<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, 1999
 
                        Commission File Number 333-57191
 
                    EVEREST HEALTHCARE SERVICES CORPORATION
             (Exact name of registrant as specified in its charter)
 
                Delaware                               36-4045521
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                  AMARILLO ACUTE DIALYSIS SPECIALISTS, L.L.C.
             (Exact name of registrant as specified in its charter)
 
                 Texas                                 75-2600337
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                          CON-MED SUPPLY COMPANY, INC.
             (Exact name of registrant as specified in its charter)
 
                Illinois                               36-3147024
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                         CONTINENTAL HEALTH CARE, LTD.
             (Exact name of registrant as specified in its charter)
 
                Illinois                               36-3084746
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                 DIALYSIS SPECIALISTS OF CORPUS CHRISTI, L.L.C.
             (Exact name of registrant as specified in its charter)
 
                 Texas                                 74-2749663
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                  DIALYSIS SPECIALISTS OF SOUTH TEXAS, L.L.C.
             (Exact name of registrant as specified in its charter)
 
                 Texas                                 74-2749689
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
<PAGE>
 
                              DUPAGE DIALYSIS LTD.
             (Exact name of registrant as specified in its charter)
 
                Illinois                               36-3029873
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                            EVEREST MANAGEMENT, INC.
             (Exact name of registrant as specified in its charter)
 
                Delaware                              Applied for
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                        HEMO DIALYSIS OF AMARILLO L.L.C.
             (Exact name of registrant as specified in its charter)
 
                 Texas                                 75-2592110
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                         HOME DIALYSIS OF AMERICA, INC.
             (Exact name of registrant as specified in its charter)
 
                Arizona                                86-0711476
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                         HOME DIALYSIS OF DAYTON, INC.
             (Exact name of registrant as specified in its charter)
 
                  Ohio                                 31-1423002
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                       LAKE AVENUE DIALYSIS CENTER, INC.
             (Exact name of registrant as specified in its charter)
 
                Indiana                                36-3490713
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                          MERCY DIALYSIS CENTER, INC.
             (Exact name of registrant as specified in its charter)
 
               Wisconsin                               39-1589773
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
<PAGE>
 
                       NEW YORK DIALYSIS MANAGEMENT, INC.
             (Exact name of registrant as specified in its charter)
 
                New York                               36-3702390
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                      NORTH BUCKNER DIALYSIS CENTER, INC.
             (Exact name of registrant as specified in its charter)
 
                Delaware                               36-4206319
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                        NORTHWEST INDIANA DIALYSIS, INC.
             (Exact name of registrant as specified in its charter)
 
                Indiana                                36-3372131
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                       OHIO VALLEY DIALYSIS CENTER, INC.
             (Exact name of registrant as specified in its charter)
 
                Indiana                                36-3575844
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                          WSKC DIALYSIS SERVICES, INC.
             (Exact name of registrant as specified in its charter)
 
                Illinois                               36-2668594
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                        EVEREST NEW YORK HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)
 
                New York                               13-3988854
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
 
                             EVEREST ONE IPA, INC.
             (Exact name of registrant as specified in its charter)
 
                New York                               13-3988854
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                             EVEREST TWO IPA, INC.
             (Exact name of registrant as specified in its charter)
 
                New York                              Applied for
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
<PAGE>
 
                            EVEREST THREE IPA, INC.
             (Exact name of registrant as specified in its charter)
 
                New York                              Applied For
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                     ACUTE EXTRACORPOREAL SERVICES, L.L.C.
             (Exact name of registrant as specified in its charter)
 
                Delaware                               36-4265964
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                DIALYSIS SPECIALISTS OF CENTRAL CINCINNATI, LTD.
             (Exact name of registrant as specified in its charter)
 
                  Ohio                                 31-1499030
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                        HOME DIALYSIS OF FAIRFIELD, INC.
             (Exact name of registrant as specified in its charter)
 
                  Ohio                                 31-1418495
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                        HOME DIALYSIS OF COLUMBUS, INC.
             (Exact name of registrant as specified in its charter)
 
                  Ohio                                 31-1430557
    (State or other jurisdiction of       (I.R.S. Employer Identification No.)
     incorporation or organization)
 
                  101 North Scoville, Oak Park, Illinois 60302
              (Address of principal executive offices) (zip code)
 
       Registrant's telephone number, including area code: (708) 386-1000
 
  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 17, 1999, the number of shares outstanding of the Common Stock of
Everest Healthcare Services Corporation, par value $.001 per share, was
12,884,720.
 
 
 
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
 
                         PART I--FINANCIAL INFORMATION
 
<TABLE>
<CAPTION>
                                                                       Page No.
                                                                       --------
<S>                                                                    <C>
Item 1. Financial Statements
  Consolidated Balance Sheet
     September 30, 1998 and March 31, 1999 (unaudited)................     2
  Consolidated Income Statement--(unaudited)
     For the three months and six months ended March 31, 1998 and
     1999.............................................................     3
  Consolidated Statement of Cash Flow--(unaudited)
     For the three months and six months ended March 31, 1998 and
     1999.............................................................     4
  Notes to the Consolidated Financial Statements......................     5
Item 2. Management's Discussion and Analysis of Financial Condition
 and Results of Operations............................................     9
Item 3. Quantitative and Qualitative Disclosures About Market Risk....    15
 
                           PART II--OTHER INFORMATION
 
Item 1. Legal Proceedings.............................................    16
Item 2. Changes in Securities and Use of Proceeds.....................    16
Item 3. Defaults Upon Senior Securities...............................    16
Item 4. Submission of Matters to a Vote of Security Holders...........    16
Item 5. Other Information.............................................    16
Item 6. Exhibits and Reports on Form 8-K..............................    17
</TABLE>
 
                                       1
<PAGE>
 
--------------------------------------------------------------------------------
                         PART I--FINANCIAL INFORMATION
--------------------------------------------------------------------------------
 
                    EVEREST HEALTHCARE SERVICES CORPORATION
 
                           CONSOLIDATED BALANCE SHEET
 
<TABLE>
<CAPTION>
                                                       September    March 31,
                                                        30, 1998       1999
                                                      ------------ ------------
                                                                   (unaudited)
ASSETS
------
<S>                                                   <C>          <C>
Current assets:
  Cash and cash equivalents.......................... $ 12,525,567 $  4,782,224
  Patient accounts receivable, less allowance of
   $6,481,000 and $7,598,000.........................   41,473,765   47,546,636
  Other current assets...............................   12,072,099   13,526,284
                                                      ------------ ------------
    Total current assets.............................   66,071,431   65,855,144
Other assets:
  Goodwill, net......................................   58,815,302   66,647,338
  Intangible assets, net.............................   26,446,720   25,477,886
  Amounts due from affiliates........................   16,643,738   12,423,947
  Other..............................................    2,983,319    2,304,932
                                                      ------------ ------------
    Total other assets...............................  104,889,079  106,854,103
Property and equipment, net..........................   27,734,949   29,403,309
                                                      ------------ ------------
                                                      $198,695,459 $202,112,556
                                                      ============ ============
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
<S>                                                   <C>          <C>
Current liabilities:
  Accounts payable................................... $  8,845,097 $ 11,460,335
  Accrued liabilities................................   19,148,881   19,335,614
  Current portion of long-term debt..................      606,624      665,437
  Current portion of capital lease obligations.......      506,058      374,406
                                                      ------------ ------------
    Total current liabilities........................   29,106,660   31,835,792
Long-term debt, less current portion ................  108,146,981  107,904,953
Capital lease obligations, less current portion......      311,408      152,163
Deferred income taxes................................    1,500,000    1,500,000
Minority interests...................................    1,374,764    1,803,445
Stockholders' equity:
  Common stock, $.001 par value, 20,000,000 shares
   authorized; 12,884,720 shares issued and
   outstanding.......................................       12,885       12,885
  Additional paid-in capital.........................   55,171,224   55,171,224
  Retained earnings..................................    3,071,537    3,732,094
                                                      ------------ ------------
    Total stockholders' equity.......................   58,255,646   58,916,203
                                                      ------------ ------------
                                                      $198,695,459 $202,112,556
                                                      ============ ============
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       2
<PAGE>
 
                    EVEREST HEALTHCARE SERVICES CORPORATION
 
                    UNAUDITED CONSOLIDATED INCOME STATEMENT
 
<TABLE>
<CAPTION>
                              Three months ended      Six Months Ended March
                                   March 31,                    31,
                            ------------------------  ------------------------
                               1998         1999         1998         1999
                            -----------  -----------  -----------  -----------
<S>                         <C>          <C>          <C>          <C>
Net revenues............... $33,926,024  $43,576,484  $67,531,294  $83,445,170
Operating expenses:
  Patient care costs.......  22,991,869   27,691,973   43,171,207   52,601,863
  General and
   administrative..........   6,218,958    9,114,679   13,124,498   17,278,476
  Provision for bad debts..     769,294    1,286,480    1,920,741    2,123,967
  Depreciation and
   amortization............   1,644,086    2,585,971    3,036,360    4,942,188
                            -----------  -----------  -----------  -----------
    Total operating
     expenses..............  31,624,207   40,679,103   61,252,806   76,946,494
                            -----------  -----------  -----------  -----------
Income from operations.....   2,301,817    2,897,381    6,278,488    6,498,676
Nonoperating income
 (expense):
  Interest expense.........  (1,043,631)  (2,848,112)  (2,201,391)  (5,807,056)
  Interest income..........     308,930      341,734      718,372      876,277
  Equity in earnings of
   unconsolidated
   subsidiaries............     650,966      537,680      650,966      664,340
  Minority interests in
   earnings................      96,819     (223,751)    (532,780)    (523,767)
  Other....................         --       139,246          --       178,834
                            -----------  -----------  -----------  -----------
                                 13,084   (2,053,203)  (1,364,833)  (4,611,372)
                            -----------  -----------  -----------  -----------
Income before income
 taxes.....................   2,314,901      844,178    4,913,655    1,887,304
Income taxes...............   1,168,598      673,891    2,618,598    1,226,747
                            -----------  -----------  -----------  -----------
Net income................. $ 1,146,303  $   170,287  $ 2,295,057  $   660,557
                            ===========  ===========  ===========  ===========
</TABLE>
 
 
 
                See notes to consolidated financial statements.
 
                                       3
<PAGE>
 
                    EVEREST HEALTHCARE SERVICES CORPORATION
 
                 UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
 
<TABLE>
<CAPTION>
                            Three Months Ended             Six Months
                                March 31,                Ended March 31,
                         -------------------------  --------------------------
                             1998         1999          1998          1999
                         ------------  -----------  ------------  ------------
<S>                      <C>           <C>          <C>           <C>
Operating activities:
Net income.............  $  1,146,303  $   170,287  $  2,295,057  $    660,557
Adjustments to
 reconcile net income
 to net cash provided
 by (used in) operating
 activities:
  Provision for bad
   debts...............       769,294    1,286,480     1,920,741     2,123,967
  Depreciation and
   amortization........     1,644,086    2,585,971     3,036,360     4,942,188
  Equity in earnings of
   unconsolidated
   subsidiaries........      (650,966)    (537,680)     (650,966)     (664,340)
  Minority interests in
   earnings............       (96,819)     223,751       532,780       523,767
  Changes in assets and
   liabilities (net
   effect of
   acquisitions):
    Patient and other
     accounts
     receivable........    (1,491,423)  (5,486,658)   (2,199,753)   (6,699,418)
    Other assets.......    (3,661,882)     663,852    (2,338,272)      (13,332)
    Accounts payable,
     accrued
     liabilities and
     other
     liabilities.......     1,585,865    6,289,221     3,244,721     1,687,227
                         ------------  -----------  ------------  ------------
      Net cash provided
       by (used in)
       operating
       activities......      (755,542)   5,195,224     5,840,668     2,560,616
Investing activities:
Additions to property
 and equipment.........      (922,259)  (1,932,693)   (3,253,237)   (3,521,993)
Acquisition of
 businesses, net of
 cash acquired.........   (11,772,505)  (8,708,529)  (11,772,505)   (9,031,529)
(Increase) decrease in
 amounts due from
 affiliates............       424,034      954,040    (1,706,574)    2,825,004
                         ------------  -----------  ------------  ------------
      Net cash used in
       investing
       activities......   (12,270,730)  (9,687,182)  (16,732,316)   (9,728,518)
Financing activities:
Proceeds from notes
 payable to banks......    34,053,574    2,850,000    49,303,574    23,400,000
Payments on notes
 payable to banks......   (19,968,377)  (2,701,067)  (36,328,457)  (23,400,000)
Payments on
 shareholders notes....      (233,658)         --       (233,658)          --
Payments on capital
 leases and installment
 note obligations......         4,392     (389,175)     (566,355)     (575,441)
Distributions to
 members...............           --           --       (600,022)          --
                         ------------  -----------  ------------  ------------
      Net cash provided
       by (used in)
       financing
       activities......    13,855,931     (240,242)   11,575,082      (575,441)
Increase (decrease) in
 cash and cash
 equivalents...........       829,659   (4,732,200)      683,434    (7,743,343)
Cash and cash
 equivalents, beginning
 of period.............     2,310,444    9,514,424     2,456,669    12,525,567
                         ------------  -----------  ------------  ------------
Cash and cash
 equivalents, end of
 period................  $  3,140,103  $ 4,782,224  $  3,140,103  $  4,782,224
                         ============  ===========  ============  ============
Supplemental cash flow
 disclosures:
Distributions of notes
 receivable to
 members...............           --           --     (7,208,831)          --
Issuance of common
 stock to acquire
 minority interests....           --           --    (26,610,000)          --
</TABLE>
 
                See notes to consolidated financial statements.
 
                                       4
<PAGE>
 
                    EVEREST HEALTHCARE SERVICES CORPORATION
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1. Basis of Presentation and Reorganization
 
  Effective November 30, 1997, Peak Healthcare, L.L.C. (Peak), the predecessor
to the Company, was reorganized whereby the following transactions occurred
simultaneously. The members of Peak contributed all of their interests in Peak
for an equal number of membership interests in Peak Liquidating, L.L.C. (Peak
Liquidating), a newly formed limited liability company. The operating agreement
and number and classes of interests of Peak Liquidating were identical to Peak.
Upon the exchange, Peak Liquidating, the sole member of Peak, contributed its
interests in Peak for shares of common stock of Everest Healthcare II, Inc.
(Everest II), a newly-formed subchapter C Corporation. The number of shares of
common stock of Everest II received by Peak Liquidating was equal to the number
of shares of Everest held by Peak. The number and class of authorized shares of
Everest II upon formation was identical to that of Everest. Following the
exchange, Peak was liquidated. Upon the consummation of these transactions,
Everest II issued shares of common stock, representing approximately 30% of the
shares of the Company, to the minority interest holders in Everest in exchange
for their shares of Everest common stock. The acquisition of minority interest
was treated as a purchase in accordance with generally accepted accounting
principles and goodwill of approximately $12.4 million was recognized. Upon the
consummation of these transactions, Everest became a wholly owned subsidiary of
Everest II. In March 1998, Everest was merged into Everest II. Upon the merger,
Everest II (the surviving entity) changed its name to Everest Healthcare
Services Corporation.
 
  All references to the Company or Everest refer collectively to Peak and its
subsidiaries prior to the reorganization, and Everest Healthcare Services
Corporation and its subsidiaries subsequent to the reorganization.
 
2. Interim Financial Statements
 
  The financial information at March 31, 1999 and for the three months and six
months ended March 31, 1998 and 1999 is unaudited but includes all adjustments
(consisting only of normal recurring adjustments) that the Company considers
necessary for a fair presentation of the financial position at such date and
the results of operations and cash flows for those periods. Results of
operations for the six months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the entire year.
 
  The unaudited interim consolidated financial statements have been prepared in
conformity with generally accepted accounting principles and reporting
practices. Certain information in footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles has been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange Commission; however, the Company believes the
disclosures are adequate to make the information not misleading. The unaudited
interim consolidated financial statements contained herein should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company's Form 10-K as filed with the Securities and
Exchange Commission on December 29, 1998.
 
3. New Accounting Standards
 
  In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information" (SFAS 131). The provisions of SFAS 131
establish standards for the way companies report information about operating
segments in annual financial statements and require that such companies report
selected information about operating segments in interim financial reports
issued to shareholders. The provisions of SFAS 131 require the disclosure of
segment information be based on a "management approach" whereby disclosures are
made of information that is available and evaluated regularly by the chief
decision makers of the Company in deciding how to allocate resources and
assessing performance. Application of the provisions of SFAS 131 will be
required for the year ended September 30, 1999. The Company operates in two
business segments; as a provider of chronic dialysis services and as a contract
service provider of extracorporeal services including acute dialysis perfusion,
apheresis, and autotransfusion. The Company believes that the adoption of SFAS
131 will not have a material impact on its future disclosure requirements.
 
                                       5
<PAGE>
 
  In February 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132 (SFAS 132), "Employers' Disclosures
about Pensions and Other Postretirement Benefits." SFAS 132 revises the
previous disclosure requirements of pension and postretirement plans. The
Statement does not change the recognition or measurement of pension plans. The
Company is evaluating the disclosure requirements of SFAS 132 and believes that
its adoption will not have a material impact on its future disclosure
requirements.
 
4. Reclassifications
 
  Certain reclassifications have been made to the prior period's financial
statements to conform to the 1999 presentation.
 
5. Business Combinations
 
  In February 1999, the Company acquired the remaining outstanding equity
interest that it previously had not owned in Dialysis Specialists of Central
Cincinnati, Ltd. (Central Cincinnati), an outpatient dialysis facility located
in Norwood, Ohio. Prior to the acquisition, the Company owned a 37.9% interest
in Central Cincinnati and accounted for the investment under the equity method
of accounting. The purchase price, including costs of the transaction, was
approximately $5.6 million. Goodwill recognized in the acquisition was
approximately $4.7 million.
 
  In February 1999, the Company increased its investment in Dialysis
Specialists of Topeka, Inc. (Topeka) from 25% to 75%. Topeka is an outpatient
dialysis facility located in Topeka, Kansas. Prior to the acquisition, the
Topeka investment was accounted for under the equity method of accounting. The
purchase price, including costs of the transaction, was approximately $1.3
million. Goodwill recognized in the acquisition was approximately $600,000.
 
  In March 1999, the Company acquired the remaining outstanding equity interest
that it previously had not owned in Home Dialysis of Fairfield, Inc.
(Fairfield), a home dialysis facility located in Fairfield, Ohio. Prior to the
acquisition, the Company owned a 50% interest in Fairfield and accounted for
the investment under the equity method of accounting. The purchase price,
including costs of the transaction, was approximately $2.8 million. Goodwill
recognized in the acquisition was approximately $1.9 million.
 
  In March 1999, the Company acquired the remaining outstanding equity interest
that it previously had not owned in Home Dialysis of Columbus, Inc. (Columbus),
an outpatient dialysis facility and a home dialysis facility located in
Columbus, Ohio. Prior to the acquisition, the Company owned a 49% interest in
Columbus and accounted for the investment under the equity method of
accounting. The purchase price, including costs of the transaction, was
approximately $500,000. Goodwill recognized in the acquisition was
approximately $500,000.
 
  These acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the allocation of the cost of the acquired assets and
liabilities has been made on the basis of the estimated fair value. The
consolidated financial statements include the operating results of each
business from the date of acquisition.
 
6. Subsequent Events
 
  In May 1999, the Company acquired the remaining outstanding equity interest
that it previously had not owned in Dialysis Specialists of Tulsa, Inc.
(Tulsa), an outpatient dialysis facility located in Tulsa, Oklahoma. Prior to
the acquisition, the Company owned a 33.33% interest in Tulsa and accounted for
the investment under the equity method of accounting. The purchase price,
including costs of the transaction, was approximately $4.4 million. Goodwill
recognized in the acquisition was approximately $3.0 million.
 
  These acquisitions have been accounted for under the purchase method of
accounting. Accordingly, the allocation of the cost of the acquired assets and
liabilities has been made on the basis of the estimated fair value. The
consolidated financial statements include the operating results of each
business from the date of acquisition.
 
7. Other Financial Information
 
  The Company is a holding company with no independent assets or operations.
Therefore, the Company relies primarily upon payment from its subsidiaries for
the funds necessary to meet its obligations, including the payment of interest.
The ability of the subsidiaries to fund the obligations is subject to
significant restrictions, will be dependent upon the earnings of the
subsidiaries, and will be subject to applicable laws and approval by the
subsidiaries. Full separate statements of the Guarantor Subsidiaries have not
been presented as the guarantors are wholly owned subsidiaries of the Company.
Management does not believe that inclusion of such financial statements would
be material to investors. The guarantees of the Guarantor Subsidiaries are
full, unconditional, and joint and several.
 
                                       6
<PAGE>
 
  The following table sets forth the financial data at March 31, 1999 and for
the six months then ended:
 
<TABLE>
<CAPTION>
                                                                        Non-
                                           Parent      Guarantor     Guarantor
                                          Company     Subsidiaries  Subsidiaries  Eliminations  Consolidated
                                        ------------  ------------  ------------  ------------  ------------
<S>                                     <C>           <C>           <C>           <C>           <C>
Income Statement Data:
 Net revenues.........................  $        --   $ 67,057,072  $16,388,098   $        --   $ 83,445,170
 Patient care costs...................           --     41,512,265   11,089,598            --     52,601,863
 General and administrative expenses..     3,770,417    11,542,750    1,965,309            --     17,278,476
 Provision for bad debts..............           --      1,685,966      438,001            --      2,123,967
 Depreciation and amortization........       991,781     3,252,246      698,161            --      4,942,188
                                        ------------  ------------  -----------   ------------  ------------
 Income (loss) from operations........    (4,762,198)    9,063,845    2,197,029            --      6,498,676
 Interest expense, net................    (4,316,157)      (65,176)    (549,446)           --     (4,930,779)
 Equity in earnings of unconsolidated
  subsidiaries........................           --        664,340          --             --        664,340
 Minority interests in earnings.......           --       (460,518)     (63,249)           --       (523,767)
 Other................................           --        178,834          --             --        178,834
                                        ------------  ------------  -----------   ------------  ------------
 Income (loss) before income tax
  expense.............................    (9,078,355)    9,381,325    1,584,334            --      1,887,304
 Income tax expense...................           --      1,102,827      123,920            --      1,226,747
                                        ------------  ------------  -----------   ------------  ------------
 Net income (loss)....................  $ (9,078,355) $  8,278,498  $ 1,460,414   $        --   $    660,557
                                        ============  ============  ===========   ============  ============
Balance Sheet Data:
 Assets:
 Cash and cash equivalents............  $  2,894,306  $    851,030  $ 1,036,888   $        --   $  4,782,224
 Patient accounts receivable and
  other...............................     1,360,513    43,401,940    7,816,482     (2,226,703)   50,352,232
 Other current assets.................        75,451     8,923,799    1,721,438            --     10,720,688
 Property and equipment, net..........     8,725,154    17,449,388    3,228,767            --     29,403,309
 Goodwill, net........................    12,872,397    38,947,329   14,827,612            --     66,647,338
 Amounts due from affiliates..........    38,485,233   (26,876,395)     815,109            --     12,423,947
 Investment in affiliates.............    50,065,989     6,280,171    1,490,050    (56,534,541)    1,301,669
 Other assets.........................     6,966,270    19,472,286       42,593            --     26,481,149
                                        ------------  ------------  -----------   ------------  ------------
 Total assets.........................  $121,445,313  $108,449,548  $30,978,939   $(58,761,244) $202,112,556
                                        ============  ============  ===========   ============  ============
 Liabilities and Stockholders' Equity:
 Current liabilities..................     9,511,283    13,305,608   10,987,577     (1,968,675)   31,835,792
 Long-term liabilities................   100,118,432     3,307,313    8,192,844       (258,028)  111,360,561
 Total stockholders' equity...........    11,815,598    91,836,627   11,798,518    (56,534,541)   58,916,203
                                        ------------  ------------  -----------   ------------  ------------
 Total liabilities and stockholders'
  equity..............................  $121,445,313  $108,449,548  $30,978,939   $(58,761,244) $202,112,556
                                        ============  ============  ===========   ============  ============
Statement of Cash Flows Data:
 Operating activities:
 Net income (loss)....................  $ (9,078,355) $  8,278,498  $ 1,460,414   $        --   $    660,557
 Adjustments to reconcile net income
  (loss) to net cash provided by
  (used in) operating activities:
  Provision for bad debts.............           --      1,685,966      438,001            --      2,123,967
  Depreciation and amortization.......       991,781     3,252,248      698,161            --      4,942,188
  Equity in earnings of
   unconsolidated subsidiaries........           --       (664,340)         --             --       (664,340)
  Minority interests in earnings......           --        587,016      (63,249)           --        523,767
  Net change in operating assets and
   liabilities (net of effect of
   acquisitions)......................     1,611,298    (4,408,548)  (2,228,273)           --     (5,025,523)
                                        ------------  ------------  -----------   ------------  ------------
  Net cash provided by (used in)
   operating activities...............    (6,475,276)    8,730,838      305,054            --      2,560,616
 Investing activities:
 Additions to property and
  equipment...........................      (274,775)   (2,760,048)    (487,170)           --     (3,521,993)
 Acquisition of businesses, net of
  cash acquired.......................           --     (9,031,529)         --             --     (9,031,529)
 Increase in amounts due from
  affiliates..........................    (1,086,252)    4,247,015     (335,759)           --      2,825,004
                                        ------------  ------------  -----------   ------------  ------------
 Net cash used in investing
  activities..........................    (1,361,027)   (7,544,562)    (822,929)           --     (9,728,518)
 Financing activities:
 Proceeds from notes payable..........    23,400,000           --           --             --     23,400,000
 Payments on notes payable............   (23,400,000)     (575,441)         --             --    (23,975,441)
                                        ------------  ------------  -----------   ------------  ------------
 Net cash used in financing
  activities..........................           --       (575,441)         --             --       (575,441)
Increase (decrease) in cash and cash
 equivalents..........................    (7,836,304)      610,836     (517,875)           --     (7,743,343)
Cash and cash equivalents at beginning
 of period............................    10,730,610       240,194    1,554,763            --     12,525,567
                                        ------------  ------------  -----------   ------------  ------------
Cash and cash equivalents at end of
 period...............................  $  2,894,306  $    851,030  $ 1,036,888   $        --   $  4,782,224
                                        ============  ============  ===========   ============  ============
</TABLE>
 
                                       7
<PAGE>
 
  The following table sets forth the financial data at March 31, 1998 and for
the six months then ended:
 
<TABLE>
<CAPTION>
                                                          Non-
                             Parent      Guarantor     Guarantor
                            Company     Subsidiaries  Subsidiaries  Eliminations Consolidated
                          ------------  ------------  ------------  ------------ ------------
<S>                       <C>           <C>           <C>           <C>          <C>
Income Statement Data:
 Net revenues...........  $        --   $ 54,424,501  $13,106,793      $ --      $ 67,531,294
 Patient care costs.....           --     33,531,091    9,640,116        --        43,171,207
 General and
  administrative
  expenses..............     3,039,699     8,240,974    1,843,825        --        13,124,498
 Provision for bad
  debts.................           --      1,753,825      166,916        --         1,920,741
  Depreciation and
  amortization..........       522,240     2,014,705      499,415        --         3,036,360
                          ------------  ------------  -----------      -----     ------------
  Income (loss) from
  operations............    (3,561,939)    8,883,906      956,521        --         6,278,488
 Interest expense, net..     1,507,906      (616,494)     591,607        --         1,483,019
 Equity in earnings of
  subsidiaries..........           --       (650,966)         --         --          (650,966)
 Minority interests in
  earnings..............           --        415,383      117,397        --           532,780
 Other..................           --          1,936       (1,936)                        --
                          ------------  ------------  -----------      -----     ------------
 Income (loss) before
  income tax expense....    (5,384,845)   10,049,047      249,453        --         4,913,655
 Income tax expense.....           --      2,618,598          --         --         2,618,598
                          ------------  ------------  -----------      -----     ------------
 Net income (loss)......  $ (5,384,845) $  7,430,449  $   249,453      $ --      $  2,295,057
                          ============  ============  ===========      =====     ============
Statement of Cash Flows
 Data:
 Operating activities:
 Net income (loss)......  $ (5,384,845) $  7,430,449  $   249,453      $ --      $  2,295,057
 Adjustments to
  reconcile net income
  (loss) to net cash
  provided by (used in)
  operating activities:
  Provision for bad
   debts................           --      1,753,825      166,916        --         1,920,741
  Depreciation and
   amortization.........       522,240     2,014,685      499,415        --         3,036,340
  Equity in earnings of
   subsidiaries.........           --       (650,966)         --         --          (650,966)
  Minority interests in
   earnings.............           --        415,383      117,397        --           532,780
  Net change in
   operating assets and
   liabilities (net of
   effect of
   acquisitions)........   (48,993,475)   45,601,162    1,469,029        --        (1,293,284)
                          ------------  ------------  -----------      -----     ------------
  Net cash provided by
   (used in) operating
   activities...........   (53,856,080)   56,564,538    2,502,210        --         5,840,668
 Investing activities:
 Additions to property
  and equipment.........      (284,745)   (2,561,376)    (407,116)       --        (3,253,237)
 Acquisition of
  businesses, net of
  cash acquired.........           --    (11,772,505)         --         --       (11,772,505)
 Increase in amounts due
  from affiliates.......     5,286,809    (6,993,383)         --         --        (1,706,574)
                          ------------  ------------  -----------      -----     ------------
 Net cash provided by
  (used in) investing
  activities............     5,002,064   (21,327,264)    (407,116)       --       (16,732,316)
 Financing activities:
 Proceeds from notes
  payable...............    15,250,000    34,053,574          --         --        49,303,574
 Payments on notes
  payable...............   (15,900,000)  (21,228,470)         --         --       (37,128,470)
 Other..................      (600,000)          (22)         --         --          (600,022)
                          ------------  ------------  -----------      -----     ------------
 Net cash provided by
  (used in) financing
  activities............    (1,250,000)   12,825,082          --         --        11,575,082
Increase (decrease) in
 cash and cash
 equivalents............   (49,474,016)   48,062,356    2,095,094        --           683,434
Cash and cash
 equivalents at
 beginning of period....       816,398       316,418    1,323,853        --         2,456,669
                          ------------  ------------  -----------      -----     ------------
Cash and cash
 equivalents at end of
 period.................  $(48,657,618) $ 48,378,774  $ 3,418,947      $ --      $  3,140,103
                          ============  ============  ===========      =====     ============
</TABLE>
 
                                       8
<PAGE>
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
  The following discussion and analysis of the financial condition and results
of operations of the Company should be read in conjunction with the more
detailed information contained in the Consolidated Financial Statements and
notes thereto appearing elsewhere in this Report and in the Company's Report on
Form 10-K for the fiscal year ended September 30, 1998.
 
             CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
 
  This Report contains certain "forward-looking statements" with respect to
results of operations and businesses of the Company. All statements other than
statements of historical facts included in this Report, including those
regarding market trends, the Company's financial position, business strategy,
projected costs, and plans and objectives of management for future operations,
are forward-looking statements. In general, such statements are identified by
the use of forward-looking words or phases including, but not limited to,
"intended," "will," "should," "may," "expects," "anticipates," and
"anticipated" or the negative thereof or variations thereon or similar
terminology. These forward-looking statements are based on the Company's
current expectations. Although the Company believes that the expectations
reflected in such forward-looking statements are reasonable, there can be no
assurance that such expectations will prove to be correct. Because forward-
looking statements involve risks and uncertainties, the Company's actual
results could differ materially. See the "Risk Factors" section of the
Company's Registration Statement on Form S-4 (File No. 333-57191) for a
discussion of certain risks applicable to the Company and its business.
 
Overview
 
  Everest is a leading provider of dialysis and other blood treatment services.
Founded in 1968 and principally owned by nephrologists, the Company has a long-
standing focus on developing strong relationships with physicians to provide
high-quality patient care. The Company is the nation's sixth-largest provider
of chronic dialysis outpatient services and serves over 5,700 patients through
61 facilities in 12 states. Everest also contracts with 102 hospitals in 11
states to provide a broad range of other extracorporeal blood treatment
services, including inpatient acute dialysis, perfusion, apheresis and auto-
transfusion (together, "Contract Services"). Pursuant to management contracts,
Everest provides management services to (i) a physician practice group
comprised of 26 nephrologists, primarily in the Chicago and northwest Indiana
areas, and (ii) certain minority-owned or unaffiliated dialysis facilities. For
the six months ended March 31, 1999, the Company derived 84.3% of its net
revenues from chronic dialysis services, 13.9% from Contract Services and 1.8%
from management services.
 
Sources of Revenues
 
  The Company's net revenues from chronic dialysis services are derived from:
(i) in-center dialysis and home dialysis services including drugs and supplies;
and (ii) management contracts with hospital-based and other outpatient dialysis
programs. The majority of the Company's in-center and home dialysis services
are paid for under the Medicare End-Stage Renal Disease ("ESRD") program in
accordance with rates established by the Health Care Financing Administration
("HCFA"). Additional payments are provided by other third-party payors
(particularly by employer group health plans during the first thirty months of
treatment), generally at rates higher than those reimbursed by Medicare.
Everest is currently seeking to expand the portion of its revenues attributable
to non-government payors by entering into contracts with managed care companies
and other private payors. Because dialysis is an ongoing, life-sustaining
therapy used to treat a chronic condition, utilization of the Company's chronic
dialysis services is generally predictable and not subject to seasonal or
economic fluctuations. ESRD patients may receive up to 156 dialysis treatments
per year; however, due to hospitalization and no shows the Company's average
number of treatments per patient per year is 136. Unless the patient moves to
another dialysis facility, receives a kidney transplant or dies, the revenues
generated per patient per year can be estimated with reasonable accuracy.
 
                                       9
<PAGE>
 
  The Company's Contract Services revenues are derived from acute dialysis,
perfusion, apheresis and auto-transfusion services provided to hospitalized
patients pursuant to contracts with hospitals. Rates paid for such services are
negotiated with individual hospitals. Because extracorporeal blood treatment
services are required for patients undergoing major surgical procedures,
utilization of the Company's Contract Services is not subject to seasonal or
economic fluctuations.
 
  The Company's revenues also include fees paid under management services
contracts. Management service fee revenue is recognized when earned. Management
service fees are based on contracted rates. The contracted rates are estimates
based upon the cost of services provided such as billing, accounting, technical
support, cash management and facilities management.
 
Acquisitions
 
  Acquisitions of dialysis and Contract Services providers have been recorded
under purchase accounting with the purchase price being principally allocated
to fixed assets, accounts receivable and inventory based on respective
estimated fair market values at the date of acquisition. Any excess of the
purchase price over the fair value of identifiable assets (including
identifiable intangible assets) is allocated to goodwill, which is amortized
over 25 years. The results of these acquisitions have been included in the
results of operations from their respective acquisition dates. The Company
regularly evaluates the potential acquisition of, and holds discussions with,
various potential acquisition candidates; as a general rule, the Company does
not intend to publicly announce such acquisitions until a definitive agreement
has been reached.
 
  During the three months ended March 31, 1999, the Company acquired additional
equity in four entities in which it previously held a minority interest: (1)
Dialysis Specialists of Topeka, Inc., which owns one outpatient and home
dialysis facility in Topeka, Kansas (the Company's interest was increased from
25.0% to 75.0%); (2) Dialysis Specialists of Central Cincinnati, Ltd., which
owns one outpatient and home dialysis facility in Norwood, Ohio (the Company's
interest was increased from 37.9% to 100.0%); (3) Home Dialysis of Fairfield,
Inc., which owns one outpatient and home dialysis facility in Fairfield, Ohio
(the Company's interest was increased from 50.0% to 100.0%); and (4) Home
Dialysis of Columbus, Inc., which owns two outpatient and home dialysis
facilities in Columbus, Ohio (the Company's interest was increased from 49.0%
to 100.0%). These acquisitions represent 79 stations and approximately 356
patients in the aggregate. In May 1999, the Company acquired the remaining
equity interests in Dialysis Specialists of Tulsa, Inc. The Company's interest
was increased from 33.33% to 100.0%. This acquisition represents 21 stations
and 136 patients.
 
Results of Operations
 
Three Months Ended March 31, 1999 Compared to Three Months Ended March 31, 1998
 
  Net Revenues. Net revenues increased $9.7 million or 28.6% to $43.6 million
for the three months ended March 31, 1999 from $33.9 million for the three
months ended March 31, 1998. This increase resulted primarily from a 23.7%
increase in the number of treatments to 159,467 for the three months ended
March 31, 1999 from 128,871 for the three months ended March 31, 1998. This
growth in treatments is the result of the acquisition and development of
various dialysis facilities and a 7.8% increase in same store treatments for
the three months ended March 31, 1999 over the three months ended March 31,
1998. The average net revenue per treatment increased from $224 for the three
months ended March 31, 1998 to $232 for the three months ended March 31, 1999.
The remaining increase in net revenues is attributable to the acquisition of a
Contract Services business and increases in the acute and extracorporeal
hospital services.
 
  Patient Care Costs. Patient care costs consist of costs directly related to
the care of patients, including direct and indirect labor, drugs and other
medical supplies and operational costs of the facilities. Patient care costs
increased $4.7 million or 20.4% to $27.7 million for the three months ended
March 31, 1999 from $23.0 million for the three months ended March 31, 1998.
This increase resulted primarily from an increase in the number of treatments
performed during the period that caused a corresponding increase in the use of
labor,
 
                                       10
<PAGE>
 
drugs and supplies. Patient care costs as a percentage of net revenues
decreased from 67.8% in the second quarter of fiscal 1998 to 63.6% in the
second quarter of fiscal 1999.
 
  General and Administrative Expenses. General and administrative expenses
include corporate office costs and other administrative costs including
accounting, billing, quality assurance, facility costs, treasury and
information systems. General and administrative expenses increased $2.9 million
or 46.8% to $9.1 million for the three months ended March 31, 1999 from $6.2
million for the three months ended March 31, 1998. This increase is mainly
attributable to the continued growth of the corporate infrastructure, including
the expansion of information systems and Year 2000 costs.
 
  Provision for Bad Debts. The Company provides for doubtful accounts in the
same period that revenue is recognized based on management's estimate of the
collectibility of the accounts receivable based upon several factors such as
payor mix and billing practices. Provision for bad debts increased $517,000 or
67.2% to $1.3 million for the three months ended March 31, 1999 from $769,000
for the three months ended March 31, 1998. This increase was a result of the
timing of the bad debt provision in fiscal 1998. The Company significantly
increased its provision for bad debts during the first quarter of fiscal 1998.
As a result, the increases in the reserve over the remainder of fiscal 1998
were not as significant.
 
  Depreciation and amortization. Depreciation and amortization increased
approximately $1.0 million or 62.5% to $2.6 million for the three months ended
March 31, 1999 from $1.6 million for the three months ended March 31, 1998. The
increase was due to increased amortization of goodwill as a result of business
acquisitions (including the purchase of minority interests).
 
  Income from Operations. Income from operations increased approximately
$600,000 or 26.1% to $2.9 million for the three months ended March 31, 1999
from $2.3 million for the three months ended March 31, 1998. Income from
operations as a percentage of net revenues decreased slightly to 6.6% for the
three months ended March 31, 1999 as compared to 6.7% for the three months
ended March 31, 1998.
 
  Interest Expense, Net. Interest expense, net of interest income, increased
$1.8 million or 244.8% to $2.5 million for the three months ended March 31,
1999 from $735,000 for the three months ended March 31, 1998. The increase in
interest expense, net of interest income, was attributable to the interest
associated with the senior subordinated debt and the amortization of deferred
financing costs. This increase was offset by a decrease in the net borrowings
under the Credit Facility.
 
  Equity in Earnings of Subsidiaries. Equity in earnings of subsidiaries
represents the Company's portion of earnings in unconsolidated joint ventures.
The Company recognized equity in earnings of subsidiaries of approximately
$538,000 for the three months ended March 31, 1999 as compared to $651,000 for
the six months ended March 31, 1998.
 
  Minority Interests in Earnings. Minority interests in earnings represents the
proportionate equity interests of other partners in the Company's consolidated
entities that are not wholly owned. The minority interests in earnings
increased approximately $321,000 or 331% to $224,000 for the three months ended
March 31, 1999 as compared to $(97,000) for the three months ended March 31,
1998. This is due to an increase in the earnings of majority owned entities.
 
  Income Taxes. Income taxes decreased approximately $495,000 or 41.3% to
$674,000 for the three months ended March 31, 1999 from $1.2 million for the
three months ended March 31, 1998 as a result of the factors discussed above.
 
Six Months Ended March 31, 1999 Compared to Six Months Ended March 31, 1998
 
  Net Revenues. Net revenues increased $15.9 million or 23.6% to $83.4 million
for the six months ended March 31, 1999 from $67.5 million for the six months
ended March 31, 1998. This increase resulted primarily
 
                                       11
<PAGE>
 
from a 26.1% increase in the number of treatments from 247,571 for the six
months ended March 31, 1998 to 312,123 for the six months ended March 31, 1999.
This growth in treatments is the result of the acquisition and development of
various dialysis facilities and an 8.2% increase in same store treatments for
the six months ended March 31, 1999 over the six months ended March 31, 1998.
The net revenue per treatment remained relatively constant at $227 per
treatment for the six months ended March 31, 1999 versus $228 per treatment for
the six months ended March 31, 1998. Factoring in the contractual adjustments
of $1.4 million which occurred in the first quarter of fiscal 1999, the average
net revenue per treatment would have increased from $228 in the second quarter
of fiscal 1998 to $232 in the second quarter of fiscal 1999. The remaining
increase in net revenues is attributable to the acquisition of a Contract
Services business and increases in the acute and extracorporeal hospital
services.
 
  Patient Care Costs. Patient care costs consist of costs directly related to
the care of patients, including direct and indirect labor, drugs and other
medical supplies and operational costs of the facilities. Patient care costs
increased $9.4 million or 21.8% to $52.6 million for the six months ended March
31, 1999 from $43.2 million for the six months ended March 31, 1998. This
increase resulted primarily from an increase in the number of treatments
performed during the period that caused a corresponding increase in the use of
labor, drugs and supplies. Patient care costs as a percentage of net revenues
decreased marginally from 63.9% for the six months ended March 31, 1998 to
63.0% for the six months ended March 31, 1999.
 
  General and Administrative Expenses. General and administrative expenses
include corporate office costs and other administrative costs including
accounting, billing, quality assurance, facility costs, treasury and
information systems. General and administrative expenses increased $4.2 million
or 32.1% to $17.3 million for the six months ended March 31, 1999 from $13.1
million for the six months ended March 31, 1998. This increase is mainly
attributable to the continued growth of the corporate infrastructure, including
the expansion of information systems and Year 2000 costs.
 
  Provision for Bad Debts. The Company provides for doubtful accounts in the
same period that revenue is recognized based on management's estimate of the
collectibility of the accounts receivable based upon several factors such as
payor mix and billing practices. Provision for bad debts increased $203,000 or
10.7% to $2.1 million for the six months ended March 31, 1999 from $1.9 million
for the six months ended March 31, 1998.
 
  Depreciation and Amortization. Depreciation and amortization increased
approximately $1.9 million or 63.3% to $4.9 million for the six months ended
March 31, 1999 from $3.0 million for the six months ended March 31, 1998. The
increase was due to increased amortization of goodwill as a result of business
acquisitions (including the purchase of minority interests) and due to
increased depreciation expense as a result of fixed asset purchases and the
development of facilities.
 
  Income from Operations. Income from operations improved slightly to $6.5
million for the six months ended March 31, 1999 from $6.3 million for the six
months ended March 31, 1998. However, income from operations as a percentage of
net revenues decreased to 7.8% for the six months ended March 31, 1999 as
compared to 9.3% for the six months ended March 31, 1998. This decrease was
mainly attributable to the increase in depreciation and amortization expense.
 
  Interest Expense, Net. Interest expense, net of interest income, increased
$3.4 million or 226% to $4.9 million for the six months ended March 31, 1999
from $1.5 million for the six months ended March 31, 1998. The increase in
interest expense, net of interest income, was attributable to the interest
associated with the senior subordinated debt and the amortization of deferred
financing costs. This increase was offset by a decrease in the net borrowings
under the Credit Facility.
 
  Equity in Earnings of Subsidiaries. Equity in earnings of subsidiaries
represents the Company's portion of earnings in unconsolidated joint ventures.
The Company recognized equity in earnings of subsidiaries of approximately
$664,000 for the six months ended March 31, 1999 as compared to $651,000 for
the six months ended March 31, 1998.
 
                                       12
<PAGE>
 
  Minority Interests in Earnings. Minority interests in earnings represents the
proportionate equity interests of other partners in the Company's entities that
are not wholly owned. The minority interests in earnings increased
approximately $9,000 to $524,000 for the six months ended March 31, 1999 as
compared to $533,000 for the six months ended March 31, 1998.
 
  Income Taxes. Income taxes decreased approximately $1.4 million or 53.8% to
$1.2 million for the six months ended March 31, 1999 from $2.6 million for the
six months ended March 31, 1998 as a result of the factors discussed above.
 
Year 2000 Compliance by the Company and Others
 
  Year 2000 compliance concerns the ability of certain computerized information
systems to properly recognize date-sensitive information as the year 2000
approaches. Systems that do not recognize such information could generate
erroneous data or cause systems to fail; this problem may occur as early as
calendar year 1999. The Company is at risk both for its own Year 2000
compliance and for the Year 2000 compliance of those with whom it does
business, particularly third party payors.
 
  The Company has established a Year 2000 Task Force to study and address Year
2000 issues. The Task Force consists of the Company's Director of Technology
and Chief Information Officer, and representatives from all major areas of the
Company, including facilities, Bio-Med, purchasing, telecommunications and
technology. The Task Force is divided into several sub-Task Forces, each with a
separate function. The Task Force meets weekly where all sub-Task Forces report
progress. The Company has also hired four consultants that devote full time
attention to Year 2000 issues.
 
  The Task Force has formulated and begun to implement a plan with six stages,
as follows: (1) awareness, (2) inventory, (3) impact analysis, (4) remediation,
(5) testing and (6) implementation.
 
  "Awareness" involves the education of our employees and is an ongoing process
that will continue past January 2000. "Inventory" involves taking stock of our
systems, a process that is underway and progressing through each unit and
corporate office. "Impact analysis" involves determining which items are not
Year 2000 compliant and how they will affect the Company's business.
"Remediation" is the process of determining what to do with non-compliant
items. Options are to fix the problem, replace the item with new software or
equipment or retire the item. "Testing" involves verifying that the fixed or
replaced item is now Year 2000 compliant. "Implementation" is the process of
placing the tested item into production. Phases (1) through (5) are currently
in progress; the Company's goal is to complete all phases and be Year 2000
compliant by June 30, 1999. Contingency planning will commence in the third
quarter of fiscal 1999.
 
  The Company has five major information technology systems, the present
compliance of which is described below:
 
    1. Client tracking system. This system is Year 2000 compliant.
 
    2. Accounting package. The existing accounting package is not Year 2000
  compliant. A Year 2000 upgrade will be available in the third quarter of
  fiscal 1999 and will be installed at that time.
 
    3. Interim accounting package for Contract Services. This package is Year
  2000 compliant.
 
    4. Physician billing. The Company installed a new billing system which is
  Year 2000 compliant.
 
    5. Facilities billing. This system is not yet Year 2000 compliant. It has
  been analyzed, and arrangements are being made with the vendor to upgrade
  the system.
 
  These systems would have been upgraded or replaced to support Company growth
irrespective of the Year 2000 issue. The process of upgrading or replacing
these systems was not accelerated by Year 2000 considerations.
 
                                       13
<PAGE>
 
  The Company has started a full review of the Year 2000 compliance of its non-
information technology systems (i.e., embedded technology such as micro-
controllers).
 
  The Company anticipates that the total amounts it will expend on Year 2000
issues are as follows:
 
<TABLE>
      <S>                                                            <C>
      Consultants................................................... $  750,000
      Hardware......................................................    558,000
      Software......................................................    165,000
      Bio-Med Embedded Technology...................................    100,000
                                                                     ----------
          Total..................................................... $1,573,000
                                                                     ==========
</TABLE>
 
Approximately 20% of the Year 2000 budget has been spent through the second
quarter of fiscal 1999. The Company anticipates that the majority of its
systems will be Year 2000 compliant by the fiscal year ended September 30,
1999.
 
  Management believes that the most significant risk to the Company of Year
2000 issues is the effect such issues may have on third-party payors, such as
Medicare. With respect to Medicare payments, neither HCFA nor its fiscal
intermediaries have any contingency plan in place. However, HCFA has mandated
that its fiscal intermediaries submit a draft of their contingency plans to it
and that they be prepared to ensure that no interruption of Medicare payments
results from Year 2000 related failures of their systems. The Task Force has
begun to consider worst case scenarios and is currently working on contingency
plans to deal with those scenarios.
 
  There can be no assurance that Year 2000 issues will not have a material
adverse effect on the Company's business, results of operations and financial
condition.
 
Liquidity and Capital Resources
 
  The Company requires capital primarily for the acquisition and development of
dialysis centers and Contract Services businesses, the purchase of property and
equipment for existing centers and to finance working capital requirements. At
March 31, 1999, the Company's working capital was $34.0 million.
 
  The Company's net cash provided by operating activities was $2.6 million for
the six months ended March 31, 1999. Cash provided by operating activities
consists of net income increased by non-cash expenses such as depreciation,
amortization and the provision for bad debts and adjusted by the changes in
components of working capital, primarily receivables, payables and accrued
expenses. The Company's net cash used in investing activities was $9.7 million
for the six months ended March 31, 1999. The Company's principal sources and
uses of cash consist of investing activities related to purchases of new
equipment and leasehold improvements for existing dialysis centers, the
purchase of majority interests in four dialysis centers and a decrease in net
advances due from affiliated entities. Net cash used in financing activities
was approximately $575,000 for the six months ended March 31, 1999. The primary
sources and uses of cash from financing activities were net borrowings or
repayments under the Company's Credit Facility.
 
  The Company does not have any current material commitments for capital
expenditures.
 
  The Company has in place a Credit Facility (the "Credit Facility") with
Harris Trust and Savings Bank, individually and as agent for a syndicate of
banks. The Credit Facility consists of two separate facilities: (i) a $35.0
million revolving credit facility maturing on May 15, 2001, which may be
extended for two one-year periods at the issuing bank's discretion (the
"Working Capital Facility"); and (ii) a $70.0 million acquisition financing
facility maturing on June 15, 1999 (the "Acquisition Facility"), which includes
the right to convert all or a portion of the borrowings outstanding thereunder
to one or more five-year term loans (the "Term Loans"). The total amount drawn
under the Credit Facility may not exceed $100.0 million. The Credit Facility
contains operating and financial covenants, including, without limitation,
requirements to maintain leverage and debt service coverage ratios and minimum
tangible net worth. In addition, the Credit Facility includes customary
covenants relating to the delivery of financial statements, reports, notices
and other information, access to information and properties, maintenance
 
                                       14
<PAGE>
 
of insurance, payment of taxes, maintenance of assets, nature of business,
corporate existence and rights, compliance with applicable laws, including
environmental laws, transactions with affiliates, use of proceeds, limitation
on indebtedness, limitations on liens, limitations on certain mergers and sales
of assets, limitations on stock repurchases, and limitations on debt payments
and other distributions including prepayment or redemption of the Company's
senior subordinated notes. The Credit Facility contains certain events of
default after expiration of applicable grace periods, including defaults
relating to: (i) nonpayment of principal, interest, fees or other accounts;
(ii) violation of covenants; (iii) material inaccuracy of representations and
warranties; (iv) bankruptcy; (v) material judgments; (vi) certain ERISA
liabilities; and (vii) actual or asserted invalidity of any loan documents. The
Company received a waiver pertaining to compliance with a financial covenant of
the Credit Facility for the period ended March 31, 1999.
 
  In November 1996, the Company issued notes in the aggregate principal amount
of $7.0 million as part of the purchase price for its acquisition of The
Extracorporeal Alliance. The notes bear interest at a variable rate equal to
the five-year Treasury note rate plus three percent and mature on October 31,
2002.
 
  A significant component of the Company's growth strategy is the acquisition
and development of dialysis centers and the acquisition of Contract Services
businesses. The Company believes that the remaining net proceeds from the
offering of its senior subordinated notes (described in Part II, Item 2),
existing cash and funds from operations, together with funds available under
the New Credit Facility, will be sufficient to meet the Company's acquisition,
development, expansion, capital expenditure and working capital needs for at
least the next twelve months. In order to finance certain strategic acquisition
opportunities, the Company may from time to time incur additional short and
long-term bank indebtedness and may issue equity or debt securities, the
availability and terms of which will depend on market and other conditions.
There can be no assurance that the Company will be successful in implementing
its growth strategy or that adequate sources of capital will be available in
the future as needed on terms acceptable to the Company.
 
Impact of Inflation
 
  A substantial portion of the Company's net revenues is subject to
reimbursement rates that are regulated by the federal government and do not
automatically adjust for inflation. The Company is unable to increase the
amount it receives for the services provided by its dialysis businesses that
are reimbursed under the Medicare composite rate. Increased operating costs due
to inflation, such as labor and supply costs, without a corresponding increase
in reimbursement rates, may adversely affect the Company's earnings in the
future. However, part of the Company's growth strategy is to acquire additional
Contract Services businesses which are not directly dependent on reimbursement
from government agencies. In addition, the Company believes that the effect of
inflation is further mitigated by a recent change in current governmental
health care laws that extends the coordination of benefits period for ESRD
patients who are covered by an employer group health plan from 18 to 21 months
to 30 to 33 months before Medicare becomes the primary payor.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
  The Company does not engage in hedging or other market structure derivative
trading activities. Additionally, the Company's debt obligations are primarily
fixed-rate in nature and, as such, are not sensitive to changes in interest
rates. The Company does not believe that its market risk financial instruments
on March 31, 1999 would have a material effect on future operations or cash
flow.
 
                                       15
<PAGE>
 
--------------------------------------------------------------------------------
                           PART II--OTHER INFORMATION
--------------------------------------------------------------------------------
 
ITEM 1. LEGAL PROCEEDINGS
 
  The Company is subject to claims and suits in the ordinary course of
business, including those arising from patient treatment. The Company believes
it will be covered by malpractice insurance with respect to these claims and
does not believe that the ultimate resolution of pending proceedings will have
a material adverse effect on the Company. However, claims against the Company,
regardless of their merit or eventual outcome, could require management to
devote time to matters unrelated to the operation of the Company's business,
and may also have a material adverse effect on the Company's ability to attract
patients or expand its business.
 
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
 
  (a) Not applicable.
 
  (b) Not applicable.
 
  (c) Not applicable.
 
  (d) On May 5, 1998, the Company sold (the "Initial Offering") its
$100,000,000 9 3/4% Senior Subordinated Notes due 2008, Series A (the "Private
Notes"). On October 2, 1998, the Company delivered in exchange (the "Exchange")
for the Private Notes its $100,000,000 9 3/4% Senior Subordinated Notes due
2008, Series B (the "Notes"). The net proceeds to the Company from the Initial
Offering were $95.2 million, after deducting the initial purchaser's discount
and offering expenses. The Company used $48.4 million of the net proceeds to
repay indebtedness under the Company's prior credit facility that bore interest
at a weighted average rate of 8.99% per annum as of June 30, 1998 and was to
mature in May 2000. $7.2 million of the net proceeds were used to repay loans
made to the Company by certain of its shareholders. $5.1 million of these loans
bore interest at the prime rate plus 1% per annum and matured at various times
throughout 1998. $2.1 million of these loans bore interest at the prime rate
plus 1% per annum and matured on November 29, 2000. The Company used $19.2
million of net proceeds to acquire a management services agreement and $4.7
million to acquire land and buildings. The Company used approximately $10.0
million to acquire controlling interests in four dialysis facilities.
Additionally, the Company used $5.4 million for working capital purposes. The
remaining $300,000 of net proceeds will be used for working capital and general
corporate purposes. Pending such uses, the net proceeds have been and will be
invested in cash and cash equivalents.
 
ITEM 3. NOT APPLICABLE
 
ITEM 4. NOT APPLICABLE
 
ITEM 5. NOT APPLICABLE
 
                                       16
<PAGE>
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
  (a) Exhibits
 
<TABLE>
<CAPTION>
     Exhibit
     No.       Exhibit
     -------   -------
     <C>       <S>
     3.46      Articles of Organization of Dialysis Specialists of Central
               Cincinnati, Ltd.
     3.47      Articles of Incorporation of Home Dialysis of Fairfield, Inc.
 
     3.48      Code of Regulations of Home Dialysis of Fairfield, Inc.
 
     3.49      Articles of Incorporation of Home Dialysis of Columbus, Inc.
 
     3.50      Code of Regulations of Home Dialysis of Columbus, Inc.
 
     4.13      Supplemental Indenture dated as of June 18, 1998, between
               Everest New York Holdings, Inc. and American National Bank and
               Trust Company of Chicago, as trustee (the "Trustee")
 
     4.14      Supplemental Indenture dated as of June 18, 1998, between
               Everest One IPA, Inc. and the Trustee
 
     4.15      Supplemental Indenture dated as of December 1, 1998, between
               Everest Two IPA, Inc. and the Trustee
 
     4.16      Supplemental Indenture dated as of December 1, 1998, between
               Everest Three IPA and the Trustee
 
     4.17      Supplemental Indenture dated as of December 1, 1998, between
               Acute Extracorporeal Services, L.L.C. and the Trustee
 
     4.18      Supplemental Indenture dated as of February 28, 1999, between
               Dialysis Specialists of Central Cincinnati, Ltd. and the Trustee
 
     4.19      Supplemental Indenture dated as of March 1, 1999, between Home
               Dialysis of Fairfield, Inc. and the Trustee
 
     4.20      Supplemental Indenture dated as of March 1, 1999, between Home
               Dialysis of Columbus, Inc. and the Trustee
     4.21      Third Amendment to Second Amended and Restated Credit Agreement.
     27        Financial Data Schedule.
</TABLE>
 
  (b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
 
                                       17
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest Healthcare Services
                                           Corporation
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       18
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Amarillo Acute Dialysis Specialists,
                                           L.L.C.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       19
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Con-Med Supply Company, Inc.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       20
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Continental Health Care, Ltd.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       21
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Dialysis Specialists of Corpus
                                           Christi, L.L.C.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       22
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Dialysis Specialists of South Texas,
                                           L.L.C.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       23
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          DuPage Dialysis Ltd.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       24
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest Management, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       25
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Hemo Dialysis of Amarillo, L.L.C.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       26
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Home Dialysis of America, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       27
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Home Dialysis of Dayton, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       28
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Lake Avenue Dialysis Center, Inc.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       29
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Mercy Dialysis Center, Inc.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       30
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          New York Dialysis Management, Inc.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       31
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          North Buckner Dialysis Center, Inc.
 
                                                   /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                                Chairman and Chief Executive
                                                           Officer
 
                                                   /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                   Chief Financial Officer
 
                                       32
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Northwest Indiana Dialysis, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       33
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Ohio Valley Dialysis Center, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       34
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          WSKC Dialysis Services, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       35
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest New York Holdings, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       36
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest One IPA, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       37
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest Two IPA, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       38
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Everest Three IPA, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       39
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Acute Extracorporeal Services,
                                           L.L.C.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               Chairman and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
                                       40
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                         Dialysis Specialists of Central
                                          Cincinnati, Ltd.
 
                                                  /s/ Craig W. Moore
                                         By: __________________________________
                                                      Craig W. Moore
                                              President and Chief Executive
                                                         Officer
 
                                                  /s/ John B. Bourke
                                         By: __________________________________
                                                      John B. Bourke
                                                 Chief Financial Officer
 
 
                                       41
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Home Dialysis of Fairfield, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               President and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       42
<PAGE>
 
                                   SIGNATURES
 
  Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized, on the 17th day of
May, 1999.
 
                                          Home Dialysis of Columbus, Inc.
 
                                                  /s/ Craig W. Moore
                                          By: _________________________________
                                                       Craig W. Moore
                                               President and Chief Executive
                                                          Officer
 
                                                  /s/ John B. Bourke
                                          By: _________________________________
                                                       John B. Bourke
                                                  Chief Financial Officer
 
 
                                       43
<PAGE>
 
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
 Exhibit
 No.       Exhibit
 -------   -------
 <C>       <S>
           Articles of Organization of Dialysis Specialists of Central
 3.46      Cincinnati, Ltd.
 3.47      Articles of Incorporation of Home Dialysis of Fairfield, Inc.
 3.48      Code of Regulations of Home Dialysis of Fairfield, Inc.
 3.49      Articles of Incorporation of Home Dialysis of Columbus, Inc.
 3.50      Code of Regulations of Home Dialysis of Columbus, Inc.
 4.13      Supplemental Indenture dated as of June 18, 1998, between Everest
           New York Holdings, Inc. and American National Bank and Trust Company
           of Chicago, as trustee (the "Trustee")
 4.14      Supplemental Indenture dated as of June 18, 1998, between Everest
           One IPA, Inc. and the Trustee
 4.15      Supplemental Indenture dated as of December 1, 1998, between Everest
           Two IPA, Inc. and the Trustee
 4.16      Supplemental Indenture dated as of December 1, 1998, between Everest
           Three IPA and the Trustee
 4.17      Supplemental Indenture dated as of December 1, 1998, between Acute
           Extracorporeal Services, L.L.C. and the Trustee
 4.18      Supplemental Indenture dated as of February 28, 1999, between
           Dialysis Specialists of Central Cincinnati, Ltd. and the Trustee
 4.19      Supplemental Indenture dated as of March 1, 1999, between Home
           Dialysis of Fairfield, Inc. and the Trustee
 4.20      Supplemental Indenture dated as of March 1, 1999, between Home
           Dialysis of Columbus, Inc. and the Trustee
 4.21      Third Amendment to Second Amended and Restated Credit Agreement
 27        Financial Data Schedule.
</TABLE>
 
                                       44