<PAGE>

--------------------------------------------------------------------------------
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                   FORM 10-Q

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

                 For the quarterly period ended March 31, 2001

                                      OR

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

                For the transition period from ______ to ______

                        Commission file number 0-23946

                      PEDIATRIC SERVICES OF AMERICA, INC.
            (Exact name of Registrant as specified in its charter)

                     Delaware                           58-1873345

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

                310 Technology Parkway, Norcross GA 30092-2929
         (Address of principal executive offices, including zip code)

                                (770) 441-1580
             (Registrant's telephone number, including area code)

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

                         Yes [X]    No [ ]

As of May 4, 2001, the Registrant had 6,688,132 shares of Common Stock, $0.01
Par Value, outstanding.

--------------------------------------------------------------------------------
                                  Page 1 of 17
<PAGE>

                                   FORM 10-Q
                      PEDIATRIC SERVICES OF AMERICA, INC.


                                     INDEX


                                                                          Page
                                                                         Number
                                                                         ------
PART I    FINANCIAL INFORMATION

ITEM 1:   Financial Statements

          Condensed Consolidated Balance Sheets as of March 31, 2001
             and September 30, 2000.......................................  3

          Condensed Consolidated Statements of Operations for
             the three and six months ended March 31, 2001 and 2000.......  5

          Condensed Consolidated Statements of Cash Flows for the three
             and six months ended March 31, 2001 and 2000.................  6

          Notes to Condensed Consolidated Financial Statements............  7

ITEM 2:   Management's Discussion and Analysis of Financial Condition
             and Results of Operations....................................  10

ITEM 3:   Quantitative and Qualitative Disclosures about Market Risk......  14


PART II   OTHER INFORMATION

ITEM 1:   Legal Proceedings...............................................  15

ITEM 4:   Submission of Matters to a Vote of Security Holders.............  16

ITEM 6:   Exhibits and Reports on Form 8-K................................  16

          Signatures......................................................  17


                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


                       PEDIATRIC SERVICES OF AMERICA, INC
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              March 31,       September 30,
                                                                2001               2000
                                                             ---------       -------------
                                                            (Unaudited)
<S>                                                         <C>              <C>
Assets
Current assets:
  Cash and cash equivalents...............................  $ 10,721           $ 14,912
  Accounts receivable, less allowances for doubtful
    accounts of $ 6,353 and $7,628, respectively..........    32,518             35,389
  Prepaid expenses........................................       962                656
  Deferred income taxes...................................     1,558              3,792
  Other current assets....................................     3,380              3,057
                                                            --------           --------
Total current assets......................................    49,139             57,806

Property and equipment:
  Home care equipment held for rental.....................    27,961             27,831
  Furniture and fixtures..................................    10,407             10,226
  Vehicles................................................       732                751
  Leasehold improvements..................................     1,103              1,039
                                                            --------           --------
                                                              40,203             39,847
  Accumulated depreciation and amortization...............   (30,147)           (27,999)
                                                            --------           --------
                                                              10,056             11,848
Other assets:
  Goodwill, less accumulated amortization of
    $8,500 and $7,386, respectively.......................    32,819             33,933
  Certificates of need, less accumulated amortization of
    $455 and $404, respectively...........................       218                269
  Deferred financing fees, less accumulated
    amortization of $574 and $549, respectively...........       940              1,419
  Non-compete agreements, less accumulated amortization of
    $1,097 and $1,084, respectively.......................        63                 76
  Deferred income taxes...................................     2,207                  -
  Other...................................................       291                242
                                                            --------           --------
                                                              36,538             35,939
                                                            --------           --------
Total assets..............................................  $ 95,733           $105,593
                                                            ========           ========
</TABLE>

See accompanying notes.

                                       3
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
               CONDENSED CONSOLIDATED BALANCE SHEETS--(Continued)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                      March 31,        September 30,
                                                                                        2001               2000
                                                                                     ---------         -------------
<S>                                                                                  <C>             <C>
                                                                                     (Unaudited)
Liabilities and stockholders' equity
Current liabilities:
    Accounts payable............................................................        $ 5,276          $  5,477
    Accrued compensation........................................................          5,571             5,513
    Income taxes................................................................          1,075               610
    Accrued insurance...........................................................          5,394             5,002
    Other accrued liabilities...................................................          5,633             6,179
    Deferred revenue............................................................            513               618
    Current maturities of long-term obligations to related parties..............             25                50
    Current maturities of long-term obligations.................................             15                18
                                                                                        -------          --------
Total current liabilities.......................................................         23,502            23,467

Long-term obligations to related parties, net of current
    maturities..................................................................             25                50
Long-term obligations, net of current maturities................................         33,057            45,439
Deferred income taxes...........................................................              -             1,106

Stockholders' equity:
    Preferred stock, $.01 par value, 2,000 shares
       authorized, no shares issued and outstanding.............................              -                 -
    Common stock, $.01 par value, 80,000 shares authorized, 6,687 and 6,658
       shares issued and outstanding at March 31, 2001 and September 30,
       2000, respectively.......................................................             67                67
    Additional paid-in capital..................................................         48,410            48,362
    Accumulated deficit.........................................................         (9,328)          (12,898)
                                                                                        -------          --------
Total stockholders' equity......................................................         39,149            35,531
                                                                                        -------          --------
Total liabilities and stockholders' equity......................................        $95,733          $105,593
                                                                                        =======          ========
</TABLE>

See accompanying notes.

                                       4
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                             Three Months Ended                     Six Months Ended
                                                                   March 31,                            March 31,
                                                            2001              2000                2001              2000
                                                           -------           -------             -------           -------
                                                         (Unaudited)       (Unaudited)         (Unaudited)       (Unaudited)
<S>                                                      <C>               <C>                 <C>               <C>
Net revenue.....................................           $45,707           $47,401             $91,269           $95,505
Costs and expenses:
 Operating salaries, wages and employee
   benefits.....................................            20,308            22,036              40,958            44,694
 Other operating costs..........................            17,460            16,848              33,874            34,499
 Corporate, general and administrative..........             4,644             5,064               9,097             9,816
 Provision for doubtful accounts................               481             1,948               1,439             4,292
 Depreciation and amortization..................             1,860             2,041               3,759             4,105
                                                           -------           -------             -------           -------
         Total costs and expenses...............            44,753            47,937              89,127            97,406
                                                           -------           -------             -------           -------
Operating income (loss).........................               954              (536)              2,142            (1,901)
Interest income.................................              (168)             (227)               (388)             (227)
Interest expense................................             1,002             1,935               2,223             4,902
                                                           -------           -------             -------           -------
Income (loss) from continuing operations........               120            (2,244)                307            (6,576)

Discontinued operations
Gain on disposal of discontinued operations.....                 -                 -                   -            24,314
                                                           -------           -------             -------           -------
Income (loss) before extraordinary item.........               120            (2,244)                307            17,738
Extraordinary item..............................             3,263                 -               3,263                 -
                                                           -------           -------             -------           -------
Net income (loss)...............................           $ 3,383           $(2,244)            $ 3,570           $17,738
                                                           =======           =======             =======           =======

Basic net income (loss) per share data:
Income (loss) from continuing operations........           $  0.02           $ (0.34)            $  0.05           $ (0.99)
Gain on disposal of discontinued operations.....                 -                 -                   -              3.66
                                                           -------           -------             -------           -------
Income (loss) before extraordinary item.........              0.02             (0.34)               0.05              2.67
Extraordinary item..............................              0.49                 -                0.49                 -
                                                           -------           -------             -------           -------
Net income (loss)...............................           $  0.51           $ (0.34)            $  0.54           $  2.67
                                                           =======           =======             =======           =======

Diluted net income (loss) per share data:
Income (loss) from continuing operations........           $  0.02           $ (0.34)            $  0.05           $ (0.99)
Gain on disposal of discontinued operations.....                 -                 -                   -              3.66
                                                           -------           -------             -------           -------
Income (loss) before extraordinary item.........              0.02             (0.34)               0.05              2.67
Extraordinary item..............................              0.47                 -                0.47                 -
                                                           -------           -------             -------           -------
Net income (loss)...............................           $  0.49           $ (0.34)            $  0.52           $  2.67
                                                           =======           =======             =======           =======

Weighted average shares outstanding:
Basic...........................................             6,666             6,653               6,663             6,652
                                                           =======           =======             =======           =======
Diluted.........................................             6,944             6,653               6,918             6,652
                                                           =======           =======             =======           =======
</TABLE>

See accompanying notes.

                                       5
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                    Six Months Ended March 31,
                                                                                     2001                2000
                                                                                    -------            --------
                                                                                 (Unaudited)          (Unaudited)
<S>                                                                              <C>                  <C>
Operating activities
Income (loss) from continuing operations..............................              $   307            $ (6,576)
Adjustments to reconcile income (loss) from continuing operations to
 net cash provided by operating activities:
  Depreciation and amortization.......................................                3,759               4,105
  Provision for doubtful accounts.....................................                1,439               4,292
  Amortization of deferred financing fees.............................                  152                 515
  Deferred income taxes...............................................               (1,079)                  -
  Changes in operating assets and liabilities:
    Accounts receivable...............................................                1,430               5,201
    Prepaid expenses..................................................                 (306)                (45)
    Other assets......................................................                 (418)               (147)
    Accounts payable..................................................                 (201)             (2,368)
    Income taxes......................................................                  465                (342)
    Accrued liabilities...............................................                 (201)             (2,108)
                                                                                    -------            --------
Net cash provided by operating activities of continuing
 operations...........................................................                5,347               2,527
Net cash used in operating activities of discontinued
 operations...........................................................                    -              (1,087)
                                                                                    -------            --------
Net cash provided by operating activities.............................                5,347               1,440
Investing activities
Purchases of property and equipment...................................                 (742)               (535)
Proceeds from sale of division........................................                    -              77,869
Other, net............................................................                    -                  70
                                                                                    -------            --------
Net cash (used in) provided by investing activities of continuing
 operations...........................................................                 (742)             77,404
Net cash used in investing activities of discontinued operations......                    -                 (24)
                                                                                    -------            --------
Net cash (used in) provided by investing activities...................                 (742)             77,380
Financing activities
Principal payments on long-term debt..................................               (8,844)            (63,281)
Deferred financing fees...............................................                    -                (242)
Proceeds from exercise of stock options...............................                   48                   -
                                                                                    -------            --------
Net cash used in financing activities.................................               (8,796)            (63,523)
                                                                                    -------            --------
(Decrease) increase in cash and cash equivalents......................               (4,191)             15,297
Cash and cash equivalents at beginning of period......................               14,912               8,361
                                                                                    -------            --------
Cash and cash equivalents at end of period............................              $10,721            $ 23,658
                                                                                    =======            ========
Supplemental disclosure of cash flow information
Cash paid for interest................................................                2,404            $  4,388
                                                                                    =======            ========
Cash paid for taxes...................................................                  673            $      -
                                                                                    =======            ========
</TABLE>
See accompanying notes.

                                       6
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Unaudited


1.   Basis of Presentation

     The accompanying unaudited condensed consolidated financial statements of
     Pediatric Services of America, Inc. (the "Company") and its majority-owned
     subsidiaries have been prepared in accordance with accounting principles
     generally accepted in the United States for interim financial information
     and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
     Accordingly, they do not include all information and notes required by
     generally accepted accounting principles for complete financial statements.
     In the opinion of management, all adjustments (consisting only of normal
     recurring accruals) considered necessary for a fair presentation have been
     included.  Results of operations for the three and six months ended March
     31, 2001 are not necessarily indicative of the results to be expected for
     the entire fiscal year ending September 30, 2001.  These condensed
     consolidated financial statements should be read in conjunction with the
     Company's audited consolidated financial statements for the year ended
     September 30, 2000 included in the Company's Annual Report on Form 10-K for
     such year filed with the Securities and Exchange Commission.  Principal
     accounting policies are set forth in the Company's 2000 Annual Report.

2.   Description of Business

     The Company provides a broad range of pediatric health care services and
     equipment including nursing, respiratory therapy,  rental and sale of
     durable medical equipment, pharmaceutical services and infusion therapy
     services.  In addition, the Company provides pediatric rehabilitation
     services, day treatment centers for medically fragile children, pediatric
     well care services and special needs educational services for pediatric
     patients.  The Company also provides case management services in order to
     assist the family and patient by coordinating the provision of services
     between the insurer or other payor, the physician, the hospital and other
     health care providers.  The Company's services are designed to provide a
     high quality, lower cost alternative to prolonged hospitalization for
     medically fragile children.  As a complement to its pediatric respiratory
     and infusion therapy services, the Company also provides respiratory and
     infusion therapy and related services for adults.

3.   Use of Estimates

     The preparation of the condensed consolidated financial statements in
     conformity with accounting principles generally accepted in the United
     States requires management to make estimates and assumptions that affect
     the reported amounts of assets and liabilities and the disclosure of
     contingent assets and liabilities at the date of the financial statements
     and the reported amount of net revenue and expenses during the reporting
     period.  Actual results could differ from those estimates and the
     differences could be material.  Due to the nature of the industry and the
     reimbursement environment in which the Company operates, certain estimates
     are required in recording net revenue and determining the provision for
     doubtful accounts.  Inherent in these estimates is the risk that they will
     have to be revised or updated as additional information becomes available
     to management.

4.   Accounts Receivable

     Accounts receivable include approximately $7.7 million for which services
     have been rendered but the amounts were unbilled as of March 31, 2001 and
     September 30, 2000.  Such unbilled amounts are primarily a result of the
     time required to obtain and reconcile information from field locations in
     order to process bills for services rendered.

                                       7
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Unaudited - (Continued)

5.   Concentration of Credit Risk

     The Company's principal financial instruments subject to potential
     concentration of credit risk are cash and cash equivalents and accounts
     receivable.  Cash and cash equivalents are held primarily in one financial
     institution.  The Company performs periodic evaluations of the relative
     credit standing of this financial institution.  The concentration of credit
     risk with respect to accounts receivable, which are primarily health care
     industry related, represent a risk to the Company given the current health
     care environment.  The risk is somewhat limited due to the large number of
     payors including Medicare and Medicaid, insurance companies, and
     individuals and the diversity of geographic locations in which the Company
     operates.

6.   Reclassifications

     Certain amounts for prior periods have been reclassified to conform to the
     current year presentation.

7.   Discontinued Operations

     The paramedical testing operations are reflected as a discontinued
     operation and the condensed consolidated financial statements of the
     Company for all periods presented have been restated to reflect the
     discontinued operations.

     Certain liabilities were not assumed by Hooper Holmes, Inc. in the sale of
     the paramedical testing division. These liabilities include accounts
     payable, additional accrued compensation and other accrued liabilities
     which totaled approximately $0.8 million at March 31, 2001.

8.   Income Taxes

     The Company has recorded a partial valuation allowance against the net
     deferred tax assets as of March 31, 2001  and September 30, 2000.  In
     recording the valuation allowance, management considered whether it is more
     likely than not that some or all of the deferred tax assets will be
     realized.  This analysis includes considering scheduled reversal of
     deferred tax liabilities, projected future taxable income, carryback
     potential and tax planning strategies.

     In the three and six months ended March 31, 2001, the Company had a current
     income tax expense of $0.9 million and $1.0 million, respectively, which
     was offset by the reduction of the valuation allowance related to the net
     deferred tax asset resulting in zero income tax expense.

                                       8
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - Unaudited - (Continued)

9.   Long-Term Borrowing Arrangements

     Subject to the terms and conditions of the Amended and Restated Loan
     Security Agreement, the Lender made available a total credit facility of up
     to $30.0 million.  At March 31, 2001, the calculated availability was $24.0
     million.  The total credit facility is comprised of a revolving line of
     credit up to the available limit, consisting of Loans and Letters of
     Credit.  As of March 31, 2001, the Company had no outstanding borrowings
     under the Amended and Restated Loan Security Agreement.

     During the three months ended March 31, 2001, the Company completed a
     series of transactions to repurchase a total of $12.4 million of the Senior
     Subordinated Notes (the "Notes") for $8.8 million cash plus accrued
     interest.  The pre-tax gain (net of the write-off of the related deferred
     financing fees) of $3.3 million is reflected as an extraordinary item in
     the condensed consolidated statements of operations for the three and six
     months ended March 31, 2001.

10.  Basic and Diluted Net Income (Loss) Per Share

     Basic net income (loss) per share is computed using the weighted average
     number of shares of common stock outstanding during the period.  Diluted
     net income (loss) per share is computed using the weighted average number
     of shares of common stock outstanding and the dilutive effect of common
     equivalent shares (calculated using the treasury stock method).  The
     dilutive effect of the weighted average options included in the diluted
     earnings per share is 277,687 and 255,279 for the three and six months
     ended March 31, 2001, respectively.  For the three and six months ended
     March 31, 2000, weighted average shares outstanding for continuing
     operations for basic and diluted computations are the same since the impact
     of common equivalent shares on earnings per share is anti-dilutive.

                                       9
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.


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

Forward-Looking Statements

This Form 10-Q contains certain forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) relating to
future financial performance of Pediatric Services of America, Inc. (the
"Company").  When used in this Form 10-Q, the words "may," "could," "should,"
"would," "believe," "feel," "expects," "anticipate," "estimate," "intend,"
"plan" and similar expressions may be indicative of forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
certain of which are beyond the Company's control.  The Company cautions that
various factors, including the factors described hereunder and those discussed
in the Company's filings with the Securities and Exchange Commission, as well as
general economic conditions, industry trends, the Company's ability to collect
for equipment sold or rented, assimilate and manage previously acquired field
operations, collect accounts receivable, including receivables related to
acquired businesses and receivables under appeal, hire and retain qualified
personnel and comply with and respond to billing requirements issues, including
those related to the Company's billing and collection system could cause actual
results or outcomes to differ materially from those expressed in any forward-
looking statements of the Company made by or on behalf of the Company.  Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of an unanticipated
event.  New factors emerge from time to time, and it is not possible for
management to predict all of such factors.  Further, management cannot assess
the impact of each such factor on the business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.

The following discussion should be read in conjunction with the unaudited
condensed consolidated financial statements of the Company included in this
quarterly report.

Recent Developments

   During the second quarter of fiscal year 2001, the Company continued its
strategic plan (the "Plan") of leveraging its opportunities in its core
competencies. To date, the Company's investments in sales and marketing
resources have not realized the anticipated revenue growth in its core
respiratory programs.  Despite these delays, the Company remains optimistic that
we will achieve the anticipated growth.  During the three months ended March 31,
2001, the Company successfully met its cash collection targets which enabled it
to repurchase through a series of transactions a total of $12.4 million of its
Senior Subordinated Notes for approximately $8.8 million, plus accrued interest.
The Company feels that the resulting capital structure provides a strong
foundation for future internal and acquired growth.  As such, the Company is
evaluating acquisition opportunities for continued growth in its core
competencies.

   During the three months ended March 31, 2001, the Company continued its
efforts to aggressively manage its portfolio of payor contracts with the
objective of maximizing reimbursement for core services.  In addition, the
Company's lobbying efforts have positively impacted private duty nurse
reimbursement rates in selected state Medicaid programs.  A portion of the
respective rate increases have been passed on to select nurses in the form of
additional benefits and/or wage increases.  Additionally, the Company has
increased select nursing wages and benefits in other markets where local market
conditions dictate.  The select wage and benefit increases along with the hiring
of a full time nurse recruiting specialist are integral to the Company's efforts
to reduce the level of unstaffed nursing hours that continue to impact us.
During the second quarter of fiscal 2001, the Company entered negotiations with
its key pharmaceutical suppliers in an effort to consolidate its purchasing
volume.  The Company anticipates improved pricing upon completion of the
negotiations.

   The Company experienced negative volatility in its workers compensation
liability during the quarter ended March 31, 2001.  The Company and its risk
brokers continue to proactively monitor the carriers claim settlement

                                       10
<PAGE>

process. In addition, the Company has engaged a loss control specialist to
assist in identifying and minimizing future exposure. As part of its annual
policy renewal, the Company decided to absorb a higher percentage of the total
cost of its medical benefit plan which is reflected in the quarter ended March
31, 2001. The Company believes continued investments in its various benefit
plans are necessary to address labor market conditions.

   Although the Company has delivered positive results to date, there can be no
assurance that the Company will be able to achieve the expected future results
from the Plan without negatively impacting operations.


Results of Operations

Due to the nature of the industry and the reimbursement environment in which the
Company operates, certain estimates are required in recording net revenue.
Inherent in these estimates is the risk that net revenue will have to be revised
or updated, with the changes recorded in subsequent periods as additional
information becomes available to management.

The following table is derived from the Company's unaudited condensed
consolidated statements of operations for the periods indicated and presents
results of continuing operations as a percentage of net revenue and the
percentage change in the dollar amounts of each item from the comparative prior
period:

<TABLE>
<CAPTION>
                                                                               Period-to-Period
                                                   Percentage of                   Percentage
                                                    Net Revenue               Increase (Decrease)
                                           ------------------------------  --------------------------
                                            Three Months     Six Months    Three Months   Six Months
                                                Ended           Ended           Ended         Ended
                                              March 31,       March 31,       March 31,     March 31,
                                           --------------  --------------  -------------  -----------
                                           2001    2000    2001    2000          2001           2001
                                           -----   -----   -----   -----         ----           ----
<S>                                        <C>     <C>     <C>     <C>      <C>            <C>
Net revenue..............................  100.0%  100.0%  100.0%  100.0%         (4)%          (4)%
Operating salaries, wages and employee
   benefits..............................   44.4    46.5    44.9    46.8          (8)           (8)
Other operating costs....................   38.2    35.5    37.1    36.1           4            (2)
Corporate, general and administrative....   10.2    10.7    10.0    10.3          (8)           (7)
Provision for doubtful accounts..........    1.1     4.1     1.6     4.5         (75)          (67)
Depreciation and amortization............    4.0     4.3     4.1     4.3          (9)           (8)
                                           -----   -----   -----   -----        ----          ----
Operating income (loss)..................    2.1    (1.1)    2.3    (2.0)        278           212
Interest income..........................   (0.4)   (0.5)   (0.4)   (0.2)        (26)           71
Interest expense.........................    2.2     4.1     2.4     5.1         (48)          (55)
                                           -----   -----   -----   -----        ----          ----
Net income (loss) from continuing
 operations..............................    0.3%  (4.7)%    0.3%  (6.9)%        108%          102%
                                           =====   =====   =====   =====        ====          ====

</TABLE>

                                       11
<PAGE>

The following table sets forth for the periods indicated the net revenue
breakdown by service: (in thousands)

<TABLE>
<CAPTION>
                                                                          Three Months                Six Months
                                                                              Ended                      Ended
                                                                            March 31,                   March 31,
                                                                        2001          2000          2001         2000
                                                                      -------       -------       -------      -------
<S>                                                                   <C>           <C>           <C>          <C>
Pediatric Home Health Care
  Nursing......................................................       $21,251       $21,231       $42,455      $42,203
  Respiratory Therapy Equipment................................         3,666         4,436         7,376        9,217
  Home Medical Equipment.......................................           336           515           668        1,029
  Pharmacy and Other...........................................        10,135         8,931        20,059       17,457
                                                                      -------       -------       -------      -------
          Total Pediatric Home Health Care.....................        35,388        35,113        70,558       69,906
                                                                      -------       -------       -------      -------

Adult Home Health Care:
  Nursing......................................................         2,665         3,039         5,485        5,986
  Respiratory Therapy Equipment................................         4,011         4,295         7,991        9,160
  Home Medical Equipment.......................................           763         1,147         1,472        2,371
  Pharmacy and Other...........................................         2,880         3,807         5,763        8,082
                                                                      -------       -------       -------      -------
          Total Adult Home Health Care.........................        10,319        12,288        20,711       25,599
                                                                      -------       -------       -------      -------
          Total Net Revenue....................................       $45,707       $47,401       $91,269      $95,505
                                                                      =======       =======       =======      =======
</TABLE>


Three Months Ended March 31, 2001 Compared to Three Months Ended March 31, 2000

  Net revenue decreased $1.7 million, or 4%, to $45.7 million in the three
months ended March 31, 2001 from $47.4 million in the three months ended March
31, 2000.  In part, the reduction in net revenue reflects the continued efforts
to reduce non-core and/or non-profitable products and services consistent with
the Plan.  In addition, the Company's investment in sales and marketing
resources in the core respiratory programs failed to contribute significantly to
the net revenues for the three months ended March 31, 2001.  Pediatric health
care net revenue increased by $0.3 million.  Adult health care net revenue
decreased $2.0 million for the three months ended March 31, 2001, primarily as a
result of the reduction in non-core services to the pharmacy and respiratory
therapy/home medical equipment patients.   In the three months ended March 31,
2001, the Company derived approximately 50% of its net revenue from commercial
insurers and other private payors, 43% from Medicaid and 7% from Medicare.

  Operating salaries, wages and employee benefits consist primarily of branch
office employee costs.  Operating salaries, wages and employee benefits
decreased $1.7 million, or 8%, to $20.3 million in the three months ended March
31, 2001 from $22.0 million in the three months ended March 31, 2000.  Labor
costs have decreased across all services primarily as a result of headcount
reductions.  As a percentage of net revenue, operating salaries, wages and
employee benefits for the three months ended March 31, 2001 decreased to 44%
from 47% for the three months ended March 31, 2000.

  Other operating costs include medical supplies, branch office rent, utilities,
vehicle expenses, allocated insurance costs and cost of sales.  Cost of sales
consists primarily of the costs of pharmaceuticals and related services.  Other
operating costs increased $0.7 million, or 4%, to $17.5 million in the three
months ended March 31, 2001, from $16.8 million in the three months ended March
31, 2000.  The increase in other operating costs relates primarily to increased
workers compensation losses as well as increased equipment distribution costs in
the three months ended March 31, 2001.  As a percentage of net revenue, other
operating costs for the three months ended March 31, 2001 increased to 38% from
36% for the three months ended March 31, 2000.

  Corporate, general and administrative costs decreased $0.5 million, or 8%, to
$4.6 million in the three months ended March 31, 2001, from $5.1 million in the
three months ended March 31, 2000.  This decrease was primarily attributable to
the reduction in the use of outside labor.  As a percentage of net revenue,
corporate, general and administrative costs for the three months ended March 31,
2001, decreased slightly compared to the three months ended March 31, 2000.

  Provision for doubtful accounts decreased $1.4 million, or 75%, to $0.5
million in the three months ended

                                       12
<PAGE>

March 31, 2001, from $1.9 million in the three months ended March 31, 2000. Cash
collections as a percentage of net revenue were 103% and 104% for the three
months ended March 31, 2001 and 2000, respectively. The Company continues to
experience strong cash collections and improvements in the reimbursement
processes contributing to a lower provision for doubtful accounts.

  Depreciation and amortization decreased $0.1 million, or 9%, to $1.9 million
in the three months ended March 31, 2001 from $2.0 million in the three months
ended March 31, 2000. As a percentage of the Company's net revenue, depreciation
and amortization costs for the three months ended March 31, 2001 decreased
slightly compared to the three months ended March 31, 2000.

  Interest expense decreased $0.9 million, or 48%, to $1.0 million in the three
months ended March 31, 2001, from $1.9 million in the three months ended March
31, 2000.  The Company's average debt outstanding decreased $37.2 million as the
Company completed a series of transactions to repurchase a portion of the Notes.

  Interest income decreased $0.1 million in the three months ended March 31,
2001.  The Company invested its excess cash balances in highly liquid
investments.


Six Months Ended March 31, 2001 Compared to Six Months Ended March 31, 2000

  Net revenue decreased $4.2 million, or 4%, to $91.3 million in the six months
ended March 31, 2001 from $95.5 million in the six months ended March 31, 2000.
In part, the reduction in net revenue reflects the continued efforts  to reduce
non-core and/or non-profitable products and services consistent with the Plan.
In addition, the Company's investment in sales and marketing resources in the
core respiratory programs failed to contribute significantly to the net revenues
for the six months ended March 31, 2001.  Pediatric health care net revenue
increased $0.7 million.  Adult health care net revenue decreased $4.9 million
for the six months ended March 31, 2001, primarily as a result of the reduction
in non-core services to the pharmacy and respiratory therapy/home medical
equipment patients.   In the six months ended March 31, 2001, the Company
derived approximately 49% of its net revenue from commercial insurers and other
private payors, 44% from Medicaid and 7% from Medicare.

  Operating salaries, wages and employee benefits consist primarily of branch
office employee costs.  Operating salaries, wages and employee benefits
decreased $3.7 million, or 8%, to $41.0 million in the six months ended March
31, 2001 from $44.7 million in the six months ended March 31, 2000.  Labor costs
have decreased across all services primarily as a result of headcount
reductions.  As a percentage of net revenue, operating salaries, wages and
employee benefits for the six months ended March 31, 2001 decreased to 45% from
47% for the six months ended March 31, 2000.

  Other operating costs include medical supplies, branch office rent, utilities,
vehicle expenses, allocated insurance costs and cost of sales.  Cost of sales
consists primarily of the costs of pharmaceuticals and related services. Other
operating costs decreased $0.6 million, or 2%, to $33.9 million in the six
months ended March 31, 2001, from $34.5 million in the six months ended March
31, 2000. As a percentage of net revenue, other operating costs for the six
months ended March 31, 2001 increased to 37% from 36% for the six months ended
March 31, 2000.

  Corporate, general and administrative costs decreased $0.7 million, or 7%, to
$9.1 million in the six months ended March 31, 2001, from $9.8 million in the
six months ended March 31, 2000.  This decrease was primarily attributable to
the reduction in the use of outside labor.  As a percentage of net revenue,
corporate, general and administrative costs for the six months ended March 31,
2001, decreased slightly compared to the six months ended March 31, 2000.

  Provision for doubtful accounts decreased $2.9 million, or 67%, to $1.4
million in the six months ended March 31, 2001, from $4.3 million in the six
months ended March 31, 2000. Cash collections as a percentage of net revenue
were 102% and 104% for the six months ended March 31, 2001 and 2000,
respectively. The Company continues to experience strong cash collections and
improvements in the reimbursement processes contributing to a lower provision
for doubtful accounts.

                                       13
<PAGE>

  Depreciation and amortization decreased $0.3 million, or 8%, to $3.8 million
in the six months ended March 31, 2001 from $4.1 million in the six months ended
March 31, 2000. As a percentage of the Company's net revenue, depreciation and
amortization costs for the six months ended March 31, 2001 decreased slightly
compared to the six months ended March 31, 2000.

  Interest expense decreased $2.7 million, or 55%, to $2.2 million in the six
months ended March 31, 2001, from $4.9 million in the six months ended March 31,
2000.  The Company's average debt outstanding decreased $44.5 million as the
amount outstanding under the Credit Agreement was paid down to zero on November
1, 1999 and the Company completed a series of transactions to repurchase a
portion of the Notes.

  Interest income increased $0.2 million in the six months ended March 31, 2001.
The Company invested its excess cash balances in highly liquid investments.

Liquidity and Capital Resources

  Subject to the terms and conditions of the Amended and Restated Loan
Security Agreement, the Lender shall make available a total credit facility of
up to $30.0 million.  At March 31, 2001, the calculated availability was $24.0
million.  The total credit facility shall be comprised of a revolving line of
credit up to the available limit, consisting of Loans and Letters of Credit.  As
of the date of this Report, the Company has no outstanding borrowings under the
Amended and Restated Loan Security Agreement.

  At March 31, 2001, total borrowings under the Notes were approximately $33.1
million.

  During the three months ended March 31, 2001, the Company completed a series
of transactions to repurchase a total of $12.4 million of the Notes for $8.8
million cash plus accrued interest.  The pre-tax gain (net of the write-off of
the related deferred financing fees) of $3.3 million is reflected as an
extraordinary item in the condensed consolidated statements of operations for
the three and six months ended March 31, 2001.

  Cash collections as a percentage of net revenue for the three months ended
March 31, 2001 and 2000 were 103% and 104%, respectively.  The organizational
restructuring of the Company's reimbursement process continues and indications
of progress to date are positive.  While management anticipates that continued
implementation of the Plan will achieve the desired results, there can be no
assurance that this will result in the Company realizing operating improvements
and improved cash flow.

  The Company's investments in property and equipment are attributable largely
to purchases of medical equipment rented to patients and computer equipment.
Capital expenditures for computer equipment and software development, have been
substantially completed.  The Company anticipates future capital expenditures
for enhancements of existing technology.  However, the Company does not
anticipate these to be significant.

  Management currently believes that its liquidity position will be adequate to
satisfy the Company's working capital requirements and potential acquisitions.

Quarterly Operating Results and Seasonality

  The Company's quarterly results may vary significantly depending primarily on
factors such as rehospitalizations of patients, the timing of new branch office
openings and pricing pressures due to legislative and regulatory initiatives  to
contain health care costs.  The Company's operating results for any particular
quarter may not be indicative of the results for the full fiscal year.


ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk

  The Company's principal financial instruments subject to potential
concentration of credit risk are cash and cash equivalents and accounts
receivable.  Cash and cash equivalents are held primarily in one financial
institution.  The Company performs periodic evaluations of the relative credit
standing of this financial institution.  The

                                       14
<PAGE>

concentration of credit risk with respect to accounts receivable, which are
primarily health care industry related, represent a risk to the Company given
the current health care environment. The risk is somewhat limited due to the
large number of payors including Medicare and Medicaid, insurance companies, and
individuals and the diversity of geographic locations in which the Company
operates.


                          PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings.

   On March 11, 1999, a putative class action complaint was filed against the
Company in the United States District Court for the Northern District of
Georgia.  The Company and certain of its then current officers and directors
were named as defendants.  To the Company's knowledge, no other putative class
action complaints were filed within the 60-day time period provided for in the
Private Securities Litigation Reform Act.  The plaintiffs and their counsel were
appointed lead plaintiffs and lead counsel, and an amended complaint was filed
on or about July 22, 1999.  In general, the plaintiffs allege that prior to the
decline in the price of the Company's Common Stock on July 28, 1998, there were
violations of the Federal Securities Laws arising from misstatements of material
information in and/or omissions of material information from certain of the
Company's securities filings and other public disclosures principally related to
its reporting of accounts receivable and the allowance for doubtful accounts.
The amended complaint purports to expand the class to include all persons who
purchased the Company's Common Stock during the period from July 29, 1997
through and including July 29, 1998.  On October 8, 1999, the Company and the
individuals named as defendants moved to dismiss the amended complaint on both
substantive and procedural grounds.  On March 30, 2000, the Court denied the
Company's motion to dismiss.  On May 15, 2000, the Company and the individuals
named as defendants filed their answer, denying liability.

   On February 27, 2001, Plaintiffs' Motion for Class Certification was granted
by the court.  Discovery in the case is proceeding.  The Company and the
individuals named as defendants deny that they have violated any of the
requirements or obligations of the Federal Securities Laws.

                                       15
<PAGE>

   On July 28, 1999, a civil action was filed against the Company and certain of
its current and former officers and directors in the United States District
Court for the Middle District of Tennessee.  The action was filed by Phyllis T.
Craighead and Healthmark Partners, LLC, as well as a liquidating trust
apparently established to wind up the business affairs of their corporation,
Kids & Nurses, Inc.  In the original complaint, in general, the plaintiffs
alleged that the defendants violated Federal and Tennessee Securities Laws and
committed common law fraud in connection with the Company's purchase of Kids and
Nurses, Inc. in November, 1997.  The plaintiffs seek actual damages in an amount
between $2.5 million and $3.5 million, plus punitive damages and the costs of
litigation, including reasonable attorneys' fees.  On September 24, 1999, the
defendants filed a motion to dismiss the complaint on both substantive and
procedural grounds.  On December 20, 1999, the plaintiffs filed an amended
complaint in which they withdrew their claims under the Federal securities laws,
and added claims under Georgia's securities laws.  The plaintiffs also filed a
brief in response to the Company's motion to dismiss.  On February 1, 2000, the
defendants filed an amended motion to dismiss addressing the allegations of the
amended complaint.  On March 29, 2001 the motion to dismiss was denied without
prejudice pending a ruling by the Tennessee Supreme Court on an unrelated case.
The Company and the individuals named as defendants deny that they have violated
any of the requirements or obligations of any applicable Federal or State
securities laws, or any other applicable law.

   In the opinion of the Company's management, the ultimate disposition of these
two lawsuits should not have a material adverse effect on the Company's
financial condition or results of operations, however, there can be no assurance
that the Company will not sustain material liability as a result of or related
to these lawsuits.

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

The 2001 Annual Meeting of Shareholders of the Company was held on February 21,
2001.  Proxies with regard to the matters to be voted upon at the Annual Meeting
were solicited under Regulation 14A of the Securities Exchange Act of 1934, as
amended.  Set forth below is a brief description of each matter voted upon at
the Annual Meeting and the results of the voting on each matter.

     (a)  Election of Robert P. Pinkas and Edward K. Wissing as directors for a
          term of three years expiring at the 2004 Annual Meeting of
          Shareholders.  There was no solicitation in opposition to the nominees
          listed in the proxy statement, and the nominees were elected.


                                   Votes                 Broker
                            -------------------  ----------------------
     Nominees                  For     Withheld  Abstentions  Non-votes
     --------               ---------  --------  -----------  ---------
     Robert P. Pinkas       6,320,662   17,007        -           -
     Edward K. Wissing      6,320,662   17,007        -           -


     (b)  Ratification of the appointment of Ernst & Young LLP as independent
          auditors of the Company for the fiscal year ending September 30, 2001.
          The Shareholders approved the proposal.

                                         Votes
     ---------------------------------------------------------------------------
     For                                Against                      Abstentions
     ---                                -------                      -----------

     6,308,339                          10,972                          18,358


ITEM 6.  Exhibits and Reports on Form 8-K.

  (a)    Exhibits
         --------

         No exhibits are filed as part of this Report.


  (b)    Reports on Form 8-K
         -------------------

         The Company did not file a Current Report on Form 8-K during the
         quarter ended March 31, 2001.

                                       16
<PAGE>

SIGNATURES

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


                                    PEDIATRIC SERVICES OF AMERICA, INC.
                                                (Registrant)



Date: May 11, 2001            By:   /s/ James M. McNeill
                                    ----------------------
                                    James M. McNeill
                                    Senior Vice President,
                                    Chief Financial Officer,
                                    Treasurer and Secretary
                                    (Duly authorized officer and
                                    Principal Financial Officer)

                                       17