<PAGE>   1



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    FORM 10-Q

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

For the quarterly period ended June 30, 1998

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

For the transition period from ________ to _________

                         Commission file number: 0-26090

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

          DELAWARE                                               04-3185995
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

                              CompDent Corporation
                        100 Mansell Court East, Suite 400
                             Roswell, Georgia 30076
                    (Address of principal executive offices)

                                 (770) 998-8936
              (Registrant's telephone number, including area code)

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

                    Yes     X                          No

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

          Class                              Outstanding at July 31, 1998
          -----                              ----------------------------
Common Stock, $.01 par value                           10,112,629



<PAGE>   2



                      COMPDENT CORPORATION AND SUBSIDIARIES


                                      INDEX
<TABLE>
<CAPTION>
                                                                                               Page #

<S>                                                                                            <C>
Part I.    Financial Information                                                                  3

           Item 1.       Financial Statements                                                     4

           Item 2.       Management's Discussion and Analysis of Financial Condition
                         and Results of Operations                                               11

Part II.   Other Information

           Item 1.       Legal Proceedings                                                       16

           Item 2.       Changes in Securities                                                   16

           Item 4.       Submission of Matters to a Vote of Security Holders                     16

           Item 5.       Other Information                                                       16

           Item 6.       Exhibits and Reports Filed on Form 8-K                                  17

Signatures                                                                                       18

Exhibit Index                                                                                    19
</TABLE>

                                                                               2
<PAGE>   3



                         PART I. - FINANCIAL INFORMATION


         This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. The Company's actual results could
differ materially from those set forth in the forward-looking statements.
Certain factors that might cause such a difference include, among others, risk
associated with the general competitive and pricing pressures in the
marketplace, the risks associated with the successful completion of new
acquisitions, the effective integration of new acquisitions and continued growth
in the dental coverage marketplace. Other risk factors are described in CompDent
Corporation's Annual Report on Form 10-K for the year ended December 31, 1997
and 1st Quarter Report on Form 10-Q, all on file with the Securities and
Exchange Commission.


                                                                               3
<PAGE>   4


ITEM 1. FINANCIAL STATEMENTS

                      COMPDENT CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          JUNE  30,   DECEMBER 31,
                                                            1998          1997
                                                         -----------  ------------
                                                         (UNAUDITED)
<S>                                                      <C>          <C>         
                  ASSETS
Current assets:
     Cash and cash equivalents                           $     9,726  $     21,963
     Premiums receivable from subscribers                      4,440         5,554
     Patient accounts receivable, net of allowance for
         doubtful accounts of $167 in 1998 and
         $1,188 in 1997                                        2,100         1,668
     Income taxes receivable                                      --           175
     Deferred income taxes                                     4,318         5,081
     Other current assets                                      5,274         2,842
                                                         -----------  ------------
         Total current assets                                 25,858        37,283
                                                         -----------  ------------

Restricted funds                                               2,320         2,321
Property and equipment, net of accumulated depreciation       12,265         6,292
Excess of purchase price over net assets acquired            100,736        96,296
Noncompetition agreements                                         13           325
Reinsurance receivable                                         5,493         5,417
Investment in DHDC                                             1,500         1,500
Other assets                                                   2,177         1,437
                                                         -----------  ------------
                                                         $   150,362  $    150,871
                                                         ===========  ============

              LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Unearned revenue                                    $     9,197  $      9,538
     Accounts payable and accrued expenses                    11,502        14,855
     Accrued interest payable                                    109           109
     Dental claims reserves                                    1,904         1,502
     Income tax payable                                          140            --
     Other current liabilities                                    63            63
                                                         -----------  ------------
         Total current liabilities                            22,915        26,067
                                                         -----------  ------------

Aggregate reserves for life policies and contracts             5,372         5,331
Notes payable                                                 54,233        56,595
Deferred compensation expense                                    276           298
Deferred income taxes                                          1,740         1,887
Other liabilities                                                453           417
                                                         -----------  ------------
         Total liabilities                                    84,989        90,595
                                                         -----------  ------------

Stockholders' equity:
     Common stock                                                101           101
     Additional paid-in capital                               97,618        97,618
     Retained deficit                                        (32,346)      (37,443)
                                                         -----------  ------------
         Total stockholders' equity                           65,373        60,276
                                                         -----------  ------------
                                                         $   150,362  $    150,871
                                                         ===========  ============
</TABLE>

The accompanying notes are an integral part of these financial statements.
                                                                               4

<PAGE>   5


                      COMPDENT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                       JUNE 30,
                                                                       --------
                                                                 1998         1997
                                                               ---------    ---------
                                                              (UNAUDITED)  (UNAUDITED)
<S>                                                            <C>          <C>     
Revenues:
     Subscriber premiums                                       $  35,982    $  35,852
     Affiliated practice revenue                                   5,824           --
     Other revenue                                                 1,757        2,348
                                                               ---------    ---------
         Total revenue                                            43,563       38,200
                                                               ---------    ---------
Expenses:
     Dental care providers' fees and claim costs                  19,505       19,906
     Commissions                                                   3,346        3,192
     Premium taxes                                                   194          256
     DHMI operating expenses                                       5,262           --
     General and administration                                    8,293        7,967
     Depreciation and amortization                                 1,475        1,355
                                                               ---------    ---------
         Total expenses                                           38,075       32,676
                                                               ---------    ---------
              Operating income                                     5,488        5,524
                                                               ---------    ---------
Other (income) expense:
     Interest income                                                (245)        (254)
     Interest expense                                              1,159          738
     Other, net                                                       (3)         (16)
                                                               ---------    ---------
                                                                     911          468
                                                               ---------    ---------

         Income before provision for income taxes                  4,577        5,056
         Income tax provision                                      1,972        2,172
                                                               ---------    ---------
              Net income                                       $   2,605    $   2,884
                                                               =========    =========

Net income per common share - basic                            $    0.26    $    0.29
                                                               =========    =========

Net income per common share - fully diluted                    $    0.26    $    0.28
                                                               =========    =========

Weighted average common shares outstanding - basic                10,113       10,106
                                                               =========    =========

Weighted average common shares outstanding - fully diluted        10,181       10,179
                                                               =========    =========
</TABLE>


The accompanying notes are an integral part of these financial statements.



                                                                               5
<PAGE>   6





                      COMPDENT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                  SIX MONTHS ENDED
                                                                     JUNE 30,
                                                                     --------
                                                                1998            1997
                                                             -----------    -----------
                                                             (UNAUDITED)    (UNAUDITED)
<S>                                                          <C>            <C>     
Revenues:
     Subscriber premiums                                       $ 71,404      $ 71,488
     Affiliated practice revenue                                 11,115            --
     Other revenue                                                3,486         4,547
                                                               --------      --------
         Total revenue                                           86,005        76,035
                                                               --------      --------
Expenses:
     Dental care providers' fees and claim costs                 38,934        39,450
     Commissions                                                  6,612         6,364
     Premium taxes                                                  455           521
     DHMI operating expenses                                      9,867            --
     General and administration                                  16,667        15,827
     Depreciation and amortization                                2,853         2,676
                                                               --------      --------
         Total expenses                                          75,388        64,838
                                                               --------      --------
              Operating income                                   10,617        11,197
                                                               --------      --------
Other (income) expense:
     Interest income                                               (499)         (415)
     Interest expense                                             2,172         1,446
     Other, net                                                      (3)          (61)
                                                               --------      --------
                                                                  1,670           970
                                                               --------      --------

         Income before provision for income taxes                 8,947        10,227
         Income tax provision                                     3,850         4,504
                                                               --------      --------
              Net income                                       $  5,097      $  5,723
                                                               ========      ========

Net income per common share - basic                            $   0.50      $   0.57
                                                               ========      ========

Net income per common share - fully diluted                    $   0.50      $   0.56
                                                               ========      ========

Weighted average common shares outstanding - basic               10,113        10,106
                                                               ========      ========

Weighted average common shares outstanding - fully diluted       10,178        10,172
                                                               ========      ========
</TABLE>


The accompanying notes are an integral part of these financial statements.




                                                                               6
<PAGE>   7





                      COMPDENT CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                              SIX MONTHS ENDED
                                                                                  JUNE 30,
                                                                              1998          1997   
                                                                          ----------    ----------   
                                                                          (UNAUDITED)   (UNAUDITED)
<S>                                                                       <C>           <C>        
Cash flows from operating activities:
         Net income                                                        $  5,097      $  5,723     
     Adjustments to reconcile net income to net cash provided by                                                
       operating activities:                                                          
         Depreciation and amortization                                        2,854         2,676   
         Gain on sale of property and equipment                                  --           (10)  
         Deferred income tax expense                                            616         1,281   
         Changes in assets and liabilities:                                                         
            Premiums receivable from subscribers and patients accounts                              
               receivable, net of allowance for doubtful accounts               682        (1,178)  
            Income taxes receivable/payable                                     315         1,156   
            Other assets                                                     (3,248)       (1,652)  
            Unearned revenue                                                   (341)         (144)  
            Accounts payable and accrued expenses                            (3,503)       (1,723)  
            Other liabilities                                                  (453)       (1,191)  
                                                                           --------      --------   
               Net cash provided by operating activities                      2,019         4,938   
                                                                           --------      --------   
                                                                                                    
Cash flows from investing activities:                                                               
     Additions to property and equipment                                     (7,041)       (1,331)  
     Increase in restricted cash                                                 --          (107)  
     Proceeds from sale of property and equipment                                (3)           18   
     Payments made in connection with proposed business acquisitions             --          (191)
     Purchase of businesses, net of cash acquired                            (4,850)         (476)  
                                                                           --------      --------   
               Net cash used in investing activities                        (11,894)       (2,087)  
                                                                           --------      --------   
Cash flows from financing activities:                                                               
     Net (repayment)/borrowings under credit agreement                       (2,362)       13,337   
     Tax benefit realized from exercise of non-qualified stock options           --           583   
                                                                           --------      --------   
               Net cash (used in) provided by financing activities           (2,362)       13,920   
                                                                           --------      --------   
                                                                                                    
(Decrease) increase in cash and cash equivalents                            (12,237)       16,771   
Cash and cash equivalents, beginning of period                               21,963        26,959   
                                                                           --------      --------   
Cash and cash equivalents, end of period                                   $  9,726      $ 43,730   
                                                                           ========      ========   
                                                                                                    
Supplemental disclosures of cash flow information:                                                  
     Cash paid during the period for:                                                               
         Interest                                                          $  2,172      $  1,198   
                                                                           ========      ========   
         Income taxes                                                      $  2,919      $  1,484   
                                                                           ========      ========   
                                                                                                    
 Non-cash investing and financing activities:                                                       
     Stock issued in exchange for business acquired                        $     --      $  1,141   
                                                                           ========      ========   
</TABLE>
                                                                           
The accompanying notes are an integral part of these financial statements.


                                                                               7
<PAGE>   8



                      COMPDENT CORPORATION AND SUBSIDIARIES
              NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
                                  JUNE 30, 1998

1.       BASIS OF PRESENTATION

         The unaudited consolidated balance sheet as of June 30, 1998, the
unaudited consolidated statements of operations for the three months and six
months ended June 30, 1998 and 1997, and the unaudited consolidated statements
of cash flows for the six months ended June 30, 1998 and 1997, in the opinion of
management, have been prepared on the same basis as the audited consolidated
financial statements and include all significant adjustments, consisting of
normal recurring adjustments, necessary for the fair presentation of the results
of the interim periods. The data disclosed in these notes to the financial
statements for these periods are also unaudited. The consolidated financial
statements and notes thereto should be read in conjunction with the consolidated
financial statements and notes thereto as of December 31, 1997 and 1996, and for
the years ended December 31, 1997, 1996, and 1995, included in the 1997 Annual
Report of CompDent Corporation and Subsidiaries (the "Company", except as the
context otherwise requires) and on Form 10-K. Operating results of the Company
for the three months and six months ended June 30, 1998, are not necessarily
indicative of the results that may be expected for the entire year ending
December 31, 1998.

2.       BUSINESS COMBINATIONS

         Effective March 21, 1997, the Company completed the acquisition of
American Dental Providers, Inc. ("AMDP"), and Diamond Dental & Vision, Inc.
("DDV"). The aggregate purchase price of $1.7 million consisted of $0.5 million
in cash and $1.2 million of Company common stock issued at fair market value.
AMDP provides managed dental care services through a network of dental care
providers, and DDV provides a vision plan and referral fee-for-service dental
plan to the Arkansas market. The Company funded the cash portion of the purchase
with cash available from operations. The acquisition of AMDP and DDV was
accounted for using the purchase method of accounting with the results of
operations of the businesses acquired included from the effective date of the
acquisition. The acquisition resulted in excess of cost over fair value of net
assets acquired of $2.4 million which will be amortized over 40 years.

         Effective for the fourth quarter of 1997, the Company changed policy
regarding the recoverability of goodwill to a discounted projection of future
cash flows using an economic rate of return that would be customary for dental
benefit company transactions. This resulted in AMDP's and DDV's goodwill being
reduced to $0.

         The following is a summary of assets acquired, liabilities assumed, and
consideration paid in connection with the acquisition:

<TABLE>
     <S>                                                  <C>        
     Fair value of assets acquired                        $ 2,652,000
     Cash paid and fair value of stock issued
       for assets acquired, net of cash acquired           (1,614,000)
     Acquisition costs paid                                  (416,000)
                                                          -----------
     Liabilities assumed                                  $   622,000
                                                          ===========
</TABLE>

         Effective July 2, 1997, the Company completed the acquisition of 21
dental facilities from The Workman Management Group, Ltd. ("Workman"). The
dental facilities are located in central and southern Illinois. The purchase
price consisted of $15.5 million in cash and funding for the acquisition was
obtained from cash available from operations and from the Company's revolving
line of credit. In addition, the Company granted an aggregate of 70,000
non-qualified options to the selling shareholders. Concurrent with the
acquisition, the Company entered into a 40-year agreement to manage the dental
practices which are operating in the dental facilities. The acquisition of
Workman was accounted for using


                                                                               8
<PAGE>   9

the purchase method of accounting with the results of operations of the
businesses acquired included from the effective date of the acquisition. The
acquisition resulted in excess of cost over fair value of net assets acquired of
$17.0 million which will be amortized over 40 years

         The following is a summary of assets acquired, liabilities assumed, and
consideration paid in connection with the acquisition:

<TABLE>
     <S>                                                                      <C>        
     Fair value of assets acquired                                            $ 18,040,000
     Cash paid, net of cash acquired                                           (15,340,000)
     Acquisition costs paid                                                       (990,000)
                                                                              ------------
     Liabilities assumed                                                      $  1,710,000
                                                                              ============
</TABLE>


         During the third and fourth quarter of 1997, the Company completed the
acquisition of several dental facilities from three additional dental groups.
Effective July 2, 1997, the Company completed the acquisition of one dental
facility located in southern Florida from the Old Cutler Dental Associates, P.A.
("Old Cutler"). Effective September 26, 1997, the Company completed the
acquisition of one dental facility located in central Tennessee from Robert T.
Winfree, D.D.S., P.C. ("Winfree"). Effective November 7, 1997, the Company
completed the acquisition of Stratman Management Group ("Stratman") and its six
dental facilities located in Indiana. The purchase price of these facilities
consisted of $4,957 million in cash less discharge of liabilities related to the
purchased assets. Funding for the acquisitions was obtained from cash available
from operations and from the Company's revolving line of credit. Concurrent with
the acquisitions, the Company entered into 40-year agreements to manage the
dental practices which are operating in the dental facilities. Each acquisition
was accounted for using the purchase method of accounting with the results of
operations of the businesses acquired included from the effective date of the
acquisition. The acquisitions resulted in excess of cost over fair value of net
assets acquired of $5,528 which will be amortized over 40 years.

         The following is a summary of assets acquired, liabilities assumed and
consideration paid in connection with the acquisitions:

<TABLE>
     <S>                                                                      <C>        
     Fair value of assets acquired                                            $ 6,465,000
     Cash paid, net of cash acquired                                           (4,957,000)
     Acquisition costs paid                                                     ( 227,000)
                                                                              -----------
     Liabilities assumed                                                      $ 1,281,000
                                                                              ===========
</TABLE>

         Effective January 2, 1998, the Company completed the acquisition of
five dental facilities from Michael H. Reznik, D.D.S., P.C. ("Reznik"). The
dental facilities are located in Atlanta, Georgia. The purchase price consisted
of $3.5 million in cash less discharge of liabilities related to the purchased
assets. Funding for the acquisition was obtained from cash available from
operations and from the Company's revolving line of credit. Concurrent with the
acquisition, the Company entered into a 40-year agreement to manage the dental
practices which are operating in the dental facilities. The acquisition of
Reznik was accounted for using the purchase method of accounting with the
results of operations of the business acquired included from the effective date
of the acquisition. The acquisition resulted in excess of cost over fair value
of net assets acquired of $4.0 million which will be amortized over 40 years.


         The following is a summary of assets acquired, liabilities assumed, and
consideration paid in connection with the acquisition:

<TABLE>
     <S>                                                                      <C>        
     Fair value of assets acquired                                            $  4,149,000
     Cash paid, net of cash acquired                                            (3,500,000)
     Acquisition costs paid                                                       (150,000)
                                                                              ------------
     Liabilities assumed                                                      $    499,000
                                                                              ============
</TABLE>

                                                                               9
<PAGE>   10

         Effective April 30, 1998, the Company completed the acquisition of two
dental facilities from R. Kendall Roberts, D.D.S., P.C., d/b/a Newhealth Dental
Group, ("Roberts"). The dental facilities are located in Fort Smith, Arkansas.
The purchase price consisted of $1.4 million in cash. Funding for the
acquisition was obtained from cash available from operations and from the
Company's revolving line of credit. Concurrent with the acquisition, the Company
entered into a 40-year agreement to manage the dental practices which are
operating in the dental facilities. The acquisition of Roberts was accounted for
using the purchase method of accounting with the results of operations of the
business acquired included from the effective date of the acquisition. There
were no liabilities, material assets acquired or material transaction costs
incurred. The acquisition resulted in excess of cost over fair value of net
assets acquired of $1.4 million which will be amortized over 40 years.

         Unaudited pro forma results of operations of the Company for the six
months ended June 30, 1998 and 1997, are included below. Such pro forma
presentation has been prepared assuming that the AMDP, DDV, Workman, Old Cutler,
Winfree, Stratman, Reznik and Roberts acquisitions had occurred as of January 1,
1997.

<TABLE>
<CAPTION>
                                                                            Six Months Ended
                                                                                June 30,
                                                                                --------
(in thousands, except per share data)                                  1998                       1997
                                                                     --------                   --------
<S>                                                                  <C>                        <C>     
Revenues                                                             $ 86,733                   $ 87,179
                                                                     ========                   ========

Net income                                                           $  5,078                   $  4,920
                                                                     ========                   ========

Net income per common share                                          $   0.50                   $   0.49
                                                                     ========                   ========
</TABLE>

         The pro forma results include the historical accounts of the Company,
historical accounts of the acquired businesses, and pro forma adjustments
including the amortization of the excess purchase price over the fair value of
the net assets acquired, calculation of interest expense on amounts borrowed to
fund these acquisitions and the applicable income tax effects of these
adjustments. The pro forma results of operations are not necessarily indicative
of actual results which may have occurred had the operations of the acquired
companies been combined in prior periods.


3.       CONTINGENT LIABILITIES

         Management does not believe there are currently any asserted or
unasserted claims that will have a material, adverse effect on the financial
position, results of operations or cash flows of the Company.



                                                                              10
<PAGE>   11


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

RESULTS OF OPERATIONS

         The following discussion should be read in conjunction with the
attached consolidated financial statements and notes thereto, and with the
Company's audited financial statements and notes thereto for the year ended
December 31, 1997.

Three months ended June 30, 1998 and 1997

         Total revenue increased $5.4 million, or 14.0%, to $43.6 million in the
second quarter of 1998 as compared to $38.2 million for the same period in 1997.
This increase was attributable to $5.8 million of affiliated practice revenue
from Dental Health Management, Inc. ("DHMI"), the Company's dental practice
management company, which commenced operations in the third quarter of 1997, and
by a $0.1 million increase in subscriber premiums. Other revenue, which consists
of third party administrator fees and indemnity fees, decreased $0.5 million
during the second quarter of 1998 versus the same period in 1997.

         Dental care providers' fees and claim costs decreased $0.4 million, or
2.0%, in the second quarter of 1998 to $19.5 million from $19.9 million for the
second quarter of 1997. Dental care providers' fees represent capitation
payments paid to dentists under the Company's managed dental care plans. Under
managed dental care plans, capitation payments to panel dentists are fixed under
the participating dental agreement regardless of the extent of services
provided. Dental claim costs represent amounts payable to dental care providers
under dental indemnity and specialty insurance plans. Dental care providers'
fees and claim costs were 54.2% of subscriber premiums in the second quarter of
1998 and 55.5% for the second quarter of 1997.

         Commission expense increased $0.1, or 4.8%, to $3.3 million in the
second quarter of 1998 from $3.2 million in the second quarter of 1997. As a
percentage of subscriber premiums, commissions increased to 9.3% in the second
quarter of 1998 from 8.9% in the second quarter of 1997. This increase reflects
a shift in emphasis toward reliance on independent agents and away from a larger
direct sales force.

         General and administrative expenses ("G&A") and DHMI operating expenses
increased $5.6 million, or 70.1%, to $13.6 million in the second quarter of 1998
from $8.0 million in the second quarter of 1997. Of the increase, $5.3 million
was the result of expenses related to the generation of affiliated practice
revenue from DHMI. As a percentage of revenues, G&A expenses, increased to 31.1%
in the second quarter of 1998 from 20.9% in the second quarter of 1997. This was
the result of increased operating expenses from DHMI and the reduction of other
revenue which was offset by the growth of affiliated practice revenue.

         Depreciation and amortization expense increased $0.1, or 8.9%, to $1.5
million in the second quarter of 1998 from $1.4 million in the second quarter of
1997. The increase was primarily due to additional depreciation derived from
purchases of leasehold improvements and dental equipment for the Company's
dental office management business which was partially offset by a decrease in
amortization principally due to the goodwill impairment the Company realized
during the fourth quarter of 1997.

         Interest expense increased $0.5 million, or 57.0%, to $1.2 million in
the second quarter of 1998 from $0.7 million in the second quarter of 1997. This
increase related principally to interest on additional debt incurred to finance
DHMI acquisitions during the last four quarters. Any future acquisitions may
cause the Company to incur additional indebtedness under its revolving credit
facility or otherwise.

         In the second quarter of 1998, the Company's effective income tax rate
increased to 43.1% compared to 43.0% in the second quarter of 1997. This slight
increase resulted from net revenue generation with the investment expenditures
in infrastructure at DHMI which was almost completely offset by the reduced
goodwill amortization due to impairment and deductible goodwill recorded in
connection with the asset 


                                                                              11
<PAGE>   12

purchases made by DHMI.

         As a result of the above mentioned factors, the net income for the
second quarter of 1998 was $2.6 million, or $0.26 per share, compared to net
income of $2.9 million, or $0.29 per share, for the same period in 1997.

Six months ended June 30, 1998 and 1997

         Total revenue increased $10.0 million, or 13.1%, to $86.0 million in
the six months ended June 30, 1998 as compared to $76.0 million for the same
period in 1997. This increase was attributable to $11.1 million of affiliated
practice revenue from Dental Health Management, Inc. ("DHMI"), the Company's
dental practice management company, which commenced operations in the third
quarter of 1997, which was partially offset by a $1.1 million decrease in other
revenue, which consists of third party administrator fees and indemnity fees,
and subscriber premiums during the six months ended June 30, 1998 versus the
same period in 1997.

         Dental care providers' fees and claim costs decreased $0.4 million, or
1.3% in the six months ended June 30, 1998 to $38.9 million from $39.5 million
for the same period in 1997. Dental care providers' fees represent capitation
payments paid to dentists under the Company's managed dental care plans. Under
managed dental care plans, capitation payments to panel dentists are fixed under
the participating dental agreement regardless of the extent of services
provided. Dental claim costs represent amounts payable to dental care providers
under dental indemnity and specialty insurance plans. Dental care providers'
fees and claim costs were 54.5% of subscriber premiums for the six months ended
June 30, 1998 as compared to 55.2% for the same period in 1997.

         Commission expense increased $0.2, or 3.9%, to $6.6 million in the six
months ended June 30, 1998 from $6.4 million for the same period in 1997. As a
percentage of subscriber premiums, commissions increased to 9.3% in the six
months ended June 30, 1998 from 8.9% for the same period in 1997. This increase
reflects a shift in emphasis toward reliance on independent agents and away from
a larger direct sales force.

         General and administrative expenses ("G&A") and DHMI operating expenses
increased $10.7 million, or 67.7%, to $26.5 million in the six months ended June
30, 1998 from $15.8 million for the same period in 1997. Of the increase, $9.9
million was the result of expenses related to the generation of affiliated
practice revenue from DHMI. As a percentage of revenues, G&A expenses, increased
to 30.9% in the six months ended June 30, 1998, from 20.8% for the same period
in 1997. This was the result of increased operating expenses from DHMI and the
reduction of other revenue which was offset by the growth of affiliated practice
revenue.

         Depreciation and amortization expense increased $0.2, or 6.7%, to $2.9
million in the six months ended June 30, 1998, from $2.7 million for the same
period in 1997. The increase was primarily due to additional depreciation
derived from purchases of leasehold improvements and dental equipment for the
Company's dental office management business, which was partially offset by a
decrease in amortization principally due to the goodwill impairment the Company
realized during the fourth quarter of 1997.

         Interest expense increased $0.8 million, or 50.2%, to $2.2 million in
the six months ended June 30, 1998, from $1.4 million for the same period in
1997. This increase related principally to interest on additional debt incurred
to finance DHMI acquisitions during the last four quarters. Any future
acquisitions may cause the Company to incur additional indebtedness under its
revolving credit facility or otherwise.

         For the six months ended June 30, 1998, the Company's effective income
tax rate decreased to 43.0% compared to 44.0% for the same period in 1997. This
decrease resulted from reduced goodwill amortization due to impairment and
deductible goodwill recorded in connection with the asset purchases made by
DHMI.


                                                                              12
<PAGE>   13

         As a result of the above mentioned factors, the net income for the six
months ended June 30, 1998, was $5.1 million, or $0.50 per share, compared to
net income of $5.7 million, or $0.57 per share, for the same period in 1997.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's primary source of cash in the six months ended June 30,
1998, was $2.0 million of cash provided by operating activities. The primary
uses of cash for the period were the acquisitions of Reznik and Roberts and the
purchases of property and equipment.

         Cash flows from operating activities were $2.0 million for the six
months ended June 30, 1998, and $4.9 million for the six months ended June 30,
1997. Cash flows from operations consist primarily of subscriber premiums and
affiliated practice revenue net of capitation payments to panel dentists, claims
paid, broker and agent commissions, general and administrative expenses and
income tax payments. The Company receives premium payments in advance of
anticipated capitation payments and claims and invests cash balances in excess
of current needs in interest-bearing accounts.

         Cash used in investing activities was $11.9 million and $2.1 million
for the six months ended June 30, 1998 and 1997, respectively. The increase in
cash used during the six months ended June 30, 1998, related to increased use of
cash for acquisitions of dental practices, build out of dental offices, and
purchases of capital expenditures. Capital expenditures increased $5.7 million
during the six months ended June 30, 1998, compared to the six months ended June
30, 1997, due primarily to purchases of leasehold improvements and dental
equipment for the Company's dental office management business, and telephone and
computer purchases. The Company has entered into a joint initiative with Golder,
Thoma, Cressey, Rauner Fund V, a leading private equity firm ("GTCR"), relating
to the development of 35 to 50 de novo dental offices within the next two years.
Under this arrangement, the Company has agreed to fund certain development costs
(including the purchase of dental equipment, supplies, and leasehold
improvements) in an amount equal to amounts funded by GTCR in connection with
the joint initiative, not to exceed $15 million. During the remainder of 1998,
the Company will be focusing on the development and growth of the dental offices
already open and functioning, and will be limiting its capital expenditures
required under this arrangement.

         Cash flows used in financing activities in the six months ended June
30, 1998, were $2.4 million, representing repayments under the Company's
revolving line of credit. For the six months ended June 30, 1997, financing
activities provided $13.9 million of cash flow, consisting almost entirely of
borrowings under the Company's revolving line of credit.

         On June 30, 1995, the Company obtained a reducing revolving $35.0
million line of credit (the "Credit Facility") from banks. The Credit Facility
subsequently was amended to increase the available line of credit to $65.0
million. The Credit Facility pursuant to a second amendment entered into on
March 16, 1998, requires a 50% reduction in available borrowings on December 31,
1999, and expiration of the Credit Facility on December 31, 2000. Outstanding
indebtedness under the Credit Facility bears interest, at the Company's option,
at a rate equal to the prime rate plus up to .25% of LIBOR plus up to 1.75%,
with the margin over the prime rate and LIBOR decreasing as the ratio of
consolidated debt to EBITDA decreases. Currently, borrowings under the Credit
Facility bear interest at the LIBOR-based rate. The Credit Facility prohibits
payment of dividends and other distributions and restricts or prohibits the
Company from making certain acquisitions, incurring indebtedness, incurring
liens, disposing of assets or making investments, and requires it to maintain
certain financial ratios on an ongoing basis. The Credit Facility is
collateralized by pledges of the stock of the Company's direct and indirect
subsidiaries. At June 30, 1998, the Company was in technical violation of one of
the financial ratios as a result of increased capital expenditures incurred in
DHMI. The Company has received a waiver with respect to this covenant from its
lenders. On August 10, 1998, the Company entered into a fourth amendment to
adjust this financial ratio to a more appropriate


                                                                              13
<PAGE>   14

level. The Company had $54.2 million of borrowings outstanding as of June 30,
1998, under the Credit Facility.

         The Company believes that cash flow generated by operations will be
sufficient to fund its normal working capital needs and capital expenditures for
at least the next 24 months. Historically, the Company's operations have not
been capital intensive; however, the Company's recent initiative in the
establishment of dental offices through its subsidiary operation, DHMI, will
present capital needs, the extent of which is indeterminate. Any acquisitions
the Company may consummate in the future may require additional financing under
the Credit Facility or otherwise.

         Under applicable insurance laws of most states in which the Company
conducts business, the Company's subsidiaries operating in the particular states
are required to maintain a minimum level of net worth and reserves. The Company
may be required from time to time to invest funds in one or more of its
subsidiaries to meet regulatory capital requirements. Applicable laws generally
limit the ability of the Company's subsidiaries to pay dividends to the extent
that required regulatory capital would be impaired and dividend payments are
further restricted under the Credit Facility.

RECENTLY ISSUED ACCOUNTING STANDARDS

         The Financial Accounting Standards Board (the "Board") has issued SFAS
No. 131, "Disclosures about Segments of an Enterprise and Related Information,"
which establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
selected information about operating segments in interim financial reports.

         This Statement requires that a public business enterprise report
financial and descriptive information about its reportable operating segments.
Operating segments are components of an enterprise about which separate
financial information is available that is evaluated regularly by the chief
operating decision maker in deciding how to allocate resources and in assessing
performance. Generally, financial information is required to be reported on the
basis that it is used internally for evaluating segment performance and deciding
how to allocate resources to segments.

         The financial information required includes a measure of segment profit
or loss, certain specific revenue and expense items, segment assets and a
reconciliation of each category to the general financial statements. The
descriptive information required includes the way that the operating segments
were determined, the products and services provided by the operating segments,
differences between the measurements used in reporting segment information and
those used in the general purpose financial statements, and changes in the
measurement of segment amounts from period to period.

         This Statement is effective for financial statements for fiscal years
beginning after December 15, 1997, with restatement of earlier periods required
in the initial year of application. This Statement need not be applied to
interim financial statements in the initial year of its application, but
comparative information for interim periods in the initial year of application
is to be reported in financial statements for interim periods in the second year
of application. The Company is currently determining if these disclosure
requirements will be applicable and, therefore, required in annual reporting for
1998.

         The Emerging Issues Task Force (EITF) has issued EITF Issue No. 97-2
("Issue 97-2"), Application of FASB Statement No. 94, Consolidation of All
Majority-Owned Subsidiaries, and APB Opinion No. 16, Business Combinations, to
Physician Practice Management Entities and Certain Other Entities with
Contractual Management Arrangements, that establishes standards for determining
whether a physician practice management group ("PPM") has a controlling
financial interest in a physician practice based on a contractual management
agreement. For purposes of Issue 97-2, the practices of medicine, dentistry, and
veterinary science are collectively referred to as "physician practices."

         Under Issue 97-2, when such a controlling financial interest exists,
consolidation of the physician


                                                                              14
<PAGE>   15

practice's financial results is required. A controlling financial interest is
defined when referenced to the term of the contractual arrangement, control over
decision making, and the extent of the PPM's financial interest in the physician
practice, and is deemed to exist if the following six criteria are met: 1) the
contractual arrangement has a term that is either (i) the entire remaining legal
life of the physician practice entity or (ii) a period of 10 years or more; 2)
the contractual arrangement is not terminable by the physician practice except
in the case of gross negligence, fraud or other illegal acts by the PPM, or
bankruptcy of the PPM; 3) the PPM has exclusive authority over all decision
making related to ongoing, major or central operations of the physician
practice, except for the dispensing of medical services; 4) the PPM has
exclusive authority over all decision making related to total practice
compensation of the licensed medical professionals as well as the ability to
establish and implement guidelines for the selection, hiring and firing of them;
5) the PPM's financial interest in the physician practice is unilaterally
salable or transferable by the PPM; 6) the PPM's financial interest in the
physician practice provides the PPM with the right to receive income as on-going
fees and as proceeds from the sale of its interest in the physician practice, in
an amount that fluctuates based on the performance of the operations of the
physician practice and the change in the fair value thereof. If the six criteria
are met, then the transaction between the PPM and physician practice in which
the PPM executes a management agreement with the physician practice is
considered to be a business combination to be accounted for under APB 16 .
Finally, Issue 97-2 establishes the presumption that an employee of a physician
practice that is consolidated by the PPM should be considered an employee of the
PPM and its subsidiaries for purposes of determining the method of accounting
for stock-based compensation.

         For all arrangements that exist on November 20, 1997, this Issue is
effective for financial statements for fiscal years ending after December 15,
1998. The effect of initially applying the consensus may be reported as the
effect of a change in accounting principle or may be retroactively reported by
restating the financial statements of prior periods.

         The Company has been evaluating the dental acquisitions made prior to
November 20, 1997, to determine the effect of Issue 97-2.

YEAR 2000 COMPLIANCE

         By the end of 1998, the Company expects that its various administrative
systems will have the capability to process transactions dated beyond 1999. The
costs to complete its efforts to modify or replace such systems are not expected
to be material.


                                                                              15
<PAGE>   16



                           PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On August 10, 1998, the Company received notice of a Complaint filed by
Shenandoah Life Insurance Company ("Shenandoah") against the Company in the
United States District Court for the Western District of Virginia, Roanoke
Division. The complaint alleges that there is a real, substantial and
justiciable controversy between the parties with respect to payment owed to
Shenandoah by CompDent under an outstanding Marketing Agreement between the
parties for the calendar year 1997. In its Complaint, Shenandoah seeks
declaratory relief holding that CompDent is wrongfully withholding payment to
Shenandoah pursuant to the terms of said Marketing Agreement. Management does
not expect this matter will have a material adverse effect on the consolidated
financial position, results of operations, or cash flows of the Company.

ITEM 2.  CHANGES IN SECURITIES

         None.

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

         The Company's annual meeting of Shareholders was held on April 30,
1998. A total of 9,008,640 shares were represented by proxy at the meeting,
representing 89% of the 10,109,539 shares eligible to vote. David R. Klock and
Joseph Ciffolillo were re-elected to the Board of Directors as Class III
Directors. With respect to Mr. Klock, 8,950,791 shares of Common Stock were
voted for his election and votes with respect to 57,849 shares were withheld.
With respect to Mr. Ciffolillo, 8,960,891 shares of Common Stock were voted for
his election and votes with respect to 47,749 were withheld.

         Also, at the meeting, the Company's 1997 Stock Option Plan was
approved, with 7,686,267 shares of Common Stock voting in favor of the plan,
1,282,818 shares of Common Stock voting against approval of the plan, and 14,056
shares of Common Stock abstaining.

ITEM 5. OTHER INFORMATION

         On July 28, 1998, the Company's Board of Directors approved the terms
of a definitive merger agreement ("Merger Agreement") with a new company formed
by Golder, Thoma, Cressey, Rauner, Inc., TA Associates, Inc. and NMS Capital
Partners which will effect a re-capitalization of CompDent Corporation
("CompDent"). Under the Merger Agreement, CompDent will be re-capitalized and
each outstanding share of CompDent's common stock, other than certain shares
held by management, will be converted into the right to receive $18.00 in cash,
and the existing funded indebtedness of CompDent will be refinanced. Certain
shares held by management will be converted into shares of the surviving
corporation and management will maintain an equity interest in the surviving
corporation.

         The proposed transaction is subject to certain conditions including
approval by stockholders of CompDent holding a majority of the outstanding
shares, regulatory approval, the closing of equity and debt financing
commitments and other customary closing conditions. The transaction will be
funded by equity commitments of Golder, Thoma, Cressey, Rauner, Inc., TA
Associates, Inc. and NMS Capital Partners. NationsBank, N.A. and NationsBridge,
L.L.C. together have committed subject to certain terms and conditions, to
provide the necessary debt financing for the transaction.

         Prior to the execution of the Merger Agreement, CompDent amended its
Shareholder Rights Agreement (the "Rights Agreement"). This amendment (the
"Rights Amendment") provides, among other things, that neither TAGTCR
Acquisition, Inc. ("TAGTCR"), nor any of its affiliates or associates, shall be
deemed an "Acquiring Person" (as such term is defined in the Rights Agreements),
and no "Stock Acquisition Date" or "Distribution Date" (as such terms are
defined in the Rights Agreement) shall be deemed to occur as a result of (i) the
execution and delivery of the Merger Agreement, (ii) any action taken by TAGTCR
or any of its affiliates, associates, or shareholders in accordance with the
provisions of the Merger Agreement, or (iii) the consummation of the Merger (as
such term is defined in the Merger Agreement) in accordance with the Merger
Agreement. 

                                                                              16
<PAGE>   17



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

         (a)  Exhibits.

<TABLE>
                <S>         <C>
                10.2        Employment Contract between CompDent Corporation and David R. Klock
                10.3        Employment Contract between CompDent Corporation and Phyllis A. Klock
                10.4        Employment Contract between CompDent Corporation and Bruce A. Mitchell
                10.5        Employment Contract between CompDent Corporation and Keith J. Yoder
                10.6        Form of Employment Contract for Vice President
                27          Financial Data Schedule (for SEC use only)
</TABLE>

         (b)  The registrant filed a Form 8-K dated July 28, 1998, disclosing
              the agreement and Plan of Merger and the amendment to the 
              Shareholder Rights Agreement as explained in Part II, Item 5
              (Other Information) of this Form 10-Q filing.


                                                                              17
<PAGE>   18




                                   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.


                                    COMPDENT CORPORATION


Date:  August 14, 1998              By:  /s/ Keith J. Yoder
                                         ---------------------------------------
                                         Keith J. Yoder
                                         Chief Financial Officer and Treasurer
                                         (Signing as duly authorized officer and
                                         chief financial officer)



                                                                              18
<PAGE>   19


                                  EXHIBIT INDEX


<TABLE>
<S>        <C>
10.2       Employment Contract between CompDent Corporation and David R. Klock

10.3       Employment Contract between CompDent Corporation and Phyllis A. Klock

10.4       Employment Contract between CompDent Corporation and Bruce A. Mitchell

10.5       Employment Contract between CompDent Corporation and Keith J. Yoder

10.6       Form of Employment Contract for Vice President

27         Financial Data Schedule (for SEC use only).
</TABLE>


                                                                              19