<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 June 30, 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 July 31, 2001, the Registrant had 6,709,856 shares of Common Stock, $0.01
Par Value, outstanding.

________________________________________________________________________________


                                  Page 1 of 17
<PAGE>

                                   FORM 10-Q
                      PEDIATRIC SERVICES OF AMERICA, INC.


                                     INDEX

<TABLE>
<CAPTION>
                                                                                              Page
                                                                                              Number
                                                                                              ------
PART I    FINANCIAL INFORMATION
<S>       <C>                                                                                    <C>
ITEM 1:   Financial Statements

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

          Condensed Consolidated Statements of Operations for
               the three and nine months ended June 30, 2001 and 2000.........................   5

          Condensed Consolidated Statements of Cash Flows for
               the nine months ended June 30, 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..........................  15

PART II   OTHER INFORMATION

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

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

          Signatures..........................................................................  17
</TABLE>

                                       2
<PAGE>

                         PART I - FINANCIAL INFORMATION


Item 1.  Financial Statements


                       PEDIATRIC SERVICES OF AMERICA, INC
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                 June 30,             September 30,
                                                                                   2001                   2000
                                                                              -------------           -------------
                                                                               (Unaudited)
<S>                                                                            <C>                    <C>
Assets
Current assets:
  Cash and cash equivalents..................................................       $ 13,801             $ 14,912
  Accounts receivable, less allowances for doubtful
    accounts of $6,257 and $7,628, respectively..............................         30,526               35,389
  Prepaid expenses...........................................................          1,223                  656
  Deferred income taxes......................................................          2,058                3,792
  Other current assets.......................................................          4,161                3,057
                                                                                    --------             --------
Total current assets.........................................................         51,769               57,806

Property and equipment:
  Home care equipment held for rental........................................         28,331               27,831
  Furniture and fixtures.....................................................         10,531               10,226
  Vehicles...................................................................            725                  751
  Leasehold improvements.....................................................          1,206                1,039
                                                                                    --------             --------
                                                                                      40,793               39,847
  Accumulated depreciation and amortization..................................        (31,349)             (27,999)
                                                                                    --------             --------
                                                                                       9,444               11,848
Other assets:
  Goodwill, less accumulated amortization of
    $9,056 and $7,386, respectively..........................................         32,263               33,933
  Certificates of need, less accumulated amortization of
    $480 and $404, respectively..............................................            193                  269
  Deferred financing fees, less accumulated
    amortization of $642 and $549, respectively..............................            872                1,419
  Non-compete agreements, less accumulated amortization of
    $1,104 and $1,084, respectively..........................................             56                   76
  Deferred income taxes......................................................          2,321                    -
  Other......................................................................            237                  242
                                                                                    --------             --------
                                                                                      35,942               35,939
                                                                                    --------             --------
Total assets.................................................................       $ 97,155             $105,593
                                                                                    ========             ========
</TABLE>

See accompanying notes.

                                       3
<PAGE>

                      PEDIATRIC SERVICES OF AMERICA, INC.
               CONDENSED CONSOLIDATED BALANCE SHEETS--(Continued)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                      June 30,               September 30,
                                                                                        2001                     2000
                                                                                  ------------------      ------------------
                                                                                    (Unaudited)
<S>                                                                               <C>                     <C>
Liabilities and stockholders' equity
Current liabilities:
 Accounts payable...............................................................         $ 6,846               $  5,477
 Accrued compensation...........................................................           4,762                  5,513
 Income taxes payable...........................................................           1,405                    610
 Accrued insurance..............................................................           5,641                  5,002
 Other accrued liabilities......................................................           4,983                  6,179
 Deferred revenue...............................................................             584                    618
 Current maturities of long-term obligations to related parties.................              25                     50
 Current maturities of long-term obligations....................................              13                     18
                                                                                         -------               --------
Total current liabilities.......................................................          24,259                 23,467

Long-term obligations to related parties, net of current
    maturities..................................................................              25                     50
Long-term obligations, net of current maturities................................          33,054                 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, 6,708 and 6,658 shares issued and outstanding at June 30,
  2001 and September 30, 2000, respectively.....................................              67                     67
 Additional paid-in capital.....................................................          48,452                 48,362
 Accumulated deficit............................................................          (8,702)               (12,898)
                                                                                         -------               --------
Total stockholders' equity......................................................          39,817                 35,531
                                                                                         -------               --------
Total liabilities and stockholders' equity......................................         $97,155               $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                    Nine Months Ended
                                                                     June 30,                              June 30,
                                                             2001              2000               2001              2000
                                                           -------           -------            --------          --------
                                                         (Unaudited)       (Unaudited)         (Unaudited)       (Unaudited)
<S>                                                      <C>               <C>                 <C>               <C>
Net revenue.....................................           $46,258           $45,397            $137,527          $140,902
Costs and expenses:
 Operating salaries, wages and
 employee benefits..............................            20,119            21,219              61,077            65,913
 Other operating costs..........................            17,946            16,439              51,820            50,939
 Corporate, general and administrative..........             4,600             4,276              13,696            14,092
 Provision for doubtful accounts................               353             1,121               1,793             5,413
 Depreciation and amortization..................             1,867             2,009               5,626             6,113
                                                           -------           -------            --------          --------
         Total costs and expenses...............            44,885            45,064             134,012           142,470
                                                           -------           -------            --------          --------
Operating income (loss).........................             1,373               333               3,515            (1,568)
Other income....................................                32                 -                  32                 -
Interest income.................................               119               161                 507               388
Interest expense................................              (898)           (1,468)             (3,121)           (6,370)
                                                           -------           -------            --------          --------
Income (loss) from continuing operations........               626              (974)                933            (7,550)

Discontinued operations
Gain on disposal of discontinued operations.....                 -               407                   -            24,721
                                                           -------           -------            --------          --------
Income (loss) before extraordinary item.........               626              (567)                933            17,171
Extraordinary item..............................                 -            10,299               3,263            10,299
                                                           -------           -------            --------          --------
Net income......................................           $   626           $ 9,732            $  4,196          $ 27,470
                                                           =======           =======            ========          ========

Basic net income per share data:
Income (loss) from continuing operations........           $  0.09           $ (0.15)           $   0.14          $  (1.13)
Gain on disposal of discontinued operations.....                 -              0.06                   -              3.71
                                                           -------           -------            --------          --------
Income (loss) before extraordinary item.........              0.09             (0.09)               0.14              2.58
Extraordinary item..............................                 -              1.55                0.49              1.55
                                                           -------           -------            --------          --------
Net income......................................           $  0.09           $  1.46            $   0.63          $   4.13
                                                           =======           =======            ========          ========

Diluted net income per share data:
Income (loss) from continuing operations........           $  0.09           $ (0.15)           $   0.14          $  (1.13)
Gain on disposal of discontinued operations.....                 -              0.06                   -              3.71
                                                           -------           -------            --------          --------
Income (loss) before extraordinary item.........              0.09             (0.09)               0.14              2.58
Extraordinary item..............................                 -              1.55                0.47              1.55
                                                           -------           -------            --------          --------
Net income......................................           $  0.09           $  1.46            $   0.61          $   4.13
                                                           =======           =======            ========          ========

Weighted average shares outstanding:
Basic...........................................             6,696             6,658               6,674             6,654
                                                           =======           =======            ========          ========
Diluted.........................................             6,934             6,658               6,923             6,654
                                                           =======           =======            ========          ========
</TABLE>

See accompanying notes.

                                       5
<PAGE>

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

<TABLE>
<CAPTION>
                                                                                            Nine Months Ended June 30,
                                                                                             2001                2000
                                                                                          -----------         -----------
Operating activities                                                                      (Unaudited)         (Unaudited)
<S>                                                                                       <C>                 <C>
Income (loss) from continuing operations.........................................         $     933           $  (7,550)
Adjustments to reconcile income (loss) from continuing operations to net cash
 provided by operating activities:
  Depreciation and amortization..................................................             5,626               6,113
  Provision for doubtful accounts................................................             1,793               5,413
  Amortization of deferred financing fees........................................               220                 599
  Deferred income taxes..........................................................            (1,693)             (3,559)
  Changes in operating assets and liabilities:
    Accounts receivable..........................................................             3,070              10,213
    Prepaid expenses.............................................................              (567)               (228)
    Other assets.................................................................            (1,207)                615
    Accounts payable.............................................................             1,369              (4,169)
    Income taxes.................................................................               795               2,807
    Accrued liabilities..........................................................            (1,342)             (5,277)
                                                                                          ---------           ---------
Net cash provided by operating activities of continuing
   operations....................................................................             8,997               4,977
Net cash used in operating activities of discontinued
   operations....................................................................                 -                (842)
                                                                                          ---------           ---------
Net cash provided by operating activities........................................             8,997               4,135
Investing activities
Purchases of property and equipment..............................................            (1,349)             (1,039)
Proceeds from sale of division...................................................                 -              78,031
Other, net.......................................................................                 -                  41
                                                                                          ---------           ---------
Net cash (used in) provided by investing activities of continuing operations.....            (1,349)             77,033
Net cash used in investing activities of discontinued operations.................                 -                 (24)
                                                                                          ---------           ---------
Net cash (used in) provided by investing activities..............................            (1,349)             77,009
Financing activities
Principal payments on long-term debt.............................................            (8,849)            (81,723)
Deferred financing fees..........................................................                 -                (251)
Proceeds from exercise of stock options..........................................                90                   -
                                                                                          ---------           ---------
Net cash used in financing activities............................................            (8,759)            (81,974)
                                                                                          ---------           ---------
Decrease in cash and cash equivalents............................................            (1,111)               (830)
Cash and cash equivalents at beginning of period.................................            14,912               8,361
                                                                                          ---------           ---------
Cash and cash equivalents at end of period.......................................         $  13,801           $   7,531
                                                                                          =========           =========
Supplemental disclosure of cash flow information
Cash paid for interest...........................................................         $   4,504           $   8,327
                                                                                          =========           =========
Cash paid for taxes..............................................................         $     965           $     667
                                                                                          =========           =========
</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 nine months ended June
     30, 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 $7.6 million and $7.7 million for
     which services have been rendered but the amounts were unbilled as of June
     30, 2001 and September 30, 2000, respectively.  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
     concentrations 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.   Impact of Recently Issued Accounting Standards

     In June 2001, the Financial Accounting Standards Board issued Statements of
     Financial Accounting Standards No. 141, "Business Combinations", and No.
     142, "Goodwill and Other Intangible Assets", effective for fiscal years
     beginning after December 15, 2001. Under the new rules, goodwill and
     intangible assets deemed to have indefinite lives will no longer be
     amortized but will be subject to annual impairment tests in accordance with
     the Statements. Other intangible assets will continue to be amortized over
     their useful lives. The Company is planning to adopt the new rules
     effective October 1, 2001. The Company is evaluating the impact of the
     adoption of these standards and has not yet determined the effect of
     adoption on its financial position and results of operations.

8.   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 $0.7 million at June 30, 2001.

9.   Income Taxes

     The Company has recorded a partial valuation allowance against the net
     deferred tax assets as of June 30, 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 nine months ended June 30, 2001, the Company had a current
     income tax expense of $1.1 million and $2.1 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)


10.  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 June 30, 2001, the calculated availability was $22.3
     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 June 30, 2001, the Company had no outstanding borrowings
     under the Amended and Restated Loan Security Agreement.

     In the second quarter of fiscal year 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 nine months
     ended June 30, 2001.

11.  Basic and Diluted Net Income Per Share

     Basic net income per share is computed using the weighted average number of
     shares of common stock outstanding during the period.  Diluted net income
     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
     238,826 and 249,795 for the three and nine months ended June 30, 2001,
     respectively.  For the three and nine months ended June 30, 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 third 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 produced the anticipated revenue growth in its core
respiratory programs.  During the three months ended June 30, 2001, the Company
implemented a number of changes in its sales and marketing program to improve
its effectiveness.  The Company remains optimistic that it will achieve the
anticipated growth.  During the three months ended June 30, 2001, the Company
successfully met its cash collection targets which resulted in an additional
$3.1 million cash on hand.  With this liquidity position, the Company is
actively seeking to invest in acquisition opportunities that enhance its core
competencies.

   During the three months ended June 30, 2001, the Company continued its
efforts to aggressively manage its portfolio of payor contracts with the
objective of maximizing reimbursement for core services.  As contracts have
entered their renewal cycles, the Company has been able to negotiate improved
prices on selected core services.  During the third quarter of fiscal 2001, the
Company's nurse recruiting specialist has had a  positive impact on unstaffed
nursing hours in select markets.  As a result, the Company has experienced
sequential revenue growth in these select markets.  The Company intends to
invest in additional resources to improve markets that continue to experience
relatively high unstaffed nursing hours.  During the third quarter of fiscal
2001, the Company experienced sporadic blood product shortages in its pharmacy
services line.  The Company is aggressively managing the availability of product
and patient requirements.

   The Company and its risk brokers continue to proactively monitor its
prevention programs and carriers claim settlement process across all insured
benefit programs.

                                       10
<PAGE>

     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    Nine Months    Three Months   Nine Months
                                                  Ended           Ended          Ended         Ended
                                                 June 30,        June 30,       June 30,      June 30,
                                                 -------         -------        -------       -------
                                               2001    2000    2001    2000      2001          2001
                                               ----    ----    ----    ----      ----          ----
<S>                                           <C>     <C>     <C>     <C>     <C>            <C>
Net revenue................................   100.0%  100.0%  100.0%  100.0%          2%           (2)%
Operating salaries, wages and employee
   benefits................................    43.5    46.7    44.4    46.8          (5)           (7)
Other operating costs......................    38.8    36.2    37.7    36.2           9             2
Corporate, general and administrative......     9.9     9.4    10.0    10.0           8            (3)
Provision for doubtful accounts............     0.8     2.5     1.3     3.8         (69)          (67)
Depreciation and amortization..............     4.0     4.5     4.1     4.3          (7)           (8)
                                              -----   -----   -----   -----
Operating income (loss)....................     3.0     0.7     2.5    (1.1)        312           324
Other income...............................     0.1       -       -       -           -             -
Interest income............................     0.3     0.4     0.4     0.3         (27)           31
Interest expense...........................    (1.9)   (3.2)   (2.3)   (4.5)        (39)          (51)
                                              -----   -----   -----   -----
Income (loss) from continuing operations...     1.5%   (2.1)%   0.6%   (5.3)%       169%          111%
                                              =====   =====   =====   =====
</TABLE>

                                       11
<PAGE>

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

<TABLE>
<CAPTION>
                                                                           Three Months                Nine Months
                                                                              Ended                      Ended
                                                                             June 30,                   June 30,
                                                                       2001          2000          2001          2000
                                                                       ----          ----          ----          ----
<S>                                                                   <C>           <C>          <C>           <C>
Pediatric Home Health Care
  Nursing......................................................       $21,352       $20,466      $ 63,808      $ 62,668
  Respiratory Therapy Equipment................................         3,803         4,119        11,179        13,336
  Home Medical Equipment.......................................           377           454         1,045         1,484
  Pharmacy and Other...........................................         9,945         8,904        30,004        26,361
                                                                      -------       -------      --------      --------
          Total Pediatric Home Health Care.....................        35,477        33,943       106,036       103,849
                                                                      -------       -------      --------      --------

Adult Home Health Care:
  Nursing......................................................         2,945         2,800         8,430         8,787
  Respiratory Therapy Equipment................................         4,042         4,384        12,033        13,543
  Home Medical Equipment.......................................           632         1,073         2,103         3,444
  Pharmacy and Other...........................................         3,162         3,197         8,925        11,279
                                                                      -------       -------      --------      --------
          Total Adult Home Health Care.........................        10,781        11,454        31,491        37,053
                                                                      -------       -------      --------      --------
          Total Net Revenue....................................       $46,258       $45,397      $137,527      $140,902
                                                                      =======       =======      ========      ========
</TABLE>

Three Months Ended June 30, 2001 Compared to Three Months Ended June 30, 2000

     Net revenue increased $0.9 million, or 2%, to $46.3 million in the three
months ended June 30, 2001 from $45.4 million in the three months ended June 30,
2000.  Pediatric home health care net revenue increased by $1.5 million for the
three months ended June 30, 2001, primarily due to the Company's growth in its
core products.  Adult health care net revenue decreased $0.6 million for the
three months ended June 30, 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 June 30, 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 $1.1 million, or 5%, to $20.1 million in the three months ended June
30, 2001 from $21.2 million in the three months ended June 30, 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 June 30, 2001 decreased to 44% from
47% for the three months ended June 30, 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 $1.5 million, or 9%, to $17.9 million
in the three months ended June 30, 2001, from $16.4 million in the three months
ended June 30, 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 June 30, 2001. As a percentage of
net revenue, other operating costs for the three months ended June 30, 2001
increased to 39% from 36% for the three months ended June 30, 2000.

     Corporate, general and administrative costs increased $0.3 million, or 8%,
to $4.6 million in the three months ended June 30, 2001, from $4.3 million in
the three months ended June 30, 2000. As a percentage of net revenue, corporate,
general and administrative costs for the three months ended June 30, 2001,
increased slightly compared to the three months ended June 30, 2000.

     Provision for doubtful accounts decreased $0.8 million, or 69%, to $0.3
million in the three months ended June 30, 2001, from $1.1 million in the three
months ended June 30, 2000. Cash collections as a percentage of net revenue were
105% and 112% for the three months ended June 30, 2001 and 2000, respectively.
The Company continues to experience strong cash collections and improvements in
the reimbursement processes contributing to a

                                       12
<PAGE>

lower provision for doubtful accounts.

     Depreciation and amortization decreased $0.1 million, or 7%, to $1.9
million in the three months ended June 30, 2001 from $2.0 million in the three
months ended June 30, 2000. As a percentage of the Company's net revenue,
depreciation and amortization costs for the three months ended June 30, 2001
decreased slightly compared to the three months ended June 30, 2000.

     Interest expense decreased $0.6 million, or 39%, to $0.9 million in the
three months ended June 30, 2001, from $1.5 million in the three months ended
June 30, 2000. The Company's average debt outstanding decreased $23.6 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 June 30,
2001. The Company invested its excess cash balances in highly liquid
investments.


Nine Months Ended June 30, 2001 Compared to Nine Months Ended June 30, 2000

     Net revenue decreased $3.4 million, or 2%, to $137.5 million in the nine
months ended June 30, 2001 from $140.9 million in the nine months ended June 30,
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 nine months ended June 30, 2001.  Pediatric home health care
net revenue increased $2.2 million primarily due to the Company's growth in its
core products.  Adult health care net revenue decreased $5.6 million for the
nine months ended June 30, 2001, primarily as a result of the reduction in non-
core services to the pharmacy and respiratory therapy/home medical equipment
patients.   In the nine months ended June 30, 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 $4.8 million, or 7%, to $61.1 million in the nine months ended June
30, 2001 from $65.9 million in the nine months ended June 30, 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 nine months ended June 30, 2001 decreased to 44% from
47% for the nine months ended June 30, 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 $0.9 million, or 2%, to $51.8 million
in the nine months ended June 30, 2001, from $50.9 million in the nine months
ended June 30, 2000. As a percentage of net revenue, other operating costs for
the nine months ended June 30, 2001 increased to 38% from 36% for the nine
months ended June 30, 2000.

     Corporate, general and administrative costs decreased $0.4 million, or 3%,
to $13.7 million in the nine months ended June 30, 2001, from $14.1 million in
the nine months ended June 30, 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 nine months ended June 30,
2001, was comparable to the nine months ended June 30, 2000.

     Provision for doubtful accounts decreased $3.6 million, or 67%, to $1.8
million in the nine months ended June 30, 2001, from $5.4 million in the nine
months ended June 30, 2000. Cash collections as a percentage of net revenue were
103% and 107% for the nine months ended June 30, 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 $0.5 million, or 8%, to $5.6
million in the nine months ended June

                                       13
<PAGE>

30, 2001 from $6.1 million in the nine months ended June 30, 2000. As a
percentage of the Company's net revenue, depreciation and amortization costs for
the nine months ended June 30, 2001 decreased slightly compared to the nine
months ended June 30, 2000.

     Interest expense decreased $3.2 million, or 51%, to $3.1 million in the
nine months ended June 30, 2001, from $6.4 million in the nine months ended June
30, 2000. The Company's average debt outstanding decreased $37.6 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 $0.1 million in the nine months ended June 30,
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 June 30, 2001, the calculated availability was $22.3
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.

     In the second quarter of fiscal year 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 nine months ended June 30, 2001.

     At June 30, 2001, total borrowings under the Notes were approximately $33.1
million.

     Cash collections as a percentage of net revenue for the three months ended
June 30, 2001 and 2000 were 105% and 112%, 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 capital expenditures 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.

                                       14
<PAGE>

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 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 closed on July 31, 2001 with a
period of expert discovery to follow through December 14, 2001. The Company and
the individuals named as defendants deny that they have violated any of the
requirements or obligations of the Federal Securities Laws.

     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.
On May 2, 2001, the Company and the individuals named as defendants, filed their
answer, denying liability. 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.

                                       15
<PAGE>

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
          -------------------

          On May 24, 2001, the Company filed a Current Report on Form 8-K,
          announcing the resignation of John M. Harrington as Chief Operating
          Officer of the Company.  The Company also announced other management
          changes.

                                       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: August 3, 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