U.S. SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

 (Mark One)

 [X]  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 or 15(d) OF THE  SECURITIES
      EXCHANGE ACT OF 1934.

 For    the     quarterly     period     ended     September     30,    2003
                                                  -----------------------------

                                       OR

[   ]    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934.

For the transition period from                       to
                               ---------------------    ------------------

                        Commission file number 000-26749

                   NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
             (Exact Name of Registrant as Specified in Its Charter)

     Delaware                                                         11-2581812
-------------------------------------------------------------------------------
(State or Other Jurisdiction of
Incorporation or Organization)                (IRS Employer Identification No.)

 26 Harbor Park Drive, Port Washington, NY                               11050
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(Address of Principal Executive Offices)                             (Zip Code)

Registrant's Telephone Number, Including Area Code            (516) 626-0007
                                                   ----------------------------

                              Not Applicable
-------------------------------------------------------------------------------
Former  Name,  Former  Address and Former  Fiscal  Year,  if Changed  Since Last
Report.

     Indicate  by check  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
                                                        -------       ---------

     Indicate by check  whether the  registration  is an  accelerated  filer (as
defined  in  Rule  12b-2  of  the  Exchange  Act.)   Yes            No x
                                                        ------        ---------

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.                                Yes           No
                                                        ------       ----------

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

     The  number of shares  outstanding  of the  issuer's  Common  Stock,  as of
November 6, 2003 was 7,652,967 shares.


<PAGE>


           NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES


                                  INDEX                                 Page

             FORWARD-LOOKING STATEMENTS                                   3

PART I   -   FINANCIAL INFORMATION                                        4
------       ---------------------

ITEM 1   -   CONDENSED FINANCIAL STATEMENTS:                              4

             CONSOLIDATED BALANCE SHEET as of                             4
             September 30, 2003 (unaudited) and June 30, 2003

             CONSOLIDATED STATEMENT OF INCOME (unaudited)                 5
             for the three months ended September 30, 2003 and 2002

             CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)             6
             for the three months ended September 30, 2003 and 2002

             CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS         7

ITEM 2   -   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL           15
             CONDITION AND RESULTS OF OPERATIONS

ITEM 3   -   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT              23
             MARKET RISK

ITEM 4   -   CONTROLS AND PROCEDURES                                     23

PART II  -   OTHER INFORMATION                                           24
-------      -----------------

ITEM 1   -   LEGAL PROCEEDINGS                                           24

ITEM 2   -   CHANGES IN SECURITIES AND USE OF PROCEEDS                   24

ITEM 3   -   DEFAULTS UPON SENIOR SECURITIES                             24

ITEM 4   -   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS         25

ITEM 5   -   OTHER INFORMATION                                           25

ITEM 6   -   EXHIBITS AND REPORTS ON FORM 8-K                            25


<PAGE>


           NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES



Forward Looking Statements

     When  used  herein,  the  words  "may,"  "could,"  "estimate,"   "believe,"
"anticipate,"  "think,"  "intend,"  "expect"  and similar  expressions  identify
forward-looking   statements  within  the  meaning  of  the  Private  Securities
Litigation  Reform Act of 1995.  Such  statements  are not  guarantees of future
performance  and involve  known and unknown risks and  uncertainties,  and other
factors, which could cause actual results to differ materially from those in the
forward-looking statements. Readers are cautioned not to place undue reliance on
such  statements,  which speak only as of the date hereof.  For a discussion  of
such risks and uncertainties,  including risks relating to pricing,  competition
in the  bidding  and  proposal  process,  our  ability  to  consummate  contract
negotiations with prospective clients,  dependence on key members of management,
government  regulation,  acquisitions  and  affiliations,  the  market  for  PBM
services, and other factors,  readers are urged to carefully review and consider
various disclosures made by National Medical Health Card Systems,  Inc. ("Health
Card" or the  "Company")  which  attempt  to advise  interested  parties  of the
factors which affect Health Card's business,  including, without limitation, the
disclosures  made  under  the  caption  "Business"  in Item 1 and  "Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations"  in
Item 7 of the  Company's  Annual  Report on Form 10-K for the fiscal  year ended
June 30, 2003,  filed with the Securities  and Exchange  Commission on September
29, 2003.



<PAGE>


                         PART I - FINANCIAL INFORMATION

Item 1 - CONDENSED FINANCIAL STATEMENTS
         NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEET
                                ($ in thousands)


<TABLE>
<S>                                                                              <C>    <C>    <C>    <C>    <C>    <C>
                                                                                 September 30,              June 30,
Assets                                                                               2003                    2003
Current:                                                                         -------------           -----------
                                                                                   (Unaudited)


  Cash and cash equivalents (including cash equivalent investments of $1,189     $       4,881           $     5,222
       in each period)
  Restricted cash                                                                        2,274                 2,383
  Accounts receivable, less allowance for doubtful accounts of $2,244                   60,236                52,022
       and $2,014, respectively
  Rebates receivable                                                                    21,446                24,584
  Inventory                                                                              1,315                     -
  Due from affiliates                                                                       29                 4,165
  Deferred tax asset                                                                     2,065                 2,065
  Other current assets                                                                   1,825                 1,714
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
      Total current assets                                                              94,071                92,155

  Property, equipment and software development costs, net                                9,178                 8,239
  Intangible assets, net of accumulated amortization of $1,447 and                       2,554                 2,291
    $1,210, respectively
  Goodwill                                                                              57,262                53,669
  Other assets                                                                             339                   386
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
      Total Assets                                                               $     163,404            $  156,740
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------

Liabilities and Stockholders' Equity
Current Liabilities:

  Accounts payable and accrued expenses                                          $      116,591            $  106,675
  Revolving credit facility and loans payable-current                                    10,579                15,683
  Current portion of capital lease obligations                                              476                   481
  Due to officer/stockholder                                                                  -                 1,117
  Income taxes payable                                                                      816                   629
  Other current liabilities                                                                 348                   137
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
     Total current liabilities                                                          128,810               124,722
  Capital lease obligations, less current portion                                           215                   327
  Long term loans payable and other liabilities                                           1,939                 1,020
  Deferred tax liability                                                                  2,245                 2,245
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
     Total liabilities                                                                  133,209               128,314

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

Commitments and Contingencies
Stockholders' Equity:

  Preferred stock $.10 par value; 10,000,000 shares authorized, none outstanding               -                     -
  Common Stock, $.001 par value, 25,000,000 shares authorized, 7,836,694 and                   8                     8
    7,812,907 shares issued, 7,645,694 and 7,621,907 outstanding, respectively
  Additional paid-in-capital                                                              15,150                15,027
  Retained earnings                                                                       15,781                14,135
  Treasury stock at cost, 191,000 shares                                                    (744)                 (744)
---------------------------------------------------------------------------------------------------------------------------
     Total stockholders' equity                                                           30,195                28,426
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
     Total Liabilities and Stockholders' Equity                                   $      163,404          $    156,740
---------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------
                          See accompanying condensed notes to consolidated financial statements


<PAGE>


           NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES
-----------------------------------------------------------------------------

                        CONSOLIDATED STATEMENT OF INCOME
                (Amounts in thousands, except per share amounts)
                                   (Unaudited)




                                                                 Three months ended
                                                                    September 30,

                                                                  2003             2002
                                                                  ----             ----

Revenues                                                   $    150,830         $ 147,367
Cost of claims                                                  137,314           136,488
--------------------------------------------------------------------------------------

Gross Profit                                                     13,516            10,879
Selling, general and administrative expenses                     10,550             8,340
------------------------------------------------------------------------------------------

Operating income                                                  2,966             2,539

Other income (expense):
Interest expense                                                   (245)             (320)
Interest income                                                      31                56
Other income, net                                                    38                38
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
                                                                   (176)             (226)

Income before provision for income taxes                          2,790             2,313
Provision for income taxes                                        1,144               948
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

Net Income                                                 $      1,646         $   1,365
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------

Earnings per common share:
    Basic                                                  $       0.22         $    0.18
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
    Diluted                                                $       0.19         $    0.17
------------------------------------------------------------------------------------------
Weighted average number of common shares outstanding:
    Basic                                                         7,641             7,524
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
    Diluted                                                       8,473             7,919
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
          See accompanying condensed notes to consolidated financial statements






<PAGE>


           NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                ($ in thousands)
                                   (Unaudited)



                                                                                               Three months ended
                                                                                                 September 30,

                                                                                              2003                       2002
                                                                                              ----                       ----
Cash flows from operating activities:
           Net income                                                                    $   1,646                   $  1,365
             Adjustments to reconcile net income to net cash
              provided by (used in) operating activities:

                Depreciation and amortization                                                1,381                      1,043
                Amortization of deferred gain                                                  (38)                       (39)
                Provision for doubtful accounts                                                230                        153
                Compensation expense accrued to officer/stockholder                             37                       (261)
             Changes in assets and liabilities, net of effect from acquisitions:
                Restricted cash                                                                109                        243
                Accounts receivable                                                         (7,555)                    (1,808)
                Rebates receivable                                                           3,138                     (2,061)
                Inventory                                                                     (777)                         -
                Other current assets                                                          (111)                       128
                Due to/from affiliates                                                         214                       (392)
                Other assets                                                                    (2)                         -
                Accounts payable and accrued expenses                                        7,991                      1,510
                Income taxes payable and other current liabilities                             394                       (654)
                Other long term liabilities                                                    958                        286
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities                                          7,615                       (487)
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------

Cash flows from investing activities:
             Capital expenditures                                                           (2,022)                      (580)
             Repayment of loan from affiliate                                                2,660                          -
             Repayment of loan from officer                                                    107                          -
             Acquisition of Integrail                                                          (13)                         -
             Acquisition of PAI                                                                  -                     (1,000)
             Acquisition of PPP, net of cash acquired                                       (3,639)                         -
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities                                                       (2,907)                    (1,580)
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
             Proceeds from exercise of stock options                                           123                        418
             Repayment of convertible note offering                                              -                     (8,000)
             Proceeds from revolving credit facility                                       183,500                    170,950
             Repayment of revolving credit facility                                       (188,594)                  (160,408)
             Deferred financing costs                                                           49                         47
             Repayment of debt and capital lease obligations                                  (127)                       (88)
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities                                         (5,049)                     2,919
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents                                          (341)                       852
Cash and cash equivalents at beginning of period                                             5,222                      1,768
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period                                               $   4,881                  $   2,620
------------------------------------------------------------------------------------------------------------------------------
                                 See accompanying condensed notes to consolidated financial statements


</TABLE>

<PAGE>


           NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC. AND SUBSIDIARIES

              CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                 (All $ in thousands, except per share amounts)
                                   (Unaudited)


1. BASIS OF PRESENTATION

     The unaudited  consolidated  financial  statements  include the accounts of
National Medical Health Card Systems,  Inc. (the "Company" or "Health Card") and
its wholly owned subsidiaries,  Pharmacy Associates,  Inc. ("PAI"),  Interchange
PMP, Inc. ("PMP"), Centrus Corporation ("Centrus"), National Medical Health Card
IPA, Inc. ("IPA"),  formerly known as PSCNY IPA, Inc.,  Specialty Pharmacy Care,
Inc.  ("Specialty"),  Integrail,  Inc.  ("Integrail"),  NMHCRX Mail Order,  Inc.
("Mail Order"), NMHCRX Contracts, Inc. ("Contracts"),  Ascend Specialty Pharmacy
Services,  Inc. (See Note 3) ("Ascend")  and PBM  Technology  Inc. ("PBM Tech").
Also  included on a  consolidated  basis are the accounts of NMHC  Funding,  LLC
("Funding"),   a  limited  liability  company  of  which  the  Company  and  its
subsidiaries  are the  owners of all of the  membership  interests.  Unless  the
context otherwise requires,  references herein to the "Company" or "Health Card"
refer to the Company and its subsidiaries, on a consolidated basis. All material
inter-company   balances  and   transactions   have  been   eliminated   in  the
consolidation.

     The unaudited  consolidated  financial statements have been prepared by the
Company in  accordance  with  accounting  principles  generally  accepted in the
United States for interim  financial  information and  substantially in the form
prescribed by the Securities  and Exchange  Commission in  instructions  to Form
10-Q and in Article 10 of Regulation S-X.  Accordingly,  they do not include all
of the  information  and footnotes  required by such  accounting  principles for
complete financial statements.  In the opinion of the Company's management,  the
September 30, 2003 and 2002 unaudited interim financial  statements  include all
adjustments,  consisting of normal recurring  adjustments,  necessary for a fair
presentation  of  results  for these  interim  periods.  In the  opinion  of the
Company's  management,  the disclosures contained in this Form 10-Q are adequate
to make the information  presented not misleading when read in conjunction  with
the Notes to Consolidated  Financial  Statements  included in the Company's Form
10-K for the year ended June 30, 2003.  The results of operations  for the three
month period ended  September  30, 2003 are not  necessarily  indicative  of the
operating results to be expected for the full year.

For information concerning the Company's significant accounting policies,
reference is made to the Company's Annual Report on Form 10-K for the year ended
June 30, 2003 (the "Annual Report").

2. STOCK-BASED COMPENSATION

     In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation  - Transition  and  Disclosure."  SFAS No. 148 amends SFAS No. 123,
"Accounting for Stock-Based  Compensation,"  to provide  alternative  methods of
transition  to SFAS No. 123's fair value method of  accounting  for  stock-based
employee  compensation.  SFAS No. 148 also amends the  disclosure  provisions of
SFAS No. 123 to require  disclosure  in the  summary of  significant  accounting
policies  of the  effects  of an  entity's  accounting  policy  with  respect to
stock-based  employee  compensation  on reported net income.  While SFAS No. 148
does not amend SFAS No. 123 to require  companies to account for employee  stock
options using the fair value method,  the disclosure  provisions of SFAS No. 148
are  applicable  to  all  companies  with  stock-based  employee   compensation,
regardless  of whether they account for that  compensation  using the fair value
method of SFAS No. 123 or the intrinsic  value method of APB No. 25. The Company
adopted SFAS No. 148 effective December 31, 2002.

     The following table illustrates the effect on net income if the Company had
applied the fair value  recognition  provisions  of SFAS No. 123 to  stock-based
compensation:
<TABLE>
<S>                                                                             <C>    <C>    <C>    <C>    <C>    <C>

                                                                  Three Months Ended September 30,
                                                              ----------------------------------------------------
                                                                        2003             2002
                                                                        ----             ----
     Reported net income                                         $     1,646         $  1,365
     Stock compensation expense included in net                            -                -
       income
     Pro forma compensation expense                                     (442)            (394)
                                                                 ------------      -----------
       Pro forma net income                                      $     1,204         $    971
    Pro forma earnings per share:
       Basic                                                     $      0.16         $   0.13
       Diluted                                                   $      0.14         $   0.12
</TABLE>

3. BUSINESS ACQUISITIONS

     On July 31, 2003, the Company entered into a Stock Purchase  Agreement with
Portland   Professional   Pharmacy  ("PPRX"),   Portland  Professional  Pharmacy
Associates   ("PRXA",   and  together  with  PPRX,  "PPP")  and  the  individual
shareholders  (the "PPP  Shareholders") to purchase all of the shares of PPP for
$3,150 (the "PPP Acquisition").  PPP provides  specialty-pharmacy  services in a
broad range of areas, including women's health, pediatric care, men's health and
transplant.  Funds  for the  PPP  Acquisition  were  supplied  by the  Company's
revolving credit facility that was put in place in January 2002 (see below). The
Company  intends to  position  PPP as a  preferred  provider  with PPP's  target
markets  while  focusing on the  extension  of their  specialty  services to the
Company's PBM division.

     The  purchase  price  for the  stock  of PPP  was  $3,150.  At the  time of
acquisition, PPP had approximately $1,664 of assets which included $177 of cash,
$889  of  accounts  receivable,  $539  of  inventory  and  $59 of  property  and
equipment.  PPP also had approximately $1,423 of liabilities which included $609
of bank debt, which was paid off at closing, and $814 of miscellaneous payables.
The  acquisition  was accounted for under the purchase  method of accounting and
the results of PPP's  operations  were  included in the  consolidated  financial
statements  commencing with the acquisition  date. The excess of the acquisition
costs over the fair value of identifiable net assets acquired was $2,946,  which
consists  of the  following  components  (subject to a formal  valuation  of the
assets): (i) customer relationships valued at $300, which will be amortized over
five (5) years; (ii) employment and non-compete  agreements valued at $100 each,
which will be  amortized  over three (3) years,  and (iii)  goodwill  of $2,446,
which will not be amortized  for book  purposes per SFAS 142. For tax  purposes,
the Company has made an election  which will allow it to amortize  the  goodwill
and other intangibles over fifteen years. In addition, the Company agreed to pay
to the  PPP  Shareholders  up to  $7,000  over a  three-year  period  if the PPP
business achieved certain financial targets.

     In connection with the PPP Acquisition, several members of PPP's management
team have joined the Company as  employees,  and have been granted stock options
to purchase an aggregate of 150,000 shares of Common Stock,  under the Company's
1999  Stock  Option  Plan,  as  amended.  As of August 1,  2003,  the  Company's
wholly-owned  subsidiary,  Ascend Specialty Pharmacy Services,  Inc.  ("Ascend")
assumed  all of the shares of PPP.  Each of PRXA and PPRX  continues  to operate
under their respective names, as subsidiaries of Ascend, in the state of Maine.

     As of  November  1, 2002,  the  Company  and its wholly  owned  subsidiary,
Integrail  Acquisition  Corp.,  entered into an Asset  Purchase  Agreement  with
Health  Solutions,  Ltd.  ("HSL"),  a New York  corporation,  and certain of its
security holders (together with HSL, the "Sellers").  Pursuant to the Agreement,
Health Card acquired  substantially all of the assets of the Integrail  division
of HSL's operations, for a purchase price of $1,400. Integrail provides software
and analytical tools in the area of informatics which allows for the blending of
medical and pharmacy data to predict future outcomes.

     Half of the $1,400  purchase price was paid at the closing  directly to the
Sellers,  and half was deposited into escrow as security for the  performance of
certain  indemnification  obligations  of  the  Sellers.  The  Company  acquired
approximately  $500  of  HSL's  assets  which  included  $158  of  property  and
equipment,  $225 of  software,  $76 of  prepaid  expenses,  and $41 of  accounts
receivable.  The Company also agreed to assume approximately $500 of liabilities
related to Integrail  which included $166 of debt under capital  leases,  $75 of
miscellaneous  payables,  and $259 due to HSL for prior  equipment  and services
provided to  Integrail  by HSL.  The  acquisition  was  accounted  for under the
purchase  method of accounting  and the results of Integrail's  operations  were
included  in  the  consolidated   financial   statements   commencing  with  the
acquisition  date.  The excess of the  acquisition  costs over the fair value of
identifiable  net assets  acquired was $1,482,  which  consists of the following
components:  (i)  software  and company  know how valued at $575,  which will be
amortized  over three (3) years;  and (ii)  goodwill of $907,  which will not be
amortized  for book  purposes per SFAS 142. For tax  purposes,  the goodwill and
other  intangibles  will  be  amortized  over  fifteen  years.  Funds  for  this
transaction  were  supplied by the  Company's  revolving  credit  facility.  The
Agreement provides that if certain operational  milestones are achieved over the
first 12  months,  certain  amounts  will be  released  from the  escrow  to the
Sellers.  All  operational  milestones  were met and all  escrowed  dollars were
released to the Sellers in November 2003.

     The Company  entered into an Asset Purchase  Agreement (the "Asset Purchase
Agreement"),  dated as of January 29, 2002, with HSL, HSL  Acquisition  Corp., a
Delaware  corporation and a wholly-owned  subsidiary of the Company ("Sub"), and
the security holders of HSL named therein,  pursuant to which the Company agreed
to acquire  certain  assets of HSL relating to the pharmacy  benefit  management
business (PBM)  conducted by HSL under the name  "Centrus" (the  "Acquisition").
Centrus  provides PBM services  primarily to managed care  organizations  in the
northeast.  The Company intends to continue to use the Centrus assets to provide
PBM services.  The Centrus  business  complements  the Company's  business while
significantly strengthening the Company's presence in the managed care market.

     The aggregate  purchase  price of the  Acquisition  was $40,000 in cash, of
which $3,000 was held in escrow to secure  certain  indemnification  obligations
(the escrow dollars have been released as of January 2003). The Company acquired
approximately  $1,400  of HSL's  assets  which  included  $900 of  property  and
equipment and $500 of software.  The Company also agreed to assume approximately
$1,400 of HSL's  liabilities  relating to the Centrus  business  which  included
$1,100  of  rebates  due to  sponsors,  $100  of  capital  leases,  and  $200 of
miscellaneous  payables.  The  acquisition  was accounted for under the purchase
method of accounting and the results of Centrus' operations were included in the
consolidated  financial  statements  commencing with the  acquisition  date. The
excess of the acquisition  costs over the fair value of identifiable  net assets
acquired was $40,672,  which consists of the following components:  (i) customer
relationships  valued at $2,415,  which will be  amortized  over five (5) years;
(ii) an employment agreement valued at $83, which will be amortized over two (2)
years:  (iii) non-compete  contracts valued at $76, which will be amortized over
four (4) years,  and (iv)  goodwill of $38,098  which will not be amortized  for
book purposes per SFAS 142. For tax purposes, the goodwill and other intangibles
will be amortized over fifteen years. In addition, the Company has agreed to pay
HSL as additional  purchase  price up to $4,000 over a period of three (3) years
if the acquired Centrus business achieves certain financial  performance targets
during the two-year period following the Closing. HSL may also be entitled to an
additional  incentive payment based on the financial  performance of the Centrus
business  during the  one-year  period  following  the  Closing.  The  financial
performance  targets  were  achieved  during  the first year and $2,000 has been
earned.  Of this amount,  $1,000 was paid in May 2003 and another $1,000 will be
paid in May 2004. The additional incentive payment target was not achieved,  and
thus, there will be no pay out of this item.

     Simultaneously  with  the  consummation  of the  Acquisition,  the  Company
entered  into an  Employment  Agreement  and a Stock Option  Agreement  with the
former president of Centrus,  pursuant to which he currently serves as President
of PBM Services for the Company.  Additionally,  several members of the Centrus'
management  team have joined the  Company as  employees,  and have been  granted
stock options to purchase an aggregate of 300,000 shares of Common Stock,  under
the Company's 1999 Stock Option Plan, as amended.

     On January 29, 2002,  the Company and certain of its  subsidiaries  entered
into a $40,000  secured  revolving  credit  facility (the  "Facility")  with HFG
Healthco-4 LLC, a specialty  finance  company.  In connection with the Facility,
the Company  and certain of its  subsidiaries  have  agreed to  transfer,  on an
on-going basis,  their accounts  receivable to Funding.  Funding  utilizes those
receivables as collateral to secure borrowings under the facility.  The Facility
has a three  year  term,  provides  for  borrowing  up to  $40,000 at the London
InterBank  Offered Rate  (LIBOR) plus 2.40% (3.5% at September  30, 2003) and is
secured  by  receivables  and other  assets of the  Company  and  certain of its
subsidiaries  as defined.  Borrowings of $28,700 under the Facility were used to
finance part of the purchase price of the  Acquisition  and will also be used by
the Company and certain of its  subsidiaries  for working  capital  purposes and
future  acquisitions in support of its business plan. The outstanding balance as
of September 30, 2003 was  approximately  $10,568,  which was all  classified as
short term.  The  Facility  requires  the Company to remain in  compliance  with
certain  financial and other  covenants.  The Company was in compliance with all
covenants at September 30, 2003.

     The  summarized  unaudited pro forma results of operations  set forth below
for the three months ended September 30, 2003 and 2002 assumes the Integrail and
PPP acquisitions had occurred as of the beginning of these periods.
<TABLE>
<S>                                                                             <C>    <C>    <C>    <C>    <C>    <C>

                                                            Three Months Ended        Three Months Ended
                                                            September 30, 2003        September 30, 2002
                                                            ------------------        ------------------
 Revenues                                                  $      152,169            $      150,618
 Net income (loss)                                         $        1,621            $          (33)
 Net income per common share:
   Basic                                                   $         0.21            $            -
   Diluted                                                 $         0.19            $            -
 Pro forma weighted-average number of common shares outstanding:
   Basic                                                            7,641                     7,524
   Diluted                                                          8,473                     7,919
</TABLE>

     This pro forma financial  information is presented for information purposes
only.  Pro forma adjusted net income per common share,  including  acquisitions,
may not be indicative of actual  results,  primarily  because pro forma earnings
include  historical  results of  operations  of the  acquired  entity and do not
reflect any cost  savings or  potential  sales  erosion that may result from the
Company's integration efforts.

4. STOCK OPTIONS

     During the three  months ended  September  30,  2003,  the Company  granted
306,456  stock  options  and 4,803 stock  options  were  cancelled  for a net of
301,653 stock options under the 1999 Stock Option Plan (the "Plan"). The options
granted  during  this period are  exercisable  at prices  ranging  from $9.75 to
$13.50 and terminate  five to seven years from the grant date.  The total number
of shares of common stock reserved by the Company for issuance under the Plan is
2,850,000  plus an  indeterminable  number of shares  of common  stock  issuable
pursuant to the  anti-dilution  provisions  of the Plan or upon the  exercise of
"reload  options."  There are no options  outstanding  that contain the "reload"
provision.  Shares  issuable  pursuant to options  granted  under the Plan as of
September 30, 2003 equal 2,237,653, net of 420,030 options exercised to date.


<PAGE>

5. EARNINGS PER SHARE

     A reconciliation  of shares used in calculating  basic and diluted earnings
per share follows:
<TABLE>
<S>                                                                             <C>    <C>    <C>    <C>    <C>    <C>

                                                                                       Three Months Ended
                                                                                          September 30,
                                                                             -------------------------------------
                                                                                        2003               2002
                                                                                        ----               ----
   Basic                                                                             7,640,894          7,524,438
   Effect of assumed exercise of employee stock options                                787,002            394,815
   Effect of assumed exercise of warrants                                               44,961                  -
                                                                                    ----------          ---------
   Diluted weighted average number of shares outstanding                             8,472,857          7,919,253
                                                                                     =========          =========

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following:

                                                                                  September 30,         June 30,
                                                                                       2003               2003
                                                                                  ------------         ----------
Claims payable                                                                   $    81,722        $    76,195
Rebates payable to sponsors                                                           26,622             24,082
Trade payables, accrued expenses and other payables                                    8,247              6,398
                                                                                     -------            -------
                                                                                 $   116,591        $   106,675
                                                                                    =======             =======
</TABLE>

7. RELATED PARTY TRANSACTIONS

     As of January 1, 2002,  the  Company  has  eliminated  the  majority of its
historical related party service  transactions with the exception being rent and
some  administrative  services.  For the  periods  presented,  certain  general,
administrative and other expenses reflected in the financial  statements include
allocations of certain  corporate  expenses from  affiliates,  which  management
believes were made on a reasonable basis.

     General and administrative expenses related to transactions with affiliates
included  in the  statement  of  income  were $244 for the  three  months  ended
September 30, 2003 and $297 for the three months ended September 30, 2002.

     Due from  affiliates  at June  30,  2003  included  a note  from a  company
affiliated by common ownership. As of September 30, 2003, the entire balance due
from this  affiliate,  including  accrued  interest,  was  paid.  This note bore
interest at 8.5% per annum,  payable  quarterly.  The note was collateralized by
1,022,758  shares of $.001 par value common stock of the Company  registered  in
the name of the Company's  Chairman of the Board and was secured by his personal
guarantee.

     On February 8, 2001, the President gave to the Company his Promissory  Note
in the amount of $34 as evidence of the loan. On April 12, 2002,  the Promissory
Note was amended and the Company  agreed to increase the loan to $100.  The loan
bears  interest  at 8%, and was due on April 25,  2003.  The  interest  rate was
lowered  effective July 1, 2002 to the rate at which the Company  borrows money.
The repayment  obligation under the Promissory Note has been satisfied through a
set-off from the bonus paid to the  President in July 2003 as part of his annual
compensation, the amount that was otherwise to be payable by the President under
the Promissory Note including accrued interest.

     In  connection  with  a  potential  bonus,  to  be  earned  pursuant  to an
employment  agreement  dated  September  30, 2002,  between the President of the
Company's mail order operations and the Company, the Company has loaned him $250
as an advance against the potential bonus. The loan is evidenced by a promissory
note  executed by the Mail Order  President  in favor of the  Company.  The loan
bears an interest  rate of 9% and was due and payable on  September  30, 2003 in
the event the bonus is not  earned.  The  Company  is  currently  negotiating  a
settlement which will resolve all monies due to both parties.

     The Company  currently  occupies office space at 26 Harbor Park Drive, Port
Washington,  New York 11050 (the "Leased  Premises").  The Company subleases the
Leased   Premises   from  an  affiliate  of  the  Chairman  of  the  Board  (the
"Affiliate").  The Affiliate has the right to purchase the Leased  Premises from
the  landlord  upon  expiration  of this  lease in  March  2005.  The  Affiliate
subleases  a portion  of the  Leased  Premises  to the  Company  (the  "Lease").
Additional  space is  currently  being built in the Leased  Premises  which will
allow the  Company  to  reconfigure  its  existing  space and to move all of its
employees in Port Washington into contiguous  space. As of October 23, 2003, the
Company and the Affiliate  amended the Lease.  Effective the later of January 1,
2004 or when the space is ready for occupancy, the Company will lease additional
square  footage in the Leased  Premises.  The total square footage leased by the
Company at that time will be 34,270. The annual rent will then be $531 per annum
plus expenses related to real estate taxes,  utilities and maintenance which are
paid  directly  to the  entities  to whom  payment  must be  made.  Annual  rent
increases  will be based upon the  Consumer  Price Index plus 2.5%  subject to a
maximum annual cap of 3.5%. The lease expires on December 31, 2013.

8. MAJOR CUSTOMERS AND PHARMACIES

     For the three months ended  September  30, 2003,  approximately  41% of the
consolidated  revenues of the Company were from two plan sponsors  administering
multiple plans. For the three months ended September 30, 2002  approximately 38%
of the  consolidated  revenues  of the  Company  were  from  two  plan  sponsors
administering  multiple  plans.  Amounts due from these sponsors as of September
30, 2003 approximated $10.3 million.

     For the three months ended September 30, 2003  approximately 11% of cost of
claims was from one pharmacy  chain.  For the three months ended  September  30,
2002,  approximately  48% of the cost of claims were from three pharmacy chains.
Amounts   payable  to  these   pharmacy   chains  at  September  30,  2003  were
approximately $13.7 million.

9. SUPPLEMENTAL CASH FLOW INFORMATION

     During the three months ended  September  30, 2003 and  September 30, 2002,
the Company  paid $245 and $320 in interest  and $958 and $636 in income  taxes,
respectively. In a non-cash transaction, the Company issued 41,668 shares of its
common stock, valued at $250, as additional  compensation to the shareholders of
PAI in August 2002, respectively.

10.      LITIGATION

See Item 1 of Part II of this Quarterly Report on Form 10-Q.

11. SUBSEQUENT EVENTS

     On October 31,  2003,  the  Company  announced  that it had entered  into a
preferred  stock  purchase  agreement  dated as of  October  30,  2003  with New
Mountain Partners L.P. ("NMP") under which NMP agreed to purchase $80 million of
10-year  convertible  preferred  stock.  Cash dividends will be 7% for the first
five  years and 3.5% for the last  five  years.  The  preferred  shares  will be
convertible into the Company's common stock at $11.50 per share, as described in
the Stock Purchase Agreement,  dated as of October 30, 2003, between the Company
and NMP.  The Company  will use  approximately  $50  million of the  proceeds to
self-tender  for 4.5 million common shares at $11 per share.  The Company's self
tender  will be  available  to all  shareholders  on a pro-rata  basis.  Bert E.
Brodsky,  the Company's largest stockholder,  and certain related  stockholders,
have  agreed to tender up to 4.5  million  shares  and to vote in support of the
transaction.  The  remaining  invested  funds,  after  the  self-tender,  net of
transaction  costs, are estimated at $22 million and are expected to be used for
growth  opportunities.  The  closing  of  the  transactions  is  subject  to the
satisfaction of certain conditions, including the receipt of required regulatory
approvals.


<PAGE>



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

Results of Operations

     Three  Months  Ended  September  30, 2003  Compared to Three  Months  Ended
September 30, 2002

     Revenues  increased $3.5 million,  or approximately 2%, from $147.3 million
for the three months ended  September 30, 2002, to $150.8  million for the three
months ended  September 30, 2003. Of this increase,  $2.9 million was due to the
inclusion  of PPP and  Integrail  which were  included in the  revenues  for the
quarter  ended  September 30, 2003,  but not in the quarter ended  September 30,
2002.  Another  approximate  $14  million of the  increase  was due to  revenues
related  to new  sponsors  or new  services  offered  during the  quarter  ended
September 30, 2003. These increases were offset by a revenue decrease related to
two  factors:  1) a major  sponsor  terminated  its  contract  with  Health Card
effective  December 31, 2002 leading to a reduction in revenue of  approximately
$22  million,  and 2) the  Company  recognized  on a net revenue  basis  certain
contracts  during  the three  months  ended  September  30,  2003  versus  fewer
contracts  that the Company  recognized  on a net revenue basis during the three
months ended September 30, 2002. The specific terms of the contracts that Health
Card enters into with its sponsors will determine whether Health Card recognizes
the gross revenue  related to the cost of the  prescriptions  filled.  For those
contracts that Health Card recognizes net revenue as compared to gross, there is
no impact on gross profit since neither the revenue nor the related costs of the
prescriptions is recorded.  In addition,  there was an increase of approximately
$9 million due primarily to increased revenues from other existing sponsors as a
result of several factors including higher charges relating to increased cost of
pharmaceuticals,  new drugs,  plan  participant  growth and an  increase  in the
average number of claims per plan participant.

     Cost of claims  increased $0.8 million,  or  approximately  1%, from $136.5
million for the three months ended September 30, 2002, to $137.3 million for the
three months ended  September  30, 2003.  PPP and  Integrail  accounted for $2.3
million of the  increase.  Increases  related to the activity of new sponsors as
well as  existing  sponsors  were  offset by the two  factors  described  in the
previous  paragraph,  namely, the loss of a major sponsor and the recognizing of
certain  contracts on a net revenue basis. As a percentage of revenues,  cost of
claims  decreased  from 92.6% to 91.0% for the three months ended  September 30,
2002 and September 30, 2003, respectively. These same two factors contributed to
the declining costs as a percentage of revenue.  The terminated major sponsor is
a managed care organization.  Industry-wide, managed care clients have a greater
cost of claims,  and  consequently  a lower  gross  margin,  than other types of
business in the PBM industry.  While not all of the revenue associated with this
sponsor was replaced by new business,  the new  business,  for the most part was
not managed  care,  so  consequently  the cost of claims on the new business was
lower than on the business it replaced. In addition, the contracts recognized on
a net revenue  basis  decrease  the overall  Company  costs as a  percentage  of
revenue due to the cost not being  recognized on the  contracts  recorded on the
net revenue basis.  The  acquisition of PPP in July 2003 also had a minor impact
in reducing  the cost of claims as  specialty  pharmacy  distribution  typically
generates lower cost of claims than a PBM.

     Gross  profit  increased  from $10.9  million  for the three  months  ended
September  30, 2002 to $13.5  million for the three months ended  September  30,
2003; a $2.6 million, or 24%, increase. In addition to PPP and Integrail leading
to a small increase in gross profit,  the impact on the Company of replacing the
terminated  major  sponsor with new  business was to have lower  revenues but to
have greater gross profits,  due to the fact that the cost of claims declined by
more than the revenue. Gross profit, as a percentage of revenue,  increased from
7.4% to 9.0% for the three months ended  September  30, 2002 and  September  30,
2003, respectively.  The contracts the Company recognizes on a net revenue basis
have the effect of improving the gross margin as a percent of revenue due to the
lower revenue and cost base.  Partially  offsetting this impact, the Company has
seen some decline in profit  margins due to  competitive  pressures.

     Selling,  general,  and administrative  expenses increased $2.2 million, or
approximately  27%,  from $8.3 million for the three months ended  September 30,
2002  to  $10.5  million  for  the  three  months  ended   September  30,  2003.
Approximately $2.0 million,  or 88%, of this increase is related to new services
provided by the Company in the three months ended  September 30, 2003 which were
not provided by the Company in the three months ended September 30, 2002.  These
services  include  specialty   pharmacy   distribution   through  the  Company's
acquisition of PPP,  predicative  modeling and consulting  services  through the
Company's  acquisition  of Integrail,  and mail order  distribution  through the
Company's owned facility in Miramar Florida. The Company acquired PPP as of July
31,  2003  (See  Note 3 of Item 1).  Approximately  $642,000  of  expenses  were
incurred  by PPP  primarily  related  to salary and  benefits  and  postage  and
supplies  during the quarter  ended  September  30, 2003.  The Company  acquired
Integrail as of November 1, 2002 (See Note 3 of Item 1). Approximately  $461,000
of expenses were incurred by Integrail  primarily related to salary and benefits
and depreciation  and amortization  during the quarter ended September 30, 2003.
Previously, the Company out-sourced the actual fulfillment of prescriptions that
are ordered by mail. By bringing these services in-house the Company believes it
will be better able to control service and cost for its customers.  The facility
was  operational  as of July 2003.  For the quarter  ended  September  30, 2003,
approximately  $853,000 of expenses  primarily related to salaries and benefits,
shipping costs and insurance were incurred in this endeavor.

     General  and  administrative   expenses  charged  by  affiliates  decreased
approximately  $53,000, or 18%,  year-over-year  from approximately  $297,000 to
approximately  $244,000  for the  three  months  ended  September  30,  2002 and
September  30, 2003,  respectively.  The  decrease  reflects the fact that these
related party services are continuing to be replaced by Company employees.

     Selling,  general,  and  administrative  expenses  as a percent  of revenue
increased  from 5.7% for the three months ended  September  30, 2002 to 7.0% for
the three months ended  September 30, 2003.  The main reason for the increase is
the impact of recognizing more contracts on a net revenue basis, as that has the
effect of dividing  these same  expenses  over a smaller  gross revenue base. In
addition, the three new services described above also led to an increase in this
percentage  particularly mail order where resources were required to be hired in
advance of the revenue.

     For the three months ended  September 30, 2002 and September 30, 2003,  the
Company recognized other expense,  net, of approximately  $226,000 and $176,000,
respectively.  The components of the approximate $50,000 decrease in net expense
were an  approximate  $75,000  decrease  in  interest  expense  incurred  on the
Company's  revolving credit facility (See Note 3 of Item 1), partially offset by
an approximate $25,000 decrease in interest income due to the affiliated company
note being  repaid as of July 31,  2003 (See Note 7 of Item 1). The  decrease in
interest expense is primarily due to the Company's increased cash generated from
operations  and the fact that interest rates on the Company's  revolving  credit
facility have declined year over year.

     Income before the provision for income taxes increased  approximately  $0.5
million,  or  21%,  from  approximately  $2.3  million,  for the  quarter  ended
September  30,  2002,  to  approximately  $2.8  million  for the  quarter  ended
September 30, 2003. The primary  factors  leading to the increase were the gross
profit increase  described above and the reduction in interest expense offset by
the increase in selling, general and administrative expenses.

     EBITDA  (earnings before interest,  taxes,  depreciation and  amortization)
increased by approximately  $0.8 million or 21%, from $3.6 million for the three
months  ended  September  30, 2002 to $4.4  million for the three  months  ended
September 30, 2003. The primary factor for the increase was the approximate $0.4
million,  or 17%,  increase in operating  income  described  above. In addition,
there was an approximate $269,000 increase in depreciation and amortization, and
an approximate $68,000 increase in other intangibles amortization related to the
Company's  acquisitions.  A  reconciliation  of net income to EBITDA is provided
below.

     The effective tax rate was 41% for both periods presented.  The tax rate of
41% represents the Company's estimated tax rate for the full fiscal year.

     Net income for the quarter ended September 30, 2003 was approximately  $1.6
million  as  compared  to  approximately  $1.4  million  for the  quarter  ended
September  30, 2002; a 21%  increase.  Earnings per diluted  share  increased by
$0.02, to $0.19 for the quarter ended September 30, 2003.

     The Company has acquired  five  companies in the last three plus years.  In
addition,  the  Company  has  made,  in  prior  years,  significant  information
technology  infrastructure  investments  in  terms  of  purchased  hardware  and
internally  developed software.  Consequently,  there is a significant amount of
depreciation and amortization that flows through the Company's current financial
statements  related to these investments.  Therefore,  the Company believes that
EBITDA is an important measure of its current financial  performance.  EBITDA is
presented as net income plus the  provision for income  taxes,  other  expenses,
net,  and  depreciation  and  amortization.  While  EBITDA is not a  measure  of
financial  performance under generally  accepted  accounting  principles,  it is
provided as  information  for certain  investors  for analysis  purposes for two
reasons:  (1) it excludes the impact of depreciation and amortization related to
prior  investments  and (2) these  items  are not  controllable  in the  current
period. EBITDA is not meant to be considered a substitute or replacement for net
income as prepared in accordance with accounting  principles  generally accepted
in the United States. EBITDA is calculated as follows:
<TABLE>
<S>                                                      <C>    <C>    <C>    <C>    <C>    <C>

                                                  Three Months Ended September 30,
                                                  --------------------------------
                                                      2003                      2002
                                         ------------------------- --------------------------
Net income                                        $   1,646                $   1,365
Provision for income taxes                            1,144                      948
Other (income) expense, net                             176                      226
Depreciation                                            465                      347
Amortization                                            916                      696
                                         ------------------------- --------------------------
                                         ------------------------- --------------------------
EBITDA                                            $   4,347                $   3,582
                                         ========================= ==========================
</TABLE>

Liquidity and Capital Resources

     The Company's  primary cash  requirements are for capital  expenditures and
operating  expenses,  including cost of  pharmaceuticals,  software and hardware
upgrades  and the  funding of  accounts  receivable.  Effective  July 2003,  the
Company also  requires  cash to carry  inventory in its mail order and specialty
pharmacy  facilities.  The Company also requires cash to execute its strategy of
pursuing  acquisitions of other PBM companies or of companies  providing related
services. As of September 30, 2003, the Company had a working capital deficit of
$34.7  million as compared to a working  capital  deficit of $32.6 million as of
June 30, 2003. The primary reasons for the decline in working capital over these
two  periods  were the  cash  paid for the  acquisition  of PPP and the  current
liability  incurred for  consideration to be paid in connection with the Centrus
acquisition.  These transactions  increased goodwill and other intangible assets
which are  long-term  assets,  while  decreasing  current  assets and  inreasing
current liabilities. The Company has now acquired five companies since July 2000
utilizing  primarily  cash.  This has had the effect of increasing the Company's
working capital deficits until sufficient profitability is generated to pay back
the cost of the  acquisitions.  In  addition,  the  Company's  revolving  credit
facility  is  treated  all as a  short-term  liability  per  generally  accepted
accounting principles even though its terms do not expire until January 2005.

     Net cash  provided by operating  activities  was $7.6 million for the three
months ended September 30, 2003. Net cash used in operating  activities was $0.5
million for the three months ended  September 30, 2002. The main factor that led
to the $8.1 million increase in cash provided by operations was the $6.5 million
increase in the change in accounts payables and accrued expenses.

     Historically,  the timing of the Company's accounts receivable and accounts
payable has generally been a net source of cash from operating activities.  This
is the result of the terms of trade in place with plan sponsors on the one hand,
and the Company's pharmacy network on the other hand. These terms generally lead
to the  Company's  payments to  participating  pharmacies  being slower than its
corresponding  collections  from plan sponsors.  The Company  believes that this
situation is not unusual in the pharmacy benefit management industry and expects
to operate on similar terms for the foreseeable future. However, there can be no
assurance that such terms of trade will continue in the future and, if they were
to change  materially,  the Company could  require  additional  working  capital
financing. Furthermore, if such terms of trade were to change materially, and/or
if the Company were unable to obtain additional working capital financing, there
could  be a  material  adverse  effect  on  the  Company's  business,  financial
condition, or results of operations.

     Net cash used in investing activities was $2.9 million for the three months
ended September 30, 2003, as compared to $1.6 million for the three months ended
September  30,  2002.  The  primary  differences  in the two  periods  were  the
acquisition  of PPP and the  repayment  of  affiliate  loans in the period ended
September 30, 2003, and a $1.4 million increase in capital  expenditures for the
three  months  ended  September  30, 2003 as compared to the three  months ended
September 30, 2002. The net cash outlay for PPP was $3,639,188, representing the
initial  payment of  $3,150,000  to the Sellers,  $608,873 to pay off PPP's bank
debt plus  $57,116 of  related  expenses.  Cash in the  amount of  approximately
$176,801 was assumed in the acquisition.  In addition, $114,540 has been accrued
as additional purchase price related to an earn out provision.

     During the three months ended  September 30, 2003 the Company  repaid a net
of approximately $5.1 million under its revolving credit facility. The repayment
of the affiliated note enabled the Company to borrow less during the quarter.

     The  Company  has entered  into  various  capital  lease  transactions  for
hardware and  software.  The Company has also  assumed  various  capital  leases
through its  acquisitions.  The  principal  balance of all capital  leases as of
September 30, 2003 was approximately $691,000.

     The Company has entered into various real estate operating leases with both
related and unrelated  parties.  The Company has entered into various  operating
leases with  unrelated  third  parties for office  equipment.  These leases have
different  payment terms and expiration  dates.  The Company also entered into a
sale-leaseback  operating  lease of certain fixed assets  (principally  computer
hardware and externally  developed  software) with an affiliate of the Company's
Vice Chairman.  See Note 9 to the Consolidated  Financial Statements  comprising
Item 8 of Form 10 -K, for the year ended June 30, 2003 for a further description
of these various leases.

     On January 29,  2002,  the  Company  entered  into a $40 million  revolving
credit  facility (the  "Facility"),  details of which are set forth in Note 3 to
the  financial  statements  in Part 1.  Borrowings  of $28.7  million  under the
Facility  were  used to  finance  part of the  purchase  price of the  Company's
acquisition of Centrus.  The Facility  contains  various  covenants that,  among
other things,  require the Company to maintain certain  financial  ratios. As of
November 6, 2003 approximately $16.6 million was outstanding under the Facility,
and the Company was in compliance with its financial covenants.
<PAGE>

     The  total  future  payments  under  these  contractual  obligations  as of
September 30, 2003, is as follows:
<TABLE>
<S>                                                                           <C>    <C>    <C>    <C>    <C>    <C>

Contractual Obligations                     Payments Due by Period
                                               ($ in thousands)

                                          Total           Less than         1-3 Years          4-5            After
                                                           1 Year                             Years          5 Years
                                        -----------     --------------      ----------      ----------      ----------
                                        -----------     --------------      ----------      ----------      ----------
Long Term Debt                         $    10,579      $      10,579      $        -      $        -      $        -
Capital Lease Obligations                      691                476             215               -               -
Operating Leases                            11,535              2,641           4,383           1,148           3,363
Sale-leaseback                                 481                444              37               -               -
                                        -----------     --------------      ----------      ----------      ----------
                                        -----------     --------------      ----------      ----------      ----------
   Total Contractual Cash
        Obligations                    $    23,286      $      14,140      $    4,635      $    1,148      $    3,363
                                        ===========     ==============      ==========      ==========      ==========
</TABLE>

     The members of PMP are eligible to receive  additional  consideration of up
to  $1,000,000  if certain PMP clients are  retained  over the first three years
after  acquisition.  These  targets  were not met in the  first  two years so no
additional  consideration was due and payable.  It is the Company's  expectation
that these amounts will not be earned in the third year either as the identified
clients were not generally retained directly, although they were replaced.

     The   shareholders   of  Centrus  are   eligible   to  receive   additional
consideration  of up  to  $4,000,000,  payable  over  three  years,  if  certain
financial  targets  are met over the  first  two years  after  acquisition.  The
financial performance targets were achieved during the first year and $2 million
has been earned.  Of this amount, $1 million was paid in May 2003 and another $1
million will be paid in May 2004.

     The Sellers of Integrail  are eligible to receive from monies put in escrow
up to $700,000 if certain  operational  milestones  are achieved  over the first
twelve months after acquisition. These milestones were achieved and all escrowed
funds were released in November 2003.

     The shareholders of PPP are eligible to receive additional consideration of
up to  $7,000,000,  if certain  financial  targets  are met over the first three
years.  Such amounts earned are payable within 45 days after the first,  second,
and third anniversary of the date of acquisition.  In the sole discretion of the
Company,  up to 50% of any amounts earned can be paid in the Company's  stock in
lieu of cash.

     In  February  1998,   the  Company   entered  into  an  agreement  with  an
unaffiliated party for computer software products and professional services. The
agreement  required the Company to pay an initial  license fee. In addition,  if
certain  milestones are met based on the number of processed  claims, as defined
in the agreement, the initial license fee increases in specified increments.  To
date, four such  milestones  have been met,  resulting in a 100% increase in the
license fee. The  agreement  also  provides for the annual  payment of a fee for
maintenance  and updating  services equal to 18% of the initial  license fee, as
defined.   It  is  anticipated,   based  on  internal  growth  and  the  Centrus
acquisition,  that the last milestone will be met. If the remaining milestone is
reached, the cash outlay by the Company would be $100,000.

     The  Company  anticipates  that  current  cash  positions,  after  its five
acquisitions  together  with  anticipated  cash  flow from  operations,  will be
sufficient to satisfy the Company's  contemplated cash requirements for at least
24  months.  This is based  upon  current  levels of  capital  expenditures  and
anticipated operating results for the next 24 months.  However, it is one of the
Company's  stated goals to acquire other pharmacy benefit  management  companies
and companies providing related services.  Depending on the Company's evaluation
of future  acquisitions,  additional  cash may be  required  to  complete  these
acquisitions.  In addition,  the Company will require cash to acquire  inventory
for its mail order and specialty distribution operations.  In the event that the
Company's  plans  change  or its  assumptions  prove  to be  inaccurate,  or the
proceeds  from the Facility  prove to be  insufficient  to fund  operations  and
acquisitions,  the Company could be required to seek additional financing sooner
than  anticipated.  (See  Subsequent  Events Note 11 of Item 1). There can be no
assurance that such financing could be obtained at rates or on terms  acceptable
to the Company, if at all.

Other Matters

Inflation

     Management  does not  believe  that  inflation  has had a material  adverse
impact on Health Card's net income.

Critical Accounting Policies and Estimates

General

     Health  Card's  discussion  and  analysis of its  financial  condition  and
results  of  operations  are based upon  Health  Card's  unaudited  consolidated
financial  statements,  which have been prepared in accordance  with  accounting
principles  generally  accepted in the United States.  The  preparation of these
financial  statements  requires Health Card to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses; these
estimates and judgments also effect related disclosures of contingent assets and
liabilities.  On an on-going  basis,  Health Card  evaluates  its  estimates and
judgments,  including those related to revenue recognition, bad debt, intangible
assets, income taxes, and financing operations.  Health Card bases its estimates
on  experience  and  on  various  other  assumptions  that  are  believed  to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

     The Company believes that of its significant  accounting policies (See Note
1 to the Consolidated  Financial Statements  comprising Item 8 of Form 10-K, for
the year ended June 30,  2003),  the  following  may involve a higher  degree of
judgment and complexity than others:


Revenue Recognition

          (a)  The  Company  has   historically   entered   into  two  types  of
     arrangements for the payment of  administrative  fees: fee for service (per
     claim charges) and capitation (per member per month charges). Under the fee
     for  service  arrangement,  the  Company  is paid by its  sponsors  for the
     Company's   contractually  agreed  upon  rates  based  upon  actual  claims
     adjudicated,   plus  a  fixed   transaction   fee.   Under  the  capitation
     arrangement,  the fee is based on the number of participants per month; the
     Company pays for the cost of prescriptions  filled and thus shares the risk
     of operating  profit or loss with these plans.  Since January 1, 2000,  all
     services have been provided on a fee for service basis only.

          Revenue under the fee for service  arrangement is recognized  when the
     claims   are   adjudicated.   Included   as  revenue   are  the   Company's
     administrative  fees and charges relating to  pharmaceuticals  dispensed by
     the Company's network of pharmacies.  Revenues are reduced by the amount of
     rebates paid to the Company's sponsors.

          (b) The specific  terms of the contracts  that Health Card enters into
     with its sponsors will determine  whether Health Card  recognizes the gross
     revenue related to the cost of the prescriptions  filled. In certain cases,
     the  Company  has not  recognized  the gross  revenue  or cost  related  to
     prescriptions  filled  for a  specific  sponsor.  This has no impact on the
     Company's  gross profit  since  neither the revenue nor the related cost of
     the prescriptions is recorded.

          (c)  Rebates  are  recognized  when the Company is entitled to them in
     accordance  with the terms of its  arrangements  with  drug  manufacturers,
     third party rebate administrators, and sponsors, and when the amount of the
     rebates is  determinable.  The Company records the gross rebate  receivable
     and the appropriate  payable to the sponsors based on estimates,  which are
     subject  to final  settlement.  The  estimates  are based  upon the  claims
     submitted  and  the  Company's  rebate  experience,  and  are  adjusted  as
     additional information becomes available.

Bad Debt

     Health Card maintains allowances for doubtful accounts for estimated losses
resulting from the liability of its sponsors to make required  payments.  If the
financial condition of Health Card's sponsors were to deteriorate,  resulting in
an impairment of their ability to make  payments,  additional  allowances may be
required.

Goodwill and Intangible Asset Impairment

     In  assessing  the  recoverability  of the  Company's  goodwill  and  other
intangibles,  the Company must make assumptions  regarding estimated future cash
flows and other factors to determine the fair value of the respective assets. If
these estimates or their related  assumptions  change in the future, the Company
may be required to record  impairment  charges for these  assets not  previously
recorded.  On July 1, 2001 the Company adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible  Assets," and will be required
to analyze its goodwill for impairment issues on a periodic basis thereafter. To
date, the Company has not recorded any impairment losses related to goodwill and
other intangible assets.

Deferred Taxes

     Health  Card  periodically  considers  whether  or not it  should  record a
valuation allowance to reduce its deferred tax assets to the amount that is more
likely than not to be realized.  While Health Card has considered future taxable
income  and  ongoing  tax  planning  strategies  in  assessing  the need for the
valuation allowance, in the event Health Card were to determine that it would be
able to  realize  its  deferred  tax  assets in the  future in excess of its net
recorded  amount,  an adjustment to the deferred tax asset would increase income
in the  period  such  determination  was  made.  Likewise,  should  Health  Card
determine  that it would not be able to realize all or part of its net  deferred
tax asset in the  future,  an  adjustment  to the  deferred  tax asset  would be
charged to income in the period such determination was made.

Capitalized Software

     The costs of  software  developed  for  internal  use  incurred  during the
preliminary project stage are expensed as incurred. Direct costs incurred during
the application  development  stage are  capitalized.  Costs incurred during the
post-implementation/operation   stage  are  expensed  as  incurred.  Capitalized
software  development  costs are amortized on a  straight-line  basis over their
estimated useful lives,  commencing on the date the software is placed into use,
primarily three years.


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.


ITEM 4 - CONTROLS AND PROCEDURES

     Disclosure controls and procedures are the controls and procedures designed
to ensure  that  information  that the  Company is  required  to disclose in its
reports under the Exchange Act is recorded,  processed,  summarized and reported
within the time periods required. They include, without limitation, controls and
procedures  designed to ensure that  information is accumulated and communicated
to management in order to allow timely decisions regarding required disclosure.

     Under the supervision and with the participation of management, chiefly the
Company's  principal  executive  officer and the Company's  principal  financial
officer,  Health Card evaluated the effectiveness of the design and operation of
its disclosure controls and procedures within 90 days of the filing date of this
quarterly report.  Based on that evaluation,  the Company's  principal executive
officer and the Company's  principal financial officer have concluded that these
controls and procedures are effective. There have been no significant changes in
the Company's  internal controls,  or in other factors that could  significantly
affect these controls, subsequent to the date of the evaluation.



<PAGE>



                           PART II - OTHER INFORMATION

ITEM 1 - LEGAL PROCEEDINGS

     The legal proceeding described below should be read in conjunction with the
legal proceeding disclosure in the following earlier reports: Part I, Item 3 and
Note 9 to the consolidated  financial  statements of Health Card's Annual Report
on From  10-K for the year  ended  June 30,  2003 and Part II,  Item 1 of Health
Card's Quarterly Report on Form 10-Q for the quarter ended March 31, 2003.

     An action was  commenced  against  the Company on April 30, 2002 by Midwest
Health Plan Inc.  ("MHP") in the United  States  District  Court for the Eastern
District of Michigan.  The amended complaint alleges,  among other things,  that
the  parties  entered  into a contract  dated July 1999 (the  "Agreement"),  and
further alleges that the Company has overcharged MHP for the  administration  of
prescription benefit services in contravention to the terms of the Agreement and
breached  its  fiduciary  duties by making a profit.  MHP is  seeking $3 million
dollars in damages.  The Company  filed an answer and  counterclaim  on June 12,
2002. In the counterclaim, the Company claimed damages in excess of $2.8 million
based on Midwest's failure to pay under a contract.  In late June 2002,  Midwest
agreed to make two payments in the amount of $1.34  million and $1.36 million to
partially settle the Company's  claims against Midwest.  Midwest has now added a
fiduciary duty claim. The Company continues to have counterclaims  totaling over
$200,000 against Midwest for Midwest's  failure to pay the amounts it had agreed
to pay Health  Card for goods and  services.  The  Company's  motion for partial
summary  judgment and motion to dismiss the fiduciary duty claim scheduled to be
heard on November 6, 2003 was cancelled. The court has not rescheduled a hearing
date for the partial summary  judgment and motion to dismiss.  In addition,  the
court has not set a trial date. Discovery closed September 30, 2003. The Company
intends to vigorously defend the action.


ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS

     For  information  concerning  the Company's 1999 Stock Option Plan, and the
options currently issued and outstanding thereunder, see Note 4 to the Financial
Statements comprising Item 1 of Part I of this Form 10-Q.

     Pursuant to the terms of the PAI Agreement, in August 2001 and August 2002,
the Company issued 62,500 and 41,668 shares respectively, of unregistered Common
Stock of the Company to the PAI stockholders as additional consideration.  These
issuances  were  valued at $250,000  each.  The Company was advised in each case
that the  issuance  of such  shares  was  exempt  from  registration  under  the
Securities Act by virtue of Section 4(2) thereof.


ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5 - OTHER INFORMATION

None.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

Exhibit
Number       Description of Exhibit
<TABLE>
<S>                                                                           <C>    <C>    <C>    <C>    <C>    <C>

 2.1     Asset  Purchase  Agreement  dated as of November 1, 2002, by and between  Health Card,  Integrail  Acquisition  Corp.,
         Health Solutions, Ltd., and certain security holders of Health Solutions, Ltd. (10)
 2.2     Assignment  Agreement  dated as of November 1, 2002,  by and between  Health Card,  Integrail  Acquisition  Corp.,  and
         Health Solutions, Ltd. (10)
 2.3     Stock Purchase Agreement dated July 31, 2003, among Health Card and Portland Professional Pharmacy, Portland Professional
         Pharmacy Associates and the individuals listed on Schedule I thereto (12)
 3.1     Certificate of Incorporation of Health Card (7)
 3.4     By-Laws of Health Card (7)
 4.1     Form of Specimen Common Stock Certificate (9)
 4.2     Form of Warrant Agreement, including form of Representatives' Warrants (1)
10.1     Mail Service Provider Agreement, dated July 1, 1996, between Health Card and Thrift   Drug,   Inc.   d/b/a
         Express Pharmacy Services (1)
10.2     Amendment to Mail Service Provider Agreement, dated January 1, 1997, between Health Card and Thrift Drug, Inc.
         d/b/a Express Pharmacy Services (1)
10.3     Software License Agreement and Professional  Service  Agreement,  dated February 18, 1998, between Health Card and
         Prospective Health, Inc. (1)
10.4     1999 Stock Option Plan (1)
10.5     Employee Covenant Agreement, dated June 15, 1998, between Health Card and Mary Casale (1)
10.6     Employee Covenant Agreement, dated June 16, 1998, between Health Card and Ken Hammond (1)
10.7     Stock Option Agreement, dated August 3, 1999, between Health Card and Ken                        Hammond (4)
10.8     Employment Agreement, dated March 27, 2000, between Health Card and David Gershen (4)
10.9     Stock Option Agreement, dated May 1, 2000, between Health Card and David       Gershen (4)
10.10    Employment Agreement, dated May 3, 2000, between Health Card and James Bigl (4)
10.11    Stock Option Agreement, dated June 12, 2000, between Health Card and James Bigl (4)
10.12    Stock Option Agreement, dated August 3, 1999, between Health Card and Kenneth J. Daley (4)
10.13    Stock Option Agreement, dated August 3, 1999, between Health Card and Gerald Angowitz (4)
10.14    Assignment, dated November 1, 1996, from Sandata, Inc., to BFS Realty, LLC (1)
10.15    Lease, dated August 10, 1998, between 61 Manorhaven Boulevard, LLC and Health Card (1)
10.16    Letter, dated June 3, 1999, from Bert Brodsky to Health Card (1)
10.17    Letter, dated June 3, 1999, from Gerald Shapiro to Health Card (1)
10.18    Agreement of Guaranty, dated June 1, 1998, by Bert E. Brodsky in favor of Health Card (1)
10.19    Promissory  Note,  dated July 31,  2000,  made  payable by P.W.  Capital,  LLC to the order of Health  Card,  in the
         amount of $3,890,940 (4)
10.20    Letter, dated  June 8, 1999, from P.W. Capital Corp. to Health Card (1)
10.21    Letter, dated June 9, 1999, from Bert E. Brodsky to Health Card (1)
10.22    Letter, dated June 8, 1999, from the Bert E. Brodsky Revocable Trust to Health Card (1)
10.23    Letter Agreement, dated June 30, 1999, between the Bert E. Brodsky Revocable Trust and Health Card (1)
10.24    Employment Agreement, dated July 1, 1999, between Health Card and Bert E. Brodsky (1)
10.25    Letter, dated June 8, 1999, from Bert E. Brodsky to Health Card (1)
10.26    Form of Lock-Up Agreement (1)
10.27    Acquisition and Merger Agreement, dated as of June 27, 2000, between Health Card and Pharmacy Associates, Inc. (3)
10.28    Lease Agreement, dated March 4, 1996, between Pharmacy Associates, Inc. and    Executive Park Partnership (4)
10.29    Amendment to Lease, dated November 2, 1998, between Pharmacy Associates, Inc.  and Executive Park Partnership (4)
10.30    Amendment to Lease, dated November 19, 1998, between Pharmacy Associates, Inc. and Executive Park Partnership (4)
10.31    Lease Agreement, dated July 8, 1999, between Pharmacy Associates, Inc. and     Executive Park Partnership (4)
10.32    Asset Purchase Agreement dated as of March 5, 2001 among National Medical Health        Card Systems,  Inc.,
         PMP  Acquisition Corp., Provider Medical Pharmaceutical, LLC and      members of PMP (5)
10.33    Employment Agreement, dated June 4, 2001, between National Medical Health Card Systems, Inc. and Tery Baskin (6)
10.34    Stock Option Agreement, dated June 4, 2001, between National Medical Health Card Systems, Inc. and Tery Baskin (6)
10.35    Stock Option Agreement, dated June 12, 2001, between National Medical Health Card Systems, Inc. and James Bigl (6)
10.36    Asset Purchase  Agreement dated January 29, 2002 by and among the Company,  Health Solutions Limited ("HSL"),
         HSL Acquisition Corp., a wholly-owned subsidiary of the Company, and the security holders of HSL (8)
10.37    Receivables  Purchase and Transfer  Agreement dated January 29, 2002 by and among the Company and certain of its
         subsidiaries and NMHC Funding, LLC (8)
10.38    Loan and Security  Agreement dated January 29, 2002, by and between NMHC Funding,  LLC and HFC  Healthco-4,  LLC, an
         affiliate of Healthcare Finance Group, Inc. (8)
10.39    Lease Agreement dated as of August 1, 2001, between National Medical Health Card Systems, Inc. and BFS Realty, LLC (6)
10.40    Amended Lease Agreement dated as of August 1, 2001,  between  National Medical Health Card Systems,  Inc. and
         BFS Realty, LLC (6)
10.41    2003 Employee Stock Purchase Plan (11)
10.42    Amendment No. 2 dated April 15, 2002 to Employment Agreement between Health Card and James Bigl (12)
10.43    Amendment No. 3 dated October 14, 2002 to Employment Agreement between Health Card and James Bigl (12)
10.44    Amendment No. 4 dated November 6, 2002 to Employment Agreement between Health Card and James Bigl (12)
10.45    Stock Option Agreement between Health Card and James Bigl dated February 20, 2001 (12)
10.46    Stock Option Agreement between Health Card and James Bigl dated April 30,. 2002 (12)
10.47    Stock Option Agreement between Health Card and James Bigl dated June 26, 2002 (12)
10.48    Stock Option Agreement between Health Card and James Bigl dated July 22, 2003 (12)
10.49    Employment Agreement dated October 14, 2002 between Health Card and Bert Brodsky (12)
10.50    Employment Agreement dated November 20, 2002 between Health Card and Agnes Hall (12)
10.51    Stock Option Agreement between Health Card and Agnes Hall dated January 8, 2001 (12)
10.52    Amendment to Stock Option Agreement between Health Card and Agnes Hall dated January 8, 2001 (12)
10.53    Stock Option Agreement between Health Card and Agnes Hall dated August 10, 2001 (12)
10.54    Amendment to Stock Option Agreement between Health Card and Agnes Hall dated August 10, 2001 (12)
10.55    Stock Option Agreement between Health Card and Agnes Hall dated January 4, 2001
10.56    Amendment to Stock Option Agreement between Health Card and Agnes Hall dated December 4, 2001
10.57    Stock Option Agreement between Health Card and Agnes Hall dated July 31, 2002 (12)
10.58    Amendment to Stock Option Agreement between Health Card and Agnes Hall dated July 31, 2002 (12)
10.59    Stock Option Agreement between Health Card and Agnes Hall dated August 1, 2003 (12)
10.60    First Amendment dated November 6, 2002 to Employment Agreement between Health Card and David Gershen (12)
10.61    Stock Option Agreement between Health Card and David Gershen dated February 20, 2001 (12)
10.62    Stock Option Agreement between Health Card and David Gershen dated September 24, 2001 (12)
10.63    Stock Option Agreement between Health Card and David Gershen dated August 1, 2002 (12)
10.64    Stock Option Agreement between Health Card and David Gershen dated August 1, 2003 (12)
10.65    First Amendment dated November 6, 2002 to Employment Agreement between Health Card and Tery Baskin (12)
10.66    Stock Option Agreement between Health Card and Tery Baskin dated July 20, 2000
10.67    Stock Option Agreement between Health Card and Tery Baskin dated August 10, 2001
10.68    Stock Option Agreement between Health Card and Tery Baskin dated August 1, 2002 (12)
10.69    Stock Option Agreement between Health Card and Tery Baskin dated September 19, 2002 (12)
10.70    Stock Option Agreement between Health Card and Tery Baskin dated August 1, 2003 (12)
10.71    Employment Agreement between Health Card and Patrick McLaughlin dated January 29, 2002 (12)
10.72    Stock Option Agreement between Health Card and Patrick McLaughlin dated January 29, 2002 (12)
10.73    Stock Option Agreement between Health Card and Patrick McLaughlin dated August 1, 2003 (12)
10.74    Amendment to Stock Option Agreement dated January 29, 2002 between Health Card and Patrick McLaughlin (12)
10.75    Stock Option Agreement between Health Card and Gerald Angowitz dated November 20, 2000 (12)
10.76    Stock Option Agreement between Health Card and Gerald Angowitz dated February 20, 2001 (12)
10.77    Stock Option Agreement between Health Card and Gerald Angowitz dated April 9, 2003
10.78    Stock Option Agreement between Health Card and Kenneth J. Daley dated November 20, 2000 (12)
10.79    Stock Option Agreement between Health Card and Kenneth J. Daley dated February 20, 2001 (12)
10.80    Stock Option Agreement between Health Card and Kenneth J. Daley dated April 9, 2003
10.81    Stock Option Agreement between Health Card and Ronald L. Fish dated November 20, 2000 (12)
10.82    Stock Option Agreement between Health Card and Ronald L. Fish dated February 20, 2001(12)
10.83    Stock Option Agreement between Health Card and Ronald L. Fish dated April 9, 2003
10.84    Stock Option Agreement between Health Card and Paul J. Konigsberg dated November 20, 2000 (12)
10.85    Stock Option Agreement between Health Card and Paul J. Konigsberg dated February 20, 2001 (12)
10.86    Stock Option Agreement between Health Card and Paul J. Konigsberg dated April 9, 2003
10.87    Stock Option Agreement between Health Card and Bert E. Brodsky dated February 20, 2001 (12)
10.88    Stock Option Agreement between Health Card and Gerald Shapiro dated February 20, 2001 (12)
10.89    Lease dated November 1, 2002 between B/A Airport Park Solutions, LLC and Health Card (12)
10.90    Lease Addendum dated March 10, 2003 between B/A Airport Park Solutions, LLC and Health Card (12)
10.91    Lease Agreement dated November 18, 2002 between Sunbeam Development Corporation and NMHCRx Mail Order, Inc. (12)
10.92    Lease  Expansion and  Modification  Agreement  dated July 31, 2003 between  Sunbeam  Development  Corporation  and
         NMHCRx Mail Order, Inc. (12)
10.93    AmerisourceBergen  Prime  Vendor  Agreement,  dated  July 21,  2003  between  NMHCRx  Mail  Order,  Inc.  d/b/a  NMHCmail
         and AmerisourceBergen Drug Corporation (12)
14.      Code of Ethics (12) 21. List of Subsidiaries (12)
23.1     Consent of Ernst & Young LLP to the  incorporation by reference in the Registration  Statement on Form S-8
         (File No. 333-8224)of its report dated September 29, 2003 (12)
23.2     Consent of Goldstein Golub Kessler LLP to the  incorporation by reference in the Registration  Statement on
         Form S-8 (File No. 333-8224) of its report dated September 29, 2003 (12)
31.1     Rule 13a-14(a)/15d-14(a) Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act
31.2     Rule 13a-14(a)/15d-14(a) Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act
32.1     Section 1350 Certification of CEO as adopted by Section 906 of the Sarbanes-Oxley Act
32.2     Section 1350 Certification of CFO as adopted by Section 906 of the Sarbanes-Oxley Act


(1) Denotes document filed as an Exhibit to Health Card's Registration Statement on Form S-1 (Registration Number: 333-72209) and
incorporated herein by reference.
(2) Denotes documentation filed as an Exhibit to Health Card's Report on Form 10-K for the fiscal year ended June 30, 1999.
(3) Denotes document filed as an Exhibit to Health Card's Form 8-K for an event dated July 20, 2000 and incorporated herein by
reference.
(4) Denotes documentation filed as an Exhibit to Health Card's Report on Form 10-K for the year ended June 30, 2000.
(5) Denotes document filed as an Exhibit to Health Card's Form 8-K for an event dated March 5, 2001.
(6) Denotes document filed as an Exhibit to Health Card's Report on Form 10-K for the year ended June 30, 2001.
(7) Denotes document filed as an Exhibit to Health Card's Definitive Proxy Statement on Schedule 14-A filed on December 21, 2001
and incorporated herein by reference.
(8) Denotes document filed as an Exhibit to Health Card's Current Report on Form 8-K for events dated January 29, 2002 and
incorporated herein by reference.
(9)Denotes document filed as an Exhibit to Health Card's Amendment number 1 on Form 8-K/A filed with the Securities and Exchange
Commission on May 21, 2002 and incorporated herein by reference.
(10) Denotes document filed as an Exhibit to Health Card's Form 10-Q for the quarter ended September 30, 2002 and incorporated
herein by reference.
(11)Denotes document filed as an Exhibit to Health Card's Definitive Proxy Statement on Schedule 14-A on October 25, 2002 and
incorporated herein by reference.
(12)Denotes document filed as an Exhibit to Health Card's Report on Form 10-K for the year ended June 30, 2003.

     (b) Reports on Form 8-K

         A  Form 8-K was filed with the Securities and Exchange Commission on
            August 12, 2003 in connection with the acquisition of PPP.

</TABLE>

<PAGE>




                                   SIGNATURES

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



                   NATIONAL MEDICAL HEALTH CARD SYSTEMS, INC.
                                  (Registrant)



Date:    November 14, 2003          By:     /s/ James J. Bigl
                                        --------------------------------------
                                                James J. Bigl,
                                                Chief Executive Officer




                                   By:      /s/Stuart F.Fleischer
                                       ---------------------------------------
                                               Stuart F. Fleischer
                                               Chief Financial Officer