8-K

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                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                     PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


       Date of Report (Date of earliest event reported): NOVEMBER 4, 1998




                                 PMR CORPORATION
             (Exact name of registrant as specified in its charter)



                                    DELAWARE
                 (State or other jurisdiction of incorporation)



     000-20488                                             23-2491707
(Commission File No.)                          (IRS Employer Identification No.)

                        501 WASHINGTON STREET, 5TH FLOOR
                           SAN DIEGO, CALIFORNIA 92103
              (Address of principal executive offices and zip code)


       Registrant's telephone number, including area code: (619) 610-4001



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ITEM 5. OTHER EVENTS.

        On November 4, 1998, PMR Corporation, a Delaware corporation ("PMR")
announced that PMR and Behavioral Healthcare Corporation, a Delaware corporation
have terminated their definitive merger agreement and established a strategic
relationship. PMR hereby incorporates by reference the contents of the news
release filed as Exhibit 99.1 to this report.


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                                    SIGNATURE


        Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

                                       PMR CORPORATION



Dated:  November 5, 1998               By: /s/ Mark P. Clein
                                           -------------------------------------
                                           Mark P. Clein
                                           Executive Vice President and
                                           Chief Financial Officer


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                                INDEX TO EXHIBITS


        99.1 News Release dated November 4, 1998.

EX-99.1

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                                  EXHIBIT 99.1

                             [PMR Corporation Logo]


FOR IMMEDIATE RELEASE                                           November 4, 1998

              PMR ANNOUNCES MUTUAL TERMINATION OF DEFINITIVE MERGER
           AGREEMENT AND ESTABLISHMENT OF STRATEGIC RELATIONSHIP WITH
                       BEHAVIORAL HEALTHCARE CORPORATION

SAN DIEGO, CA -- PMR CORPORATION (NASDAQ NMS - "PMRP"), a leading provider of
disease management services for the Seriously Mentally Ill, announced today that
PMR and Behavioral Healthcare Corporation ("BHC") have entered into a mutual
termination of their definitive merger agreement and have agreed to establish a
strategic relationship to develop outpatient programs for the SMI population at
BHC facilities.

PMR and BHC have entered into a formal enabling agreement that anticipates
developing ten programs over the next year while also examining other
opportunities to develop additional services for patients with disorders of the
brain.

"PMR and BHC are pleased that the significant commitment of time and resources
has produced a relationship that will provide strategic, clinical and financial
benefit to both parties," said Allen Tepper, CEO. "We look forward to advancing
the strategy of creating complete continuums of coordinated health care services
for individuals that have disorders of the brain in key markets throughout the
country."

PMR anticipates incurring one-time non-recurring expenses of approximately $2.1
million representing the incurred legal, due diligence, advisory, financing and
related costs associated with the terminated merger, which will be expensed in
the quarter ended October 31, 1998.

BHC, located in Nashville Tennessee, is a national leader in the provision of a
broad range of acute psychiatric care and behavioral health services. BHC owns
and operates 43 hospitals in 18 states and Puerto Rico, serving more than 60,000
patients and generated more than $300 million in annual revenue in the fiscal
year ended June 30, 1998.

PMR is a national leader in the management of outpatient based disease
management services for individuals with a serious mental illness. PMR operates
55 programs in 23 states serving more than 11,000 patients and generated
approximately $67 million in annual revenue in the fiscal year ended April 30,
1998.


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This press release contains forward looking statements that involve risks and
uncertainties, including the risk that the enabling agreement does not result in
new programs in the anticipated time period. Forward looking statements reflect
PMR's current views with respect to future events. Actual results may vary
materially and adversely from those anticipated, believed, estimated, or
otherwise indicated. Reference is made to the cautionary statements contained in
PMR's annual report on form 10K on file with the Securities and Exchange
Commission.

CONTACT:
PMR Corporation: 619-610-4001
Mark Clein, Executive V.P./CFO