UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 2002

                                       OR
            [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                  For the transition period from to ___________
                         Commission File Number 0-31014

                               HEALTHEXTRAS, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
     <S>                                  <C>

               Delaware                             52-2181356
    -------------------------------      ---------------------------------------
    (State or other jurisdiction of      (I.R.S. Employer Identification Number)
    incorporation or organization)

</TABLE>


          2273 Research Boulevard, 2nd Floor, Rockville, Maryland 20850
          -------------------------------------------------------------
               (Address of principal executive offices, zip code)

                                 (301) 548-2900
                                 --------------
                (Registrant's phone number, including area code)

                                 Not Applicable
                                 --------------
              (Former name, former address and former fiscal year,
                          if changed since last report)




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
                                             ----

Indicate the number of shares  outstanding  of each of the issuer's  classes of
common stock, as of the last practicable date.


The number of shares of common stock, par value $.01 per share,  outstanding on
May 14, 2002 was 33,053,220.


<PAGE>


<PAGE>





                               HEALTHEXTRAS, INC.

                          First Quarter 2002 Form 10-Q
                          ----------------------------


                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
PART I   FINANCIAL INFORMATION

                                                                        Page
                                                                        ----
<S>                                                                    <C>
 Item 1.     Financial Statements

 Consolidated Balance Sheets as of December 31, 2001
   and March 31, 2002 (Unaudited).........................................1

 Consolidated Statements of Operations for the Three
   Months Ended March 31, 2001 and 2002 (Unaudited).......................2

 Consolidated Statements of Cash Flows for the Three Months Ended
      March 31, 2001 and 2002 (Unaudited).................................3

 Notes to Financial Statements............................................4

 Item 2.     Management's Discussion and Analysis of Financial Condition
              and Results of Operations...................................5

  Item 3.    Quantitative and Qualitative Disclosures About Market
              Risk.......................................................10

PART II  OTHER INFORMATION

SIGNATURES
</TABLE>



<PAGE>

PART 1.  FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS
-------  --------------------


                               HEALTHEXTRAS, INC.
                          CONSOLIDATED BALANCE SHEETS


<TABLE>

                                                         December 31,    March 31,
                                                           2001            2002
                                                       ------------    ------------
                                                                       (unaudited)
<S>                                                    <C>             <C>
ASSETS
Current assets:
  Cash and cash equivalents ........................   $ 33,009,143    $ 31,008,929
  Accounts receivable, net .........................     22,410,968      22,015,962
  Deferred charges:
    Direct .........................................      1,204,526       1,279,191
    Marketing and promotion ........................        881,832       2,795,439
  Other current assets .............................        653,627         502,469
                                                       ------------    ------------
      Total current assets .........................     58,160,096      57,601,990
Fixed assets, net ..................................      5,056,235       4,929,644
Intangible assets, net .............................      4,449,487       5,382,940
Goodwill, net ......................................     17,566,866      21,458,074
Restricted cash ....................................      1,000,000       1,000,000
Other assets .......................................      1,920,651       1,301,537
                                                       ------------    ------------
      Total assets .................................   $ 88,153,335    $ 91,674,185
                                                       ============    ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .................................   $ 25,708,968    $ 20,961,131
  Accrued expenses and other current liabilities ...      3,270,967       2,967,626
  Notes payable ....................................      8,883,069      17,780,000
  Deferred revenue .................................      4,509,055       4,558,583
                                                       ------------    ------------
      Total liabilities ............................     42,372,059      46,267,340
                                                       ------------    ------------

Minority interest ..................................        543,800            --

Stockholders' equity:
  Preferred stock, $0.01 par value, 5,000,000 shares
    authorized, none issued ........................             --            --
  Common stock, $0.01 par value, 100,000,000 shares
    authorized, 31,868,012 and 31,959,087 shares
    issued and outstanding at December 31, 2001
    and March 31, 2002, respectively ...............        318,680         319,591
  Additional paid-in capital .......................     69,747,302      69,302,829
  Deferred compensation ............................       (107,665)        (78,442)
  Retained earnings (accumulated deficit) ..........    (24,720,841)    (24,137,133)
                                                       ------------    ------------
      Total stockholders' equity ...................     45,237,476      45,406,845
                                                       ------------    ------------
      Total liabilities and stockholders' equity ...   $ 88,153,335    $ 91,674,185
                                                       ============    ============
</TABLE>

   The accompanying notes are an integral part of these financial statements

                                       1



<PAGE>

                               HEALTHEXTRAS, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                       For the three months ended
                                                                  March 31,
                                                      -----------------------------
                                                          2001           2002
                                                      -------------   -------------
                                                                 (unaudited)

<S>                                                   <C>             <C>
Revenue ...........................................   $ 21,771,437    $ 54,652,255
                                                      ------------    ------------

Expenses:
  Direct ..........................................     15,426,743      44,658,086
  Selling, general and administrative .............      9,624,225       9,421,601
                                                      ------------    ------------
      Total operating expenses ....................     25,050,968      54,079,687
                                                      ------------    ------------

      Operating (loss) gain .......................     (3,279,531)        572,568

Interest income, net ..............................        387,602          56,132
                                                      ------------    ------------

      (Loss) income before minority interest ......     (2,891,929)        628,700

Minority interest
                                                                --          44,992
                                                      ------------    ------------

      Net (loss) income ...........................   $ (2,891,929)   $    583,708
                                                      ============    ============


Net (loss) income per share, basic ................   $      (0.10)   $       0.02

Net (loss) income per share, diluted ..............   $      (0.10)   $       0.02

Weighted average shares of common stock, basic
  (in thousands) ..................................         29,119          32,027
Weighted average shares of common stock outstanding
   diluted
  (in thousands) ..................................         29,119          32,076
</TABLE>

   The accompanying notes are an integral part of these financial statements
                                       2



<PAGE>


                               HEALTHEXTRAS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

                                                      For the three months ended
                                                               March 31,
                                                     ----------------------------
                                                        2001              2002
                                                     ------------    ------------
                                                                (unaudited)
<S>                                                  <C>             <C>
Cash flows from operating activities:
  Net income (loss) ..............................   $ (2,891,929)   $    583,708
  Depreciation expense ...........................        371,109         332,342
  Non-cash charges (credits) .....................      1,354,415        (447,808)
  Amortization of goodwill
                                                          153,710              --
  Amortization of intangibles and other assets
                                                               --          85,661
  Minority interest
                                                               --          44,992
  Changes in assets and liabilities:
    Accounts receivable, net .....................     (1,498,267)        395,006
    Other assets
                                                           49,935         151,158
    Deferred charges .............................       (325,837)     (1,988,272)
    Accounts payable and accrued expenses
                                                           99,805      (5,228,643)
    Deferred revenue .............................       (570,230)         49,528
                                                     ------------    ------------
      Net cash used in operating activities ......     (3,257,289)     (6,022,328)
                                                     ------------    ------------

Cash flows from investing activities:
  Capital expenditures ...........................       (505,818)       (205,752)
  Deposits, restricted cash and other
                                                               --         600,000
  Business acquisitions and related costs ........       (601,504)     (8,905,603)
                                                     ------------    ------------
      Net cash used in investing activities ......     (1,107,322)     (8,511,355)
                                                     ------------    ------------

Cash flows from financing activities:

  Proceeds received from exercise of stock options             --          33,469

  Proceeds from borrowings .......................             --      12,500,000
                                                     ------------    ------------
      Net cash provided by financing activities ..             --      12,533,469
                                                     ------------    ------------

Net decrease in cash and cash equivalents ........     (4,364,611)     (2,000,214)

Cash and cash equivalents at the beginning
  of period ......................................     28,921,312      33,009,143
                                                     ------------    ------------
Cash and cash equivalents at the end of period ...   $ 24,556,701    $ 31,008,929
                                                     ============    ============
</TABLE>

    The accompanying notes are an integral part of these financial statements
                                       3

<PAGE>





                               HEALTHEXTRAS, INC.

                          NOTES OF FINANCIAL STATEMENTS
                                   (Unaudited)

1.       BASIS OF PRESENTATION

         The accompanying  consolidated  financial statements have been prepared
by HealthExtras,  Inc. (the "Company")  pursuant to the rules and regulations of
the  Securities  and  Exchange  Commission  (the  "SEC") for  interim  financial
reporting.  These  consolidated  financial  statements are unaudited and, in the
opinion of management,  include all adjustments,  consisting of normal recurring
adjustments and accruals,  as well as the accounting  changes to adopt Financial
Accounting  Standards No. 142,  "Goodwill and Other Intangible Assets" (FAS 142)
and Emerging Issues Task Force Issue 01-9,  "Accounting for Consideration  Given
by a Vendor to a Customer or a Reseller of the Vendor's  Products," (ETIF 01-9),
necessary for a fair presentation of the consolidated balance sheets,  operating
results  and cash flows for the  periods  presented.  Operating  results for the
three months ended March 31, 2002, are not necessarily  indicative of the result
that may be expected for the year ending December 31, 2002. Certain  information
and footnote  disclosures normally included in the financial statements prepared
in accordance with accounting principles generally accepted in the United States
have been omitted in accordance with the rules and regulations of the SEC. These
consolidated financial statements should be read in conjunction with the audited
consolidated  financial  statements  and  accompanying  notes,  included  in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 2001, as
filed with the SEC on March 29, 2002.  Certain  prior  period  amounts have been
reclassified to conform to the current period presentation.

2.       ACCOUNTING CHANGES

     FAS 142
     -------

         In July 2001, the Financial  Accounting Standards Board issued FAS 142,
"Goodwill and Other Intangible  Assets" ("FAS 142"). Under FAS 142, goodwill and
intangible assets with indefinite lives are no longer amortized but are reviewed
at least annually for  impairment.  With respect to goodwill  amortization,  the
Company  adopted  FAS 142  effective  January 1, 2002.  At March 31,  2002,  the
Company had  goodwill of $21.5  million.  Pursuant to FAS 142,  the Company will
complete its test for goodwill impairment during the second quarter 2002 and, if
impairment  is  indicated,  record such  impairment  as a  cumulative  effect of
accounting  change  effective  January 1, 2002.  The  following  table  reflects
consolidated  results  adjusted as though the adoption of FAS 142 occurred as of
January 1, 2001:



<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                    ----------------------------
                                                              March 31
                                                    ----------------------------

                                                          2001           2002
                                                    --------------    ----------


<S>                                                 <C>               <C>
Net (loss) income, as reported ..................   $   (2,891,929)   $  583,708
Goodwill amortization ...........................          153,710            --
                                                    --------------    ---------
Net (loss) income, as adjusted ..................       (2,738,219)      583,708
                                                    ==============   ===========

Net (loss) income per share, basic, as reported .   $        (0.10)  $      0.02

Goodwill amortization ...........................             0.01            --
                                                    --------------    ----------

                                       4
<PAGE>

Net (loss) income per share, basic, as adjusted .   $        (0.09)  $      0.02
                                                    ==============   ===========

Net (loss) income per share, diluted, as reported   $        (0.10)  $      0.02

Goodwill amortization ...........................             0.01            --
                                                    --------------    ----------

Net (loss) income per share, diluted, as adjusted   $        (0.09)  $      0.02
                                                    ==============   ===========
</TABLE>



     EITF 01-9
     ---------


         Effective  January 1, 2002, the Company adopted EITF 01-9,  "Accounting
for Consideration  Given by a Vendor to a Customer or a Reseller of the Vendor's
Products",  ("EITF  01-9"),  which was issued in November  2001.  The  Company's
adoption of EITF 01-9  resulted in changing the way the Company  recognizes  the
cost of consideration provided to a marketing partner under a warrant agreement.
Effective  January 1, 2002, the charge for this  consideration is to be recorded
as a reduction to revenue from the marketing  partner rather than as a charge to
direct  expense,  as reflected in prior periods.  The financial  statements from
prior periods  presented for  comparative  purposes  have been  reclassified  to
comply with these provisions.


         On a quarterly  basis,  the Company  establishes the value of warrants,
and in accordance with EITF 01-9,  records the change in value as a reduction or
credit to revenue. Using the appropriate equity-pricing model, the fair value of
each warrant was estimated to be $3.74 and $1.18,  at March 31, 2001,  and March
31, 2002, respectively. During the first quarter of 2001, the Company recorded a
non-cash  direct expense of $1.3 million  related to the warrant  agreement.  To
comply  with EITF 01-9,  the $1.3  million  non-cash  warrant  expense  has been
reclassified as a reduction to revenue from the marketing partner for the period
ended March 31, 2001.

         Due to the lower fair market value of the warrants,  at March 31, 2002,
as compared to the  measurement  of such charge  through  December 31, 2001, the
Company  recognized  a  non-cash  credit  of  $477,000  related  to the  warrant
agreement  in the period  ended March 31,  2002.  To comply with EITF 01-9,  the
$477,000  non-cash  credit was recorded in revenue in the period ended March 31,
2002.


3.       GOODWILL AND INTANGIBLE ASSETS

         The changes in the  carrying  amount of goodwill  for the period  ended
March 31, 2002, are as follows:


<TABLE>
        <S>                                          <C>
         Balance as of January 1, 2002               $     17,566,866

         Goodwill acquired during the
              period ended March 31, 2002            $      3,891,208
                                                     ----------------

         Balance as of March 31, 2002                $     21,458,074
                                                     ================
</TABLE>

         As of March 31, 2002, intangible assets consisted of the following:

<TABLE>
<CAPTION>
                                                         As of March 31, 2002
                                                   ------------------------------

                                                   Gross Earnings     Accumulated
                                                       Amount         Amortization
                                                   -------------     -------------

<S>                                                <C>               <C>
         Customer contracts and relationships      $   5,000,000     $  (87,500)
         Other PBM contracts                             495,200        (24,760)
                                                   -------------     -----------
                                                   $   5,495,200     $ (112,260)
                                                   =============     ===========
</TABLE>

                                       5
<PAGE>


         Amortization  expense for the three month  period ended March 31, 2002,
was approximately $67,000.

         Estimated Amortization Expense
         ------------------------------

<TABLE>
<CAPTION>
         For year ending, December 31,        Amount

                  <S>                     <C>
                  2002                     $ 291,200
                  2003                       300,500
                  2004                       300,500
                  2005                       300,500
                  2006                       300,500
</TABLE>

4.       CONSOLIDATION EXPENSES


         In  accordance  with EITF  94-3,  "Liability  Recognition  for  Certain
Employee  Termination  Benefits and the Costs to Exit an Activity,"  the Company
recognized a non-recurring charge of approximately  $672,000 associated with the
consolidation  of its  Birmingham,  Alabama  operations.  The  charge  primarily
consisted of a write-down of fixed assets and inventory, severance payments, and
the balance due on the office  lease  during the three month  period ended March
31, 2002. A total of $359,000  has been paid by the Company,  and the  remaining
$313,000 is recorded in accrued liabilities. The liabilities will be paid within
a  twelve-month  period  beginning  March 31,  2002.  The  facility  was  closed
effective  February 28, 2002 and the  operations  were  consolidated  within the
Company's Rockville, MD and Las Vegas, NV offices.

5.       NET INCOME (LOSS) PER SHARE


         Basic  income per common share is computed  using the weighted  average
number of common shares outstanding during the period. Diluted income per common
share is computed using the combination of dilutive common share equivalents and
the weighted average number of common shares outstanding during the period.

         At March 31,  2001,  the  diluted net loss per share was equal to basic
net loss per share since the Company  operated at a loss position.  At March 31,
2002, the dilutive  effect (49,000  shares  determined  using the treasury stock
method) of stock options to purchase  272,415 shares of common stock included in
the computation of diluted earnings per common share because the option exercise
price was less than the average  market  price of the common  shares  during the
period. The dilutive effect of 3.6 million  outstanding common stock options and
warrants  for the  period  ended  March 31,  2002,  has been  excluded  from the
computation of diluted net income per share as the effect would be antidilutive.


6.       SEGMENT REPORTING

         The Company  operates in two market  segments as a provider of pharmacy
benefit  management  ("PBM")  services  to plan  sponsors  and as a provider  of
supplemental health programs and disability to individuals.  The following table
represents  financial data by segment for the three months ended March 31, 2002,
and March 31, 2001.

For the three months ended March 31, 2002
<TABLE>
<CAPTION>


                                    Supplemental
                                       Health &
                          PBM        Disability       Total
                       -----------   ----------    -----------
<S>                    <C>           <C>           <C>
Revenue ............   $34,512,951   $20,139,304   $54,652,255
Operating expenses..    34,107,696    19,971,991    54,079,687
Net income .........       424,580       159,128       583,708

                                       6
<PAGE>

Total assets .......    63,408,460    28,265,725    91,674,185
Accounts receivable.    20,007,326     2,008,636    22,015,962
Accounts payable ...    19,354,917     1,606,214    20,961,131
</TABLE>



         For the three months ended March 31, 2001

<TABLE>
<CAPTION>

                                     Supplemental
                                       Health &
                          PBM        Disability       Total
                       -----------   ----------    -----------
<S>                   <C>            <C>           <C>
Revenue ...........   $  7,661,659   $14,109,778   $21,771,437
Operating expenses.      7,765,123    17,285,845    25,050,968
Net (loss) .........       (84,965)   (2,806,964)   (2,891,929)
Total assets .......     4,500,444    44,934,219    49,434,663
</TABLE>


7.       NOTES PAYABLE

         On January 22,  2002,  the  Company  arranged a line of credit for $5.0
million to support the working capital requirements of the Company's acquisition
of Catalyst Inc. and Catalyst Consultants ("Catalyst").  The outstanding balance
on the line of  credit  at  March  31,  2002,  was  $4.5  million.  The note was
collateralized  by a certificate of deposit with an approximate  balance of $5.6
million  held by the  lending  financial  institution.  Under  the  terms of the
agreement,  all outstanding  principal and accrued  interest is to be paid on or
before July 22, 2002.  The note bears at a rate of 4.59% per annum.  The Company
repaid the outstanding principal and accrued interest in full in April 2002.

         On March 1, 2002, the Company agreed to purchase the minority  interest
in Catalyst for additional consideration of $5.3 million, which is to be settled
by March 1, 2003.  The  acquisition  resulted  in  goodwill  of $3.9 million and
intangible assets of $1.0 million.

         In March 2002,  the Company  arranged  an $8 million  revolving  credit
facility.  Borrowings on the credit facility are collateralized by substantially
all  of  the  Company's  trade   receivables.   The  credit  agreement  contains
affirmative   and   negative   covenants   related  to   indebtedness,   capital
expenditures, and consolidated net worth.

         The facility bears interest at LIBOR plus 2.25%. The effective interest
rate at March 31, 2002,  was 5.25%.  Interest is payable in arrears on the fifth
day of each month beginning May 5, 2002. The  outstanding  balance on the credit
facility at March 31, 2002, was $8.0 million. All principal and accrued interest
is due to the bank on May 31, 2003,  however,  the facility must be fully repaid
for at least 30 consecutive days prior to the expiration date.

                                       7
<PAGE>




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

         The following discussion should be read in conjunction with the interim
consolidated  financial  statements  presented  in  Item 1.  Certain  statements
contained herein may constitute forward-looking statements (see "Certain Factors
That May Affect Future Operating Results or Stock Prices") within the meaning of
Section  21E  of  the  Securities  Exchange  Act  of  1934,  as  amended.  These
forward-looking  statements  involve  a number of risks  and  uncertainties.  We
undertake no  obligation  to revise any  forward-looking  statements in order to
reflect  events or  circumstances  that may arise after the date of this report.
Readers are urged to carefully review and consider the various  disclosures made
in this  report  and in our  other  filings  with the  Securities  and  Exchange
Commission  that attempt to advise  interested  parties of the risks and factors
that may affect our business.

OVERVIEW
--------

         HealthExtras  is  a  diversified  provider  of  pharmacy,   health  and
disability benefits. The Company currently provides benefits to over 1.5 million
members and the Company's  clients  include  managed care  organizations,  large
employer  groups,   unions  and  government  agencies,  as  well  as  individual
customers. The acquisitions of International Pharmacy Management,  Inc. ("IPM"),
now operating as  HealthExtrasRx,  and Catalyst have created a strong foundation
for the PBM  business of the  Company.  The PBM  segment is the largest  revenue
generating  segment and the Company  expects  this portion of the business to be
the primary source of growth and profit potential in the years ahead.

     PHARMACY BENEFIT MANAGEMENT

         Our primary PBM services consist of the automated online  processing of
prescription claims on behalf of our employer and managed care customers. When a
member of one of our customer  accounts  presents a prescription  or health plan
identification  card to a retail pharmacist in our network,  our system provides
the  pharmacist  with  accesses  to online  information  regarding  eligibility,
patient history,  health plan formulary listings, and contractual  reimbursement
rates.  The  member  generally  pays a co-pay  to the  retail  pharmacy  and the
pharmacist  fills  the  prescription.  On behalf of our  customer  accounts,  we
electronically  aggregate  pharmacy benefit claims,  which include  prescription
costs plus our claims processing fees, for consolidated  billing and payment. We
receive payments from customer accounts and remit the amounts owed to the retail
pharmacies  pursuant  to our  negotiated  rates and  retaining  the  difference,
including claims processing fees.

         We  have  established  a  nationwide  network  of  over  50,000  retail
pharmacies.  In general,  self-insured  employers and managed care organizations
contract  with us to  access  our  negotiated  retail  pharmacy  network  rates,
participate in certain rebate arrangements with manufacturers based on formulary
design and the other care  enhancement  protocols  in our  system.  Under  these
contracts,  we have an independent  obligation to pay network retail  pharmacies
for the drugs  dispensed and accordingly  have assumed that risk  independent of
our customers. Pharmacy benefit claim payments from our health plan sponsors are
recorded as  revenues,  and  prescription  costs paid to retail  pharmacies  are
recorded in direct expenses.

     SUPPLEMENTAL HEALTH AND DISABILITY PROGRAMS

         The Company's  secondary  segment,  supplemental  health and disability
programs,  generates revenue from the sale of membership  programs which provide
disability  insurance benefits.  We focus on the distribution of our programs to
customers of our financial institution  partners.  Christopher Reeve is featured
prominently in our marketing campaigns for these programs.

         Revenue is generated by payments for program benefits and payments from
certain business  partners.  In general,  program revenue is recognized based on
the  number of members  enrolled  in each  reporting  period  multiplied  by the
applicable  fee collected  from the member or paid by the marketing  partner for
their  specific   membership   program.   The  program  revenue   recognized  by
HealthExtras includes the cost of the membership benefits, which are supplied by
others,  including the  insurance  components.  Payments from business  partners
related  to new  member  enrollments  are  recorded  as revenue to the extent of
related  direct  expenses,  which to date have  exceeded  payments from business
partners.

                                       8
<PAGE>

         Direct expenses consist principally of the cost of benefits provided to
program members, business partner compensation, and transaction processing fees.
Direct expenses are a function of the level of membership  during the period and
the  specific  set  of  program  features  selected  by  members.  The  coverage
obligations  of our benefit  suppliers  and the related  expense are  determined
monthly, as are the remaining direct expenses.

         Revenue from program  payments  received,  and related direct expenses,
are deferred to the extent that they are  applicable to future periods or to any
refund  guarantee we offer.  As of March 31, 2002,  initial  program revenue was
deferred for approximately 61,000 program members. HealthExtras has committed to
minimum premium  volumes with respect to the insurance  features of its programs
supplied by others. In the event that there were insufficient members to utilize
the  minimum  premium   commitment,   the  differential  would  be  expensed  by
HealthExtras  without any related  revenue.  HealthExtras  believes that current
enrollment  trends will allow the minimum future  commitments at March 31, 2002,
to be fully utilized by current enrollment levels.

RESULTS OF OPERATIONS
---------------------

THREE MONTHS ENDED MARCH 31, 2002, COMPARED TO THREE MONTHS ENDED MARCH 31, 2001

         REVENUE.  Revenue from  operations for the first quarter of fiscal year
2002 was $54.7  million,  compared  to $21.8  million  for the first  quarter of
fiscal year 2001.  Revenue of $54.7 million for the three months ended March 31,
2002, consisted of program member premiums,  business partner payments and sales
revenue  generated by pharmacy benefit  management  services,  which contributed
22%, (3)%, and 81%, respectively,  to the increase over the comparable period of
the prior  year.  The  pharmacy  benefit  management  services  segment  revenue
contributed  $26.9  million  of the  revenue  increase,  while  revenue  for the
supplemental  health and  disability  segment  increased by $6.0 million.  Total
revenue in the three month period increased 350% and 43% in the pharmacy benefit
management  services segment and the supplemental health and disability segment,
respectively.  The PBM increase was principally due to the Catalyst acquisition.
Due to the  Company's  adoption of EITF 01-9,  revenue for the first  quarter of
2001 has been reduced by $1.3 million in the comparative  financial  statements.
For more information about the adoption of EITF 01-9, see Note 2 of the Notes to
the Consolidated Financial Statements.

         DIRECT  EXPENSES.  Direct expenses for the period ended March 31, 2002,
of $44.7 million  consisted of $32.2 million in direct costs associated with the
pharmacy benefit management  services segment and $12.5 million  attributable to
benefit costs and  compensation to our  distribution  partners for  supplemental
health and disability products. Direct expenses for the same period in 2001 were
$15.4  million,  consisting  of  approximately  $7.1  million  and $8.3  million
attributable to the pharmacy benefit management services and supplemental health
and disability  segments,  respectively.  The PBM increase is principally due to
the Catalyst acquisition.  he direct expenses of $44.7 million and $15.4 million
for the three month period ended March 31, 2002, and March 31, 2001, represented
83% and 62% of operating expenses for the respective periods.

         SELLING,    GENERAL   AND   ADMINISTRATIVE.    Selling,   general   and
administrative expenses for the three month period ended March 31, 2002, totaled
$9.4  million  or 17% of total  operating  expenses,  $1.9  million of which was
related to the Company's pharmacy benefit management services segment, while the
remaining $7.5 million related to the management of the supplemental  health and
disability  segment.  These expenses  included $5.2 million in telemarketing and
media  development,  $1.9  million in  compensation  and  benefits,  $900,000 in
professional  services,  $672,000  in  consolidation  and shut down costs of the
Birmingham, Alabama location, $222,000 in deprecation and amortization, $217,000
in direct marketing, $128,000 in travel expenses, $74,000 in website development
and Internet advertisement, and $67,500 in telephone and software expenses.

         Selling,  general and  administrative  expenses  for the same period in
2001 were  approximately $9.6 million or 38% of total operating  expenses,  $1.0
million  of which  related  to the  Company's  management  of  pharmacy  benefit
management  services  segment,  while $8.6 million  related to the  supplemental
health  and  disability  segment.   These  expenses  included  $6.0  million  in
telemarketing and media development,  $1.3 million in compensation and benefits,
$295,000 in  professional  fees,  $525,000  in  depreciation  and  amortization,
$600,000 in direct  marketing,  $142,000 in travel  expense,  $64,000 in website
development  and Internet  advertisement,  and $43,000 in telephone and software
expenses.

                                       9


<PAGE>

         The  decrease in  deprecation  and  amortization  expense is  primarily
attributable  to the Company ceasing  amortization of goodwill,  pursuant to the
adoption of FAS 142.  For more  information  about the  adoption of FAS 142, see
Note 2 of the Notes to the Consolidated Financial Statements.

         INTEREST INCOME,  NET.  Interest income,  net for the first quarter was
$56,000,  compared  to  $388,000  in the first  quarter of 2001,  a decrease  of
$332,000  or 86%,  principally  attributable  to  lower  invested  balances  and
interest rates.

         MINORITY  INTEREST.  Minority  interest  for the period ended March 31,
2002, was  approximately  $45,000;  there was no minority  interest at March 31,
2001. This charge represents the net income attributable due to the 20% minority
interest holder of Catalyst for the months of January and February, 2002. As the
Company  purchased  the  remaining  minority  interest  on  March  1,  2002,  no
additional  minority  interest  charge for Catalyst will appear on the Company's
financial statements.

         NET  INCOME,  (LOSS).  Net  income  for the first  quarter  of 2002 was
$584,000  compared to $2.9  million net loss for the first  quarter of 2001,  an
increase of $3.5 million. As a percentage of revenue,  net income increased from
(13.3)% to 1.1%.

LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

         Cash and cash  equivalents  at March 31, 2002,  totaled  $31.0  million
compared to $33.0 million at December 31, 2001. During the first three months of
2002 the Company received $12.5 million in cash from financing activities,  paid
$8.9 million to satisfy the  Catalyst  acquisition  promissory  note and reduced
accounts payable and accrued expenses by $5.2 million.

         CASH USED IN OPERATING,  ACTIVITIES. Cash used for operating activities
during the first three months of 2002 was $6.0 million compared to the cash used
for operating  activities of $3.3 million during the first three months of 2001.
The variance is due to a large reduction in accounts payable,  accrued expenses,
and an increase in deferred charges.

         CASH USED IN INVESTING  ACTIVITIES.  Cash used in investing  activities
for the first three months of 2002 was $8.5 million compared to $1.1 million for
the first three  months of 2001.  The increase is  primarily  attributed  to the
payment of $8.9  million in January  2002 to  satisfy  the  Catalyst acquisition
promissory note.

         CASH FROM FINANCING ACTIVITIES. In January 2002, the Company arranged a
line of credit with a financial institution for $5.0 million. At March 31, 2002,
the  outstanding  balance was $4.5 million.  The Company repaid the  outstanding
principal and accrued interest in full in April 2002. In March 2002, the Company
also  arranged an $8.0 million  revolving  credit  facility.  These amounts were
fully drawn at March 31, 2002. All principal and accrued  interest is due to the
bank on May 31, 2003.

         By managing accounts  receivable to conform more closely to our payment
obligations  to  suppliers,  the  Company  should be able to  generate  positive
operating  cash flow  which  combined  with  available  cash  resources  will be
sufficient  to meet  our  planned  working  capital,  capital  expenditures  and
business expense requirements.  However,  there can be no assurance that we will
not require additional capital. Even if such funds are not required, we may seek
additional  equity or debt  financing.  We cannot be assured that such financing
will be available on acceptable  terms,  if at all, or that such  financing will
not be dilutive to our stockholders.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         (Included in Management's Discussion and Analysis of Financial
          Condition and Results of Operations)


                                       10
<PAGE>



PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS
-------  -----------------

         In the ordinary  course of business,  the Company may become subject to
legal proceedings and claims.  The Company is not aware of any legal proceedings
or claims which,  in the opinion of management,  will have a material  effect on
the financial condition or results of operations of the Company.

ITEM 2   CHANGES IN SECURITIES
------   ---------------------

         In  connection  with the March 1,  2002,  acquisition  of the remaining
minority  interest in  Catalyst.  The Company  issued  319,033  shares of common
stock.  The shares of Company  stock issued were valued at $3.31 per share,  the
closing price of the stock on the effective date of the  agreement.  The Company
relied upon the exemption from the  registration  requirements of the Securities
Act of 1933 provided by Section (42) of the Act.


ITEM 3.  DEFAULTS UPON SENIOR SECURITIES       (Not Applicable)
-------  -------------------------------


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (Not Applicable)
-------  ---------------------------------------------------

ITEM 5.  OTHER INFORMATION                     (None)
-------  -----------------

                                       11
<PAGE>

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

1.       The following exhibits are filed as part of this report unless noted
         otherwise:
<TABLE>
<CAPTION>


     Exhibit No.                                          Description
     -----------------------------------------------------------------
<S> <C>
    2.1    Form of Reorganization Agreement by and among HealthExtras, Inc.,
           HealthExtras, LLC and Capital Z Healthcare Holding Corp (1)
    2.2    CatalystRx, Inc. Securities Purchase Agreement Dated as of November
           14, 2001 by and among HealthExtras, Inc. as the Purchaser, Catalyst
           Rx, Inc. and Kevin C. Hooks as the Seller (2)
    2.3    Catalyst Consultants, Inc. Securities Purchase Agreement Dated as of
           November 14, 2001 by and among HealthExtras, Inc. as the purchaser,
           Catalyst Consultants, Inc. and Kevin C. Hooks as the Seller (2)
    3.1(a) Certificate of Incorporation of HealthExtras, Inc( 1)
    3.1(b) Form of Amended and Restated Certificate of Incorporation (1)
    3.2    Bylaws of HealthExtras, Inc. (1)
    4.1    Specimen Stock Certificate of HealthExtras, Inc.
    4.2    Form of Stockholders' Agreement (1)
   10.1    Form of Employment Agreement between HealthExtras, Inc. and David T.
           Blair (1)
   10.2    Form of Employment Agreement between HealthExtras, Inc. and certain
           Executive Officers (1)
   10.3    Reserved
   10.4    Reserved
   10.5    Reserved
   10.6    Agreement by and between Cambria Productions, Inc. f/s/o Christopher
           Reeve and HealthExtras, Inc. (1) (3)
   10.7    Indemnification Agreement (1)
   10.8    Sublease Agreement by and between United Payors & United Providers,
           Inc. and HealthExtras, Inc.
   10.9    Form of HealthExtras, Inc. 1999 Stock Option Plan (1)
   10.10   Form of Registration Rights Agreement (1)
   10.11   Securities Purchase Agreement by and among HealthExtras, Inc., as the
           Purchaser, and TD Javelin Capital Fund, L.P., (4)
   10.12   Form of HealthExtras, Inc. 2000 Stock Option Plan
   10.13   Form of HealthExtras, Inc. 2000 Directors' Stock Option Plan
   10.14   Warrant Agreement by and among HealthExtras, Inc. and J.C. Penney
           Life Insurance Company
   10.15   Amended Agreement by and between Cambria Productions, Inc. f/s/o
           Christopher Reeve and HealthExtras, Inc.
   21.1    Subsidiaries of Registrant
</TABLE>

------------------
(1)      Incorporated  herein  by  reference  into this  document  from the
         Exhibits  to  the  Form  S-1   Registration   Statement,   as  amended,
         Registration  No.   333-83761,   initially  filed  on  July  26,  1999.
(2)      Incorporated  herein  by  reference  into  this  document  from  the
         Exhibits to the Form 8-K  initially  filed on November  29,  2001.
(3)      Confidential  treatment  requested for portion of agreement pursuant to
         Section 406 of Regulation C.  promulgated  under the  Securities Act of
         1933,  as  amended.
(4)      Incorporated  herein by  reference  into this document from the
         Exhibits to the Form 8-K initially  filed on November
         21, 2000.

2.       Reports on Form 8-K
         None

                                       12
<PAGE>

                                   SIGNATURES

    Pursuant  to the  requirements  of  Sections  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.


                                   HealthExtras, Inc.




Date:  May 15, 2002           By:  /s/ David T. Blair
                                   -------------------------------------
                                   David T. Blair
                                   Chief Executive Officer and Director


Date:  May 15, 2002           By:  /s/ Michael P. Donovan
                                   -------------------------------------
                                   Michael P. Donovan
                                   Chief Financial Officer and
                                   Chief Accounting Officer



                                       13