##### Table of Contents









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 June 30, 2001

OR



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| | o | 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 000-19480

PER-SE TECHNOLOGIES, INC.



|                                                                                      |  |                                                
|------------------------------------------------------------------------------------- |  | -----------------------------------------------
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Delaware(State or other jurisdiction of
	incorporation or organization)               |  | 58-1651222(I.R.S. Employer
	Identification No.)
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|2840 Mt. Wilkinson Parkway
	Atlanta, Georgia(Address of principal executive
	offices) |  | 30339(Zip code)                                

(770) 444-5300



Not Applicable



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 
o

Indicate the number of shares of stock outstanding of each of
the issuers classes of common stock, as of the latest
practicable date.

|                                        |  |                    |                   | 
|--------------------------------------- |  | ------------------ | ----------------- | 
|                                        |  | Shares Outstanding
|Title of Class                          |  | at August 10, 2001
|                                        |  |                   
|Common Stock $0.01 Par Value            |  |                    | 29,910,416 Shares | 
|                                       
|                                       
|                                       
|                                       
|Non-voting Common Stock $0.01 Par Value |  |                    | 0 Shares          | 



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TABLE OF CONTENTS



|                                                       |                                                                                              |  |  |  |  |  |  | 
|------------------------------------------------------ | -------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|PART I FINANCIAL INFORMATION                          
|                                                       | Item 1.Financial Statements                                                                 
|CONSOLIDATED BALANCE SHEETS                           
|CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)     
|CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)     
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                                       | Item 2.Managements Discussion and Analysis of Financial Condition and Results of Operations
|PART II OTHER INFORMATION                             
|                                                       | Item 1.Legal Proceedings                                                                    
|                                                       | Item 4.Submission of Matters to a Vote of Security Holders                                  
|                                                       | Item 6.Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                                            
|INDEX TO EXHIBITS                                     
|Second Amendment to Employee Retirement Plan          



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##### Table of Contents



PER-SE TECHNOLOGIES, INC.

FORM 10-Q

For the fiscal quarter ended June 30, 2001


|                                |          |                                                                                                  |                                                                                        |      |   |    | 
|------------------------------- | -------- | ------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------- | ---- | - | -- | 
|                                |          |                                                                                                  |                                                                                        | Page
|                                |          |                                                                                                  |                                                                                        |     
|                               
|                               
|                               
|                               
|Part I:  FINANCIAL
	INFORMATION |          |                                                                                                  |                                                                                        |     
|                               
|                               
|                               
|                               
|                                | Item  1: |                                                                                                  | Financial Statements                                                                   |      |   |    | 
|                               
|                               
|                               
|                               
|                                |          | Consolidated Balance Sheets as of June 30,
	2001 and December 31, 2000                           |                                                                                        |      | 2 |   
|                               
|                               
|                               
|                               
|                                |          | Consolidated Statements of Operations for the
	three and six months ended June 30, 2001 and 2000 |                                                                                        |      | 3 |   
|                               
|                               
|                               
|                               
|                                |          | Consolidated Statements of Cash Flows for the six
	months ended June 30, 2001 and 2000           |                                                                                        |      | 4 |   
|                               
|                               
|                               
|                               
|                                |          | Notes to Consolidated Financial Statements                                                       |                                                                                        |      | 5 |   
|                               
|                               
|                               
|                               
|                                | Item  2: |                                                                                                  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |      |   | 10 | 
|                               
|                               
|                               
|                               
|Part II:  OTHER
	INFORMATION    |          |                                                                                                  |                                                                                        |     
|                               
|                               
|                               
|                               
|                                | Item  1: |                                                                                                  | Legal Proceedings                                                                      |      |   | 17 | 
|                               
|                               
|                               
|                               
|                                | Item  4: |                                                                                                  | Submission of Matters to a Vote of Security
	Holders                                   |      |   | 17 | 
|                               
|                               
|                               
|                               
|                                | Item  6: |                                                                                                  | Exhibits and Reports on Form 8-K                                                       |      |   | 17 | 





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##### Table of Contents






PART I

FINANCIAL INFORMATION




Item 1.     Financial
Statements




PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except par value data)


|                            |                                                                                                                                                               |                             |         |              |         |   |         |          |         |  
|--------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------- | ------- | ------------ | ------- | - | ------- | -------- | ------- | -
|                            |                                                                                                                                                               | June 30,                    |         | December 31,
|                            |                                                                                                                                                               | 2001                        |         | 2000        
|                            |                                                                                                                                                               |                             |         |             
|                            |                                                                                                                                                               | (unaudited)                 |         |             
|                           
|                           
|                           
|                           
|Current Assets:             |                                                                                                                                                               |                             |         |              |         |   |         |         
|                           
|                           
|                           
|                           
|                            | Cash and cash equivalents                                                                                                                                     |                             | $       | 20,229       |         |   | $       | 30,970   |        
|                           
|                           
|                           
|                           
|                            | Restricted cash                                                                                                                                               |                             |         | 8,953        |         |   |         | 7,352    |        
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | Total cash                  |         |              | 29,182  |   |         |          | 38,322  |  
|                           
|                           
|                           
|                           
|                            | Accounts receivable, billed (less allowances of
	$7,019 and $7,635, respectively)                                                                             |                             |         | 48,913       |         |   |         | 53,309   |        
|                           
|                           
|                           
|                           
|                            | Accounts receivable, unbilled (less allowances of
	$2,952 and $4,338, respectively)                                                                           |                             |         | 5,542        |         |   |         | 5,786    |        
|                           
|                           
|                           
|                           
|                            | Other                                                                                                                                                         |                             |         | 5,082        |         |   |         | 5,793    |        
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | Total current assets        |         |              | 88,719  |   |         |          | 103,210 |  
|                           
|                           
|                           
|                           
|Property and equipment, net |                                                                                                                                                               |                             | 27,714  |              |         |   | 32,813  |         
|                           
|                           
|                           
|                           
|Intangible assets           |                                                                                                                                                               |                             | 79,766  |              |         |   | 72,695  |         
|                           
|                           
|                           
|                           
|Other                       |                                                                                                                                                               |                             | 5,412   |              |         |   | 5,408   |         
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | $                           | 201,611 |              |         | $ | 214,126 |         
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|Current Liabilities:        |                                                                                                                                                               |                             |         |              |         |   |         |         
|                           
|                           
|                           
|                           
|                            | Accounts payable                                                                                                                                              |                             | $       | 6,005        |         |   | $       | 11,002   |        
|                           
|                           
|                           
|                           
|                            | Accrued compensation                                                                                                                                          |                             |         | 19,739       |         |   |         | 18,652   |        
|                           
|                           
|                           
|                           
|                            | Accrued expenses                                                                                                                                              |                             |         | 20,675       |         |   |         | 21,712   |        
|                           
|                           
|                           
|                           
|                            | Accrued litigation settlements                                                                                                                                |                             |         |             |         |   |         | 1,602    |        
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               |                             | 46,419  |              |         |   | 52,968  |         
|                           
|                           
|                           
|                           
|                            | Deferred revenue                                                                                                                                              |                             |         | 23,723       |         |   |         | 23,063   |        
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | Total current liabilities   |         |              | 70,142  |   |         |          | 76,031  |  
|                           
|                           
|                           
|                           
|Long-term debt              |                                                                                                                                                               |                             | 175,127 |              |         |   | 175,000 |         
|                           
|                           
|                           
|                           
|Other obligations           |                                                                                                                                                               |                             | 6,994   |              |         |   | 7,231   |         
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | Total liabilities           |         |              | 252,263 |   |         |          | 258,262 |  
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|Stockholders Deficit:      |                                                                                                                                                               |                             |         |              |         |   |         |         
|                           
|                           
|                           
|                           
|                            | Preferred stock, no par value, 20,000 authorized;
	none issued                                                                                                |                             |         |             |         |   |         |         |        
|                           
|                           
|                           
|                           
|                            | Common stock, voting, $0.01 par value, 200,000
	authorized, 29,907 and 29,902 issued and outstanding as of
	June 30, 2001 and December 31, 2000, respectively |                             |         | 299          |         |   |         | 299      |        
|                           
|                           
|                           
|                           
|                            | Common stock, non-voting, $0.01 par value, 600
	authorized; none issued                                                                                       |                             |         |             |         |   |         |         |        
|                           
|                           
|                           
|                           
|                            | Paid-in capital                                                                                                                                               |                             |         | 774,637      |         |   |         | 774,603  |        
|                           
|                           
|                           
|                           
|                            | Warrants                                                                                                                                                      |                             |         | 1,495        |         |   |         | 1,495    |        
|                           
|                           
|                           
|                           
|                            | Accumulated deficit                                                                                                                                           |                             |         | (827,083     | )       |   |         | (820,533 | )      
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | Total stockholders deficit |         |              | (50,652 | ) |         |          | (44,136 | )
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         
|                            |                                                                                                                                                               | $                           | 201,611 |              |         | $ | 214,126 |         
|                            |                                                                                                                                                               |                             |         |              |         |   |         |         

See notes to consolidated financial statements.

2



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##### Table of Contents






PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share data)


|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |       |         |  
|------------------------------------------------------------ | -------------------------------------------------- | ------------------ | ------ | ---------------- | ------ | ---- | ------ | ----- | ------ | - | ------- | ----- | ------- | - | ------- | ----- | ------- | -
|                                                             |                                                    |                    |        |                 
|                                                             |                                                    | Three Months Ended |        | Six Months Ended
|                                                             |                                                    | June 30,           |        | June 30,        
|                                                             |                                                    |                    |        |                 
|                                                             |                                                    | 2001               |        | 2000             |        | 2001 |        | 2000 
|                                                             |                                                    |                    |        |                  |        |      |        |      
|Revenue                                                      |                                                    | $                  | 83,233 |                  |        | $    | 78,879 |       |        | $ | 163,211 |       |         | $ | 157,708 |      
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Salaries and wages                                           |                                                    |                    | 50,612 |                  |        |      | 47,082 |       |        |   | 100,652 |       |         |   | 99,340  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Other operating expenses                                     |                                                    |                    | 23,706 |                  |        |      | 22,717 |       |        |   | 47,608  |       |         |   | 47,195  |      
|                                                            
|                                                            
|                                                            
|                                                            
|Depreciation                                                 |                                                    |                    | 3,308  |                  |        |      | 4,483  |       |        |   | 6,557   |       |         |   | 8,447   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Amortization                                                 |                                                    |                    | 3,192  |                  |        |      | 2,388  |       |        |   | 6,369   |       |         |   | 4,807   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Interest expense, net                                        |                                                    |                    | 4,342  |                  |        |      | 3,659  |       |        |   | 8,357   |       |         |   | 7,312   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Process improvement project expenses                         |                                                    |                    | 1,211  |                  |        |      |       |       |        |   | 2,176   |       |         |   |        |      
|                                                            
|                                                            
|                                                            
|                                                            
|Non-recurring expenses and other                             |                                                    |                    | (18    | )                |        |      |       |       |        |   | 623     |       |         |   |        |      
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|                                                             |                                                    | Total expenses     |        |                  | 86,353 |      |        |       | 80,329 |   |         |       | 172,342 |   |         |       | 167,101 |  
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Loss before income taxes                                     |                                                    |                    | (3,120 | )                |        |      | (1,450 | )     |        |   | (9,131  | )     |         |   | (9,393  | )    
|                                                            
|                                                            
|                                                            
|                                                            
|Income tax expense (benefit)                                 |                                                    |                    | 177    |                  |        |      | 371    |       |        |   | 353     |       |         |   | (743    | )    
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Loss from continuing operations                              |                                                    |                    | (3,297 | )                |        |      | (1,821 | )     |        |   | (9,484  | )     |         |   | (8,650  | )    
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Income from discontinued operations, net of tax              |                                                    |                    | 2,942  |                  |        |      | 9,241  |       |        |   | 2,911   |       |         |   | 10,895  |      
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|(Loss) income before cumulative effect of
	accounting change |                                                    |                    | (355   | )                |        |      | 7,420  |       |        |   | (6,573  | )     |         |   | 2,245   |      
|                                                            
|                                                            
|                                                            
|                                                            
|Cumulative effect of accounting change, net of tax           |                                                    |                    |       |                  |        |      |       |       |        |   |        |       |         |   | (37,684 | )    
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|                                                             |                                                    | Net (loss) income  |        | $                | (355   | )    |        | $     | 7,420  |   |         |       | (6,573  | ) |         |       | (35,439 | )
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Basic net (loss) income per common share:                    |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Loss from continuing operations                    |                    | $      | (0.11            | )      |      | $      | (0.06 | )      |   | $       | (0.32 | )       |   | $       | (0.29 | )      
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Income from discontinued operations, net of tax    |                    |        | 0.10             |        |      |        | 0.31  |        |   |         | 0.10  |         |   |         | 0.36  |        
|                                                            
|                                                            
|                                                            
|                                                            
|                                                             | Cumulative effect of accounting change, net of tax |                    |        |                 |        |      |        |      |        |   |         |      |         |   |         | (1.26 | )      
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|                                                             |                                                    | Net (loss) income  |        | $                | (0.01  | )    |        | $     | 0.25   |   |         | $     | (0.22   | ) |         | $     | (1.19   | )
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      
|Weighted average shares outstanding                          |                                                    |                    | 29,904 |                  |        |      | 29,868 |       |        |   | 29,903  |       |         |   | 29,812  |      
|                                                             |                                                    |                    |        |                  |        |      |        |       |        |   |         |       |         |   |         |      

See notes to consolidated financial statements.

3



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##### Table of Contents






PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |         |        |        |        |  
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------- | ------------------------------ | ------------------------------------------------------ | ----------------------------------------------------- | ------ | ------- | ------- | ------- | ------ | ------ | ------ | -
|                                                                                            |                                                                                         |                               
|                                                                                            |                                                                                         | Six Months Ended              
|                                                                                            |                                                                                         | June 30,                      
|                                                                                            |                                                                                         |                               
|                                                                                            |                                                                                         | 2001                           |                                                        | 2000                                                 
|                                                                                            |                                                                                         |                                |                                                        |                                                      
|Cash Flows From Operating
	Activities:                                                      |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net loss                                                                                    |                                                                                         | $                              | (6,573                                                 | )                                                     |        | $       | (35,439 | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Adjustments to reconcile net loss to net cash
	provided by (used for) operating activities: |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Depreciation and amortization                                                           |                                |                                                        | 12,926                                                |        |         |         | 13,254  |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Income from discontinued operations                                                     |                                |                                                        | (2,911                                                | )      |         |         | (10,895 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Cumulative effect of accounting change                                                  |                                |                                                        |                                                      |        |         |         | 37,684  |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            | Changes in assets and liabilities, excluding
	effects of acquisitions and divestitures: |                                |                                                        |                                                       |        |         |         |         |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Restricted cash                |                                                        |                                                       | (1,382 | )       |         |         | 321    |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accounts receivable, billed    |                                                        |                                                       | 3,689  |         |         |         | (6,608 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accounts receivable, unbilled  |                                                        |                                                       | 245    |         |         |         | 2,225  |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accounts payable               |                                                        |                                                       | (5,009 | )       |         |         | 483    |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accrued compensation           |                                                        |                                                       | 1,087  |         |         |         | (5,028 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accrued expenses               |                                                        |                                                       | (1,718 | )       |         |         | (5,817 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Accrued litigation settlements |                                                        |                                                       | (1,602 | )       |         |         | (1,181 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Deferred revenue               |                                                        |                                                       | 1,487  |         |         |         | 909    |       
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         | Other, net                     |                                                        |                                                       | 252    |         |         |         | 1,866  |       
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                            |                                                                                         |                                | Net cash provided by (used for) continuing
	operations |                                                       |        | 491     |         |         |        | (8,226 | )     
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                            |                                                                                         |                                | Net cash provided by discontinued operations           |                                                       |        | 2,942   |         |         |        |       |       
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                            |                                                                                         |                                |                                                        | Net cash provided by (used for) operating
	activities |        |         | 3,433   |         |        |        | (8,226 | )
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|Cash Flows From Investing
	Activities:                                                      |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Purchases of property and equipment                                                         |                                                                                         |                                | (1,521                                                 | )                                                     |        |         | (7,650  | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Software development costs                                                                  |                                                                                         |                                | (3,099                                                 | )                                                     |        |         | (3,510  | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from sale of property and equipment                                                |                                                                                         |                                | 1,523                                                  |                                                       |        |         | 55      |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net proceeds from sale of subsidiaries                                                      |                                                                                         |                                |                                                       |                                                       |        |         | 10,895  |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Acquisitions, net of cash acquired                                                          |                                                                                         |                                | (10,780                                                | )                                                     |        |         | (970    | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Other                                                                                       |                                                                                         |                                | (31                                                    | )                                                     |        |         |        |        
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                            |                                                                                         |                                | Net cash used for investing activities                 |                                                       |        | (13,908 | )       |         |        | (1,180 | )     
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|Cash Flows From Financing
	Activities:                                                      |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from issuance of stock                                                             |                                                                                         |                                |                                                       |                                                       |        |         | 292     |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Proceeds from the exercise of stock options                                                 |                                                                                         |                                |                                                       |                                                       |        |         | 82      |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Payments of debt                                                                            |                                                                                         |                                | (38                                                    | )                                                     |        |         | (33     | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Deferred financing costs                                                                    |                                                                                         |                                | (228                                                   | )                                                     |        |         | (5      | )      
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                            |                                                                                         |                                | Net cash (used for) provided by financing
	activities  |                                                       |        | (266    | )       |         |        | 336    |       
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|Cash and Cash Equivalents:                                                                  |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Net change                                                                                  |                                                                                         |                                | (10,741                                                | )                                                     |        |         | (9,070  | )      
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Balance at beginning of period                                                              |                                                                                         |                                | 30,970                                                 |                                                       |        |         | 74,354  |        
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        
|Balance at end of period                                                                    |                                                                                         | $                              | 20,229                                                 |                                                       |        | $       | 65,284  |        
|                                                                                            |                                                                                         |                                |                                                        |                                                       |        |         |         |        

See notes to consolidated financial statements.

4



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##### Table of Contents






PER-SE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Note 1  Basis of Presentation

The accompanying unaudited condensed consolidated financial
statements of Per-Se Technologies, Inc. (the
Company) are presented in accordance with the
requirements of Form 10-Q and Rule 10-01 of
Regulation S-X. For further information, the reader of this
Form 10-Q may wish to refer to the audited consolidated
financial statements of the Company for the fiscal year ended
December 31, 2000 included in the Companys Annual
Report on Form 10-K filed March 23, 2001 with the
Securities and Exchange Commission.

The unaudited condensed financial information has been prepared
in accordance with the Companys customary accounting
policies and practices. In the opinion of management, all
adjustments, consisting of normal recurring adjustments
considered necessary for a fair presentation of results for the
interim period, have been included.

The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets, liabilities, revenues and expenses. Actual results
could differ from those estimates.

Basic net loss per common share is based on the weighted average
number of shares of common stock outstanding during the period.
All stock options and warrants have been excluded from the
calculation of diluted net loss per share because all such
securities are antidilutive for the periods presented. Diluted
earnings per share is not presented since the Company has a net
loss from continuing operations.

Activity related to the Medaphis Services Corporation
(Hospital Services) and Impact Innovations Group
(Impact) businesses, which were sold in 1998 and
1999, respectively, has been presented as discontinued
operations for all periods presented.

Note 2  New Accounting Pronouncements

On July 20, 2001, the Financial Accounting Standards Board
issued Statement No. 142 Goodwill and Other Intangible
Assets(SFAS 142). Under SFAS 142, goodwill and
indefinite lived intangible assets are no longer amortized but
are reviewed annually for impairment. The Company is currently
evaluating the impact of the newly issued standard on its
financial statements and expects to adopt the standard on
January 1, 2002.

Note 3  Restricted Cash

At June 30, 2001, restricted cash primarily represents
restrictions on $7.0 million of the Companys cash as
security for certain of the Companys letters of credit.
The remaining balance represents amounts held in escrow and
amounts collected on behalf of certain clients, a portion of
which is held in trust until remitted to such clients.

Note 4  Acquisitions

On April 27, 2001, the Company acquired all of the assets
of Virtual Information Systems, Inc. (VIS) for
consideration of $7.0 million cash. The purchase agreement also
provides for a purchase price adjustment of up to $1.5 million
payable in cash should VIS meet certain financial targets over
the twelve months following the date of acquisition. VISs
core product, Virtual Remittance Processing System, is an
automated remittance processing solution, which ensures accurate
and efficient processing of cash collections.

Additionally, on April 27, 2001, the Company acquired all
of the assets of Officemed.com LLC (OfficeMed) for
consideration of $3.25 million cash, of which $150,000 is
payable over the six months following the date of acquisition.
OfficeMed offers a web-based application service provider (ASP)
solution

5



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##### Table of Contents





Both the VIS and OfficeMed acquisitions were recorded using the
purchase method of accounting and, accordingly, the purchase
price has been preliminarily allocated to the assets acquired
and the liabilities assumed based on their estimated fair market
value at the date of acquisition. On a preliminary basis,
approximately $10.2 million of the purchase price has been
allocated to goodwill. The operating results of VIS and
OfficeMed, which were not material to the Companys
operations, are included in the Companys Consolidated
Statements of Operations from the date of acquisition in the
e-Health Solutions business segment.

On February 9, 2000, the Company acquired the outstanding
capital stock of Knowledgeable Healthcare Solutions, Inc.
(KHS). The purchase agreement provides for a
purchase price adjustment of up to $6.0 million, payable in cash
and the Companys common stock, should KHS meet certain
financial targets over the three years following the
acquisition. The Company was required under the purchase
agreement to make a purchase price adjustment in April 2001
totaling $0.1 million, 25% of which was paid through the
issuance of the Companys common stock.

Note 5  Discontinued Operations and
Divestitures

In January of 1998, SCI Management Corporation (SCI)
filed a complaint against the commercial division of Impact. The
Company paid a total of $5.3 million in settlement of the
complaint. In May of 2001, the Company received an insurance
settlement related to the SCI matter of approximately $3 million.

On November 30, 1998, the Company completed the sale of
Hospital Services to NCO Group, Inc. (NCO) for
initial consideration of $107.5 million. On May 5, 2000,
the Company received a purchase price adjustment of $10.0
million cash from NCO based on Hospital Services
achievement of various operational targets in 1999. The purchase
price adjustment resulted in the recognition of an additional
gain of approximately $9.2 million.

On December 17, 1999, the government division of Impact was
sold to J3 Technology Services Corp. for $46.5 million,
including a purchase price adjustment of $1.5 million received
on March 30, 2000 based on the divisions tangible net
worth at closing. The purchase price adjustment resulted in the
recognition of an additional gain of $1.5 million.

Pursuant to APB No. 30, Reporting the Results of
Operations  Reporting the Effects of Disposal of a Segment
of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions,the consolidated
financial statements of the Company have been presented to
reflect both Hospital Services and Impact as discontinued
operations for all periods presented.

Note 6  Cumulative Effect of Accounting
Change

On December 3, 1999, the Securities and Exchange Commission
(the Commission) issued Staff Accounting Bulletin
Number 101, Revenue Recognition in Financial Statements(SAB 101). SAB 101 summarizes certain
of the Commissions views in applying generally accepted
accounting principles to revenue recognition in financial
statements. SAB 101 provides interpretative guidance on the
unbilled accounts receivable and related revenue recognition
within the Companys industry. Therefore, consistent with
the Commissions guidance and changing industry practice,
the Company began recognizing revenue in its Physician Services
segment on an as billed basis January 1, 2000.
This change has not significantly impacted annual recognized
revenue amounts and has no effect on cash flow.

The change in accounting method resulted in the elimination of
$37.7 million of unbilled accounts receivable. The one-time,
cumulative non-cash expense in the Companys statement of
operations for the six months ended June 30, 2000 reflects
the $22.7 million elimination of the unbilled accounts
receivable on a net of tax basis and a corresponding $15.0
million increase in the Companys deferred tax valuation
allowance.

6



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##### Table of Contents



Note 7  Legal Matters

The Company is subject to claims, litigation and official
billing inquiries in the ordinary course of its business. Within
the Companys industry, federal and state civil and
criminal laws govern medical billing and collection activities.
These laws provide for various fines, penalties, damages,
assessments and sanctions for violations, including possible
exclusion from federal and state healthcare programs.

The Company believes that it has meritorious defenses to the
claims and other issues asserted in pending legal matters. There
can be no assurance that pending or future claims, government
investigations, and legal matters will not have an adverse
effect on the Company. Since the Company is often unable to
estimate a range of awards or losses, if any, in pending legal
matters, amounts thereof have not been reflected in the
financial statements unless estimable and probable.

Note 8  Process Improvement Project

The Company incurred approximately $2.2 million of expense in
the six months ended June 30, 2001 associated with the
implementation of a process improvement project within the
Physician Services segment (the Project). The
Project installs a formalized set of productivity and quality
measures, workflow processes and a management operating system
in certain of the Companys major processing centers. The
Project focuses on productivity improvements that result in both
improved client service for the segments clients as well
as improved profitability for the segment. The costs associated
with the Project primarily consist of professional fees paid to
outside consultants retained exclusively for implementation of
the Project.

Note 9  Non-Recurring Expenses

During the first quarter of 2001, the Company recorded a
severance expense of approximately $0.6 million associated with
former executive management.

Note 10  Long-Term Debt

Under the Indenture governing the 9 1/2% $175 million of
Senior Notes due 2005 (the Notes), the balance of
net proceeds, as defined, from the sale of any assets having a
fair value in excess of $1.0 million must be invested in the
Companys business within 360 days of receipt of
proceeds related to the sale. The Company may use the net
proceeds for capital expenditures, to acquire long-term assets,
to repay secured debt or to acquire a controlling interest in
another company. To the extent net proceeds are not invested
within 360 days, such amount constitutes excess
proceeds. If the aggregate amount of excess proceeds is
greater than $10.0 million, the Company is required to offer to
repurchase the Notes at par with such proceeds. The Company has
invested the excess proceeds from all asset sales in accordance
with the Indenture.

The Company entered into a $50 million credit facility (the
Credit Facility) on April 6, 2001. Availability
under the Credit Facility is determined by a borrowing base
calculated based on eligible billed accounts receivable of the
Borrowing Base Parties, as defined in the Credit Facility. The
Company has the option of making LIBOR based loans
or index rate loans under the Credit Facility. LIBOR
based loans bear interest at LIBOR plus amounts ranging from
1.85% to 2.65% based on the Companys leverage ratio, as
defined in the Credit Facility, after the first year. Index rate
loans bear interest at rates approximating Prime plus amounts
ranging from 0.35% to 1.15% based on the Companys leverage
ratio, as defined, after the first year. LIBOR based loans bear
interest at LIBOR plus 2.50% and index rate loans bear interest
at rates approximating Prime plus 1.0% for the first twelve
months of the Credit Facility. In addition the Company pays a
quarterly commitment fee on the unused portion of the Credit
Facility of 0.375% per annum.

The Credit Facility contains financial and other restrictive
covenants, including, without limitation, those restricting the
incurrence of additional indebtedness, creation of liens,
payment of dividends, sales of assets, stock offerings, capital
expenditures and prepayment of the Notes and those requiring
maintenance of minimum EBITDA, as defined, and minimum fixed
charge coverage, as defined. The initial term of the Credit
Facility is 42 months. The Company and the lender can
mutually agree to extend this term by 18 months if certain
conditions have been met. The Company intends to use the Credit
Facility for future investments in its

7



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##### Table of Contents





Note 11  Income Taxes

As of June 30, 2001, the Company has a net deferred tax
asset, which is fully offset by a valuation allowance.
Realization of the net deferred tax asset is dependent upon the
Company generating sufficient taxable income prior to the
expiration of the federal net operating loss carryforwards. The
Company will adjust this valuation reserve accordingly, if
during future periods, management believes the Company will
generate sufficient taxable income to realize the net deferred
tax asset.

The Company recognized a $1.2 million tax benefit in the six
months ended June 30, 2000 related to a state income tax
refund.

Note 12  Segment Reporting

The Companys reportable segments are operating units that
offer different services and products. Per-Se provides its
services and products through its three operating segments:
Physician Services, Application Software and e-Health Solutions.

Physician Services provides business management outsourcing
services to hospital-affiliated physician practices, physicians
in academic settings and other large physician practices.
Services include clinical data collection, data input, medical
coding, billing, contract management, cash collections and
accounts receivable management. These services are designed to
assist healthcare providers with the business management
functions associated with the delivery of healthcare services,
allowing physicians and hospital staff to focus on providing
quality patient care. These services also assist physicians in
improving cash flows and reducing administrative costs and
burdens.

The Application Software segment provides enterprise-wide
financial and clinical software to acute care healthcare
organizations, including patient and staff scheduling, clinical
information systems and patient financial management software.
These applications enable healthcare organizations to
simultaneously optimize the quality of care delivered and the
profitability of business operations.

The e-Health Solutions segment provides healthcare providers and
payers with connectivity and business intelligence solutions
that help reduce administrative costs and enhance revenue cycle
management. Solutions include electronic claims processing,
referral submissions, eligibility verification and other
electronic and paper transaction processing. In addition,
e-Health Solutions offers physician practice management software
as Application Service Provider (ASP) to physician
practices and managed care solutions to payers in ASP, turnkey
or outsourced formats.

The Company evaluates each segments performance based on
operating profit or loss. The e-Health Solutions segment revenue
includes intersegment revenues for services provided to the
Physicians Services segment which are shown in Eliminations to
reconcile to total consolidated revenue.

8



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##### Table of Contents



Information concerning the Companys reportable operating
segments is as follows:

|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |         |  
|------------------------------------------------------- | -------------------- | ------------------ | ------ | ---------------- | - | ---- | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                        |                      |                    |        |                 
|                                                        |                      | Three Months Ended |        | Six Months Ended
|                                                        |                      | June 30,           |        | June 30,        
|                                                        |                      |                    |        |                 
|                                                        |                      | 2001               |        | 2000             |   | 2001 |        | 2000  
|                                                        |                      |                    |        |                  |   |      |        |       
|                                                        |                      |                    |        |                 
|                                                        |                      | (in thousands)     |        | (in thousands)  
|                                                       
|                                                       
|                                                       
|                                                       
|Revenue:                                                |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Physician Services   |                    | $      | 57,311           |   |      | $      | 57,769 |   |   | $       | 112,452 |   |   | $       | 116,591 |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Application Software |                    |        | 14,540           |   |      |        | 15,251 |   |   |         | 29,419  |   |   |         | 29,603  |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | e-Health Solutions   |                    |        | 14,141           |   |      |        | 8,600  |   |   |         | 26,812  |   |   |         | 17,087  |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Eliminations         |                    |        | (2,759           | ) |      |        | (2,741 | ) |   |         | (5,472  | ) |   |         | (5,573  | )
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                        |                      | $                  | 83,233 |                  |   | $    | 78,879 |        |   | $ | 163,211 |         |   | $ | 157,708 |        
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Operating profit (loss)(1):                             |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Physician Services   |                    | $      | 3,462            |   |      | $      | 2,624  |   |   | $       | 4,350   |   |   | $       | 2,704   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Application Software |                    |        | 1,127            |   |      |        | 1,962  |   |   |         | 2,365   |   |   |         | 270     |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | e-Health Solutions   |                    |        | 1,018            |   |      |        | 1,000  |   |   |         | 990     |   |   |         | 1,905   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Corporate            |                    |        | (3,192           | ) |      |        | (3,377 | ) |   |         | (5,680  | ) |   |         | (6,960  | )
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                        |                      | $                  | 2,415  |                  |   | $    | 2,209  |        |   | $ | 2,025   |         |   | $ | (2,081  | )      
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Interest expense, net                                   |                      | $                  | (4,342 | )                |   | $    | (3,659 | )      |   | $ | (8,357  | )       |   | $ | (7,312  | )      
|                                                       
|                                                       
|                                                       
|                                                       
|Process Improvement Project and Non-recurring
	Expenses |                      |                    | (1,193 | )                |   |      |       |        |   |   | (2,799  | )       |   |   |        |        
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Loss before income taxes                                |                      | $                  | (3,120 | )                |   | $    | (1,450 | )      |   | $ | (9,131  | )       |   | $ | (9,393  | )      
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Depreciation and amortization:                          |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Physician Services   |                    | $      | 2,936            |   |      | $      | 3,778  |   |   | $       | 5,866   |   |   | $       | 7,110   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Application Software |                    |        | 1,763            |   |      |        | 1,763  |   |   |         | 3,606   |   |   |         | 3,526   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | e-Health Solutions   |                    |        | 1,521            |   |      |        | 631    |   |   |         | 2,841   |   |   |         | 1,240   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Corporate            |                    |        | 280              |   |      |        | 699    |   |   |         | 613     |   |   |         | 1,378   |  
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                        |                      | $                  | 6,500  |                  |   | $    | 6,871  |        |   | $ | 12,926  |         |   | $ | 13,254  |        
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Capital expenditures:                                   |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Physician Services   |                    | $      | 184              |   |      | $      | 3,026  |   |   | $       | 635     |   |   | $       | 4,075   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Application Software |                    |        | 15               |   |      |        | 717    |   |   |         | 180     |   |   |         | 878     |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | e-Health Solutions   |                    |        | 295              |   |      |        | 1,020  |   |   |         | 699     |   |   |         | 1,661   |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Corporate            |                    |        | 6                |   |      |        | 671    |   |   |         | 7       |   |   |         | 1,036   |  
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                        |                      | $                  | 500    |                  |   | $    | 5,434  |        |   | $ | 1,521   |         |   | $ | 7,650   |        
|                                                        |                      |                    |        |                  |   |      |        |        |   |   |         |         |   |   |         |        

|                     |                      |                |         |              |  |   |         |        | 
|-------------------- | -------------------- | -------------- | ------- | ------------ |  | - | ------- | ------ | 
|                     |                      |               
|                     |                      | As of         
|                     |                      |               
|                     |                      | June 30,       |         | December 31,
|                     |                      | 2001           |         | 2000        
|                     |                      |                |         |             
|                     |                      |               
|                     |                      | (in thousands)
|                    
|                    
|                    
|                    
|Identifiable Assets: |                      |                |         |              |  |   |         |       
|                    
|                    
|                    
|                    
|                     | Physician Services   |                | $       | 62,032       |  |   | $       | 70,241 | 
|                    
|                    
|                    
|                    
|                     | Application Software |                |         | 37,968       |  |   |         | 54,488 | 
|                    
|                    
|                    
|                    
|                     | e-Health Solutions   |                |         | 65,253       |  |   |         | 44,033 | 
|                    
|                    
|                    
|                    
|                     | Corporate            |                |         | 36,358       |  |   |         | 45,364 | 
|                     |                      |                |         |              |  |   |         |       
|                     |                      | $              | 201,611 |              |  | $ | 214,126 |       
|                     |                      |                |         |              |  |   |         |       






|    |                                                                                           
|--- | ------------------------------------------------------------------------------------------
|(1) | Excludes process improvement project and non-recurring expenses
	and net interest expense.

9



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##### Table of Contents






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

General

Per-Se Technologies, Inc. (the Company), a
corporation organized in 1985 under the laws of the State of
Delaware, is a global leader in delivering technology-enabled
business management outsourcing services, financial and clinical
software solutions and Internet-enabled e-health solutions to
healthcare providers and payers. Per-Se delivers its services
and products through its three operating segments: Physician
Services, Application Software and e-Health Solutions.

Physician Services provides business management outsourcing
services to hospital-affiliated physician practices, physicians
in academic settings and other large physician practices.
Services include clinical data collection, data input, medical
coding, billing, contract management, cash collections and
accounts receivable management. These services are designed to
assist healthcare providers with the business management
functions associated with the delivery of healthcare services,
allowing physicians and hospital staff to focus on providing
quality patient care. These services also assist physicians in
improving cash flows and reducing administrative costs and
burdens.

The Application Software segment provides enterprise-wide
financial and clinical software to acute care healthcare
organizations, including patient and staff scheduling, clinical
information systems and patient financial management software.
These applications enable healthcare organizations to
simultaneously optimize the quality of care delivered and the
profitability of business operations.

The e-Health Solutions segment provides healthcare providers and
payers with connectivity and business intelligence solutions
that help reduce administrative costs and enhance revenue cycle
management. Solutions include electronic claims processing,
referral submissions, eligibility verification and other
electronic and paper transaction processing. In addition,
e-Health Solutions offers physician practice management software
as Application Service Provider (ASP) to physician
practices and managed care solutions to payers in ASP, turnkey
or outsourced formats.

Per-Se markets its products and services primarily to integrated
healthcare delivery networks (IDNs), hospitals,
hospital-affiliated physician practices and payer organizations.

Results of Operations

Three months ended June 30, 2001 as compared to three
months ended June 30, 2000

Revenue.Revenue classified by the Companys
reportable segments is as follows:

|                     |  |                    |        |      |  |   |        |  
|-------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                     |  |                   
|                     |  | Three Months Ended
|                     |  | June 30,          
|                     |  |                   
|                     |  | 2001               |        | 2000
|                     |  |                    |        |     
|                     |  |                   
|                     |  | (in thousands)    
|                    
|                    
|                    
|                    
|Physician Services   |  | $                  | 57,311 |      |  | $ | 57,769 |  
|                    
|                    
|                    
|                    
|Application Software |  |                    | 14,540 |      |  |   | 15,251 |  
|                    
|                    
|                    
|                    
|e-Health Solutions   |  |                    | 14,141 |      |  |   | 8,600  |  
|                    
|                    
|                    
|                    
|Eliminations         |  |                    | (2,759 | )    |  |   | (2,741 | )
|                     |  |                    |        |      |  |   |        |  
|                     |  | $                  | 83,233 |      |  | $ | 78,879 |  
|                     |  |                    |        |      |  |   |        |  

Physician Services revenue decreased slightly for the
three months ended June 30, 2001 as compared to the same
period in 2000. The decline is primarily due to client-initiated
discontinuances throughout 2000. This decline was almost
completely offset by new sales in 2000 and 2001 and an
improvement in the Companys customers accounts
receivable which has improved the segments revenue cycle.
The rate of client-initiated discontinuances continues to
decline in 2001.

Application Softwares revenue decreased approximately 5%
for the three months ended June 30, 2001 as compared to the
same period in 2000. The decrease is primarily attributable to
the timing of implementations, which impacts revenue recognition
under percentage-of-completion accounting.

10



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##### Table of Contents



e-Health Solutions revenue increased approximately 64% for
the three months ended June 30, 2001 as compared to the
same period in 2000. The increase is the result of increased
revenue from the recent acquisitions of Health Data Services,
Inc. and its affiliate company, Patient Account Management
Services, Inc. (HDS/PAMS), VIS and OfficeMed as well
as increased transaction volume from the existing client base.

Operating Profit. Operating profit, which excludes the
process improvement project and non-recurring expenses, and net
interest expense, classified by the Companys reportable
operating segments is as follows:

|                     |  |                    |        |      |  |   |        |  
|-------------------- |  | ------------------ | ------ | ---- |  | - | ------ | -
|                     |  |                   
|                     |  | Three Months Ended
|                     |  | June 30,          
|                     |  |                   
|                     |  | 2001               |        | 2000
|                     |  |                    |        |     
|                     |  |                   
|                     |  | (in thousands)    
|                    
|                    
|                    
|                    
|Physician Services   |  | $                  | 3,462  |      |  | $ | 2,624  |  
|                    
|                    
|                    
|                    
|Application Software |  |                    | 1,127  |      |  |   | 1,962  |  
|                    
|                    
|                    
|                    
|e-Health Solutions   |  |                    | 1,018  |      |  |   | 1,000  |  
|                    
|                    
|                    
|                    
|Corporate            |  |                    | (3,192 | )    |  |   | (3,377 | )
|                     |  |                    |        |      |  |   |        |  
|                     |  | $                  | 2,415  |      |  | $ | 2,209  |  
|                     |  |                    |        |      |  |   |        |  

The increase in Physician Services operating profit for
the three months ended June 30, 2001 as compared to the
same period in 2000 is attributable to managements focus
on profitable business and productivity enhancements.

The decrease in Application Softwares operating profit for
the three months ended June 30, 2001 as compared to the
same period in 2000 is primarily attributable to the decline in
revenue resulting from the timing of implementations.

The increase in e-Health Solutions operating profit for
the three months ended June 30, 2001 as compared to the
same period in 2000 is primarily attributable to the
acquisitions previously mentioned, offset by increased spending
in preparation for future growth.

The decrease in Corporate overhead for the three months ended
June 30, 2001 as compared to the same period in 2000 is
primarily attributable to managements continued commitment
to reduce costs where feasible and create more efficient
processes.

Interest.Net interest expense was $4.3 million for the
three months ended June 30, 2001 as compared with $3.7
million for the same period in 2000. The increase is
attributable to a reduction in interest income due to lower cash
balances primarily resulting from investments in strategic
acquisitions and a decrease in investment rates available.

Income Taxes.Income tax expense, which was primarily
related to state income taxes, was $0.2 million for the three
months ended June 30, 2001 as compared to income tax
expense of $0.4 million for the same period in 2000. As of
June 30, 2001, the Company has a net deferred tax asset,
which is fully offset by a valuation allowance. Realization of
the net deferred tax asset is dependent upon the Company
generating sufficient taxable income prior to the expiration of
the federal net operating loss carryforwards. The Company will
adjust this valuation reserve accordingly if, during future
periods, management believes the Company will generate
sufficient taxable income to realize the net deferred tax asset.

Discontinued Operations.In January of 1998, SCI
Management Corporation (SCI) filed a complaint
against the commercial division of Impact. The Company paid a
total of $5.3 million in settlement of the complaint. In May of
2001, the Company received an insurance settlement related to
the SCI matter of approximately $3 million.

On November 30, 1998, the Company completed the sale of
Hospital Services to NCO Group, Inc. (NCO) for
initial consideration of $107.5 million. On May 5, 2000, the
Company received a purchase price adjustment of $10.0 million
cash from NCO based on Hospital Services achievement of
various operational

11



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Six months ended June 30, 2001 as compared to six
months ended June 30, 2000

Revenue.Revenue classified by the Companys
reportable segments is as follows:

|                     |  |                  |         |      |  |   |         |  
|-------------------- |  | ---------------- | ------- | ---- |  | - | ------- | -
|                     |  |                 
|                     |  | Six Months Ended
|                     |  | June 30,        
|                     |  |                 
|                     |  | 2001             |         | 2000
|                     |  |                  |         |     
|                     |  |                 
|                     |  | (in thousands)  
|                    
|                    
|                    
|                    
|Physician Services   |  | $                | 112,452 |      |  | $ | 116,591 |  
|                    
|                    
|                    
|                    
|Application Software |  |                  | 29,419  |      |  |   | 29,603  |  
|                    
|                    
|                    
|                    
|e-Health Solutions   |  |                  | 26,812  |      |  |   | 17,087  |  
|                    
|                    
|                    
|                    
|Eliminations         |  |                  | (5,472  | )    |  |   | (5,573  | )
|                     |  |                  |         |      |  |   |         |  
|                     |  | $                | 163,211 |      |  | $ | 157,708 |  
|                     |  |                  |         |      |  |   |         |  

Physician Services revenue decreased approximately 4% for
the six months ended June 30, 2001 as compared to the same
period in 2000. The decline is primarily due to client-initiated
discontinuances throughout 2000. This decline was partially
offset by new sales in 2000 and 2001 and an improvement in the
Companys customers accounts receivable which has
improved the segments revenue cycle. The rate of
client-initiated discontinuances continues to decline in 2001.

Application Softwares revenue for the six months ended
June 30, 2001 was essentially flat as compared to the same
period in 2000.

e-Health Solutions revenue increased approximately 57% for
the six months ended June 30, 2001 as compared to the same
period in 2000. The increase is a primarily the result of
increased revenue from the recent acquisitions of HDS/PAMS, VIS
and OfficeMed as well as increased transaction volume from the
existing client base.

Operating Profit (Loss). Operating profit (loss), which
excludes the process improvement project and non-recurring
expenses, and net interest expense, classified by the
Companys reportable operating segments is as follows:

|                     |  |                  |        |      |  |   |        |  
|-------------------- |  | ---------------- | ------ | ---- |  | - | ------ | -
|                     |  |                 
|                     |  | Six Months Ended
|                     |  | June 30,        
|                     |  |                 
|                     |  | 2001             |        | 2000
|                     |  |                  |        |     
|                     |  |                 
|                     |  | (in thousands)  
|                    
|                    
|                    
|                    
|Physician Services   |  | $                | 4,350  |      |  | $ | 2,704  |  
|                    
|                    
|                    
|                    
|Application Software |  |                  | 2,365  |      |  |   | 270    |  
|                    
|                    
|                    
|                    
|e-Health Solutions   |  |                  | 990    |      |  |   | 1,905  |  
|                    
|                    
|                    
|                    
|Corporate            |  |                  | (5,680 | )    |  |   | (6,960 | )
|                     |  |                  |        |      |  |   |        |  
|                     |  | $                | 2,025  |      |  | $ | (2,081 | )
|                     |  |                  |        |      |  |   |        |  

The increase in Physician Services operating profit for
the six months ended June 30, 2001 as compared to the same
period in 2000 is attributable to managements focus on
profitable business and productivity enhancements.

The increase in Application Softwares operating profit for
the six months ended June 30, 2001 as compared to the same
period in 2000 is attributable to reduced operating expenses due
to managements continued focus on cost containment,
specifically salaries and wages, contract labor, travel
expenses, and outside services.

The decrease in e-Health Solutions operating profit for
the six months ended June 30, 2001 as compared to the same
period in 2000 is primarily attributable to HDS/PAMS transition
costs incurred in the first quarter of 2001 and increased
spending in preparation for future growth, partially offset by
operating profit from recent acquisitions.

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The decrease in Corporate overhead for the six months ended
June 30, 2001 as compared to the same period in 2000 is
primarily attributable to managements continued commitment
to reduce costs where feasible and create more efficient
processes.

Interest.Net interest expense was $8.4 million for the
six months ended June 30, 2001 as compared with $7.3
million for the same period in 2000. The increase is
attributable to a reduction in interest income due to lower cash
balances primarily resulting from investments in strategic
acquisitions and a decrease in investment rates available.

Income Taxes.Income tax expense, which was primarily
related to state income taxes, was $0.4 million for the six
months ended June 30, 2001 as compared to an income tax
benefit of $0.7 million for the same period in 2000. The Company
recognized a $1.2 million tax benefit in the six months ended
June 30, 2000 related to a state income tax refund. As of
June 30, 2001, the Company has a net deferred tax asset,
which is fully offset by a valuation allowance. Realization of
the net deferred tax asset is dependent upon the Company
generating sufficient taxable income prior to the expiration of
the federal net operating loss carryforwards. The Company will
adjust this valuation reserve accordingly, if during future
periods, management believes the Company will generate
sufficient taxable income to realize the net deferred tax asset.

Discontinued Operations.In January of 1998, SCI
Management Corporation (SCI) filed a complaint
against the commercial division of Impact. The Company paid a
total of $5.3 million in settlement of the complaint. In May of
2001, the Company received an insurance settlement related to
the SCI matter of approximately $3 million.

On November 30, 1998, the Company completed the sale of
Hospital Services to NCO Group, Inc. (NCO) for
initial consideration of $107.5 million. On May 5, 2000,
the Company received a purchase price adjustment of $10.0
million cash from NCO based on Hospital Services
achievement of various operational targets in 1999. The purchase
price adjustment resulted in the recognition of an additional
gain of approximately $9.2 million.

On December 17, 1999 the government division of Impact was
sold to J3 Technology Services Corp. for $46.5 million,
including a purchase price adjustment of $1.5 million received
on March 30, 2000 based on the divisions tangible net
worth at closing. The purchase price adjustment resulted in the
recognition of an additional gain of $1.5 million.

Liquidity and Capital Resources

The Company had working capital of $18.6 million at
June 30, 2001 including $20.2 million of unrestricted cash
and cash equivalents. The $8.6 million decrease in working
capital from December 31, 2000 is primarily the result of
the timing of payments on accruals, the payment of semi-annual
interest payments required under the $175 million of 9 1/2%
Senior Notes due 2005 (the Notes) and investment in
the Companys operations, including the acquisitions of VIS
and Officemed in April 2001, offset by cash generated from
operations.

As of June 30, 2001, the Company had uninvested net
proceeds (as defined by the Indenture governing the Notes)
related to the sale of non-core operations and other assets
totaled approximately $10.8 million. The net proceeds are the
result of various asset sales and, as such, under the Indenture,
must be invested in the Companys business at varying
points. The Company expects to reinvest the remaining net
proceeds related to assets sales through maintenance level
investments in capital expenditures and capitalized software to
support operations.

For more information about the Companys long-term debt,
refer to Note 10  Long-Term Debt in
the Companys Notes to Consolidated Financial Statements.

The Company believes that its current cash flow is sufficient to
permit the Company to meet its operating expenses, service its
debt requirements as they become due in the next twelve months
and for the long-term, and to invest in the business.

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Forward-Looking Statements

Certain statements included in the Notes to Consolidated
Financial Statements, Managements Discussion and Analysis
of Financial Condition and Results of Operations, and elsewhere
in this report are forward-looking statements within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934, as amended by the Private Securities
Litigation Reform Act of 1995, including certain statements set
forth under the captions Note 7  Legal
Matters, Note 8  Process Improvement
Project, Note 10  Long-Term
Debt and Liquidity and Capital Resources.
Forward-looking statements include the Companys
expectations with respect to industry growth segments, affect of
industry and regulatory changes on the Companys customer
base, the impact of operational improvement or cost reduction
initiatives, operating margins, overall profitability and the
availability of capital. Although the Company believes that the
statements it has made are based on reasonable assumptions, they
are based on current information and beliefs and, accordingly,
the Company can give no assurance that its expectations will be
achieved. In addition, these statements are subject to factors
that could cause actual results to differ materially from those
suggested by the forward-looking statements. These factors
include, but are not limited to, factors identified below under
the caption Factors That May Affect Future Results of
Operations, Financial Condition or Business. The Company
disclaims any responsibility to update any forward-looking
statements.

Factors That May Affect Future Results of Operations,
Financial Condition or Business

Competition with Business Management Outsourcing Services
Companies and In-house Providers

The business management outsourcing business, especially
surrounding the areas of billings and collections, is highly
competitive. The Company competes with regional physician and
hospital reimbursement organizations, national information and
data processing organizations, and physician groups and
hospitals that provide their own business management services.
Successful competition within this industry is dependent on
numerous industry and market conditions.

Potential industry and market changes that could adversely
affect the Companys ability to compete for business
management outsourcing services include an increase in the
number of managed care providers compared to fee-for-service
providers, and new alliances between healthcare providers and
third-party payers in which healthcare providers are employed by
such third-party payers.

Competition with Information Technology Companies

The business of providing application software, information
technology and consulting services is also highly competitive.
The Company competes with national and regional companies in
this regard. Some competitors have longer operating histories
and greater financial, technical and marketing resources than
that of the Company. The Companys successful competition
within this industry is dependent on numerous industry and
market conditions.

Major Client Projects

The Companys application software business involves
projects designed to reengineer customer operations through the
strategic use of imaging, client/server and other advanced
technologies. Failure to meet customers expectations with
respect to a major project could, possibly, have the following
consequences: damage the Companys reputation and standing
in this marketplace; impair its ability to attract new
client/server information technology business; and inhibit its
ability to collect for services performed on a project.

Changes in the Healthcare Industry

The markets for the Companys software and e-commerce
products and services as well as its business management
outsourcing services are characterized by rapidly changing
technology, evolving industry standards and frequent new product
introductions. The Companys ability to keep pace with
changes in the healthcare industry may be dependent on a variety
of factors, including its ability to enhance existing products

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##### Table of Contents





Competitors may develop competitive products that could
adversely affect the Companys operating results. It is
possible that the Company will be unsuccessful in refining,
enhancing and developing our software and billing systems going
forward. The costs associated with refining, enhancing and
developing its software and billing systems may increase
significantly in the future. Existing software and technology
may become obsolete as a result of ongoing technological
developments in the marketplace.

Consolidation in the Marketplace

In general, consolidation initiatives in the healthcare
marketplace could result in fewer potential customers for the
Companys services. Some of these types of initiatives
include employer initiatives such as creating purchasing
cooperatives (HMOs); provider initiatives, such as risk-sharing
among healthcare providers and managed care companies through
capitated contracts; and integration among hospitals and
physicians into comprehensive delivery systems.

Continued consolidation of management and billing services
through integrated delivery systems could result in a decrease
in demand for the Companys business management outsourcing
services for particular physician practices.

Government Regulations

The healthcare industry is highly regulated and is subject to
changing political, economic and regulatory influences. For
example, the Balanced Budget Act contained significant changes
to Medicare and Medicaid and began to have its initial impact in
1998 due to limitations on reimbursement, resulting cost
containment initiatives, and effects on pricing and demand for
capital-intensive systems. These factors affect the purchasing
practices and operations of healthcare organizations. Federal
and state legislatures have periodically considered programs to
reform or amend the U.S. healthcare system at both the federal
and state level and to change healthcare financing and
reimbursement systems. These programs may contain proposals to
increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which
healthcare industry participants operate. Current or future
government regulations or healthcare reform measures may affect
our business. Healthcare industry participants may respond by
reducing their investments or postponing investment decisions,
including investments in the Companys products and
services.

Medical billing and collection activities are governed by
numerous federal and state civil and criminal laws. Federal and
state regulators increasingly use these laws to investigate
healthcare providers and companies that provide billing and
collection services. In connection with these laws, the Company
may be subjected to federal or state investigations and possible
penalties may be imposed upon the Company, false claims
litigation may be filed, private payers may file claims against
the Company, and the Company may be excluded from Medicare,
Medicaid and/or other government-funded healthcare programs.

In the past, the Company has been the subject of federal
investigations, and it may become the subject of false claims
litigation or additional investigations relating to its billing
and collection activities. Any such proceeding or investigation
could have a material adverse effect on the Companys
business.

Currently in the area of privacy and security of health
information, numerous federal and state civil and criminal laws
govern the collection, use, storage and disclosure of health
information. Penalties for noncompliance, both criminal and
civil, may be brought by federal or state enforcement agencies.
Persons who believe their health information has been misused or
disclosed improperly may bring claims and payers who believe
instances of noncompliance with privacy and security standards
have occurred may bring administrative sanctions or remedial
actions against offending parties.

The final HIPAA rules for the standards for electronic
transactions and standards of privacy of individually
identifiable health information were published in 2000 and 2001,
respectively, with implementation deadlines of 2002 and 2003,
respectively. These rules set new or higher standards for the
healthcare industry as to handling healthcare transactions and
information and will require changes to the manner in

15



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##### Table of Contents





Passage of HIPAA is part of a wider healthcare reform
initiative. The Company expects that healthcare reform will
continue to be widely debated. The Company also expects that the
federal government as well as state governments will pass laws
and issue regulations addressing healthcare issues and
reimbursement of healthcare providers. The Company cannot
predict whether new legislation and regulations will be enacted
and, if enacted, whether such new developments will affect its
business.

Debt

The Company has a significant amount of long-term indebtedness
and, as a result, obligations to make interest payments on that
debt. If unable to make the required debt payments, the Company
could be required to reduce or delay capital expenditures, sell
certain assets, restructure or refinance its indebtedness, or
seek additional equity capital. The Companys ability to
make payments on its debt obligations will depend on future
operating performance, which will be affected by certain
conditions that are beyond the Companys control.

Litigation

The Company is involved in litigation arising in the ordinary
course of its business, which may expose it to loss
contingencies. These matters include, but are not limited to,
claims brought by former customers with respect to the operation
of our business. The Company has also received written demands
from customers and former customers that have not yet resulted
in legal action. Many of the Companys software products
provide data for use by healthcare providers in providing care
to patients. Although no claims have been brought against the
Company to date regarding injuries related to the use of its
products, such claims may be made in the future.

The Company may not be able to successfully resolve such legal
matters or other legal matters that may arise in the future. In
the event of an adverse outcome with respect to such legal
matters or other legal matters in which the Company may become
involved, there is the risk that its insurance coverage may not
fully cover any damages assessed against the Company. Although
the Company maintains all insurance coverage in amounts that it
believes is sufficient for its business, there can be no
assurance that such coverage will prove to be adequate or that
such coverage will continue to remain available on acceptable
terms, if at all. A successful claim brought against the
Company, which is uninsured or under-insured, could materially
harm its business, results of operations or financial condition.

Stock Price Volatility

The trading price of the Companys common stock may be
volatile. The market for the Companys common stock may
experience significant price and volume fluctuations in response
to a number of factors including actual or anticipated
variations in quarterly operating results, changes in
expectations of future financial performance or changes in
estimates of securities analysts, government regulatory action,
healthcare reform measures, client relationship developments and
other factors, many of which are beyond the Companys
control. Furthermore, the stock market in general and the market
for software, healthcare and high technology companies in
particular, has experienced extreme volatility that often has
been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may
adversely affect the trading price of the Companys common
stock, regardless of actual operating performance.

16



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##### Table of Contents






PART II

OTHER INFORMATION




Item  1.     Legal
Proceedings

The information required by this Item is included in Note
7  Legal Matters of Notes to Consolidated
Financial Statements in Item 1 of Part I.




Item  4.     Submission of
Matters to a Vote of Security Holders

The Company held its Annual Meeting of Stockholders on
May 3, 2001. The following directors were elected at such
meeting:

|                         |  |              |  |            |  |               |   |                |  |  |         | 
|------------------------ |  | ------------ |  | ---------- |  | ------------- | - | -------------- |  |  | ------- | 
|Nominee                  |  | Board Term   |  | Votes For  |  | Votes Against |   | Votes Withheld
|                         |  |              |  |            |  |               |   |               
|Roderick M. Hills        |  | Through 2001 |  | 26,325,338 |  |               |  |                |  |  | 584,195 | 
|                        
|                        
|                        
|                        
|David R. Holbrooke, M.D. |  | Through 2001 |  | 26,325,529 |  |               |  |                |  |  | 584,004 | 
|                        
|                        
|                        
|                        
|David E. McDowell        |  | Through 2001 |  | 26,318,940 |  |               |  |                |  |  | 590,593 | 
|                        
|                        
|                        
|                        
|Kevin E. Moley           |  | Through 2001 |  | 26,325,529 |  |               |  |                |  |  | 584,004 | 
|                        
|                        
|                        
|                        
|Philip M. Pead           |  | Through 2001 |  | 26,319,000 |  |               |  |                |  |  | 590,533 | 
|                        
|                        
|                        
|                        
|John C. Pope             |  | Through 2001 |  | 26,325,197 |  |               |  |                |  |  | 584,336 | 
|                        
|                        
|                        
|                        
|C. Christopher Trower    |  | Through 2001 |  | 26,325,522 |  |               |  |                |  |  | 584,011 | 




Item  6.     Exhibits and
Reports on Form 8-K

(A)  Exhibits

|        |     |  |  |          |  |                                                                                                                                                                                                                                                                                                                               
|------- | --- |  |  | -------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |     |  |  |         
|Number  |     |  |  | Document
|        |     |  |  |         
|        | 2.1 |  |  |         |  | Stock Purchase Agreement dated as of
	October 15, 1998, between Registrant and NCO Group, Inc.
	(incorporated by reference to Exhibit 2.1 to Quarterly
	Report on Form 10-Q for the quarter ended
	September 30, 1998).                                                                                                       
|        | 2.2 |  |  |         |  | Stock Purchase Agreement dated as of
	April 20, 1999, among Complete Business Solutions, Inc.,
	E-Business Solutions.com, Inc., Impact Innovations Holdings,
	Inc. and Registrant (incorporated by reference to
	Exhibit 2.1 to Current Report on Form 8-K filed on
	May 5, 1999).                                            
|        | 2.3 |  |  |         |  | Stock Purchase Agreement dated as of
	November 4, 1999, among J3 Technology Services Corp.,
	Impact Innovations Holdings, Inc., Impact Innovations Government
	Group, Inc. and Registrant (incorporated by reference to
	Exhibit 2.3 to Quarterly Report on Form 10-Q for the
	quarter ended September 30, 1999).             
|        | 2.4 |  |  |         |  | Stock Purchase Agreement dated as of
	December 8, 2000, among Registrant, Health Data Services,
	Inc., Patient Account Management Services, Inc., and Marc
	Saltzberg, Raymond DelBrocco, Charles Moore, And Larry Shaw
	(incorporated by reference to Exhibit 2.1 to Current Report
	on Form 8-K filed on December 20, 2000).
|        | 2.5 |  |  |         |  | Asset Purchase Agreement dated as of
	April 27, 2001, among Registrant, Health Data Services,
	Inc., Virtual Information Systems, Inc., and Paul M. Helmick and
	William T. Adams (incorporated by reference to Exhibit 2.5
	to Quarterly Report on Form 10-Q for the quarter ended
	March 31, 2001).                         
|        | 2.6 |  |  |         |  | Asset Purchase Agreement dated as of
	April 27, 2001, among Registrant, Per-Se Transaction
	Services, Inc., officemed.com LLC, SoftLinc, Inc., and Daniel
	Mansfield (incorporated by reference to Exhibit 2.6 to
	Quarterly Report on Form 10-Q for the quarter ended
	March 31, 2001).                                      
|        | 3.1 |  |  |         |  | Restated Certificate of Incorporation of
	Registrant (incorporated by reference to Exhibit 3.1 to
	Annual Report on Form 10-K for the year ended
	December 31, 1999).                                                                                                                                                         
|        | 3.2 |  |  |         |  | Restated By-laws of Registrant (incorporated by
	reference to Exhibit 3.2 to Annual Report on Form 10-K
	for the year ended December 31, 1999).                                                                                                                                                                               

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##### Table of Contents



|        |      |  |  |          |  |                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---- |  |  | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |  |         
|Number  |      |  |  | Document
|        |      |  |  |         
|        | 4.1  |  |  |         |  | Indenture dated as of February 20, 1998,
	among Registrant, as Issuer, the Subsidiary Guarantors named in
	the Indenture and State Street Bank and Trust Company, as
	Trustee (including form of note) (incorporated by reference to
	Exhibit 10.3 to Current Report on Form 8-K filed on
	March  3, 1998).                                                                            
|        | 4.2  |  |  |         |  | Warrant Agreement dated as of July 8, 1998,
	between Registrant and SunTrust Bank, Atlanta, as Warrant Agent
	(including form of warrant certificate) (incorporated by
	reference to Exhibit 4.2 to Registration Statement on
	Form  8-A filed on July 21, 1998)                                                                                                                       
|        | 4.3  |  |  |         |  | Rights Agreement dated as of February 11,
	1999, between Registrant and American Stock Transfer & Trust
	Company (including form of rights certificates) (incorporated by
	reference to Exhibit 4 to Current Report on Form 8-K
	filed on February 12, 1999).                                                                                                                          
|        | 4.4  |  |  |         |  | First Amendment to Rights Agreement dated as of
	February  11, 1999, between Registrant and American Stock
	Transfer & Trust Company, entered into as of May 4,
	2000 (incorporated by reference to Exhibit 4.4 to Quarterly
	Report on Form  10-Q for the quarter ended March 31,
	2000).                                                                                             
|        | 10.1 |  |  |         |  | Credit Agreement dated as of April 6, 2001,
	among the Registrant, as Borrower, certain subsidiaries of the
	Registrant, as the other Credit Parties, the lenders signatory
	thereto from time to time, as Lenders, and General Electric
	Capital Corporation, as Agent and Lender (incorporated by
	reference to Exhibit 10.1 to Current Report on
	Form 8-K filed on April 23, 2001).
|        | 10.2 |  |  |         |  | Second Amendment to the Per-Se Technologies
	Employees Retirement Savings Plan.                                                                                                                                                                                                                                                                                                       

(B)  Reports on Form 8-K

The Company filed the following reports on Form 8-K during
the quarter ended June 30, 2001:

|                                                      |  |            |  |                |               |             |  |  |                | 
|----------------------------------------------------- |  | ---------- |  | -------------- | ------------- | ----------- |  |  | -------------- | 
|                                                      |  | Financial  |  |                |               |            
|                                                      |  | Statements |  |                |               |            
|Item Reported                                         |  | Filed      |  | Date of Report |               | Filing Date
|                                                      |  |            |  |                |               |            
|Entry into $50 million Credit Facility                |  | No         |  |                | April 6, 2001 |             |  |  | April 23, 2001 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Change in principal accountants to Ernst &
	Young LLP |  | No         |  |                | June 14, 2001 |             |  |  | June 21, 2001  | 

18



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##### Table of Contents






SIGNATURES

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



| |                          
| | -------------------------
| | PER-SE TECHNOLOGIES, INC.
| | (Registrant)             



| |     |                     
| | --- | --------------------
| | By: | /s/ CHRIS E. PERKINS

| |                             
| | ----------------------------
| |                             
| | Chris E. Perkins            
| | Executive Vice President and
| | Chief Financial Officer     



| |     |                     
| | --- | --------------------
| | By: | /s/ MARY C. CHISHOLM

| |                               
| | ------------------------------
| |                               
| | Mary C. Chisholm              
| | Vice President and Controller 
| | (Principal Accounting Officer)

Date: August 13, 2001

19



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##### Table of Contents






INDEX TO EXHIBITS

|        |      |  |  |          |  |                                                                                                                                                                                                                                                                                                                                                                                        
|------- | ---- |  |  | -------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |  |  |         
|Number  |      |  |  | Document
|        |      |  |  |         
|        | 2.1  |  |  |         |  | Stock Purchase Agreement dated as of
	October 15, 1998, between Registrant and NCO Group, Inc.
	(incorporated by reference to Exhibit 2.1 to Quarterly
	Report on Form 10-Q for the quarter ended
	September 30, 1998).                                                                                                                                                                
|        | 2.2  |  |  |         |  | Stock Purchase Agreement dated as of
	April 20, 1999, among Complete Business Solutions, Inc.,
	E-Business Solutions.com, Inc., Impact Innovations Holdings,
	Inc. and Registrant (incorporated by reference to
	Exhibit 2.1 to Current Report on Form 8-K filed on
	May 5, 1999).                                                                                                     
|        | 2.3  |  |  |         |  | Stock Purchase Agreement dated as of
	November 4, 1999, among J3 Technology Services Corp.,
	Impact Innovations Holdings, Inc., Impact Innovations Government
	Group, Inc. and Registrant (incorporated by reference to
	Exhibit 2.3 to Quarterly Report on Form 10-Q for the
	quarter ended September 30, 1999).                                                                      
|        | 2.4  |  |  |         |  | Stock Purchase Agreement dated as of
	December 8, 2000, among Registrant, Health Data Services,
	Inc., Patient Account Management Services, Inc., and Marc
	Saltzberg, Raymond DelBrocco, Charles Moore, And Larry Shaw
	(incorporated by reference to Exhibit 2.1 to Current Report
	on Form 8-K filed on December 20, 2000).                                                         
|        | 2.5  |  |  |         |  | Asset Purchase Agreement dated as of
	April 27, 2001, among Registrant, Health Data Services,
	Inc., Virtual Information Systems, Inc., and Paul M. Helmick and
	William T. Adams (incorporated by reference to
	Exhibit 2.5 to Quarterly Report on Form 10-Q for the
	quarter ended March 31, 2001).                                                                                  
|        | 2.6  |  |  |         |  | Asset Purchase Agreement dated as of
	April 27, 2001, among Registrant, Per-Se Transaction
	Services, Inc., officemed.com LLC, SoftLinc, Inc., and Daniel
	Mansfield (incorporated by reference to Exhibit 2.6 to
	Quarterly Report on Form 10-Q for the quarter ended
	March 31, 2001).                                                                                               
|        | 3.1  |  |  |         |  | Restated Certificate of Incorporation of
	Registrant (incorporated by reference to Exhibit 3.1 to
	Annual Report on Form 10-K for the year ended
	December 31, 1999).                                                                                                                                                                                                                  
|        | 3.2  |  |  |         |  | Restated By-laws of Registrant (incorporated by
	reference to Exhibit 3.2 to Annual Report on Form 10-K
	for the year ended December 31, 1999).                                                                                                                                                                                                                                        
|        | 4.1  |  |  |         |  | Indenture dated as of February 20, 1998,
	among Registrant, as Issuer, the Subsidiary Guarantors named in
	the Indenture and State Street Bank and Trust Company, as
	Trustee (including form of note) (incorporated by reference to
	Exhibit 10.3 to Current Report on Form 8-K filed on
	March  3, 1998).                                                                            
|        | 4.2  |  |  |         |  | Warrant Agreement dated as of July 8, 1998,
	between Registrant and SunTrust Bank, Atlanta, as Warrant Agent
	(including form of warrant certificate) (incorporated by
	reference to Exhibit 4.2 to Registration Statement on
	Form  8-A filed on July 21, 1998).                                                                                                                      
|        | 4.3  |  |  |         |  | Rights Agreement dated as of February 11,
	1999, between Registrant and American Stock Transfer & Trust
	Company (including form of rights certificates) (incorporated by
	reference to Exhibit 4 to Current Report on Form 8-K
	filed on February 12, 1999).                                                                                                                          
|        | 4.4  |  |  |         |  | First Amendment to Rights Agreement dated as of
	February  11, 1999, between Registrant and American Stock
	Transfer & Trust Company, entered into as of May 4,
	2000 (incorporated by reference to Exhibit 4.4 to Quarterly
	Report on Form  10-Q for the quarter ended March 31,
	2000.                                                                                              
|        | 10.1 |  |  |         |  | Credit Agreement dated as of April 6, 2001,
	among the Registrant, as Borrower, certain subsidiaries of the
	Registrant, as the other Credit Parties, the lenders signatory
	thereto from time to time, as Lenders, and General Electric
	Capital Corporation, as Agent and Lender (incorporated by
	reference to Exhibit 10.1 to Current Report on
	Form 8-K filed on April 23, 2001).
|        | 10.2 |  |  |         |  | Second Amendment to the Per-Se Technologies
	Employees Retirement Savings Plan.                                                                                                                                                                                                                                                                                                       

20