UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 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 March 31, 2001

                                       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 0-12050

                       SAFEGUARD HEALTH ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

           DELAWARE                                       52-1528581
  (State or other jurisdiction              (I.R.S. Employer Identification No.)
       of incorporation)

                                  95 ENTERPRISE
                          ALISO VIEJO, CALIFORNIA 92656
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (949) 425-4300
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.

                                  Yes  X    No
                                      ---      ---

As  of May 1, 2001, the number of shares of registrant's common stock, par value
$.01 per share, outstanding was 4,737,498 shares (not including 3,284,788 shares
of  common  stock  held  in  treasury), and the number of shares of registrant's
convertible  preferred  stock, par value $.01 per share, outstanding was 300,000
shares.


<PAGE>
                       SAFEGUARD HEALTH ENTERPRISES, INC.
             INDEX TO FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2001


                                                                          PAGE
                                                                        --------

PART  I.     FINANCIAL  INFORMATION

   Item  1.   Condensed  Consolidated  Financial  Statements . . . . . . . 1

   Item  2.   Management's Discussion and Analysis of Financial
              Condition and Results  of  Operations . . . . . . . . . . . .8

   Item  3.   Quantitative  and  Qualitative  Disclosures  About
              Market  Risk . . . . . . . . . . . . . . . . . . . . . . . .11

PART  II.     OTHER  INFORMATION

   Item  1.   Legal  Proceedings . . . . . . . . . . . . . . . . . . . . .11

   Item  6.   Exhibits  and  Reports  on  Form  8-K. . . . . . . . . . . .12

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13


<PAGE>
<TABLE>
<CAPTION>
PART  I.     FINANCIAL  INFORMATION
ITEM  1.     CONDENSED  CONSOLIDATED  FINANCIAL  STATEMENTS

                SAFEGUARD  HEALTH  ENTERPRISES,  INC.  AND  SUBSIDIARIES
                         CONDENSED CONSOLIDATED BALANCE SHEETS
                                     (IN THOUSANDS)
                                                            MARCH 31,     DECEMBER 31,
                                                              2001            2000
                                                           ------------  --------------
                                 ASSETS                    (unaudited)
<S>                                                        <C>           <C>
Current assets:
  Cash and cash equivalents                                $     1,129   $       1,381
  Investments available-for-sale, at fair value                 16,096          15,321
  Accounts receivable, net of allowances                         1,969           2,778
  Other current assets                                           1,476           1,788
                                                           ------------  --------------
    Total current assets                                        20,670          21,268

Property and equipment, net of accumulated depreciation          2,436           2,843
Restricted investments available-for-sale, at fair value         2,692           2,700
Notes receivable, net of allowances                              1,180           1,750
Intangible assets, net of accumulated amortization               4,085           4,154
Other assets                                                       273             380
                                                           ------------  --------------

    Total assets                                           $    31,336   $      33,095
                                                           ============  ==============

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
  Accounts payable                                         $     3,766   $       3,986
  Accrued interest, converted to equity in 2001 (Note 4)            --           4,990
  Other accrued expenses                                         5,850           6,457
  Short-term debt, converted to equity in 2001 (Note 4)             --          47,545
  Other short-term debt                                            242             250
  Claims payable and claims incurred but not reported            6,869           7,554
  Deferred revenue                                               1,516           1,413
                                                           ------------  --------------
    Total current liabilities                                   18,243          72,195

Long-term debt                                                     202             250
Other long-term liabilities                                        985           1,079

Stockholders' equity (deficit):
  Convertible preferred stock                                   41,250              --
  Common stock                                                  21,829          21,829
  Retained earnings (accumulated deficit)                      (33,080)        (44,254)
  Accumulated other comprehensive income                            40             119
  Treasury stock, at cost                                      (18,133)        (18,123)
                                                           ------------  --------------
    Total stockholders' equity (deficit)                        11,906         (40,429)
                                                           ------------  --------------

    Total liabilities and stockholders' equity (deficit)   $    31,336   $      33,095
                                                           ============  ==============
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                      -1-
<PAGE>
<TABLE>
<CAPTION>
                  SAFEGUARD  HEALTH  ENTERPRISES,  INC.  AND  SUBSIDIARIES
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                        THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                        (UNAUDITED)

                                                                          2001      2000
                                                                        --------  --------
<S>                                                                     <C>       <C>
Premium revenue, net                                                    $21,643   $24,463

Health care services expense                                             15,187    17,738
Selling, general and administrative expense                               6,534     8,413
                                                                        --------  --------

Operating income (loss)                                                     (78)   (1,688)

Investment and other income                                                 435       259
Interest expense on debt that was converted to equity in 2001 (Note 4)     (402)   (1,015)
Other interest expense                                                      (32)      (17)
                                                                        --------  --------

Income (loss) before income taxes and extraordinary item                    (77)   (2,461)
Income tax expense                                                           --        --
                                                                        --------  --------

Income (loss) before extraordinary item                                     (77)   (2,461)
Extraordinary item:
  Conversion of debt to convertible preferred stock (Note 4)             11,251        --
                                                                        --------  --------

    Net income (loss)                                                   $11,174   $(2,461)
                                                                        ========  ========

Basic and diluted net income (loss) per share:
  Income (loss) before extraordinary item                               $    --   $ (0.52)
  Extraordinary item                                                       0.45        --
                                                                        --------  --------

    Net income (loss)                                                   $  0.45   $ (0.52)
                                                                        ========  ========

Weighted average basic and diluted shares outstanding                    24,738     4,747
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                      -2-
<PAGE>
<TABLE>
<CAPTION>
              SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                   THREE MONTHS ENDED MARCH 31, 2001 AND 2000
                                 (IN THOUSANDS)
                                  (UNAUDITED)

                                                                    2001       2000
                                                                  ---------  --------
<S>                                                               <C>        <C>
Cash flows from operating activities:
  Net income (loss)                                               $ 11,174   $(2,461)
  Adjustments to reconcile net income (loss) to net
    cash provided by (used in) operating activities:
    Gain on conversion of debt to convertible preferred stock      (11,251)       --
    Bad debt expense                                                    75        --
    Amortization of deferred loan costs                                 24        25
    Depreciation and amortization                                      621       727
    Gain on sale of investments                                        (98)       --
  Changes in operating assets and liabilities:
    Accounts receivable                                                734       106
    Other current assets                                                48       492
    Accounts payable                                                  (219)   (1,999)
    Accrued expenses                                                  (890)      367
    Claims payable and claims incurred but not reported               (685)      355
    Deferred revenue                                                   103       313
                                                                  ---------  --------
      Net cash used in operating activities                           (364)   (2,075)

Cash flows from investing activities:
  Purchase of investments available-for-sale                        (7,919)   (8,850)
  Proceeds from sale/maturity of investments available-for-sale      7,171     2,570
  Purchase of property and equipment                                  (145)       --
  Payments received on notes receivable                                845       355
  Additions to intangibles and other assets                             --      (354)
                                                                  ---------  --------
      Net cash used in investing activities                            (48)   (6,279)

Cash flows from financing activities:
  Borrowings on debt                                                    --     8,000
  Increase in accrued interest, converted to equity in 2001            321       931
  Payments on debt                                                     (56)      (75)
  Repurchase of common stock                                           (10)       --
  Payments on other long-term liabilities                              (95)     (119)
                                                                  ---------  --------
    Net cash provided by financing activities                          160     8,737
                                                                  ---------  --------
Net (decrease) increase in cash                                       (252)      383
Cash and cash equivalents at beginning of period                     1,381     1,639
                                                                  ---------  --------
Cash and cash equivalents at end of period                        $  1,129   $ 2,022
                                                                  =========  ========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.


                                      -3-
<PAGE>
               SAFEGUARD HEALTH ENTERPRISES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1.  GENERAL
-----------------

The accompanying unaudited consolidated financial statements of SafeGuard Health
Enterprises,  Inc.  and  subsidiaries (the "Company") for the three months ended
March  31,  2001  and  2000,  have  been  prepared in accordance with accounting
principles  generally  accepted  in  the United States of America, applicable to
interim  periods.  The  accompanying financial statements reflect all normal and
recurring  adjustments  that,  in the opinion of management, are necessary for a
fair  presentation of the Company's financial position and results of operations
for  the  interim  periods.  The  financial  statements  have  been  prepared in
accordance  with  the regulations of the Securities and Exchange Commission, and
omit certain footnote disclosures and other information necessary to present the
Company's  financial  position  and  results of operations for annual periods in
accordance with accounting principles generally accepted in the United States of
America.  These  financial  statements  should  be  read in conjunction with the
Consolidated  Financial  Statements and Notes thereto contained in the Company's
Annual  Report  on  Form  10-K  for  the  year  ended  December  31,  2000.

The  Company  incurred  significant  net losses in each of the three years ended
December  31,  2000.  During  the period since the beginning of 2000, management
took  certain  actions  to improve the Company's operating results and financial
position.  In  March  2000,  the Company obtained $8.0 million of financing, and
entered  into  a transaction under which substantially all of the Company's debt
was  converted  into  equity,  as  discussed  in Note 4, which has substantially
reduced  the  Company's  interest expense. During the first quarter of 2000, the
Company  consolidated  all  of  its  administrative activities into its National
Service  Center  in California, which resulted in a significant reduction in the
number  of  employees  at the Company and the amount of office space used by the
Company.  Also  during the first quarter of 2000, the Company reduced its health
care  services  expense  by  eliminating non-standard payments to certain dental
service  providers.  These  actions,  along  with  reductions  in  various other
selling,  general  and  administrative expenses, have had a significant positive
impact  on the Company's results of operations and financial position, beginning
in  the  second  quarter  of  2000.  Management  intends  to further improve the
Company's  results of operations by increasing revenue through improved customer
service and customer retention programs, decreasing health care services expense
by  expanding  its  provider  networks, and making further reductions in various
selling, general and administrative expenses. The Company believes these actions
and its improved financial position will provide adequate financial resources to
support  its  operations  for  the  foreseeable  future.

Basic  and  diluted net income (loss) per share is based on the weighted average
common  shares  outstanding,  including  the  common  shares  into  which  the
convertible  preferred  stock is convertible. The weighted average common shares
outstanding  includes  the common share equivalents of the convertible preferred
stock,  because  the  Company  believes  the  convertible  preferred  stock  is
essentially  equivalent to common stock, based on all the rights and preferences
of  both  types of stock. During the three months ended March 31, 2001 and 2000,
other  potentially  dilutive securities that were outstanding consisted of stock
options  and  warrants.  Due  to a net loss before extraordinary item in both of
these  periods,  the  outstanding  stock  options  and  warrants  would  have an
anti-dilutive  effect  on  diluted  loss per share in each period.  Accordingly,
stock options and warrants are excluded from the calculation of diluted loss per
share for each of these periods. Therefore, the Company's diluted loss per share
is  the  same  as  its basic loss per share for the three months ended March 31,
2001  and  2000.

Certain amounts in the prior year financial statements have been reclassified to
conform  to  the  current  year  presentation.

NOTE  2.  RECENT  ACCOUNTING  PRONOUNCEMENTS
--------------------------------------------

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of  Financial  Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments  and  Hedging Activities." SFAS No. 133 was amended by SFAS No. 137,
"Accounting  for Derivative Instruments and Hedging Activities - Deferral of the
Effective  Date of SFAS No. 133," in June 1999, and by SFAS No. 138, "Accounting
for  Certain  Derivative  Instruments  and  Certain Hedging Activities," in June
2000.  SFAS  No. 133, as amended, establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other  contracts, and for hedging activities. SFAS No. 133, as amended, requires
derivatives  to  be reported on the balance sheet at fair value, and was adopted
by  the  Company  effective on January 1, 2001. The adoption of SFAS No. 133, as
amended,  had  no  significant  effect  on  the  Company's financial statements.


                                      -4-
<PAGE>
In  September  2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing  of Financial Assets and Extinguishments of Liabilities." SFAS No. 140
replaces  SFAS  No.  125,  which  has the same title, revises the accounting and
reporting  standards  for  securitizations  and  other  transfers of assets, and
expands  the  disclosure requirements for such transactions. Under SFAS No. 140,
consistent  standards  are  provided  for  distinguishing transfers of financial
assets  that  are  sales  from  transfers  that  are  secured  borrowings.  The
accounting  requirements  of  SFAS  No.  140  are  effective  for  transfers and
servicing  of  financial  assets  and  extinguishments of liabilities that occur
after  March  31,  2001,  and must be applied prospectively. The Company expects
that  SFAS  No.  140  will  not  have  a  significant  effect  on  its financial
statements.

NOTE  3.  SALE  OF  DISCONTINUED  OPERATIONS
--------------------------------------------

In  1997  and  1998, the Company sold a number of general dental and orthodontic
practices  (the "Practices") to a single purchaser (the "Purchaser") in exchange
for  long-term  promissory  notes.  The  Purchaser subsequently defaulted on its
obligations  to  the  Company under those promissory notes, and in October 2000,
the  Company  completed a transaction with the Purchaser and another third party
(the "New Purchaser"), in which the Practices were sold to the New Purchaser. In
this transaction, the Purchaser transferred its interest in the Practices to the
New  Purchaser, the New Purchaser paid $2.4 million to the Company and placed an
additional $1.5 million in an escrow account for the benefit of the Company, and
the  Company agreed to pay certain obligations related to these practices. These
obligations  consisted primarily of payroll, dental office lease obligations for
which the Company was the primary lessee, patient refunds, and the obligation to
complete  the orthodontic treatments for the Company's managed care patients who
had  previously  paid  their  full  share  of  the cost of the treatments. These
obligations  either had to be paid in order to complete the transaction, or were
obligations  for  which the Company may be contingently liable in any event. The
amount  of  the  escrow  account  that  may  be realized by the Company, and the
ultimate  cost  of  the obligations assumed by the Company, are reflected on the
accompanying  consolidated  balance sheet based on the Company's best estimates,
but  these  amounts  are  subject  to  uncertainties.

NOTE  4.  NOTES  PAYABLE  AND  LONG-TERM  DEBT
----------------------------------------------

Short-term  and  long-term  debt  consisted  of  the  following  (in thousands):

                                  MARCH 31,    DECEMBER 31,
                                   2001           2000
                                -----------  --------------
     Investor senior loan       $       --   $       8,000
     Revolving credit facility          --           7,045
     Senior notes payable               --          32,500
     Other                             444             500
                                -----------  --------------
       Total debt                      444          48,045
     Less - short-term portion        (242)        (47,795)
                                -----------  --------------

       Long-term debt           $      202   $         250
                                ===========  ==============

On  March 1, 2000, the Company entered into a Recapitalization Agreement with an
investor  group  (the  "Investors"),  the  revolving credit facility lender (the
"Bank"),  and the holder of the senior notes payable (the "Senior Note Holder").
In  this  transaction,  the  Investors loaned $8.0 million to the Company in the
form  of  an  investor senior loan, due April 30, 2001, with an interest rate of
10%  annually.  The  Investors,  the  Bank, and the Senior Note Holder agreed to
convert  the  $8.0 million investor senior loan, the outstanding balance of $7.0
million  under  the  revolving  credit facility, and the $32.5 million of senior
notes  payable  into  convertible  preferred  stock,  subject  to regulatory and
stockholder  approval.


                                      -5-
<PAGE>
Effective  as  of  January 31, 2001, the Company completed the conversion of the
investor senior loan ($8.0 million), the outstanding balance under the revolving
credit  facility  ($7.0  million), the senior notes payable ($32.5 million), and
the  accrued  interest  on  the  revolving  credit facility and the senior notes
payable ($5.3 million as of January 31, 2001) into 300,000 shares of convertible
preferred  stock.  The  estimated  value  of the convertible preferred stock was
$137.50 per share as of January 31, 2001, which is based on the closing price of
the  Company's common stock on January 31, 2001, which was $1.375 per share, and
the  fact that each share of convertible preferred stock is convertible into 100
shares  of  common  stock.  Based  on  this  estimated  value,  the  conversion
transaction  resulted  in a gain of $11.3 million, which is net of approximately
$350,000  of  transaction  costs.  There is no income tax effect related to this
transaction,  due  to  the  Company's  net operating loss carry-forwards for tax
purposes,  as  discussed  in  Note  5.

The  convertible  preferred  stock  does  not accrue dividends of any kind. Each
share  of  convertible  preferred stock is convertible into 100 shares of common
stock  at the option of the holder. The convertible preferred stock entitles the
holder to one vote for each share of common stock into which the preferred stock
is  convertible, with respect to all matters voted on by the common stockholders
of  the  Company,  except  for  the  election  of  directors. The holders of the
convertible  preferred  stock have the right to elect a total of five members of
the  board  of  directors, and the holders of the common stock have the right to
elect  the  remaining  two  directors. The convertible preferred stock has a $30
million  liquidation  preference  over  the  common  stock.

As  a  result  of  the  conversion  transaction,  the previously existing common
stockholders  of  the  Company  now  own  approximately  14% of the common stock
interests  of  the  Company.  In  March  2000, in connection with the conversion
transaction,  the  Company agreed to place four new directors, who represent the
holders  of  the  investor  senior  loan, the revolving credit facility, and the
senior  notes  payable, on its board of directors. Three of those directors were
placed  on  the  board  in March 2000, and the fourth director was placed on the
board  as  of January 31, 2001. These new directors constitute a majority of the
board  of  directors,  which  currently  has  a  total  of  seven  members.

In  1999,  in  connection  with a restructuring of the senior notes payable, the
Company issued warrants to purchase 382,000 shares of its common stock for $4.51
per share to the Senior Note Holder. These warrants were cancelled without being
exercised,  in  connection  with the conversion of the senior notes payable into
convertible  preferred  stock  effective  January  31,  2001.

NOTE  5.  INCOME  TAXES
-----------------------

The  Company's  net deferred tax assets have been fully reserved since September
30,  1999, due to uncertainty about whether those net assets will be realized in
the future. The uncertainty is primarily due to operating losses incurred by the
Company  during  each  of  the  three  years  ended  December  31, 2000, and the
existence  of  significant  net  operating  loss  carryforwards.  The  Company's
deferred  tax  assets  remain  fully reserved as of March 31, 2001, for the same
reasons.

Due  to  the conversion of outstanding debt into convertible preferred stock, as
described in Note 4, there was a "change of control" of the Company for purposes
of  Internal  Revenue Code Section 382, effective January 31, 2001. As a result,
effective  January 31, 2001, the amount of net operating loss carryforwards that
can be used to offset current taxable income on the Company's federal tax return
is  limited  to  approximately  $350,000  per  year.

As  of  December  31,  2000, the Company had net operating loss carryforwards of
approximately  $35.3  million for federal income tax purposes, and approximately
$18.6  million  for  state income tax purposes. Therefore, the Company's taxable
income during the month ended January 31, 2001, which included the $11.3 million
gain  on  conversion  of the Company's debt into convertible preferred stock, as
discussed  in  Note  4,  was  completely  offset  by loss carryforwards, and the
Company  recognized no income tax expense for this period. The Company had a net
loss  for  tax purposes for the period from February 1, 2001, to March 31, 2001,
and  accordingly,  recorded  no  income  tax  expense  for  this  period.


                                      -6-
<PAGE>
NOTE  6.  TOTAL  COMPREHENSIVE  INCOME
--------------------------------------

Total  comprehensive  income or loss reflects the change in stockholders' equity
during  the  period  from  transactions  and other events and circumstances from
non-stockholder  sources.  Total comprehensive income or loss of the Company for
the three months ended March 31, 2001 and 2000, includes net income or loss, and
other comprehensive income or loss, which consists of unrealized gains or losses
on  marketable securities, net of realized gains and losses that occurred during
the  period.  Other comprehensive (loss) income was $(79,000) and $5,000 for the
three  months  ended  March 31, 2001 and 2000, respectively. Total comprehensive
income  (loss) was $11,095,000 and $(2,456,000) for the three months ended March
31,  2001  and  2000,  respectively.

NOTE  7.  CONTINGENCIES
-----------------------

LITIGATION

The  Company  is a defendant in various lawsuits arising in the normal course of
business.  In  the  opinion  of  management,  the  ultimate  outcome of existing
litigation  will  not have a material effect on the Company's financial position
or  results  of  operations.

In  December  1999,  a  stockholder lawsuit against the Company was filed, which
alleged that the Company and certain of its officers violated certain securities
laws  by  issuing a series of alleged false and misleading statements concerning
the  Company's  publicly reported revenues and earnings during a specified class
period.  On  September  12, 2000, after the plaintiffs had filed a first amended
complaint,  the  Federal  District  Trial  Court  dismissed  the  lawsuit  with
prejudice,  stating  that the plaintiffs had failed to state a claim against the
Company.  On October 6, 2000, the plaintiffs filed an appeal of the dismissal of
the lawsuit, and that appeal is currently pending. The Company has directors and
officers  liability  insurance  and intends to vigorously contest the appeal. In
the  opinion  of management, the ultimate outcome of this matter will not have a
material  adverse  effect  on  the  Company's  financial  position or results of
operations.

Contingent  Lease  Obligations

The  Company  sold all of its general dental practices and orthodontic practices
in  1996,  1997 and 1998. The Company also re-sold certain of these practices in
October  2000,  after  the  original  purchaser  of  a number of these practices
defaulted  on  its  obligations  to  the  Company,  as  discussed  in Note 3. In
connection  with  the sale and re-sale of those practices, all the purchasers of
the  practices agreed to make the remaining lease payments related to the dental
offices  used  by  those  practices.  However,  the Company remains contingently
liable  for  the  lease  payments in the event the purchasers of those practices
fail  to  make  the  payments.  As  of  March 31, 2001, the aggregate contingent
liability  of  the Company related to all of these leases was approximately $5.1
million  over the terms of the various lease agreements, which expire at various
dates through 2007.  Management has not been notified of any defaults that would
materially  affect  the  Company's  financial position. The aggregate contingent
lease  obligation  of  $5.1  million  excludes  $425,000  of  estimated  lease
obligations  that  have  been  accrued  as  of  March  31, 2001, due to possible
failures  by  the entities to make the lease payments under the leases that were
assigned  by  the  Company.  This  estimated lease obligation is included in the
accompanying  consolidated  balance  sheet  under  the  caption  "Other  accrued
expenses."


                                      -7-
<PAGE>
ITEM  2.     MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF FINANCIAL CONDITION AND
RESULTS  OF  OPERATIONS

SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The  Private  Securities  Litigation Reform Act of 1995 provides a "safe harbor"
for  forward-looking  statements,  as long as those statements are identified as
forward-looking  and  are  accompanied  by  meaningful  cautionary  statements
identifying  important  factors  that  could  cause  actual  results  to  differ
materially  from  those discussed in the statements. The Company desires to take
advantage  of  these  safe  harbor  provisions.  In addition to the Risk Factors
section  of the Company's Annual Report on Form 10-K for the year ended December
31,  2000, filed with the Securities and Exchange Commission, the following risk
factors  should  be  considered in connection with this Quarterly Report on Form
10-Q  for  the  period  ended  March  31,  2001.

The  statements  contained  in  this  Management's  Discussion  and  Analysis of
Financial  Condition  and  Results of Operations concerning expected growth, the
outcome of business strategies, future operating results and financial position,
economic  and  market  events  and trends, future premium revenue, future health
care  expenses,  the  Company's ability to control health care, selling, general
and  administrative  expenses,  and all other statements that are not historical
facts,  are  forward-looking  statements.  Words  such  as  expects,  projects,
anticipates, intends, plans, believes, seeks or estimates, or variations of such
words  and  similar  expressions,  are also intended to identify forward-looking
statements.  These  forward-looking statements are subject to significant risks,
uncertainties  and  contingencies,  many  of which are beyond the control of the
Company.  Actual  results  may  differ  materially  from  those projected in the
forward-looking  statements,  which  statements involve risks and uncertainties.

The  Company's  ability to expand its business is affected by competition from a
large  number  of other entities, many of which are much larger and have greater
financial  resources than the Company, that offer dental plans in the markets in
which the Company operates. There is a risk that the Company will not be able to
increase  revenues  in  the  future  as  employer groups and other purchasers of
dental  coverage  continue  to  resist premium rate increases, while demanding a
wide  choice  of  dental  care  providers  and a high level of customer service.
Securing cost-effective contracts with dentists may become more difficult due to
increased  competition  among  dental plans for contracts with dental providers,
and  a possible decrease in the number of dentists in practice in the markets in
which  the  Company  operates.

There are risks associated with changes in the Company's operating and expansion
strategies,  and  the possible inability to realize all of the proceeds from the
recent  resale of certain dental office assets to a third party. There is a risk
that  the  Company  will  be  unable  to continue to improve its earnings before
interest,  taxes,  depreciation  and  amortization  ("EBITDA"),  as  any  such
improvement  is dependent upon a multitude of factors including, but not limited
to,  the ability of the Company to identify additional opportunities to increase
sales  and  reduce  costs.

There  is  a risk that the purchaser of certain resold dental office assets will
not  comply  with  its  agreement  to make rental payments on the related office
lease  agreements,  for which the Company remains contingently liable, and there
is a risk that other dentists who previously purchased dental practices from the
Company  will  not  make the required payments on their assigned or sublet lease
agreements,  for  which  the  Company  remains  contingently  liable.

There  is  a  risk  that the Company may incur additional expenses in connection
with  the  delivery of the dental office assets resold to the New Purchaser, and
there  are  risks  associated  with  additional health care expenses that may be
incurred by the Company for the cost of the completion of orthodontic and dental
treatment that may be required to be paid in connection with the transfer of the
recently  resold  dental  office  assets.  There is a risk that the dentists who
purchased  a  number  of dental practices from the Company and issued promissory
notes  to  the  Company,  will  not  make  payments  on  such  promissory notes.

All  of  these  risks  and  uncertainties  could  have  a negative impact on the
estimated  net  proceeds  from  the  resale  of  the dental office assets by the
Company.

The  Company's  profitability  depends,  in  part,  on  its  ability to maintain
effective  control  over  its  health  care  costs, while providing members with
quality  dental  care. A variety of factors, such as utilization rates of dental
services,  changes  in  the value of the Company's assets, new technologies, the
cost  of dental services delivered by referral specialists, the amount of claims
incurred  by  patients  insured  by  the  Company,  and  numerous other external
influences  could  affect  the  Company's  operating  results.


                                      -8-
<PAGE>
All  of  the  risks set forth herein could negatively impact the earnings of the
Company  in  the  future. The Company's expectations for the future are based on
current  information  and  its evaluation of external influences. Changes in any
one factor could materially impact the Company's expectations related to premium
rates,  benefits plans offered, membership enrollment, the amount of health care
expenses  incurred, and profitability, and therefore, affect the forward-looking
statements  which  may  be  included in this report. In addition, past financial
performance  is  not  necessarily a reliable indicator of future performance. An
investor  should  not  use  historical  performance  alone  to anticipate future
results  or  future  period  trends.

SUMMARY  OF  RESULTS  OF  OPERATIONS

The following table shows the Company's results of operations as a percentage of
revenue,  and  is  used  in  the  period-to-period  comparisons discussed below.

<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                                     MARCH  31,
                                                                   ---------------
                                                                    2001    2000
                                                                   ------  -------
<S>                                                                <C>     <C>
Premium revenue, net                                               100.0%   100.0%

Health care services expense                                        70.2     72.5
Selling, general and administrative expense                         30.2     34.4
                                                                   ------  -------
Operating income (loss)                                             (0.4)    (6.9)

Investment and other income                                          2.0      1.0
Interest expense on debt that was converted to equity in 2001 (1)   (1.9)    (4.1)
Other interest expense                                              (0.1)    (0.1)
                                                                   ------  -------
Income (loss) before income taxes and extraordinary item            (0.4)   (10.1)
Income tax expense                                                    --       --
                                                                   ------  -------
Income (loss) before extraordinary item                             (0.4)   (10.1)
Extraordinary item                                                  52.0       --
                                                                   ------  -------

  Net income (loss)                                                 51.6%  (10.1)%
                                                                   ======  =======

<FN>
(1)  Substantially  all  of  the  Company's  debt was converted into convertible
     preferred  stock effective January 31, 2001. See Note 4 to the accompanying
     consolidated  financial  statements.
</TABLE>

THREE  MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

Premium  revenue decreased by $2.8 million, or 11.5%, from $24.5 million in 2000
to  $21.6 million in 2001. The average membership for which the Company provided
dental  coverage  decreased  by  approximately  204,000  members, or 23.7%, from
859,000  members during 2000 to 655,000 during 2001. The decrease in the average
number  of  members is due to the loss of a number of employer groups during the
twelve months ended March 31, 2001. Premium revenue decreased by only 11.5% even
though  average membership decreased by 23.7%. This was primarily due to a shift
in the product mix toward preferred provider ("PPO")/indemnity plans, which have
significantly  higher  premium  rates  than managed care plans, and increases in
premium  rates.

Health  care  services  expense  decreased by $2.5 million, or 14.4%, from $17.7
million  in  2000  to  $15.2  million in 2001. Health care services expense as a
percentage of premium revenue (the "loss ratio") decreased from 72.5% in 2000 to
70.2% in 2001. This decrease is primarily due to a decrease in the loss ratio in
the  managed  care  business.  This  decrease was primarily due to a decrease in
health  care  expenses  incurred  pursuant  to  non-standard  provider  payment
arrangements,  such  as  minimum  capitation  arrangements  and  fee-for-service
payments for dental services that are covered by capitation arrangements in most
cases.  The  Company renegotiated several of these non-standard arrangements, or
in  some  cases, terminated the related provider contracts, during the first six
months  of  2000.


                                      -9-
<PAGE>
Selling, general and administrative ("SG&A") expenses decreased by $1.9 million,
or  22.3%, from $8.4 million in 2000 to $6.5 million in 2001. SG&A expenses as a
percentage  of  premium  revenue  decreased from 34.4% in 2000 to 30.2% in 2001.
The  decrease  in  SG&A expenses is due to several reasons. The most significant
reason  is that salaries and benefits decreased due to a reduction in the number
of  employees  during  the  first  quarter  of  2000,  in  connection  with  a
consolidation  of  the Company's administrative services into a single location.
In  addition,  the  Company has decreased its administrative expenses in several
areas,  principally  telephone  and  data  communications  expenses, office rent
expense,  and  equipment  rent  expense. The decrease is also partially due to a
decrease  in  broker  commissions,  which  is related to the decrease in premium
revenue,  as  discussed  above.

Investment  and  other  income increased by $176,000, or 68.0%, from $259,000 in
2000  to  $435,000  in 2001. This increase is primarily due to realized gains on
the  sale  of investments in 2001, but is also partially due to the $8.0 million
borrowing  in  March  2000,  which increased the amount of funds invested by the
Company.

Total  interest  expense  decreased  by $598,000, or 57.9%, from $1.0 million in
2000  to  $434,000  in 2001. This decrease is primarily due to the conversion of
substantially  all  of  the  Company's  debt  into  convertible  preferred stock
effective  January  31,  2001,  which  eliminated  nearly  all  of the Company's
interest  expense.

The  loss  before income taxes and extraordinary item decreased by $2.4 million,
from  $2.5  million in 2000 to $77,000 in 2001. The loss before income taxes and
extraordinary  item  as  a percentage of premium revenue decreased from 10.1% in
2000  to  0.4%  in  2001.  The  decrease in the loss was primarily due to a $1.9
million  decrease  in  SG&A expenses, a decrease in the loss ratio from 72.5% to
70.2%,  and  a  $598,000  decrease  in interest expense, all as discussed above.

There  was  an extraordinary gain of $11.3 million in the first quarter of 2001,
compared  to  zero  in  the same period in 2000. The extraordinary gain resulted
from  the conversion of substantially all of the Company's debt into convertible
preferred  stock.  See  Note  4  to  the  accompanying  consolidated  financial
statements  for  more  discussion  of  this  transaction.

LIQUIDITY  AND  CAPITAL  RESOURCES

Net  cash  used  in  operating activities decreased from $2.1 million in 2000 to
$364,000  in  2001.  This improvement was due to several reasons, the largest of
which  are  described  below.  First,  the  net  loss  before extraordinary item
decreased from $2.5 million in 2000 to $77,000 in 2001, as discussed above under
Results  of Operations. In addition, the net cash used by the change in accounts
payable decreased from $2.0 million in 2000 to $219,000 in 2001. The decrease in
2000  was  primarily  due to the fact that the Company significantly reduced the
processing  time  for accounts payable during the first quarter of 2000 by using
the  proceeds  of the $8.0 borrowing on March 1, 2000, as discussed in Note 4 to
the accompanying financial statements. These factors were partially offset by an
$890,000  decrease  in accrued expenses in 2001, compared to a $367,000 increase
in  2000,  and  a  $685,000  decrease  in  claims payable in 2001, compared to a
$355,000  increase  in  2000.  The  decrease  in  accrued  expenses  in 2001 was
primarily  due  to  the  payment  of  liabilities related to the sale of certain
assets  of  discontinued  operations, as discussed in Note 3 to the accompanying
financial statements, payments on equipment leases for which the future payments
were  previously accrued, and payment of accrued interest on the investor senior
loan,  which  was  converted  to  convertible  preferred  stock  in  January, as
discussed  in  Note  4 to the accompanying financial statements. The decrease in
claims  payable  in  2001 was primarily due to a decrease in the processing time
for  dental  claim  payments  during  the  first  quarter  of  2001.

Net  cash  used  in  investing activities decreased from $6.3 million in 2000 to
$48,000  in  2001.  The  net  cash  used  by  investing  activities  in 2000 was
primarily due to the purchase of investments with the $8.0 million proceeds from
the  borrowing  on  March  1,  2000,  as discussed in Note 4 to the accompanying
financial  statements.  The  investment  of those proceeds in 2000 was partially
offset  by  the  sale  of  investments  to  finance the $2.0 million decrease in
accounts  payable  in  2000,  as discussed above. Net cash provided by financing
activities decreased from $8.7 million in 2000 to $160,000 in 2001. The net cash
provided  by  financing activities in 2000 was primarily due to the $8.0 million
borrowing  on  March  1,  2000,  as  discussed  above.


                                      -10-
<PAGE>
The  Company's  net  working  capital improved from negative $50.9 million as of
December  31, 2000, to positive $2.4 million as of March 31, 2001, primarily due
to the conversion of $52.5 million of debt and accrued interest into convertible
preferred  stock,  as  discussed  in  Note  4  to  the accompanying consolidated
financial  statements.  Excluding the obligations that were converted to equity,
the Company's net working capital increased from $1.6 million as of December 31,
2000, to $2.4 million as of March 31, 2001. This improvement is primarily due to
$845,000  of payments received in exchange for the cancellation of certain notes
receivable  during  the  quarter  ended  March 31, 2001.

The  Company's  total short-term and long-term debt decreased from $48.0 million
at  December  31, 2000, to $0.4 million at March 31, 2001, due to the conversion
of  substantially  all  of  the  Company's debt into convertible preferred stock
effective  January  31,  2001.  See  Note  4  to  the  accompanying consolidated
financial  statements  for  more  discussion  of  this  transaction. The Company
believes  it has adequate financial resources to continue its current operations
for  the  foreseeable  future.

RECENT  ACCOUNTING  PRONOUNCEMENTS

See Note 2 to the accompanying condensed consolidated financial statements for a
discussion  of  recent  accounting  pronouncements.

IMPACT  OF  INFLATION

The Company's operations are potentially impacted by inflation, which can affect
premium  rates,  health  care  services  expense,  and  selling,  general  and
administrative  expenses.  The  Company  expects  that  its  earnings  will  be
positively  impacted  by  inflation  in premium rates, because premium rates for
dental  benefit plans in general have been increasing due to inflation in recent
years.  The  Company  expects  that  its earnings will be negatively impacted by
inflation  in  health  care  costs,  because  fees charged by dentists and other
dental  providers  have  been  increasing  due to inflation in recent years. The
impact  of  inflation  on the Company's health care expenses is mitigated in the
short-term  by  the  fact  that  approximately 40% of total health care services
expense  consists  of capitation payments to providers. In addition, most of the
Company's  selling,  general and administrative expenses are impacted by general
inflation  in  the  economy.

ITEM  3.     QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET  RISK

The  Company  is  not subject to a material amount of risk related to changes in
interest  rates  or  foreign  currency  exchange  rates.

PART  II.     OTHER  INFORMATION

ITEM  1.     LEGAL  PROCEEDINGS

The  Company  is  subject  to  various  claims and legal actions in the ordinary
course  of  business. The Company believes all pending claims either are covered
by liability insurance maintained by the Company or by dentists in the Company's
provider  network,  or  will  not  result  in  a significant adverse outcome. In
December  1999,  a  stockholder  lawsuit  against  the  Company was filed, which
alleged that the Company and certain of its officers violated certain securities
laws  by  issuing a series of alleged false and misleading statements concerning
the  Company's  publicly reported revenues and earnings during a specified class
period.  On  September  12, 2000, after the plaintiffs had filed a first amended
complaint,  the  Federal  District  Trial  Court  dismissed  the  lawsuit  with
prejudice,  stating  that the plaintiffs had failed to state a claim against the
Company.  On October 6, 2000, the plaintiffs filed an appeal of the dismissal of
the lawsuit, and that appeal is currently pending. The Company has directors and
officers  liability  insurance  and intends to vigorously contest the appeal. In
the  opinion  of management, the ultimate outcome of this matter will not have a
material  adverse  effect  on  the  Company's  financial  position or results of
operations.


                                      -11-
<PAGE>
ITEM  6.     EXHIBITS  AND  REPORTS  ON  FORM  8-K

(A)  EXHIBITS

         EXHIBIT               DESCRIPTION
         -------               -----------

         3.2                   Amended and Restated Bylaws of the Company

(B)  REPORTS  ON  FORM  8-K.

The Company filed a Report on Form 8-K dated as of March 5, 2001, announcing the
closing  of  the  Company's recapitalization transaction as of January 31, 2001.

The  Company  filed  a Report on Form 8-K dated as of March 19, 2001, announcing
the  scheduling  of the Company's Annual Meeting of Stockholders set for May 23,
2001,  at  the  executive  offices  of  the  Company.


                                      -12-
<PAGE>
                                   SIGNATURES

Pursuant  to  the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Registrant  has duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized, in the City of Aliso
Viejo,  State  of  California,  on  the  10th  day  of  May  2001.

                          SAFEGUARD  HEALTH  ENTERPRISES,  INC.


                          By:  /s/  James  E.  Buncher
                               -----------------------
                               James  E.  Buncher
                               President  and  Chief  Executive  Officer
                               (Principal  Executive  Officer)


                          By:  /s/  Dennis  L.  Gates
                               ----------------------
                               Dennis  L.  Gates
                               Senior Vice President and Chief Financial Officer
                               (Chief  Accounting  Officer)


                                      -13-
<PAGE>