<PAGE>

















                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q

                                   (Mark One)
          /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1995

                                       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 No. 0-13849

                            RAMSAY HEALTH CARE, INC.

             (Exact name of registrant as specified in its charter)

              Delaware                                  63-0857352
              (State or other jurisdiction              (I.R.S. Employer
              of incorporation or organization)         Identification Number)

                                One Poydras Plaza
                          639 Loyola Avenue, Suite 1700
                          New Orleans, Louisiana 70113
               (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (504) 525-2505

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

                                    Yes X No

      The                  number  of shares of the  Registrant's  Common  Stock
                           outstanding at February 12, 1996 follows:

           Common Stock, par value $0.01 per share - 8,023,468 shares



<PAGE>



                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES


                                    FORM 10-Q


                                      INDEX



                                                                            Page

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements
    Consolidated balance sheets - December 31, 1995 and
    June 30, 1995 (unaudited) ...........................................    1

Consolidated statements of operations - three and six months ended
    December 31, 1995 and 1994 (unaudited) ..............................    3

Consolidated statements of cash flows - three months ended
    December 31, 1995 and 1994 (unaudited) ..............................    4

Notes to consolidated financial statements - December 31, 1995
    (unaudited) .........................................................    5

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ...............................................    8


Part II.  OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders .............   14

Item 5. Other Information ...............................................   14

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

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



<PAGE>





                          PART I. FINANCIAL INFORMATION


                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)


                                                       December 31     June 30
                                                          1995           1995
                                                       ------------  ----------
     ASSETS

CURRENT ASSETS
 Cash and cash equivalents.............................$  5,390,000 $  9,044,000
 Patient accounts receivable, less allowances for
  doubtful accounts of $3,545,000 and $3,886,000
  at December 31, 1995 and June 30, 1995, respectively.  23,815,000   21,564,000
 Amounts due from third-party contractual agencies.....   6,173,000    5,956,000
 Receivable from affiliated company....................   1,651,000      325,000
 Other receivables.....................................   3,781,000    3,330,000
 Other current assets..................................   2,087,000    2,764,000
                                                        -----------  -----------
   TOTAL CURRENT ASSETS................................  42,897,000   42,983,000


OTHER ASSETS
 Cash held in trust....................................   1,592,000    1,778,000
 Cost in excess of net asset value of purchased
  businesses...........................................     652,000      663,000
 Unamortized preopening and loan costs.................   1,709,000    2,221,000
 Receivable from affiliated company....................   6,177,000    7,170,000
 Deferred income taxes.................................   8,391,000    8,652,000
 Other non-current assets..............................   2,206,000    2,301,000
                                                        ------------ -----------
                                                         20,727,000   22,785,000

PROPERTY AND EQUIPMENT
 Land..................................................   5,359,000    5,383,000
 Building and improvements.............................  77,850,000   77,630,000
 Equipment, furniture and fixtures.....................  20,063,000   19,611,000
                                                        ------------------------
                                                        103,272,000  102,624,000
 Less accumulated depreciation.........................  31,415,000   29,156,000
                                                        ------------------------
                                                         71,857,000   73,468,000
                                                        ----------- ------------

                                                       $135,481,000 $139,236,000
                                                        ===========  ===========







                 See notes to consolidated financial statements.



                                       1
<PAGE>



                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)






                                                      December 31      June 30
                                                         1995            1995
                                                      --------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable .................................. $  2,428,000 $   3,868,000
 Accrued salaries and wages ........................    4,479,000     4,843,000
 Other accrued liabilities .........................    1,244,000     1,347,000
 Amounts due to third-party contractual agencies ...    5,332,000     4,996,000
 Current portion of long-term debt .................    8,123,000     3,831,000
                                                      -----------   -----------
   TOTAL CURRENT LIABILITIES .......................   21,606,000    18,885,000

LIABILITIES FOR SELF-INSURANCE CLAIMS, less
current portion ....................................    1,326,000     1,337,000

LONG-TERM DEBT, less current portion ...............   48,576,000    55,568,000

MINORITY INTERESTS .................................      846,000     1,667,000

STOCKHOLDERS' EQUITY
 Class B convertible preferred stock, Series C, 
   $1 par value--authorized 152,321 shares; 
   issued 142,486 shares (liquidation value of  
   $7,244,000)including accrued dividends
   of $91,000 ......................................      233,000       233,000
 Common Stock, $.01 par value--authorized 20,000,000
   shares; issued 8,594,251 at December 31, 1995 and
   8,290,795 shares at June 30, 1995 ...............       86,000        83,000
 Additional paid-in capital ........................  100,048,000    99,147,000
 Retained earnings (deficit) .......................  (33,341,000)  (33,785,000)
 Treasury Stock, at cost--581,550 shares at
   December 31,1995 and June 30, 1995 ..............   (3,899,000)   (3,899,000)
                                                     ------------   ------------
                                                       63,127,000    61,779,000
                                                     ------------   ------------

                                                     $135,481,000  $139,236,000
                                                      ============  ============








                 See notes to consolidated financial statements.



                                       2
<PAGE>



                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)


                                     Quarter Ended           Six Months Ended
                                      December 31              December 31
                                    --------------------------------------------
                                    1995        1994         1995        1994
                                    --------------------------------------------

NET REVENUES                     $31,815,000 $35,634,000 $60,944,000 $71,457,000

Operating Expenses:
 Salaries, wages and benefits...  16,194,000  18,212,000  32,433,000  35,946,000
 Other operating expenses.......  10,190,000  11,232,000  19,746,000  22,243,000
 Provision for doubtful accounts   1,070,000   1,297,000   2,026,000   2,582,000
 Depreciation and amortization..   1,291,000   1,970,000   2,626,000   3,810,000
 Interest and other financing
   charges......................   1,783,000   2,144,000   3,509,000   4,311,000
                                  ----------------------------------------------
      TOTAL OPERATING EXPENSES..  30,528,000  34,855,000  60,340,000  68,892,000
                                  ----------------------------------------------

INCOME BEFORE MINORITY INTERESTS
 AND INCOME TAXES...............   1,287,000     779,000     604,000   2,565,000
Minority interests..............     (49,000)    166,000    (101,000)  1,013,000
                                  ----------------------------------------------

INCOME BEFORE INCOME TAXES......   1,336,000     613,000     705,000   1,552,000
Provision for income taxes......     501,000     176,000     261,000     527,000
                                  ----------------------------------------------

      NET INCOME ............... $   835,000 $   437,000 $   444,000  $1,025,000
                                  ==============================================

Income per common and dilutive common equivalent share:
 Primary........................       $0.09       $0.05       $0.05       $0.11
 Fully diluted..................       $0.09       $0.05       $0.05       $0.11

Weighted average number of shares outstanding:
 Primary........................   9,378,000   9,515,000   9,262,000   9,512,000
 Fully diluted..................   9,438,000   9,527,000   9,438,000   9,529,000














                 See notes to consolidated financial statements.



                                       3
<PAGE>






                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                                   Six Months Ended December 31
                                                         1995         1994
                                                   ----------------------------
Cash Flows from Operating Activities
Net income ...........................................$   444,000  $ 1,025,000
Adjustments to reconcile net income to net
 cash provided by(used in) operating activities:
 Depreciation and amortization .......................  3,035,000    4,204,000
 Provision (benefit) for deferred income taxes .......    261,000     (190,000)
 Provision for doubtful accounts .....................  2,026,000    2,582,000
 Minority interests ..................................   (101,000)   1,013,000
 Cash flows from (increase) decrease in operating assets:
    Accounts receivable .............................. (4,277,000)  (3,371,000)
    Amounts due from third-party contractual agencies    (217,000)  (2,895,000)
    Other current assets .............................    772,000   (1,671,000)
    Receivable from affiliated company ...............   (333,000)        --
    Other non-current assets .........................     95,000     (537,000)
 Cash flows from increase (decrease) in operating liabilities:
    Accounts payable ................................. (1,440,000)     213,000
    Accrued salaries, wages and other liabilities ....   (467,000)  (1,896,000)
    Unpaid self-insurance claims .....................    (11,000)    (130,000)
    Amounts due to third-party contractual agencies ..    336,000      300,000
                                                      -----------  -----------
       Total adjustments .............................   (321,000)  (2,378,000)
                                                      -----------  -----------
          Net cash provided by (used in) operating
          activities .................................    123,000   (1,353,000)
                                                      -----------  -----------
Cash Flows from Investing Activities
 Expenditures for property and equipment, net ........   (648,000)  (1,506,000)
 Preopening costs ....................................    (22,000)    (346,000)
 Restricted cash used for debt payments ..............       --      3,055,000
 Cash held in trust ..................................    186,000     (960,000)
                                                      -----------  -----------
           Net cash provided by (used in) investing
           activities ................................   (484,000)     243,000
                                                      -----------  -----------
Cash Flows from Financing Activities
 Loan costs ..........................................   (217,000)    (230,000)
 Payment of costs related to distribution of
 subsidiary ..........................................         --     (949,000)
 Proceeds from exercise of stock options and stock
 purchases ...........................................    526,000      157,000
 Distributions to minority interests .................   (720,000)  (1,656,000)
 Proceeds from private placement of shares of former
  subsidiary..........................................        --     3,320,000
 Proceeds from working capital facility ..............        --     2,500,000
 Payments on debt ...................................  (2,700,000) (4,749,000)
 Payment of preferred stock dividends ...............    (182,000)   (182,000)
 Purchase of treasury stock .........................        --       (44,000)
                                                      -----------  ----------
       Net cash used in financing activities .......  (3,293,000) (1,833,000)
                                                      -----------  ----------
Net decrease in cash and cash equivalents ...........  (3,654,000) (2,943,000)
Cash and cash equivalents at beginning of period ....   9,044,000   6,207,000
                                                      -----------  ----------
Cash and cash equivalents at end of period ..........$  5,390,000 $ 3,264,000
                                                      ============ ==========

Supplemental  Disclosures of Cash Flow  Information
Cash paid during the period
for:
 Interest ............................ .............. $ 2,672,000 $ 3,425,000
 Income taxes ......................................       89,000   1,316,000

                 See notes to consolidated financial statements.



                                       4
<PAGE>




                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                December 31, 1995


NOTE 1

         The accompanying  unaudited 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
three and six months ended December 31, 1995 are not  necessarily  indicative of
the results that may be expected for the year. 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 June 30, 1995.

NOTE 2

         At  December  31,  1995,  the  Company's  credit  facilities   included
$34,168,750 in senior secured notes and $2,076,924 in subordinated secured notes
(the 1990 Credit Facility), and approximately  $20,000,000 in letters of credit,
which support the Company's  variable rate demand revenue bonds (the 1993 Credit
Facility).

         On May 1, 1995,  the Company  utilized a portion of the proceeds from a
sale/leaseback  of two of its  inpatient  facilities  and prepaid  $7,500,000 of
principal  due on the  senior  secured  notes  as  follows:  $3,531,250  in full
satisfaction  of the  amount  due on  September  30,  1995,  $3,531,250  in full
satisfaction  of the  amount  due on March 31,  1996,  and  $437,500  in partial
satisfaction  of the  $3,531,250  due on September 30, 1996.  The senior secured
notes bear interest at 11.6% and are due in semi-annual  installments that began
on March 31,  1993 and,  after the May 1, 1995  prepayment,  resume  semi-annual
installments  on September  30, 1996 through  March 31, 2000.  The  subordinated
secured  notes bear  interest at 15.6% and are due in  semi-annual  installments
that began on March 31, 1994 and end on March 31, 2000.

         The variable  rate demand  revenue  bonds were issued in 1984 and 1985,
have  terms of 30 years  and  require  annual  principal  payments  of  $800,000
(through year 2000) and $900,000 to $1,300,000 (from years 2001 to maturity).

         Effective  September  15,  1995,  the  Company  and the  group of banks
supporting  the 1993 Credit  Facility  agreed to an extension of the facility to
February  15,  1997.  In  connection  with  this  extension,  certain  financial
covenants were modified and the Company agreed to reduce the banks'  exposure by
$2.8 million on or before December 31, 1995 and an additional $3.0 million on or
before  July 1,  1996.  In  December  1995,  the  Company  fully  paid  down and
terminated a working capital facility  originally  issued in connection with the


                                       5
<PAGE>

1993  Credit  Facility,   thereby  achieving,  along  with  regularly  scheduled
principal payments made prior to December 31,1995, the $2.8 million reduction in
the banks' credit exposure.

A summary of the Company's debt obligations is as follows:

                                         December 31      June 30
                                             1995           1995
                                        -------------  -------------

11.6% senior secured notes ............ $  34,169,000   $ 34,169,000
Variable rate demand revenue bonds ....    19,400,000     20,200,000
15.6% subordinated secured notes ......     2,077,000      2,308,000
Capital lease obligation...............       707,000        919,000
Working capital facility...............           ---      1,500,000
Other notes payable....................       346,000        303,000
                                          -----------     ----------
                                           56,699,000     59,399,000
Less amounts due within one year.......     8,123,000      3,831,000
                                          -----------     ----------
                                        $  48,576,000   $ 55,568,000
                                           ==========     ==========

         The Company has pledged as  collateral  substantially  all of its land,
buildings and improvements.

NOTE 3

         In April 1995, the Company sold and leased back the land, buildings and
fixed  equipment of two of its inpatient  facilities.  The leases have a primary
term of 15 years (with  three  successive  renewal  options of 5 years each) and
require  aggregate  annual minimum  rentals of $1.54 million,  payable  monthly.
Beginning April 1, 1996, the lease payments are subject to an upward  adjustment
(not to exceed 3% annually)  based upon any increase in the consumer price index
over the preceding  twelve months.  Effective  April 1995, the Company agreed to
lease an 80-bed  facility  near Salt Lake  City,  Utah for four  years,  with an
option to renew for an additional  three years.  The lease requires  annual base
rental payments of $456,000. In addition, the lease provides for percentage rent
payments to the lessor equal to 2% of the net revenues of the facility,  payable
quarterly.  The Company  leases its  corporate  headquarters  for a term of five
years ending in April 1999 and various other clinics and  outpatient  operations
over terms  ranging  from one to five  years.  Annual  rent  expense  related to
noncancellable operating leases totals approximately $2.7 million.

NOTE 4

         The provision for income taxes included in the consolidated  statements
of income  differs from the amounts  computed by applying  the normal  statutory
rates to income before income taxes because such  provision  includes a) amounts
reportable  as income for federal  income tax purposes  which are not income for
financial  reporting  purposes,  b) amounts  deducted  for  financial  reporting
purposes  that are not  allowable  deductions  for federal and state  income tax
purposes  and c)  amounts  for  state  income  taxes  applicable  to  profitable
subsidiaries which do not utilize the operating losses generated by unprofitable
subsidiaries  to offset  taxable  income.  At December 31, 1995, the Company has
estimated operating loss carryforwards available to reduce future taxable income
of approximately $21,000,000, subject to significant annual limitations pursuant
to Section 382 of the Internal Revenue Code of 1986, as amended.

                                       6
<PAGE>

NOTE 5

         Effective April 24, 1995, the Company distributed,  on a pro-rata basis
in the form of a dividend,  the common stock of its  subsidiary,  Ramsay Managed
Care, Inc. ("RMCI"),  held by the Company, to the holders of record on April 21,
1995 of the  Company's  common and  preferred  stock (the "RMCI  Distribution").
RMCI,  which was formed in October  1993,  manages the delivery of mental health
and substance abuse care and provides employee  assistance and mental health and
substance abuse treatment programs for and on behalf of self-insured  employers,
health  maintenance  organizations  ("HMOs"),  insurance  companies,  government
agencies and other third-party payors. Subsequent to the RMCI Distribution, RMCI
ceased being a subsidiary of the Company.

         For the three months ended December 31, 1994,  net revenues,  operating
expenses and income before income taxes of RMCI were $3,492,000,  $3,403,000 and
$89,000, respectively. For the six months ended December 31, 1994, net revenues,
operating  expenses  and income  before  income  taxes of RMCI were  $6,955,000,
$6,804,000  and  $151,000,  respectively.  Inclusion  of RMCI  in the  Company's
consolidated  results of operations  for the three and six months ended December
31, 1994  increased  earnings per share  reported in those  periods by $0.01 per
share.

     At December 31, 1995,  total net cash advances made by the Company to or on
behalf of RMCI, including for purposes of partially funding acquisitions and for
working capital and other corporate purposes, totalled approximately $7,800,000.
The Company  anticipates  the current  portion of this  receivable  will be paid
prior to fiscal yar end or otherwise  in  accordance  with the payment  terms as
described  below.  Of  the  $7,800,000  currently  outstanding,  $6  million  is
represented by an unsecured, interest-bearing (8%), subordinated promissory note
due from RMCI and issued on  October  25,  1994.  Interest  on the  subordinated
promissory  note  commenced  June 30, 1995 and is payable on a quarterly  basis.
Principal on the subordinated promissory note is payable over a four-year period
in 17 equal quarterly installments commencing September 30, 1996.

         In  addition  to the  subordinated  promissory  note and  pursuant to a
Distribution   Agreement   between  RHCI  and  RMCI  which   governed  the  RMCI
Distribution,  RMCI agreed to pay amounts owed to RHCI as of April 24, 1995 (the
"Distribution  Date")  totalling  approximately  $1,100,000.   Pursuant  to  the
Distribution Agreement, $600,000 of this amount was payable by RMCI on or before
October 21, 1995 or on such other date and on such other terms and conditions as
mutually agreed to by RHCI and RMCI. RMCI paid $275,000 to RHCI on June 30, 1995
in partial  satisfaction  of the amount due on October  21, 1995 and the parties
are currently  discussing deferred payment terms on the remaining $325,000.  The
balance  of the  amount  outstanding  on the  Distribution  Date,  approximately
$500,000,  is payable on or before December 31, 1996,  together with interest at
7% per annum  accruing  from October 21, 1995, or on such other date and on such
other terms and conditions as shall be mutually agreed to between RHCI and RMCI.

     Subsequent to the RMCI Distribution,  RHCI paid additional amounts incurred
by RMCI prior to the Distribution  Date and has provided certain  administrative
services to RMCI pursuant to certain  agreements entered into in connection with
the RMCI  Distribution.  RHCI will be paid for  these  amounts  which,  which at
December 31, 1995, totalled  approximately  $855,000.

                                       7
<PAGE>

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

         The  Company  pursues  business  expansion   opportunities   which  are
consistent with its overall  strategic plan and disposes of operations no longer
considered  viable or  consistent  with this  plan.  The  following  significant
events, which occurred subsequent to December 31, 1994, impact the comparison of
revenues and operating expenses of the Company between the periods presented.

         *        The RMCI Distribution.

         *        Virtual elimination (due to statutory changes effective July
                  1, 1995) of  disproportionate  share  payments to the Company.
                  Disproportionate  share was a funding  mechanism  designed  to
                  adequately  reimburse  facilities serving a disproportionately
                  high volume of Medicaid patients, relative to other providers.
                  The majority of disproportionate  share payments were received
                  at the Company's Three Rivers facility,  which was operated as
                  a limited  partnership in which the Company had a 55% interest
                  and limited  partners  maintained a 45%  interest.  Due to the
                  virtual   elimination  of   disproportionate   share  payments
                  effective  July  1,  1995,  as  well  as  significantly   more
                  restrictive   admission  criteria  imposed  by  the  State  of
                  Louisiana on behavioral health providers treating  adolescents
                  in the State,  the Three  Rivers  facility  was closed in June
                  1995. See Part II. Item 5 - "Other Information".

          *       Commencement of operations in April 1995 at an 80-bed leased
                  facility near Salt Lake City, Utah.

          *       The closure of several day treatment  centers and outpatient
                  clinics during fiscal 1995 due to negative operating margins.

          *       Expansion of the Company's contract services division during
                  the latter part of fiscal 1995.





                                       8
<PAGE>



Results of Operations

         The  following  table sets forth,  for the periods  indicated,  certain
items of the Company's Consolidated  Statements of Operations as a percentage of
the  Company's net revenues.  The prior year  percentages  have been adjusted to
exclude the operations of RMCI.

                                           Percentage of Net Revenues
                                         Quarter Ended  Six Months Ended
                                           December 31     December 31
                                        ----------------------------------
                                          1995    1994    1995    1994
                                        ----------------------------------

Net revenues .......................     100.0%  100.0%  100.0%  100.0%
Operating expenses:
     Salaries, wages and benefits ..      50.9    51.5    53.2    51.0
     Other operating expenses ......      32.0    30.5    32.4    29.7
     Provision for doubtful accounts       3.4     4.1     3.3     4.0
     Depreciation and amortization .       4.1     5.3     4.3     5.1
     Interest expense ..............       5.6     6.5     5.8     6.5
                                         -----   -----   -----   -----
Total operating expenses ...........      96.0    97.9    99.0    96.3
                                         -----   -----   -----   -----
Income before minority interests and
     income taxes ..................       4.0     2.1     1.0     3.7

Minority interests .................      (0.2)    0.5    (0.1)    1.6
                                         -----   -----   -----   -----
Income before income taxes .........       4.2     1.6     1.1     2.1
                                         =====   =====   =====   =====

Quarter Ended December 31, 1995 Compared to
Quarter Ended December 31, 1994

         Net revenues in the quarter ended December 31, 1995 were $31.8 million,
compared to $35.6  million in the  comparable  quarter of the prior fiscal year.
The material  changes in net revenues  between these  periods  consisted of a) a
$1.1 million  decrease in same facility net inpatient  revenues between periods,
b) a $0.7 million  decrease in same  facility net  outpatient  revenues  between
periods,  c) a decrease in net patient  revenues of $2.7  million (of which $0.6
million was  disproportionate  share  revenues)  due to the closure of the Three
Rivers facility,  d) an increase in net patient revenues of $1.7 million related
to the opening of an additional  facility near Salt Lake City, Utah  ("Benchmark
South"),  e) a $1.9  million  increase  in net patient  revenues  related to the
Company's  subacute  operations,  f) a $0.5  million  increase  in net  revenues
related to the Company's contract services division,  and g) net revenues in the
quarter ended December 31, 1994 related to RMCI of $3.5 million.

         Same facility net inpatient revenues decreased 5% between periods (from
$22.6  million in the December 1994 quarter to $21.4 million in the current year
quarter) while same facility patient days were stable between periods. Increased
pressures by managed care organizations and other payors, as well as a change in
the Company's  payor mix and service levels,  decreased the Company's  inpatient
revenue per patient day by 5.5%  between  periods.  The increase in net revenues
related to subacute  operations is due to the opening of an  additional  unit at
the end of the  December  1994  quarter  and a  significant  increase  in census
between periods at two of the Company's other three subacute units.

                                       9
<PAGE>

         Salaries,  wages and  benefits in the quarter  ended  December 31, 1995
were $16.2 million,  compared to $18.2 million in the comparable  quarter of the
prior fiscal year.  Same facility  salaries,  wages and benefits  decreased $0.2
million (from $13.5 million to $13.3 million)  between  periods,  or 1.5%. Other
changes to salaries,  wages and benefits  between periods included a) a decrease
of $1.3  million  related to the  closure of the Three  Rivers  facility,  b) an
increase  of $0.9  million  related to the  opening of  Benchmark  South,  c) an
increase of $0.3 million related to subacute  operations and d) salaries,  wages
and  benefits in the quarter  ended  December  30, 1994  related to RMCI of $1.7
million.

         Other  operating  expenses in the quarter ended  December 31, 1995 were
$10.2 million,  compared to $11.2 million in the comparable quarter of the prior
fiscal year.  Same facility  other  operating  expenses  decreased  $0.5 million
between periods ($7.1 million in the current quarter compared to $7.6 million in
the prior fiscal year quarter),  other operating expenses of RMCI in the quarter
ended December 31, 1994 were $1.4 million,  and other operating expenses related
to subacute operations  increased $0.8 million between periods.  The decrease in
other operating  expenses between periods due to the closure of the Three Rivers
facility  was offset by the  increase  in other  operating  expenses  due to the
opening of Benchmark South.

         The provision for doubtful  accounts in the quarter ended  December 31,
1995  totalled  $1.1  million,  compared  to  $1.3  million  in the  prior  year
comparable quarter.  The overall provision for doubtful accounts associated with
the same facilities  decreased $0.2 million between periods due to the continued
shift in the Company's overall payor mix away from charged-based  payors,  which
typically  include a higher patient  portion due and,  consequently,  higher bad
debts.

         Depreciation  and  amortization  in the quarter ended December 31, 1995
totalled  $1.3  million,  compared to $2.0 million in the prior year  comparable
quarter.  This  decrease is due to a) the closure of the Three  Rivers  facility
($0.1 million),  b) depreciation  and amortization in the quarter ended December
31, 1994 related to RMCI of $0.3 million and c) a sale/leaseback transaction and
asset  write-down  recorded  by the  Company  in the third and  fourth  quarter,
respectively,  of its prior fiscal year, which reduced  depreciation  expense on
the underlying assets between periods by $0.3 million.

         Interest  expense  decreased  from $2.1  million in the  quarter  ended
December 31, 1994 to $1.8 million in the current year comparable  quarter.  Debt
levels were reduced  between  periods  through a prepayment  of principal on the
senior secured notes, a $0.5 million  reduction in principal on the subordinated
secured  notes and a $0.8 million  reduction  in principal on the variable  rate
demand revenue bonds.  In addition,  interest costs included in the December 31,
1994 quarter related to RMCI were not incurred in the current year quarter.

         Minority  interests  reflects the limited  partners' share of income or
loss before income taxes of the Three Rivers facility.  The decrease in minority
interests between periods is due to the closure of this facility in June 1995.


                                       10
<PAGE>






Six Months Ended December 31, 1995 Compared to
Six Months Ended December 31, 1994

         Net  revenues  in the six months  ended  December  31,  1995 were $60.9
million,  compared to $71.5 million in the comparable period of the prior fiscal
year. The material changes in net revenues between these periods consisted of a)
a $2.4 million decrease in same facility net inpatient revenues between periods,
b) a $0.9 million  decrease in same  facility net  outpatient  revenues  between
periods,  c) a decrease in net patient  revenues of $7.1  million (of which $2.8
million was  disproportionate  share  revenues)  due to the closure of the Three
Rivers facility,  d) an increase in net patient revenues of $3.0 million related
to the opening of an additional  facility near Salt Lake City, Utah  ("Benchmark
South"),  e) a $3.1  million  increase  in net patient  revenues  related to the
Company's  subacute  operations,  f) a $0.7  million  increase  in net  revenues
related to the Company's  contract  services division and g) net revenues in the
six months ended December 31, 1994 related to RMCI of $7.0 million.

         Same   facility   net   inpatient    revenues,    excluding   Louisiana
disproportionate share revenues recorded at the Company's Bayou Oaks facility in
the prior year period,  decreased 3% between  periods (from $43.9 million in the
prior year to $42.4  million in the current  year) while same  facility  patient
days  increased  3%  between  periods.   Increased  pressures  by  managed  care
organizations  and other payors,  as well as a change in the Company's payor mix
and service levels, decreased the Company's inpatient revenue per patient day by
6.2%  between  periods.  The  increase  in  net  revenues  related  to  subacute
operations  is due to the opening of an  additional  unit at the end of December
1994  and a  significant  increase  in  census  between  periods  at  two of the
Company's other three subacute units.

         Salaries,  wages and benefits in the six months ended December 31, 1995
were $32.4 million,  compared to $35.9 million in the  comparable  period of the
prior fiscal year.  Same facility  salaries,  wages and benefits  increased $0.3
(from $26.5 million to $26.8 million) between  periods,  or 1%. Other changes to
salaries,  wages and  benefits  between  periods  included a) a decrease of $2.9
million related to the closure of the Three Rivers  facility,  b) an increase of
$1.6 million  related to the opening of Benchmark  South, c) an increase of $0.6
million  related to subacute  operations and d) salaries,  wages and benefits in
the six months ended December 31, 1994 related to RMCI of $3.1 million.

         Other operating expenses in the six months ended December 31, 1995 were
$19.7  million,  compared to $22.2 million in the comparable six month period of
the prior fiscal year.  Same facility other  operating  expenses  decreased $0.2
million  between  periods ($14.5 million in the current year period  compared to
$14.7 million in the prior year period), other operating expenses of RMCI in the
six months  ended  December  31,  1994 were $2.9  million,  and other  operating
expenses related to subacute operations  increased $0.7 million between periods.
The decrease in other operating  expenses  between periods due to the closure of
the Three Rivers facility was offset by the increase in other operating expenses
due to the opening of Benchmark South.

         The  provision for doubtful  accounts in the six months ended  December
31, 1995  totalled  $2.0  million,  compared  to $2.6  million in the prior year
comparable period.  The overall provision for doubtful accounts  associated with


                                       11
<PAGE>

the same facilities  decreased $0.6 million between periods due to the continued
shift in the Company's overall payor mix away from charged-based  payors,  which
typically  include a higher patient  portion due and,  consequently,  higher bad
debts.

         Depreciation and amortization in the six months ended December 31, 1995
totalled  $2.6  million,  compared to $3.8 million in the prior year  comparable
period.  This  decrease  is due to a) the closure of the Three  Rivers  facility
($0.2  million),  b)  depreciation  and  amortization  in the six  months  ended
December  31,  1994  related  to RMCI of $0.5  million  and c) a  sale/leaseback
transaction and asset write-down recorded by the Company in the third and fourth
quarter,  respectively,  of its prior fiscal year,  which  reduced  depreciation
expense on the underlying assets between periods by $0.5 million.

         Interest  expense  decreased  from $4.3 million in the six months ended
December 31, 1994 to $3.5 million in the current year  comparable  period.  Debt
levels were  reduced  between  periods  through  regularly  scheduled  principal
payments and a  prepayment  of principal  on the senior  secured  notes,  a $0.5
million  reduction  in principal on the  subordinated  secured  notes and a $0.8
million  reduction in principal on the variable rate demand  revenue  bonds.  In
addition,  interest  costs  included in the  December  31, 1994 six month period
related to RMCI were not incurred in the current year period.

         Minority  interests  reflects the limited  partners' share of income or
loss before income taxes of the Three Rivers facility.  The decrease in minority
interests between periods is due to the closure of this facility in June 1995.

Financial Condition

         The  Company  records  amounts due to or from  third-party  contractual
agencies (Medicare,  Medicaid and Blue Cross) based on its best estimate,  using
the principles of cost  reimbursement,  of amounts to be ultimately  received or
paid under current and prior years' cost reports filed (or to be filed) with the
appropriate intermediaries.  Ultimate settlements and other lump-sum adjustments
due from and paid to these  intermediaries  occur at  various  times  during the
fiscal year. At December 31, 1995, amounts due from Medicare,  Medicaid and Blue
Cross totalled $3.7 million, $1.3 million and $1.2 million,  respectively.  Also
at December 31, 1995, amounts due to Medicare,  Medicaid and Blue Cross totalled
$3.9 million, $1.1 million and $0.3 million, respectively.

         During the six months ended December 31, 1995, amounts owed to minority
interests  decreased by a total of $0.8 million due  primarily to  distributions
made to the minority partners in the Three Rivers Hospital Limited  Partnership.
In addition, the current portion of long-term debt increased  approximately $4.3
million  since June 30, 1995 due to a) the  Company's  commitment  to reduce the
credit  exposure  of its bank group by $3.0  million on July 1, 1996 and b) $3.1
million in principal on the senior  secured notes which came due within one year
on September 30, 1995.  These  increases were offset by $1.5 million in payments
during the six months ended December 31, 1995 on the amount  outstanding at June
30, 1995 under the Company's former working capital facility.  The Company fully
paid down and  terminated  this working  capital  facility in December 1995. See
"Liquidity and Capital Resources" below.

         The Company has net deferred tax assets of  approximately  $8.4 million
at December 31, 1995.  Management has considered the effects of implementing tax


                                       12
<PAGE>

planning strategies, consisting of the sales of certain appreciated property, as
the  primary  basis for not  recognizing  a valuation  allowance  related to its
deferred tax assets at December 31, 1995.  The ultimate  realization of deferred
tax assets may be affected by changes in the underlying values of the properties
considered in the Company's tax planning strategies,  which values are dependent
upon the  operating  results and cash flows of the  individual  properties.  The
Company  evaluates the  realizability  of its deferred tax assets on a quarterly
basis by reviewing  its tax planning  strategies  and  assessing  the need for a
valuation allowance.

         In October 1995, a corporate  affiliate of Paul J. Ramsay, the Chairman
of the Board of the Company,  acquired through private placement an aggregate of
275,863 shares of common stock of the Company at a price of $3.625 per share. Of
the total shares acquired,  121,363 were issued for cash and 154,500 were issued
for  management  fees due during the remainder of the Company's  current  fiscal
year under the Company's  management  agreement with another corporate affiliate
of Mr. Ramsay.  The shares issued for  management  fees were recorded as prepaid
management fees and the total amount prepaid at December 31, 1995 ($0.4 million)
is included in other current assets in the accompanying  balance sheet. With the
issuance of the  additional  shares,  the voting  power of the  interests in the
Company  controlled  by  Mr.  Ramsay  increased  from  approximately   30.9%  to
approximately 32.9%.

Liquidity and Capital Resources

         The Company's credit facilities include $34.2 million in senior secured
notes,  approximately  $20  million in  letters  of credit  and $2.1  million in
subordinated  secured notes. The senior secured notes bear interest at 11.6% and
are  payable  as  follows:  a)  $3.1  million  due on  September  30,  1996,  b)
semi-annual  principal  payments of $3.5  million  from March 31,  1997  through
September 30, 1998 and c) semi-annual  principal  payments of $5.65 million from
March 31, 1999  through  March 31, 2000.  The  subordinated  secured  notes bear
interest at 15.6% and require  semi-annual  principal  payments of $0.2  million
through March 31, 2000.  Required annual principal payments on the variable rate
demand  revenue  bonds total $0.8 million  through year 2000 and $0.9 million to
$1.3 million in years 2001 through 2015.

         In September 1995, the Company and the banks supporting the 1993 Credit
Facility  agreed to terms which extended the expiration  date of the 1993 Credit
Facility  from May 15,  1996 to  February  15,  1997.  In  connection  with this
extension,  the Company agreed to reduce the banks'  exposure  (through  regular
principal payments on the variable rate demand revenue bonds outstanding,  early
redemption  of certain of these bonds and/or  elimination  of a working  capital
facility) by $2.8 million on or before  December 31, 1995 and an  additional  $3
million on or before July 1, 1996. In December 1995, the Company fully paid down
and terminated the working capital facility originally issued in connection with
the 1993 Credit  Facility,  thereby  achieving,  along with regularly  scheduled
principal  payments made prior to December 31, 1995, the $2.8 million  reduction
in the banks' credit exposure.

         At the current time, the Company does not have any  commitments to make
any  material  capital   expenditures.   The  Company's   current  primary  cash
requirements relate to its normal operating expenses,  the requirement to reduce
its banks' credit exposure as discussed above,  principal payments on its senior
secured  notes  (which  recommence  on September  30, 1996) and routine  capital
improvements  at its  facilities.  Construction  costs  related to the Company's
subacute  business were  completed  during  fiscal 1995 and this business  began


                                       13
<PAGE>

generating  positive cash flow from  operations in the fourth  quarter of fiscal
1995. Also, during 1995, the Company closed outpatient day treatment centers and
other outpatient clinics which were experiencing negative cash flow.

         On the basis of its historical experience and projected cash needs, the
Company  believes that its existing cash resources,  internally  generated funds
from  operations,  repayments  of certain of the amounts owed by Ramsay  Managed
Care,  Inc. and funds  derived from any future asset sales will be sufficient to
fund its current cash requirements and future identifiable needs. At the present
time, the Company does not have any agreement to sell any of its assets.

PART II - OTHER INFORMATION

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

         The Annual Meeting of  Stockholders of the Company was held on November
10, 1995. At the meeting,  the Ramsay Health Care, Inc. 1995 Long Term Incentive
Plan was approved by the  stockholders  by a vote of  4,734,610  votes in favor,
1,128,348 votes against, 20,492 votes abstaining and 1,214,063 broker non-votes.
The  Board  of  Directors'  selection  of  Ernst  & Young  LLP as the  Company's
independent auditors for the fiscal year ended June 30, 1996 was ratified during
the  meeting  by a vote  of  7,047,306  in  favor,  33,523  against  and  17,440
abstaining.  The  affirmative  vote of a majority of the shares of Company stock
represented and voted at the meeting was required for approval or ratification.

         During  the Annual  Meeting  of  Stockholders  of the  Company  held on
November 10, 1995, nominees for directors of the Company were approved by a vote
which  approximated,   for  each  director,   6,700,000  in  favor  and  400,000
abstaining. The nine directors of the Company elected during the meeting were as
follows: Aaron Beam, Jr., Gregory H. Browne, Peter J. Evans, Robert E. Galloway,
Thomas M. Haythe,  Reynold J.  Jennings,  Paul J. Ramsay,  Steven J. Shulman and
Michael S. Siddle.

Item 5.  Other Information

         During fiscal years 1994 and 1995, the Company's  Three Rivers facility
received Medicaid disproportionate share payments based on annual patient volume
projections made at the beginning of the facility's cost reporting periods.  The
State of Louisiana has reviewed  Three Rivers'  annual  patient volume for these
periods and has made a preliminary  determination that the facility was overpaid
approximately  $1.6  million in  disproportionate  share  payments.  The Company
believes that certain of the calculations which support the State's  preliminary
determination  are in error  and that  other  relevant  factors  affecting  this
determination have not been considered.

         Further,  during fiscal years 1994 and 1995, the Company's Three Rivers
and Bayou Oaks facilities  received additional  disproportionate  share payments
totalling $2.6 million and $0.6 million, respectively,  based on the facilities'
classification  as Louisiana  teaching  hospitals.  The Company is aware through
public  information  sources that the State of  Louisiana  may take the position
that these  facilities  (and other  psychiatric  facilities  not operated by the
Company) were not teaching  hospitals at the time these  payments were made. The
Company believes that,  based on its  understanding of the rules and regulations


                                       14
<PAGE>

in place at the time these payments were made,  payments received as a result of
the teaching classification were appropriate.

         In neither of the foregoing  matters has the State of Louisiana  made a
final determination or demand for repayment by the Company. Although the Company
intends to discuss the foregoing matters with  representatives from the State of
Louisiana,  at this  time,  the  Company  cannot  predict  the  outcome of these
discussions or the State's ultimate position on these matters.


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:

                 Exhibit 10.103       Ramsay Health Care, Inc. 1995 Long Term
                                      Incentive Plan

                 Exhibit 11           Computation of Net Income per Share

                 Exhibit 27           Financial Data Schedule

         (b)     Current Reports on Form 8-K

                 There  were no  Current  Reports  on Form  8-K  filed  with the
                 Commission during the quarter ended December 31, 1995.



                                       15
<PAGE>






                    RAMSAY HEALTH CARE, INC. AND SUBSIDIARIES

                                   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 HEALTH CARE, INC.
                                              Registrant


                                              /s/ Daniel A. Sims
                                              Corporate Controller





Date:  February 14, 1996


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