<PAGE>
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                            Washington, DC 20549-1004


                                    FORM 10-Q


 x   QUARTERLY REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
---  1934
                 For the quarterly period ended March 31, 2002


                                       OR


     TRANSITION REPORT PURSUANT TO SECTION 13 OF THE SECURITIES EXCHANGE ACT OF
---  1934

               For the transition period from           to


                         Commission file number 0-21485



                    SUPERIOR CONSULTANT HOLDINGS CORPORATION
             (exact name of registrant as specified in its charter)



<TABLE>
<S>                                                                            <C>
              STATE OF DELAWARE                                                    38-3306717
       (State or other jurisdiction of                                          (I.R.S. Employer
       incorporation or organization)                                          Identification No.)


17570 West 12 Mile Road, Southfield, Michigan                                        48076
  (Address of principal executive offices)                                         (Zip Code)
</TABLE>


        Registrant's telephone number, including area code (248) 386-8300


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

As of May 14, 2002, 10,747,767 shares of the registrant's common stock (par
value $.01) were outstanding, excluding treasury shares.



<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
                          QUARTER ENDED MARCH 31, 2002
                                      INDEX


<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION                                                                             PAGE NO.
                                                                                                           --------

<S>                                                                                                        <C>
     Item 1.       Financial Statements

                   Consolidated Balance Sheets as of March 31, 2002 and December 31, 2001
                   (unaudited)                                                                                   3

                   Consolidated Statements of Operations for the three months ended March 31,
                   2002 and 2001 (unaudited)                                                                     4

                   Consolidated Statements of Cash Flows for the three months ended March 31,
                   2002 and 2001 (unaudited)                                                                     5

                   Notes to Consolidated Financial Statements                                                    6

     Item 2.       Management's Discussion and Analysis of Financial Condition and Results of
                   Operations                                                                                   10

     Item 3.       Quantitative and Qualitative Disclosure About Market Risk
                   Sensitive Instruments                                                                        15


PART II - OTHER INFORMATION

     Item 6.       Exhibits and Reports on Form 8-K                                                             15

SIGNATURES                                                                                                      16
</TABLE>


                                     Page 2
<PAGE>

PART I.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                      MARCH 31,          DECEMBER 31,
                                                                                        2002                 2001
                                                                                  ------------------   -----------------
<S>                                                                               <C>                  <C>
                                       ASSETS

  Current assets
       Cash and cash equivalents                                                   $        16,091      $       16,902
       Accounts receivable, net                                                             15,044              14,164
       Accrued interest receivable and prepaid expenses                                      2,709               3,644
       Refundable income taxes                                                               3,011                 706
                                                                                  ------------------   -----------------

          Total current assets                                                              36,855              35,416

  Property and equipment, net                                                               13,476              14,071
  Goodwill, net                                                                              8,223               8,223
  Other long-term assets, net                                                                  822                 897
                                                                                  ------------------   -----------------

          Total Assets                                                             $        59,376      $       58,607
                                                                                  ==================   =================

                        LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities
       Notes payable to bank                                                       $         2,925      $        2,925
       Accounts payable                                                                      7,100               8,565
       Accrued liabilities, deferred bonuses and compensation                                3,898               2,752
       Deferred revenue                                                                      2,233               2,141
                                                                                  ------------------   -----------------

          Total current liabilities                                                         16,156              16,383

  Commitments and contingencies (Note 8)                                                         -                   -

  Stockholders' equity
       Preferred stock; authorized, 1,000,000 shares of $.01 par value; no
       shares issued or outstanding as of March 31, 2002 and
       December 31, 2001                                                                         -                   -

       Common stock; authorized, 30,000,000 shares of $.01 par value; issued and
       outstanding, 11,097,616 shares as of March 31, 2002
       and 11,080,042 shares as of December 31, 2001                                           111                 111

       Additional paid-in capital                                                          116,085             116,062

       Stockholders' notes receivable                                                       (1,536)             (1,536)

       Treasury stock - at cost, 352,100 shares as of March 31, 2002 and
       December 31, 2001                                                                    (3,270)             (3,270)

       Accumulated deficit                                                                 (68,170)            (69,143)
                                                                                  ------------------   -----------------

          Total stockholders' equity                                                        43,220              42,224
                                                                                  ------------------   -----------------

          Total Liabilities and Stockholders' Equity                               $        59,376      $       58,607
                                                                                  ==================   =================
</TABLE>

                 See notes to consolidated financial statements.


                                     Page 3
<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENT OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   THREE MONTHS ENDED MARCH 31,
                                                                               --------------------------------------
                                                                                     2002                 2001
                                                                               -----------------    -----------------
<S>                                                                            <C>                  <C>
Revenue
   Revenue before reimbursements (net revenue)                                  $       21,257       $       21,778
   Out-of-pocket reimbursements                                                          1,820                3,246
                                                                               -----------------    -----------------

      Total revenue                                                                     23,077               25,024

Operating costs and expenses
   Cost of services before reimbursements (net cost of services)                        14,190               15,298
   Out-of-pocket reimbursements                                                          1,820                3,246
                                                                               -----------------    -----------------

      Total cost of services                                                            16,010               18,544

   Selling, general and administrative expenses                                          8,467               10,903
                                                                               -----------------    -----------------

         Total operating costs and expenses                                             24,477               29,447
                                                                               -----------------    -----------------

         Loss from operations                                                           (1,400)              (4,423)


Other income (expense), net                                                                 72                   (8)
                                                                               -----------------    -----------------

         Loss before income tax benefit                                                 (1,328)              (4,431)


Income tax benefit                                                                      (2,301)                   -
                                                                               -----------------    -----------------

         Net earnings (loss)                                                    $          973       $       (4,431)
                                                                               =================    =================

Net earnings (loss) per share

   Basic                                                                        $         0.09       $        (0.40)
                                                                               =================    =================

   Diluted                                                                      $         0.08       $        (0.40)
                                                                               =================    =================

Weighted average number of common shares outstanding

   Basic                                                                                10,733               10,990
                                                                               =================    =================

   Diluted                                                                              11,513               10,990
                                                                               =================    =================
</TABLE>

                 See notes to consolidated financial statements.

                                     Page 4
<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                            THREE MONTHS ENDED MARCH 31,
                                                                                     -----------------------------------------
                                                                                            2002                  2001
                                                                                     -------------------   -------------------
<S>                                                                                  <C>                   <C>
   Cash flows from operating activities:
       Net earnings (loss)                                                            $            973      $         (4,431)
       Adjustments to reconcile net earnings (loss) to net cash
         used in operating activities:
          Depreciation and amortization of property and equipment                                1,054                 1,008
          Goodwill amortization                                                                      -                   187
          Bad debt expense                                                                          47                    75
          Other                                                                                    (50)                  (20)
          Changes in operating assets and liabilities:
             Accounts receivable                                                                  (927)                1,314
             Accrued interest receivable and prepaid expenses                                      935                   987
             Refundable income taxes                                                            (2,288)                   60
             Accounts payable                                                                   (1,465)               (1,634)
             Accrued liabilities, deferred bonuses and compensation                              1,146                   941
             Deferred revenue                                                                       92                   339
                                                                                     -------------------   -------------------

                  Net cash used in operating activities                                           (483)               (1,174)

   Cash flows from investing activities:
       Purchase of property and equipment                                                         (384)                 (745)
       Change in other long-term assets                                                              -                   (73)
                                                                                     -------------------   -------------------

                  Net cash used in investing activities                                           (384)                 (818)

   Cash flows from financing activities:
       Repayment of line of credit                                                                   -                (2,200)
       Principal payments on stockholders' notes receivable                                          -                     9
       Exercise of stock options                                                                    56                     -
                                                                                     -------------------   -------------------

                  Net cash provided by (used in) financing activities                               56                (2,191)
                                                                                     -------------------   -------------------

   Net decrease in cash and cash equivalents                                                      (811)               (4,183)

   Cash and cash equivalents, beginning of period                                               16,902                20,825
                                                                                     -------------------   -------------------

   Cash and cash equivalents, end of period                                           $         16,091      $         16,642
                                                                                     ===================   ===================

   Supplemental disclosure of cash flow information:
       Interest payments                                                              $             48      $            116

       Unrealized gain on investment, net of deferred income taxes                    $              -      $            182
</TABLE>

                 See notes to consolidated financial statements.

                                     Page 5
<PAGE>
            SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 2002

NOTE 1 - BASIS OF PRESENTATION

         The accompanying unaudited consolidated financial statements have been
prepared pursuant to the rules of the Securities and Exchange Commission for
quarterly reports on Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals and estimated provisions for bonus and
profit-sharing arrangements) considered necessary for a fair presentation have
been included. Operating results for the three month period ended March 31,
2002, are not necessarily indicative of the results that may be expected for the
year ended December 31, 2002.

         These financial statements should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto included
in the Company's 2001 annual report on Form 10-K filed by the Company with the
Securities and Exchange Commission on April 1, 2002.

         Certain reclassifications were made to the three months ended March 31,
2001, unaudited consolidated financial statements to conform to the three months
ended March 31, 2002 presentation.

NOTE 2 - NET EARNINGS (LOSS) PER SHARE

         The Company accounts for Earnings (Loss) Per Share under the rules of
Statement of Financial Accounting Standards No. 128, "Earnings Per Share". The
Company's basic net earnings (loss) per share amounts have been computed by
dividing net earnings (loss) by the weighted average number of common shares
outstanding during the period. Diluted net earnings (loss) per share has been
computed by dividing net earnings (loss) by the weighted average number of
common shares outstanding and the dilutive effect of common shares potentially
issuable upon the exercise of stock options and warrants ("common share
equivalents") during the period.

         The computation of diluted net earnings (loss) per share for the three
months ended March 31, 2002, includes approximately 780,000 common share
equivalents. Options and warrants to purchase approximately 2,155,000 and
3,674,000 shares of common stock with a weighted average exercise price of
$20.86 and $18.80 were outstanding at March 31, 2002 and 2001, respectively, but
were excluded from the computation of diluted net earnings (loss) per share
because to do so would have been antidilutive for the periods presented.

NOTE 3 - COMPREHENSIVE INCOME (LOSS)

         Comprehensive income (loss), which is included as a component of
stockholders' equity, includes unrealized gains on investments in marketable
equity securities. The Company sold its remaining holdings of marketable equity
securities during the year ended December 31, 2001. Total comprehensive income
(loss) is summarized as follows in thousands:

<TABLE>
<CAPTION>
                                                                                      THREE MONTHS ENDED
                                                                                           MARCH 31,
                                                                               ----------------------------------
                                                                                    2002              2001
                                                                               ---------------   ----------------
<S>                                                                            <C>               <C>
Net earnings (loss)                                                             $       973       $    (4,431)

Other comprehensive income, net of tax:

   Unrealized holding gains on securities arising
      during the period                                                                   -               182
                                                                               ---------------   ----------------

Other comprehensive income, net of tax                                                    -               182
                                                                               ---------------   ----------------

Total comprehensive income (loss)                                               $       973       $    (4,249)
                                                                               ===============   ================
</TABLE>


                                     Page 6
<PAGE>

NOTE 4 - SEGMENT FINANCIAL INFORMATION

         The Company is organized into the two business segments of consulting
and outsourcing. The consulting segment provides information technology, as well
as strategic and operations management consulting, solutions, and application
support to a broad cross-section of healthcare industry participants and
information systems vendors. The outsourcing segment helps healthcare providers
simplify their management agendas, improve their return on information systems
investment and strengthen their technology management. The Company deploys
specialized resources to deliver higher quality at lower cost and helps clients
avoid or reduce certain capital expenses. The Company evaluates segment
performance and allocates resources based on gross profit. Intrasegment services
are provided at cost.

         Pursuant to the provisions of the Financial Accounting Standards Board
Staff Announcement Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred," the Company's
reported revenue and cost of services include reimbursements received for
out-of-pocket expenses incurred. Amounts for 2001 have been restated to conform
to this change in classification, which has no effect on current or previously
reported margins or net earnings (loss). Due to the nature of the Company's
business, a majority of the reimbursable out-of-pocket expenses are incurred on
traditional consulting engagements.


         Financial information for the Company's operations for the three months
ended March 31, 2002 and 2001 is as follows (in thousands):

<TABLE>
<CAPTION>
                                                                               THREE MONTHS ENDED MARCH 31,
                                                                       ---------------------------------------------
                                                                              2002                     2001
                                                                       --------------------     --------------------
<S>                                                                    <C>                      <C>
Revenue:
     Consulting:
          Revenue before reimbursements (net revenue)                   $          13,479        $          15,713
          Out-of-pocket reimbursements                                              1,669                    2,619
                                                                       --------------------     --------------------

              Total consulting revenue                                             15,148                   18,332

     Outsourcing:
          Revenue before reimbursements (net revenue)                               7,778                    6,065
          Out-of-pocket reimbursements                                                151                      627
                                                                       --------------------     --------------------

              Total outsourcing revenue                                             7,929                    6,692
                                                                       --------------------     --------------------

                   Consolidated revenue                                 $          23,077        $          25,024
                                                                       ====================     ====================

Gross Profit and Statement of Operations Reconciliation:
              Consulting                                                $           5,202        $           5,253
              Outsourcing                                                           1,865                    1,227
                                                                       --------------------     --------------------

                   Consolidated gross profit                                        7,067                    6,480

Unallocated:
              Selling, general and administrative expenses                          8,467                   10,903
              Other (income) expense, net                                             (72)                       8
                                                                       --------------------     --------------------

                   Subtotal                                                         8,395                   10,911
                                                                       --------------------     --------------------

                   Consolidated loss before income tax benefit          $          (1,328)       $          (4,431)
                                                                       ====================     ====================
</TABLE>

         The Company does not evaluate assets and capital expenditures on a
segment basis, and accordingly, such information is not provided.

         The Company's reportable segments are business units that offer and
provide different services through different means. The Company's training,
information technology, accounting and finance, facilities, sales and marketing,
legal, senior management and other selling, general and administrative ("SG&A")
functions are combined into the unallocated SG&A expenses.



                                     Page 7
<PAGE>

NOTE 5 - INCOME TAXES

         During the three months ended March 31, 2002, the Company recorded a
$2.3 million tax benefit as the result of a recent change in federal tax
legislation, which allows the Company to carryback a portion of its 2001 loss
for an additional three years. The income tax benefit for the three months ended
March 31, 2002, does not approximate the federal statutory tax rate, due to the
recording of the one-time benefit for the new tax legislation in the period of
enactment. As of March 31, 2002, the Company has net operating loss
carryforwards for federal income tax purposes of approximately $43.0 million,
the last of which will expire in 2022 if not utilized.

NOTE 6 - LINE OF CREDIT

         The Company has a line of credit with a bank allowing for borrowings of
up to $8.0 million, based on qualifying accounts receivable. Based on the
eligibility provisions in the loan agreement, the Company could have borrowed
$6.9 million on the line of credit as of March 31, 2002; $2.9 million was
outstanding. Borrowings under the line mature in September 2002. Borrowings bear
interest at the greater of the prime rate or 1% plus the Federal funds effective
rate. The interest rate at March 31, 2002, was 4.75%. The line is collateralized
by accounts receivable and any deposits held by the bank. There are no
compensating balance requirements. The loan agreement contains covenants,
including financial ratios concerning liquidity, working capital and operating
results. The Company was in compliance with all financial covenants as of March
31, 2002. In addition, the Company has letters of credit of approximately $1.3
million issued by a bank, secured by bank deposits.

NOTE 7 - RESTRUCTURING CHARGES

         In connection with the restructuring plan initiated during 2000, the
Company recorded restructuring charges of approximately $3.1 million during the
year ended December 31, 2001. Refer to the Company's audited consolidated
financial statements and notes thereto for the year ended December 31, 2001, for
further details on the components of these charges.

         A summary of the activity of the restructuring-related liabilities
included in accounts payable, which consists of an accrual for future lease
obligations, is as follows (in thousands):

<TABLE>
<S>                                                        <C>
                  Accrual as of December 31, 2001          $  2,231
                  Cash payments                                (210)
                                                           ---------

                  Accrual as of March 31, 2002             $  2,021
                                                           =========
</TABLE>

         The obligation is payable as follows: $630,000 during the remainder of
2002, $865,000 during 2003, $294,000 during 2004, $205,000 during 2005 and
$27,000 during 2006.

NOTE 8 - CONTINGENCIES

         The Company is involved in various legal proceedings, including
business and employment matters of a nature considered normal to its operations.
The Company accrues for amounts related to these legal matters if it is probable
that a liability has been incurred and an amount is reasonably estimable. In the
opinion of the Company, although the outcome of any legal proceeding cannot be
predicted with certainty, the ultimate liability of the Company in connection
with its legal proceedings will not have a material adverse effect on the
Company's financial position, but could be material to the results of operations
in any one accounting period.



                                     Page 8
<PAGE>


NOTE 9 - RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

         In November 2001, the Financial Accounting Standards Board issued Staff
Announcement Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred", which states that
reimbursements received for out-of-pocket expenses should be characterized as
revenue in the income statement. The application of Staff Announcement Topic No.
D-103 does not have an impact on current or previously reported net earnings
(loss) or earnings (loss) per share. The three months ended March 31, 2001,
statement of operations included herein has been conformed to the provisions of
this new pronouncement.

         Effective January 1, 2002, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets" ("SFAS 142"), issued by the Financial Accounting Standards
Board. SFAS 142 addresses how intangible assets that are acquired should be
accounted for upon acquisition. SFAS 142 specifies that goodwill is not subject
to amortization, but is subject to impairment assessments at least annually. The
Company will complete its initial assessment during the second quarter of 2002.
The impact of these impairment assessments is not reasonably estimable. As of
January 1, 2002, the Company has recorded goodwill of approximately $22.8
million and accumulated amortization of approximately $14.6 million. Effective
January 1, 2002, the Company does not record goodwill amortization.

         The following table shows on a comparative basis (in thousands, except
per share data) what net earnings (loss) and net earnings (loss) per share would
have been exclusive of amortization expense (including any related tax effects):

<TABLE>
<CAPTION>
                                                                              THREE MONTHS ENDED MARCH 31,
                                                                     ----------------------------------------------
                                                                            2002                       2001
                                                                     --------------------       -------------------
<S>                                                                  <C>                        <C>
         Reported net earnings (loss)                                 $               973        $          (4,431)
         Add:  goodwill amortization                                                    -                      187
                                                                     --------------------       -------------------
         Adjusted net earnings (loss)                                 $               973        $          (4,244)
                                                                     ====================       ===================


         Basic net earnings (loss) per share:
            Reported net earnings (loss) per share                    $              0.09        $           (0.40)
            Add:  goodwill amortization                                                 -                     0.01
                                                                     --------------------       -------------------
            Adjusted net earnings (loss) per share                    $              0.09        $           (0.39)
                                                                     ====================       ===================


         Diluted net earnings (loss) per share:
            Reported net earnings (loss) per share                    $              0.08        $           (0.40)
            Add:  goodwill amortization                                                 -                     0.01
                                                                     --------------------       -------------------
            Adjusted net earnings (loss) per share                    $              0.08        $           (0.39)
                                                                     ====================       ===================
</TABLE>





                                     Page 9
<PAGE>

ITEM 2            MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations, which are not historical in
nature, are intended to be, and are hereby identified as "forward looking
statements" for purposes of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended by Public Law 104-67.
Forward-looking statements may be identified by words including "anticipate,"
"believe," "intends," "estimates," "promises," "expect," "should," "conditioned
upon" and similar expressions. This discussion and analysis contains
forward-looking statements relating to future financial results or business
expectations. Business plans may change as circumstances warrant. Actual results
may differ materially as a result of factors over which the Company has no
control. Such factors include, but are not limited to: significant client
assignments, timing of contracts, recruiting and new business solicitation
efforts, the healthcare market's acceptance of and demand for the Company's
offerings, acquisitions under consideration, the ability to integrate
acquisitions on a timely basis, regulatory changes and other factors affecting
the financial constraints on the Company's clients, economic factors specific to
healthcare, general economic conditions and unforeseen disruptions in
transportation, communications or other infrastructure components. These risk
factors and additional information are included in the Company's reports on file
with the Securities and Exchange Commission.

         The Company conducts its business in two segments through its primary
operating subsidiary, Superior Consultant Company, Inc. ("Superior"). Superior
is a nationally deployed, integrated technology services company that provides
Digital Business Transformation(TM) services to the healthcare industry,
connecting online technologies to business processes that have traditionally
been conducted offline. The Company provides business process and information
technology ("IT") outsourcing, management and IT consulting services and
solutions to healthcare organizations, including health plans and technology
providers, with special emphasis on hospital systems and integrated delivery
networks.

         The Company is organized into the two business segments of outsourcing
and consulting. The outsourcing segment helps healthcare providers simplify
their management agendas, improve their return on information systems investment
and strengthen their technology management. The Company deploys specialized
resources to deliver higher quality at lower cost and helps clients avoid or
reduce certain capital expenses. The outsourcing segment offers the client an
array of services, functions and economic elements that can be tailored to the
specific client program/agenda, including business process management, IT
management, IT planning and budgeting, applications support, applications
implementation, IT operations, data center consolidation, 24/7/365 network
monitoring and help desk, financial management and risk sharing, facility
management, application unification, application outsourcing and interim
management. The consulting segment provides information technology, as well as
strategic and operations management consulting, solutions, and application
support to a broad cross-section of healthcare industry participants and
information systems vendors. The consulting segment also assists clients to
leverage the power, speed and value of Internet technologies to achieve
efficiencies in business and operations, realize measurable return on
investment, connect with consumers, physicians and trading partners and provide
total solutions in secure business-to-business and business-to-consumer
e-commerce. From strategic planning and go-to-market strategies to Internet
enabling and development, integration and implementation, Superior offers
assistance to its clients and their efforts to achieve supply chain
efficiencies, accelerate revenue, achieve Health Insurance Portability and
Accountability Act ("HIPAA") compliance and improve patient safety and clinical
quality.

         In recent years, the Company has expanded its outsourcing, e-commerce,
solution sales and systems integration capabilities. As healthcare and other
sectors move increasingly to Internet and web-based technologies and
applications, and as the Company continues to innovate services and solutions to
develop and capitalize on this growing market, the Company will incur risks
related to its participation in such untested opportunities, markets and quickly
evolving lines of business. Such risks can include, but are not limited to: new
and unforeseen technologies superseding development of the Internet and/or the
systems integration platforms and other technologies in which the Company
invests; the e-commerce and/or systems integration markets taking turns not
foreseen by the Company and adverse to the positioning and investments
undertaken by the Company; potential government regulation of the Internet;
slowness of traditional healthcare clients to adopt new technologies and
increased competition for consultant talent in the e-commerce field, increasing
the Company's cost of providing services.

         The Company derives a substantial portion of its revenue from fees for
professional services. The Company establishes standard-billing guidelines based
on the type and level of service offered. Actual billing rates are established
on a project-by-project basis and may vary from the standard guidelines.


                                    Page 10
<PAGE>
Billings for time and materials engagements are generally contracted to be made
on a bi-weekly basis to monitor client satisfaction and manage outstanding
accounts receivable balances. Revenue on time and materials contracts is
recognized as the services are provided. Outsourcing engagements, fixed-fee
projects and pre-packaged solution sales are billed by deliverable or on a
periodic basis, generally monthly. Revenue on these contracts is generally
recognized ratably over the life of the contract or on a percentage of
completion basis. Increased use of fixed-fee contracts subjects the Company to
increased risks, including cost overruns. As of March 31, 2002, the Company has
six significant contracts to provide healthcare IT outsourcing services. In
addition, the Company provides help desk and call center support, which are
typically billable on a per seat per month basis; and managed trust (digital
security) services, which are generally billed annually and recognized ratably
over the life of the contract. The Company also derives revenues from fees
generated from its Digital Business Transformation(TM) partnerships. This
revenue is generally recognized ratably over the life of the contract. There can
be no assurance that the Company will be able to achieve profit margins on
existing and new contracts, which are consistent with its historical levels of
profitability. In addition, profit margins on outsourcing and support contracts
are generally lower than other traditional consulting engagements. As the
Company moves to incorporate proprietary software tools or applications in its
client offerings it expects to recognize revenue from license fees and annual
support and maintenance fees. The Company anticipates that license fees will
generally be recognized upon the licensing of the tools or applications, and the
support and maintenance fees will generally be recognized ratably over the
support or maintenance term.

         The Company seeks to increase revenue through various means, including
an increased emphasis on outsourcing engagements, an increase in the value and
duration of projects for existing and new clients, as well as continued
additions to its recurring revenue base. In addition, the Company seeks to
increase revenue by expanding its range of specialty services with a focus on
opportunities arising from the demand for clinical quality and patient safety,
digital communications, system security and HIPAA expertise. The Company manages
its client development efforts through its internal Client Partner Organizations
("CPO") having specific geographic responsibility and focus. Within a geography,
the Company's CPO members develop relationships and pursue opportunities at
strategic clients, maintain relationships with various stakeholders (buyers,
suppliers and advisors) and develop other business opportunities. The Company's
success in increasing its revenue will be dependent upon, among other factors,
the continuing recovery of the marketplace, timely sales, suitable rates and
continued growth and improvement in proposal acceptance rates in outsourcing and
consulting. In addition, the Company's revenues could be impacted by any
unforeseen disruptions in transportation, communications or other infrastructure
components. Should the Company be unsuccessful in increasing its revenue, the
Company may fail to meet the public market's expectations of its financial
performance and operating results, which could have a material adverse effect on
its common stock price.

         The Company's most significant expense is cost of services, which
consists primarily of consultant compensation expense and operating costs
associated with its full outsourcing contracts. Historically, consultant
compensation expense has grown faster than consultant billing rates, resulting
in an increase in the Company's cost of services as a percentage of revenue. The
Company has sought to address the consultant compensation issue by adding an
additional variable portion of compensation payable upon the achievement of
measurable performance goals. In addition, the Company has sought to address
compensation expense pressures through increased use of stock options as an
overall part of its compensation package. These efforts have been hampered in
the past by the impact of the Company's stock price and could be affected in the
future depending upon market conditions. Cost of services declined in total and
as a percentage of revenue during the first quarter of 2002 as compared to the
first quarter of 2001 due primarily to workforce reductions. This current
environment may or may not continue depending on whether competition for
recruiting and retaining skilled consultants intensifies.

         The Company's cost of services as a percentage of revenue is also
impacted by how efficiently the Company utilizes its consultant resources and
delivers its consulting and outsourcing services and solutions. The Company
attempts to optimize efficient deployment of its consultants through initial
engagement planning and by continuously monitoring project requirements,
timetables, and service and solution deliveries. The number of consultants
assigned to a project will vary according to the type, size, complexity,
duration and demands of the project. Project terminations, completions and
scheduling delays have and can result in periods when the Company experiences
lower gross margins.

         In recent years the healthcare industry has experienced a slow-down in
consulting expenditures as fiscal constraints imposed by factors such as the
Balanced Budget Act of 1997, changes in the private reimbursement environment
and lingering Y2K transition effects combined forces to dampen overall industry
demand for new IT service consulting projects. These forces continued to hamper
demand for the Company's services during the first quarter of 2002. Furthermore,
the Balanced Budget Act of 1997 and other forces such as private reimbursement
changes may continue to adversely affect the financial stability of the
Company's clients and may impact their ability to pay for professional services
rendered.



                                    Page 11
<PAGE>

         During 2001, the events of September 11 and resulting disruptions in
air travel adversely affected the Company's business. The Company believes that
certain client decisions on pending projects were delayed, and that some 2001
work was deferred to later periods. In addition, the aftermath of September 11,
including increased federal spending on defense and homeland security, could
adversely affect the federal government's spending on Medicare, Medicaid and
other healthcare initiatives, which could adversely affect the Company's
clients' revenues and cause them to defer or cancel projects that would create
demand for the Company's services. Further, potential increases to the cost of
and time consumed by travel could have a material adverse affect on the
Company's business.

         In addition, the Company's establishment of new Competency Centers,
services and market offerings and hiring of consultants in peak hiring periods
have and can from time to time adversely affect margins. Also, seasonal factors,
such as vacation days and total business days in a quarter have and can affect
margins. Variations in market offering solution sales, longer outsourcing sales
cycles, deployment of resources and failure to secure large engagements can also
result in quarterly variability of the Company's cost of services as a
percentage of revenue. The Company's consultants are generally employed on a
full-time basis and therefore the Company will, in the short run, incur
substantially all of its employee-related costs even during periods of low
utilization, as the majority of employment costs of these personnel are fixed.

         Selling, general and administrative expenses include the costs of
recruiting, training and re-training, continuing education, technology, sales
and marketing, facilities, administration, outside professional fees and
depreciation. During 2001, selling, general and administrative expenses also
included amortization of goodwill. However, on January 1, 2002, the Company
adopted the provisions of SFAS 142, which specifies that goodwill is no longer
subject to amortization, but is subject to impairment assessments at least
annually. The Company will complete its initial assessment during the second
quarter of 2002. The impact of these impairment assessments is not reasonably
estimable.

         The Company considers its accounting policy relating to the
restructuring accrual to be critical. As of March 31, 2002, the accrual amounted
to approximately $2.0 million, which represents the present value of future
operating lease obligations for facilities no longer used by the Company, but
not sublet or sublet at amounts less than the Company's obligation. If the
Company is successful in subletting additional space in the future, this accrual
may be reduced.

         In November 2001, the Financial Accounting Standards Board issued Staff
Announcement Topic No. D-103, "Income Statement Characterization of
Reimbursements Received for Out-of-Pocket Expenses Incurred", which states that
reimbursements received for out-of-pocket expenses should be characterized as
revenue in the income statement. The application of Staff Announcement Topic No.
D-103 does not have an impact on current or previously reported net earnings
(loss) or earnings (loss) per share. The Company will continue to use net
revenue (revenue excluding out-of-pocket reimbursements) and net cost of
services (cost of services excluding out-of-pocket reimbursements) to compute
percentage and margin calculations, as well as for purposes of comparing the
results of operations for the three months ended March 31, 2002, to the three
months ended March 31, 2001.




                                    Page 12
<PAGE>


THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THREE MONTHS ENDED MARCH 31, 2001

         Net Revenue.

                  Consulting. Net revenue in this segment decreased by $2.2
         million, or 14.2%, to $13.5 million for the three months ended March
         31, 2002, as compared to $15.7 million for the three months ended March
         31, 2001. The revenue decrease was primarily due to a decline in demand
         for this segment's services.

                  Outsourcing. Net revenue in this segment increased by $1.7
         million, or 28.2%, to $7.8 million for the three months ended March 31,
         2002, as compared to $6.1 million for the three months ended March 31,
         2001. The revenue increase was primarily the result of the signing of
         new outsourcing agreements subsequent to March 31, 2001, partially
         offset by a reduction of the Company's services to one of its
         outsourcing clients during the three months ended March 31, 2001.

         Net Cost of Services.

                  Consulting. Net cost of services in this segment decreased by
         $2.2 million, or 20.9%, to $8.3 million for the three months ended
         March 31, 2002, as compared to $10.5 million for the three months ended
         March 31, 2001. The decrease was due primarily to lower consultant
         compensation expenses as a result of the reduction in consultant
         headcount in this segment. Net cost of services as a percentage of net
         revenue for this segment decreased to 61.4% for the three months ended
         March 31, 2002, as compared to 66.6% for the three months ended March
         31, 2001. The decrease was attributable to lower consultant headcount
         in this segment.

                  Outsourcing. Net cost of services in this segment increased by
         $1.1 million, or 22.2%, to $5.9 million for the three months ended
         March 31, 2002, as compared to $4.8 million for the three months ended
         March 31, 2001. The increase was primarily due to costs incurred for
         new engagements. Net cost of services as a percentage of net revenue
         for this segment decreased to 76.0% for the three months ended March
         31, 2002, as compared to 79.8% for the three months ended March 31,
         2001. The decrease was attributable to lower consultant headcount in
         this segment.

                  Selling, general and administrative expenses. Selling, general
         and administrative expenses decreased by $2.4 million, or 22.3%, to
         $8.5 million for the three months ended March 31, 2002, as compared to
         $10.9 million for the three months ended March 31, 2001. The decrease
         was primarily attributable to planned reductions in: compensation,
         facility, continuing education, communication, goodwill amortization,
         marketing and charges related to litigation and claims. Selling,
         general and administrative expenses as a percentage of net revenue
         decreased to 39.8% for the three months ended March 31, 2002, as
         compared to 50.1% for the three months ended March 31, 2001. The
         decrease is primarily attributable to increased operating efficiencies
         as a result of the Company's disciplined cost controls.

                  Other income and expense. Other income was $72,000 for the
         three months ended March 31, 2002, as compared to other expense of
         $8,000 for the three months ended March 31, 2001. The change was
         primarily the result of the reduced interest earned on the Company's
         short-term investments during the three months ended March 31, 2002, as
         well as the decrease in interest expense during the three months ended
         March 31, 2002, due to the partial repayment of the line of credit
         during the three months ended March 31, 2001.





                                    Page 13
<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

         In connection with the restructuring plan initiated during 2000, the
Company recorded restructuring charges of approximately $3.1 million during the
year ended December 31, 2001. These charges primarily related to the accelerated
expense associated with certain lease obligations, the write-off of property and
equipment and leasehold improvements, and severance costs related to the
Company's continued organizational restructuring, partially offset by a
reduction to the 2000 accrual for restructuring costs. Refer to the Company's
audited consolidated financial statements and notes thereto for the year ended
December 31, 2001, for further details on the components of these charges.
During the three months ended March 31, 2002, the Company had cash outflows of
approximately $210,000, related to the accelerated expense associated with
certain lease obligations, which were accrued for as of December 31, 2001. The
current accrued liability for additional cash outflows, related to the
accelerated expense associated with certain lease obligations, is approximately
$2.0 million and will be payable as follows: $630,000 throughout the remainder
of 2002, $865,000 during 2003, $294,000 during 2004, $205,000 during 2005 and
$27,000 during 2006.

         The Company's primary capital needs have been, and will be, to fund its
outsourcing and solution sales initiatives, as well as its capital expenditures.
The Company believes after giving effect to the restructuring plan and assuming
revenue consistent with current levels, that its current cash and cash
equivalents, cash generated from operations, plus available credit under its
bank credit facility, will be sufficient to finance its working capital and
capital expenditure requirements for at least the next twelve months. The
nature, amount and timing of the Company's long-term capital needs can be
affected by a number of factors. For example, the Company's strategic plan
includes a heightened focus on the development of the Company's outsourcing
business and the winning of large engagements. The implementation of a new
outsourcing engagement can involve the need for capital investment by the
Company, including the hiring of new personnel and the acquisition of a client's
IT assets, including hardware and software. An additional element of the
Company's outsourcing business strategy includes offering data center
consolidation to its clients, which in turn, requires investment by the Company
in data center facilities. The timing, number and scale of potential future
outsourcing engagements can impact the Company's need for capital resources. In
addition, the Company's future long-term capital needs will be affected by the
timing of the Company's market and service offerings, in addition to
outsourcing, and the degree and timing of success enjoyed by such offerings in
the market. A failure of the Company's offerings to meet success in the market,
and the Company's ability to adjust its operating expenses to an appropriate
level commensurate with operating expenses, can also affect the Company's need
for capital resources. For all of these reasons and those risk factors
identified in the Company's reports on file with the Securities and Exchange
Commission, the Company's ability to project long-term revenue levels and
capital needs are subject to substantial uncertainty. If the Company's available
funds and cash generated from operations are insufficient to satisfy its
long-term liquidity requirements, or if an event of default occurs under its
credit agreement with its lenders and the Company is required to repay all
outstanding indebtedness under the credit agreement, the Company may need to
seek additional sources of funding, such as selling additional equity or debt
securities or obtaining additional lines of credit. The Company could also, in
such event, face the need to delay or reduce the development of services or the
pursuit of engagements that would require significant investment to complete.
The Company could also face the need to reduce staffing levels and related
expenses or potentially to liquidate selected assets. If the Company's
management decides that it is in the Company's best interest to raise cash to
strengthen the Company's balance sheet, broaden its investor base, increase
liquidity of its pool of publicly traded stock or for any other reason, the
Company may decide to issue equity or debt, notwithstanding that its currently
available funds are sufficient to meet its anticipated needs for working capital
and capital expenditures through the next twelve months. The Company may decide
to enter into such a transaction to raise cash even if all of its current
funding sources remain available to the Company. If the Company issues
additional securities to raise funds, those securities may have rights,
preferences, or privileges senior to those of its common stock and its
shareholders may experience dilution. The Company cannot be certain that
additional financing will be available to the Company on favorable terms when
required, or at all. The inability of the Company to obtain additional financing
when needed could impair the Company's ability to develop products and services
for the market; to implement its business strategies; and may otherwise
materially and adversely affect the Company's business.

         At March 31, 2002, the Company had cash and cash equivalents of $16.1
million and working capital of $20.7 million, as compared with cash and cash
equivalents of $16.9 million and working capital of $19.0 million at December
31, 2001.

         As of March 31, 2002, the Company had a line of credit arrangement at
Comerica Bank N.A. allowing for borrowings of up to $8.0 million, based on
qualifying accounts receivable. Based on the eligibility provisions in the loan
agreement, the Company could have borrowed $6.9 million on the line of credit as
of March 31, 2002; $2.9 million was outstanding. Borrowings bear interest at the
greater of the prime rate or 1% plus the Federal funds effective rate. The
interest rate at March 31, 2002, was 4.75%. The line is collateralized by
accounts receivable and any deposits held by the bank. Prior to March 31,



                                    Page 14
<PAGE>

2002, the credit agreement was amended to extend the maturity date to September
30, 2002, and modify the financial covenants for 2002. The Company was in
compliance with all financial covenants as of March 31, 2002. In addition, the
Company has letters of credit of approximately $1.3 million issued by a bank,
secured by bank deposits.

         Net cash used in operations was $483,000 for the three months ended
March 31, 2002, as compared to net cash used in operations of $1.2 million for
the three months ended March 31, 2001. The decrease in net cash used in
operations is primarily the result of the decrease in the net operating loss
during the three months ended March 31, 2002, as compared to the three months
ended March 31, 2001, partially offset by the increase in refundable income
taxes during the three months ended March 31, 2002.

         Net cash of $384,000 used in investing activities during the three
months ended March 31, 2002, consists of additions to property, equipment and
software.

         Net cash of $56,000 provided by financing activities during the three
months ended March 31, 2002, was the result of exercises of stock options.

         The Company does not believe that inflation has had a material effect
on the results of its operations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK SENSITIVE
INSTRUMENTS

         The Company is exposed to interest rate change market risk in
connection with its credit facility with its bank. The interest rate on this
facility is tied to the bank's prime rate, and changes in the variable rate will
have an impact on the Company's interest expense.

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)      Exhibits

         NONE

(b)      Form 8-K

         NONE


                                    Page 15
<PAGE>


SIGNATURES


         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 thereunto duly authorized.

                                      Superior Consultant Holdings Corporation


Date: May 15, 2002                       /s/ Richard D. Helppie, Jr.
------------------                       ---------------------------------
                                         Richard D. Helppie, Jr.
                                         Chief Executive Officer
                                         (Principal Executive Officer)

Date: May 15, 2002                       /s/ Richard R. Sorensen
------------------                       ---------------------------------
                                         Richard R. Sorensen
                                         Chief Financial Officer
                                         (Principal Financial and
                                         Accounting Officer)








                                    Page 16