may be questioned under the Anti-kickback



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Statute if the government concludes that the opportunity to invest was offered
as an inducement for referrals. The penalties for violations of this law include
criminal sanctions and exclusion from the federal healthcare program.

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

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

Although neither the investments in the Company by physicians nor the Service
Agreements between the Company and physicians qualify for protection under the
safe harbor regulations, the Company does not believe that these activities fall
within the types of activities the Anti-kickback Statute was intended to
prohibit. A determination that the Company had violated or is violating the
Anti-kickback Statute would have a material adverse effect on the Company's
business.

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

On January 4, 2001, the Health Care Financing Administration ("HCFA") issued a
partial final rule (the "Phase I Final Regulations") regarding certain
provisions of the Stark Law with an effective date for the relevant portions of
January 4, 2002. Certain administrative review initiatives may have the effect
of postponing the effective date until March 5, 2002. A second rulemaking, Phase
II of the Stark Law regulations, that would address the remaining sections of
the Stark Law is pending. It is not known when these additional final
regulations will be promulgated. The Phase I Final Regulations expand upon the
statutory exceptions and contemplate that designated health services may be
provided by a physician practice or by another corporation if the relevant
exceptions delineated in the regulations apply. In any event, the federal
regulatory authorities have indicated through various charges that recently have
been brought against providers that they consider the Stark Law to be
sufficiently self-implementing that charges may be brought when violations of
unambiguous elements of the Stark Law are found.

The Company believes that in the vast majority of situations it would not be
construed as a provider of any designated health service under the Stark Law for
which the Company claims reimbursement from Medicare or Medicaid. However, there
can be no certainty that the Company will not be deemed to be the provider for
designated health services in at least some circumstances. In that event,
referrals from the physicians for designated health services will be permissible
only if the relevant contractual relationship(s) meets an exception to the Stark
Law prohibitions. To qualify for such exception, the payments made under the


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relevant contract must be set at fair market value as well as meeting other
requirements of the relevant Stark Law exception. The Company intends to
structure its arrangements so as to qualify for applicable exceptions under the
Stark Law; however, there can be no assurance that a review by courts or
regulatory authorities would not result in a contrary determination. A finding
of noncompliance with the Stark Law could have a material adverse effect upon
the Company and subject it and the Company's affiliated physicians to penalties
and sanctions.

STATE LAW

STATE ANTI-KICKBACK LAWS Many states have laws that prohibit the payment of
kickbacks in return for the referral of patients. Some of these laws apply only
to services reimbursable under the state Medicaid program. However, a number of
these laws apply to all healthcare services in the state, regardless of the
source of payment for the service. The Company pays oncologists who supervise
their patients' treatment at the IMPACT Centers certain professional fees for
collecting and monitoring treatment and outcomes data and reporting such data to
the Company. The Company believes such fees reflect the fair market value of the
services rendered by such physicians to the Company. However, the laws in most
states regarding kickbacks have been subjected to limited judicial and
regulatory interpretation and, therefore, no assurances can be given that the
Company's activities will be found to be in compliance. Noncompliance with such
laws could have a material adverse effect upon the Company and subject it and
such physicians to penalties and sanctions.

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

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

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

The Florida Board of Medicine recently ruled in a declaratory statement that
payments of 30% of a physician group's net income to a practice management
company in return for a number of services, including expansion of the practice
by increasing patient referrals through the creation of provider networks,
affiliation with other networks, and the negotiation of managed care contracts,
constituted fee-splitting arrangements in violation of the Florida law
prohibiting fee-splitting and could subject the physicians engaged in such
arrangements to disciplinary action. This order has been affirmed by a Florida
appellate court, though the order itself only applies to the physician practice
management company and the individual physicians whose fact situation was
presented to the Florida Board of Medicine for a declaratory statement. While
the Company believes that its Service Agreements are substantially different
from the management services agreement that the Florida Board of Medicine ruled
on, there is a risk that the adverse decision by the Florida court on the case
presented could have an adverse precedential impact on the Company's Service
Agreements with Florida affiliated practices. The Company's Service Agreements
contain provisions requiring modification of the Service Agreements in such
event in a manner that preserves the economic value of the Service Agreement,
but there can be no assurance that Florida courts would specifically enforce
such contractual provisions. The adverse determinations of the Florida court
could have a material adverse effect on the Company.

CORPORATE PRACTICE OF MEDICINE Most states prohibit corporations from engaging
in the practice of medicine. Many of these state doctrines prohibit a business
corporation from employing a physician. However, states differ with respect to
the extent to which a licensed physician can affiliate with corporate entities




                                       8
<PAGE>   9

for the delivery of medical services. Some states interpret the "practice of
medicine" broadly to include decisions that have an impact on the practice of
medicine, even where the physician is not an employee of the corporation and the
corporation exercises no discretion with respect to the diagnosis or treatment
of a particular patient.

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

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

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

REIMBURSEMENT AND COST CONTAINMENT

Approximately 50% of the net revenue of the Company's practice management
division and less than 5% of the revenue of the Company's IMPACT division are
derived from payments made by government sponsored health care programs
(principally Medicare and Medicaid). As a result, any change in reimbursement
regulations, policies, practices, interpretations or statutes could adversely
affect the operations of the Company. The Company expects that the Federal
Government will continue to constrain the growth of spending in the Medicare and
Medicaid programs. To the extent the Company's volume adjusted costs increase,
the Company will not be able to recover such cost increases from government
reimbursement programs. In addition, because of cost containment measures and
market changes in non governmental insurance plans, it is increasingly unlikely
that the Company will be able to shift cost increases to non governmental
payors.

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

EMPLOYEES

As of March 1, 2001, the Company employed approximately 393 persons,
approximately 298 of whom were full-time employees. Under the terms of the
Service Agreements with the affiliated physician groups, the Company is
responsible for the practice compensation and benefits of the groups'
non-physician medical personnel. No employee of the Company or of any affiliated
physician group is a member of a labor union or subject to a collective
bargaining agreement. The Company believes that its labor relations are good.

ITEM 2.  PROPERTIES

As of March 1, 2001, the Company leased approximately 24,000 square feet of
space at 1805 and 1835 Moriah Woods Boulevard, in Memphis, Tennessee, where the
Company's headquarters and central business office are located. The leases
expire in 2002. The Company also leases all facilities housing the Company's
operating facilities. Management believes that the Company's properties are well


                                       9
<PAGE>   10


maintained and suitable for its business operations. The Company may lease
additional space in connection with the development of future treatment
facilities or practice affiliations.

ITEM 3.  LEGAL PROCEEDINGS

The Company filed voluntary petitions seeking reorganization under Chapter 11 of
the United States Bankruptcy Code on March 29, 2001. Additional information
related to the filing is set forth under Part I, Item 1 and Part II, Item 7 of
this Form 10-K and Note B of the Notes to Consolidated Financial Statements.
Such information is incorporated herein by reference.

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

ITEM 4.  MATTERS SUBMITTED TO STOCKHOLDERS' VOTE

Not applicable.




                                       10
<PAGE>   11


                                     PART II

ITEM 5.  MARKET INFORMATION AND RELATED STOCKHOLDER MATTERS

The Company's common stock traded on The Nasdaq Stock Market under the symbol
"ROIX" through March 14, 2001. As of this date, the Company's common stock was
held by approximately 1,874 shareholders of record. The Company's common stock
was delisted from the Nasdaq Stock Market effective March 15, 2001 due to
non-compliance with the listing standard that requires the Company's stock to
maintain a minimum bid price of $1.00 or more. The Company does not plan to
further appeal the delisting. The Company's common stock is currently traded on
the OTC Bulletin Board.

The high and low closing sale prices of the Company's common stock, as listed on
the Nasdaq National Market System, were as follows for the quarterly periods
indicated.

<TABLE>
<CAPTION>

                  YEAR ENDED DECEMBER 31, 2000                                          YEAR ENDED DECEMBER 31, 1999
----------------------------------------------------------------         ------------------------------------------------------

                                     HIGH             LOW                                           HIGH            LOW
                                     ----             ---                                           ----            ---

<S>                                 <C>              <C>                  <C>                      <C>              <C>
First Quarter                       $ 3 1/16         $ 1  1/8             First Quarter            $ 4 3/8          $ 2 3/8

Second Quarter                      $ 1  3/8         $  25/32             Second Quarter           $ 3  1/2         $ 2  1/2

Third Quarter                       $ 1  7/8         $    7/8             Third Quarter            $ 3              $ 23/32

Fourth Quarter                      $  31/32         $   5/32             Fourth Quarter           $ 1  7/8         $    3/8


</TABLE>


The Company has not paid any cash dividends on the common stock since its
inception. The Board of Directors does not intend to pay cash dividends on the
common stock in the foreseeable future, but intends to retain all earnings, if
any, for use in the Company's business.

RECENT SALES OF UNREGISTERED SECURITIES

In April 1999, the Company issued 36,870 shares of its common stock and
unsecured and subordinated 4% promissory notes in the aggregate principal amount
of $244,000, payment of which may be made, at the option of the holders, in
shares of common stock at a conversion price equal to 120% of the ten day
average closing price per share on the Nasdaq on the election date
(collectively, the "Unregistered Securities"), in one acquisition transaction
pursuant to which the Company acquired the operating assets of a medical
oncology practice from the physician owners ("Physician Owners") thereof. The
Unregistered Securities were issued in exchange for certain assets of the
professional association owned by the Physician Owners. The Unregistered
Securities were offered and issued to the Physician Owners in reliance upon the
exemption from registration under Section 4(2) of the Securities Act of 1933.
Each of the Physician Owners was an accredited investor, as that term is defined
in Rule 501 under Regulation D.



                                       11
<PAGE>   12


ITEM 6.  SELECTED FINANCIAL DATA
         (in thousands except per share data)

The following table sets forth certain selected consolidated financial data and
should be read in conjuction with the Company's consolidated financial
statements and related notes appearing elsewhere in this report.

<TABLE>
<CAPTION>

                                                                       YEARS ENDED DECEMBER 31,
                                                  ------------------------------------------------------------------------
                                                     2000            1999            1998            1997           1996
                                                  ---------       ---------       ---------       ---------      ---------
<S>                                               <C>             <C>             <C>             <C>            <C>
Net revenue                                       $ 130,833       $ 135,567       $ 128,246       $ 101,920      $  67,353

Net earnings (loss)                                 (14,419)         (1,693)        (17,448)          4,202            910

Net earnings (loss) to common stockholders          (14,419)         (1,693)        (17,449)          4,199            907

Total assets                                         92,413         119,645         126,753         149,075        142,950

Long-term debt and capital lease obligations            303          36,025          33,252          35,443         62,230

Earnings (loss) per common share:

    Basic                                         ($   1.17)      ($   0.14)      ($   1.45)      $    0.36      $    0.11
                                                  =========       =========       =========       =========      =========
    Diluted                                       ($   1.17)      ($   0.14)      ($   1.45)      $    0.36      $    0.11
                                                  =========       =========       =========       =========      =========
</TABLE>

On March 29, 2001, the Company filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court. Although the Company is currently operating its business as a
debtor-in-possession under the jurisdiction of the Bankruptcy Court, the
continuation of its business as a going concern is contingent upon, among other
things, resolution of matters related to the bankruptcy filing as described in
Note B. Chief among these matters is the status of the Company's credit facility
and revisions to the credit facility that might result from resolution of the
bankruptcy matters, as further described in Note F. The selected financial data
above, was derived from consolidated financial statements. The consolidated
financial statements do not include any adjustments that might result from the
outcome of these uncertainties, nor do the consolidated financial statements
include any adjustments that might result from the establishment, settlement and
classification of liabilities that may be required in connection with
restructuring the Company as it reorganizes under Chapter 11 of the United
States Bankruptcy Code.

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

OVERVIEW

The Company is a comprehensive cancer management company. The Company provides
advanced cancer treatment services through outpatient facilities known as IMPACT
Centers under the direction of practicing oncologists; owns the assets of and
manages the nonmedical aspects of oncology practices; compounds and dispenses
pharmaceuticals to certain medical oncology practices for a fixed or cost plus
fee; and conducts outcomes research on behalf of pharmaceutical manufacturers.
Approximately 300 medical oncologists are associated with the Company through
these programs.

As further discussed throughout this document, the Company sees important
threats and opportunities for its businesses which will require management's
focused attention over the near-term. The material decline in the Company's
IMPACT Center volumes, coupled with continuing contractual issues in its
physician practice management segment, have required and will continue to
require significant and rapid strategic and operational responses to facilitate
the Company's continued viability. The Company's focused business plan is
currently being modified to not only incorporate such responses, but also to
explore management's plans to exploit key opportunity areas and more effectively
leverage important Company assets, including possibilities to expand and enhance
the Company's pharmaceutical services.

In order to preserve its operational strength and the assets of its businesses,
the Company sought protection of the federal bankruptcy laws by filing a
voluntary petition for relief on March 29, 2001, under Chapter 11 of the United




                                       12
<PAGE>   13
States Bankruptcy Code. Under Chapter 11, the Company continues to conduct
business in the ordinary course under the protection of the Bankruptcy Court,
while a reorganization plan is developed to restructure its obligations and its
operations. KPMG, L.L.P., the Company's financial statement auditors, have
included an explanatory paragraph to their opinion dated March 30, 2001, stating
that the bankruptcy filing and related matters raise substantial doubt about the
Company's ability to continue as a going concern. There can be no assurance that
any reorganization plan that is effected will be successful.

In 1990 the Company began development of a network of specialized IMPACT Centers
to provide complex outpatient chemotherapy services under the direction of
practicing oncologists. The majority of the therapies provided at the IMPACT
Centers entail the administration of high dose chemotherapy coupled with
peripheral blood stem cell support of the patient's immune system. At December
31, 2000, the Company's network consisted of 23 IMPACT Centers, including 14
wholly-owned, 7 managed programs, and 2 owned and operated in joint venture with
a host hospital. Prior to January 1997, the Company derived substantially all of
its revenues from outpatient cancer treatment services through reimbursements
from third party payors on a fee-for-service or discounted fee-for-service
basis. During 1997, the Company began concentrating its efforts on contracting
on a "global case rate" basis where the Company contracts with the appropriate
third-party payor to receive a single payment that covers the patient's entire
course of treatment at the center and any necessary in-patient care.

In May of 1999, the results of certain breast cancer studies were released at
the meeting of the American Society of Clinical Oncology (ASCO). These studies,
involving the use of high dose chemotherapy, sparked controversy among
oncologists, and, in the aggregate, caused confusion among patients, third-party
payers, and physicians about the role of high dose chemotherapy in the treatment
of breast cancer. Since the release of these data, the Company's high dose
business has slowed significantly, as evidenced by a 49% decrease in high dose
procedures in 2000 as compared to 1999 and a 64% decrease as compared to 1998.
High dose procedures in the Company's wholly-owned IMPACT Centers decreased 54%
in 2000 as compared to 1999, while procedures in the Company's managed and joint
venture Centers decreased 43% and 34%, respectively. The Company closed 12
marginal IMPACT Centers in 1999 due to decreased patient volumes and 19
additional IMPACT Centers in 2000. On an ongoing basis, the Company evaluates
the economic feasibility of the centers in its IMPACT network. The Company is
generally able to re-deploy related assets throughout the IMPACT Center network.

While additional data presented at the 2000 ASCO annual meeting appeared to
somewhat clarify the role of high dose therapies for breast cancer and indicated
favorable preliminary results, the Company has not experienced an increase in
referrals for breast cancer patients nor does the Company expect this trend to
reverse in the foreseeable future. Because of the significance of this negative
trend to the Company's IMPACT Center volumes, the Company is actively evaluating
the best fashion in which to leverage the IMPACT Center network. This evaluation
includes the exploration of opportunities to deliver high dose therapies against
diseases other than breast cancer; however, there can be no assurance that other
such diseases and related treatment protocols can be identified, implemented,
and/or effectively managed through the existing network. Continuing declines in
high dose therapy volumes and/or an inability to develop new referral lines or
treatment options for the network that result in increased non-breast cancer
volumes will adversely affect the financial results of this line of business.
Such adverse results would likely require that the Company evaluate potential
additional closures of individual IMPACT Centers in the network.

During the first quarter of 2000, the Company decided to expand into the
specialty pharmaceutical business and began to put in place certain of the
resources necessary for this expansion. The Company intends to leverage its
expertise and resources in the delivery of complex pharmaceuticals to cancer
patients into the delivery of specialty drugs to patients with a wide range of
chronic, costly and complex diseases. Specifically, this will include the
distribution of new drugs with special handling requirements, and is expected to
involve the use of the Company's regional network of specialized pharmaceutical
centers. In addition, the Company intends to use its national network of IMPACT
Centers and its highly trained healthcare professionals to administer the most
fragile compounds to the expanded patient population. The Company has hired an
expert consultant to assist in the development of the business plan. In
addition, the Company recruited a chief medical officer and a vice president of
operations in the third quarter of 2000. These individuals have operating
responsibilities over the existing business segments and for the development of
the specialty pharmacutical business. The Company has also engaged in
discussions with potential strategic partners, including certain pharmaceutical
manufacturers, partner hospitals, and affiliated physicians. Various clinical
and marketing materials have also been developed. To date, these services have
been marketed to select physicians and third-party payers in existing locations
within the IMPACT Center network, but no patients utilizing such specialty drugs
have been treated by the Company. Although the Company is still pursuing this
strategy, given its current financial and operating constraints, there can be no
assurances that this plan will be successfully implemented.



                                       13
<PAGE>   14

The Company also provides pharmacy management services for certain medical
oncology practices through its IMPACT Center pharmacies. These services include
compounding and dispensing pharmaceuticals for a fixed or cost plus fee.

During 1996, the Company executed a strategy of diversification into physician
practice management and subsequently affiliated with 43 physicians in 12 medical
oncology practices in Florida and Tennessee. Pursuant to Service Agreements, the
Company provides management services that extend to all nonmedical aspects of
the operations of the affiliated practices. The Company is responsible for
providing facilities, equipment, supplies, support personnel, and management and
financial advisory services.

In its practice management relationships, the Company has predominantly used two
models of Service Agreements: (i) an "adjusted net revenue" model; and (ii) a
"net operating income" model. Service Agreements utilizing the adjusted net
revenue model provide for payments out of practice net revenue, in the following
order: (A) physician retainage (i.e. physician compensation, benefits, and
perquisites, including malpractice insurance) equal to a defined percentage of
net revenue ("Physician Expense"); (B) a clinic expense portion of the
management fee (the "Clinic Expense Portion") equal to the aggregate actual
practice operating expenses exclusive of Physician Expense; and (C) a base
service fee portion (the "Base Fee") equal to a defined percentage of net
revenue. In the event that practice net revenue is insufficient to pay all of
the foregoing in full, then the Base Fee is first reduced, followed by the
Clinic Expense Portion of the management fee, and finally, Physician Expense,
therefore effectively shifting all operating risk to the Company. In each
Service Agreement utilizing the adjusted net revenue model, the Company is
entitled to a Performance Fee equal to a percentage of Annual Surplus, defined
as the excess of practice revenue over the sum of Physician Expense, the Clinic
Expense Portion, and the Base Fee.

Service Agreements utilizing the net operating income model provide for a
management fee equal to the sum of a Clinic Expense Portion (see preceding
paragraph) plus a percentage (the "Percentage Portion") of the net operating
income of the practice (defined as net revenue minus practice operating
expenses). Practice operating expenses do not include Physician Expense. In
those practice management relationships utilizing the net operating income model
Service Agreement, the Company and the physician group share the risk of expense
increases and revenue declines, but likewise share the benefits of expense
savings, economies of scale and practice enhancements.

Each Service Agreement contains a liquidated damages provision binding the
physician practice and the principals thereof in the event the Service Agreement
is terminated "for cause" by the Company. The liquidated damages are a declining
amount, equal in the first year to the purchase price paid by the Company for
practice assets and declining over a specified term. Principals are relieved of
their individual obligations for liquidated damages only in the event of death,
disability, or retirement at a predetermined age. Each Service Agreement
provides for the creation of an oversight committee, a majority of whom are
designated by the practice. The oversight committee is responsible for
developing management and administrative policies for the overall operation of
each clinic. However, under each Service Agreement, the affiliated practice
remains obligated to repurchase practice assets, typically including intangible
assets, in the event the Company terminates the Service Agreement for cause.

In February 1999 and April 1999, respectively, the Company announced that it had
terminated its Service Agreements with Knoxville Hematology Oncology Associates,
PLLC, and Southeast Florida Hematology Oncology Group, P.A., two of the
Company's three underperforming net revenue model relationships. Since these
were not "for cause" terminations initiated by the Company, the affiliated
practices were not responsible for liquidated damages. In 1998 the Company
recorded an impairment charge related to the three Service Agreements in
accordance with Financial Accounting Standards Board Statement No. 121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets To
Be Disposed Of" ("SFAS No. 121"). The structure of these contracts failed over
time to align the physician and Company incentives, producing deteriorating
returns and/or negative cash flows to the Company. The Company currently has no
plans to terminate the Service Agreement with the third physician group.

In the fourth quarter of 1999, the Company terminated its Service Agreement with
one single-physician practice in Florida. This termination was initiated on a
"for cause" basis and the Company is seeking recovery of liquidated damages.
During the same period, the Company began negotiations to terminate another
Service Agreement with a single-physician practice. Since this was not a "for
cause" termination initiated by the Company, the affiliated practice was not
responsible for liquidated damages. The Company experienced deteriorating
returns on this particular Service Agreement and concluded that continuing the




                                       14
<PAGE>   15

relationship was not economically feasible. At December 31, 1999, the Company
had recorded an impairment charge related to both Service Agreements and
associated assets. The Company terminated the second Service Agreement in April
of 2000.

In the fourth quarter of 2000, the Company began negotiating, in response to
certain contract disuptes, to sell the assets of the OHG Group, to the existing
physician group. Concurrent with the sale of the assets, the Service Agreement
was terminated, and the parties signed a pharmacy management agreement for the
Company to provide turnkey pharmacy management services to the practice. The
sale and pharmacy management agreement were completed and effective February 1,
2001. At December 31, 2000, the Company adjusted the Service Agreement and
associated assets to their net realizable value as measured by the termination
and sale agreement.

In the first quarter of 2001, the Company began negotiating the termination of a
three-physician practice in Florida. These negotiations resulted from several
contractual disagreements between the practice and the Company. Although the
termination is probable, the financial terms have not been agreed upon and
therefore, the financial impact of any potential termination is not currently
estimable.

From time to time, the Company and its affiliated physicians disagree on the
interpretation of certain provisions of the Service Agreements. The Company has
one pending arbitration proceeding and recently received a ruling on another
case. The pending arbitration matter relates to a dispute over the methodology
utilized for certain financial calculations provided for in the Service
Agreement. The dispute is generally related to the timing of recording certain
adjustments that affect the calculation of the Company's service fee and
physician compensation. The Company believes that it has a contractual basis for
its position, but there can be no assurances that the Company will prevail in
arbitration. In such event, the Company's service fee and the physician's
compensation would be increased. The arbitration ruling received by the Company
addressed issues related to the economic feasibility of certain capital
expenditures. In this matter, the arbitrator ruled that outlays by the Company
for capital expenditures are subject to economic feasibility standards. However,
the Company was required to expand the office space for this particular
practice.

In January 2001, the Company received a notice of default from one of its
affiliated physician practices alleging a breach of contract for failure to
obtain or take adequate steps to develop certain ancillary services. The Company
has negotiated a forbearance agreement with the practice to prevent issuance of
a notice of termination while it works to develop the project. These activities
have included negotiations related to building construction and the purchase of
land and equipment. While the Company has made progress on the development of
these services, there can be no assurance that the Company will satisfy all
requirements of the project in the agreed upon timeframe. If the practice issues
a notice of termination, the Company will invoke mandatory arbitration to try to
avoid termination and obtain a ruling that the Company has not breached the
contract or has made sufficient progress towards a cure.

During the second quarter of 2000, the Health Care Financing Administration
("HCFA"), which runs the Medicare program, announced its intent to adjust
certain pharmaceutical reimbursement mechanisms. HCFA targeted dozens of drugs,
principally those used for the treatment of cancer and AIDS. More specifically,
Medicare utilizes the average wholesale price ("AWP") of pharmaceuticals as the
benchmark for reimbursement. It is HCFA's stated position that some drug
companies are reporting artificially inflated AWPs to industry guides that are
used for government-reimbursement purposes resulting in overpayments by Medicare
and excess profits for physicians and other providers. HCFA's investigation into
inflated AWPs is ongoing.

On September 8, 2000, HCFA announced that the previously reported reductions in
reimbursement rates for oncology drugs would not be fully implemented pending a
comprehensive study to develop more accurate reimbursement methodologies for
cancer therapy services. However, HCFA did encourage its intermediaries to adopt
a new fee schedule for selected chemotherapy agents. To date, the Company has
not experienced any reduction in reimbursement levels related to these
chemotherapy agents. However, should any of these reimbursement changes occur,
it could have a material adverse effect on reimbursement for certain
pharmaceutical products utilized by the Company's affiliated physicians in the
practice management division. Consequently, the Company's management fee in its
practice management relationships could be materially reduced. Given the dynamic
nature of the proposed changes, the Company is currently not able to reasonably
estimate their financial impact.

On December 1, 2000, the Company received a delisting notification from the
Nasdaq Stock Market for failure to maintain a minimum bid price of $1.00 over



                                       15
<PAGE>   16
the last 30 consecutive trading days as required under the maintenance
standards of the Nasdaq National Market. The Company had 90 calendar days, or
until January 30, 2001, to regain compliance with this rule by obtaining a bid
price on its common stock of at least $1.00 for a minimum of 10 consecutive
trading days. On March 15, 2001, the Company's common stock was delisted from
the Nasdaq Stock Market. The decision was issued following a written appeal and
hearing before the Nasdaq Listing Qualifications Panel due to the non-compliance
with the listing standard that requires the Company's stock to maintain a
minimum bid price of $1.00 or more. The Company's common stock is currently
traded on the OTC Bulletin Board.

RESULTS OF OPERATIONS

2000 COMPARED TO 1999

Net revenue decreased 3% to $130.8 million for the year ended December 31, 2000,
compared to $135.6 million for the year ended December 31, 1999. The $14.1
million, or 50%, decrease in IMPACT Center revenue continues to reflect the
confusion and related pullback in breast cancer admissions resulting from high
dose chemotherapy/breast cancer study results presented at ASCO in May 1999. In
addition, the Company experienced a decline in insurance approvals on the high
dose referrals obtained. Since the release of the study results, the Company's
high dose business has slowed significantly, as evidenced by a 49% decrease in
high dose procedures in 2000 as compared to 1999. Practice management service
fees were $77.7 million in 2000 compared to $68.4 million in 1999 for a 14%
increase. This increase was due to growth in patient volumes for both
non-ancillary and ancillary services and pharmaceutical utilization, and
occurred despite a 7% decrease in the number of physicians under management
agreements during the year ended December 31, 2000 as compared to 1999.
Additionally, pharmaceutical sales to physicians increased $1 million, or 3%,
from $37.5 million in 1999 to $38.5 million in 2000. This increase is due to
increased drug utilization by the physicians serviced under these agreements,
but was tempered by the termination of pharmaceutical sales agreements with two
physician practices effective July 1, 2000. As described earlier, management
believes that enhanced pharmaceutical services represent a significant area of
opportunity for revenue growth.

Salaries and benefits costs decreased $4.5 million, or 17%, from $25.8 million
in 1999 to $21.3 million in 2000. The decrease was primarily due to the
termination of certain Service Agreements in 1999, the modification of a Service
Agreement which resulted in a change in the manner in which physician
compensation is recorded, the closing of various IMPACT Centers and a reduction
in corporate staffing. Salaries and benefits expense as a percentage of net
revenue was 16% in 2000 and 19% in 1999.

Supplies and pharmaceuticals expense increased $9.2 million, or 12%, from 1999
to 2000. The increase was primarily related to greater utilization of new
chemotherapy agents with higher costs in the practice management division and
increased volume in pharmaceutical sales to physicians. Supplies and
pharmaceuticals expense as a percentage of net revenue was 68% and 59% for the
years ended 2000 and 1999, respectively. The increase as a percentage of net
revenue was due to the increase in pharmaceutical sales to physicians as well as
general price increases in pharmaceuticals used in the practice management
division. Pharmaceutical sales to physicians have lower margins than high dose
treatment and physician practice management pharmaceutical margins.

Other operating expenses decreased $2.8 million, or 24%, from $11.5 million in
1999 to $8.7 million in 2000. Other operating expenses consist primarily of
medical director fees, purchased services related to global case rate contracts,
rent expense, and other operational costs. The decrease was primarily due to the
closure of various IMPACT Centers and lower purchased services and physician
fees as a result of lower IMPACT and cancer research volumes as compared to the
year ended December 31, 1999.

General and administrative expense increased $.4 million or 7%, from $6.5
million in 1999 to $6.9 million in 2000. The increase was primarily due to the
net effect of increased expenses for professional services, principally
consulting fees related to the Company's restructuring efforts, and decreased
administrative expenses due to the closure of various IMPACT Centers and the
termination of certain Service Agreements.

For the year ended December 31, 2000, all operating and general expenses other
than those related to pharmaceuticals and supplies were reduced by $6.9 million,



                                       16
<PAGE>   17

or 16%, as compared with those for the year ended December 31, 1999. These
reductions reflect cost reduction and containment steps put in place in the
first quarter of 2000, the closure of 19 IMPACT Centers, lower patient volumes
and the termination of certain Service Agreements.

Depreciation and amortization increased $.1 million from $4.5 million in 1999 to
$4.6 million in 2000. Had the Oncology/Hematology Group sales transaction been
effected as of January 1, 2000, depreciation and amortization would have
declined to $3.6 million on a pro forma basis in 2000.

EBITDA (earnings before interest, taxes, depreciation and amortization)
decreased $19.8 million to ($13.4) million for the year ended December 31, 2000
in comparison to $6.4 million for the year ended December 31, 1999. EBITDA from
the IMPACT services segment decreased $6.8 million, or 103%, for the year ended
December 31, 2000 as compared to the year ended December 31, 1999. The decrease
is primarily due to a decrease in referral volumes and high dose chemotherapy
procedures. In addition, during the second quarter of 2000, the Company received
notices of termination of pharmaceutical sales agreements from two physician
practices effective July 1, 2000. EBITDA from the physician practice management
segment decreased $14.1 million, or 193%, for the year ended December 31, 2000
as compared to the year ended December 31, 1999. This decrease is primarily due
to the charge of $16.0 million recorded in the fourth quarter of 2000 to adjust
the Service Agreement and associated assets to their net realizable value
related to the sale of a physician practice.

1999 COMPARED TO 1998

Net revenue increased 6% to $135.6 million for the year ended December 31, 1999,
compared to $128.2 million for the year ended December 31, 1998. Practice
management service fees were $68.4 million in 1999 compared to $59.5 million in
1998 for a 15% increase. This increase was due to growth in utilization of both
non-ancillary and ancillary services. Pharmaceutical sales to physicians
increased $10.7 million or 40% from $26.8 million in 1998 to $37.5 million in
1999. Additionally, net patient service revenues from IMPACT services decreased
$9.8 million or 26% from $38.0 million in 1998 to $28.2 million in 1999. This
decrease in IMPACT services revenues was primarily due to reduced breast cancer
patient referrals subsequent to research study data released at the annual
meeting of ASCO in May 1999.

Salaries and benefits increased $.6 million, or 2%, from $25.2 million in 1998
to $25.8 million in 1999. The increase was primarily attributable to the
addition of personnel in the practice management division and general increases
in salaries and benefits. Salaries and benefits as a percentage of net revenue
was 19% and 20% in 1999 and 1998, respectively.

Supplies and pharmaceuticals expense increased $12.9 million, or 19%, from 1998
to 1999. The increase was primarily related to greater utilization of new
chemotherapy agents with higher costs in the practice management division and
increased volume in pharmaceutical sales to physicians. Supplies and
pharmaceuticals expense as a percentage of net revenue was 59% and 52% for the
years ended 1999 and 1998, respectively. The increase as a percentage of net
revenue was due to the lower margin associated with the increased pharmaceutical
sales to physicians as well as general price increases in pharmaceuticals used
in the practice management division.

Other operating expenses decreased $2.4 million, or 17%, from $13.9 million in
1998 to $11.5 million in 1999. Other operating expenses consist primarily of
medical director fees, rent expense, and other operational costs. The decrease
was primarily due to lower purchased services and physician fees as a result of
lower IMPACT and cancer research patient volumes as compared to 1998.

General and administrative expenses decreased $.8 million, or 11%, from $7.3
million in 1998 to $6.5 million in 1999. The decrease was primarily due to
expenses recognized in 1998 for various aborted mergers and acquisitions and the
termination of the Service Agreements with two of the Company's three
underperforming net revenue model relationships.

Depreciation and amortization decreased $1.1 million from $5.6 million in 1998
to $4.5 million in 1999. The decrease was primarily attributable to the
impairment of management service agreements recognized in the fourth quarter of
1998.

EBITDA (earnings before interest, taxes, depreciation and amortization)
increased $20.4 million or 146% to $6.4 million for the year ended December 31,
1999 in comparison to ($14.0) million for the year ended December 31, 1998.
EBITDA from the IMPACT services segment decreased $4.4 million, or 40%, for the



                                       17
<PAGE>   18


year ended December 31, 1999 as compared to the year ended December 31, 1998.
The decrease in IMPACT services revenues was primarily due to reduced breast
cancer patient referrals subsequent to research study data released at the
annual meeting of ASCO in May 1999. EBITDA from the physician practice
management segment increased $36.8 million, or 125%, for the year ended December
31, 1999 as compared to the year ended December 31, 1998. This increase is
primarily due to the reserve for impairment of Service Agreements established in
the fourth quarter of 1998.

LIQUIDITY AND CAPITAL RESOURCES

At December 31, 2000, the Company had a working capital deficit of ($9.7)
million with current assets of $44.3 million and current liabilities of $54.0
million. Cash and cash equivalents represented $7.3 million of the Company's
current assets. Negative working capital is primarily attributable to the
current balance sheet classification of amounts due under the Company's Credit
Facility, as further described below.

Cash provided by operating activities was $5.1 million in 2000 as compared to
cash provided by operating activities of $12.8 million in 1999. The decrease in
operating cash flow is largely attributable to the increased net losses incurred
by the Company in 2000 as compared to 1999. This decrease is also due to the
timing of inventory purchases and amounts due from affiliated physician groups,
tempered by increased collections on accounts receivable and the timing of
payments of accounts payable and accrued expenses.

Cash used in investing activities was $.6 million and $.7 million in 2000 and
1999, respectively. This decrease is primarily the result of lower expenditures
for equipment.

Cash used in financing activities was $4.4 million in 2000 and $5.9 million in
1999. This decrease is primarily attributable to additional payments on notes
payable in 1999 as compared to 2000, a decrease in distributions to joint
venture partners, and no financing costs being incurred in 2000, as compared to
1999.

The terms of the Company's original lending agreement provided for a $42.0
million Credit Facility, to mature in June 2002, to fund the Company's
acquisition and working capital needs. The Credit Facility, originally comprised
of a $35.0 million Term Loan Facility and a $7.0 million Revolving Credit
Facility, is collateralized by the assets of the Company and the common stock of
its subsidiaries. The Credit Facility bears interest at a variable rate equal to
LIBOR plus an original spread between 1.375% and 2.5%, depending upon borrowing
levels. The Company was also obligated to a commitment fee of .25% to .5% of the
unused portion of the Revolving Credit Facility. At December 31, 2000, $33.7
million aggregate principal was outstanding under the Credit Facility with a
current interest rate of approximately 12.7%. The Company is subject to certain
affirmative and negative covenants which, among other things, originally
required that the Company maintain certain financial ratios, including minimum
fixed charge coverage, funded debt to EBITDA and minimum net worth. This
original lending agreement was subsequently and significantly amended in
November 1999, and March 2000, as described below.

In November 1999, the Company and its lenders amended certain terms of the
Credit Facility. As a result of this amendment, the Revolving Credit Facility
was reduced from $7.0 million to $6.0 million and the interest rate was adjusted
to LIBOR plus a spread of 3.25%. The Company's obligation for commitment fees
was adjusted from a maximum of .5% to .625% of the unused portion of the
Revolving Credit Facility. Repayment of the January 1, 2000 quarterly
installment was accelerated. In addition, certain affirmative and negative
covenants were added or modified, including minimum EBITDA requirements for the
fourth quarter of 1999 and the first quarter of 2000. Compliance with certain
covenants was also waived for the quarters ending September 30, 1999 and
December 31, 1999.

On March 30, 2000, the Company and its lenders again amended various terms of
the Credit Facility. As a result of this amendment, certain affirmative and
negative covenants were added (including minumum quarterly cash flow
requirements through March 2001), and certain other existing covenants were
modified. Additionally, certain principal repayment terms were modified and
certain future and current compliance with specific covenants was waived.
Finally, the maturity date of the Credit Facility was accelerated to June 2001.

During the third quarter of 2000, the Company did not meet certain financial
covenants of the Credit Facility, including those related to minimum cash flow
requirements. This occurred primarily due to further erosion in high dose
chemotherapy volumes. As a result of this event of default, the Company's
lenders adjusted the interest rates on the outstanding principal to the default
rate of prime plus 3% (12.5% at the time of default) and terminated any



                                       18
<PAGE>   19

obligation to advance additional loans or issue letters of credit. As a result
of this termination, the Company has not experienced an impact on operating cash
flow. Under the terms of the Credit Facility, additional remedies available to
the lenders (as long as an event of default exists and has not been cured)
include acceleration of all principal and accrued interest outstanding, the
right to foreclose on related security interests in the assets of the Company
and stock of its subsidiaries, and the right of setoff against any monies or
deposits that the lenders have in their possession.

Effective December 29, 2000, the Company executed a forbearance agreement with
its lenders. Under the terms of the forbearance agreement, the lenders agreed to
forbear from enforcing their rights or remedies pursuant to the Credit Facility
documents until the earlier of (i) March 30, 2001 (as amended), or (ii) certain
defined events of default. During this period, the interest rate was adjusted to
prime plus 2%. The forbearance agreement also required that the Company retain a
financial advisor to assist in the development of a restructuring plan and
perform certain valuation analyses. The Company has submitted the restructuring
plan to its lenders and is negotiating an extension to the Credit Facility.

With the Company's March 29, 2001 Chapter 11 bankruptcy filing, any potential
future revisions to the Credit Facility are subject to Chapter 11 reorganization
processes (described elsewhere in conjunction with discussion of the filing).
There can be no assurances as to the form of such revisions (if any) or their
impact on the Company's financial position or continued business viability.
Additionally, as of the date of the bankruptcy filing, the Company was in
technical default under the terms of the Credit Facility.

The Company enters into LIBOR-based interest rate swap agreements ("Swap
Agreement") with the Company's lender as required by the terms of the Credit
Facility. In June 2000, the Company entered into a new Swap Agreement effective
July 1, 2000. Amounts hedged under this most recent Swap Agreement accrue
interest at the difference between 7.24% and the ninety-day LIBOR rate and are
settled quarterly. The Company has hedged $17.0 million under the terms of the
Swap Agreement. The Swap Agreement matures on July 1, 2001.

Long-term unsecured amortizing promissory notes bearing interest at rates from
4% to 9% were issued as partial consideration for the practice management
affiliations consummated in 1996. Principal and interest under the long-term
notes may, at the election of the holders, be paid in shares of common stock of
the Company based upon conversion rates ranging from $11.50 to $16.97. The
unpaid principal amount of the long-term notes was $.8 million at December 31,
2000.

The Company is committed to future minimum lease payments under operating leases
of $15.3 million for administrative and operational facilities.

HEALTH INSURANCE PORTABILITY AND ACCOUNTABILITY ACT OF 1996

The federal Health Insurance Portability and Accountability Act of 1996
("HIPAA"), required that standards be developed for the privacy and protection
of individually identifiable health information. As directed by HIPAA, the
federal government proposed detailed regulations to protect individual health
information that is maintained or transmitted electronically from improper
access, alteration or loss. To date, only the transactions and code sets
standards have been finalized. However, privacy standards are expected to be
finalized effective April 14, 2001. The Company expects that health care
organizations will be required to comply with the new standards 24 months after
the date of adoption. The Company is currently assessing preliminary HIPAA
issues, with detailed compliance and integration measures taking place in 2001
and 2002.

Because only certain elements of the HIPAA regulations have been finalized, the
Company has not been able to determine the impact of the new standards on its
financial position or results. The Company does expect to incur costs to
evaluate and implement the rules, and will be actively evaluating such costs and
their impact on its financial position and operations.

NEW ACCOUNTING STANDARD

The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 requires all entities to report
derivative securities at fair value on the balance sheet. The Company has



                                       19
<PAGE>   20


reviewed the applicability and implications of SFAS No. 133 for the Company's
financial statements. The sole derivative instrument to which the accounting
prescribed by the Statement is applicable is the Swap Agreement described above.
The Company recorded a cumulative adjustment charge in implementing the
Statement on January 1, 2001 of approximately $111,000 in recognition of the
reported fair value of the Swap Agreement.

FORWARD-LOOKING STATEMENTS

With the exception of historical information, the matters discussed in this
filing are forward-looking statements that involve a number of risks and
uncertainties. The actual future results of the Company could differ
significantly from those statements. The Private Securities Litigation Reform
Act of 1995 provides a safe harbor for forward-looking statements. Factors that
could cause or contribute to such differences include, but are not limited to:
(i) a continued decline in high dose chemotherapy referrals due to the high dose
chemotherapy breast cancer results; (ii) difficulty in transitioning operating
responsibilities to new members of senior management; (iii) continued decline in
margins for cancer drugs; (iv) reductions in third-party reimbursement from
managed care plans and private insurance resulting from stricter utilization and
reimbursement standards; (v) the inability of the Company to recover all or a
portion of the carrying amounts of the cost of service agreements, resulting in
an additional charge to earnings; (vi) the Company's dependence upon its
affiliations with physician practices, given that there can be no assurance that
the practices will remain successful or that key members of a particular
practice will remain actively employed; (vii) changes in government regulations;
(viii) risk of professional malpractice and other similar claims inherent in the
provision of medical services; (ix) the Company's dependence on the ability and
experience of its executive officers; (x) the Company's inability to raise
additional capital or refinance existing debt; (xi) uncertainty pertaining to
the outcome of the Chapter 11 filing by the Company; and (xii) issues related to
the implementation of the Company's new business plan. The Company cautions that
any forward-looking statement reflects only the beliefs of the Company or its
management at the time the statement is made. The Company undertakes no
obligation to update any forward-looking statement to reflect events or
circumstances after the date on which the statement was made.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's primary market risk exposure is to changes in interest rates
obtainable on its Credit Facility. The Company's interest rate risk objective is
to limit the impact of interest rate fluctuations on earnings and cash flows and
to lower its overall borrowing costs by selecting favorable interest periods for
traunches of the Credit Facility based on the current market interest rates. The
Company has the option of fixing current interest rates for interest periods of
1, 2, 3 or 6 months.

The Company is also a party to a LIBOR based interest rate swap agreement ("Swap
Agreement") with an affiliate of one of the Company's lenders as required by the
terms of the Credit Facility. Amounts hedged under the Swap Agreement accrue
interest at the difference between 7.24% and the ninety-day LIBOR rate and are
settled quarterly. As of December 31, 2000, approximately 50% of the Company's
outstanding principal balance under the Credit Facility was hedged under the
Swap Agreement. The Swap Agreement matures in July 2001. The Company does not
enter into derivative or interest rate transactions for speculative purposes.

At December 31, 2000, $33.7 million aggregate principal was outstanding under
the Credit Facility with a default interest rate of approximately 12.7%. The
Company does not have any other material market-sensitive financial instruments.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This item is submitted in a separate section of this report (see pages 25
through 42).

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

Not applicable.



                                       20
<PAGE>   21


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS

The information required by this item with respect to the executive officers and
directors of the Company is incorporated herein by reference to the sections
entitled "Executive Officers" and "Nominees for Election as Directors" in the
Company's definitive proxy statement for its Annual Meeting of Shareholders to
be held July 10, 2001.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item with respect to executive compensation is
incorporated herein by reference to the section entitled "Executive
Compensation" in the Company's definitive proxy statement for its Annual Meeting
of Shareholders to be held July 10, 2001.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item with respect to security ownership of
certain beneficial owners and management is incorporated herein by reference to
the section entitled "Security Ownership of Certain Beneficial Owners, Directors
and Management" in the Company's definitive proxy statement for its Annual
Meeting of Shareholders to be held July 10, 2001.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this item is incorporated herein by reference to the
section entitled "Certain Transactions" in the Company's definitive proxy
statement for its Annual Meeting of Shareholders to be held July 10, 2001.

                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1) and (2) -- The response to this portion of Item 14 is submitted as a
separate section of this report

(a)(3)            LISTING OF EXHIBITS

2(a)              Stock Purchase Agreement between the Registrant and
                  stockholders of Oncology Hematology Group of South Florida
                  (filed as Exhibit 10(m) to Registrant's Form 8-K filed January
                  17, 1996 (File No. 0-15416) and incorporated herein by
                  reference)

2(b)              Purchase and Sale Agreement between the Registrant, Knoxville
                  Hematology Oncology Associates and Partners of Knoxville
                  Hematology Oncology Associates (filed as Exhibit 10(q) to
                  Registrant's Form 8-K filed April 15, 1996 (File No. 0-15416)
                  and incorporated herein by reference)

2(c)              Stock Purchase Agreement between the Registrant and
                  stockholders of Jeffrey L. Paonessa, M.D., P.A. (filed as
                  Exhibit 10(s) to Registrant's Form 8-K filed July 5, 1996
                  (File No. 0-15416) and incorporated herein by reference)

2(d)              Stock Purchase Agreement between the Registrant and
                  stockholders of Southeast Florida Hematology Oncology Group,
                  P.A. (filed as Exhibit 2(d) to Registrant's Form 8-K filed
                  July 15, 1996 (File No. 0-15416) and incorporated herein by
                  reference)

2(e)              Asset Purchase Agreement by and among the Registrant,
                  stockholders of The Center for Hematology-Oncology, P.A. and
                  the Registrant's Form 8-K filed October 21, 1996 (File No.
                  1-09922) and incorporated herein by reference

2(f)              Stock Purchase Agreement by and among the Registrant,
                  stockholders of Hematology Oncology Associates of the Treasure
                  Coast, P.A., and Hematology Oncology Associates of the
                  Treasure Coast, P.A. (filed as Exhibit 10(z) to the
                  Registrant's Form 8-K filed November 5, 1996 (File No 1-09922)
                  and incorporated herein by reference)

3(a)              Charter (1)

3(b)              Bylaws (2)

4                 Trust Indenture, Deed of Trust and Security Agreement dated
                  April 3, 1990 (3)

10(a)             Registrant's 1985 Stock Option Plan, as amended (4)



                                       21
<PAGE>   22

10(b)*            Registrant's 1990 Non-Qualified Stock Option Plan, as
                  amended** (6)(8)

10(c)*            Employment agreement between the Registrant and William H.
                  West, M.D. dated January 1, 1995*

10(d)*            Employment agreement between the Registrant and Joseph T.
                  Clark dated July 1, 1995**(7)

10(e)             Service Agreement between the Registrant and stockholders of
                  Oncology Hematology Group of South Florida (filed as Exhibit
                  10(n) to Registrant's Form 8-K filed January 17, 1996 (File
                  No. 0-15416) and incorporated herein by reference)

10(f)**           Amendment to 1990 Registrant's Non-Qualified Stock Option Plan
                  adopted April 20, 1995 (7)

10(g)             Service Agreement between the Registrant and stockholders of
                  Jeffrey L. Paonessa, M.D., P.A. (filed as Exhibit 10(t) to
                  Registrant's Form 8-K filed July 5, 1996 (File No. 0-15416)
                  and incorporated herein by reference)

10(h)             Service Agreement between the Registrant and stockholders of
                  Southeast Florida Hematology Oncology Group, P.A. (filed as
                  Exhibit 10(u) to Registrant's Form 8-K filed July 15, 1996
                  (File No 0-15416) and incorporated herein by reference)

10(i)**           Amendment No. 3 to 1990 Registrant's Non-qualified Stock
                  Option Plan adopted December 16, 1995 (8)

10(j)             Service Agreement between the Registrant, Rosenberg & Kalman,
                  M.D., P.A., and stockholders of R&K, M.D., P.A. (filed as
                  Exhibit 10(x) to Registrant's Form 8-K filed September 18,
                  1996 (File No. 1-09922) and incorporated herein by reference)

10(k)             Loan Agreement dated April 21, 1997 between Registrant,
                  NationsBank of Tennessee, N.A., AmSouth Bank of Tennessee and
                  Union Planters National Bank (10)

10(l)             Registrant's 1996 Stock Incentive Plan (9)

10(m)             Second amendment to First Amended and Restated Loan Agreement
                  dated March 31, 1999 between Registrant, NationsBank of
                  Tennessee, N.A., AmSouth Bank of Tennessee and Union Planters
                  National Bank (11)

10(n)             First Amendment to Revolving Credit Note dated March 31, 1999
                  between Registrant, NationsBank of Tennessee, N.A., AmSouth
                  Bank of Tennessee and Union Planters National Bank (11)

10(o)             Credit Agreement dated June 10, 1999 between Registrant,
                  AmSouth Bank, Union Planters National Bank and NationsBank,
                  N.A. (12)

10(p)             Swap Agreement dated June 25, 1999 between Registrant and
                  NationsBank, N.A. (12)

10(q)             Employment Agreement between Registrant and Anthony M.
                  LaMacchia (13)

10(r)             First Amendment to Credit Agreement dated September 30, 1999,
                  between Registrant, AmSouth Bank, Union Planters Bank, N.A.
                  and Bank of America, N.A. (14)

10(s)             Second Amendment to Credit Agreement dated March 30, 2000,
                  between Registrant, AmSouth Bank, Union Planters Bank, N.A.
                  and Bank of America, N.A (15)

10(t)             Employment Agreement between Registrant and Patrick J.
                  McDonough (16)

10(u)             Swap Agreement dated June 29, 2000 between Registrant and Bank
                  of America, N.A. (16)

10(v)             Employment Agreement between Registrant and Nelson M. Braslow,
                  M.D. (17)

10(w)             Forbearance Agreement dated December 29, 2000, between
                  Registrant, AmSouth Bank, Union Planters Bank, N.A. and Bank
                  of America, N.A.

10(x)             First Amendment to Forbearance Agreement dated February 28,
                  2001, between Registrant, AmSouth Bank, Union Planters Bank,
                  N.A. and Bank of America, N.A.

11                Statement regarding Computation of Per Share Earnings

13                Annual Report to Shareholders for the year ended December 31,
                  2000 -- to be filed

21                List of Subsidiaries

23                Consent of Independent Auditors

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

*    These documents may be obtained by stockholders of Registrant upon written
     request to: Response Oncology, Inc., 1805 Moriah Woods Blvd., Memphis,
     Tennessee 38117

**   Management Compensatory Plan

(1)  Incorporated by reference to the Registrant's 1989 10-K, dated July 31,
     1989

(2)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-1 under the Securities Act of 1933 (File No. 33-5016) effective
     April 21, 1986

(3)  Incorporated by reference in the initial filing of the Registrants' 1990
     10-K, dated July 18, 1990, filed July 20, 1990 and amended on September 19,
     1990




                                       22
<PAGE>   23

(4)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 under the Securities Act of 1933 (File No. 33-21333) effective
     April 26, 1988

(5)  Incorporated by reference to the Registrant's 1991 10-K, dated July 26,
     1991

(6)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 under the Securities Act of 1933 (File No. 33-45616) effective
     February 11, 1992

(7)  Incorporated by reference to the Registrant's 1995 10-K, dated March 29,
     1996

(8)  Incorporated by reference to the Registrant's Registration Statement on
     Form S-8 under the Securities Act of 1933 (File No. 333-14371) effective
     October 11, 1996

(9)  Incorporated by reference to the Registrant's Statement on Form S-8 under
     the Securities Act of 1933 (File No. 333-28973) effective June 11, 1997

(10) Incorporated by reference to the Registrant's 1997 10-K dated March 31,
     1998

(11) Incorporated by reference to the Registrant's 1998 10-K dated March 31,
     1999

(12) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 1999

(13) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 1999

(14) Incorporated by reference to the Registrant's 1999 10-K, dated March 30,
     2000

(15) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended March 31, 2000

(16) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended June 30, 2000

(17) Incorporated by reference to the Registrant's Quarterly Report on Form 10-Q
     for the quarter ended September 30, 2000


(b)  Reports on Form 8-K filed in the fourth quarter of 2000 - None

(c)  Exhibits - The response to this portion of Item 14 is submitted as a
     separate section of this report

(d)  Financial Statement Schedules - The response to this portion of Item 14 is
     submitted as a separate section of this report





                                       23
<PAGE>   24


                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Response Oncology, Inc. has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

RESPONSE ONCOLOGY, INC.
                                                By: /s/ ANTHONY M. LAMACCHIA
                                                    --------------------------
                                                    Anthony M. LaMacchia
                                                    President, Chief Executive
                                                    Officer, and Director

                                                    Date: April 17, 2001

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

 By:  /s/ FRANK M. BUMSTEAD             By:/s/ PETER A. STARK
     -----------------------------         -----------------------------------
     Frank M. Bumstead                     Peter A. Stark
     Vice-Chairman of the Board            Executive Vice President,
                                           Chief Financial Officer

     Date: April 17, 2001                  Date: April 17, 2001

 By: /s/ ANTHONY M. LAMACCHIA           By:/s/ P. ANTHONY JACOBS
     --------------------------            -------------------------------------
     Anthony M. LaMacchia                  P. Anthony Jacobs
     President, Chief Executive            Director
     Officer, and Director

     Date: April 17, 2001                  Date: April 17, 2001

 By: /s/JAMES R. SEWARD                 By:/s/ WILLIAM H. WEST, M.D.
     -----------------------------         --------------------------
     James R. Seward                       William H. West, M.D.
     Director                              Chairman of the Board

     Date: April 17, 2001                  Date: April 17, 2001

 By: /s/LAWRENCE N. KUGELMAN            By:/s/ W. THOMAS GRANT II
     -----------------------------         --------------------------
     Lawrence N. Kugelman                  W. Thomas Grant II
     Director                              Director

     Date: April 17, 2001                  Date: April 17, 2001






                                       24
<PAGE>   25


Independent Auditors' Report
The Board of Directors
Response Oncology, Inc.:

We have audited the accompanying consolidated balance sheets of Response
Oncology, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 2000. In
connection with our audits of the consolidated financial statements, we have
also audited the financial statement schedule as listed in the accompanying
index at Item 14. These consolidated financial statements and financial
statement schedule are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Response Oncology,
Inc. and subsidiaries as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 2000, in conformity with accounting principles generally
accepted in the United States of America. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

The accompanying consolidated financial statements and financial statement
schedule have been prepared assuming that the Company will continue as a going
concern. As discussed in Note B, on March 29, 2001, the Company filed voluntary
petitions for relief under Chapter 11 of the United States Bankruptcy Code in
the United States Bankruptcy Court. This event and related circumstances,
including those discussed in Note F, raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial statements
and financial statements schedule do not include any adjustments that might
result from the outcome of this uncertainty.

                                                                        KPMG LLP

Memphis, Tennessee
March 30, 2001



                                       25
<PAGE>   26


PART I - FINANCIAL INFORMATION
ITEM 1:         FINANCIAL STATEMENTS
                RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
                CONSOLIDATED BALANCE SHEETS
                (Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                                                           DECEMBER 31,
                                                                                      -------------------------
                                                                                         2000            1999
                                                                                      ---------       ---------
<S>                                                                                   <C>             <C>
ASSETS

CURRENT ASSETS

    Cash and cash equivalents                                                         $   7,327       $   7,195
    Accounts receivable, less allowance for doubtful accounts
         of $3,489 and $2,632                                                             9,469          16,007
    Supplies and pharmaceuticals                                                          3,702           3,485
    Prepaid expenses and other current assets                                             3,529           4,778
    Due from affiliated physician groups                                                 19,121          16,884
    Deferred income taxes                                                                 1,168             114
                                                                                      ---------       ---------
         TOTAL CURRENT ASSETS                                                            44,316          48,463

    Property and equipment, net                                                           3,212           4,222
    Deferred charges, less accumulated amortization of $320 and $86                         156             380
    Management service agreements, less accumulated amortization of $7,685
           and $8,206                                                                    44,231          66,113
    Other assets                                                                            498             467
                                                                                      ---------       ---------
         TOTAL ASSETS                                                                 $  92,413       $ 119,645
                                                                                      =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
    Accounts payable                                                                  $  14,665       $  15,665
    Accrued expenses and other liabilities                                                4,581           5,440
    Current portion of notes payable                                                     34,509           3,745
    Current portion of capital lease obligations                                            277             267
                                                                                      ---------       ---------
         TOTAL CURRENT LIABILITIES                                                       54,032          25,117
                                                                                      ---------       ---------

    Notes payable, less current portion                                                      --          35,445
    Capital lease obligations, less current portion                                         303             580
    Deferred income taxes                                                                 3,525           9,802
    Minority interest                                                                     1,164             924

STOCKHOLDERS' EQUITY
    Series A convertible preferred stock, $1.00 par value (aggregate liquidation
         preference $183), authorized 3,000,000 shares; issued and outstanding
         16,631 shares at each period end                                                    17              17
    Common stock, $.01 par value, authorized 30,000,000 shares; issued and
          outstanding 12,290,764 and 12,270,406 shares                                      123             123
    Paid-in capital                                                                     102,011         101,980
    Accumulated deficit                                                                 (68,762)        (54,343)
                                                                                      ---------       ---------
              TOTAL NET STOCKHOLDERS' EQUITY                                             33,389          47,777
                                                                                      ---------       ---------
         TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                   $  92,413       $ 119,645
                                                                                      =========       =========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       26
<PAGE>   27


RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollar amounts in thousands except for share data)

<TABLE>
<CAPTION>

                                                                 YEARS ENDED DECEMBER 31,
                                                      --------------------------------------------------
                                                           2000               1999               1998
                                                      ------------       ------------       ------------

<S>                                                   <C>                <C>                <C>
NET REVENUE                                             $  130,833         $  135,567         $  128,246

COSTS AND EXPENSES
     Salaries and benefits                                  21,308             25,810             25,227
     Pharmaceuticals and supplies                           89,444             80,210             67,290
     Other operating costs                                   8,683             11,529             13,887
     General and administrative                              6,927              6,487              7,315
     Depreciation and amortization                           4,610              4,509              5,579
     Interest                                                3,680              3,305              2,946
     Provision for doubtful accounts                         1,309              2,625              2,947
     Impairment of management service agreements
       and associated assets                                15,951              1,921             35,489
                                                      ------------       ------------       ------------
                                                           151,912            136,396            160,680
                                                      ------------       ------------       ------------
LOSS BEFORE INCOME TAXES AND MINORITY INTEREST             (21,079)              (829)           (32,434)
     Minority owners' share of net earnings                   (633)              (700)              (749)
                                                      ------------       ------------       ------------

LOSS BEFORE INCOME TAXES                                   (21,712)            (1,529)           (33,183)
     Income tax provision (benefit)                         (7,293)               164            (15,735)
                                                      ------------       ------------       ------------

NET LOSS                                                   (14,419)            (1,693)           (17,448)
Dividend to preferred stockholders                              --                 --                 (1)
                                                      ------------       ------------       ------------

NET LOSS TO COMMON STOCKHOLDERS                         $  (14,419)        $   (1,693)        $  (17,449)
                                                      ============       ============       ============

LOSS PER COMMON SHARE:
     Basic                                              $    (1.17)        $    (0.14)        $    (1.45)
                                                      ============       ============       ============
     Diluted                                            $    (1.17)        $    (0.14)        $    (1.45)
                                                      ============       ============       ============

Weighted average number of common shares:

     Basic                                              12,288,352         12,014,153         12,039,480
                                                      ============       ============       ============
     Diluted                                            12,288,352         12,014,153         12,039,480
                                                      ============       ============       ============
</TABLE>

See accompanying notes to consolidated financial statements.



                                       27
<PAGE>   28



RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollar amounts in thousands except for share data)


<TABLE>
<CAPTION>

                                           SERIES A CONVERTIBLE
                                            PREFERRED STOCK            COMMON STOCK
                                         ----------------------- -----------------------
                                                     PAR VALUE                 PAR VALUE                                 TOTAL
                                                     $1.00 PER                 $.01 PER       PAID-IN    ACCUMULATED  STOCKHOLDERS'
                                           SHARES      SHARE       SHARES        SHARE        CAPITAL     DEFICIT        EQUITY
                                         ---------  -----------  ----------    ---------   -----------  ------------   -----------
<S>                                       <C>       <C>           <C>           <C>        <C>            <C>          <C>
Balances at December 31, 1997             27,233    $      27     11,972,358    $   120    $   101,402    ($ 35,201)   $  66,348
    Net loss                                                                                                (17,448)     (17,448)
    Exercise of common stock options                                  54,164                       320                       320
    Common stock issued in connection
     with practice affiliations                                       22,406                       190                       190
    Conversion of preferred stock           (602)                        110
    Dividend on preferred stock                                          293                         1           (1)          --
                                         -------    ---------    -----------    -------    -----------    ---------    ---------
Balances at December 31, 1998             26,631           27     12,049,331        120        101,913      (52,650)      49,410
    Net loss                                                                                                 (1,693)      (1,693)
    Common stock issued in connection
       with practice affiliations                                     36,870          1            112                       113
   Common stock issued under
      compensation plan                                              300,000          3            297                       300
   Common stock received in connection
      with practice termination                                     (117,811)        (1)          (352)                     (353)
   Conversion of preferred stock         (10,000)         (10)         1,833                        10
   Dividend on preferred stock                                           183
                                         -------    ---------    -----------    -------    -----------    ---------    ---------
Balances at December 31, 1999             16,631           17     12,270,406        123        101,980      (54,343)      47,777
    Net  loss                                                                                               (14,419)     (14,419)
    Exercise of common stock options                                  20,175                        31                        31
    Dividend on preferred stock                                          183
                                         -------    ---------    -----------    -------    -----------    ---------    ---------
Balances at December 31, 2000             16,631    $      17     12,290,764    $   123    $   102,011    ($ 68,762)   $  33,389
                                         =======    =========    ===========    =======    ===========    =========    =========

</TABLE>


See accompanying notes to consolidated financial statements.



                                       28
<PAGE>   29

RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollar amounts in thousands)

<TABLE>
<CAPTION>

                                                                         YEARS ENDED DECEMBER 31,
                                                                      --------------------------------
                                                                        2000        1999        1998
                                                                      --------    --------    --------
<S>                                                                   <C>         <C>         <C>
OPERATING ACTIVITIES
    Net loss                                                          ($14,419)   ($ 1,693)   ($17,448)
    Adjustments to reconcile net loss to net cash
          provided by operating activities:
      Depreciation and amortization                                      4,610       4,509       5,579
      Impairment of management service agreements and associated
        assets                                                          15,951       1,921      35,489
      Deferred income taxes                                             (7,331)      1,920     (16,367)
      Provision for doubtful accounts                                    1,309       2,625       2,947
      Gain on sale of property and equipment                               (67)         --          --
      Minority owners' share of net earnings                               633         700         749
      Changes in operating assets and liabilities net of effect of
      acquisitions:
         Accounts receivable                                             5,229       4,212      (8,881)
         Supplies and pharmaceuticals, prepaid expenses and other
             current assets                                                880       1,359      (2,624)
         Deferred charges and other assets                                 193        (178)       (175)
         Due from affiliated physician groups                           (1,067)       (108)     (4,955)
         Accounts payable and accrued expenses                            (800)     (2,472)      8,467
                                                                      --------    --------    --------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                5,121      12,795       2,781
                                                                      --------    --------    --------

INVESTING ACTIVITIES
    Purchase of equipment                                                 (645)       (741)     (1,702)
    Proceeds from sale of property and equipment                            87          --          --
    Acquisition of nonmedical assets of affiliated physician groups         --          --      (1,011)
                                                                      --------    --------    --------
NET CASH USED IN INVESTING ACTIVITIES                                     (558)       (741)     (2,713)
                                                                      --------    --------    --------

FINANCING ACTIVITIES
    Financing costs incurred                                                --        (416)         --
    Proceeds from exercise of stock options and warrants                    32          --         320
    Distributions to joint venture partners                               (392)       (757)       (805)
    Proceeds from notes payable                                             --       1,734       8,191
    Principal payments on notes payable                                 (3,804)     (6,202)     (8,907)
    Principal payments on capital lease obligations                       (267)       (301)       (209)
                                                                      --------    --------    --------
NET CASH USED IN FINANCING ACTIVITIES                                   (4,431)     (5,942)     (1,410)
                                                                      --------    --------    --------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                           132       6,112      (1,342)
    Cash and cash equivalents at beginning of period                     7,195       1,083       2,425
                                                                      --------    --------    --------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $  7,327    $  7,195    $  1,083
                                                                      ========    ========    ========

</TABLE>


                                                                      Continued:


                                       29
<PAGE>   30


<TABLE>
<CAPTION>

                                                             YEARS ENDED DECEMBER 31,
                                                           ---------------------------
                                                            2000      1999       1998
                                                           ------   -------    -------
<S>                                                         <C>     <C>        <C>
Supplemental schedule of noncash investing
  and financing activities:

    Effect of practice affiliations:
      Intangible assets                                        --   $ 1,036    $ 1,040
      Property and equipment                                   --        15         20
      Acquired accounts receivable, net                        --        --        139
      Other assets                                             --      (695)        --
                                                           ------   -------    -------
      Total assets acquired, net of cash                       --       356      1,199
                                                           ------   -------    -------
      Liabilities assumed                                      --        --         --
      Issuance of notes payable                                --      (244)        --
      Issuance of common stock                                 --      (112)      (188)
                                                           ------   -------    -------
      Payments for practice affiliation operating assets       --        --    $ 1,011
                                                           ======   =======    =======
Cash paid for interest                                     $3,500   $ 3,831    $ 3,010
                                                           ======   =======    =======
Cash paid for income taxes                                 $  280   $    55    $ 2,202
                                                           ======   =======    =======
</TABLE>

See accompanying notes to consolidated financial statements.



                                       30
<PAGE>   31


RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2000

NOTE A--ORGANIZATION AND DESCRIPTION OF BUSINESS

Response Oncology, Inc. (the "Company") is a comprehensive cancer management
company which owns and/or operates a network of outpatient treatment centers
("IMPACT(R) Centers"), that provide stem cell supported high dose chemotherapy
and other advanced cancer treatment services under the direction of practicing
oncologists; compounds and dispenses pharmaceuticals to certain oncologists for
a fixed or cost plus fee; owns the assets of and manages oncology practices; and
conducts outcomes research on behalf of pharmaceutical manufacturers.

NOTE B--BANKRUPTCY PROCEEDINGS

On March 29, 2001, the Company filed voluntary petitions for reorganization
under Chapter 11 of the United States Bankruptcy Code and began operating its
business as a debtor-in-possession under the supervision of the Bankruptcy
Court. A statutory creditors committee will be appointed in the Chapter 11 case,
and substantially all of the Company's liabilities as of the filing date
("prepetition liabilities") are subject to settlement under a plan of
reorganization. Generally, actions to enforce or otherwise effect repayment of
all prepetition liabilities as well as all pending litigation against the
Company are stayed while the Company continues to operate its business as
debtor-in-possession. Schedules will be filed by the Company with the Bankruptcy
Court setting forth its assets and liabilities as of the filing date as
reflected in the Company's accounting records. Differences between amounts
reflected in such schedules and claims filed by creditors will be investigated
and either amicably resolved or subsequently adjudicated before the Bankruptcy
Court. The ultimate amount and settlement terms for such liabilities are subject
to a plan of reorganization, and accordingly, are not presently determinable.

NOTE C--SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION: The consolidated
financial statements include the accounts of the Company and its wholly-owned
subsidiaries and majority-owned or controlled joint ventures. All significant
intercompany accounts and transactions have been eliminated in consolidation.

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

ACCOUNTS RECEIVABLE: Accounts receivable primarily consists of receivables from
patients, insurers, government programs and other third-party payors for medical
services provided. Such amounts are reduced by an allowance for contractual
adjustments and other uncollectible amounts. Contractual adjustments result from
the differences between the amounts charged for services performed and the
amounts allowed by the Medicare and Medicaid programs and other public and
private insurers.

DUE FROM AFFILIATED PHYSICIANS: Due from affiliated physicians consists of
management fees earned and due pursuant to related Management Service Agreements
("Service Agreements" - see below). In addition, the Company may also fund
certain working capital needs of affiliated physicians from time to time.

A significant portion of the affiliated physicians' medical service revenues are
related to third-party reimbursement agreements, primarily Medicare and other
governmental programs. Medicare and other governmental programs reimburse
physicians based on fee schedules which are determined by the related
governmental agency. In the ordinary course of business, affiliated physicians
receiving reimbursement from Medicare and other governmental programs are
potentially subject to a review by regulatory agencies concerning the accuracy
of billings and sufficiency of supporting documentation of procedures performed.

SUPPLIES AND PHARMACEUTICALS: Supplies and pharmaceuticals are recorded at lower
of cost (first-in, first-out) or market.



                                       31
<PAGE>   32

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

Equipment under capital lease obligations is amortized using the straight-line
method over the shorter of the lease term or the estimated useful life of the
equipment. Such amortization is included in depreciation and amortization in the
consolidated financial statements.

MANAGEMENT SERVICE AGREEMENTS: The recorded value of Service Agreements results
from the excess of the purchase price over the fair value of net assets of
acquired practices. The Service Agreements are noncancelable except for
performance defaults, as defined. In the event a practice breaches the
agreement, or if the Company terminates with cause, the practice is required to
purchase all tangible assets at fair value and pay substantial liquidated
damages.

At each reporting period, the Company reviews the carrying value of Service
Agreements on a practice-by-practice basis to determine if facts and
circumstances exist which would suggest that the value of the Service Agreements
may be impaired or that relevant amortization periods need to be modified. Among
the factors considered by the Company in making the evaluation are changes in
the practices' market position, reputation, profitability and geographical
penetration. Using these factors, if circumstances are present which may
indicate impairment is probable, the Company will prepare a projection of the
undiscounted cash flows before interest charges of the specific practice and
determine if the Service Agreements are recoverable based on these undiscounted
cash flows. Additionally, the impairment evaluation also routinely considers the
Company's current strategic and operational plans with respect to its Service
Agreement portfolio, including active and/or contemplated negotiations with
related physicians, and assesses implications for the fair value of Service
Agreement and associated assets. If impairment is indicated, then an adjustment
will be made to reduce the carrying value of intangible and, if applicable,
associated net assets to fair value. Certain Service Agreements were determined
to be impaired during 2000, 1999 and 1998, as more fully discussed in Note D.

DEFERRED CHARGES: Deferred charges includes costs capitalized in connection with
obtaining long-term financing and are being amortized using the interest method
over the terms of the related debt.

NET REVENUE: The Company's net patient service revenue includes charges to
patients, insurers, government programs and other third-party payers for medical
services provided. Such amounts are recorded net of contractual adjustments and
other uncollectible amounts. Contractual adjustments result from the differences
between the amounts charged for services performed and the amounts allowed by
government programs and other public and private insurers.

The Company's revenue from practice management affiliations includes a fee equal
to practice operating expenses incurred by the Company (which excludes expenses
that are the obligation of the physicians, such as physician salaries and
benefits) and a management fee either fixed in amount or equal to a percentage
of each affiliated oncology group's adjusted net revenue or net operating
income. In certain affiliations, the Company may also be entitled to a
performance fee if certain financial criteria are satisfied.

Pharmaceutical sales to physicians are recorded based upon the Company's
contracts with physician groups to manage the pharmacy component of the groups'
practices. Revenue recorded for these contracts represents the cost of
pharmaceuticals plus a fixed or percentage fee.

Clinical research revenue is recorded based upon the Company's contracts with
certain pharmaceutical companies to manage clinical trials and is generally
measured on a per patient basis for monitoring and collection of data.



                                       32
<PAGE>   33

The following table is a summary of net revenue by source.

                                              YEARS ENDED DECEMBER 31,
                                                  (IN THOUSANDS)
                                           ------------------------------
                                             2000       1999       1998
                                           --------   --------   --------
      Net patient service revenue          $ 14,105   $ 28,179   $ 37,957
      Practice management service fees       77,671     68,413     59,527
      Pharmaceutical sales to physicians     38,510     37,530     26,849
      Clinical research revenue                 547      1,445      3,913
                                           --------   --------   --------
                                           $130,833   $135,567   $128,246
                                           ========   ========   ========

Revenue is recognized when earned. Revenues and related cost of revenues are
generally recognized upon delivery of goods or performance of services.

INCOME TAXES: The asset and liability method is used whereby deferred tax assets
and liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities, and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.

LOSS PER COMMON SHARE: Loss per common share has been computed based upon the
weighted average number of shares of common stock outstanding during the period,
plus (in periods in which they have a dilutive effect) common stock equivalents,
primarily stock options and warrants.

FAIR VALUE OF FINANCIAL INSTRUMENTS: Fair value of a financial instrument is
defined as the amount at which such an instrument could be exchanged in a
current transaction between willing parties. Given the circumstances outlined in
Notes B and F, it is not practicable to estimate the fair value of any such
instruments in the Company's consolidated balance sheet at December 31, 2000.

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

RECLASSIFICATIONS: Certain reclassifications have been made in the 1999 and 1998
consolidated financial statements to conform with the 2000 presentation, with
no impact on the consolidated results of the Company.

NOTE D - IMPAIRMENT OF MANAGEMENT SERVICE AGREEMENTS AND ASSOCIATED ASSETS

The Company recognized a pretax impairment charge during the fourth quarter of
1998, based on the criteria described in Note C, totaling $35,489,000. This
charge was principally related to the poor performance of three specific
Physician Practice Management Service Agreements as further described below. Of
the total charge, $33,094,000 related to the impairment of Service Agreement
assets and $2,395,000 related to the write-off of certain net tangible assets
associated with the individual physician practices.

Certain significant economic issues, especially the introduction of new and more
costly cancer drugs and the Company's related inability to convert the subject
physician practices to a more equitable revenue sharing model, began to
materially and negatively impact these practices during 1998. Practice operating
losses and other factors led the Company to evaluate the recoverability of
related Service Agreements and other assets. This evaluation and the factors
described in the following paragraph led to the recognition of impairment
charges in the accompanying 1998 financial statements, which included the
complete write-off of the subject Service Agreement assets.

Given the results of the evaluation described above, the Company began actively
negotiating with the subject physician practices, principally regarding
potential exit strategies and/or Service Agreement modifications. On February 1,
1999 and March 31, 1999, the Company executed termination agreements with two of



                                       33
<PAGE>   34


the three physician practices. The terms of the agreements provided for the
termination of the Service Agreements and return of certain net tangible assets
to the physician practices. The Company currently has no plans to terminate the
Service Agreement with the third physician group.

In the fourth quarter of 1999, the Company terminated its Service Agreement with
one single-physician practice in Florida. During the same period, the Company
began negotiations to terminate another Service Agreement with a
single-physician practice. The Company experienced deteriorating returns on this
particular Service Agreement and concluded that continuing the relationship was
not economically feasible. At December 31, 1999, the Company recorded an
impairment charge, based on similar evaluation processes as described above,
related to the Service Agreements and associated assets totaling $1,185,000. The
Company terminated the second Service Agreement in the second quarter of 2000.

In the fourth quarter of 2000, the Company began negotiating, in response to
certain contract disputes, to sell the assets of the OHG Group, to the existing
physician group. Concurrent with the sale of the assets, the Service Agreement
was terminated, and the parties signed a pharmacy management agreement for the
Company to provide turnkey pharmacy management services to the practice. The
sale and pharmacy management agreement were completed and effective February 1,
2001. At December 31, 2000, the Company has recorded an impairment charge
totaling $15,951,000 related to the Service Agreement and associated assets,
based on the terms of the related agreement.

NOTE E--PROPERTY AND EQUIPMENT

Balances of major classes of property and equipment at December 31, 2000 and
1999 are as follows:
(In thousands)

                                                         2000        1999
                                                       --------    --------
      Lab and pharmacy equipment                       $  5,480    $  5,423
      Furniture and office equipment                      5,532       5,666
      Equipment under capital leases                      2,597       2,597
      Leasehold improvements                              2,292       2,902
                                                       --------    --------
                                                         15,901      16,588
      Less accumulated depreciation and amortization    (12,689)    (12,366)
                                                       --------    --------
                                                       $  3,212    $  4,222
                                                       ========    ========

NOTE F--NOTES PAYABLE

Notes payable at December 31, 2000 and 1999 consist of the following:
(In thousands)
<TABLE>
<CAPTION>

                                                                               2000        1999
                                                                             --------    --------
<S>                                                                          <C>         <C>
      Credit Facility (see below)                                            $ 33,749    $ 36,667
      Various subordinated notes payable to affiliated physicians and
        physician practices, bearing interest ranging from 4% to 9%,
        with maturity dates through 2001                                          758       2,457
      Other notes payable collateralized by furniture and equipment, with
        interest rates between 8% and 10%, payable in monthly installments
        of principal and interest through 2001                                      2          66
                                                                             --------    --------
      Total notes payable                                                      34,509      39,190
      Less current portion                                                    (34,509)     (3,745)
                                                                             --------    --------
                                                                                   --    $ 35,445
                                                                             ========    ========
</TABLE>


The terms of the Company's original lending agreement provided for a $42.0
million Credit Facility, to mature in June 2002, to fund the Company's
acquisition and working capital needs. The Credit Facility, originally comprised
of a $35.0 million Term Loan Facility and a $7.0 million Revolving Credit
Facility, is collateralized by the assets of the Company and the common stock of
its subsidiaries. The Credit Facility bears interest at a variable rate equal to
LIBOR plus an original spread between 1.375% and 2.5%, depending upon borrowing
levels. The Company was also obligated to a commitment fee of .25% to .5% of the
unused portion of the Revolving Credit Facility. At December 31, 2000, $33.7
million aggregate principal was outstanding under the Credit Facility with a
default interest rate of approximately 12.7%. The Company is subject to certain
affirmative and negative covenants which, among other things, originally




                                       34
<PAGE>   35

required that the Company maintain certain financial ratios, including minimum
fixed charge coverage, funded debt to EBITDA and minimum net worth. This
original lending agreement was subsequently and significantly amended in
November 1999, and March 2000, as described below.

In November 1999, the Company and its lenders amended certain terms of the
Credit Facility. As a result of this amendment, the Revolving Credit Facility
was reduced from $7.0 million to $6.0 million and the interest rate was adjusted
to LIBOR plus a spread of 3.25%. The Company's obligation for commitment fees
was adjusted from a maximum of .5% to .625% of the unused portion of the
Revolving Credit Facility. Repayment of the January 1, 2000 quarterly
installment was accelerated. In addition, certain affirmative and negative
covenants were added or modified, including minimum EBITDA requirements for the
fourth quarter of 1999 and the first quarter of 2000. Compliance with certain
covenants was also waived for the quarters ended September 30, 1999 and December
31, 1999.

On March 30, 2000, the Company and its lenders again amended various terms of
the Credit Facility. As a result of this amendment, certain affirmative and
negative covenants were added (including minumum quarterly cash flow
requirements through March 2001), and certain other existing covenants were
modified. Additionally, certain principal repayment terms were modified and
certain future and current compliance with specific covenants was waived.
Finally, the maturity date of the Credit Facility was accelerated to June 2001.

During the third quarter of 2000, the Company did not meet certain financial
covenants of the Credit Facility, including those related to minimum cash flow
requirements. This occurred primarily due to further erosion in high dose
chemotherapy volumes. As a result of this event of default, the Company's
lenders adjusted the interest rates on the outstanding principal to the default
rate of prime plus 3% (12.5% at the time of default) and terminated any
obligation to advance additional loans or issue letters of credit. The Company
does not anticipate that the termination of the lenders obligation to advance
additional loans or letters of credit will have an immediate impact on
operations. Under the terms of the Credit Facility, additional remedies
available to the lenders (as long as an event of default exists and has not been
cured) include acceleration of all principal and accrued interest outstanding,
the right to foreclose on related security interests in the assets of the
Company and stock of its subsidiaries, and the right of setoff against any
monies or deposits that the lenders have in their possession.

Effective December 29, 2000, the Company executed a forbearance agreement with
its lenders. Under the terms of the forbearance agreement, the lenders agreed to
forbear from enforcing their rights or remedies pursuant to the Credit Facility
documents until the earlier of (i) March 30, 2001 (as amended), or (ii) certain
defined events of default. During this period, the interest rate was adjusted to
prime plus 2%. The forbearance agreement also provided that a financial advisor
be retained by the Company to assist in the development of a restructuring plan
and perform certain valuation analyses. The Company has submitted the
restructuring plan to its lenders and is negotiating an extension to the Credit
Facility.

With the Company's March 29, 2001 Chapter 11 bankruptcy filing, any potential
future revisions to the Credit Facility are subject to Chapter 11 reorganization
processes (described elsewhere in conjunction with discussion of the filing).
There can be no assurances as to the form of such revisions (if any) or their
impact on the Company's financial position or continued business viability.
Additionally, as of the date of the bankruptcy filing, the Company was in
technical default under the terms of the Credit Facility.

The Company enters into LIBOR-based interest rate swap agreements ("Swap
Agreement") with the Company's lender as required by the terms of the Credit
Facility. In June 2000, the Company entered into a new Swap Agreement effective
July 1, 2000. Amounts hedged under this most recent Swap Agreement accrue
interest at the difference between 7.24% and the ninety-day LIBOR rate and are
settled quarterly. The Company has hedged $17.0 million under the terms of the
Swap Agreement. The Swap Agreement matures on July 1, 2001. The Company has
reviewed the applicability and implications of SFAS No. 133 for the Company's
financial statements. The sole derivative instrument to which the accounting
prescribed by the Statement is applicable is the Swap Agreement described above.
The Company recorded a cumulative adjustment charge in implementing the
Statement on January 1, 2001 of approximately $111,000 in recognition of the
reported fair value of the Swap Agreement.

The installment notes payable to affiliated physicians and physician practices
were issued as partial consideration for the practice management affiliations.
Principal and interest under the long-term notes may, at the election of the
holders, be paid in shares of common stock of the Company based on conversion
prices ranging from $11.50 to $16.97.



                                       35
<PAGE>   36


Amounts due under the Credit Facility have been classified in the consolidated
balance sheet at December 31, 2000 in a fashion consistent with the contractual
maturities in effect as of the balance sheet date. The aggregate maturities of
long-term debt at December 31, 2000 are as follows:

(In thousands)

                  2001                                    $34,509
                  2002                                         --
                  2003                                         --
                  2004                                         --
                  2005                                         --
                  Thereafter                                   --
                                                    --------------
                                                          $34,509
                                                    ==============

NOTE G -- LEASES

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

Interest has been imputed on capital leases at rates of 6% to 12%. Accumulated
amortization of assets recorded under capital leases totaled $2,063,000 and
$1,821,000 at December 31, 2000 and 1999, respectively. Amortization of leased
assets is included in depreciation and amortization expense.

Total rental expense under operating leases amounted to $3,331,000, $3,838,000,
and $3,527,000 for the years ended December 31, 2000, 1999, and 1998
respectively. The Company is generally obligated to the lessors for its
proportionate share of operating expenses of the leased premises. At December
31, 2000, future minimum lease payments under capital and operating leases with
initial terms of one year or more are as follows (in thousands):

<TABLE>
<CAPTION>

                                                 CAPITAL LEASES         OPERATING LEASES
                                                 -----------------     --------------------
<S>                              <C>                         <C>                    <C>
Year ending December 31:
                                 2001                        $306                   $2,101
                                 2002                         284                    1,595
                                 2003                          31                    1,244
                                 2004                          --                    1,131
                                 2005                          --                      828
                                  Thereafter                   --                    8,416
                                                 ----------------      --------------------
Total  minimum payments                                       621                  $15,315
                                                                       ====================

        Less imputed interest                                  41
                                                 ----------------
Present value of minimum rental payments                      580
Less current portion                                          277
                                                 ----------------
Capital lease obligations,
        less current portion                                 $303
                                                 ================

</TABLE>

NOTE H --- INCOME TAXES

The components of the actual expense or benefit for the years ended 2000, 1999,
and 1998 are as follows (in thousands):



                                       36
<PAGE>   37


                                                  2000        1999        1998
                                               --------    --------    --------
      Federal current tax expense (benefit)          --    ($ 1,756)   $    500
      State current tax expense                      38          --         132
      Deferred federal tax expense (benefit)     (6,201)      1,914     (13,780)
      Deferred state tax expense (benefit)       (1,130)          6      (2,587)
                                               --------    --------    --------
                                               ($ 7,293)   $    164    ($15,735)
                                               ========    ========    ========


The actual tax expense or benefit for the years ended December 31, 2000, 1999,
and 1998 respectively, differs from the expected tax expense or benefit for
those years (computed by applying the federal corporate tax rate of 34% to
earnings or loss before income taxes) as follows (in thousands):

<TABLE>
<CAPTION>

                                                          2000        1999        1998
                                                        --------    --------    --------
<S>                                                     <C>         <C>         <C>
      Computed expected tax benefit                     ($ 7,382)   ($   520)   ($11,282)
      Permanent benefit of stock loss                         --          --      (4,855)
      Non-deductible expenses                                  4          19          25
      Utilization of net operating loss carryforwards         --          --          --
      State tax expense (benefit)                           (721)          4      (1,620)
      Valuation allowance                                  1,200         779       2,238
      Other                                                 (394)       (118)       (241)
                                                        --------    --------    --------
      Actual income tax expense (benefit)               ($ 7,293)   $    164    ($15,735)
                                                        ========    ========    ========
</TABLE>

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

                                                     2000        1999
                                                   --------    --------
      Deferred tax assets:
         Net operating loss carryforwards          $  4,929    $  3,974
         Reserve for bad debts                          887         105
         Excess book depreciation/amortization          546         620
         Minimum tax credit                             181          --
         Accrued expenses                               228          --
         Impairment of management service
                agreements and associated assets      3,369       3,541
                                                   --------    --------
      Total deferred assets                          10,140       8,240
      Valuation allowance                            (4,217)     (3,017)
                                                   --------    --------
      Net deferred tax assets                         5,923       5,223
                                                   --------    --------
      Deferred tax liability:
         Management service agreements                8,268      14,876
         Other                                           12          35
                                                   --------    --------
       Total deferred tax liability                   8,280      14,911
                                                   --------    --------
      Net deferred tax liability                   $  2,357    $  9,688
                                                   ========    ========

The valuation allowance for the deferred tax assets as of December 31, 2000 is
$4,217,000. The net change in the total valuation allowance for the year ended
December 31, 2000, was an increase of $1,200,000. Management believes that a
valuation allowance is necessary with respect to certain losses which will
expire. In assessing the realizability of deferred tax assets, management
considers whether it is more likely than not some portion or all of the deferred
tax assets will be realized. Management considers the scheduled reversal of
deferred tax liabilities, projected future taxable income, income taxes paid in
prior years eligible to be offset by net operating loss carrybacks, and tax
planning strategies in making this assessment. Based upon these factors,
management believes it is more likely than not the Company will realize the
benefits of ordinary deductible differences related to the net deferred tax
asset of $5,923,000.



                                       37
<PAGE>   38


As of December 31, 2000, the Company had available for federal income tax
purposes net operating loss carryforwards totaling approximately $12.3 million.
Of this amount, $3.0 million of the net operating loss carryforward is subject
to annual limitations and is likely to expire. In addition, as of December 31,
2000, the Company had approximately $17.5 million of state net operating loss
carryforwards available. In addition to the net operating losses available to
offset future taxable income, the Company has a minimum tax credit of $181,000
that can be carried forward indefinitely.

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

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

During the years ended December 31, 1999 and 1998, 10,000 and 602 shares of
Series A Convertible Preferred Stock were converted into 1,833 and 110 shares of
common stock, respectively.

In December 2000, 1999, and 1998, the Board of Directors approved a common stock
dividend of 183, 183 and 293 shares to the holders of the Series A Convertible
Preferred Stock of record as of December 15, 2000, 1999, and 1998, respectively,
that was paid January 2001, 2000, and 1999, respectively. The market value of
the common stock distributed was approximately $34, $297 and $1,000 at December
15, 2000, 1999 and 1998, respectively.. The dividends have been reflected in the
"Statement of Operations," and the weighted average number of common shares in
the determination of net loss to common stockholders and the loss per common
share calculations. The par value of the common stock distributed was recorded
to paid-in capital.

OPTIONS: The 1985 Stock Option Plan (the "1985 Plan"), as amended in fiscal year
1988, allows for granting of incentive stock options, non qualified stock
options, and stock appreciation rights for up to 122,000 shares of common stock
to eligible officers and key employees of the Company at an exercise price of
not less than the market price of the common stock on the date of grant for an
incentive stock option and not less than 85% of the market price of the common
stock on the date of grant for a non qualified stock option. The 1985 Plan
expired in 1995; no additional shares are available for grant.

The 1990 Non Qualified Stock Option Plan (the "1990 Plan"), as amended in 1995,
allows for the granting of up to 1,125,000 non qualified stock options to
eligible officers, directors, key employees, and consultants of the Company at
an exercise price of not less than the market price of the common stock on the
date of grant with an option period up to 10 years.

The 1996 Incentive and Non Qualified Stock Option Plan (the "1996 Plan"), as
amended in 1997 and 2000, allows for the granting of up to 1,630,000 options to
eligible officers, directors, advisors, medical directors, consultants, and key
employees of the Company at an exercise price of not less than the market price
of the common stock on the date of grant with an option period up to 10 years.



                                       38
<PAGE>   39

A summary status of the 1985 Plan as of December 31, 2000, 1999, and 1998 and
changes during the years then ended is presented below:

<TABLE>
<CAPTION>

                                                  2000                              1999                             1998
                                      ----------------------------    ------------------------------    -------------------------
                                                      WEIGHTED                           WEIGHTED                     WEIGHTED
                                                       AVERAGE                           AVERAGE                       AVERAGE
                                        NUMBER        EXERCISE           NUMBER          EXERCISE         NUMBER      EXERCISE
           FIXED OPTIONS               OF SHARES        PRICE          OF SHARES          PRICE         OF SHARES       PRICE
           -------------              ------------  --------------    -------------    -------------    -----------  ------------
<S>                                        <C>              <C>             <C>               <C>           <C>         <C>
Outstanding at beginning of year           51,100           $3.79           60,203            $3.85         61,203       $3.81
Exercised                                      --              --               --               --         (1,000)       1.88
Forfeited                                 (50,900)           3.75           (9,103)            3.59             --          --
                                     ------------                     ------------                      ----------
Outstanding at end of year                    200           11.88           51,100             3.79         60,203        3.85
                                     ============                     ============                      ==========
Options exercisable end of year               200                           51,100                          60,006
                                     ============                     ============                      ==========
</TABLE>


A summary status of the 1990 Plan as of December 31, 2000, 1999, and 1998 and
changes during the years then ended is presented below:

<TABLE>
<CAPTION>

                                                  2000                             1999                             1998
                                      ---------------------------    ----------------------------     ---------------------------
                                                     WEIGHTED                         WEIGHTED                         WEIGHTED
                                                      AVERAGE                          AVERAGE                          AVERAGE
                                        NUMBER       EXERCISE          NUMBER         EXERCISE          NUMBER         EXERCISE
           FIXED OPTIONS               OF SHARES       PRICE          OF SHARES         PRICE          OF SHARES         PRICE
           -------------              ------------  -------------    ------------    ------------     ------------    ------------
<S>                                       <C>              <C>           <C>             <C>            <C>               <C>
Outstanding at beginning of year          783,972          $4.86         779,108         $6.34           810,034          $6.75
Granted                                        --             --         220,000           .69            54,500           6.75
Exercised                                 (20,175)          1.56              --            --           (47,103)          6.00

Forfeited                                (114,732)          3.61        (215,136)         5.96           (38,323)          6.00
                                     ------------                    ------------                   ------------
Outstanding at end of year                649,065           5.18         783,972          4.86           779,108           6.34
                                     ============                    ============                   ============
Options exercisable end of year           530,736                        569,609                         754,420
                                     ============                    ============                   ============
</TABLE>


A summary status of the 1996 Plan for the years ended December 31, 2000, 1999,
and 1998 and changes during the years then ended is presented below:

<TABLE>
<CAPTION>

                                                  2000                             1999                             1998
                                      ------------------------------    --------------------------     -------------------------
                                                        WEIGHTED                       WEIGHTED                       WEIGHTED
                                                         AVERAGE                        AVERAGE                        AVERAGE
                                        NUMBER          EXERCISE          NUMBER       EXERCISE          NUMBER       EXERCISE
           FIXED OPTIONS               OF SHARES          PRICE          OF SHARES       PRICE          OF SHARES       PRICE
           -------------              ------------    --------------    ------------  ------------     ------------   -----------
<S>                                     <C>                 <C>           <C>             <C>            <C>            <C>
Outstanding at beginning of year        1,019,933           $3.67         1,101,690       $6.54          1,086,989      $6.55
Granted                                   324,000            1.10           579,000         .85             61,000       6.62
Exercised                                      --              --                --          --             (8,061)      6.00
Forfeited                                (181,422)           6.16          (660,757)       5.98            (38,238)      6.97
                                     ------------                       -----------                    -----------
Outstanding at end of year              1,162,511            2.57         1,019,933        3.67          1,101,690       6.54
                                     ============                       ===========                    ===========
Options exercisable end of year           639,178                           665,601                      1,017,146
                                     ============                       ===========                    ===========


</TABLE>

                                       39
<PAGE>   40



The following table summarizes information about fixed stock options outstanding
at December 31, 2000:

<TABLE>
<CAPTION>

                                       OPTIONS OUTSTANDING                              OPTIONS EXERCISABLE
                     --------------------------------------------------------     ---------------------------------
                                          WEIGHTED AVERAGE        WEIGHTED                             WEIGHTED
                                              REMAINING            AVERAGE                              AVERAGE
     RANGE OF              NUMBER            CONTRACTUAL          EXERCISE          NUMBER             EXERCISE
  EXERCISE PRICES        OUTSTANDING        LIFE (YEARS)            PRICE         EXERCISABLE            PRICE
--------------------    --------------    ------------------     ------------    --------------     ----------------

<S>                           <C>               <C>                    <C>             <C>                    <C>
    $0.69  -  $0.69           676,667           8.84                   $0.69           343,337                $0.69
    $0.91  -  $1.13           364,000           9.22                   $1.08            74,000                $1.00
    $1.25  -  $6.00           337,209           6.48                   $5.51           323,876                $5.63
    $6.25  - $11.56           346,600           5.99                   $8.15           341,601                $8.16
    $11.88 - $16.50            86,500           5.06                  $13.90            86,500               $13.90
    $16.88 - $16.88               800           4.75                  $16.88               800               $16.88

</TABLE>

The Company accounts for employee stock options in accordance with the
provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," and related interpretations (APB 25). As such,
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. On December 31, 1995,
the Company adopted Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation" (SFAS 123), which permits entities to
recognize as expense over the vesting period the fair value of all stock-based
awards on the date of grant. Alternately, SFAS 123 allows entities to continue
to apply the provisions of APB 25 and provide certain disclosures for employee
stock option grants made in 1995 and future years as if the fair-value-based
method defined in SFAS 123 had been applied. The Company has elected to continue
to apply the provisions of APB 25 and provide the pro forma disclosures required
by SFAS 123.

The per share weighted average fair value of stock options granted during 2000,
1999, and 1998 was $.92, $.61, and $4.47 on the date of grant. The fair values
were calculated by using the "Black Scholes" option-pricing model with the
following average assumptions: 2000 - expected dividend yield of 0%, risk-free
interest rate of 4.7%, expected volatility factor of 117% and an expected life
of five years, 1999 - expected dividend yield of 0%, risk-free interest rate of
6.5%, expected volatility factor of 100% and an expected life of five years,
1998 - expected dividend yield of 0%, risk-free interest rate of 5.5%, expected
volatility factor of 80% and an expected life of five years. Since the Company
applies APB 25 in accounting for its plans, no compensation cost has been
recognized for its stock options in the financial statements. Had the Company
recorded compensation cost based on the fair value at the grant date for its
stock options under SFAS 123, the Company's net loss and loss per common share
would have been increased by the proforma amounts indicated below (in thousands
except for per share data):

                                         2000        1999        1998
                                      ---------   ---------   ---------
      Increase in net loss            $     277   $     517   $   1,767
      Increase in basic loss per
        common share                  $    0.02   $    0.04   $    0.15
      Increase in diluted loss
        per common share              $    0.02   $    0.04   $    0.15

Pro forma net loss reflect only options granted subsequent to 1995. Therefore,
the full impact of calculating compensation cost for stock options under SFAS
123 is not reflected in the pro forma net loss amounts presented above because
compensation costs are reflected over the options' vesting period of five years
for the 2000, 1999, and 1998 options.

NOTE J -- BENEFIT PLAN

The Company established a 401(k) Profit Sharing Plan (the "Plan") which allows
qualifying employees electing participation to defer a portion of their income
on a pretax basis through contributions to the Plan. For each dollar of employee
contributions, the Company makes a discretionary percentage matching
contribution to the Plan. In addition, eligible employees share in any
additional discretionary contributions which are based upon the profitability of
the Company. All contributions made by the Company are determined by the
Company's Board of Directors. For the Plan year ended December 31, 2000, the




                                       40
<PAGE>   41

approved matching percentage is 35% up to a maximum of $1,750 per employee.
Expense recognized for the Company's contributions to the plan amounted to
$121,000, $177,000, and $130,000 in 2000, 1999, and 1998 respectively. The
Company has suspended matching contributions in 2001.

NOTE K - PROFESSIONAL AND LIABILITY INSURANCE

With respect to professional and general liability risks, the Company currently
maintains an insurance policy that provides coverage during the policy period
ending August 1, 2001, on a claims-made basis, for $1,000,000 per claim in
excess of the Company retaining $25,000 per claim, and $3,000,000 in the
aggregate. Costs of defending claims are in addition to the limit of liability.
In addition, the Company maintains a $10,000,000 umbrella policy with respect to
potential professional and general liability claims. Since inception, the
Company has incurred no professional or general liability losses. As of December
31, 2000 the Company was not aware of any pending professional or general
liability claims that would have a material adverse effect on the Company's
financial condition or results of operations.

NOTE L - SEGMENT INFORMATION

The Company's reportable segments are strategic business units that offer
different services. The Company has three reportable segments: IMPACT Services,
Physician Practice Management and Cancer Research Services. The IMPACT Services
segment provides stem cell supported high dose chemotherapy and other advanced
cancer treatment services under the direction of practicing oncologists and
pharmacy management services for certain medical oncology practices through
IMPACT Center pharmacies. The Physician Practice Management segment owns the
assets of and manages oncology practices. The Cancer Research Services segment
conducts clinical cancer research on behalf of pharmaceutical manufacturers.

The accounting policies of the segments are the same as those described in the
summary of significant accounting policies except that the Company does not
allocate interest expense, taxes or corporate overhead to the individual
segments. The Company evaluates performance based on profit or loss from
operations before income taxes and unallocated amounts.

(In thousands)

<TABLE>
<CAPTION>

                                                                        PHYSICIAN
                                                                        PRACTICE        CANCER RESEARCH
                                                   IMPACT SERVICES      MANAGEMENT         SERVICES           TOTAL
                                                   ---------------     -------------    ---------------     ------------
<S>                                                 <C>                <C>                <C>                <C>
      For the year ended December 31, 2000:

      Net revenue                                   $  52,615          $  77,671          $     547          $ 130,833
      Total operating expenses                         52,404             68,500                634            121,538
      Impairment of management services
         agreements and associated assets                  --             15,951                 --             15,951
                                                    ---------          ---------          ---------          ---------
      Segment contribution (deficit)                      211             (6,780)               (87)            (6,656)
      Depreciation and amortization                       408              3,972                 --              4,380
                                                    ---------          ---------          ---------          ---------
      Segment loss                                  ($    197)         ($ 10,752)         ($     87)         ($ 11,036)
                                                    =========          =========          =========          =========
      Segment assets                                $  12,463          $  68,146          $     769          $  81,378
                                                    =========          =========          =========          =========
      Capital expenditures                          $     168          $     354                 --          $     522
                                                    =========          =========          =========          =========

</TABLE>





                                       41
<PAGE>   42





<TABLE>
<CAPTION>

                                                                         PHYSICIAN
                                                          IMPACT          PRACTICE        CANCER RESEARCH
                                                         SERVICES         MANAGEMENT         SERVICES          TOTAL
                                                         -----------    -------------     ----------------  -------------
<S>                                                       <C>              <C>              <C>              <C>
      For the year ended December 31, 1999:

      Net revenue                                         $ 65,709         $ 68,413         $  1,445         $135,567
      Total operating expenses                              59,120           59,280            1,438          119,838
      Impairment of management service agreements
         and associated assets                                  --            1,921               --            1,921
                                                          --------         --------         --------         --------
      Segment contribution                                   6,589            7,212                7           13,808
      Depreciation and amortization                            536            3,777               --            4,313
                                                          --------         --------         --------         --------
      Segment profit                                      $  6,053         $  3,435         $      7         $  9,495
                                                          ========         ========         ========         ========
      Segment assets                                      $ 18,448         $ 87,483         $  1,669         $107,600
                                                          ========         ========         ========         ========
      Capital expenditures                                $    112         $    741         $     --         $    853
                                                          ========         ========         ========         ========
</TABLE>

<TABLE>
<CAPTION>

                                                                            PHYSICIAN
                                                           IMPACT             PRACTICE       CANCER RESEARCH
                                                          SERVICES           MANAGEMENT        SERVICES           TOTAL
                                                        -------------     --------------     ----------------   ------------
<S>                                                       <C>               <C>                <C>               <C>
      For the year ended December 31, 1998:

      Net revenue                                         $  64,806         $  59,527          $   3,913         $ 128,246
      Total operating expenses                               53,806            53,570              2,059           109,435
      Impairment of management service agreements
         and associated assets                                   --            35,489                 --            35,489
                                                          ---------         ---------          ---------         ---------
      Segment contribution (deficit)                         11,000           (29,532)             1,854           (16,678)
      Depreciation and amortization                             921             4,208                 --             5,129
                                                          ---------         ---------          ---------         ---------
      Segment profit (loss)                               $  10,079         ($ 33,740)         $   1,854         ($ 21,807)
                                                          =========         =========          =========         =========
      Segment assets                                      $  26,448         $  91,291          $   2,279         $ 120,018
                                                          =========         =========          =========         =========
      Capital expenditures                                $     340         $   2,711          $      18         $   3,069
                                                          =========         =========          =========         =========
</TABLE>

<TABLE>
<CAPTION>

                                                                         YEARS ENDED
                                                        -----------------------------------------------
                                                           2000              1999               1998
                                                        ---------          ---------          ---------
<S>                                                     <C>                <C>                <C>
      Reconciliation of profit (loss):
      Segment profit (loss)                             ($ 11,036)         $   9,495          ($ 21,807)
      Unallocated amounts:
        Corporate general and administrative                6,754              7,755              7,980
        Corporate depreciation and amortization               230                195                450
        Corporate interest expense                          3,692              3,074              2,946
                                                        ---------          ---------          ---------
      Loss before income taxes                          ($ 21,712)         ($  1,529)         ($ 33,183)
                                                        =========          =========          =========
</TABLE>

<TABLE>
<CAPTION>


                                                                         YEARS ENDED
                                                        -----------------------------------------------
                                                           2000              1999               1998
                                                        ---------          ---------          ---------
<S>                                                     <C>                <C>                <C>
      Reconciliation of consolidated assets:

      Segment assets                                    $  81,378          $ 107,600          $ 120,018
      Unallocated amounts:
        Cash and cash equivalents                           7,327              7,195              1,083
        Prepaid expenses and other assets                   2,940              3,966              4,782
        Property and equipment, net                           768                884                870
                                                        ---------          ---------          ---------

      Consolidated assets                               $  92,413          $ 119,645          $ 126,753
                                                        =========          =========          =========

</TABLE>

                                       42
<PAGE>   43

SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
RESPONSE ONCOLOGY, INC. AND SUBSIDIARIES
(Dollar amounts in thousands)

<TABLE>
<CAPTION>

                  COL A                      COL B                 COL C - ADDITIONS                COL D           COL E
                                                                                CHARGED TO
                                          BALANCE AT          CHARGED TO          OTHER          DEDUCTIONS -     BALANCE AT
                                         BEGINNING OF         COSTS AND         ACCOUNTS -       DESCRIBE (1)       END OF
             CLASSIFICATION                 PERIOD             EXPENSES          DESCRIBE                           PERIOD

<S>                                              <C>                <C>                                   <C>          <C>
Year ended December 31, 2000
   Deducted from asset accounts:
   Allowance for doubtful
   accounts - accounts receivable                 $2,632             $1,309                                $452         $3,489
                                        ================    ===============                     ===============  =============

Year ended December 31, 1999
   Deducted from asset accounts:
   Allowance for doubtful
   accounts - accounts receivable                 $2,772             $2,625                              $2,765         $2,632
                                        ================    ===============                     ===============  =============

Year ended December 31, 1998:
   Deducted from asset accounts:
   Allowance for doubtful
   accounts - accounts receivable                 $3,130             $2,947                              $3,305         $2,772
                                        ================    ===============                     ===============  =============
</TABLE>


(1)      Accounts written off, net of recoveries





                                       43



</TEXT>
</DOCUMENT>
g68543ex10-w.txt FOREBEARANCE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.W
<SEQUENCE>2
<FILENAME>g68543ex10-w.txt
<DESCRIPTION>FOREBEARANCE AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10(W)

                              FORBEARANCE AGREEMENT

         THIS FORBEARANCE AGREEMENT dated as of December 29, 2000 ("this
Forbearance Agreement") is executed by RESPONSE ONCOLOGY, INC., a Tennessee
corporation ("Response"), RESPONSE ONCOLOGY MANAGEMENT OF SOUTH FLORIDA, INC., a
Tennessee corporation ("Management"), RESPONSE ONCOLOGY OF TAMARAC, INC., a
Florida corporation ("Tamarac") and RESPONSE ONCOLOGY OF FORT LAUDERDALE, INC.,
a Florida corporation ("Ft. Lauderdale"; Response, Management, Tamarac and Ft.
Lauderdale are sometimes together referred to as the "Borrowers"); AMSOUTH BANK,
an Alabama banking corporation ("AmSouth"), UNION PLANTERS BANK, NATIONAL
ASSOCIATION, a national banking association, and BANK OF AMERICA, N.A., a
national banking association and formerly known as NationsBank, N.A.
(collectively, the "Lenders"), and AMSOUTH BANK, in its capacity as Agent for
Lenders ("Agent")

                                   BACKGROUND

         A.       The Borrowers, the Lenders and the Agent have entered into a
Credit Agreement dated as of June 10, 1999, as amended by a First Amendment
thereto dated as of September 30, 1999 and a Second Amendment thereto dated as
of March 30, 2000 (such Credit Agreement, as so subsequently amended, modified
or supplemented through the date hereof, the "Credit Agreement"). Capitalized
terms not otherwise defined in this Forbearance Agreement have the same meanings
as specified in the Credit Agreement.

         B.       The Borrowers have informed the Lenders that they are not in
compliance with the provisions of Section 7.7 of the Credit Agreement (each an
"Event" and collectively, the "Events"). The Events constitute Events of
Default.

         C.       In order to provide the Borrowers with a period of time within
which to develop a plan to address the Borrowers' current financial
difficulties, the Borrowers have requested that the Lenders forbear from
exercising their rights and remedies under the Credit Documents. Subject to the
terms and conditions of this Forbearance Agreement, the Lenders have agreed to
this request.

                                    AGREEMENT

         NOW, THEREFORE, incorporating the section in this Forbearance Agreement
captioned "Background" above, and for other good and valuable consideration, the
Agent, the Lenders and the Borrowers agree as of the date hereof (the
"Forbearance Agreement Effective Date") as follows:
<PAGE>   2

                                    ARTICLE 1

                         ACKNOWLEDGMENTS AND AGREEMENTS

         1.1      Acknowledgment of Existing Events; Existing Credit Documents.
The Borrowers acknowledge and agree that: (a) each Event is material in nature
and constitutes an Event of Default; (b) the Credit Documents are valid and
enforceable against the Borrowers in every respect and all of the terms and
conditions thereof are binding upon the Borrowers; and (c) the Subordinated Debt
is subordinated and subject in right of payment to the prior payment in full of
the obligations described in the Credit Agreement. The Borrowers further
acknowledge and agree that, as a result of the Events, the Lenders are entitled
immediately without further notice or declaration to the Borrowers or any other
Person, to accelerate the Obligations pursuant to the Credit Documents and to
exercise all rights and remedies under the Credit Documents, applicable law or
otherwise. With respect to the Events, to the extent that any of the Credit
Documents require notification by the Lenders or the Borrowers of the existence
of a default or an opportunity for the Borrowers to cure such a default, or
both, such notice and period for cure have been properly given by the Lenders or
hereby are waived by the Borrowers.

         1.2      Acknowledgment of Current Outstanding Obligations. As of
December 26, 2000, the Borrowers are indebted to the Lenders in an aggregate
amount equal to the principal sum (including the face amount of outstanding
letters of credit) of $33,748,715 apportioned as follows:

<TABLE>
                  <S>                                <C>
                  Term Loan Facility                 $28,749,000.00

                  Revolving Credit Facility          $ 4,999,715.00

                  Letters of Credit                  $            0
</TABLE>

plus accrued but unpaid interest, plus, to the extent provided in the Credit
Documents, the costs and expenses associated with the Loans incurred by any
Lender and/or the Lenders, including, without limitation, reasonable attorneys'
fees incurred by the Agent in the negotiation and preparation of the Credit
Documents, this Forbearance Agreement and the documents related hereto (the
foregoing amounts are hereafter collectively referred to as the "Current
Outstanding Obligations") and/or in connection with the Events, all without
offset, counterclaims or defenses of any kind. Nothing contained herein shall
alter, amend, modify or extinguish the obligation of the Borrowers to repay the
Current Outstanding Obligations, and neither this Forbearance Agreement nor any
of the other documents related hereto constitutes a novation or modification of
any of the Credit Documents.

         1.3      Acknowledgment of Liens and Priority. Pursuant to the Credit
Documents and except as specifically set forth therein or herein, the Agent, for
the benefit of the Lenders, holds first priority, perfected security interests
in and liens upon all of the Borrowers' assets, wherever located, including
assets now owned or hereafter acquired, and as more specifically described in


                                      -2-
<PAGE>   3

the Credit Documents. The Borrowers will promptly take all actions and execute
all documents requested by the Agent in regard to such security interests and
liens including any actions requested by the Agent as a result of revisions to
the Uniform Commercial Code in the jurisdictions in which any Collateral is
located. Such security interests and liens secure all of the Obligations now or
hereafter incurred, including, without limitation, the Current Outstanding
Obligations and all other amounts now or hereafter owed by the Borrowers to the
Lenders under the Credit Documents. For purposes of this Forbearance Agreement,
the word "Obligations" shall mean any and all obligations and liabilities of the
Borrowers to the Lenders, of every kind and description, direct and indirect,
absolute and contingent, sole, joint, several, or joint and several, primary or
secondary, due or to become due, now existing or hereafter arising, regardless
of how they arise or by what agreement or instrument they may be evidenced or
whether evidenced by any agreement or instrument, and includes obligations to
perform acts and refrain from taking actions as well as obligations to pay
money, and also includes the Current Outstanding Obligations.

         1.4      Reaffirmation of Security Interests. All of the assets of the
Borrowers pledged, assigned, conveyed, mortgaged, hypothecated or transferred to
the Agent for the benefit of the Lenders pursuant to the Credit Documents
including, without limitation, the Collateral constitute collateral security for
all of the Obligations. The Borrowers hereby reaffirm their prior conveyance to
the Agent for the benefit of the Lenders of a continuing security interest in
and lien on the Collateral as well as a security interest in and lien upon any
and all funds and/or monies of the Borrowers.

                                    ARTICLE 2

                                   FORBEARANCE

         2.1      Forbearance Period. Subject to the terms and conditions of
this Forbearance Agreement, and without waiving the Events or other Defaults or
Events of Default that may exist, the Lenders agree to forbear from enforcing
their rights or remedies pursuant to the Credit Documents and applicable law as
a result of the occurrence of the Events until the earliest to occur of the
following (as the case may be, the "Forbearance Termination Date"): (i) February
28, 2001, (ii) the occurrence of an Event of Default under this Forbearance
Agreement, any other Credit Document or any other loan or credit agreement or
other document evidencing a debt obligation of the Borrowers, including without
limitation the documents evidencing Subordinated Debt, except for the Events,
and (iii) the exercise of any rights by any party to any loan or credit
agreement or other document evidencing a debt obligation, including, without
limitation, the documents evidencing Subordinated Debt, which the Required
Lenders and the Agent consider to be adverse to the interests of the Lenders.

         2.2      Payments to Affiliates; Subordinated Payments. Until the
occurrence of the Forbearance Termination Date, neither the Borrowers, nor any
Subsidiary, will (i) pay, redeem, purchase, defease or otherwise partially or
fully satisfy in any manner, whether in respect of


                                      -3-
<PAGE>   4

interest, principal, premiums, fees, expenses or otherwise, any of the
Subordinated Debt except for the payment of interest to Medical Oncology
Hematology Consultants, PLLC in the amount of $3,605, which payment is due on
January 1, 2001; provided, however, Response represents to the Agent and the
Lenders that it is negotiating an amendment to the Management Services Agreement
with Oncology-Hematology Group of South Florida ("OHG") that would allow
Response not to pay the Subordinated Debt payment due OHG on December 31, 2000.
If the negotiations between Response and OHG fail to result in nonpayment of the
scheduled Subordinated Debt payment to OHG, the Agent and the Lenders will
consider, as promptly as practicable, approving such payment by Response to OHG.
In no event shall the Agent and the Lenders be deemed to permit such payment
without written approval signed by the Agent and the Lenders; or (ii) make any
other payment, whether as a dividend, compensation, management fee, bonus or
otherwise to any Affiliate of the Borrowers or any of their Subsidiaries.

         2.3      Financial Advisor. (a) The Borrowers are utilizing the
services of PricewaterhouseCoopers, which is acceptable to the Lenders, to
develop a business plan and otherwise advise the Borrowers with respect to the
Borrowers' current financial difficulties. The business plan developed with the
assistance of the outside professionals and the restructuring proposal
formulated by the Borrowers will be delivered to the Agent and the Lenders by no
later than February 1, 2001.

         (b)      The Borrowers agree promptly to provide to the Agent copies of
any existing or subsequently created valuations of the Borrowers' businesses
and/or the Collateral. The Borrowers confirm that they will require
PricewaterhouseCoopers to perform a valuation of the Borrowers' businesses under
various scenarios and assumptions as soon as practicable.

         2.4      Interest and No Advances. From the Forbearance Agreement
Effective Date until the occurrence of the Forbearance Termination Date, (i)
interest on the Obligations shall be charged at the Prime Rate plus two
percentage points (200 basis points), (ii) the Borrowers shall otherwise make
all payments required to be made in accordance with the terms of the Credit
Documents and (iii) the Lenders shall not be obligated to advance any additional
Loans and the Issuing Bank shall not be obligated to issue Letters of Credit.

         2.5      Forbearance Fee. In consideration for the Lenders' agreement
to forbear as set forth herein, the Borrowers hereby agree to pay to the Agent
for distribution to the Lenders Pro Rata, on the date of the Borrowers'
execution of this Forbearance Agreement a forbearance fee in an amount equal to
Sixty-Seven Thousand Four Hundred Ninety-Seven and 43/100 Dollars ($67,497.43),
which shall be fully earned and not refundable by the Lenders.

         2.6      Financial Information. In addition to all the information
required to be provided to the Agent under the Credit Agreement, including
without limitation the information required to be provided under Section 5.3 of
the Credit Agreement, the Borrowers shall deliver to the Agent each week
commencing January 1, 2001, cash flow forecasts for each of the next four weeks
on both a consolidated and consolidating basis in such form and content as are
mutually acceptable


                                      -4-
<PAGE>   5

to the Agent and to the Borrowers. The cash flow forecasts shall be on a rolling
basis, shall reflect actual receipts and disbursements, shall compare actual
cash flow for the past week to the previously projected amounts for such past
week and shall reflect the actual cash on hand as of the date of the forecasts.

                                    ARTICLE 3

                              CONDITIONS TO CLOSING

         The obligations of the Agent and the Lenders under this Forbearance
Agreement and the effectiveness of this Forbearance Agreement are subject to the
receipt by the Agent of the following:

         (a)      this Forbearance Agreement duly executed by the Borrowers, the
                  Lenders and the Agent; and

         (b)      all reasonable fees, costs, expenses and disbursements owing
                  to the Lenders, including without limitation, the fees and
                  disbursements of Maynard, Cooper & Gale, P.C. shall have been
                  paid.

                                    ARTICLE 4

                         REPRESENTATIONS AND WARRANTIES

         To induce the Lenders to enter into this Forbearance Agreement and as
partial consideration for the terms and conditions contained herein, the
Borrowers, jointly and severally, make the following representations and
warranties to the Lenders, each and all of which shall survive the execution and
delivery of this Forbearance Agreement and all of the other documents executed
in connection herewith:

         4.1      Organization. (a) The Borrowers are corporations duly
incorporated and validly existing and in good standing under the laws of their
respective states of incorporation, and are duly authorized to do business and
are duly qualified as foreign corporations in all jurisdictions wherein the
nature of their businesses or properties make such qualification necessary, and
have the corporate power to own their respective properties and to carry on
their respective businesses as now conducted; and

         (b)      The Borrowers have the requisite corporate power and authority
to deliver and perform this Forbearance Agreement and all of the documents
executed by them in connection herewith.


                                      -5-
<PAGE>   6

         4.2      Authorization; Valid and Binding Agreement. All corporate
action required to be taken by the Borrowers and their respective officers,
directors and stockholders and all actions required to be taken by the
principals of the Borrowers for the authorization, execution, delivery and
performance of this Forbearance Agreement and other documents contemplated
hereby have been taken. Each person executing this Forbearance Agreement on
behalf of the Borrowers is an authorized officer of the Borrowers. This
Forbearance Agreement is, and each of the documents executed pursuant hereto
will be, legal, valid, and binding obligations of the party or parties thereto,
enforceable against each such party in accordance with their respective terms,
subject only to bankruptcy, insolvency, reorganization, moratorium and other
laws or equitable principles affecting creditors' rights generally.

         4.3      Third Party Consents. The execution, delivery and performance
by the Borrowers of this Forbearance Agreement and the documents related hereto
will not:

         (a)      require any consent or approval of any person or entity which
has not been obtained prior to, and which is not in full force and effect as of,
the date of this Forbearance Agreement;

         (b)      result in the breach of, default under, or cause the
acceleration of any obligation owed under any loan, credit agreement, note,
security agreement, lease indenture, mortgage, loan document or other agreement
by which any of them are bound or affected; or

         (c)      result in, or require the creation or imposition of, any lien
or encumbrance on any of their respective properties other than those liens or
security interests in favor of the Lenders or the liens or security interests
disclosed to the Lenders in the Credit Documents.

         4.4      Other Representations and Warranties. The Borrowers hereby
reaffirm all of their representations and warranties to the Lenders contained in
the Credit Documents, and warrant that such representations and warranties, not
otherwise rendered untrue by the Events as disclosed by the Borrowers herein,
are true and correct as of the date of this Forbearance Agreement (it being
understood that any representation or warranty made as of a specific date shall
be true and correct in all material respects as of such specified date).

                                    ARTICLE 5

                              DEFAULTS AND REMEDIES

         It shall constitute an immediate Event of Default under this
Forbearance Agreement if the Borrowers (i) fail to perform or observe any
covenants, term, agreement or condition of this Forbearance Agreement, or (ii)
are in violation of or non-compliance with any provision of this Forbearance
Agreement or any of the Credit Documents (other than the Events) after the
expiry of any cure period related thereto, if applicable. The Borrowers
specifically agree that, upon and at any time after the Forbearance Termination
Date, the Lenders, upon written notice to the Borrowers, may, in their sole
discretion, exercise or enforce any or all of their rights and


                                      -6-
<PAGE>   7

remedies under this Forbearance Agreement, the Credit Documents, and/or
applicable law, against any one or more of the Borrowers.

                                    ARTICLE 6

                                  MISCELLANEOUS

         6.1      Submission to Jurisdiction; Selection of Forum. Each of the
parties hereto agree that the provisions of Sections 10.6 and 10.24 of the
Credit Agreement shall be incorporated herein by reference and shall apply to
any action with respect to this Forbearance Agreement as if fully set forth
herein.

         6.2      Cooperation; Other Documents. At all times following the
execution of this Forbearance Agreement, the Borrowers shall execute and deliver
to the Lenders and the Agent, or shall cause to be executed and delivered to the
Lenders and the Agent, and shall do or cause to be done all such other acts and
things as the Lenders and the Agent may reasonably deem to be necessary or
desirable to assure the Lenders of the benefit of this Forbearance Agreement and
the documents comprising or relating to this Forbearance Agreement.

         6.3      Remedies Cumulative; No Waiver. The respective rights, powers
and remedies of the Lenders in this Forbearance Agreement and in the other
Credit Documents are cumulative and not exclusive of any right, power or remedy
provided in the Credit Documents, by law or equity and no failure or delay on
the part of the Lenders in the exercise of any right, power or remedy shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or remedy preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy. Nothing contained in this
Forbearance Agreement or in any prior communications between or among the
Borrowers and the Lenders shall constitute a waiver or modification of any
rights or remedies that the Lenders may have under the Credit Documents and
applicable law. The Lenders expressly reserve and preserve all of their rights
and remedies.

         6.4      Notices. Each of the parties hereto agree that the provisions
of Section 10.1 of the Credit Agreement shall be incorporated herein by
reference and shall apply to any action with respect to this Forbearance
Agreement as if fully set forth herein, except that copies of notice to
Borrowers shall be sent to:

                           Akin, Gump, Strauss, Hauer & Feld, LLP
                           Attn: James A. Barker, Esq.
                           1333 New Hampshire Avenue, N.W.
                           Washington, D.C.  20036
                           Telecopier: 202-887-4288


                                      -7-
<PAGE>   8

         6.5      Indemnification. If, after receipt of any payment of all or
any part of the Obligations, the Lenders are compelled to surrender such payment
to any person or entity for any reason (including, without limitation, a
determination that such payment is void and voidable as a preference or
fraudulent conveyance, an impermissible setoff, or a diversion of trust funds),
then the Borrowers shall be jointly and severally liable for, and shall
indemnify, defend and hold harmless the Lenders with respect to the full amount
so surrendered including any fees and costs incurred by the Lenders in
connection therewith. The provisions of this section shall survive the
termination of this Forbearance Agreement and the other Credit Documents and
shall be and remain effective notwithstanding the payment of the Obligations,
the cancellation of the Notes, the release of any lien, security interest or
other encumbrance securing the Obligations or any other action which the Lenders
may have taken in reliance upon their receipt of such payment. Any cancellation
of the Notes, release of any such encumbrance or other such action shall be
deemed to have been conditioned upon any payment of the Obligations having
become final and irrevocable.

         6.6      RELEASE. TO INDUCE THE AGENT AND THE LENDERS TO ENTER INTO
THIS FORBEARANCE AGREEMENT, THE BORROWERS HEREBY RELEASE, ACQUIT AND FOREVER
DISCHARGE THE LENDERS, AND EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, AGENTS,
EMPLOYEES, SUCCESSORS AND ASSIGNS, FROM ANY AND ALL LIABILITIES, CLAIMS,
DEMANDS, ACTIONS OR CAUSES OF ACTION OF ANY KIND OR NATURE (IF THERE BE ANY),
WHETHER ABSOLUTE OR CONTINGENT, DISPUTED OR UNDISPUTED, AT LAW OR IN EQUITY, OR
KNOWN OR UNKNOWN, THAT THE BORROWERS NOW HAVE OR EVER HAD AGAINST THE AGENT OR
THE LENDERS ARISING UNDER OR IN CONNECTION WITH ANY OF THE CREDIT DOCUMENTS OR
OTHERWISE.

         6.7      Restructuring Negotiations. The Borrowers have informed the
Lenders of their desire to restructure the Obligations owing to the Lenders. In
connection with any such restructuring, the Borrowers acknowledge that (i)
discussions among the Borrowers, the Agent and the Lenders do not evidence an
agreement on the Lenders' part to modify or restructure the Obligations; (ii)
any discussions, questions or comments posed or made by the Lenders' staff,
consultants or advisors during any discussions or meetings should not be
considered by the Borrowers to be a binding commitment by the Lenders to accede
to any requests or proposals made by the Borrowers during any such discussions
or meetings; (iii) even if any understanding in principle is reached on the
terms of a restructuring of any of the Obligations at any time, neither the
Borrowers nor the Lenders shall be legally bound until the appropriate approval
authority in the Lenders has approved the proposed restructuring, and until all
parties have signed definitive documents evidencing such restructuring; and (iv)
any discussions concerning the terms of a proposed restructuring shall in no way
invalidate, nullify or waive the Lenders' rights and remedies under the Credit
Documents or signify the Lenders' agreement to postpone the exercise of any of
their respective remedies under the Credit Documents. The parties contemplate
that these discussions may be lengthy and complex and that while the parties may
reach agreement on one or more preliminary matters that are part of the disputes
and issues that they are trying to


                                      -8-
<PAGE>   9

resolve, the parties agree that none of them shall be bound by any agreement
until said agreement has been reduced to a written agreement and signed by each
of the parties. Thus, no party can rely upon (i) any understanding or agreement
which is not reduced to a written agreement and signed; or (ii) the existence of
the negotiations. The terms and conditions set forth in this Forbearance
Agreement are the product of joint draftsmanship by ALL parties, each being
represented by counsel, and any ambiguities in this Forbearance Agreement or any
documentation prepared pursuant to or in connection with this Forbearance
Agreement shall not be construed against any of the parties because of
draftsmanship.

         6.8      Survival of Representations and Warranties. All
representations and warranties of the Borrowers contained in this Forbearance
Agreement and in all other documents and instruments executed in connection
herewith or otherwise relating to this Forbearance Agreement shall survive the
execution of this Forbearance Agreement and are material and have been or will
be relied upon by the Agent and the Lenders, notwithstanding any investigation
made by any person, entity or organization on the Agent and the Lenders' behalf.
No implied representations or warranties are created or arise as a result of
this Forbearance Agreement or the documents comprising or relating to this
Forbearance Agreement.

         6.9      Governing Law. This Forbearance Agreement and all documents
and instruments executed in connection herewith or otherwise relating to this
Forbearance Agreement shall be construed in accordance with and governed by the
internal laws of the State of Tennessee without reference to conflict of laws
principles.

         6.10     Amendment and Waiver. No amendment of this Forbearance
Agreement, and no waiver, discharge or termination of any one or more of the
provisions thereof, shall be effective unless set forth in writing and signed by
all of the parties hereto.

         6.11     Successors and Assigns. This Forbearance Agreement and the
other Credit Documents, (i) shall be binding upon the Lenders, the Agent, the
Borrowers and their respective heirs, nominees, successors and assigns, and (ii)
shall inure to the benefit of the Lenders, the Agent, the Borrowers and their
respective heirs, nominees, successors and assigns; provided, however, that none
of the Borrowers may assign any rights hereunder or any interest herein without
obtaining the prior written consent of the Lenders, any such assignment or
attempted assignment shall be void and of no effect with respect to the Lenders.

         6.12     Severability of Provisions. Any provision of this Forbearance
Agreement that is held to be inoperative, unenforceable, void or invalid in any
jurisdiction shall, as to that jurisdiction, be ineffective, unenforceable, void
or invalid without affecting the remaining provisions in that jurisdiction or
the operation, enforceability or validity of that provision in any other
jurisdiction, and to this end the provisions of this Forbearance Agreement are
declared to be severable.


                                      -9-
<PAGE>   10

         6.13     Counterparts; Effectiveness. This Forbearance Agreement may be
executed in any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Forbearance
Agreement. This Forbearance Agreement may be executed by facsimile signatures,
and shall be effective when Agent has received telecopy transmissions of the
signature pages executed by all parties hereto; provided, however, that all
parties shall deliver original executed documents to Agent promptly following
the execution hereof.

         6.14     Credit Documents to Remain in Effect. Except as specifically
modified by this Forbearance Agreement, the Credit Agreement and the other
Credit Documents shall remain in full force and effect in accordance with their
respective terms. This Forbearance Agreement shall be one of the Credit
Documents wherever that term is used.


                  [Remainder of page left intentionally blank]


                                      -10-
<PAGE>   11

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunder duly authorized as of the date
first written above.

                           RESPONSE ONCOLOGY, INC.


                           By: /s/ A. LaMacchia
                              --------------------------------------------------

                                Title: /s/ President & CEO
                                      ------------------------------------------



                           RESPONSE ONCOLOGY MANAGEMENT OF SOUTH
                           FLORIDA, INC.


                           By: /s/ A. LaMacchia
                              --------------------------------------------------

                                Title: /s/ President & CEO
                                      ------------------------------------------


                           RESPONSE ONCOLOGY OF TAMARAC, INC.


                           By: /s/ A. LaMacchia
                              --------------------------------------------------

                                Title: /s/ President & CEO
                                      ------------------------------------------



                           RESPONSE ONCOLOGY OF FORT LAUDERDALE, INC.


                           By: /s/ A. LaMacchia
                              --------------------------------------------------

                                Title: /s/ President & CEO
                                      ------------------------------------------


                                      -11-
<PAGE>   12


                           AMSOUTH BANK, as Lender


                           By:  /s/ Cathy M. Wind
                              --------------------------------------------------

                                Title: Vice President
                                      ------------------------------------------


                                      -12-
<PAGE>   13

                           UNION PLANTERS NATIONAL BANK, as a Lender


                           By: /s/ Elizabeth Rouse
                              --------------------------------------------------

                                Title: Senior Vice President
                                      ------------------------------------------


                                      -13-
<PAGE>   14

                           BANK OF AMERICA, N.A. (formerly known as NationsBank,
                           N.A.), as a Lender


                           By: /s/ David Colmie
                              --------------------------------------------------

                                Title: Senior Vice President
                                      ------------------------------------------


                                      -14-
<PAGE>   15

                           AMSOUTH BANK, as Agent


                           By: /s/ Cathy M. Wind
                              --------------------------------------------------

                                Title: Vice President
                                      ------------------------------------------


                                      -15-
</TEXT>
</DOCUMENT>
g68543ex10-x.txt FIRST AMENDMENT TO FOREBEARANCE AGREEMENT
<DOCUMENT>
<TYPE>EX-10.X
<SEQUENCE>3
<FILENAME>g68543ex10-x.txt
<DESCRIPTION>FIRST AMENDMENT TO FOREBEARANCE AGREEMENT
<TEXT>

<PAGE>   1
                                                                   EXHIBIT 10(X)

                                 FIRST AMENDMENT
                                       TO
                              FORBEARANCE AGREEMENT

         THIS FIRST AMENDMENT TO FORBEARANCE AGREEMENT, dated as of February 28,
2001, ("this Amendment") is executed by RESPONSE ONCOLOGY, INC., a Tennessee
corporation ("Response"), RESPONSE ONCOLOGY MANAGEMENT OF SOUTH FLORIDA, INC., a
Tennessee corporation ("Management"), RESPONSE ONCOLOGY OF TAMARAC, INC., a
Florida corporation ("Tamarac") and RESPONSE ONCOLOGY OF FORT LAUDERDALE, INC.,
a Florida corporation ("Ft. Lauderdale"; Response, Management, Tamarac and Ft.
Lauderdale are sometimes together referred to as the "Borrowers"); AMSOUTH BANK,
an Alabama banking corporation ("AmSouth"), UNION PLANTERS BANK, NATIONAL
ASSOCIATION, a national banking association, and BANK OF AMERICA, N.A., a
national banking association and formerly known as NationsBank, N.A.
(collectively, the "Lenders"), and AMSOUTH BANK, in its capacity as Agent for
Lenders ("Agent").

                                    RECITALS

         A.       The Borrowers, the Lenders and the Agent entered into a Credit
Agreement dated as of June 10, 1999, as amended by a First Amendment thereto
dated as of September 30, 1999 and a Second Amendment thereto dated as of March
30, 2000.

         B.       In order to provide the Borrowers with a period of time within
which to develop a plan to address the Borrowers' financial difficulties, the
Borrowers, the Lenders and the Agent entered into a Forbearance Agreement dated
as of December 29, 2000 (the "Agreement"). Capitalized terms not otherwise
defined in this Amendment have the same meanings as specified in the Agreement.

         C.       The Borrowers and the Lenders now desire to extend the
Forbearance Termination Date as set forth in this Amendment.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the recitals and the mutual
obligations and covenants contained herein, the Borrowers and the Lenders hereby
agree as follows:

         1.       Capitalized terms used in this Amendment and not otherwise
defined herein have the respective meanings attributed thereto in the Agreement.

         2.       Section 2.1(i) of the Agreement is hereby amended to read as
follows:

<PAGE>   2

                  "(i) March 30, 2001."

         3.       Section 2.7 is hereby added to the Agreement, and shall read,
in its entirety, as follows:

                  2.7      Extension Fee. In consideration for the Lenders'
                  agreement to extend the Forbearance Period as set forth
                  herein, the Borrowers hereby agree to pay to the Agent for
                  distribution to the Lenders Pro Rata, on the date of the
                  Borrowers' execution of the First Amendment to Forbearance
                  Agreement an extension fee in an amount equal to Twenty-Nine
                  Thousand Nine Hundred Ten and 72/100 Dollars ($29,910.72),
                  which shall be fully earned and not refundable by the Lenders.

         4.       Except as hereby amended, the Agreement shall remain in full
force and effect as written. This Amendment may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which when
taken together shall constitute one and the same instrument. The covenants and
agreements contained in this Amendment shall apply to and inure to the benefit
of and be binding upon the parties hereto and their respective successors and
permitted assigns.

         5.       Nothing contained herein shall be construed as a waiver,
acknowledgment or consent to any breach of, or Event of Default under, the
Agreement and the Loan Documents not specifically mentioned herein, and the
consents granted herein are effective only in the specific instance and for the
purposes for which given.

         6.       This Amendment shall be governed by the laws of the State of
Tennessee.



                  [Remainder of page intentionally left blank]

<PAGE>   3


         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunder duly authorized as of the date
first written above.

                                    RESPONSE ONCOLOGY, INC.


                                    By:  /s/ A. LaMacchia
                                       -----------------------------------------

                                         Title: /s/ President
                                               ---------------------------------



                                    RESPONSE ONCOLOGY MANAGEMENT OF SOUTH
                                    FLORIDA, INC.


                                    By:  /s/ A. LaMacchia
                                       -----------------------------------------

                                         Title: /s/ President
                                               ---------------------------------


                                    RESPONSE ONCOLOGY OF TAMARAC, INC.


                                    By:  /s/ A. LaMacchia
                                       -----------------------------------------

                                         Title: /s/ President
                                               ---------------------------------



                                    RESPONSE ONCOLOGY OF FORT LAUDERDALE, INC.


                                    By:  /s/ A. LaMacchia
                                       -----------------------------------------

                                         Title: /s/ President
                                               ---------------------------------


<PAGE>   4


                                    AMSOUTH BANK, as a Lender


                                    By: /s/ Cathy Wind
                                       -----------------------------------------

                                         Title: Vice President
                                               ---------------------------------


<PAGE>   5


                                    UNION PLANTERS NATIONAL BANK, as a Lender


                                    By: /s/ Elizabeth Rouse
                                       -----------------------------------------

                                         Title: Senior Vice President
                                               ---------------------------------



<PAGE>   6


                                    BANK OF AMERICA, N.A. (formerly known as
                                    NationsBank, N.A.), as a Lender


                                    By: /s/ David Colmie
                                       -----------------------------------------

                                         Title: Senior Vice President
                                               ---------------------------------




<PAGE>   7


                                    AMSOUTH BANK, as Agent


                                    By: /s/ Cathy Wind
                                       -----------------------------------------

                                         Title: Vice President
                                               ---------------------------------



</TEXT>
</DOCUMENT>
g68543ex11.txt COMPUTATION OF PER SHARE EARNINGS
<DOCUMENT>
<TYPE>EX-11
<SEQUENCE>4
<FILENAME>g68543ex11.txt
<DESCRIPTION>COMPUTATION OF PER SHARE EARNINGS
<TEXT>

<PAGE>   1
EXHIBIT 11

STATEMENT RE:  COMPUTATION OF DILUTED COMMON EARNINGS (LOSS) PER SHARE
(In thousands)

<TABLE>
<CAPTION>

                                                                          Years Ended December 31,
                                                   -----------------------------------------------------------------------
                                                           2000                    1999                     1998
                                                   ---------------------    --------------------    ----------------------
<S>                                                              <C>                     <C>                       <C>
Weighted average number of shares                                12,288                  12,014                    12,039
Net effect of dilutive stock options and
    warrants based on the treasury stock
    method (1)                                                       --                      --                        --
                                                  ---------------------    --------------------    ----------------------
Weighted average number of common shares
     and common stock equivalents                                12,288                  12,014                    12,039
                                                  ---------------------    --------------------    ----------------------
Net loss                                                       ($14,419)                ($1,693)                 ($17,448)
Common stock dividend to preferred
    shareholders (2)                                                 --                      --                        (1)
                                                  ---------------------    --------------------    ----------------------
Net loss to common stockholders                                ($14,419)                ($1,693)                 ($17,449)
                                                  =====================    ====================    ======================
Diluted loss per share amount (3)                                ($1.17)                 ($0.14)                   ($1.45)
                                                  =====================    ====================    ======================
</TABLE>


(1)  Stock options and warrants are excluded from the weighted average number of
     common shares due to their anti-dilutive effect.

(2)  In December 2000, 1999, and, 1998, the Board of Directors approved a Common
     Stock dividend of 183, 183, and 293 shares to the stockholders of record of
     Series A Convertible Preferred Stock as of December 15, 2000, 1999, and
     1998 that was paid January 2001, 2000, and 1999 respectively. The market
     value of the common stock distributed was approximately $34, $297 and
     $1,000 at December 15, 2000, 1999 and 1998, respectively.

(3)  The assumed conversion of the preferred stock would have an immaterial
     effect (less than 1/10 of $.01) in all periods, and therefore that
     calculation has been omitted.





</TEXT>
</DOCUMENT>
g68543ex21.txt LIST OF SUBSIDIARIES
<DOCUMENT>
<TYPE>EX-21
<SEQUENCE>5
<FILENAME>g68543ex21.txt
<DESCRIPTION>LIST OF SUBSIDIARIES
<TEXT>

<PAGE>   1
EXHIBIT 21

LIST OF SUBSIDIARIES

COMPANY                                                  STATE OF ORGANIZATION
-------                                                  ---------------------
IMPACT Center of Albany, LLC                                   Tennessee
IMPACT Center of Bayonne, LLC                                 New Jersey
IMPACT Center of Billings, LLC                                  Montana
IMPACT Center of Fort Smith, LLC                               Tennessee
IMPACT Center of Glendale, LLC                                 Tennessee
IMPACT Center of Mobile, LLC                                   Tennessee
IMPACT Center of Mt. Diablo, LLC                               Tennessee
IMPACT Center of Northridge, LLC                               Tennessee
IMPACT Center of St. Johns, LLC                                Tennessee
IMPACT Center of Tri-City Medical Center, LLC                  Tennessee
IMPACT Center of Washington, D.C., LLC                         Tennessee
Response Oncology of Fort Lauderdale, Inc.                      Florida
Response Oncology of Tamarac, Inc.                              Florida
Response Oncology Management of South Florida, Inc.            Tennessee



</TEXT>
</DOCUMENT>
g68543ex23.txt CONSENT OF KPMG LLP
<DOCUMENT>
<TYPE>EX-23
<SEQUENCE>6
<FILENAME>g68543ex23.txt
<DESCRIPTION>CONSENT OF KPMG LLP
<TEXT>

<PAGE>   1


EXHIBIT 23

ACCOUNTANTS' CONSENT

The Board of Directors
Response Oncology, Inc.:

We consent to incorporation by reference in the Registration Statements (No.
33-45616, No. 33-21333, and No. 333-14371) on Form S-8 of Response Oncology,
Inc. of our report dated March 30, 2001, relating to the consolidated balance
sheets of Response Oncology, Inc. and subsidiaries as of December 31, 2000 and
1999, and the related consolidated statements of operations, stockholders'
equity, and cash flows for each of the years in the three-year period ended
December 31, 2000, and the related financial statement schedule, which report
appears in the December 31, 2000 annual report on Form 10-K of Response
Oncology, Inc.

Our report dated March 30, 2001 contains an explanatory paragraph that states
that on March, 29, 2001, the Company filed voluntary petitions for relief under
Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy
Court. The filing and related matters raise substantial doubt about its ability
to continue as a going concern. The consolidated financial statements and
financial statement schedule do not include any adjustments that might result
from the outcome of this uncertainty.

                                                KPMG LLP

Memphis, Tennessee
March 30, 2001





</TEXT>
</DOCUMENT>
Additional Files
FileSequenceDescriptionTypeSize
0000950144-01-500861.txt   Complete submission text file   241222

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