<PAGE>   1
                       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 [FEE REQUIRED]

                  For the quarterly period ended March 31, 2000

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                 For the Transition period from ______ to ______

                         Commission file number 0-13849


                           RAMSAY YOUTH SERVICES, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


          Delaware                                      63-0857352
-------------------------------             ------------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

Columbus Center
One Alhambra Plaza, Suite 750
Coral Gables, Florida                                     33134
----------------------------------------               ----------
(Address of principal executive offices)               (Zip Code)


        Registrant's Telephone Number, Including Area Code (305) 569-6993


         Indicate by a 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 [ ].

         The number of shares of the Registrant's Common Stock outstanding as of
May 2, 2000, follows:


         Common Stock, par value $0.01 per share - 9,105,809 shares


<PAGE>   2


                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES

                                    FORM 10-Q

                                      INDEX



<TABLE>
<CAPTION>
                                                                                                   Page
                                                                                                   ----
<S>                                                                                                 <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements..................................................................      1

Condensed consolidated balance sheets - March 31, 2000 (unaudited) and
         December 31, 1999.....................................................................      1

Condensed consolidated statements of operations - quarters ended
         March 31, 2000 and 1999 (unaudited)...................................................      3

Condensed consolidated statements of cash flows - quarters ended March 31,
         2000 and 1999 (unaudited).............................................................      4

Notes to condensed consolidated financial statements - March 31, 2000 (unaudited)..............      5

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations.............................................................      9


PART II. OTHER INFORMATION

Item 5.  Other Information.....................................................................     13

Item 6.  Exhibits and Current Reports on Form 8-K..............................................     15

SIGNATURES.....................................................................................     16


</TABLE>

<PAGE>   3




                          PART I. FINANCIAL INFORMATION

                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                             March 31,       December 31,
                                                                               2000              1999
                                                                            -----------      -----------
                                                                            (unaudited)          (Note 1)
<S>                                                                         <C>              <C>
ASSETS

Current assets
    Cash and cash equivalents ........................................      $ 1,602,000      $   622,000
     Accounts receivable, less allowances for doubtful
        accounts of $2,515,000 and $2,615,000 at March 31,
        2000 and December 31, 1999, respectively .....................       16,406,000       15,189,000
    Amounts due from third-party contractual agencies ................        2,396,000        2,549,000
    Other receivables ................................................          986,000        2,409,000
    Other current assets .............................................        1,621,000        1,430,000
                                                                            -----------      -----------
        Total current assets .........................................       23,011,000       22,199,000


Other assets
   Cash held in trust ................................................        1,893,000        1,893,000
   Cost in excess of net asset value of purchased businesses, net ....        1,313,000        1,426,000
   Other intangible assets, net ......................................          444,000          453,000
   Unamortized loan costs, net .......................................        1,239,000          987,000
   Net assets held for sale ..........................................        2,123,000        2,090,000
                                                                            -----------      -----------
        Total other assets ...........................................        7,012,000        6,849,000


Property and equipment
  Land ...............................................................        3,545,000        3,448,000
  Buildings and improvements .........................................       30,376,000       30,126,000
  Equipment, furniture and fixtures ..................................       10,771,000       13,225,000
                                                                            -----------      -----------
                                                                             44,692,000       46,799,000

  Less accumulated depreciation ......................................       17,039,000       19,221,000
                                                                            -----------      -----------
                                                                             27,653,000       27,578,000
                                                                            -----------      -----------

                                                                            $57,676,000      $56,626,000
                                                                            ===========      ===========
</TABLE>


            See notes to condensed consolidated financial statements.


                                       1
<PAGE>   4


                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                           March 31,          December 31,
                                                                             2000                 1999
                                                                         -------------       -------------
                                                                          (unaudited)           (Note 1)
<S>                                                                      <C>                 <C>
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
   Accounts payable ...............................................      $   4,909,000       $   7,274,000
   Accrued salaries and wages .....................................          4,278,000           2,975,000
   Other accrued liabilities ......................................          2,441,000           3,601,000
   Amounts due to third-party contractual agencies ................          5,476,000           5,193,000
   Due to affiliate ...............................................            600,000             600,000
   Current portion of long-term debt ..............................          1,457,000           1,394,000
                                                                         -------------       -------------
         Total current liabilities ................................         19,161,000          21,037,000

Noncurrent liabilities
   Other accrued liabilities ......................................          6,983,000           6,934,000
   Long-term debt, less current portion ...........................         13,818,000          11,561,000

Commitments and contingencies

Stockholders' equity
   Common stock $.01 par value--authorized
       30,000,000 shares; issued 9,105,809 shares at March 31,
       2000 and 9,086,191 shares at December 31, 1999 .............             91,000              90,000
   Additional paid-in capital .....................................        126,598,000         126,138,000
   Accumulated deficit ............................................       (105,076,000)       (105,235,000)
   Treasury stock--193,850 common shares at March 31, 2000
       and December 31, 1999, at cost .............................         (3,899,000)         (3,899,000)
                                                                         -------------       -------------
           Total stockholders' equity .............................         17,714,000          17,094,000
                                                                         -------------       -------------

                                                                         $  57,676,000       $  56,626,000
                                                                         =============       =============

</TABLE>

            See notes to condensed consolidated financial statements.





                                       2
<PAGE>   5

                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    Quarter Ended March 31,
                                                                -------------------------------
                                                                    2000               1999
                                                                ------------       ------------
<S>                                                             <C>                <C>
REVENUES .................................................      $ 23,457,000       $ 18,894,000

Operating Expenses:
   Salaries, wages and benefits ..........................        14,687,000         11,189,000
   Other operating expenses ..............................         6,931,000          6,164,000
   Provision for doubtful accounts .......................           581,000            485,000
   Depreciation and amortization .........................           590,000            572,000
                                                                ------------       ------------
TOTAL OPERATING EXPENSES .................................        22,789,000         18,410,000
                                                                ------------       ------------

Income from operations ...................................           668,000            484,000

Non-operating income (expenses):
   Investment and other income ...........................            28,000          1,552,000
   Interest and other financing charges ..................          (494,000)          (284,000)
                                                                ------------       ------------
     Total non-operating income (expenses), net ..........          (466,000)         1,268,000

INCOME BEFORE INCOME TAXES ...............................           202,000          1,752,000

Provision for income taxes ...............................            42,000             47,000
                                                                ------------       ------------

NET INCOME ...............................................      $    160,000       $  1,705,000
                                                                ============       ============

Income attributable to common stockholders ...............      $    160,000       $  1,705,000
                                                                ============       ============
Income per common share:
   Basic .................................................      $        .02       $        .19
                                                                ============       ============
   Diluted ...............................................      $        .02       $        .19
                                                                ============       ============

Weighted average number of common shares outstanding:
   Basic .................................................         8,895,000          8,887,000
                                                                ============       ============
   Diluted ...............................................         9,003,000          8,887,000
                                                                ============       ============

</TABLE>


            See notes to condensed consolidated financial statements.




                                       3
<PAGE>   6


                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                              Quarter Ended March 31,
                                                                           -----------------------------
                                                                               2000              1999
                                                                           -----------       -----------
<S>                                                                        <C>               <C>
Cash flows from operating activities:
    Net income ......................................................      $   160,000       $ 1,705,000
    Adjustments to reconcile net income to net cash
        used in operating activities:
       Depreciation .................................................          468,000           442,000
       Amortization, including loan costs ...........................          196,000           201,000
       Provision for doubtful accounts ..............................          581,000           485,000
       Change in operating assets and liabilities:
           Accounts receivable ......................................       (1,798,000)          (60,000)
           Other current assets .....................................        1,385,000          (295,000)
           Accounts payable .........................................       (2,365,000)         (249,000)
           Accrued salaries, wages and other accrued liabilities ....          192,000        (1,108,000)
           Amounts due to third-party contractual agencies ..........          283,000        (1,326,000)
                                                                           -----------       -----------
               Total adjustments ....................................       (1,058,000)       (1,910,000)
                                                                           -----------       -----------
                   Net cash used in operating activities ............         (898,000)         (205,000)
                                                                           -----------       -----------
Cash flows from investing activities:
   Increase in net assets held for sale .............................          (33,000)         (774,000)
   Expenditures for property and equipment ..........................         (394,000)         (238,000)
   Acquisitions .....................................................         (149,000)               --
   Preopening costs .................................................               --           (16,000)
   Cash held in trust ...............................................               --            (4,000)
                                                                           -----------       -----------
                  Net cash used in investing activities .............         (576,000)       (1,032,000)
                                                                           -----------       -----------
Cash flows from financing activities:
   Loan costs .......................................................         (326,000)          (32,000)
   Amounts paid to affiliate ........................................               --          (700,000)
   Proceeds from issuance of debt and warrants ......................        5,149,000         1,277,000
   Payments on debt .................................................       (2,375,000)               --
   Net proceeds from exercise of options and stock purchases ........           24,000            12,000
   Registration costs ...............................................          (18,000)           60,000
                                                                           -----------       -----------
                Net cash provided by financing activities ...........        2,454,000           617,000
                                                                           -----------       -----------
Net increase (decrease) in cash and cash equivalents ................          980,000          (620,000)
Cash and cash equivalents at beginning of period ....................          622,000         1,478,000
                                                                           -----------       -----------
Cash and cash equivalents at end of period ..........................      $ 1,602,000       $   858,000
                                                                           ===========       ===========


Cash paid during the period for:
   Interest .........................................................      $   422,000       $   196,000
                                                                           ===========       ===========
   Income taxes .....................................................      $   889,000       $   490,000
                                                                           ===========       ===========

</TABLE>

            See notes to condensed consolidated financial statements.




                                       4
<PAGE>   7


                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 2000


NOTE 1.  BASIS OF PRESENTATION

         Ramsay Youth Services, Inc. and its subsidiaries (the "Company") is a
leading quality provider and manager of diversified education, treatment and
community based programs and services for at-risk and troubled youth in
residential and non-residential settings nationwide. The Company offers its full
spectrum of education and treatment programs and services in Alabama, Florida,
Missouri, Michigan, Nevada, North Carolina, South Carolina, Texas, Utah and the
Commonwealth of Puerto Rico. The Company also provides a limited range of adult
behavioral services at certain of its locations in response to community demand.

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation of the interim information are,
unless otherwise discussed in this report, of a normal recurring nature and have
been included. The Company's business is seasonal in nature and subject to
general economic conditions and other factors. Accordingly, operating results
for the quarter ended March 31, 2000 are not necessarily indicative of the
results that may be expected for the year. The balance sheet at December 31,
1999 has been derived from the audited financial statements at that date but
does not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. For further
information, refer to the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.

         On January 13, 1999, the Company's Board of Directors approved a
one-for-three reverse stock split of the Company's common stock which became
effective March 15, 1999. As a result, all references herein to common stock,
per share amounts and stock options and warrants data have been restated to give
retroactive recognition to such reverse stock split.

         On June 30, 1999, the Company acquired all of the issued and
outstanding shares of common stock of Ramsay Hospital Corporation of Louisiana,
Inc. ("RHCL") in a purchase transaction between companies under common control
and recorded the transaction in a manner similar to pooling-of-interests
accounting. Accordingly, the Company's financial statements reflect the
consolidated balance sheets and consolidated results of operations of both
entities as if the merger had been in effect for all periods presented.

SEGMENT INFORMATION

         Effective July 1, 1998, the Company adopted SFAS No. 131, "DISCLOSURE
ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION" which requires public
companies to report segment information in annual financial statements and also
requires these companies to report selected segment information in interim
financial reports to shareholders. The Company has determined that it has only
one reportable segment.

FUTURE ACCOUNTING REQUIREMENTS

         In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133, "ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES", which establishes standards for the
accounting and reporting of derivative instruments embedded in other contracts
(collectively referred to as derivatives) and hedging activities. It requires
that an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure these





                                       5
<PAGE>   8
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES




instruments at fair value. This statement is effective for years beginning after
June 15, 2000. The adoption of this new accounting standard is not expected to
have a material impact on the Company's consolidated financial position or
results of operations.

         Certain reclassifications have been made to the prior year financial
statements to conform to the fiscal 2000 presentation.

NOTE 2.  ASSETS HELD FOR SALE

         The assets and liabilities relating to the Company's facility in Palm
Bay, Florida are reflected in the accompanying consolidated balance sheets as
net assets held for sale. The following is a summary of these assets and
liabilities at March 31, 2000:

<TABLE>
<S>                                                                   <C>
         Other receivables                                            $    32,000
         Other current assets                                               9,000
         Property and equipment                                         2,103,000
         Other accrued liabilities                                        (21,000)
                                                                      -----------
            Total                                                     $ 2,123,000
                                                                      ===========
</TABLE>

         For the quarter ended March 31, 2000, this facility had revenues and
income before income taxes of approximately $20,000 and $3,000, respectively.

NOTE 3.  TRANSACTIONS WITH AFFILIATES

         As previously mentioned, on June 30, 1999, the Company acquired all of
the issued and outstanding shares of common stock of RHCL, a holding company in
liquidation whose principal asset consisted of a receivable from the State of
Louisiana, in a purchase transaction between companies under common control. The
transaction was accounted for in a manner similar to the pooling-of-interest
method. The purchase price of $700,000 is equal to the net book value of RHCL on
the date of the acquisition. Accordingly, the Company's financial statements
reflect the consolidated balance sheets and consolidated results of operations
of both entities as if the merger had been in effect for all periods presented.
As of March 31, 2000, the Company has paid $100,000 of the purchase price.
Payment of the remaining $600,000 is subject to the occurrence of certain events
as defined in the Company's senior credit facility (see Note 4). RHCL had no
operations during the quarters ended March 31, 2000 or March 31, 1999.

NOTE 4.  BORROWINGS

         The Company's long-term debt at March 31, 2000 is as follows:

<TABLE>
<S>                                                                                  <C>
         Variable rate Term Loan, due October 30, 2003                           $ 7,081,000
         Revolver, due October 30, 2003                                            1,067,000
         Acquisition Loan, due October 30, 2003                                    2,397,000
         Subordinated Note (net of $454,000 discount), due January 25, 2007        4,546,000
         Other                                                                       184,000
                                                                                 -----------
                                                                                  15,275,000
         Less current portion                                                      1,457,000
                                                                                 -----------
                                                                                 $13,818,000
                                                                                 ===========

</TABLE>

         On October 30, 1998, the Company refinanced its existing credit
facilities with proceeds from a credit facility consisting of term and revolving
credit debt of $22,000,000 (the "Senior Credit Facility").

         Under the terms of the Senior Credit Facility, the Company was provided
with (i) a term loan of $8,000,000 (the "Term Loan"), payable in 54 monthly
installments ranging from $83,000 to $208,000,





                                       6
<PAGE>   9
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES





beginning May 1, 1999, with a final installment of $1,000,000 due on October 30,
2003, (ii) a revolving credit facility (the "Revolver") for an amount up to the
lesser of $8,000,000 or the borrowing base of the Company's receivables (as
defined in the agreement) and (iii) an acquisition loan (the "Acquisition Loan")
commitment of up to $6,000,000, beginning March 1, 1999. As of May 2, 2000,
approximately $1,985,000 had been drawn under the Revolver and $2,345,000 had
been drawn under the Acquisition Loan.

         Interest on the Term Loan and the Revolver varies, and at the option of
the Company, would equal (i) a function of a base rate plus a margin ranging
from 0.5% to 2.0% (9.5% at March 31, 2000), based on the Company's ratio of
total indebtedness to EBITDA or (ii) a function of the Eurodollar rate plus a
margin ranging from 2.0% to 3.5%, based on the Company's ratio of total
indebtedness to EBITDA.

         Interest on the Acquisition Loan varies, and at the option of the
Company, would equal (i) a function of a base rate plus a margin ranging from
0.75% to 2.25% (9.75% at March 31, 2000), based on the Company's ratio of total
indebtedness to EBITDA or (ii) a function of the Eurodollar rate plus a margin
ranging from 2.25% to 3.75%, based on the Company's ratio of total indebtedness
to EBITDA.

         Additionally, the Company is obligated to pay to the financial
institution an amount equal to one half of 1% of the unused portion of the
Revolver and the Acquisition Loan.

         The Senior Credit Facility requires that the Company meet certain
covenants, including (i) the maintenance of certain fixed charge coverage,
interest coverage and leverage ratios, (ii) the maintenance of certain proforma
availability levels (as defined in the credit agreement) and (iii) a limitation
on capital expenditures. The Senior Credit Facility also prohibits the payment
of cash dividends to common stockholders of the Company until the Company's
EBITDA (as defined in the credit agreement) exceeds $7,800,000. As of December
31, 1999, the Company is in compliance with these ratios.

         On June 30, 1999, the Company's Senior Credit Facility was amended and
restated to provide for the approval of the RHCL purchase (the "Second
Amendment"). The Second Amendment prohibits the payment of the RHCL purchase
price until the earlier to occur of certain events (as defined in the agreement)
or September 1, 1999. The second Amendment also provides for a $3,000,000
reserve on the Revolver borrowing base until the occurrence of certain events
(as defined in the Second Amendment).

         On November 28, 1999, the Company's Senior Credit Facility was amended
and restated (the "Third Amendment"). The Third Amendment provides for, among
other things, (i) up to $3.0 million in bridge loan advances under the
Acquisition Loan for certain purposes (the "Bridge Loan Advances"), (ii) a
release of the $3.0 million reserve on the Revolver borrowing base in an amount
equal to the Bridge Loan Advances actually made and (iii) a change to the
definitions for purposes of calculating the Pro Forma Availability covenant.

         Proceeds from any borrowings under the Bridge Loan Advances are
restricted, and may be used by the Company solely to satisfy certain contingent
liabilities (as defined in the agreement). The Bridge Loan Advances will be
mandatorily payable on the occurrence of certain events (as defined in the Third
Amendment). The interest rate on the Bridge Loan Advances is equal to the
interest rate on the Acquisition Loan.

         In connection with the Third Amendment, a corporate affiliate of Paul
J. Ramsay, Chairman of the Board of the Company, entered into a Junior
Subordinated Note Purchase Agreement with the Senior Credit Facility lender to
participate in the Senior Credit Facility in an amount equal to the Bridge Loan
Advances.

         The Company and its subsidiaries have pledged substantially all of
their real property, receivables and other assets as collateral for the Senior
Credit Facility.




                                       7
<PAGE>   10
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES



         On January 25, 2000, the Company entered into a subordinated note and
warrant purchase agreement with an unrelated financial institution for an
aggregate principal amount of $5.0 million (the "Subordinated Note"). The
Subordinated Note permits the financial institution to excercise, under certain
conditions, up to 475,000 warrants which are convertible into the Company's
common stock. Borrowings under the Subordinated Note bear interest at a rate of
12.5% per annum. The interest is payable quarterly, and the principal balance
and any unpaid interest is due January 25, 2007. The Company's Senior Credit
Facility was amended on January 25, 2000 to provide for the approval of the
Subordinated Note.

NOTE 5.  LEASES

         In April 1995, the Company sold and leased back the land, buildings and
fixed equipment of its Desert Vista facility in Mesa, Arizona and its Mission
Vista facility in San Antonio, Texas. The lease of the Desert Vista facility was
released and the facility was sold on September 28, 1998. The lease at the
Mission Vista facility has a primary term of 15 years (with three successive
renewal options of 5 years each) and at March 31, 1999 had aggregate annual
minimum rentals of approximately $558,000, payable monthly.

         In August 1997, the Company leased its Meadowlake facility in Oklahoma
to an independent healthcare provider for an initial term of three years, with
four three-year renewal options. Lease payments during the initial term total
$360,000 per year and at each renewal option are subject to adjustment based on
the change in the consumer price index during the preceding lease period. In
accordance with the terms of the lease agreement, the tenant is responsible for
all costs of ownership, including taxes, insurance, maintenance and repairs. In
addition, the tenant has the option to purchase the facility at any time during
the initial term for $3,000,000, less $15,417 for each month of occupancy.
Subsequent to the initial term, the tenant has the option to purchase the
facility at any time for $2,500,000. The book value of the facility was
$2,013,000 on March 31, 2000.

         On September 28, 1998, the Company sold and leased back the land,
buildings and fixed equipment of its Havenwyck facility in Auburn Hills,
Michigan. The lease has a term of 12 years and currently requires annual minimum
lease payments of approximately $1,277,000, payable monthly. Effective April 1
of each year, the lease payments are subject to upward adjustments (not to
exceed 3% annually) in the consumer price index over the preceding twelve
months.

         The Company leases office space for various other purposes over terms
ranging from one to five years. Annual rent expense related to noncancellable
operating leases totals approximately $3,000,000.

NOTE 6.  INCOME TAXES

         Income taxes are accounted for in accordance with Statement of
Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES ("SFAS No.
109"). SFAS No. 109 requires recognition of deferred tax assets and liabilities
for the expected future tax consequences of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and
the amounts used for income tax purposes. At March 31, 2000, the Company had net
operating loss carryovers of approximately $46,000,000 and alternative minimum
tax credit carryovers of approximately $1,100,000 available to reduce future
federal income taxes, subject to certain annual limitations. The net operating
loss carryovers expire in the years 2000 through 2018.


NOTE 7.  EARNINGS PER SHARE

         For all periods presented, the Company has calculated earnings per
share in accordance with SFAS No. 128, EARNINGS PER SHARE, which became
effective for financial statements issued for periods ending after December 31,
1997. SFAS No. 128 simplifies and replaces the standards for computing






                                       8
<PAGE>   11


                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES


earnings per share previously required in APB Opinion No. 15, EARNINGS PER
SHARE, and makes them comparable to international earnings per share standards.

         The following table sets forth the computation of basic and diluted
earnings per share:

<TABLE>
<CAPTION>
                                                                                          Quarter Ended March 31,
                                                                                     -------------------------------
                                                                                          2000                1999
                                                                                     -------------      -------------
                                                                                      (unaudited)        (unaudited)
<S>                                                                                  <C>                <C>
         Numerator:
              Numerator for basic earnings per share - income attributable
                to common stockholders, before extraordinary
                item ..........................................................      $     160,000      $   1,705,000
                                                                                     -------------      -------------
            Effect of dilutive securities .....................................                 --                 --
                                                                                     -------------      -------------

              Numerator for diluted earnings per share - income
                attributable to common stockholders after assumed
                conversions ...................................................      $     160,000      $   1,705,000
                                                                                     =============      =============

         Denominator:
            Denominator for basic earnings per share - weighted-average
              shares ..........................................................          8,895,000          8,887,000

            Effect of dilutive securities:
              Employee stock options and warrants .............................            108,000                 --
                                                                                     -------------      -------------
            Dilutive potential common shares ..................................            108,000                 --
                                                                                     -------------      -------------
              Denominator for diluted earnings per share - adjusted
              weighted-average shares and assumed conversions .................          9,003,000          8,887,000
                                                                                     =============      =============

         Basic earnings per share, before extraordinary item ..................      $         .02      $         .19
         Extraordinary item ...................................................                 --                 --
                                                                                     -------------      -------------
         Basic earnings per share .............................................      $         .02      $         .19
                                                                                     =============      =============

         Diluted earnings per share before extraordinary item .................      $         .02      $         .19
         Extraordinary item ...................................................                 --                 --
                                                                                     -------------      -------------
         Diluted earnings per share ...........................................      $         .02      $         .19
                                                                                     =============      =============

</TABLE>

         Options and warrants were not included in the computation for the
quarter ended March 31, 1999 because their effect would have been antidilutive
for this period.

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

         The Company receives revenues primarily from the delivery of
diversified education, treatment and community based programs and services for
at-risk and troubled youth in residential and non-residential settings. The
Company receives revenues based on per diem rates, fixed fee contracts or flat
or cost-based rate contracts. In addition, the Company also receives revenues
from management consulting contracts with other entities. Revenues under the
Company's programs are recognized as services are rendered. Revenues of the
Company's programs and services are affected by changes in the rates the Company
charges, changes in reimbursement rates by third-party payors, the volume of
individuals treated and changes in the mix of payors.

         Salaries, wages and benefits include facility and program payrolls and
related taxes, as well as employee benefits, including insurance and workers'
compensation coverage. Employee compensation and





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<PAGE>   12
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES




benefits also includes general and administrative payroll and related benefit
costs, including salaries and supplemental compensation of officers.

         Other operating expenses include all expenses not otherwise presented
separately in the Company's statements of operations. Significant components of
these expenses at the operating level include items such as food, utilities,
supplies, rent and insurance. Significant components of these expenses at the
administrative level include legal, accounting, investor relations, marketing,
consulting and travel expense.

         The Company's quarterly results may fluctuate significantly as a result
of a variety of factors, including the timing of the opening of new programs.
When the Company opens a new program, the program may be unprofitable until the
program's population, and net revenues contributed by the program, approach
intended levels, primarily because the Company staffs its programs in
anticipation of achieving such levels. The Company's quarterly results may also
be impacted by seasonality, as revenues generated by youth education and
treatment services are generally seasonal in nature.

         During the year ended December 31, 1999 and the quarter ended March 31,
2000, the Company opened the following new programs:

         o        February 1999 - A 15-bed group home in Aiken, South Carolina

         o        February 1999 - A 10-bed group home in Las Vegas, Nevada

         o        June 1999 - A 12-bed group home in Conway, South Carolina

         o        June 1999 - A 10-bed group home in Bessemer, Alabama

         o        September 1999 - A 120-bed juvenile justice facility in
                                   Bayamon, Puerto Rico

         o        October 1999 - A 100-bed juvenile justice facility in
                                 Crestview, Florida

         o        February 2000 - An education services program serving up to
                                  574 youth at seven facilities throughout the
                                  Commonwealth of Puerto Rico

         o        March 2000 - A 50-bed juvenile justice facility in West Palm
                               Beach, Florida

         IN CONNECTION WITH THE "SAFE-HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995, THE COMPANY NOTES THAT THIS QUARTERLY
REPORT ON FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS ABOUT THE COMPANY. THE
COMPANY IS HEREBY SETTING FORTH CAUTIONARY STATEMENTS IDENTIFYING IMPORTANT
FACTORS THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS TO DIFFER MATERIALLY FROM
THOSE SET FORTH IN ANY FORWARD-LOOKING STATEMENTS OR INFORMATION MADE BY OR ON
BEHALF OF OR CONCERNING THE COMPANY. SOME OF THE MOST SIGNIFICANT FACTORS
INCLUDE (I) ACCELERATING CHANGES OCCURRING IN THE AT-RISK YOUTH INDUSTRY,
INCLUDING COMPETITION FROM CONSOLIDATING AND INTEGRATED PROVIDER SYSTEMS AND
LIMITATIONS ON REIMBURSEMENT RATES, (II) FEDERAL AND STATE GOVERNMENTAL
BUDGETARY CONSTRAINTS WHICH COULD HAVE THE EFFECT OF LIMITING THE AMOUNT OF
FUNDS AVAILABLE TO SUPPORT GOVERNMENTAL PROGRAMS, (III) STATUTORY, REGULATORY
AND ADMINISTRATIVE CHANGES OR INTERPRETATIONS OF EXISTING STATUTORY AND
REGULATORY PROVISIONS AFFECTING THE CONDUCT OF THE COMPANY'S BUSINESS AND
AFFECTING CURRENT AND PRIOR REIMBURSEMENT FOR THE COMPANY'S SERVICES AND (IV)
THE COMPANY'S INABILITY TO SUCCESSFULLY IMPLEMENT ITS NEW STRATEGIC DIRECTION OF
PROVIDING TREATMENT AND EDUCATION PROGRAMS FOR AT-RISK AND TROUBLED YOUTH. THERE
CAN BE NO ASSURANCE THAT ANY ANTICIPATED FUTURE RESULTS WILL BE ACHIEVED. AS A
RESULT OF THE FACTORS IDENTIFIED ABOVE AND OTHER FACTORS, THE COMPANY'S ACTUAL
RESULTS OR FINANCIAL OR OTHER CONDITION COULD VARY SIGNIFICANTLY FROM THE
PERFORMANCE OR FINANCIAL OR OTHER CONDITION SET FORTH IN ANY FORWARD-LOOKING
STATEMENTS OR INFORMATION.



                                       10
<PAGE>   13
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES




RESULTS OF OPERATIONS

         Total revenues increased from $18.9 million in the quarter ended March
31, 1999 to $23.5 million in the quarter ended March 31, 2000. The increase of
$4.6 million in revenues from 1999 to 2000 is primarily a result of (i) an
increase in revenues of $2.9 million from new programs and (ii) an increase of
$1.7 million in the Company's other youth services facilities primarily due to a
total increase in census of 13% between periods (from 58,004 days during the
quarter ended March 31, 1999 to 65,516 days during the quarter ended March 31,
2000).

         Total salaries, wages and benefits increased from $11.2 million in the
quarter ended March 31, 1999 to $14.7 million in the quarter ended March 31,
2000. The increase of $3.5 million in salaries, wages and benefits from 1999 to
2000 is primarily a result of (i) an increase in salaries, wages and benefits of
$2.0 million from new programs and (ii) an increase of $1.5 million in the
Company's other youth service facilities due primarily to a total increase in
census of 13% between periods (from 58,004 days during the quarter ended March
31, 1999 to 65,516 days during the quarter ended March 31, 2000).

         Other operating expenses increased from $6.2 million in the quarter
ended March 31, 1999 to $6.9 million in the quarter ended March 31, 2000. The
increase of $0.7 million in other operating expenses from 1999 to 2000 is
primarily a result of (i) an increase of $0.6 million in operating expenses from
new programs and (ii) an increase in the Company's other youth service
facilities due primarily to a total increase in census of 13% between periods
(from 58,004 days during the quarter ended March 31, 1999 to 65,516 days during
the quarter ended March 31, 2000).

         The provision for doubtful accounts, which consist primarily of
commercial and self-pay accounts receivable deemed uncollectible, remained
stable between periods. Provision for doubtful accounts as a percentage of total
revenues approximated 2.5% for both the quarter ended March 31, 2000 and the
quarter ended March 31, 1999.

         Depreciation and amortization expense did not change significantly
between periods.

         Investment and other income for the quarter ended March 31, 1999 is
primarily a result of two non-recurring settlements in favor of the Company.

         Interest and other financing charges increased from $0.3 million in the
quarter ended March 31, 1999 to $0.5 million in the quarter ended March 31,
2000. The increase in interest and other financing charges is primarily
attributable to an increase in the Company's average outstanding borrowings
between quarters.

         For both periods presented, the provision for income taxes was recorded
at an effective tax rate significantly less than the statutory tax rate due to
the Company's significant net operating loss carryovers.

                         LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2000 and December 31, 1999, the Company had $3.9 million
and $1.1 million, respectively, in working capital and $1.6 million and $0.6
million, respectively, in cash and cash equivalents. The Company's principal
sources of liquidity as of March 31, 2000 and December 31, 1999 consisted
primarily of the aforementioned cash and cash equivalents and accounts
receivable of $16.4 million and $15.2 million, respectively.

         During the quarter ended March 31, 1999, cash used in operating
activities decreased by $1.5 million as a result of two non-recurring
settlements in favor of the Company. During the quarter ended






                                       11
<PAGE>   14

                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES





March 31, 2000, cash used in operating activities decreased by $1.5 million as a
result of the collection of a note receivable due the Company. The net increase
in cash used in operating activities between periods was primarily a result of
an increase in accounts receivable due to new programs started by the Company.

         Cash used in investing activities was $0.6 million for the quarter
ended March 31, 2000 compared to cash used in investing activities of $1.0
million for the quarter ended March 31, 1999. The fluctuation is primarily a
result of the Company's decision in December 1999 to retain its medical
sub-acute and behavioral healthcare facility in San Antonio, Texas. These assets
and liabilities are no longer reflected as net assets held for sale in the
accompanying balance sheets.

         The fluctuations in cash provided by financing activities for the
quarters ended March 31, 2000 and 1999 was primarily a result of an increase in
net borrowings of $2.2 million between periods.

         On October 30, 1998, the Company refinanced its existing credit
facilities with proceeds from a credit facility consisting of term and revolving
credit debt of $22.0 million (the "Senior Credit Facility").

         Under the terms of the Senior Credit Facility, the Company was provided
with (i) a term loan of $8.0 million (the "Term Loan"), payable in 54 monthly
installments ranging from $0.1 million to $0.2 million, beginning May 1, 1999,
with a final installment of $1.0 million due on October 30, 2003, (ii) a
revolving credit facility (the "Revolver") for an amount up to the lesser of
$8.0 million or the borrowing base of the Company's receivables (as defined in
the agreement) and (iii) an acquisition loan (the "Acquisition Loan") commitment
of up to $6.0 million, beginning March 1, 1999. As of May 2, 2000, approximately
$2.0 million had been drawn under the Revolver and $2.3 million had been drawn
under the Acquisition Loan.

         Interest on the Term Loan and the Revolver varies, and at the option of
the Company, would equal (i) a function of a base rate plus a margin ranging
from 0.5% to 2.0% (9.5% at March 31, 2000), based on the Company's ratio of
total indebtedness to EBITDA or (ii) a function of the Eurodollar rate plus a
margin ranging from 2.0% to 3.5%, based on the Company's ratio of total
indebtedness to EBITDA.

         Interest on the Acquisition Loan varies, and at the option of the
Company, would equal (i) a function of a base rate plus a margin ranging from
0.75% to 2.25% (9.75% at March 31, 2000), based on the Company's ratio of total
indebtedness to EBITDA or (ii) a function of the Eurodollar rate plus a margin
ranging from 2.25% to 3.75%, based on the Company's ratio of total indebtedness
to EBITDA.

         Additionally, the Company is obligated to pay to the financial
institution an amount equal to one half of 1% of the unused portion of the
Revolver and the Acquisition Loan.

         The Senior Credit Facility requires that the Company meet certain
covenants, including (i) the maintenance of certain fixed charge coverage,
interest coverage and leverage ratios, (ii) the maintenance of certain proforma
availability levels (as defined in the credit agreement) and (iii) a limitation
on capital expenditures. The Senior Credit Facility also prohibits the payment
of cash dividends to common stockholders of the Company until the Company's
EBITDA (as defined in the credit agreement) exceeds $7.8 million. As of December
31, 1999, the Company is in compliance with these ratios.

         On June 30, 1999, the Company's Senior Credit Facility was amended and
restated to provide for the approval of the RHCL purchase (the "Second
Amendment"). The Second Amendment prohibits the payment of the RHCL purchase
price until the earlier to occur of certain events (as defined in the agreement)
or September 1, 1999. The second Amendment also provides for a $3.0 million
reserve on the Revolver borrowing base until the occurrence of certain events
(as defined in the Second Amendment).

         On November 28, 1999, the Company's Senior Credit Facility was amended
and restated (the "Third Amendment"). The Third Amendment provides for, among
other things, (i) up to $3.0 million in bridge loan advances under the
Acquisition Loan for certain purposes (the "Bridge Loan Advances"), (ii) a
release of the $3.0 million reserve on the Revolver borrowing base in an amount
equal to the Bridge Loan






                                       12
<PAGE>   15

                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES




Advances actually made and (iii) a change to the definitions for purposes of
calculating the Pro Forma Availability covenant.

         Proceeds from any borrowings under the Bridge Loan Advances are
restricted, and may be used by the Company solely to satisfy certain contingent
liabilities (as defined in the agreement). The Bridge Loan Advances will be
mandatorily payable on the occurrence of certain events (as defined in the Third
Amendment). The interest rate on the Bridge Loan Advances is equal to the
interest rate on the Acquisition Loan.

         In connection with the Third Amendment, a corporate affiliate of Paul
J. Ramsay, Chairman of the Board of the Company, entered into a Junior
Subordinated Note Purchase Agreement (the "Junior Note") with the Senior Credit
Facility lender to participate in the Senior Credit Facility in an amount equal
to the Bridge Loan Advances.

         The Company and its subsidiaries have pledged substantially all of
their real property, receivables and other assets as collateral for the Senior
Credit Facility.

         On January 25, 2000, the Company entered into a subordinated note and
warrant purchase agreement with an unrelated financial institution for an
aggregate principal amount of $5.0 million (the "Subordinated Note"). The
Subordinated Note permits the financial institution to excercise, under certain
conditions, up to 475,000 warrants which are convertible into the Company's
common stock. Borrowings under the Subordinated Note bear interest at a rate of
12.5% per annum. The interest is payable quarterly, and the principal balance
and any unpaid interest is due January 25, 2007. The Company's Senior Credit
Facility was amended on January 25, 2000 to provide for the approval of the
Subordinated Note.

         The Company's current cash requirements relate to its normal operating
expenses and routine capital improvements at its youth service facilities and
schools, the expansion of its youth service business and the payment of
liabilities associated with the sales of non-youth services businesses in fiscal
1998.

         Management of the Company believes that it can meet its current cash
requirements and future identifiable needs with (i) internally generated funds
from operations, (ii) the Senior Credit Facility and (iii) its ability to obtain
debt or equity capital through other sources.

         There can, however, be no assurance that additional financing will be
available on acceptable terms. In addition, the Company's Senior Credit Facility
places restrictions on the Company's ability to incur additional indebtedness
which could adversely affect its ability to raise additional capital through
debt financing.


                           PART II - OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

         The Company is party to certain claims, suits and complaints, including
those matters described below, whether arising from the acts or omissions of its
employees, providers or others, which arise in the ordinary course of business.
The Company has established reserves at March 31, 2000 for the estimated amounts
which might be recovered from the Company as a result of all outstanding legal
proceedings. In the opinion of management, the ultimate resolution of these
pending legal proceedings is not expected to have a material adverse effect on
the Company's financial position, results of operations or liquidity.

         In March 1997, a former executive vice president of the Company
commenced arbitration and court proceedings against the Company in which he
claims his employment was wrongfully terminated by






                                       13
<PAGE>   16
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES



the Company and seeks damages of approximately $2.3 million. On June 28, 1999,
the arbitrator awarded the former executive vice president $0.7 million in
damages and interest. Additionally, the Company is responsible for all fees and
expenses incurred by the former executive vice president in connection with the
claim. The Company had fully reserved for this contingency as of December 31,
1998.

         Prior to the merger with the Company, Ramsay Managed Care, Inc.
("RMCI") sold its subsidiary which, as a licensed HMO in Louisiana, Alabama and
Mississippi, managed and provided prepaid healthcare services to its members. On
September 29, 1997, RMCI received a demand for indemnification by the purchaser
of this subsidiary in an amount totalling approximately $5.8 million. The
Company intends to vigorously defend any proceedings which may result from this
matter. In addition, on September 30, 1997, the Company demanded indemnification
from the purchaser for various matters in an amount exceeding $2.0 million.

         During fiscal year ended June 30, 1996, the State of Louisiana
requested repayment of disproportionate share payments received by two of the
Company's Louisiana facilities in fiscal years ended June 30, 1995 and 1994
totaling approximately $5.5 million. The repayment requested related primarily
to alleged overpayments received by a former facility of the Company. In
connection with the alleged overpayment, during fiscal year ended June 30, 1998,
the State of Louisiana used $5.5 million in payments owed to two of the
Company's Louisiana facilities to pay off the alleged overpayment. The Company
has filed an administrative appeal with the State of Louisiana Department of
Health and Hospitals Bureau of Appeals claiming that the State of Louisiana
improperly used the monies. The Company believes that this matter may be settled
for an amount less than Louisiana's initial request. The Company intends to
vigorously contest any position by Louisiana which it considers adverse.







                                       14
<PAGE>   17
                  RAMSAY YOUTH SERVICES, INC. AND SUBSIDIARIES




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits

         The Exhibits required to be filed as part of this Quarterly Report on
         Form 10-Q are as follows:

<TABLE>
<S>                                 <C>
                  Exhibit 11        Computation of Net Income (Loss) Per Share............................

                  Exhibit 27        Financial Data Schedule...............................................

                  Exhibit 99.7      Press Release dated January 27, 2000..................................

                  Exhibit 99.8      Press Release dated February 7, 2000..................................

                  Exhibit 99.9      Press Release dated February 17, 2000.................................

                  Exhibit 99.10     Press Release dated March 13, 2000....................................

                  Exhibit 99.11     Press Release dated April 13, 2000....................................

                  Exhibit 99.12     Press Release dated April 27, 2000....................................

</TABLE>

(b)      Current Reports on Form 8-K

         The Company did not file any Current Reports on From 8-K during the
         quarter ended March 31, 2000.






                                       15
<PAGE>   18

                                   SIGNATURES

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

                                         RAMSAY YOUTH SERVICES, INC.
                                         Registrant



                                         /s/ Marcio C. Cabrera
                                         -----------------------------------
                                         Marcio C. Cabrera
                                         Executive V.P. and
                                         Chief Financial Officer



Date:  May 7, 2000








                                       16