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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 September 30, 2002
|                                                  |  |                                                                                         
|OR                                               
|                                                  |  |                                                                                         
|o                                                 |  | 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. 0-27640

RENAL CARE GROUP, INC.

(Exact name of registrant as specified in its charter)

|                                                                        |  |                                                
|----------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State or other jurisdiction of
incorporation or organization) |  | 62-1622383
(I.R.S. Employer Identification No.)

2525 West End Avenue, Suite 600, Nashville, Tennessee 37203
(Address of principal executive offices) (Zip code)
Registrants telephone number, including area code: (615) 345-5500

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).

Yesx    No  o

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

|                              |  |                                
|----------------------------- |  | -------------------------------
|Class                         |  | Outstanding at November 8, 2002
|                              |  |                                
|Common Stock, $0.01 par value |  | 48,394,770                     





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TABLE OF CONTENTS



|                               |                                                                                                |  |  |  |  |  |  | 
|------------------------------ | ---------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                               | PART I FINANCIAL INFORMATION                                                                  
|                               | ITEM 1. FINANCIAL STATEMENTS                                                                  
|                               | Condensed Consolidated Balance Sheets                                                         
|                               | Condensed Consolidated Income Statements                                                      
|                               | Condensed Consolidated Statements Of Cash Flows                                               
|                               | NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                                          
|                               | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
|                               | ITEM 4. CONTROLS AND PROCEDURES                                                               
|                               | PART II - OTHER INFORMATION                                                                   
|                               | ITEM 1. LEGAL PROCEEDINGS.                                                                    
|                               | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.                                                     
|FORM OF STOCK OPTION AGREEMENT
|FORM OF STOCK OPTION AGREEMENT



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RENAL CARE GROUP, INC.

INDEX

|                               |  |                                                                                                                               |  |  |  |          |    | 
|------------------------------ |  | ----------------------------------------------------------------------------------------------------------------------------- |  |  |  | -------- | -- | 
|                               |  |                                                                                                                               |  |  |  | Page No.
|                               |  |                                                                                                                               |  |  |  |         
|PART I - FINANCIAL INFORMATION
|Item 1.                        |  | Financial Statements                                                                                                          |  | 
|                               |  | Condensed Consolidated Balance Sheets
December 31, 2001 and September 30, 2002 (unaudited)                                    |  |  |  |          | 1  | 
|                               |  | Condensed Consolidated Income Statements  (unaudited)
For the three months and nine months ended September 30, 2001 and 2002 |  |  |  |          | 2  | 
|                               |  | Condensed Consolidated Statements of Cash Flows  (unaudited)
For the nine months ended September 30, 2001 and 2002           |  |  |  |          | 3  | 
|                               |  | Notes to Condensed Consolidated Financial Statements  (unaudited)                                                            |  |  |  |          | 4  | 
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition And
Results of Operations                                         |  |  |  |          | 9  | 
|                               |  | Risk Factors                                                                                                                  |  |  |  |          | 14 | 
|Item 4.                        |  | Controls and Procedures                                                                                                       |  |  |  |          | 21 | 
|PART II - OTHER INFORMATION   
|Item 1.                        |  | Legal Proceedings                                                                                                             |  |  |  |          | 22 | 
|Item 6.                        |  | Exhibits and Reports on Form 8-K                                                                                              |  |  |  |          | 22 | 

Note: Item 3 of Part I, and Items 2, 3, 4 and 5 of Part II are omitted because
they are not applicable





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PART I  FINANCIAL INFORMATION




ITEM 1. FINANCIAL STATEMENTS




RENAL CARE GROUP, INC.
Condensed Consolidated Balance Sheets
(in thousands, except per share data)

|                                           |                                                                                                                                                    |   |              |         |               |   |             |         |  
|------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------- | - | ------------ | ------- | ------------- | - | ----------- | ------- | -
|                                           |                                                                                                                                                    |   | December 31, |         | September 30,
|                                           |                                                                                                                                                    |   | 2001         |         | 2002         
|                                           |                                                                                                                                                    |   |              |         |              
|                                           |                                                                                                                                                    |   |              |         |               |   | (unaudited)
|ASSETS                                     |                                                                                                                                                    |   |              |         |               |   |             |        
|Current assets:                            |                                                                                                                                                    |   |              |         |               |   |             |        
|                                           | Cash and cash equivalents                                                                                                                          |   | $            | 27,423  |               |   | $           | 39,802  |  
|                                           | Accounts receivable, net                                                                                                                           |   |              | 127,056 |               |   |             | 142,474 |  
|                                           | Inventories                                                                                                                                        |   |              | 16,292  |               |   |             | 15,252  |  
|                                           | Prepaid expenses and other current assets                                                                                                          |   |              | 18,584  |               |   |             | 15,045  |  
|                                           | Income taxes receivable                                                                                                                            |   |              | 7,058   |               |   |             |        |  
|                                           | Deferred income taxes                                                                                                                              |   |              | 16,894  |               |   |             | 16,894  |  
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total current assets                       |                                                                                                                                                    |   | 213,307      |         |               |   | 229,467     |        
|Property, plant and equipment, net         |                                                                                                                                                    |   | 175,925      |         |               |   | 198,038     |        
|Goodwill                                   |                                                                                                                                                    |   | 243,530      |         |               |   | 262,798     |        
|Intangible assets, net                     |                                                                                                                                                    |   | 10,365       |         |               |   | 11,691      |        
|Other assets                               |                                                                                                                                                    |   | 7,922        |         |               |   | 5,423       |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total assets                               |                                                                                                                                                    | $ | 651,049      |         |               | $ | 707,417     |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|LIABILITIES AND STOCKHOLDERS EQUITY       |                                                                                                                                                    |   |              |         |               |   |             |        
|Current liabilities:                       |                                                                                                                                                    |   |              |         |               |   |             |        
|                                           | Accounts payable                                                                                                                                   |   | $            | 28,198  |               |   | $           | 20,830  |  
|                                           | Income taxes payable                                                                                                                               |   |              |        |               |   |             | 7,141   |  
|                                           | Current portion of long-term debt                                                                                                                  |   |              | 726     |               |   |             | 123     |  
|                                           | Other current liabilities                                                                                                                          |   |              | 80,336  |               |   |             | 97,622  |  
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total current liabilities                  |                                                                                                                                                    |   | 109,260      |         |               |   | 125,716     |        
|Long-term debt, net of current portion     |                                                                                                                                                    |   | 3,776        |         |               |   | 2,805       |        
|Deferred income taxes                      |                                                                                                                                                    |   | 12,728       |         |               |   | 12,728      |        
|Minority interest                          |                                                                                                                                                    |   | 15,034       |         |               |   | 27,850      |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total liabilities                          |                                                                                                                                                    |   | 140,798      |         |               |   | 169,099     |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Commitments and contingencies              |                                                                                                                                                    |   |              |         |               |   |             |        
|Stockholders equity:                      |                                                                                                                                                    |   |              |         |               |   |             |        
|                                           | Preferred stock, $0.01 par value, 10,000 shares authorized,
none issued                                                                            |   |              |        |               |   |             |        |  
|                                           | Common stock, $0.01 par value, 90,000 shares authorized,
49,597 and 50,632 shares issued at December 31, 2001
and September 30, 2002, respectively |   |              | 496     |               |   |             | 507     |  
|                                           | Treasury stock, 100 and 2,098 shares of common stock at
December 31, 2001 and September 30, 2002, respectively                                     |   |              | (3,059  | )             |   |             | (65,755 | )
|                                           | Additional paid-in capital                                                                                                                         |   |              | 277,300 |               |   |             | 300,487 |  
|                                           | Retained earnings                                                                                                                                  |   |              | 235,514 |               |   |             | 303,079 |  
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total stockholders equity                 |                                                                                                                                                    |   | 510,251      |         |               |   | 538,318     |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        
|Total liabilities and stockholders equity |                                                                                                                                                    | $ | 651,049      |         |               | $ | 707,417     |        
|                                           |                                                                                                                                                    |   |              |         |               |   |             |        

See accompanying notes to condensed consolidated financial statements.

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RENAL CARE GROUP, INC.
Condensed Consolidated Income Statements
(in thousands, except per share data)
(unaudited)

|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |         | 
|------------------------------------------------ | ----------------------------------- | - | ------------------ | ------- | ----------------- | - | ------- | ------- | ---- | - | ------- | ------- |  | - | ------- | ------- | 
|                                                 |                                     |   | Three Months Ended |         | Nine Months Ended
|                                                 |                                     |   | September 30,      |         | September 30,    
|                                                 |                                     |   |                    |         |                  
|                                                 |                                     |   | 2001               |         | 2002              |   | 2001    |         | 2002
|                                                 |                                     |   |                    |         |                   |   |         |         |     
|Net revenue                                      |                                     | $ | 193,149            |         |                   | $ | 231,542 |         |      | $ | 551,382 |         |  | $ | 660,389 |        
|Operating costs and expenses:                    |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                 | Patient care costs                  |   |                    | 125,020 |                   |   |         | 151,722 |      |   |         | 357,166 |  |   |         | 432,184 | 
|                                                 | General and administrative expenses |   |                    | 16,430  |                   |   |         | 19,686  |      |   |         | 47,222  |  |   |         | 56,033  | 
|                                                 | Provision for doubtful accounts     |   |                    | 5,215   |                   |   |         | 6,008   |      |   |         | 14,885  |  |   |         | 17,228  | 
|                                                 | Depreciation and amortization       |   |                    | 9,997   |                   |   |         | 10,402  |      |   |         | 28,121  |  |   |         | 29,697  | 
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Total operating costs and expenses               |                                     |   | 156,662            |         |                   |   | 187,818 |         |      |   | 447,394 |         |  |   | 535,142 |        
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Income from operations                           |                                     |   | 36,487             |         |                   |   | 43,724  |         |      |   | 103,988 |         |  |   | 125,247 |        
|Interest expense, net                            |                                     |   | 198                |         |                   |   | 569     |         |      |   | 2,470   |         |  |   | 880     |        
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Income before minority interest and income taxes |                                     |   | 36,289             |         |                   |   | 43,155  |         |      |   | 101,518 |         |  |   | 124,367 |        
|Minority interest                                |                                     |   | 4,104              |         |                   |   | 5,364   |         |      |   | 10,956  |         |  |   | 15,381  |        
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Income before income taxes                       |                                     |   | 32,185             |         |                   |   | 37,791  |         |      |   | 90,562  |         |  |   | 108,986 |        
|Provision for income taxes                       |                                     |   | 12,288             |         |                   |   | 14,361  |         |      |   | 34,591  |         |  |   | 41,421  |        
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Net income                                       |                                     | $ | 19,897             |         |                   | $ | 23,430  |         |      | $ | 55,971  |         |  |   | 67,565  |        
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Net income per share:                            |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                 | Basic                               |   | $                  | 0.41    |                   |   | $       | 0.48    |      |   | $       | 1.17    |  |   | $       | 1.37    | 
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                 | Diluted                             |   | $                  | 0.39    |                   |   | $       | 0.46    |      |   | $       | 1.12    |  |   | $       | 1.32    | 
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|Weighted average shares outstanding:             |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                 | Basic                               |   |                    | 48,518  |                   |   |         | 48,672  |      |   |         | 47,791  |  |   |         | 49,190  | 
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        
|                                                 | Diluted                             |   |                    | 50,904  |                   |   |         | 50,518  |      |   |         | 50,187  |  |   |         | 51,036  | 
|                                                 |                                     |   |                    |         |                   |   |         |         |      |   |         |         |  |   |         |        

See accompanying notes to condensed consolidated financial statements.

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RENAL CARE GROUP, INC.
Condensed Consolidated Statements Of Cash Flows
(in thousands)
(unaudited)

|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |      |         |        |         | 
|--------------------------------------------------------------------------------- |  | ------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------- | ---- | ------- | ------ | ------- | 
|                                                                                  |  |                                       |                                                                              |                                           |         | Nine Months Ended
|                                                                                  |  |                                       |                                                                              |                                           |         | September 30,    
|                                                                                  |  |                                       |                                                                              |                                           |         |                  
|                                                                                  |  |                                       |                                                                              |                                           |         | 2001              |         | 2002
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|OPERATING ACTIVITIES                                                              |  |                                       |                                                                              |                                           |         |                   |         |     
|Net income                                                                        |  | $                                     | 55,971                                                                       |                                           |         | $                 | 67,565  |      |        
|Adjustments to reconcile net income to net cash
provided by operating activities: |  |                                       |                                                                              |                                           |         |                   |         |      |        
|                                                                                  |  |                                       | Depreciation and amortization                                                |                                           |         | 28,121            |         |      |         | 29,697 |        
|                                                                                  |  |                                       | Distributions to minority shareholders                                       |                                           |         | (9,552            | )       |      |         | (5,461 | )      
|                                                                                  |  |                                       | Income applicable to minority interest                                       |                                           |         | 10,956            |         |      |         | 15,381 |        
|                                                                                  |  |                                       | Changes in operating assets and liabilities net of effects from acquisitions |                                           |         | 13,685            |         |      |         | 20,183 |        
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|                                                                                  |  |                                       |                                                                              | Net cash provided by operating activities |         |                   | 99,181  |      |         |        | 127,365 | 
|INVESTING ACTIVITIES                                                              |  |                                       |                                                                              |                                           |         |                   |         |     
|Purchases of property and equipment                                               |  |                                       | (44,083                                                                      | )                                         |         |                   | (49,413 | )   
|Cash paid for acquisitions, net of cash acquired                                  |  |                                       | (21,403                                                                      | )                                         |         |                   | (19,904 | )   
|Change in other assets                                                            |  |                                       | 3,355                                                                        |                                           |         |                   | (843    | )   
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|                                                                                  |  | Net cash used in investing activities |                                                                              |                                           | (62,131 | )                 |         |      | (70,160 | )     
|FINANCING ACTIVITIES                                                              |  |                                       |                                                                              |                                           |         |                   |         |     
|Net payments of debt                                                              |  |                                       | (51,285                                                                      | )                                         |         |                   | (1,574  | )   
|Net proceeds from issuance of common stock                                        |  |                                       | 23,992                                                                       |                                           |         |                   | 16,548  |     
|Investment by joint venture partner                                               |  |                                       |                                                                             |                                           |         |                   | 2,896   |     
|Repurchase of treasury shares                                                     |  |                                       |                                                                             |                                           |         |                   | (62,696 | )   
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|                                                                                  |  | Net cash used in financing activities |                                                                              |                                           | (27,293 | )                 |         |      | (44,826 | )     
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|Increase in cash and cash equivalents                                             |  |                                       | 9,757                                                                        |                                           |         |                   | 12,379  |     
|Cash and cash equivalents, at beginning of period                                 |  |                                       | 29,902                                                                       |                                           |         |                   | 27,423  |     
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     
|Cash and cash equivalents, at end of period                                       |  | $                                     | 39,659                                                                       |                                           |         | $                 | 39,802  |     
|                                                                                  |  |                                       |                                                                              |                                           |         |                   |         |     

See accompanying notes to condensed consolidated financial statements.

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RENAL CARE GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2002
(Dollar amounts in thousands, except per share data)
(unaudited)

1.   Basis of Presentation

Overview

Renal Care Group, Inc. provides dialysis services to patients with chronic
kidney failure, also known as end-stage renal disease (ESRD). As of September
30, 2002, the Company provided dialysis and ancillary services to nearly 20,000
patients through 260 outpatient dialysis centers in 26 states, in addition to
providing acute dialysis services in more than 120 hospitals.

Renal Care Groups net revenue has been derived primarily from the
following sources:



| |  |  | outpatient hemodialysis services;                                                                                                          
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | ancillary services associated with dialysis, primarily the
administration of erythropoietin (also known as Epogen® or EPO) and
other drugs;
|
| |  |  | home dialysis services;                                                                                                                    
|
| |  |  | inpatient hemodialysis services provided to acute care hospitals and skilled nursing facilities;                                           
|
| |  |  | laboratory services; and                                                                                                                   
|
| |  |  | management contracts with hospital-based and medical university dialysis programs.                                                         

Patients with end-stage renal disease typically receive three dialysis
treatments each week, with reimbursement for services provided primarily by the
Medicare ESRD program based on rates established by Congress or the Centers for Medicare &
Medicaid Services (CMS). For the nine months ended September 30, 2002,
approximately 58% of the Companys net revenue was derived from reimbursement
under the Medicare and Medicaid programs. Medicare reimbursement is subject to
rate and other legislative changes by Congress and periodic changes in
regulations, including changes that may reduce payments under the ESRD program.
Effective January 1, 2001, Congress increased the Medicare composite rate by
1.2%. An additional increase of 1.2% took effect April 1, 2001. The April 1,
2001 increase included an adjustment factor that made that 1.2% increase
effective for all of 2001. Accordingly, the net result of the 1.2% increases
on January 1, 2001 and April 1, 2001, plus the April adjustment factor, was an
effective increase of 2.4% for calendar year 2001. Neither Congress nor CMS
approved an increase in the composite rate for 2002. Although a Medicare
spending bill has not been approved as of the date of this quarterly report,
neither Congress nor CMS has approved an increase in the Medicare composite
rate for 2003, and management believes that the likelihood that Congress or CMS
will approve an increase in the dialysis composite rate for 2003 is no better
than 50% as of the date of this quarterly report.

The Medicare composite rate applies to a designated group of outpatient
dialysis services, including the dialysis treatment, supplies used for the
treatment, certain laboratory tests and medications, and most of the home

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dialysis services provided by Renal Care Group. Certain other services,
laboratory tests, and drugs are eligible for separate reimbursement under
Medicare and are not part of the composite rate, including specific drugs such
as EPO and some physician-ordered tests provided to dialysis patients.

For patients with private health insurance, dialysis is typically
reimbursed at rates significantly higher than Medicare during the first 30
months of treatment. After that period Medicare becomes the primary payor.
Reimbursement for dialysis services provided pursuant to a hospital contract is
negotiated with the individual hospital and generally is higher than the
Medicare composite rate on a per treatment equivalent basis. Because dialysis
is a life-sustaining therapy to treat a chronic disease, utilization is
predictable and is not subject to seasonal fluctuations.

Renal Care Group derives a significant portion of its net revenue and net
income from the administration of EPO. EPO is manufactured by a single company,
Amgen Inc. In April 2002, Amgen implemented its third EPO price increase of
3.9% in as many years. This increase will not affect Renal Care Groups
results of operations in 2002 because Renal Care Groups contract with Amgen
included price protection for all of 2002. The Company is currently engaged in
negotiations with Amgen concerning its contract for 2003. Renal Care Group and
Amgen have agreed in principle that the Companys current pricing formula will
remain in effect for 2003. As a result, the Company believes, although it can
give no assurances, that it will be able to mitigate a substantial portion of
the 2002 price increase in 2003. This agreement in principle is conditioned on
negotiating and finalizing a written amendment to the contract between the
Company and Amgen.

Interim Financial Statements

In the opinion of management, the information contained in this quarterly
report on Form 10-Q reflects all adjustments necessary to make the results of
operations for the interim periods a fair representation of such operations.
All such adjustments are of a normal recurring nature. Operating results for
interim periods are not necessarily indicative of results that may be expected
for the year as a whole. The Company suggests that persons read these financial
statements in conjunction with the consolidated financial statements and the
related notes thereto included in the Companys Form 10-K, as filed with the
SEC on March 29, 2002.

2.   Reclassifications

Certain prior period balances have been reclassified to conform to the
current period presentation. Such reclassifications had no effect on the
results of operations as previously reported.

3.  Goodwill and Intangible Assets

On January 1, 2002, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 142, Goodwill and Other Intangible Assets, which
addresses the financial accounting and reporting standards for the acquisition
of intangible assets and for goodwill and other intangible assets subsequent to
the acquisition. This accounting standard requires that goodwill be disclosed
separately from other intangible assets in the balance sheet and that goodwill
no longer be amortized; instead, goodwill will be tested for impairment on a
periodic basis. The provisions of this accounting standard required the Company
to complete a transitional impairment test within six months of the Companys
adoption of this standard, with any identified impairments treated as a
cumulative effect of a change in accounting principle. The Company has
completed its transitional impairment test, and it has identified no impairments.

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In accordance with SFAS No. 142, the Company discontinued the amortization
of goodwill effective January 1, 2002. A reconciliation of previously reported
net income and earnings per share to the pro forma amounts adjusted for the
exclusion of goodwill amortization net of the related income tax effect
follows:

|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|--------------------------------------------- |  | ------------------ | ------ | ----------------- |  | ---- | ------ | ---- |  | - | ------ |  |  | - | ------ | 
|                                              |  | Three Months Ended |        | Nine Months Ended
|                                              |  | September 30,      |        | September 30,    
|                                              |  |                    |        |                  
|                                              |  | 2001               |        | 2002              |  | 2001 |        | 2002
|                                              |  |                    |        |                   |  |      |        |     
|Reported net income                           |  | $                  | 19,897 |                   |  | $    | 23,430 |      |  | $ | 55,971 |  |  | $ | 67,565 | 
|Add: goodwill amortization, net of tax        |  |                    | 1,031  |                   |  |      |       |      |  |   | 2,925  |  |  |   |       | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Pro forma adjusted net income                 |  | $                  | 20,928 |                   |  | $    | 23,430 |      |  | $ | 58,896 |  |  | $ | 67,565 | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Reported basic earnings per share             |  | $                  | 0.41   |                   |  | $    | 0.48   |      |  | $ | 1.17   |  |  | $ | 1.37   | 
|Add: goodwill amortization, net of tax        |  |                    | 0.02   |                   |  |      |       |      |  |   | 0.06   |  |  |   |       | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Pro forma adjusted basic earnings per share   |  | $                  | 0.43   |                   |  | $    | 0.48   |      |  | $ | 1.23   |  |  | $ | 1.37   | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Reported diluted earnings per share           |  | $                  | 0.39   |                   |  | $    | 0.46   |      |  | $ | 1.12   |  |  | $ | 1.32   | 
|Add: goodwill amortization, net of tax        |  |                    | 0.02   |                   |  |      |       |      |  |   | 0.05   |  |  |   |       | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 
|Pro forma adjusted diluted earnings per share |  | $                  | 0.41   |                   |  | $    | 0.46   |      |  | $ | 1.17   |  |  | $ | 1.32   | 
|                                              |  |                    |        |                   |  |      |        |      |  |   |        |  |  |   |        | 

Changes in the carrying amount of goodwill for the nine months ended
September 30, 2002, are as follows:

|                                    |  |   |         | 
|----------------------------------- |  | - | ------- | 
|Balance as of December 31, 2001     |  | $ | 243,530 | 
|Goodwill acquired during the period |  |   | 19,268  | 
|                                    |  |   |         | 
|Balance as of September 30, 2002    |  | $ | 262,798 | 
|                                    |  |   |         | 

The Companys separately identifiable intangible assets, which consist of
noncompete agreements and acute dialysis services agreements, are as follows:

|                         |  |              |        |               |  |   |        |  
|------------------------ |  | ------------ | ------ | ------------- |  | - | ------ | -
|                         |  | December 31, |        | September 30,
|                         |  | 2001         |        | 2002         
|                         |  |              |        |              
|Carrying amount          |  | $            | 16,090 |               |  | $ | 18,757 |  
|Accumulated amortization |  |              | (5,725 | )             |  |   | (7,066 | )
|                         |  |              |        |               |  |   |        |  
|Net                      |  | $            | 10,365 |               |  | $ | 11,691 |  
|                         |  |              |        |               |  |   |        |  

Separately identifiable intangible assets are being amortized over their
useful lives, ranging from four to ten years. Amortization expense for the
nine months ended September 30, 2002 was approximately $1,341. Estimated
amortization expense for each of the five succeeding fiscal years is as
follows:

|                         |  |        |       | 
|------------------------ |  | ------ | ----- | 
|Year ending December 31, |  | Amount
|                         |  |       
|2002                     |  | $      | 2,010 | 
|2003                     |  |        | 2,139 | 
|2004                     |  |        | 2,139 | 
|2005                     |  |        | 2,122 | 
|2006                     |  |        | 2,067 | 

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4.  Earnings Per Share (in thousands, except per share data)

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

|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |        |       | 
|--------------------- | ------------------------------------------------------------------------------------------------------- | ------------- | - | ------------------ | ----- | ----------------- | - | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                      |                                                                                                         |               |   | Three Months Ended |       | Nine months Ended
|                      |                                                                                                         |               |   | September 30,      |       | September 30,    
|                      |                                                                                                         |               |   |                    |       |                  
|                      |                                                                                                         |               |   | 2001               |       | 2002              |   | 2001   |       | 2002
|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |     
|Numerator:            |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|                      | Numerator for basic and diluted income per
share                                                        |               | $ | 19,897             |       |                   | $ | 23,430 |       |      | $ | 55,971 |       |  | $ | 67,565 |      
|Denominator:          |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|                      | Denominator for basic net income per share 
weighted-average shares                                    |               |   | 48,518             |       |                   |   | 48,672 |       |      |   | 47,791 |       |  |   | 49,190 |      
|                      | Effect of dilutive securities:                                                                          |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |        |      
|                      |                                                                                                         | Stock options |   |                    | 1,966 |                   |   |        | 1,749 |      |   |        | 1,980 |  |   |        | 1,749 | 
|                      |                                                                                                         | Warrants      |   |                    | 420   |                   |   |        | 97    |      |   |        | 416   |  |   |        | 97    | 
|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|                      | Denominator for diluted net income per share 
adjusted weighted-average shares and assumed
conversions |               |   | 50,904             |       |                   |   | 50,518 |       |      |   | 50,187 |       |  |   | 51,036 |      
|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|Net income per share: |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|                      | Basic                                                                                                   |               | $ | 0.41               |       |                   | $ | 0.48   |       |      | $ | 1.17   |       |  | $ | 1.37   |      
|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       
|                      | Diluted                                                                                                 |               | $ | 0.39               |       |                   | $ | 0.46   |       |      | $ | 1.12   |       |  | $ | 1.32   |      
|                      |                                                                                                         |               |   |                    |       |                   |   |        |       |      |   |        |       |  |   |       

5.  Contingencies

On August 30, 2000, 19 patients were hospitalized and one patient died
shortly after becoming ill while receiving treatment at one of the Companys
dialysis centers in Youngstown, Ohio. One of the 19 hospitalized patients also
died some time later. In March 2001, the Company was sued in Mahoning County,
Ohio by one of the affected patients for injuries related to the August 30,
2000 illnesses. Additional suits have been filed, and, as of September 30,
2002, a total of 11 suits were pending. The suits allege negligence, medical
malpractice and product liability. Additional defendants are named in each of
the suits. Additional defendants in some of the suits include the water system
vendors that installed and maintained the water system in the dialysis center.
Renal Care Group has denied the allegations and has filed cross-claims against
the water system vendors. Renal Care Group intends to pursue these
cross-claims vigorously. Management believes that Renal Care Groups insurance
should be adequate to cover these illnesses and does not anticipate a material
adverse effect on the Companys consolidated financial position or results of
operation.

On December 12, 2000, the Company reached an agreement in principle with
the U.S. Attorney for the Southern District of Mississippi to settle claims
arising out of alleged inadequacies in physician documentation related to lab
tests performed by its laboratory subsidiary, RenaLab, Inc. The terms of such
agreement provided that the Company pay $1,980 to the Medicare program. This
amount was recorded during the fourth quarter of 2000 and was paid in January
2002, when the Company and the government finalized the terms of a corporate
integrity agreement.

The Company is involved in other litigation and regulatory investigations
arising in the ordinary course of business. In the opinion of management, after
consultation with legal counsel, these matters will be resolved without
material adverse effect on the Companys consolidated financial position or
results of operations.

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The Company generally engages practicing board-certified or board-eligible
nephrologists to serve as medical directors for its centers. Medical directors
are responsible for the administration and monitoring of the Companys patient
care policies, including patient education, administration of dialysis
treatment, development programs and assessment of all patients. The Company
pays medical director fees that are consistent with the fair market value of
the required supervisory services. Such medical director agreements typically
have a term of seven years with a three-year renewal option.

6.  Recent Accounting Pronouncements

On June 30, 2001, the Company adopted SFAS No. 141, Business Combinations,
which eliminated the pooling-of-interests method of accounting for all business
combinations initiated after June 30, 2001 and addressed the initial
recognition and measurement of goodwill and other intangible assets acquired in
a business combination.

As discussed in detail in Note 3, the Company adopted SFAS No. 142 on
January 1, 2002.

Effective January 1, 2002, the Company adopted SFAS No. 144, Accounting
for the Impairment or Disposal of Long-Lived Assets, which addresses the
accounting and reporting for the impairment or disposal of long-lived assets.
SFAS No. 144 did not have an effect on the Companys results of operations in
the nine months ended September 30, 2002.

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

Results of Operations

Three Months Ended September 30, 2001 Compared to Three Months Ended September
30, 2002

Net Revenue.Net revenue increased from $193.1 million for the three
months ended September 30, 2001 to $231.5 million for the three months ended
September 30, 2002, an increase of $38.4 million, or 19.9%. This increase
resulted primarily from a 14.5% increase in the number of treatments performed
by Renal Care Group from approximately 675,000 in the 2001 period to
approximately 773,000 in the 2002 period. This growth in treatments is the
result of the acquisition and development of various dialysis facilities and a
5.9% increase in same-market treatments for 2002 over 2001. In addition,
average net revenue per dialysis treatment increased 5.7% from $282 in 2001 to
$298 in 2002. The increase in revenue per treatment was largely due to a rate
increase to private payors that Renal Care Group implemented in the fourth
quarter of 2001 and an increase in utilization of certain ancillary drugs.

For convenience, the Company has historically referred to internal growth
in its existing markets, as opposed to growth through acquisition or
development activities in new markets, as same-center growth. This
same-center growth has included increases in the number of new patients in
existing dialysis centers as well as net new patients added when the Company
opened a new dialysis center in an existing market. To describe this internal
market growth more accurately, Renal Care Group will now use the term
same-market growth instead of same-center growth.

Patient Care Costs.Patient care costs consist of costs directly related
to the care of patients, including direct labor, drugs and other medical
supplies, and operational costs of facilities. Patient care costs increased
from $125.0 million for the three months ended September 30, 2001, to $151.7
million for the three months ended September 30, 2002, an increase of 21.4%.
This increase was due principally to the increase in the number of treatments
performed during the period, which was reflected in corresponding increases in
the use of labor, drugs and supplies. Patient care costs as a percentage of net
revenue increased from 64.7% in the 2001 period to 65.5% in the 2002 period.
Patient care costs per treatment increased 5.9% from $185 in the 2001 period to
$196 in the 2002 period. These increases were due to increases in the price of
EPO, increased labor costs to address wage pressures in many of the Companys
markets, increases in the cost of insurance, the increase in utilization of
certain ancillary drugs and the increased cost of the drug Heparin following a
recall by its manufacturer. Management believes that the Company will continue
to face increases in the cost of EPO, insurance and labor in the remainder of
2002 and throughout 2003. Management believes that the cost of the drug
Heparin will return to historic levels over the next two quarters as production
of the drug returns to normal levels.

General and Administrative Expenses.General and administrative expenses
include corporate office costs and facility costs not directly related to the
care of patients, including facility administration, accounting, billing and
information systems. General and administrative expenses increased from $16.4
million for the three months ended September 30, 2001 to $19.7 million for the
three months ended September 30, 2002, an increase of 19.8%. General and
administrative expenses as a percentage of net revenue remained consistent at
8.5% in the 2001 and 2002 periods.

Provision for Doubtful Accounts.The provision for doubtful accounts is
determined as a function of payor mix, billing practices, and other factors.
Renal Care Group reserves for doubtful accounts in the period in which the
revenue is recognized based on managements estimate of the net collectibility
of the accounts receivable.
Management estimates the net collectibility of accounts receivable based upon a
variety of factors. These factors

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include, but are not limited to, analyzing
revenues generated from payor sources, performing subsequent collection testing
and regularly reviewing detailed accounts receivable agings. Based on
the results of managements estimated net collectibility of
accounts receivable adjustments to the allowance for doubtful
accounts are recorded as necessary. The provision for
doubtful accounts increased from $5.2 million for the three months ended
September 30, 2001 to $6.0 million for the three months ended September 30,
2002, an increase of approximately $793,000, or 15.2%. The provision for
doubtful accounts as a percentage of net revenue decreased slightly from 2.7%
in 2001 to 2.6 % in 2002.

Depreciation and Amortization.Depreciation and amortization increased
from $10.0 million for the three months ended September 30, 2001 to $10.4
million for the three months ended September 30, 2002, an increase of 4.1%.
This increase was due to the start-up of dialysis facilities, the normal
replacement costs of dialysis facilities and equipment, the purchase of
information systems, and the amortization of separately identifiable intangible
assets associated with acquisitions. Depreciation and amortization as a
percentage of net revenue decreased from 5.2% in the 2001 period to 4.5% in the
2002 period, primarily as a result of the implementation of SFAS No. 142, under
which the Company stopped amortizing goodwill effective January 1, 2002.

Income from Operations.Income from operations increased from $36.5
million for the three months ended September 30, 2001 to $43.7 million for the
three months ended September 30, 2002, an increase of 19.8%. Income from
operations as a percentage of net revenue remained consistent at 18.9% in the
2001 and 2002 periods.

Interest Expense, Net.Interest expense increased from approximately
$198,000 for the three months ended September 30, 2001 to approximately
$569,000 for the three months ended September 30, 2002, an increase of 187.4%.
This increase was principally the result of expensing some loan origination
costs associated with the Companys line of credit, which was substantially
amended in the quarter, and borrowings made and repaid during the
three months ended
September 30, 2002 to fund repurchases of Company common stock.

Minority Interest.Minority interest represents the proportionate equity
interest of other partners in the Companys consolidated entities that are not
wholly-owned. Minority interest as a percentage of net revenue increased to
2.3% in the 2002 period from 2.1% in the 2001 period. This increase was the
result of continued operational improvements in Renal Care Groups joint
ventures, primarily those in Ohio, Oregon and Washington, as well as an
increase in the number of facilities operated as joint ventures.

Provision for Income Taxes. Income tax expense increased from $12.3
million for the three months ended September 30, 2001 to $14.4 million for the
three months ended September 30, 2002, an increase of $2.1 million or 16.9%.
The increase is a result of pre-tax earnings increasing by approximately 17.4%.
The effective tax rate of the Company decreased slightly from 38.2% in the
2001 period to 38.0% in the 2002 period. This decrease was primarily the
result of the implementation of SFAS No. 142.

Net Income. Net income increased from $19.9 million for the three months
ended September 30, 2001 to $23.4 million for the three months ended September
30, 2002, an increase of $3.5 million or 17.8%. The increase is a result of
the items discussed above.

Results of Operations

Nine months Ended September 30, 2001 Compared to Nine months Ended September
30, 2002

Net revenue. Net revenue increased from $551.4 million for the nine months
ended September 30, 2001 to $660.4 million for the nine months ended September
30, 2002, an increase of $109.0 million, or 19.8%. This increase resulted
primarily from a 12.7% increase in the number of treatments from approximately
2.0 million in
the 2001 period to approximately 2.2 million in the 2002 period. This growth in
treatments is the result of the

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acquisition and development of various dialysis
facilities and a 5.8% increase in same-market treatments for the 2001 period
over the 2002 period. In addition, average net revenue per dialysis treatment
increased 6.9% from $275 in the 2001 period to $294 in the 2002 period. The
increase in revenue per treatment was due in part to the implementation of the
2001 Medicare composite rate increase and an increase in the utilization of
certain ancillary drugs. Renal Care Group also implemented a rate increase to
private payors in the fourth quarter of 2001.

Patient Care Costs.Patient care costs consist of costs directly related
to the care of patients, including direct labor, drugs and other medical
supplies, and operational costs of facilities. Patient care costs increased
from $357.2 million for the nine months ended September 30, 2001, to $432.2
million for the nine months ended September 30, 2002, an increase of 21.0%.
This increase was due principally to the increase in the number of treatments
performed during the period, which was reflected in corresponding increases in
the use of labor, drugs and supplies. Patient care costs as a percentage of net
revenue increased from 64.8% in the 2001 period to 65.4% in the 2002 period.
Patient care costs per treatment increased 7.2% from $181 in the 2001 period to
$194 in the 2002 period. These increases were due to the 2001 EPO price
increase, increased labor costs to address wage pressures in many of the
Companys markets, increases in the cost of insurance, the increase in
utilization of certain ancillary drugs and the increased cost of the drug
Heparin following a recall by its manufacturer. Management believes that the
Company will continue to face increases in the cost of EPO, insurance and labor
in the remainder of 2002 and throughout 2003. Management believes that the
cost of the drug Heparin will return to historic levels over the next two
quarters as production of the drug returns to normal levels.

General and Administrative Expenses.General and administrative expenses
include corporate office costs and facility costs not directly related to the
care of patients, including facility administration, accounting, billing and
information systems. General and administrative expenses increased from $47.2
million for the nine months ended September 30, 2001 to $56.0 million for the
nine months ended September 30, 2002, an increase of 18.7%. General and
administrative expenses as a percentage of revenue decreased slightly from 8.6%
in the 2001 period to 8.5% in the 2002 period.

Provision for Doubtful Accounts.The provision for doubtful accounts is
determined as a function of payor mix, billing practices, and other factors.
Renal Care Group reserves for doubtful accounts in the period in which the
revenue is recognized based on managements estimate of the net collectibility
of the accounts receivable. Management estimates the net collectibility of
accounts receivable based upon a variety of factors. These factors include, but
are not limited to, analyzing revenues generated from payor sources, performing
subsequent collection testing and regularly reviewing detailed accounts
receivable agings. The provision for doubtful accounts increased from $14.9
million for the nine months ended September 30, 2001 to $17.2 million for the
nine months ended September 30, 2002, an increase of $2.3 million, or 15.7%.
The provision for doubtful accounts as a percentage of net revenue decreased
slightly from 2.7% in the 2001 period to 2.6% in the 2002 period.

Depreciation and Amortization. Depreciation and amortization increased
from $28.1 million for the nine months ended September 30, 2001 to $29.7
million for the nine months ended September 30, 2002, an increase of $1.6
million, or 5.6%. This increase was due to the start-up of dialysis
facilities, the normal replacement costs of dialysis facilities and equipment,
the purchase of information systems, and the amortization of separately
identifiable intangible assets associated with acquisitions. Depreciation and
amortization as a percentage of net revenue decreased from 5.1% in the 2001
period to 4.5% in the 2002 period, primarily as a result of the implementation
of SFAS No. 142, under which the Company stopped amortizing goodwill effective
January 1, 2002.

Income from Operations. Income from operations increased from $104.0
million for the nine months ended September 30, 2001 to $125.2 million for the
nine months ended September 30, 2002, an increase of $21.3

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million, or 20.4%.
Income from operations as a percentage of net revenue increased slightly from
18.9% in the 2001 period to 19.0% in the 2002 period as a result of the factors
discussed above.

Interest Expense, Net.Interest expense decreased from $2.5 million for
the nine months ended September 30, 2001 to approximately $880,000 for the nine
months ended September 30, 2002. The decrease was the result of lower average
borrowings during 2002. The Company had generally retired all debt outstanding
under its credit facilities, and has recognized interest expense in 2002
primarily on short-term borrowings to fund repurchases of Renal Care Group
common stock, capital leases and equipment notes payable, commitment fees and
amortization of debt issuance costs. In addition, in 2002 the Company expensed
some loan origination costs associated with its line of credit, which was
substantially amended in the quarter ended September 30, 2002.

Minority Interest. Minority interest represents the proportionate equity
interest of other partners in the Companys consolidated subsidiaries that are
not wholly-owned. Minority interest as a percentage of net revenue increased
to 2.3% in 2002 from 2.0% in 2001. This increase was the result of the
continued operational improvements in Renal Care Groups joint ventures,
primarily those in Ohio, Washington and Oregon, as well as an increase in the
number of facilities operated as joint ventures.

Provision for Income Taxes. Income tax expense increased from $34.6
million for the nine months ended September 30, 2001 to $41.4 million for the
nine months ended September 30, 2002, an increase of $6.8 million or 19.7%.
The increase is a result of pre-tax earnings increasing $18.4 million,
representing an increase of 20.3% over the 2001 period.

Net Income. Net income increased from $56.0 million for the nine months
ended September 30, 2001 to $67.6 million for the nine months ended September
30, 2002, an increase of $11.6 million or 20.7%. The increase is a result of
the items discussed above.

Liquidity and Capital Resources

Renal Care Group requires capital primarily to acquire and develop
dialysis centers, to purchase property and equipment for existing centers, to
repurchase shares of its common stock and to finance working capital needs. At
September 30, 2002, the Companys working capital was $103.8 million, cash and
cash equivalents were $39.8 million, and the Companys current ratio was
approximately 1.8 to 1.

Net cash provided by operating activities was $127.4 million for the nine
months ended September 30, 2002. Cash provided by operating activities consists
of net income before depreciation and amortization expense, adjusted for
changes in components of working capital, primarily accounts receivable. Net
cash used in investing activities was $70.2 million for the nine months ended
September 30, 2002. Cash used in investing activities consisted primarily of
$49.4 million of purchases of property and equipment and $19.9 million of cash
paid for acquisitions, net of cash acquired. Net cash used in financing
activities was approximately $44.8 million for the nine months ended September
30, 2002. Cash used in financing activities primarily reflects repurchases of
Renal Care Group common stock of $62.7 million offset by a $2.9 million
investment by a joint venture partner and $16.5 million in net proceeds from
the issuance of common stock as stock options were exercised.

Effective July 1, 2002, Renal Care Group entered into two credit
agreements with a group of banks totaling $150.0 million consisting of a $100.0
million Second Amended and Restated Loan Agreement (the Multi-Year
Facility) and a $50.0 Loan Agreement (the 364-day Facility). The Multi-Year
Facility has a final maturity of July 1, 2005 and the 364-day Facility has a
final maturity of June 30, 2003. The Multi-Year Facility replaced the
Companys First Amended and Restated Loan Agreement. Borrowings under the
credit agreements may be used for

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acquisitions, capital expenditures, working
capital and general corporate purposes. No more than $25.0 million of either
credit agreement may be used for any single acquisition without the consent of
the lenders. Under the Multi-Year Facility, the Company may borrow up to $10.0
million in swingline loans for working capital purposes. These variable rate
debt instruments carry a degree of interest rate risk. Specifically, variable
rate debt may result in higher costs to the Company if interest rates rise.

Each of Renal Care Groups wholly-owned subsidiaries has guaranteed all of
Renal Care Groups obligations under the loan agreements. Further, Renal Care
Groups obligations under the loan agreement, and the obligations of each of
its subsidiaries under its guaranty, are secured by a pledge of the equity
interests held by Renal Care Group in each of the subsidiaries. Financial
covenants are customary based on the amount and duration of this commitment.

A significant component of Renal Care Groups growth strategy is the
acquisition and development of dialysis facilities. There can be no assurance
that Renal Care Group will be able to identify suitable acquisition candidates
or to close acquisition transactions with them on acceptable terms. Management
believes that existing cash and funds from operations, together with funds
available under existing credit facilities, will be sufficient to meet Renal
Care Groups acquisition, expansion, capital expenditure and working capital
needs for the foreseeable future. However, in order to finance certain large
strategic acquisition opportunities, Renal Care Group may need to incur
additional short and long-term bank indebtedness or to issue equity or debt
securities. The availability and terms of any future financing will depend on
market and other conditions. There can be no assurance that any additional
financing, if required, will be available on terms acceptable to Renal Care
Group.

Capital expenditures of approximately $65.0 million, primarily for
equipment replacement, expansion of existing dialysis facilities and
construction of de novo facilities, are planned in 2002. The Company has made
capital expenditures of approximately $49.4 million through September 30, 2002.
The Company expects that remaining capital expenditures in 2002 will be funded
with cash provided by operating activities and the Companys existing credit
facilities. Management believes that capital resources available to Renal Care
Group will be sufficient to meet the needs of its business, both on a short-
and long-term basis.

Management, from time to time, determines the appropriateness of
repurchasing its common stock in accordance with a repurchase plan initially
authorized by the Board of Directors in October 2000. In the fourth quarter of
2001, Renal Care Group began repurchasing shares of its common stock by
purchasing 100,000 shares of common stock for approximately $3.1 million. In
the first and second quarters of 2002, Renal Care Group repurchased 700,000
shares of common stock for approximately $22.2 million. In July 2002, the
Company announced that its Board of Directors had approved an increase in the
repurchase plan from $50.0 million to $100.0 million. In the third quarter of
2002, the Company repurchased 1.3 million shares of common stock for
approximately $40.4 million. Subsequent to September 30, 2002 and through
November 8, 2002, therefore, the Company repurchased an
additional 354,000
shares of common stock for approximately $11.4 million. Through November 8,
2002, the Company had repurchased an aggregate of 2,454,000 shares under the
plan, for a total of approximately $77.1 million. Management expects to
continue to repurchase additional shares of common stock during the remainder
of 2002, possibly using all of the remaining amount approved by the Board of
Directors by the end of the year.

Critical Accounting Policies

On December 12, 2001, the Securities and Exchange Commission issued a
financial reporting release, FR-60, Cautionary Advice Regarding Disclosure
About Critical Accounting Policies. In accordance with FR-60, management has
identified accounting policies that it considers critical to the business of
Renal Care Group. Those policies include net revenue and contractual
provisions, provision for doubtful accounts, self-insurance

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accruals, and
impairment of long-lived assets and long-lived assets to be disposed of. These
policies were identified as critical based on their importance to the
consolidated financial statements as well as on the degree of subjectivity and
complexity involved in these policies. There have been no changes in Renal Care
Groups critical accounting policies or in the application of those policies
from those described in the annual report on Form 10-K, as filed with the SEC
on March 29, 2002.

RISK FACTORS

You should carefully consider the risks described below before investing
in Renal Care Group. The risks and uncertainties described beloware notthe
only ones facing Renal Care Group. Other risks and uncertainties that we have
not predicted or assessed may also adversely affect our company.

If any of the following risks occur, our earnings, financial condition or
business could be materially harmed, and the trading price of our common stock
could decline, resulting in the loss of all or part of your investment.

If Congress or CMS Changes the Medicare or Medicaid Programs for Dialysis, Then
Our Revenue and Earnings Could Decrease

If the government changes the Medicare, Medicaid or similar government
programs or the rates paid by those programs for our services, then our revenue
and earnings may decline. We estimate that approximately 53% of our net
revenue for 2000, 49% of our net revenue for 2001 and 51% of our net revenue
for the nine months ended September 30, 2002 consisted of reimbursements from
Medicare, including the administration of EPO to treat anemia. We also estimate
that approximately 5% of our net revenue for 2000, 6% of our net revenue for
2001 and 7% of our net revenue for the nine months ended September 30, 2002
consisted of reimbursements from Medicaid or comparable state programs. Any of
the following actions in connection with government programs could cause our
revenue and earnings to decline:



| |  |  | a reduction of the amount paid to us under
government programs;                                                                                                                         
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | an increase in the costs associated with performing
our services that are subject to inflation, such as labor
and supply costs, without a corresponding increase in
reimbursement rates;
|
| |  |  | the inclusion of some or all ancillary services,
for which we are now reimbursed separately, in the flat
composite rate for a standard dialysis treatment; or                           
|
| |  |  | changes in laws, or the interpretations of laws,
which could cause us to modify our operations.                                                                                         

Specifically, Congress and the Centers for Medicare & Medicaid Services,
or CMS, have proposed reviewing and potentially recalculating the average
wholesale prices of certain drugs, including some drugs for which we bill
outside of the flat composite rate. CMS has indicated that it believes the
average wholesale prices on
which it currently bases reimbursement are too high and that Medicare
reimbursement for these drugs is, therefore, too high. Because we are unable
to predict accurately whether reimbursement will be changed and, if so, by how
much, we are unable to quantify what the net effect of changes in reimbursement
for these drugs would have on our revenue and earnings.

14



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##### Table of Contents



In addition, the Medicaid programs in some of the states in which we
operate reimburse us at rates higher than those paid by Medicare. Some of these
state programs have approved reductions in reimbursement, proposed reductions
or have announced that they are considering reductions. Any action to reduce
those higher Medicaid reimbursement rates would adversely affect our revenue
and earnings.

If Reimbursement for Epogen Decreases, Then We Could Be Less Profitable

If government or private payors decrease reimbursement rates for EPO, for
which we are currently reimbursed separately outside of the flat composite
rate, our revenue and earnings will decline. EPO is a bio-engineered hormone
that is used to treat anemia. Revenues from the administration of EPO were
approximately 26% of our net revenue for 2000, 25% of our net revenue for 2001
and 23% of our net revenue for the nine months ended September 30, 2002. Most
of our payments for EPO come from government programs. For the nine months
ended September 30, 2002, Medicare and Medicaid reimbursement represented
approximately 58% of the total revenue we derived from EPO. A reduction in the
reimbursement rate for EPO could materially and adversely affect our revenue
and earnings.

If Amgen Raises the Price for EPO or if EPO Becomes in Short Supply, Then We
Could Be Less Profitable

EPO is produced by a single manufacturer, Amgen Inc., and there are no
substitute products currently marketed to dialysis providers in the United
States. In April 2002, Amgen announced a 3.9% increase in the price of EPO.
This price increase will not affect our earnings in 2002 because our contract
with Amgen has pricing protection through 2002. In addition, Amgen implemented
a 3.9% increase in the price of EPO in May 2001. That price increase will
adversely affect our earnings in 2002. If Amgen imposes additional EPO price
increases or if Amgen or other factors interrupt the supply of EPO, then our
revenue and earnings will decline.

If Amgen Markets Aranesp® for ESRD Patients, Then We Could Be Less Profitable

Amgen has developed and obtained FDA approval for a new drug to treat
anemia marketed as Aranesp® (darbepoetin alfa). Aranesp® is a longer acting
form of bio-engineered protein that, like EPO, can be used to treat anemia.
EPO is usually administered in conjunction with each dialysis treatment.
Aranesp® can remain effective for between two and three weeks. If Amgen markets
Aranesp® for the treatment of dialysis patients, then our earnings could be
materially and adversely affected by either of the following factors:



| |  |  | our margins realized from the administration of
Aranesp® could be lower than the margins realized on the
administration of EPO; or                        
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | physicians could decide to administer Aranesp® in
their offices, and we would not recognize revenue or profit
from the administration of EPO or Aranesp® .

If Payments by Private Insurers, Hospitals or Managed Care Organizations
Decrease, Then Our Revenue and Earnings Could Decrease

If private insurers, hospitals or managed care organizations reduce their
rates or if we experience a significant shift in our revenue mix toward
additional Medicare or Medicaid reimbursement, then our revenue and earnings
will decline. We estimate that approximately 42% of our net revenue for 2000,
45% of our net revenue for 2001 and 42% of our net revenue for the nine months
ended September 30, 2002 were derived from sources other than Medicare and
Medicaid. In general, payments we receive from private insurers and hospitals
for our services

15



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##### Table of Contents



are at rates significantly higher than the Medicare or
Medicaid rates. Additionally, payments we receive from managed care
organizations are at rates higher than Medicare and Medicaid rates but lower
than those paid by private insurers. As a result, any of the following events
could have a material adverse effect on our revenue and earnings:



| |  |  | any number of economic or demographic factors could
cause private insurers, hospitals or managed care companies
to reduce the rates they pay us;                                                    
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | a portion of our business that is currently
reimbursed by private insurers or hospitals may become
reimbursed by managed care organizations, which generally
have lower rates for our services; or  
|
| |  |  | the scope of coverage by Medicare or Medicaid under
the flat composite rate could expand and, as a result,
reduce the extent of our services being reimbursed at the
higher private-insurance rates.

If Our Referring Physicians Stop Referring To Our Centers or Were Prohibited
From Referring for Regulatory Reasons, Then Our Revenue and Earnings Would
Decline

Our dialysis centers depend on referrals from local nephrologists.
Typically, one or a few physicians patients make up all or a significant
portion of the patient base at each of our dialysis centers, and the loss of
the patient base of one or more referring physicians could have a material
adverse effect on the operations of that center. The loss of the patient base
of a significant number of referring physicians could cause our revenue and
earnings to decline. In many instances, the primary referral sources for our
centers are physicians who also serve as medical directors of our centers and
may be shareholders. If the medical director relationship or stock ownership
were deemed to violate applicable federal or state law, including fraud and
abuse laws and laws prohibiting self-referrals, then the physicians
acting as medical directors or owning our stock could be forced to stop referring patients
to our centers. Further, we may not be able to renew or renegotiate our
medical director agreements successfully, which could result in a loss of
patients since dialysis patients are typically treated at a center where their
physician or a member of his or her practice group serves as a medical
director.

If Our Business Is Alleged or Found To Violate Heath Care or Other Applicable
Laws, Then Our Revenue and Earnings Could Decrease

We are subject to extensive federal, state and local regulation regarding
the following:



| |  |  | fraud and abuse prohibitions under health care reimbursement laws;                                                                                                                                                 
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | prohibitions and limitations on patient referrals;                                                                                                                                                                 
|
| |  |  | billing and reimbursement, including false claims
prohibitions under health care reimbursement laws;                                                                                                               
|
| |  |  | collection, use, storage and disclosure of patient
health information, including the federal Health Insurance
Portability and Accountability Act of 1996, referred to as
HIPAA, and state law equivalents of HIPAA;
|
| |  |  | facility licensure;                                                                                                                                                                                                

16



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| |  |  | health and safety requirements;  
| | - |  | ---------------------------------
|
| |  |  | environmental compliance; and    
|
| |  |  | medical and toxic waste disposal.

Much of this regulation, particularly in the areas of fraud and abuse and
patient referral, is complex and open to differing interpretations. Due to the
broad application of the statutory provisions and the absence in many instances
of regulations or court decisions addressing the specific arrangements by which
we conduct our business, including our arrangements with medical directors,
physician stockholders and physician joint venture partners, governmental
agencies could challenge some of our practices under these laws.

New regulations governing electronic transactions and the collection, use,
storage, and disclosure of health information impose significant administrative
and financial obligations on our business. If, after the required compliance
date, we are found to have violated these restrictions, we could be subject to:



| |  |  | criminal or civil penalties;                                                                     
| | - |  | -------------------------------------------------------------------------------------------------
|
| |  |  | claims by persons who believe their health information
has been improperly used or disclosed; and
|
| |  |  | administrative penalties by payors.                                                              

Government investigations of health care providers, including dialysis
providers, have continued to increase. We have been the subject of
investigations in the past, and the government may investigate our business in
the future. One of our competitors, DaVita, Inc., has announced that it is the
subject of an investigation by the U.S. Attorney for the Eastern District of
Pennsylvania, and another competitor, Gambro Healthcare, Inc., has announced
that it is the subject of an investigation by the U.S. Attorneys Office in St.
Louis, Missouri. If any of our operations are found to violate applicable
laws, we may be subject to severe sanctions or be required to alter or
discontinue the challenged conduct or both. If we are required to alter our
practices, we may not be able to do so successfully. If any of these events
occurs, our revenue and earnings could decline.

Changes In the Health Care Delivery, Financing or Reimbursement Systems Could
Adversely Affect Our Business

The health care industry in the United States remains in a period of
change and uncertainty. Health care organizations, public or private, may
dramatically change the way they operate and pay for services. Our business is
designed to function within the current health care financing and reimbursement
system. During the past several years, the health care industry has been
subject to increasing levels of government regulation of, among other things,
reimbursement rates and capital expenditures. In addition, proposals to reform
the health care system have been considered by Congress. These proposals, if
enacted, could further increase government regulation of or other
involvement in health care, lower reimbursement rates and otherwise change the
operating environment for health care companies. We cannot predict the
likelihood of those events or what impact they may have on our business.

17



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The Dialysis Business Is Highly Competitive. If We Do Not Compete Effectively
in Our Markets, Then We Could Lose Market Share and Our Rate of Growth Could
Slow

The dialysis industry is largely consolidated, and the consolidation trend
continues as large providers acquire smaller providers. There is a small
number of large dialysis companies that compete for the acquisition of
outpatient dialysis centers and the development of relationships with referring
physicians. Two of our major competitors are part of larger companies that
also manufacture dialysis equipment, which allows them to benefit from lower
equipment costs. Several of our competitors, including these equipment
manufacturers, are significantly larger than we are and have greater financial
resources and more established operations. We cannot assure you that we will
be able to compete effectively with any of our competitors.

If We Lose Any of Our Executive Officers, or Are Unable To Attract and Retain
Qualified Nurses and Medical Directors, Then Our Ability To Run Our Business
Could Be Adversely Affected, and Our Revenue and Earnings Could Decline

We depend on the services of our executive officers Sam A.
Brooks, Jr., our Chairman, Chief Executive Officer and President, Raymond
Hakim, M.D., Ph.D., R. Dirk Allison and Gary Brukardt, each an Executive Vice
President. Mr. Brooks, Dr. Hakim and Mr. Brukardt have each been with Renal
Care Group since its formation. The services of Mr. Brooks and these three
Executive Vice Presidents would be very difficult to replace. We do not carry
key-man life insurance on any of our officers. Further, our growth will depend
in part upon our ability to attract and retain skilled nurses to provide
services in our facilities, for whom competition is intense. We also believe
that our future success will depend on our ability to attract and retain
qualified physicians to serve as medical directors of our dialysis centers.

If We are Unable to Make Acquisitions in the Future, Then Our Rate of Growth
Will Slow

Much of our historical growth has come from acquisitions. Although we
intend to continue to pursue growth through the acquisition of dialysis
centers, we may be unable to continue to identify and complete suitable
acquisitions at prices we are willing to pay or we may be unable to obtain the
necessary financing. Further, due to the increased size of our Company since
its formation, the amount that most acquired businesses contribute to our
revenue and profits will continue to be smaller on a percentage basis. Also,
as a result of consolidation in the dialysis industry, the four largest
providers of outpatient dialysis services own approximately 65% of the total
number of outpatient dialysis facilities in the United States. We compete with
these other companies to identify and complete suitable acquisitions. We
expect this competition to intensify in light of the smaller pool of available
acquisition candidates and other market forces. As a result, we believe it
will be more difficult for us to acquire suitable companies on favorable terms.
Further, the businesses we acquire may not perform well enough to justify our
investment. If we are unable to make additional acquisitions on suitable
terms, then we may not meet our growth expectations.

If We Complete Future Acquisitions, We May Dilute Existing Stockholders by
Issuing More of Our Common Stock or We May Incur Expenses Related to Debt and
Goodwill, Which Could Reduce Our Earnings

We may issue equity securities in future acquisitions that could be
dilutive to our shareholders. We also may incur additional debt in future
acquisitions. Interest expense on additional debt incurred to fund our
acquisitions may significantly reduce our profitability. On June 29, 2001, the
Financial Accounting Standards
Board approved rules that eliminate the pooling-of-interests accounting method.
The elimination of the pooling-of-interests method results in recording
goodwill for all acquisitions after June 30, 2001. Under these new rules

18



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goodwill and other intangible assets with indefinite lives are not amortized to
expense; however, we are required to review all of these assets at regular
intervals for impairment and to charge an appropriate amount to expense when
impairment is identified. If impairment is identified and we are required to
write off a significant portion of our intangible assets at one time, then
there could be a material adverse impact on our stock price.

If We Fail to Integrate Acquired Companies, Then We Will Be Less Profitable

We have grown significantly by acquisitions of other dialysis providers
since our formation in February 1996. We have completed some of our
acquisitions as recently as June 2002. We intend to pursue acquisitions of
more dialysis businesses in the future. We are unable to predict the number
and size of any future acquisitions. We face significant challenges in
integrating an acquired companys management and other personnel, clinical
operations, and financial and operating systems with ours, often without the
benefit of continued services from key personnel of the acquired company. We
may be unable to integrate the businesses we acquire successfully or to achieve
anticipated benefits from an acquisition in a timely manner, which could lead
to substantial costs and delays or other operational, technical or financial
problems, including diverting managements attention from our existing
business. Any of these results could damage our profitability and our
prospects for future growth.

If Acquired Businesses Have Unknown Liabilities, Then We Could Be Exposed to
Liabilities That Could Harm Our Business and Profitability

Businesses we acquire may have unknown or contingent liabilities,
including liabilities for failure to comply with health care laws. Although we
generally attempt to identify practices that may give rise to unknown or
contingent liabilities and conform them to our standards after the acquisition,
private plaintiffs or governmental agencies may still assert claims. Even
though we generally seek to obtain indemnification from the sellers of
businesses we buy, unknown and contingent liabilities may not be covered by
indemnification or may exceed contractual limits or the financial capacity of
the indemnifying party.

If Our Costs of Insurance and Claims Increase, Then Our Earnings Could Decrease

Renal Care Group currently maintains a program of general and professional
liability insurance as well as directors and officers insurance with
significant deductible amounts on each claim. We have accepted higher
deductibles in each of the last several years to offset in part increases in
premiums for the program. However, the deductibles and premiums increased
substantially in 2002, and management believes they are likely to increase
again in 2003. Our earnings could be materially and adversely affected by any
of the following:



| |  |  | further increases in premiums and deductibles;                                                                             
| | - |  | ---------------------------------------------------------------------------------------------------------------------------
|
| |  |  | increases in the number of liability claims against us or the
cost of settling or trying cases related to those claims; and
|
| |  |  | an inability to obtain one or more types of insurance on
acceptable terms.                                                 

19



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If Our Board of Directors Does Not Approve an Acquisition or Change in Control
of Renal Care Group, Then Our Shareholders May Not Realize the Full Value of
Their Stock

Our certificate of incorporation and bylaws contain a number of provisions
that may delay, deter or inhibit a future acquisition or change in control of
Renal Care Group that is not first approved by our board of directors. This
could occur even if our shareholders receive an attractive offer for their
shares or if a substantial number or even a majority of our shareholders
believe the takeover may be in their best interest. These provisions are
intended to encourage any person interested in acquiring Renal Care Group to
negotiate with and obtain approval from our board of directors prior to
pursuing the transaction. Provisions that could delay, deter or inhibit a
future acquisition or change in control of Renal Care Group include the
following:



| |  |  | a staggered board of directors that would require
two annual meetings to replace a majority of the board of
directors;                                                                                         
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | restrictions on calling special meetings at which
an acquisition or change in control might be brought to a
vote of the shareholders;                                                                          
|
| |  |  | blank check preferred stock that may be issued by
our board of directors without shareholder approval and that
may be substantially dilutive or contain preferences or
rights objectionable to an acquiror; and
|
| |  |  | a poison pill that would substantially dilute the
interest sought by an acquiror.                                                                                                                              

These provisions could also discourage bids for our common stock at a
premium and cause the market price of our common stock to decline.

Our Stock Price Is Volatile and, as a Result, the Value of Your Investment May
Go Down for Reasons Unrelated To the Performance of Our Business

Our common stock is traded on the New York Stock Exchange. The market
price of our common stock has been volatile, ranging from a low of $27.72 per
share to a high of $33.65 per share during the three months ended September 30,
2002. The market price for our common stock could fluctuate substantially
based on a variety of factors, including the following:



| |  |  | future announcements concerning us, our competitors or the health care market;
| | - |  | ------------------------------------------------------------------------------
|
| |  |  | the threat of litigation or government investigation;                         
|
| |  |  | changes in government regulations; and                                        
|
| |  |  | changes in earnings estimates by analysts.                                    

Furthermore, stock prices for many companies fluctuate widely for reasons
that may be unrelated to their operating results. These fluctuations, coupled
with changes in demand or reimbursement levels for our services and general
economic, political and market conditions, could cause the market price of our
common stock to decline.

20



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Forward Looking Statements

Some of the information in this quarterly report on Form 10-Q represents
forward-looking statements that involve substantial risks and uncertainties.
You can identify these statements by forward-looking words such as may,
will, expect, anticipate, believe, intend, estimate and continue
or similar words. You should read statements that contain these words carefully
for the following reasons:



| |  |  | the statements discuss our future expectations;                                             
| | - |  | --------------------------------------------------------------------------------------------
|
| |  |  | the statements contain projections of our future earnings or of our financial condition; and
|
| |  |  | the statements state other forward-looking information.                                   

We believe it is important to communicate our expectations to our
investors. There may, however, be events in the future that we are not
accurately able to predict or over which we have no control. The risk factors
listed above, as well as any cautionary language in or incorporated by
reference into this quarterly report on Form 10-Q, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. The SEC
allows us to incorporate by reference the information we file with them,
which means we can disclose important information to you by referring you to
those documents. Before you invest in our common stock, you should be aware
that the occurrence of any of the events described in the above risk factors,
elsewhere in or incorporated by reference into this quarterly report on Form
10-Q and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition and business. If
the events described above or other unpredicted events occur, then the trading
price of our common stock could decline and you may lose all or part of your
investment.




ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The chief executive
officer and chief financial officer of the Company have evaluated
Renal Care Groups disclosure controls and procedures (as
defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934, as amended), within 90 days prior to the filing
of this quarterly report and concluded, as of the date of that
evaluation, that Renal Care Group maintains disclosure controls and
procedures that provide reasonable assurance that information
required to be disclosed in Renal Care Groups reports under the Exchange Act is
recorded, processed, summarized and reported within the periods
specified in the SECs rules and forms.

Changes in Internal Controls

There have been no significant changes in the Companys
internal controls or other factors that could significantly affect these
controls subsequent to the date last evaluated.

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PART II - OTHER INFORMATION




ITEM 1.  LEGAL PROCEEDINGS.

As disclosed in Renal Care Groups annual report on Form 10-K filed with
the SEC on March 29, 2002, we are subject to a number of lawsuits arising out
of events on August 30, 2000. On that day 19 patients were hospitalized and
one patient died shortly after becoming ill while receiving treatment at one of
Renal Care Groups dialysis centers in Youngstown, Ohio. One of the 19
hospitalized patients also died some time later. There have been no material
developments in these lawsuits in the quarter ended September 30, 2002.
Management believes that Renal Care Groups insurance should be adequate to
cover these illnesses and does not anticipate a material adverse effect on the
Companys consolidated financial position.




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

| |  |     |  |                      |  |                                                                                                                                                     
| |  | --- |  | -------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
| |  | (a) |  | Exhibits:            |  |                                                                                                                                                     
| |  |     |  | 10.62                |  | Form of Stock Option Agreement for stock option
grants to executive employees under the Companys 1999 Long-Term
Incentive Plan.                    
| |  |     |  | 10.63                |  | Form of Stock Option Agreement for stock option
grants to non-management directors under the Companys 1996
Stock Option Plan for Outside Directors.
| |  | (b) |  | Reports on Form 8-K:
| |  |     |  | None.                |  |                                                                                                                                                     

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SIGNATURE

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

|                  |  |                        |  |                                                                                                                                    
|----------------- |  | ---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------
|                  |  | RENAL CARE GROUP, INC.
|                  |  |                        |  |                                                                                                                                    
|November 12, 2002 |  | BY:                    |  | /s/ R. Dirk Allison                                                                                                                
|                  |  |                        |  |                                                                                                                                    
|                  |  |                        |  | R. Dirk Allison
Executive Vice President,
Chief Financial Officer, and Principal
Financial Officer and Principal
Accounting Officer

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CERTIFICATION

I, SAM A. BROOKS, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER OF
RENAL CARE GROUP, INC., CERTIFY THAT:

1.     I have reviewed this quarterly report on Form 10-Q of Renal
Care Group, Inc. (the registrant);

2.     Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4.     The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of the
registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have
identified for the registrants auditors any material
weaknesses in internal controls; and

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| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrants internal controls; and

6.     The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

|      |  |                   |  |                                                                               
|----- |  | ----------------- |  | ------------------------------------------------------------------------------
|Date: |  | November 12, 2002 |  | /s/ Sam A. BrooksSam A. Brooks
Chairman, President and
Chief Executive Officer

25



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CERTIFICATION

I, R. DIRK ALLISON, EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER OF
RENAL CARE GROUP, INC., CERTIFY THAT:

1.     I have reviewed this quarterly report on Form 10-Q of Renal
Care Group, Inc. (the registrant);

2.     Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3.     Based on my knowledge, the financial statements, and other
financial information included in this quarterly report,
fairly present in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4.     The registrants other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:



| |                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries,
is made known to us by others within those entities,
particularly during the period in which this
quarterly report is being prepared;



| |                                                                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the Evaluation Date); and



| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (c) presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5.     The registrants other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrants auditors and the audit committee of the
registrants board of directors (or persons performing the
equivalent function):



| |                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (a) all significant deficiencies in the design or
operation of internal controls which could adversely
affect the registrants ability to record, process,
summarize and report financial data and have
identified for the registrants auditors any material
weaknesses in internal controls; and

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| |                                                                                                                                                           
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) any fraud, whether or not material, that involves
management or other employees who have a significant
role in the registrants internal controls; and

6.     The registrants other certifying officers and I have
indicated in this quarterly report whether or not there were
significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent
to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and
material weaknesses.

|      |  |                   |  |                                                                                        
|----- |  | ----------------- |  | ---------------------------------------------------------------------------------------
|Date: |  | November 12, 2002 |  | /s/ R. Dirk
AllisonR. Dirk Allison
Executive Vice President and
Chief Financial Officer

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RENAL CARE GROUP, INC.

EXHIBIT INDEX

|                       |  |                                                                                                                                                     
|---------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|Number and             |  |                                                                                                                                                     
|Description of Exhibit |  |                                                                                                                                                     
|                       |  |                                                                                                                                                     
|10.62                  |  | Form of Stock Option Agreement for stock option grants to
executive employees under the Companys 1999 Long-Term Incentive
Plan.                    
|10.63                  |  | Form of Stock Option Agreement for stock option grants to
non-management directors under the Companys 1996 Stock Option Plan
for Outside Directors.

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