**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

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**FORM 10-Q**

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(Mark One)

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

**For the quarterly period ended **March 31, 2001** or**

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

**For the transition period from ________to _________**

**Commission file number: 000-29377**

**Landacorp, Inc.**
(Exact name of registrant as specified in its charter)



|**Delaware**                                                   | **94-3346710**                      
|-------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification Number)

**4151 Ashford Dunwoody Road, Suite 505Atlanta, Georgia     30319**(Address of principal executive offices including zip code)

**(404) 531-9956**(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 reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [  ].

Number of shares of Common stock, par value of $0.001, outstanding as of
March 31, 2001: 15,538,000









**Landacorp, Inc.

                                TABLE OF CONTENTS**



|**PART I.   Financial Information**                                                                                    | **Page No.**
|---------------------------------------------------------------------------------------------------------------------- | ------------
|                                                                                                                       |             
|Item 1.   Financial Statements
                  (unaudited):                                                          |             
|                                                                                                                       |             
|Condensed Consolidated Balance Sheet
        
          as of March 31, 2001 and December 31, 2000.                    | 3           
|                                                                                                                       |             
|Condensed Consolidated Statements of Operations
        
          for the three months ended March 31, 2001 and 2000. | 4           
|                                                                                                                       |             
|Condensed Consolidated Statements of Cash Flows
        
          for the three months ended March 31, 2001 and 2000. | 5           
|                                                                                                                       |             
|Notes to Condensed Consolidated Financial Statements                                                                   | 6           
|                                                                                                                       |             
|Item 2.   Management's Discussion and Analysis of Financial
                      Condition and Results of Operations  | 7           
|                                                                                                                       |             
|Item 3.   Quantitative and Qualitative Disclosures About Market Risk                                                   | 15          
|                                                                                                                       |             
|**PART II.  Other Information**                                                                                        |             
|                                                                                                                       |             
|Item 1.   Legal Proceedings                                                                                            | 16          
|                                                                                                                       |             
|Item 2: Changes in Securities and Use of Proceeds                                                                      | 16          
|                                                                                                                       |             
|Item 3: Defaults Upon Senior Securities                                                                                | 16          
|                                                                                                                       |             
|Item 4: Submission of Matters to a Vote of Security Holders                                                            | 16          
|                                                                                                                       |             
|Item 5: Other Information                                                                                              | 16          
|                                                                                                                       |             
|Item 6.   Exhibits and Reports on Form 8-K                                                                             | 16          
|                                                                                                                       |             
|**Signatures**                                                                                                         | 17          

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**PART I -- FINANCIAL INFORMATION**

**ITEM 1.      FINANCIAL STATEMENTS (UNAUDITED)**

---

**LANDACORP, INC.

                        Condensed Consolidated Balance Sheets**

`March 31,    December 31,
                                                                        2001          2000
                                                                    ------------  ------------
                                                                    (unaudited)    (audited)
                              ASSETS
Current assets:
   Cash and cash equivalents...................................... $ 17,779,000  $ 21,752,000
   Accounts receivable and costs and estimated
    earnings in excess of billings on uncompleted
    contracts, net................................................    3,465,000     5,316,000
   Other current assets...........................................      946,000       781,000
                                                                    ------------  ------------
     Total current assets.........................................   22,190,000    27,849,000
Property and equipment, net.......................................    2,797,000     2,626,000
Capitalized software, net.........................................      136,000       136,000
Intangible assets, net............................................   13,918,000    15,210,000
                                                                    ------------  ------------
                                                                   $ 39,041,000  $ 45,821,000
                                                                    ============  ============

               LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable............................................... $  1,183,000  $  1,413,000
   Accrued expenses...............................................    3,489,000     4,273,000
   Deferred revenue and billings in excess of costs                          --            --
    and estimated earnings on uncompleted contracts...............    3,617,000     4,168,000
   Current portion of long-term debt..............................       78,000        77,000
                                                                    ------------  ------------
     Total current liabilities....................................    8,367,000     9,931,000
Long-term debt, net of current portion............................      213,000       229,000
                                                                    ------------  ------------
     Total liabilities............................................    8,580,000    10,160,000
                                                                    ------------  ------------

Stockholders' equity:
   Common Stock, $0.001 par value, 50,000,000 shares authorized;
    15,538,000 and 14,916,000 shares issued and outstanding.......       16,000        15,000
   Additional paid-in capital.....................................   58,157,000    57,815,000
   Common stock to be issued......................................           --       516,000
   Notes receivable from officers.................................     (187,000)     (187,000)
   Unearned stock-based compensation..............................   (1,659,000)   (2,324,000)
   Accumulated deficit............................................  (25,866,000)  (20,174,000)
                                                                    ------------  ------------
     Total stockholders' equity...................................   30,461,000    35,661,000
                                                                    ------------  ------------
                                                                   $ 39,041,000  $ 45,821,000
                                                                    ============  ============`

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

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**LANDACORP, INC.

                      Condensed Consolidated Statements of Operations

                                   (unaudited)**

`Three Months Ended
                                                  March 31,
                                           --------------------------
                                               2001          2000
                                           ------------  ------------
Revenues:
   Program revenues and maintenance fees. $  2,926,000  $    694,000
   System sales and consulting fees......    1,286,000     1,718,000
                                           ------------  ------------
     Total revenues......................    4,212,000     2,412,000
                                           ------------  ------------
Cost of revenues:
   Program revenues and maintenance fees.    1,463,000       185,000
   System sales and consulting fees......    1,175,000     1,038,000
                                           ------------  ------------
     Total cost of revenues..............    2,638,000     1,223,000
                                           ------------  ------------
Gross profit.............................    1,574,000     1,189,000
                                           ------------  ------------
Operating expenses:
   Sales and marketing...................    1,607,000     1,676,000
   Research and development..............    1,475,000       661,000
   General and administrative............    3,182,000     1,120,000
   Amortization of intangible assets.....      588,000        51,000
   Impairment of intangible assets.......      704,000            --
                                           ------------  ------------
     Total operating expenses............    7,556,000     3,508,000
                                           ------------  ------------
Loss from operations.....................   (5,982,000)   (2,319,000)
Interest and other income, net...........      296,000       271,000
Interest expense.........................       (6,000)       (8,000)
                                           ------------  ------------
Loss before income tax...................   (5,692,000)   (2,056,000)
Provision for income tax ................           --            --
                                           ------------  ------------
Net Loss ................................ $ (5,692,000) $ (2,056,000)
                                           ============  ============
Net loss per share:
   Basic and diluted..................... $      (0.39) $      (0.26)
                                           ============  ============

   Weighted average shares...............   14,635,000     7,992,000
                                           ============  ============`

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

---

**LANDACORP, INC.

                    Condensed Consolidated Statement of Cash Flows

                                   (unaudited)**

`Three Months Ended
                                                                                 March 31,
                                                                         ----------- ------------
                                                                            2001          2000
                                                                         -----------  -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net loss............................................................ $(5,692,000) $(2,056,000)
   Adjustments to reconcile net loss to net
    cash used in operating activities:
     Depreciation and amortization.....................................     804,000      201,000
     Provision (recovery) of doubtful accounts.........................     668,000      (29,000)
     Amortization of unearned stock-based compensation.................     482,000      522,000
     Impairment of Intangible assets...................................     704,000           --
     Changes in assets and liabilities, net of effects of acquisition:
         Accounts receivable and costs and estimated earnings in
         in excess of billings on uncompleted contracts, net...........   1,183,000      838,000
         Other assets..................................................    (165,000)    (261,000)
         Accounts payable..............................................    (230,000)     (25,000)
         Accrued expenses..............................................    (784,000)     (63,000)
         Deferred revenue and billings in excess of costs
          and estimated earnings on uncompleted contracts..............    (551,000)    (790,000)
                                                                         -----------  -----------
           Net cash used in operating activities.......................  (3,581,000)  (1,663,000)
                                                                         -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of property and equipment, net............................    (387,000)    (425,000)
                                                                         -----------  -----------
           Net cash used in investing activities.......................    (387,000)    (425,000)
                                                                         -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Payments on long-term debt..........................................     (15,000)    (280,000)
   Proceeds from issuance of common stock, net ........................      10,000   35,743,000
   Collection on note receivable from officer..........................          --        2,000
                                                                         -----------  -----------
           Net cash (used in) provided by financing activities.........      (5,000)  35,465,000
                                                                         -----------  -----------
(Decrease) increase in cash and cash equivalents.......................  (3,973,000)  33,377,000
Cash and cash equivalents, beginning of period.........................  21,752,000    1,884,000
                                                                         -----------  -----------
Cash and cash equivalents, end of period............................... $17,779,000  $35,261,000
                                                                         ===========  ===========
Supplemental non-cash investing and financing  activities:
   Note payable issued in connection with the acquisition of IMG....... $        --  $ 1,000,000
                                                                         ===========  ===========

   Unearned Stock-based compensation................................... $        --  $   497,000
                                                                         ===========  ===========`

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

---

**LANDACORP, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

1. The Company and Basis of Presentation
2. Revenues
3. Net loss per share
4. Common  Stock
5. Subsequent Events

In May 2001, the Company announced a reduction in
work force representing approximately 16% of the Company's total work force.
The Company expects to incur a severance charge of approximately $400,000
related to employee termination benefits.

During May 2001, the Company announced it's plans to
discontinue operations of its Portland, Oregon-based Interactive Media Group
(IMG). The Company has recorded a $0.7 million impairment charge on the
intangible assets related to IMG in the operating expenses for the three months
ended March 31, 2001.

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

Note Regarding Forward-Looking Statements: This
quarterly report contains forward looking statements for purpose of the safe
harbor provisions under the Private Securities Litigation Reform Act of 1995.
Examples of such forward looking statements include statements regarding
Landacorp's anticipated expenses, revenues and financial results and business
performance for 2001, anticipated growth in the market for population health
management services and increased penetration of our related product offerings;
and our ability to capitalize on synergies and growth opportunities and reduce
costs as a result of recent acquisitions.  Actual results may differ materially
from those projected in such forward-looking statements due to various known and
unknown risks and uncertainties, including the risk that we may fail to close on
certain pending customer contracts during 2001, our dependence on a limited
number of products with limited market acceptance, the risk that the market for
population health management services does not develop as anticipated, and the
risk that we are unable to  successfully integrate the products and service
offerings of our recent acquisitions and successfully capitalize on anticipated
synergies and growth opportunities.  For further information regarding these and
the other risks related to Landacorp's business, investors should consult
Landacorp's filings with the Securities and Exchange Commission, including its
Form 10-K (as amended) for the year ended December 31, 2000.

OVERVIEW

Landacorp provides strategic healthcare management
solutions to healthcare delivery and payer organizations.  Our core Internet-
and Windows-based medical management software is integrated with extensive
predictive and preventive population health management programs and interactive
media services to deliver comprehensive solutions that help manage and avoid
cost, and enhance quality of healthcare. Our medical management software
applications automate and streamline administrative and business processes and
enable real-time interaction among various healthcare participants. Our
population health management solutions help our clients to deliver consistent
and appropriate educational information to members of plans who have chronic or
potentially high-predicted expenditure outcomes associated with their illness.
As of March 31, 2001, 26 payers who claim to have a combined membership of 33
million participants were using our payer solutions, and approximately 160
hospital providers were using our provider solutions. We have historically
derived revenues from the installation and licensing of our maxMC and Maxsys
solutions, sublicensing third-party software applications as part of system
implementations and delivery of post-contract customer support, training and
consulting services. We are currently focusing our primary development, sales
and marketing efforts on our e-maxMC, maxMC, DSBuilder, DSManager, Managing for
Tomorrow and Maxsys II products. Although we do not anticipate future system
sales or enhancements of Maxsys I, we continue to provide maintenance services
to, and receive maintenance fees from, customers who purchased this product in
the past. We plan to continue to support Maxsys I for the foreseeable future as
a service to such customers and pursuant to ongoing contractual obligations.

Traditionally, we have recognized system sales revenues and
associated costs using the percentage-of-completion method, with labor hours
incurred relative to total estimated contract hours as the measure of progress
towards completion. We recognize revenues from sublicensing of third-party
software upon installation of such software. We recognize revenues from support
services ratably over the support period. We recognize revenues from training
and consulting as such services are delivered.

We introduced a new subscription-based fee structure for our
e-maxMC and maxMC solutions during 2000 that provides for implementation
services at a fixed hourly rate and the licensing of installed systems and post
customer contract support through a monthly subscription fee based upon the
number of members covered by the payer organization. Subscription-based
contracts allow us to recognize the fair value of the implementation services as
such services are delivered and recognize subscription fees on a monthly basis.
With the acquisition of DSBuilder, DSManager and Managing for Tomorrow products
in November 2000, we now have additional products for which revenue is
recognized on a subscription fee based methodology.  The majority of DSBuilder
and DSManager revenue is recorded on a per member per month basis. Revenue
received from our Managing for Tomorrow program is invoiced on a participant per
year basis.

To accelerate the implementation of elements of our strategy,
we intend to target and pursue strategic acquisitions and relationships, such as
marketing alliances with vendors of complementary products and services and
partnerships with Internet providers of healthcare content, disease management
and health-related e-commerce services. Investigating or entering into any such
strategic relationships could lead to additional expenditures.

On May 9, 2001 we announced an impairment charge in the first
quarter 2001 on intangible assets acquired in connection with the acquisition of
the Portland, Oregon-based Interactive Media Group (IMG).  The charge was $0.7
million.  In May 2001, management determined that the operations of IMG should
be discontinued due to the slowdown in the web design and consulting industry.
On May 8, 2001, the Board of Directors approved a plan to immediately
discontinue IMG's operations.  The employees of IMG are included in the
reduction in workforce as described below.

We also announced on May 9, 2001 a reduction in our work force of
approximately 16%.  This includes the closing of our IMG operation, as well as
the elimination of a number of positions in our medical management
operations.

RECENT ACQUISITIONS

On January 31, 2000, we purchased from High
Technology Solutions, Inc. assets related to its business of providing Web site
services to healthcare payers (also referred to as Interactive Media Group or
IMG). The purchase price for the assets was $1,268,000 (including an estimated
$18,000 in assumed liabilities) of which we paid $250,000 at the closing. We
paid the remaining balance in April 2000. The acquired assets included
equipment, know how, trademarks and other intangible rights used by High
Technology Solutions, Inc. in the operation of its business of providing Web
site services to healthcare payers, as well as contracts, none of which were
material. In connection with the acquisition we hired a number of former
employees of High Technology Solutions, Inc.

The purchase price of $1,268,000 (including an estimated
$18,000 in assumed liabilities) was  allocated to the various tangible and
intangible assets acquired. The acquired intangible assets were amortized over
their estimated useful lives of twenty-four to thirty-six months. On May 9, 2001
we announced an impairment charge in the first quarter 2001 on intangible assets
acquired in connection with the acquisition of IMG.  The charge was $0.7
million. In May 2001, management determined that the operations of IMG should be
discontinued due to the slowdown in the web design and consulting industry.  On
May 8, 2001, the Board of Directors approved a plan to immediately discontinue
IMG's operations.

On October 27, 2000 we completed the acquisition of assets
and liabilities of the ProMedex business from PMX Holdings, Inc.
("ProMedex"), a leading provider of population and disease management
programs and services. The total purchase price of $4,632,000, consisted of
$585,000 cash, $516,000 of the Company's common stock (250,000 shares), other
acquisition related expenses of approximately $319,000, consisting primarily of
payment for legal and financial advisory services and the assumption of
liabilities of $3,212,000. The purchase price was allocated to intangible
assets, including existing technology ($1,600,000), customer base ($510,000),
assembled work force ($430,000), and goodwill ($2,092,000).

On November 2, 2000 we completed the acquisition of
PatientCentrix, Inc. ("PatientCentrix"), a leading provider of
population management targeting and intervention programs and services.  The
Company acquired 100% of the shares and assumed all outstanding options of
PatientCentrix in return for cash of $5,850,000 paid to the stockholders and
option holders, and issuing 1,157,000 shares to the stockholders of
PatientCentrix.  The price of the shares issued was $1.777 based on the average
of the previous 20 trading days prior to the date of the definitive agreement,
which was October 31, 2000.  We also assumed all of the incentive stock options
issued by PatientCentrix prior to the acquisition.  These represented options to
purchase up to 1,582,532 of Common Stock of Landacorp with an average exercise
price of $1.525. The total purchase price of $11,188,000 consisted of $5,850,000
cash, $2,056,000 of our Common Stock (1,157,000 shares), assumed stock options
with a fair value of $2,970,000, and other acquisition related expenses of
approximately $312,000, consisting primarily of payment for legal and financial
advisory services. Of the total purchase price, approximately $191,000 was
allocated to the net tangible assets, approximately $961,000 was allocated to
unearned compensation related to our right to repurchase 30% of the shares of
the Company's Common Stock and options to purchase our Common Stock issued to
employees of PatientCentrix pursuant to the purchase agreement in the event of
such employee's termination under certain circumstances, and the remainder was
allocated to intangible assets, including existing technology ($3,600,000),
customer base ($640,000), assembled work force ($280,000), and goodwill
($5,516,000). Additionally, based on the total contract value of sales for
PatientCentrix software and services, capped at $50 million in orders for the
twelve months from the closing of the acquisition; up to $6 million in
additional cash will be paid to the shareholders and option holders of
PatientCentrix, prorata to their rights to PatientCentrix stock.  As of March
31, 2001, no additional amounts were paid to the shareholders or option holders
of PatientCentrix.



RESULTS OF OPERATIONS

The following table presents the statement of operations data as a percentage
of total revenues:

`Three Months Ended
                                                  March 31,                 % of revenues
                                           --------------------------  --------------------------
                                               2001          2000          2001          2000
                                           ------------  ------------  ------------  ------------
                                                                (unaudited)
Revenues:
   Program revenues and maintenance fees. $  2,926,000  $    694,000          69.5 %        28.8 %
   System sales and consulting fees......    1,286,000     1,718,000          30.5          71.2
                                           ------------  ------------  ------------  ------------
     Total revenues......................    4,212,000     2,412,000         100.0         100.0
                                           ------------  ------------  ------------  ------------
Cost of revenues:
   Program revenues and maintenance fees.    1,463,000       185,000          34.7           7.7
   System sales and consulting fees......    1,175,000     1,038,000          27.9          43.0
                                           ------------  ------------  ------------  ------------
     Total cost of revenues..............    2,638,000     1,223,000          62.6          50.7
                                           ------------  ------------  ------------  ------------
Gross profit.............................    1,574,000     1,189,000          37.4          49.3
                                           ------------  ------------  ------------  ------------
Operating expenses:
   Sales and marketing...................    1,607,000     1,676,000          38.2          69.5
   Research and development..............    1,475,000       661,000          35.0          27.4
   General and administrative............    3,182,000     1,120,000          75.5          46.4
   Amortization of intangible assets.....      588,000        51,000          14.0           2.1
   Impairment of intangible assets.........    704,000            --          16.7            --
                                           ------------  ------------  ------------  ------------
     Total operating expenses............    7,556,000     3,508,000         179.4         145.4
                                           ------------  ------------  ------------  ------------
Loss from operations.....................   (5,982,000)   (2,319,000)       (142.0)        (96.1)
Interest and other income, net...........      296,000       271,000           7.0          11.2
Interest expense.........................       (6,000)       (8,000)         (0.1)         (0.3)
                                           ------------  ------------  ------------  ------------
Loss before income tax...................   (5,692,000)   (2,056,000)       (135.1)        (85.2)
Provision for income tax ..................         --            --            --            --
                                           ------------  ------------  ------------  ------------
Net Loss .................................$ (5,692,000) $ (2,056,000)       (135.1)%       (85.2)%
                                           ============  ============  ============  ============`



Comparison of the first quarters ended March 31, 2000 and
2001.

Revenues. We have reclassified our revenue into two distinct
revenue streams starting with the first quarter of 2001.  Program revenues and
maintenance fees represent repeat and recurring revenue streams, such as per
member per month licensing and servicing revenues, per participant per year fees
and support charges for maintaining software. System sales and consulting fees
represent one-off or non-recurring and non-repeat revenue, such as sales of
perpetual licenses, implementation and ad-hoc consulting or training services.
The revenues and costs for first quarter 2000 have been re-categorized into
these groups for comparison purposes.

Program revenues and maintenance fees have increased by
$2,232,000 or 322% from $694,000 for the first quarter of 2000 to $2,926,000 in
the first quarter of 2001. During the three months ended March 31, 2001, two
customers accounted for 39% and 13% of the program revenues and maintenance
fees. One customer accounted for 10% of the program revenues and maintenance
fees revenues for the first quarter of 2000.  The increase in revenues relates
mainly to the addition of DSBuilder, DSManager and Managing from Tomorrow to our
product mix.  These products were acquired as part of the recent acquisition of
the assets of ProMedex and the acquisition of PatientCentrix, Inc. more fully
discussed in the Overview section.

System sales and consulting fees decreased by $432,000 or 25%
from $1,718,000 in first quarter of 2000 to $1,286,000 in first quarter of 2001.
The decrease in system sales and consulting fees resulted from reduced sales in
our medical management software products partially offset by an increase in ad-
hoc consulting fees and other services sold in connection with our DSBuilder and
DSManager product. During the three months ended March 31, 2001, two customers
accounted for 13% and 12% of the system sales and consulting fees. Two customers
accounted for 22% and 14% of system sales and consulting fees during the
corresponding period of 2000.

Cost of Program Revenue and Maintenance Fees. Cost of program
revenues and maintenance fees increased by $1,278,000 or 691% from $185,000 for
the quarter ended March 31, 2000 to $1,463,000 for the quarter ended March 31,
2001, representing 27% of program revenues and maintenance fees revenues for
first quarter of 2000 and 50% for the first quarter of 2001. This increase
resulted from increased salaries, benefits, stock-based compensation expense
further discussed below, and other personnel-related expenses associated with
the recent acquisitions discussed in the Overview section and, additionally,
from the provision of certain specific direct costs associated with the delivery
of our Managing for Tomorrow programs that require educational and other medical
related supplies to be sent to participants.  None of these revenues or direct
costs were part of our activities in the first quarter of 2000 and directly
effected the gross margins accordingly.  We expect that cost of program revenues
and maintenance fees will increase in line with the increase in associated
revenues as we expand our customer base and implement further customers. We
cannot yet determine the impact that these anticipated increased costs or
increased revenues will have on our gross margin percentages.

Cost of System Sales and Consulting Fees. Cost of system
sales and consulting fees consists principally of costs incurred in the
implementation of our software products, and other consulting and training
personnel costs.  The cost of system sales and consulting fees includes
personnel costs, amortization of unearned stock-based compensation, non-
reimbursed travel expenditures, related department overhead, amortization of
capitalized software development costs, costs of third party software products,
and depreciation on equipment. During the quarter ended March 31, 2001 these
costs were $1,175,000 or 91% of system sales and consulting fees, compared to
costs of $1,038,000 representing 60% of system sales and consulting fees during
the quarter ended March 31, 2000. Cost of system sales and consulting fees
increased by $137,000 or 13% from the quarter ended March 31, 2000 to the same
period for 2001. This cost increase resulted from additional personnel costs,
stock-based compensation expense further discussed below, and additional costs
associated with the service delivery.  The decrease in the gross margin on
system sales from 40% for the quarter ended March 31, 2000 to 9% during the
corresponding period in 2001 was mostly due to reduced sales for our medical
management software products.

Sales and Marketing. Sales and marketing expenses consist
principally of compensation for our sales and marketing personnel, amortization
of unearned stock-based compensation, advertising, trade show and other
promotional costs, and departmental overhead. Sales and marketing expenses
during the quarter ended March 31, 2001 amounted to $1,607,000 representing 38%
of total revenues, in comparison with $1,676,000 representing 69% of total
revenues during the corresponding quarter of the previous year. Sales and
marketing expenses decreased by $69,000 or 4% from the first quarter of 2000.
This decrease resulted from a one time bonus of $335,000 paid to the Chief
Marketing Officer and recorded in the first quarter of 2000 in connection with
deferred compensation that became payable in the event the company went public
(further disclosure of this non-recurring item can be found in our S-1
prospectus filed with the SEC), a decrease in headcount compared to the first
quarter of 2000 responsible for the sale of the e-maxMC, maxMC and Maxsys II
products, offset by an increase in the headcount and associated costs associated
with the sales and marketing teams acquired in connection with our recent
acquisitions, discussed in the Overview section.

Research and Development. Research and development expenses
consist of personnel costs, amortization of unearned stock-based compensation,
related department overhead and depreciation on equipment. Research and
development expenses totaled $1,475,000 or 35% of total revenues during the
quarter ended March 31, 2001, an increase of $814,000 or 123% compared to
expenses totaling $661,000 representing 27% of total revenues during the quarter
ended March 31, 2000. This increase resulted from the inclusion of the research
and development expenses arising from both of our recent acquisitions, described
in the Overview section, in the costs for the first quarter of 2001 that were
not present in the first quarter of 2000.  Additionally, there are increases
associated with the headcount, salaries, benefits and other personnel-related
expenses, including stock-based compensation expense further discussed below, as
we have increased the size of the research and development staff since first
quarter of 2000. This is in line with our announcement in the second quarter
ended June 30, 2000 that we intended to increase our research and development
expenses as we began to create our Advanced Products Group to more fully
leverage Internet technologies in our marketplace.

General and Administrative. General and administrative
expenses consist of compensation for personnel, fees for outside professional
services, costs associated with maintaining the company as a public corporation,
amortization of unearned stock-based compensation, and allocated occupancy and
overhead costs. General and administrative expenses increased by $2,062,000 or
184% from $1,120,000, representing 46% of total revenues, in the first quarter
of 2000 to $3,182,000, representing 76% of total revenues, in the first quarter
of 2001. Approximately $668,000 of this increase relates to a specific increase
in our bad debt reserve for a customer that is having financial difficulty in
meeting their payment obligations.  Additionally, the balance of the increase
was due to: additional employees arising from the recent acquisitions as
discussed in the Overview section; higher professional service fees, stock-based
compensation expenses, further discussed below, together with other costs
associated with operating as a public company; additional office space assumed
with our recent acquisitions associated with our population health management
product offerings; and approximately $600,000 for the cost associated with
managing the data center operations for our Managing for Tomorrow product line
acquired in the Promedex acquisition described in the Overview section.
Excluding the data center operations costs and bad debt reserve our general and
administrative expenses would have been approximately $1.9 million, or 45% of
total revenues.

Amortization of Intangible Assets.  Amortization expense
increased by $537,000 or 1,053% from $51,000 or 2% of revenues in first quarter
of 2000 to $588,000 or 14% of revenues in first quarter 2001.  These costs are
directly related to our acquisitions made last year.  For the quarter ended
March 31, 2000 the charge represents only two months of the acquisition of our
Interactive Media Group compared to first quarter of 2001 that reflects a full
quarter of all our 2000 acquisitions.  These are all more fully described in the
Overview section.

Impairment of Intangible Assets. On May 9, 2001 we announced
an impairment charge in the first quarter 2001 on intangible assets acquired in
connection with the acquisition of the Portland, Oregon-based Interactive Media
Group (IMG).  The charge was $0.7 million. In May 2001, management determined
that the operations of IMG should be discontinued due to the slowdown in the web
design and consulting industry.  On May 8, 2001, the Board of Directors approved
a plan to immediately discontinue IMG's operations.  The employees of IMG are
included in the reduction in workforce described in the overview section.

Stock-based Expenses. In connection with certain stock option
grants and common stock issuance during the years ended December 31, 1998, 1999
and 2000, we recognized unearned compensation totaling $4,166,000, $1,610,000
and $1,521,000 respectively. The 2000 figure of $1,521,000 is net of a credit of
$112,000 relating to employees who have left. This unearned stock based
compensation is being amortized over the vesting periods or as the Company's
repurchase rights lapse (See Note 5 of Notes to Financial Statements for year
ended December 31, 2000), as applicable, using the multiple option approach
prescribed by FIN No. 28. Amortization expense recognized during the first
quarters of 2000 and 2001 were $522,000 and $482,000, respectively, and has been
allocated to cost of sales and operating expenses.

Interest and Other Income and Interest Expense. Interest and
other income consists primarily of earnings on our cash and cash equivalents.
Interest and other income amounted to $271,000 for the first quarter of 2000 and
$296,000 for the first quarter of 2001. The increase in Interest and other
income in 2001 of $25,000 is due to having cash invested in interest bearing
accounts and debt equities for the full first quarter of 2001 offset by the
higher levels of cash and cash equivalents held during the first quarter of 2000
after our February 9, 2000 initial public offering. Interest expense of $6,000
during the first quarter of 2001 and $8,000 for first quarter of 2000 arises
from financing certain fixed assets through finance leases.

Provision for Income Tax. We recorded no current provision or
benefit for federal or state income taxes for the first quarters of 2000 or
2001, as the Company had incurred net operating losses and had no carry-back
potential. As of March 31, 2001, we had approximately $15 million in net
operating loss carry-forwards for federal tax purposes and approximately $7
million for state tax purposes. These federal and state tax loss carry-forwards
are available to reduce future taxable income. Utilization of such carry-
forwards may be limited in certain circumstances including, but not limited to,
cumulative stock ownership changes of more than 50 percent over a three-year
period and will expire at varying amounts during the period from December 31,
2000 to 2014. We believe that there were cumulative changes of ownership of
greater than 50 percent in February 1998. Accordingly, the amount of loss carry-
forwards that may be utilized to reduce future taxable income for federal and
state income tax purposes may be limited. The amount of the limitation has not
yet been calculated. We have not recognized a deferred tax asset on our balance
sheet.

LIQUIDITY AND CAPITAL RESOURCES

Since inception, we have financed our operations through net
cash generated from operating activities, and private sales of common and
preferred stock. During February 2000, we completed our initial public offering
through which we raised net proceeds of approximately $35 million. As of March
31, 2001, we had $17.8 million in cash and cash equivalents and $13.8 million in
working capital with outstanding debt totaling $0.3 million.

Net cash used in operating activities was $3,581,000 and
$1,663,000 during the three months ended March 31, 2001 and 2000, respectively.
Net cash used to fund operating activities in 2001 reflects net losses before
non-cash charges for depreciation and amortization of intangible assets,
provision for bad and doubtful accounts, charges for amortization of unearned
stock-based compensation and impairment of intangible assets and decreases in
net accounts receivable, offset by an increase in other current assets, a
decrease in accounts payable, accrued expenses and deferred revenue. Net cash
used to fund operating activities in 2000 reflects net losses before non-cash
charges for depreciation and amortization of intangible assets, charges for
amortization of unearned stock-based compensation and decreases in net accounts
receivable, offset by a recovery for bad and doubtful accounts, an increase in
other current assets, a decrease in accounts payable, accrued expenses and
deferred revenue.

Net cash used in investing activities was $387,000 in 2001
and $425,000 in 2000. Investing activities consist primarily of purchases of
computer equipment, office furniture and leasehold improvements, and additions
to capitalized software development costs.

Net cash used in financing activities was $5,000 in 2001 and
net cash provided by financing activities $35.5 million in 2000. Net cash used
in financing activities in 2001 resulted from the proceeds from the issuance of
some common stock less certain finance lease payments.  Net cash generated from
financing activities in 2000 resulted from the issuance of common stock in
connection with the Company's initial public offering that was completed during
February 2000 less the initial payment for the acquisition of Interactive Media
Group, as described more fully below, and additional finance lease payments.

We purchased our Interactive Media Group assets from High
Technology Solutions, Inc. on January 31, 2000. At the closing, we paid High
Technology Solutions, Inc. $250,000 and delivered a promissory note in the
principal amount of $1,000,000. We paid the remaining balance of the promissory
note in April 2000.

In February 1998, the Company entered into an agreement with
Brian Lang whereby the Company agreed to pay a bonus of $335,000 to Mr. Lang
upon the successful completion of an initial public offering. This amount was
paid on March 1, 2000 following our Initial Public Offering and the expense was
recorded as operating expense for that period.

On October 27, 2000 we acquired the business assets and
liabilities of ProMedex from PMX Holdings, Inc. for  $4,632,000, consisting of
$585,000 cash, $516,000 of the Company's common stock (250,000 shares), other
acquisition related expenses of approximately $319,000, consisting primarily of
payment for legal and financial advisory services and the assumption of
liabilities of $3,212,000.

On November 2, 2000 we acquired all of the shares of
PatientCentrix, Inc. for $5,850,000 in cash, the issuance of 1,157,000 shares of
the Company's common stock and assumption of all the issued and outstanding
options of PatientCentrix, Inc. It is anticipated that there will be additional
net cash expenditure required to fund both business units before they can become
cash flow neutral or cash flow positive.

On May 9, 2001 we announced a reduction in our work force of
approximately 16%.  This includes the closing of our IMG operation, as well as
the elimination of a number of positions in our medical management operations.
We have taken this action as a result of industry-wide slowdowns in the web
design and consulting industry and medical management software industry.  We
expect these actions to save us approximately $4.6 million in annual operating
cost.

We may utilize cash resources to fund additional acquisitions
or investments in other businesses, technologies or product lines. We believe
that available cash and cash equivalents and the net proceeds from the sale of
the common stock in our February 2000 offering will be sufficient to meet our
working capital and operating expense requirements for at least the next twelve
months. Thereafter, we may require additional funds to support our working
capital and operating expense requirements or for other purposes and may seek to
raise such additional funds through public or private debt or equity financing.
Such additional financing may be unavailable, or if it is available, it may only
be available on unreasonable terms and may be dilutive to our stockholders.

ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities
is to preserve principal while, at the same time, maximizing the yields without
significantly increasing risk. To achieve this objective, we invest in highly
liquid and high-quality money market accounts that invest in debt securities.
Our investment in debt securities is subject to interest rate risk. To minimize
the exposure due to adverse shifts in interest rates, we invest in money market
accounts that invest only in short-term securities that maintain an average
maturity of less than one year and debt securities that also have an average
maturity of less than one year. As a result, we do not believe we are subject to
significant market risk.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

None

Item 2. Changes in Securities

We increased our authorized
common stock from 15,000,000 to 50,000,000 at a meeting of our stockholders held
on March 22, 2001, more fully covered under Part II, Item 4
"Submission of Matters to a Vote of Security Holders"
below.

Item 3. Defaults in Senior Securities

None

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

On March 7, 2001, a Proxy
Statement under Form 14A was sent to the Securities Holders of all Landacorp,
Inc. stock registered on December 31, 2000.  The matters to be voted on were the
increase in the authorized share capital and the increase in our stock option
pool and were needed in order to complete our obligations under the terms of the
purchases of the assets of ProMedex on October 27, 2000 and PatientCentrix, Inc.
on November 2, 2000.  The meeting was held on March 22, 2001 at which time a
quorum was declared and the security holders of record voted in favor of both
matters outstanding before the meeting.

Item 5. Other Information

None

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

(b)Reports on Form 8-K

(i)Report on Form 8-K/A filed with the commission on January
10, 2001 relating to our acquisition of the business assets and liabilities of
the ProMedex business from PMX Holdings, Inc. and the acquisition of
PatientCentrix, Inc.

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**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.



| |                
| | ---------------
| | LANDACORP, INC.

| |             
| | ------------
| | (Registrant)

Dated:  May 15, 2001



| |     |                            
| | --- | ---------------------------
| | By: | /s/  Eugene Santa Cattarina

| |                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                 
| | Eugene Santa Cattarina                                                                                                                          
| | President, Chief Executive Officer, and Interim
                                           Chief Operating Officer (principal executive officer)

Dated:  May 15, 2001



| |     |                   
| | --- | ------------------
| | By: | /s/  Mark Rapoport

| |                        
| | -----------------------
| |                        
| | Mark Rapoport          
| | Chief Financial Officer

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