<PAGE>   1

                                  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 ending December 31, 1999.

[ ]      Transition Report pursuant to Section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from _____________ to
         _______________.

                         Commission File No.: 001-14397

                      NEW AMERICAN HEALTHCARE CORPORATION
             (Exact name of registrant as specified in its charter)

DELAWARE                                                              62-1750169
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


109 WESTPARK DRIVE, SUITE 440
BRENTWOOD, TENNESSEE                                                  37027
(Address of principal executive offices)                            (Zip Code)

(615) 221-5070
(Registrant's telephone number, including area code)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                          if changed since last report)

         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 FEBRUARY 1, 2000
          -----                               -------------------------------

 Common stock, $.01 par value                           17,442,455




<PAGE>   2


                       NEW AMERICAN HEALTHCARE CORPORATION

                                      INDEX

<TABLE>
<S>                                                                         <C>
PART I.  FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS:

          Consolidated Balance Sheets
                December 31, 1999 (unaudited) and March 31, 1999             1

          Consolidated Statements of Operations
                Three Months and Nine Months Ended
                December 31, 1999 and 1998                                   2

          Condensed Consolidated Statements of Cash Flows
                Nine Months Ended December 31, 1999 and 1998                 3

          Notes to Condensed Consolidated Financial Statements               4

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
          OF OPERATIONS AND FINANCIAL CONDITION                              8

PART II.  OTHER INFORMATION

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                  17

          SIGNATURES                                                        18
</TABLE>


<PAGE>   3


              NEW AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES

                           Consolidated Balance Sheets

                December 31, 1999 (unaudited) and March 31, 1999
                  (In thousands, except per share information)

<TABLE>
<CAPTION>
                                                                                                  DECEMBER 31,  MARCH 31,
                               ASSETS                                                                1999          1999
                                                                                                   --------      --------
                                                                                                 (Unaudited)
<S>                                                                                               <C>           <C>
Current assets:
      Cash and cash equivalents                                                                       1,897         5,971
      Patient accounts receivable, net of allowance for doubtful accounts of
         $8,085 and $10,005                                                                          27,641        39,986
      Other receivables                                                                               2,434         2,113
      Inventories                                                                                     2,314         3,824
      Prepaid expenses and other current assets                                                       1,213         2,393
      Assets held for sale                                                                            8,399            --
                                                                                                   --------      --------
                   Total current assets                                                              43,898        54,287

Property and equipment, net                                                                          81,187       122,199
Goodwill, net of accumulated amortization of $920 and $927                                           22,261        41,919
Other assets                                                                                          2,156         1,359
                                                                                                   --------      --------
                   Total assets                                                                     149,502       219,764
                                                                                                   ========      ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Accounts payable and accrued expenses                                                          19,189        20,014
      Estimated third-party payor settlements                                                         7,443         7,188
      Current portion of capital lease obligations                                                      340           447
      Current portion of long-term debt                                                             104,048            --
                                                                                                   --------      --------
                   Total current liabilities                                                        131,020        27,649

Capital lease obligations, excluding current portion                                                  5,230         5,499
Long-term debt                                                                                           --       103,300
Deferred income taxes                                                                                   262         1,473

Stockholders' equity:

      Common stock, $.01 par value; 50,000 shares authorized; 16,019 and 16,172 shares issued
         and outstanding                                                                                160           162
      Non-voting common stock, $.01 par value: 1,500 shares authorized; 1,423 shares
         issued and outstanding                                                                          14            14
      Treasury stock, 153 and 92 shares of common stock at cost                                         (16)           (5)
      Additional paid-in capital                                                                     81,760        82,082
      Common stock warrants                                                                             235           235
      Deferred compensation                                                                            (207)         (507)
      Accumulated deficit                                                                           (68,956)         (138)
                                                                                                   --------      --------
                   Total stockholders' equity                                                        12,990        81,843
                                                                                                   --------      --------
                   Total liabilities and stockholders' equity                                       149,502       219,764
                                                                                                   ========      ========
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements



                                                                               1
<PAGE>   4

              NEW AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES

                      Consolidated Statements of Operations

          Three months and nine months ended December 31, 1999 and 1998
                  (In thousands, except per share information)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                             THREE MONTHS ENDED     NINE MONTHS ENDED
                                                                DECEMBER 31,           DECEMBER 31,
                                                            -------------------    --------------------
                                                             1999        1998        1999        1998
                                                            -------    --------    --------    --------
<S>                                                          <C>         <C>        <C>         <C>
Revenue:
     Net patient service revenue                             37,015      46,891     129,350     118,617
     Other revenue                                              425       1,264       2,129       3,398
                                                            -------    --------    --------    --------
         Net operating revenue                               37,440      48,155     131,479     122,015
                                                            -------    --------    --------    --------
Expenses:
     Salaries and benefits                                   19,465      21,947      63,842      55,093
     Professional fees                                        5,851       6,174      19,484      15,802
     Supplies                                                 4,782       5,366      16,338      13,305
     Provision for doubtful accounts                          3,893       3,520      15,133       9,618
     General and administrative                               1,127       1,086       3,567       2,518
     Asset write-down, transition and other related costs     6,181          --      54,756          --
     Other                                                    4,851       4,575      14,644      12,456
     Depreciation and amortization                            1,446       1,825       5,259       4,459
     Interest                                                 2,841       1,674       8,110       4,772
                                                            -------    --------    --------    --------
                                                             50,437      46,167     201,133     118,023
                                                            -------    --------    --------    --------
         Income (loss) before income taxes and
             extraordinary item                             (12,997)      1,988     (69,654)      3,992
Income taxes                                                     --         795        (836)      1,597
                                                            -------    --------    --------    --------
         Income (loss) before extraordinary item            (12,997)      1,193     (68,818)      2,395

Extraordinary item - loss on early extinguishment of debt
     (net of tax of $89)                                         --          --          --         134
                                                            -------    --------    --------    --------
                                                            (12,997)      1,193     (68,818)      2,261

Cumulative preferred dividend                                    --          --          --         710
                                                            -------    --------    --------    --------
Net income (loss) attributable to common stockholders       (12,997)      1,193     (68,818)      1,551
                                                            =======    ========    ========    ========
Net income (loss) per share:
     Basic
         Continuing operations                                (0.75)       0.07       (3.94)       0.13
         Extraordinary                                           --          --          --       (0.01)
                                                            -------    --------    --------    --------
                                                              (0.75)       0.07       (3.94)       0.12
                                                            =======    ========    ========    ========
     Diluted
         Continuing operations                                (0.75)       0.07       (3.94)       0.11
         Extraordinary                                           --          --          --       (0.01)
                                                            -------    --------    --------    --------
                                                              (0.75)       0.07       (3.94)       0.10
                                                            =======    ========    ========    ========
Weighted average number of shares and dilutive
       share equivalents outstanding:
     Basic                                                   17,442      17,596      17,462      12,849
                                                            =======    ========    ========    ========
     Diluted                                                 17,442      18,093      17,462      15,521
                                                            =======    ========    ========    ========
</TABLE>

      See accompanying Notes to Condensed Consolidated Financial Statements


                                                                               2
<PAGE>   5


              NEW AMERICAN HEALTHCARE CORPORATION AND SUBSIDIARIES

                 Condensed Consolidated Statements of Cash Flows

                  Nine months ended December 31, 1999 and 1998
                                 (In thousands)

                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                    NINE MONTHS ENDED
                                                                       DECEMBER 31,
                                                                    -----------------
                                                                     1999       1998
                                                                    ------    -------
<S>                                                                 <C>         <C>
Cash flows provided by (used in) operating activities               (3,542)     2,290
                                                                    ------    -------
Cash flows from investing activities:
    Purchase of property and equipment                              (5,755)    (8,916)
    Sale of property                                                   289        250
    Cash paid for acquisitions                                          --    (60,716)
    Cash proceeds from dispositions                                  5,318         --
                                                                    ------    -------
       Net cash provided by (used in) investing activities            (148)   (69,382)
                                                                    ------    -------
Cash flows from financing activities:
    Proceeds from issuance of long-term debt                         7,400     70,250
    Repayment of long-term debt                                     (6,652)   (14,500)
    Repayment of notes payable to affiliates                            --    (25,000)
    Repayment of capital lease obligations                            (363)      (443)
    Purchase of treasury stock                                         (11)        --
    Issuance of common stock                                            --     58,013
    Repayment of redeemable preferred stock                             --    (26,327)
    Deferred financing costs                                          (758)      (286)
                                                                    ------    -------
       Net cash provided by (used in) financing activities            (384)    61,707
                                                                    ------    -------
Net decrease in cash                                                (4,074)    (5,385)

Cash and cash equivalents at beginning of period                     5,971      6,119
                                                                    ------    -------
Cash and cash equivalents at end of period                           1,897        734
                                                                    ======    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
    Cash paid during the period for interest                         6,523      4,056
    Cash paid during the period for income taxes                        81      1,928

NONCASH INVESTING AND FINANCING ACTIVITIES:
Assets acquired and liabilities assumed in hospital acquisitions:

    Receivables                                                         --     11,715
    Inventory                                                           --        566
    Prepaid expenses and other assets                                   --        964
    Accounts payable and accrued expenses                               --      4,568
    Estimated third-party payor settlements                             --        108
    Capital lease obligations                                           --      1,161
Notes receivable issued in hospital disposition                      3,484         --
</TABLE>


      See accompanying Notes to Condensed Consolidated Financial Statements



                                                                               3
<PAGE>   6


                       NEW AMERICAN HEALTHCARE CORPORATION
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
                  (In thousands, except per share information)

(1)    BASIS OF PRESENTATION

       The accompanying unaudited condensed consolidated financial statements
       have been prepared in accordance with interim financial reporting
       instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly,
       they do not include all of the information and footnotes required by
       generally accepted accounting principles for complete financial
       statements. Interim results are not necessarily indicative of results
       that may be expected for the full year.

       In the opinion of management, the accompanying unaudited interim
       financial statements contain all material adjustments, consisting only of
       normal recurring adjustments, necessary to present fairly the
       consolidated financial position, results of operations and cash flows of
       New American Healthcare Corporation (the "Company") for the interim
       periods presented.

       For further information, refer to the consolidated financial statements
       and footnotes thereto included in the Company's Annual Report on Form
       10-K for the year ended March 31, 1999.

(2)    ASSET WRITE-DOWN, TRANSITION AND OTHER RELATED COSTS

       Asset write-down, transition and other related costs totaling
       approximately $6,181, $18,947 and $29,628 were recorded during the
       quarters ended December 31, 1999, September 30, 1999 and June 30, 1999,
       respectively. These charges were comprised of approximately $54,023 of
       asset write-down costs, $703 of severance costs and $30 of other related
       costs. The asset write-down costs related to four hospitals, two of which
       were disposed of during the quarter ended September 30, 1999, as
       discussed below, and two of which are held for sale as of December 31,
       1999.

       Assets held for sale totaled approximately $8,399 at December 31, 1999,
       and consisted of current assets, property and equipment and other assets
       from two hospitals associated with the asset write-downs during the nine
       months ended December 31, 1999. The Company expects to dispose of the
       assets by June 30, 2000. Net revenue and pre-tax losses from the
       hospitals disposed of and held for sale totaled $7,948 and $2,847,
       respectively, for the three months ended December 31, 1999 and $40,255
       and $7,332, respectively, for the nine months ended December 31, 1999.
       Net revenue and pre-tax income from the hospitals disposed of and held
       for sale totaled $18,213 and $111, respectively, for the three months
       ended December 31, 1998 and $51,493 and $2,091, respectively, for the
       nine months ended December 31, 1998.

       Effective August 1, 1999, the Company sold substantially all of the
       assets of Davenport Medical Center, with the exception of patient
       accounts receivable and estimated third-party payor settlements. The
       facility had 149 licensed beds. The sales price of approximately $5,236
       was received in cash. The value received approximated the net carrying
       value of the assets sold.

       Effective September 1, 1999, the Company sold substantially all of the
       assets of Delta Medical Center, with the exception of estimated
       third-party payor settlements. The facility had 243 licensed


                                                                               4
<PAGE>   7
                       NEW AMERICAN HEALTHCARE CORPORATION
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
                  (In thousands, except per share information)

       beds. During the quarter ended September 30, 1999, the Company increased
       the asset write-down recorded in the quarter ended June 30, 1999 for
       Delta Medical Center to reflect a decrease in the anticipated purchase
       price due to generally poor market conditions related to the sale of
       hospitals. The sales price of approximately $3,584 was received through a
       combination of $100 in cash and promissory notes totaling $3,484. The
       promissory notes were secured by a $400 certificate of deposit held in
       escrow and a lien on the property. On October 31, 1999, the purchaser of
       Delta Medical Center was unable to pay a scheduled $2,000 promissory
       note. The note was extended for sixty days in return for a $150 principle
       payment and payment of all interest owed on the $2,000 promissory note as
       of October 31, 1999. The purchasers were also unable to meet the
       sixty-day extension so the note was extended for another thirty days.
       During February 2000, the Company received $2,500 in full settlement of
       all outstanding promissory notes.

(3)    LONG-TERM DEBT

       At December 31, 1999, the Company is in default of certain debt covenants
       under the credit agreement and, beginning in December 1999, the Company
       suspended interest payments on its credit agreement. The Company is
       currently in discussions with its senior bank lenders with respect to the
       bank lenders' response to the foregoing. There can be no assurance that
       the bank lenders will not call the loans in default and demand the full
       repayment of the loans. If the credit agreement is called, the Company
       does not have sufficient assets to repay the entire outstanding balance
       under the credit agreement.

       On October 28, 1999, the Company amended the credit agreement to extend
       the payment date of $5,348, originally due October 31, 1999, to February
       28, 2000. In addition $8,000 is due October 31, 2000. Due to the debt
       covenant violations and the uncertainty of being able to restructure the
       credit agreement, the entire $104,048 of debt is considered current. The
       Company plans to make a portion of this payment from the proceeds of the
       hospitals held for sale. If the Company is unable to close the sale of
       the hospitals for sufficient cash prior to February 28, 2000, the Company
       does not expect to have sufficient cash available to pay the amount due
       on February 28, 2000. There can be no assurance that the Company will be
       able to obtain another extension from its lender.

(4)    EARNINGS (LOSS) PER SHARE

       The following table sets forth the components used in the computation of
       basic and diluted earnings (loss) per share:



                                                                               5
<PAGE>   8

                       NEW AMERICAN HEALTHCARE CORPORATION
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
                  (In thousands, except per share information)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED   NINE MONTHS ENDED
                                                            DECEMBER 31,         DECEMBER 31,
                                                         -----------------   ------------------
                                                          1999      1998      1999       1998
                                                         -------    ------   -------    -------
<S>                                                      <C>         <C>     <C>          <C>
       Numerator:
            Income (loss) from operations before
                 extraordinary item                      (12,997)    1,193   (68,818)     2,395
            Cumulative preferred dividends                    --        --        --       (710)
                                                         -------    ------   -------    -------
                 Continuing operations                   (12,997)    1,193   (68,818)     1,685

            Extraordinary item                                --        --        --       (134)
                                                         -------    ------   -------    -------
                 Net income (loss) available to common
                      shareholders                       (12,997)    1,193   (68,818)     1,551
                                                         =======    ======   =======    =======
       Denominator:
            Denominator for basic earnings per
                 share - weighted-average shares
                      outstanding                         17,442    17,596    17,462     12,849

            Effect of dilutive securities
                 Stock options                                --       136        --        138
                 Warrants                                     --       361        --        370
                 Series B preferred stock                     --        --        --      2,164
                                                         -------    ------   -------    -------
                      Denominator for diluted earnings
                           per share                      17,442    18,093    17,462     15,521
                                                         =======    ======   =======    =======
</TABLE>

(5)    CONTINGENCIES

       On January 28, 2000, the Company announced the execution of a letter of
       intent with respect to the sale of Crosby Memorial Hospital. Pursuant to
       the letter of intent, the buyer would assume the Company's obligations
       under a Lease Agreement dated October 29, 1998. In this lease agreement,
       the Company is obligated to build a new, replacement facility for Crosby
       Memorial Hospital within 30 months of the October 7, 1999 date that it
       obtained a certificate of need for the new facility. If the Company fails
       to meet this commitment, the Company must purchase the existing facility
       for $15,000. In addition, the Company is obligated to post a performance
       bond or other financial instrument within ninety days after obtaining the
       certificate of need for the new facility to guarantee the construction of
       the facility. The obligation for such bond became due in January 2000. As
       of the date of this filing, the Company has not posted such bond or other
       financial instrument. The Company has not been able to obtain such
       performance bond or other financial instrument on reasonable commercial
       terms. The failure to post such financial instrument is a default under
       the agreement and may subject the Company to the payment of damages to
       the seller. There can be no assurance that the seller will waive this
       requirement nor can there be any assurance that if the bond requirement
       is waived that the Company can fund either the new facility or the
       $15,000 penalty payment under the terms of the agreement.

                Effective immediately prior to the opening of the market on
       February 3, 2000, the New York Stock Exchange ("NYSE") suspended trading
       of the Company's common stock and applied to delist the Company's stock
       from the NYSE. As a result, beginning February 3, 2000, trading of



                                                                               6
<PAGE>   9
                       NEW AMERICAN HEALTHCARE CORPORATION
                                AND SUBSIDIARIES

              Notes to Condensed Consolidated Financial Statements
                                   (Unaudited)
                  (In thousands, except per share information)

       the Company's common stock is conducted on the over-the-counter market
       ("OTC") or, upon application by broker-dealers, may be included the
       NASD's Electronic Bulletin Board. To the Company's knowledge, no
       broker-dealer has applied to become a market maker of the Company's
       stock, which is required in order for the Company to be listed on the
       "pink sheets" of the OTC or on the Electronic Bulletin Board.



                                                                               7
<PAGE>   10



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

FORWARD-LOOKING STATEMENTS

         Certain statements in this Report constitute forward-looking
statements. Such forward-looking statements (which may be identified by words
such as "anticipate," "believe," "estimate," "expect," "intend" and similar
expressions) involve known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of New American
Healthcare Corporation (the Company) or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others:
general economic and business conditions, both nationally and in regions where
the Company operates; demographic changes; the effect of existing or future
governmental regulation and federal and state legislative and enforcement
initiatives affecting the Company's business, including the Balanced Budget Act
of 1997; changes in Medicare and Medicaid reimbursement levels; the Company's
ability to implement successfully its business strategy and changes in such
strategy; the ability to comply with the Company's existing bank covenants or
obtain amendments to such covenants; the availability and terms of financing to
fund the operation of the Company's business; the Company's liquidity and
capital resources; the Company's ability to attract and retain qualified
management personnel and to recruit and retain physicians and other health care
personnel to the non-urban markets it serves; the effect of managed care
initiatives on the non-urban markets served by the Company's hospitals and the
Company's ability to enter into managed care provider arrangements on acceptable
terms; the effect of liability and other claims asserted against the Company;
the effect of competition in the markets served by the Company's hospitals; and
other factors referenced in this Report. Certain of these factors are discussed
in more detail elsewhere in this Report. There can be no assurance that the
forward-looking statements included in this Report will prove to be accurate. In
light of the significant uncertainties inherent in the forward-looking
statements included herein, the inclusion of such information should not be
regarded as a representation by the Company or any other person that the
objectives and plans of the Company will be achieved.

OVERVIEW

         The Company operates nine acute care hospitals, two of which are held
for sale, with a total of 955 licensed beds and located in seven states
throughout the United States. The Company was formed to capitalize on
opportunities to be the principal provider of health care services in those
non-urban communities which it targets. The Company acquired its first hospital
in August 1996 and through December 1999 has acquired ten additional hospitals
and disposed of two hospitals.

RESULTS OF OPERATIONS

         Net operating revenue is comprised of net patient service revenue and
other revenue. Net patient service revenue is reported net of contractual
adjustments and policy discounts. The adjustments principally result from
differences between the hospitals' customary charges and payment rates under the
Medicare and Medicaid programs and other third-party payors. Customary charges
have generally increased at a faster rate than the rate of increase for Medicare
and Medicaid payments. Other revenue includes cafeteria sales, medical office
building rental income and other miscellaneous revenue. Operating expenses
primarily consist of hospital related costs of operation and include salaries
and benefits, professional fees (includes medical professionals and consulting
services), supplies, provision for doubtful accounts, and other operating
expenses (principally consisting of utilities, insurance, property taxes,
travel, freight, postage,



                                                                               8
<PAGE>   11

telephone, advertising, repairs and maintenance). General and administrative
expenses primarily relate to corporate overhead.

         The following table presents, for the periods indicated, information
expressed as a percentage of net operating revenue. Such information has been
derived from the Consolidated Statements of Operations of the Company included
elsewhere in the report.

<TABLE>
<CAPTION>
                                              THREE MONTHS       PERCENTAGE
                                                  ENDED           INCREASE
                                               DECEMBER 31,      (DECREASE)
                                             ---------------     OF DOLLAR
                                              1999     1998       AMOUNTS
                                             ------    ------    ----------
<S>                                          <C>       <C>       <C>
Net operating revenue                        100.0%    100.0%      (22.4%)
Operating expenses before depreciation
     and amortization and interest           123.5%     88.6%        8.2%
                                             ------    ------
EBITDA(1)                                    (23.5%)    11.4%     (260.0%)
Depreciation and amortization                  3.7%      3.7%      (22.2%)
Interest                                       7.5%      3.5%       64.7%
                                             ------    ------
Income (loss) before income taxes and
     extraordinary item                      (34.7%)     4.2%     (750.0%)
Income taxes                                   0.0%      1.7%     (100.0%)
                                             ------    ------
Net income (loss) attributable to common
     stockholders                            (34.7%)     2.5%    (1183.3%)
</TABLE>

<TABLE>
<CAPTION>
                                               NINE MONTHS       PERCENTAGE
                                                  ENDED           INCREASE
                                               DECEMBER 31,      (DECREASE)
                                             ---------------     OF DOLLAR
                                              1999     1998       AMOUNTS
                                             ------    ------    ----------
<S>                                          <C>       <C>       <C>
Net operating revenue                        100.0%    100.0%        7.8%
Operating expenses before depreciation
     and amortization and interest           142.8%     89.2%       72.6%
                                             ------    ------
EBITDA(1)                                    (42.8%)    10.8%     (526.5%)
Depreciation and amortization                  4.0%      3.7%       17.8%
Interest                                       6.2%      3.9%       68.8%
                                             ------    ------
Income (loss) before income taxes and
     extraordinary item                      (53.0%)     3.2%    (1887.2%)
Income taxes                                  (0.7%)     1.3%     (156.3%)
                                             ------    ------
Income (loss) before extraordinary item      (52.3%)     1.9%    (3091.3%)
Extraordinary item                             0.0%      0.1%     (100.0%)
Cumulative preferred dividend                  0.0%      0.6%     (100.0%)
                                             ------    ------
Net income (loss) attributable to common
     stockholders                            (52.3%)     1.2%    (4686.7%)
                                             ======    ======
</TABLE>

(1)      EBITDA represents the sum of income before income tax expense,
         interest, and depreciation and amortization. Management understands
         that industry analysts generally consider EBITDA to be one



                                                                               9
<PAGE>   12

       measure of the financial performance of a company that is presented to
       assist investors in analyzing the operating performance of the company
       and its ability to service debt. Management believes that an increase in
       EBITDA level is an indicator of the Company's improved ability to service
       existing debt, to sustain potential future increases in debt and to
       satisfy capital requirements. However, EBITDA is not a measure of
       financial performance under generally accepted accounting principles and
       should not be considered an alternative (i) to net income as a measure of
       operating performance or (ii) to cash flows from operating, investing, or
       financing activities as a measure of liquidity. Given that EBITDA is not
       a measurement determined in accordance with generally accepted accounting
       principles and is thus susceptible to varying calculation, EBITDA, as
       presented, may not be comparable to other similarly titled measures of
       other companies.

THREE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO THREE MONTHS ENDED DECEMBER 31,
1998

         Net operating revenue was $37.4 million for the three months ended
December 31, 1999, compared to $48.2 million for the comparable period of 1998,
a decrease of $10.8 million or 22.4%. Net operating revenue for the hospitals
owned during both three months ended December 31, 1999 and 1998, excluding the
hospital held for sale, was $25.0 million and $27.1 million, respectively. Net
operating revenue for the hospital held for sale owned during both three months
ended December 31, 1999 and 1998 was $3.4 million and $5.2 million,
respectively. The decrease for hospitals owned during both periods, excluding
the hospital held for sale, is primarily due to the effects of the Balanced
Budget Act of 1997. In addition, several markets have experienced managed care
pricing pressures.

         Operating expenses less depreciation and amortization and interest were
$46.2 million, or 123.5% of net operating revenue, for the three months ended
December 31, 1999, compared to $42.7 million, or 88.6% of net operating revenue,
for the comparable period of 1998. During the three months ended December 31,
1999, the Company recorded asset write-down costs of $6.2 million. Operating
expenses less depreciation and amortization and interest for the hospitals owned
during both three months ended December 31, 1999 and 1998, excluding the
hospital held for sale and asset write-down costs, was $25.6 and $23.6 million,
respectively. Operating expenses less depreciation and amortization and interest
for the hospital held for sale owned during both three months ended December 31,
1999 and 1998 was $5.3 and $4.5 million, respectively. The increase for
hospitals owned during both periods, excluding the hospital held for sale, is
primarily due to an increase in corporate overhead costs and salary and
professional fees.

         Depreciation and amortization expense was $1.4 million for the three
months ended December 31, 1999, compared to $1.8 million for the comparable
period of 1998, a decrease of $0.4 million or 22.2%. The decrease is primarily
due to a decrease in depreciation expense relating to dispositions. In addition,
the Company no longer records depreciation and amortization expense on the
assets held for sale.

         Interest expense was $2.8 million for the three months ended December
31, 1999, compared to $1.7 million for the comparable period of 1998, an
increase of $1.1 million or 64.7%. The increase was primarily due to the
increase in average outstanding indebtedness associated with borrowings to
acquire two hospitals since September 1998 and an increase in the Company's
interest rate. The average debt outstanding for the three months ended December
31, 1999 and 1998 was $103.6 million and $86.6 million, respectively, bearing
interest at an average rate of 10.1% and 6.9% at the end of each respective
period.



                                                                              10
<PAGE>   13


NINE MONTHS ENDED DECEMBER 31, 1999 COMPARED TO NINE MONTHS ENDED DECEMBER 31,
1998

         Net operating revenue was $131.5 million for the nine months ended
December 31, 1999, compared to $122.0 million for the comparable period of 1998,
an increase of $9.5 million or 7.8%. Net operating revenue for the hospitals
owned during both nine months ended December 31, 1999 and 1998, excluding the
hospital held for sale, remained steady at $58.4 million and $58.6 million,
respectively. Net operating revenue for the hospital held for sale owned during
both nine months ended December 31, 1999 and 1998 was $13.0 million and $15.9
million, respectively.

         Operating expenses less depreciation and amortization and interest were
$187.8 million, or 142.8% of net operating revenue, for the nine months ended
December 31, 1999, compared to $108.8 million, or 89.2% of net operating
revenue, for the comparable period of 1998. During the nine months ended
December 31, 1999, the Company recorded asset write-down, transition and other
related costs of $54.8 million. Operating expenses less depreciation and
amortization and interest for the hospitals owned during both nine months ended
December 31, 1999 and 1998, excluding the hospital held for sale and asset
write-down costs, was $56.5 million and $52.3 million, respectively. Operating
expenses less depreciation and amortization and interest for the hospital held
for sale owned during both nine months ended December 31, 1999 and 1998 was
$15.7 million and $13.9 million, respectively. The increase for hospitals owned
during both periods, excluding the hospital held for sale, is primarily due to
an increase in corporate overhead costs and salary and professional fees.

         Depreciation and amortization expense was $5.3 million for the nine
months ended December 31, 1999, compared to $4.5 million for the comparable
period of 1998, an increase of $0.8 million or 17.8%. The increase is primarily
due to an increase in depreciation expense relating to acquisitions.

         Interest expense was $8.1 million for the nine months ended December
31, 1999, compared to $4.8 million for the comparable period of 1998, an
increase of $3.3 million or 68.8%. The increase was primarily due to the
increase in average outstanding indebtedness associated with borrowings to
acquire two hospitals since September 1998 and an increase in the Company's
interest rate. The average debt outstanding for the nine months ended December
31, 1999 and 1998 was $103.7 and $52.7 million, respectively, bearing interest
at an average rate of 10.1% and 6.9% at the end of each respective period.

LIQUIDITY AND CAPITAL RESOURCES

          At December 31, 1999, the Company had working capital (deficit) of
$(87.1) million including cash and cash equivalents of $1.9 million. The ratio
of current assets to current liabilities was 0.3 to 1.0 at December 31, 1999 and
2.0 to 1.0 at March 31, 1999.

         Cash flows used in operating activities were $3.5 million for the nine
months ended December 31, 1999 compared to cash flows provided by operating
activities of $2.3 million for the comparable period of 1998. Cash flows used in
investing activities were $0.1 million for the nine months ended December 31,
1999, primarily related to the purchase of capital and equipment net of proceeds
from the disposition of Davenport Medical Center. Cash flows used in investing
activities were $69.4 million for the nine months ended December 31, 1998,
primarily related to the acquisition of Puget Sound Hospital, Crosby Memorial
Hospital and Memorial Hospital of Adel. Net cash used in financing activities
was $0.4 million for the nine months ended December 31, 1999, primarily due to
the repayment of long-term debt from the sale proceeds of Davenport Medical
Center. In addition, the Company had bank borrowings of $7.4 million related to
working capital expenditures. Net cash provided by financing activities was
$61.7 million for the nine



                                                                              11
<PAGE>   14

months ended December 31, 1998, primarily from the Company's initial public
offering and borrowings related to the Puget Sound Hospital acquisition, net of
repayment of subordinated debt and preferred stock.

         Capital expenditures, excluding acquisitions, for the nine months ended
December 31, 1999 and 1998 were $5.8 million and $8.9 million, respectively.
Capital expenditures related to management information systems ("MIS") (both
financial and clinical) were approximately $1.0 million for the nine months
ended December 31, 1999. Capital expenditures for the Company's hospitals will
vary from year to year depending on facility improvements and service
enhancements undertaken.

         The Company's credit agreement provided for a revolving credit limit of
$116.0 million, which as of December 31, 1999 has been reduced to $110.0 million
as a result of a permanent reduction due to the application of the proceeds of
an asset sale. Borrowings under the facility bear interest of (i) a base rate
equal to the greater of the Prime Rate or the Federal Funds rate, plus in either
case, a margin of up to 2.75% or (ii) London Interbank Offered Rate as of the
date of borrowing plus a margin of up to 4%. The applicable margin is determined
by a ratio of indebtedness to EBITDAR, as defined in the Credit Agreement,
calculated on a monthly basis. The facility is due and payable November 30,
2002, and requires a permanent reduction of $12.0 million, which was extended
(see below), and an $8.0 million permanent reduction by October 31, 2000.
Additionally, the Company is required to pay down outstanding indebtedness upon
the sale of any facilities and beginning with the year ended March 31, 2000, by
the amount of any excess cash flow for the year, as defined within the
agreement, less $4.0 million of cash and cash equivalents to be maintained by
the Company.

         At December 31, 1999, the Company is in default of certain debt
covenants under the credit agreement and, beginning in December 1999, the
Company suspended interest payments on its credit agreement. The Company is
currently in discussions with its senior bank lenders with respect to the bank
lenders' response to the foregoing. There can be no assurance that the bank
lenders will not call the loans in default and demand the full repayment of the
loans. If the credit agreement is called, the Company does not have sufficient
assets to repay the entire outstanding balance under the credit agreement.

         On October 28, 1999, the Company amended the credit agreement to extend
the payment date of $5.3 million, originally due October 31, 1999, to February
28, 2000. In addition $8.0 million is due October 31, 2000. Due to the debt
covenant violations and the uncertainty of being able to restructure the credit
agreement, the entire $104.0 million of debt is considered current. The Company
plans to make a portion of this payment from the proceeds of the hospitals held
for sale. If the Company is unable to close the sale of the hospitals for
sufficient cash prior to February 28, 2000, the Company does not expect to have
sufficient cash available to pay the amount due on February 28, 2000. There can
be no assurance that the Company will be able to obtain another extension from
its lenders.

         At December 31, 1999, $104.0 million of the credit agreement was
outstanding, an increase of $0.7 million from March 31, 1999. This increase is
comprised of $7.4 million of working capital draws, a $4.4 million repayment
from Davenport sale proceeds, and a $2.3 million repayment primarily from the
collections of Davenport accounts receivable and interest on notes receivable.
At December 31, 1999, the average borrowing rate on the credit agreement was
10.1%. As of December 31, 1999, there is $7.6 million available on the credit
agreement; however, the Company's ability to access these funds is contingent on
compliance with the terms of the credit agreement, some of the terms of which
the Company is not currently in compliance. The Company does not expect that
internally generated cash flows from earnings, existing



                                                                              12
<PAGE>   15

cash balances, and proceeds from the sale of the two hospitals held for sale
will be sufficient to fund existing debt payments or future capital and working
capital requirements through fiscal year 2000.

         Effective August 1, 1999, the Company sold substantially all of the
assets of Davenport Medical Center, with the exception of patient accounts
receivable and estimated third-party payor settlements. The facility had 149
licensed beds. The sales price of approximately $5.2 million was received in
cash. The value received approximated the net carrying value of the assets sold.

       Effective September 1, 1999, the Company sold substantially all of the
assets of Delta Medical Center, with the exception of estimated third-party
payor settlements. The facility had 243 licensed beds. During the quarter ended
September 30, 1999, the Company increased the asset write-down recorded in the
quarter ended June 30, 1999 for Delta Medical Center to reflect a decrease in
the anticipated purchase price due to generally poor market conditions related
to the sale of hospitals. The sales price of approximately $3.6 million was
received through a combination of $0.1 million in cash and promissory notes
totaling $3.5 million. The promissory notes were secured by a $0.4 million
certificate of deposit held in escrow and a lien on the property. On October 31,
1999, the purchaser of Delta Medical Center was unable to pay a scheduled $2.0
million promissory note. The note was extended for sixty days in return for a
$0.2 million principle payment and payment of all interest owed on the $2.0
million promissory note as of October 31, 1999. The purchasers were also unable
to meet the sixty-day extension so the note was extended for another thirty
days. During February 2000, the Company received $2.5 million in full settlement
of all outstanding promissory notes.

         On January 28, 2000, the Company announced the execution of a letter of
intent with respect to the sale of Crosby Memorial Hospital. Pursuant to the
letter of intent, the buyer would assume the Company's obligations under a Lease
Agreement dated October 29, 1998. In this lease agreement, the Company is
obligated to build a new, replacement facility for Crosby Memorial Hospital
within 30 months of the October 7, 1999 date that it obtained a certificate of
need for the new facility. If the Company fails to meet this commitment, the
Company must purchase the existing facility for $15.0 million. In addition, the
Company is obligated to post a performance bond or other financial instrument
within ninety days after obtaining the certificate of need for the new facility
to guarantee the construction of the facility. The obligation for such bond
became due in January 2000. As of the date of this filing, the Company has not
posted such bond or other financial instrument. The Company has not been able to
obtain such performance bond or other financial instrument on reasonable
commercial terms. The failure to post such financial instrument is a default
under the agreement and may subject the Company to the payment of damages to the
seller. There can be no assurance that the seller will waive this requirement
nor can there be any assurance that if the bond requirement is waived that the
Company can fund either the new facility or the $15.0 million penalty payment
under the terms of the agreement.

         In addition to Crosby Memorial Hospital, the Company announced its
intentions to sell an additional hospital. The Company expects to dispose of
these assets by June 30, 2000. The funds provided by any dispositions will be
used to pay down outstanding indebtedness on the revolving credit facility.

DELISTING BY THE NEW YORK STOCK EXCHANGE

         Effective immediately prior to the opening of the market on February 3,
2000, the New York Stock Exchange ("NYSE") suspended trading of the Company's
common stock and applied to delist the Company's stock from the NYSE. As a
result, beginning February 3, 2000, trading of the Company's common stock is
conducted on the over-the-counter market ("OTC") or, upon application by
broker-dealers,



                                                                              13
<PAGE>   16

may be included the NASD's Electronic Bulletin Board. To the Company's
knowledge, no broker-dealer has applied to become a market maker of the
Company's stock, which is required in order for the Company to be listed on the
"pink sheets" of the OTC or on the Electronic Bulletin Board.

YEAR 2000 ISSUES

         The inability of programming code in existing computer systems to
properly recognize dates and related potential date sensitive problems are
referred to as the Year-2000 situation. The Year-2000 situation could
potentially have an adverse impact on the Company's internal information systems
infrastructure, Company products which either contain or utilize digital devices
and the internal information systems of suppliers to the Company.

         As of the date of this filing, the Company has not incurred any
significant business interruptions as a result of the Year-2000 situation.
However, while no such occurrence has developed as of the date of this filing,
Year-2000 problems may surface throughout the calendar year 2000. Therefore,
there is no assurance that the Company will not be negatively impacted by the
Year-2000 situation in the future. The Company will continue to monitor this
situation and expeditiously remediate any issues that may arise.

         Based on the Company's readiness efforts, the Company currently does
not reasonably foresee any material Year-2000 issues, and therefore the costs
associated with potential Year-2000 issues that may arise during calendar year
2000 are not expected to have a material adverse effect on either the financial
condition or results of operations of the Company. However, there is no
guarantee that the Company will not incur significant business interruptions due
to the Year-2000 situation, whether due to the Company's own Year-2000 problems
or that of its customers or suppliers.

ENVIRONMENTAL MATTERS

         The Company acquired Puget Sound Hospital in Tacoma, Washington in
September 1998. During its due diligence process, the Company discovered certain
environmental contamination involving underground storage tanks no longer in
use. Environmental consultants have developed a work plan to remediate such
existing contamination, which must be approved by the Washington State
Department of Ecology. Once the work plan is approved, remediation may begin.
The prior owner has agreed to fund all costs of such remediation.

         Although the Company is not currently aware of any other material
environmental claims pending or threatened against it or any of its hospitals,
no assurances can be given that a material environmental claim will not be
asserted against the Company or against any of its hospitals. The costs of
defending against claims of liability, or of remediating a contaminated
property, could have a material adverse effect on the Company's business,
financial condition and results of operations.



                                                                              14
<PAGE>   17


INFLATION

         The health care industry is labor intensive. Wages and other expenses
increase, especially during periods of inflation and labor shortages. In
addition, suppliers pass along rising costs to the Company in the form of higher
prices. The Company has generally been able to offset such increases in
operating costs by its cost containment activities and expanding services. In
light of reimbursement measures imposed by government agencies and private
insurance companies, the Company is unable to predict its ability to offset or
control future cost increases, or its ability to pass on the increased costs
associated with providing health care services to patients with government or
managed care payors, unless such payors correspondingly increase reimbursement
rates.

GENERAL

         Hospital revenue is received primarily from Medicare, Medicaid and
commercial insurance. The federal Medicare program accounted for approximately
52.2% and 46.4% of hospital patient days for the nine months ended December 31,
1999 and 1998, respectively. The state Medicaid programs accounted for
approximately 20.5% and 12.3% of hospital patient days for the nine months ended
December 31, 1999 and 1998, respectively. The Company's percentage of revenue
received from the Medicare program is expected to increase due to the general
aging of the population. The payment rates under the Medicare program for
inpatients are prospective, based upon the diagnosis of a patient. The Medicare
payment rate increases have historically been less than actual inflation. In
addition, numerous states, insurance companies and employers are actively
negotiating discounts to the Company's standard rates. The trend towards
increased managed care, including a shift in payor mix toward health maintenance
organizations, preferred provider organizations and other managed care payors,
may also adversely affect payment rates for the Company's services and the
Company's ability to achieve targeted growth rates in net patient service
revenue.

         Both federal and state legislators are continuing to scrutinize the
health care industry for the purpose of reducing health care costs. While the
Company is unable to predict what, if any, future health reform legislation may
be enacted at the federal or state level, the Company expects continuing
pressure to limit expenditures by governmental health care programs. Payments
for Medicare outpatient services provided at acute care hospitals and home
health services historically have been paid based on costs, subject to certain
limits. The Balanced Budget Act of 1997 requires that the payment for those
services be converted to a prospective payment system, which will be phased in
over time. The 1997 Act also includes a managed care option, which could direct
Medicare patients to managed care organizations. Further changes in the Medicare
or Medicaid programs and other proposals to limit health care spending could
have a material adverse impact upon the health care industry and the Company.

         The Company's acute care hospitals, like most acute care hospitals in
the United States, have significant unused capacity. The result is substantial
competition for patients and physicians. Inpatient utilization continues to be
negatively affected by payor-required pre-admission authorization and by payor
pressure to maximize outpatient and alternative health care delivery services
for less acutely ill patients. The Company expects increased competition and
admission constraints to continue in the future. The ability to respond
successfully to these trends, as well as spending reductions in governmental
health care programs, will play a significant role in determining the hospitals'
ability to continue operations.

         The Company expects the industry trend from inpatient to outpatient
services to continue due to the increased focus on managed care and advances in
technology. Outpatient revenue of the Company's



                                                                              15
<PAGE>   18

hospitals was approximately 40.4% and 42.5% of gross patient service revenue for
the nine months ended December 31, 1999 and 1998, respectively.

         The complexity of the Medicare and Medicaid regulations, increases in
managed care, hospital personnel turnover, the dependence of hospitals on
physician documentation of medical records and the subjective judgment involved
complicates the billing and collections of accounts receivable by hospitals.
There can be no assurance that this complexity will not negatively impact the
Company's future cash flow or results of operations.

         The federal government and a number of states are rapidly increasing
the resources devoted to investigating allegations of fraud and abuse in the
Medicare and Medicaid programs. At the same time, regulatory and law enforcement
authorities are taking an increasingly strict view of the requirements imposed
on providers by the Social Security Act and Medicare and Medicaid regulations.
Although the Company believes that it is in material compliance with such laws,
a determination that the Company has violated such laws, or even the public
announcement that the Company was being investigated concerning possible
violations, could have a material adverse effect on the Company.

ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
133, Accounting for Derivative Instruments and Hedging Activities, which was
amended by FAS 137 and is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. FAS 133 establishes accounting and reporting
standards for derivative instruments, including derivative instruments imbedded
in other contracts and for hedging activities. It requires that entities
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The Company does
not presently have any derivative financial instruments and does not believe
that this statement will have a material impact on its financial position or
results of operations.



                                                                              16
<PAGE>   19


                                    PART II.

                                OTHER INFORMATION

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

       (i) Exhibits

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
    Exhibit No.
    -----------

<S>           <C>
       3.1    Certificate of Incorporation of the Registrant (incorporated by
              reference to Exhibit 3.1 of the Company's Report on Form 10-Q for
              the quarter ended September 30, 1998).

       3.2    Bylaws of the Registrant (incorporated by reference to Exhibit 3.2
              of the Company's Report on Form 10-Q for the quarter ended
              September 30, 1998).

       10.1   Sixth Amendment and Waiver to the Second Amended and Restated
              Credit Agreement dated as of January 6, 2000 by and among New
              American Healthcare Corporation, as Borrower, Toronto Dominion
              (Texas), Inc., as Agent, The Toronto-Dominion Bank, as Issuing
              Bank and various lenders thereto.

       10.2   Seventh Amendment and Waiver to the Second Amended and Restated
              Credit Agreement dated as of February 2, 2000 by and among New
              American Healthcare Corporation, as Borrower, Toronto Dominion
              (Texas), Inc., as Agent, The Toronto-Dominion Bank, as Issuing
              Bank and various lenders thereto.

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

       (b) Reports on Form 8-K

                     During the three months ended December 31, 1999, the
              Company filed the following reports on Form 8-K:

              (i)    Form 8-K dated December 20, 1999, to inform the market of
                     the two press releases issued on December 9, 1999 and
                     December 15, 1999.



                                                                              17
<PAGE>   20


                                 SIGNATURES

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


Dated: February 21, 2000             NEW AMERICAN HEALTHCARE CORPORATION



                                     By: /s/  Thomas W. Singleton
                                         ---------------------------------------
                                         Chief Executive Officer




                                     By: /s/  Timothy S. Hill
                                         ---------------------------------------
                                         Chief Financial Officer




                                                                              18