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, 2003
                                       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)

            Securities registered pursuant to 12(b) of the Act: None
              Securities registered pursuant to 12(g) of the Act:
                         Common Stock, $0.01 par value



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 by check mark whether the registrant is an  accelerated  filer (as
defined in Rule 12b-2 of the Exchange Act) Yes  X   No
                                               ---     -------

As of May  13,  2003,  there  were  32,379,615  shares  outstanding  of the
Registrant's $0.01 par value common stock.



<PAGE>





                               HEALTHEXTRAS, INC.

                          First Quarter 2003 Form 10-Q

                                TABLE OF CONTENTS

<TABLE>
                                                                            Page
                                                                            ----
<S>                                                                        <C>
PART I   FINANCIAL INFORMATION

 Item 1.     Financial Statements

     Consolidated Balance Sheets as of December 31, 2002 and March 31,
        2003 (Unaudited).......................................................1

     Consolidated Statements of Operations for the Three
          Months Ended March 31, 2002 and 2003 (Unaudited).....................2

     Consolidated Statements of Cash Flows for the Three Months Ended
          March 31, 2002 and 2003 (Unaudited)..................................3

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

 Item 2.     Management's Discussion and Analysis of Financial Condition
                and Results of Operations......................................9

 Item 3.     Quantitative and Qualitative Disclosures About Market Risk.......12

 Item 4.     Controls and Procedures..........................................12

PART II  OTHER INFORMATION

 Item 1      Legal Proceedings................................................12

 Item 2      Changes in Securities............................................12

 Item 3      Defaults Upon Senior Securities..................................12

 Item 4      Submission of Matters to a Vote of Security Holders..............12

 Item 5      Other Information................................................12

 Item 6      Exhibits and Reports on Form 8-K.................................13


SIGNATURES

CERTIFICATIONS

</TABLE>


<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  Financial Statements

                               HEALTHEXTRAS, INC.
                          CONSOLIDATED BALANCE SHEETS
                                  (Unaudited)
<TABLE>
<CAPTION>


                                                                    December 31,      March 31,
                                                                        2002             2003
                                                                    ------------    -------------
<S>                                                                <C>              <C>
ASSETS
Current assets:
  Cash and cash equivalents ....................................   $  17,531,051    $  23,947,271
  Accounts receivable, net .....................................      37,799,778       40,472,122
  Income taxes receivable ......................................       2,773,773        2,111,533
  Deferred income taxes ........................................       1,286,313        1,286,313
  Deferred charges .............................................       1,888,072        2,160,361
  Other current assets .........................................       1,282,484        1,333,275
                                                                    ------------    -------------
      Total current assets .....................................      62,561,471       71,310,875

Fixed assets, net ..............................................       4,056,130        3,711,380
Deferred income taxes ..........................................       3,759,152        2,576,152
Intangible assets, net .........................................      14,185,751       13,981,762
Goodwill .......................................................      33,538,142       33,666,142
Restricted cash ................................................       1,000,000        1,000,000
Other assets ...................................................         901,490          873,494
                                                                    ------------    -------------
      Total assets .............................................   $ 120,002,136    $ 127,119,805
                                                                   =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .............................................   $  34,451,789    $  42,697,757
  Note payable .................................................       1,056,000               --
  Accrued expenses and other current liabilities ...............       2,156,165        2,006,010
  Deferred revenue .............................................       4,813,555        4,871,443
                                                                    ------------    -------------
      Total current liabilities ................................      42,477,509       49,575,210

Note payable ...................................................      18,000,000       16,000,000
                                                                    ------------    -------------
      Total liabilities ........................................      60,477,509       65,575,210
                                                                    ------------    -------------

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,
    32,295,120 and 32,376,787 shares issued and outstanding at
    December 31, 2002 and March 31, 2003, respectively .........         322,951          323,768
  Additional paid-in capital ...................................      70,460,184       70,589,898
  Accumulated deficit ..........................................     (11,243,127)      (9,369,071)
  Deferred compensation ........................................         (15,381)              --
                                                                    ------------    -------------
      Total stockholders' equity ...............................      59,524,627       61,544,595
                                                                    ------------    -------------
      Total liabilities and stockholders' equity ...............   $ 120,002,136    $ 127,119,805
                                                                   =============    =============
</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,
                                                               ----------------------------
                                                                     2002           2003
                                                               ------------    ------------
<S>                                                            <C>             <C>
Revenue ....................................................   $ 54,652,255    $ 91,734,861
                                                               ------------    ------------
Direct expenses ............................................     44,658,086      82,460,106
Selling, general and administrative expenses ...............      9,421,601       6,068,919
                                                               ------------    ------------
   Total operating expenses ................................     54,079,687      88,529,025
                                                               ------------    ------------

   Operating income ........................................        572,568       3,205,836

Interest income (expense), net .............................         56,132        (148,780)
                                                               ------------    ------------

   Income before income taxes and minority interest ........        628,700       3,057,056

Minority interest ..........................................        (44,992)             --
                                                               ------------    ------------

   Income before income taxes ..............................        583,708       3,057,056

Provision for income taxes .................................             --       1,183,000
                                                               ------------    ------------

   Net income ..............................................   $    583,708    $  1,874,056
                                                               ============    ============

Earnings per share, basic ..................................   $       0.02    $       0.06
Earnings per share, diluted ................................   $       0.02    $       0.06

Weighted average shares of common stock, basic
(in thousands) .............................................         32,027          32,337
Weighted average shares of common stock outstanding, diluted
 (in thousands) ............................................         32,076          32,507
</TABLE>



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



<PAGE>


                               HEALTHEXTRAS, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                               For the three months ended
                                                                         March 31,
                                                              ----------------------------
                                                                   2002           2003
                                                              ------------    ------------
<S>                                                           <C>             <C>
Cash flows from operating activities:
 Net income ...............................................   $    583,708    $  1,874,056
 Depreciation expense .....................................        332,342         395,087
 Deferred income taxes ....................................             --       1,183,000
 Income taxes receivable ..................................             --         662,240
 Noncash charges (credits) ................................       (447,808)         17,912
 Amortization of intangibles and other assets .............         85,661         203,989
 Minority interest ........................................         44,992              --
 Changes in assets and liabilities:
  Accounts receivable, net ................................        395,006      (2,672,344)
  Other assets ............................................        151,158         (22,795)
  Deferred charges ........................................     (1,988,272)       (272,289)
  Accounts payable, accrued expenses, and other liabilities     (5,228,643)      8,095,813
  Deferred revenue ........................................         49,528          57,888
                                                              ------------    ------------
   Net cash (used in) provided by operating activities ....     (6,022,328)      9,522,557
                                                              ------------    ------------

Cash flows from investing activities:
 Capital expenditures .....................................       (205,752)        (50,337)
 Deposits, restricted cash and other ......................        600,000              --
 Business acquisitions and related payments ...............     (8,905,603)     (1,056,000)
                                                              ------------    ------------
   Net cash used in investing activities ..................     (8,511,355)     (1,106,337)
                                                              ------------    ------------

Cash flows from financing activities:
 Proceeds received from exercise of stock options .........         33,469              --
 Proceeds from (repayment of) line of credit ..............     12,500,000      (2,000,000)
                                                              ------------    ------------
   Net cash provided by (used in) financing activities ....     12,533,469      (2,000,000)
                                                              ------------    ------------

Net (decrease) increase in cash and cash equivalents ......     (2,000,214)      6,416,220

Cash and cash equivalents at the beginning
 of period ................................................     33,009,143      17,531,051
                                                              ------------    ------------
Cash and cash equivalents at the end of period ............   $ 31,008,929    $ 23,947,271
                                                              ============    ============
</TABLE>

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


<PAGE>





                               HEALTHEXTRAS, INC.

                          NOTES TO 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,  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,  2003,  are  not  necessarily
indicative  of the result that may be expected for the year ending  December 31,
2003.  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, 2002, as filed with the SEC on March 31, 2003.  Certain
prior period  amounts have been  reclassified  to conform to the current  period
presentation.

2.   RECENT ACCOUNTING PRONOUNCEMENTS
     --------------------------------

  SFAS NO. 148

     In December 2002, the Financial  Accounting Standards Board ("FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 148,  "Accounting for
Stock-Based  Compensation  -  Transition  and  Disclosure,  an amendment of FASB
Statement No. 123", to provide alternative methods of transition for a voluntary
change to the fair value based method of  accounting  for  stock-based  employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
FASB  statement  No. 123 to require  prominent  disclosures  in both  annual and
interim  financial  statements  about the method of accounting  for  stock-based
employee compensation and the effect of the method used on reported results. The
application of the transition provisions of SFAS No. 148 is effective for fiscal
years  ending  after  December  15,  2002.  The Company has  included the proper
disclosures in Note 3 to these Notes To Financial Statements.

  FIN NO. 45

     In  November  2002,  the FASB issued  FASB  Interpretation  ("FIN") No. 45,
"Guarantor's  Accounting and Disclosure  Requirements  for Guarantees  Including
Indirect  Guarantees  of  Indebtedness  of  Others",  which  elaborates  on  the
disclosures  to be made by a  guarantor  in its  interim  and  annual  financial
statements about its obligations under certain guarantees that it has issued. It
also clarifies that a guarantor is required to recognize,  at the inception of a
guarantee,  a  liability  for the fair  value of the  obligation  undertaken  in
issuing  the  guarantee.   The  initial   recognition  and  initial  measurement
provisions of FIN No. 45 are  applicable  on a  prospective  basis to guarantees
issued or modified  after  December 31, 2002,  irrespective  of the  guarantor's
fiscal  year end.  The  disclosure  requirements  are  effective  for  financial
statements of interim or annual  periods  ending after  December 15, 2002. As of
March 31, 2003,  there is no impact on the Company's  financial  statements as a
result of the issuance of FIN No. 45.

3.   STOCK-BASED COMPENSATION
     ------------------------

     At March 31,  2003,  the Company  has  stock-based  compensation  plans for
employees and  directors.  Stock-based  compensation  is accounted for using the
intrinsic-value-based  method in accordance with the Accounting Principals Board
Option  ("APB") 25,  "Accounting  for Stock  Issued to  Employees",  and related
Interpretations.  No stock-based compensation expense is reflected in net income
as all options  granted  under  these  plans had an exercise  price equal to the
market

                                       4
<PAGE>

value of the underlying  common stock on issue date of the grant.  The following
table illustrates the effect on net income and earnings per share if the Company
had applied the fair value recognition  provisions of SFAS 123,  "Accounting for
Stock-Based Compensation", to stock-based employee compensation:

<TABLE>
<CAPTION>

                                                                   Three months ended
                                                                        March 31,

                                                                       2003        2002
                                                                   ----------   ----------
<S>                                                                <C>          <C>
Net income, as reported                                            $1,874,056   $  583,708
Deduct:  Total stock-based employee compensation
   expense determined under fair value method for all
   awards, net of related tax effects, in 2003                       (597,940)    (516,137)
                                                                   ----------   ----------
Pro forma net income                                               $1,276,116   $   67,571
                                                                   ==========   ==========
</TABLE>

<TABLE>
<CAPTION>
Earnings per share:
<S>                                                                <C>          <C>
   Basic - as reported                                             $     0.06   $     0.02
   Basic - pro forma                                               $     0.04   $     0.00
   Diluted - as reported                                           $     0.06   $     0.02
   Diluted - pro forma                                             $     0.04   $     0.00
</TABLE>


     The fair value for these  options  was  estimated  at the date of the grant
using the Black-Scholes option pricing model with the following weighted average
assumptions for the three months ended March 31, 2003 and 2002:

<TABLE>
<CAPTION>

                                                  Three months ended
                                                         March 31,
                                                2003                 2002
                                           ----------------      -----------
<S>                                           <C>                    <C>
         Expected term                        5 years                5 years
         Volatility factor                   85.16 - 87.31%               87%
         Risk free interest rate               2.70 - 3.19%       4.46 - 5.0%
         Dividend yield                                 --                --
         Fair value                        $          2.79       $      2.34
</TABLE>


4.   BUSINESS COMBINATIONS
     ---------------------

  ACQUISITION OF CATALYST

     During the first quarter of 2002, the Company purchased the outstanding 20%
minority  interest in Catalyst Rx, and  Catalyst  Consultants  ("Catalyst")  for
319,033  shares of the Company's  stock valued at $1.1 million and notes payable
of $4.2 million.  The stock was  transferred to the seller on April 1, 2002, and
$3.1 million was paid on the note in 2002,  with the final  installment  of $1.1
million paid on March 1, 2003.

  ACQUISITION OF PNNC

     On  December  1, 2002,  the Company  acquired  100% of the common  stock of
Pharmacy Network National  Corporation  ("PNNC").  Total  consideration for PNNC
stock was $20.2 million.  Total  acquisition cost included  transaction costs of
approximately  $1.4 million.  Funding for the $21.6 million cash transaction was
derived from the Company's working capital.  The acquistion resulted in goodwill
of approximately $10.6 million and intangible assets of $8.0 million.

                                       5
<PAGE>


     The following table sets forth certain  unaudited  proforma  financial data
assuming  that the  acquisition  of 100% of  Catalyst  and  PNNC  had each  been
completed  as of January 1, 2002,  after  giving  effect to purchase  accounting
adjustments. Amounts are in thousands, except for per share data.

<TABLE>
<CAPTION>

                                                     Three Months Ended
                                                          March 31,
                                               ----------------------------
                                                    2002              2003
                                               -----------        ---------
                                                 (proforma)         (actual)
         <S>                                   <C>                <C>
         Revenue                               $    83,930        $  91,735
         Net income                            $     1,557        $   1,874
         Net income per share basic            $      0.05        $    0.06
         Net income per share diluted          $      0.05        $    0.06
         Weighted average shares basic              32,238           32,337
         Weighted average shares diluted            32,287           32,507
</TABLE>



     The proforma  results of operations are not  necessarily  indicative of the
results that would have occurred had the Company owned 100% of Catalyst and PNNC
at  January  1,  2001,  nor are these  results  indicative  of future  operating
results.

5.   GOODWILL
     --------

     The Company  adopted SFAS No. 142, and  discontinued  the  amortization  of
goodwill and  indefinite-lived  intangible assets effective January 1, 2002. The
Company  completed  its initial  adoption  impairment  testing of  goodwill  and
concluded that no impairment of goodwill exists. The Company performed a similar
test as of December 31,  2002,  and  concluded  that no  impairment  of goodwill
exists.  In the three month period ended March 31, 2003,  the Company  increased
goodwill by $128,000 due to additional acquisition costs incurred related to the
PNNC acquisition.

6.   INTANGIBLE ASSETS
     -----------------

     As of March 31, 2003, intangible assets consisted of the following:

<TABLE>
<CAPTION>

                                                                Amortization Period
                                                                -------------------
              <S>                           <C>                        <C>
              Catalyst customer contracts   $    5,700,000             20 years
              PNNC customer contracts            8,000,000             20 years
              Other PBM contracts                  945,200             5 - 10 years
                                            --------------

              Total intangible assets           14,645,200
              Accumulated amortization            (663,438)
                                            --------------
                  Total                     $   13,981,762
                                            ==============
</TABLE>


     Catalyst and PNNC customer contracts  represent the estimated fair value of
customer  contracts held by Catalyst and PNNC at the dates of acquisition.  This
estimated  fair  value  and the  weighted  average  useful-lives  are  based  on
income-method  valuation  calculations,  performed by an independent  consulting
firm.

     The estimated aggregate  amortization  expense of intangible assets through
2007 is as follows:

<TABLE>

     <S>          <C>
     2003         $    816,000
     2004              816,000
     2005              816,000
     2006              816,000
     2007              776,000
                     ---------
         Total    $  4,040,000
</TABLE>


     Amortization  expense was $67,000 and $204,000 for the three month  periods
ended March 31, 2002 and March 31, 2003, respectively.

                                       6

<PAGE>

7.   NOTES PAYABLE
     -------------

     At  December  31,  2002,  the Company  had a note  payable of $1.1  million
relating  to the 2002  purchase  of the 20%  outstanding  minority  interest  in
Catalyst.  The $1.1 million due to the former minority  interest holder was paid
on March 1, 2003.

     In December 2002, the Company  arranged an $18.0 million  revolving  credit
facility.  Borrowings on the credit facility are collateralized by substantially
a1l of the Company's trade receivables. The credit facility contains affirmative
and  negative   covenants   related  to  indebtedness,   other  liabilities  and
consolidated  net worth.  The facility bears  interest at LIBOR plus 2.75%.  The
effective rate at March 31, 2003,  was 4.06%.  Interest is payable in arrears on
the fifth day of each month.  The outstanding  balance on the credit facility at
March 31, 2003, was $16.0 million.  All principal and accrued interest is due to
the bank on May 31,  2004.  Interest  expense  related to notes  payable for the
period ended March 31, 2003, was approximately $184,000.

8.   SEGMENT REPORTING
     -----------------


     The  Company  operates  in two  business  segments,  PBM  and  supplemental
benefits. The following table represents financial data by segment for the three
months ended March 31, 2003, and March 31, 2002.

     For the three months ended March 31, 2003:

<TABLE>
<CAPTION>
                                                   Supplemental
                                    PBM              Benefits          Total
                             -------------       -------------     ------------
<S>                          <C>                 <C>               <C>
Revenue                      $  78,418,131       $  13,316,730     $ 91,734,861

Segment operating expenses      75,934,030          11,151,204       87,085,234

Segment operating income         2,484,101           2,165,526        4,649,627

Total assets                   108,953,033          18,166,772      127,119,805

Accounts receivable             40,208,640             263,482       40,472,122

Accounts payable                41,837,386             860,371       42,697,757
</TABLE>


     Operating  expenses  of the  segments  exclude  $1.4  million in  corporate
overhead that was not allocated by management in assessing  segment  performance
for the three month period ended March 31, 2003.

                                       7
<PAGE>



     For the three months ended March 31, 2002:

<TABLE>
<CAPTION>
                                                   Supplemental
                                    PBM              Benefits          Total
                             -------------       -------------     ------------
<S>                          <C>                 <C>               <C>

Revenue                      $  34,512,951       $  20,139,304     $ 54,652,255

Segment operating expenses      33,819,026          19,322,446       53,141,472

Segment operating income           693,925             816,858        1,510,783

Total assets                    69,759,573          21,914,612       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>


     Operating  expenses of the segments exclude $938,000 in corporate  overhead
that was not allocated by management in assessing  segment  performance  for the
three month period ended March 31, 2002.

9.   PROVISION FOR INCOME TAXES
     --------------------------

     In the first quarter of 2003,  the Company  recorded a provision for income
taxes of approximately  $1.2 million at an effective rate of 38.6%. In the first
quarter of 2002,  the Company  recorded no provision  for income  taxes,  as the
Company maintained a full valuation allowance against the Company's deferred tax
assets due to the uncertainty as to their ultimate realization.

10.  NET INCOME PER SHARE
     --------------------

     Basic net  income  per  share is based on the  weighted  average  number of
shares outstanding during the period. Diluted income per share is computed based
on the weighted  average number of shares and dilutive  common stock  equivalent
shares outstanding during the period.

     At March 31, 2003, the dilutive  effect  (170,000 shares using the treasury
stock method) of stock options to purchase  approximately  1.1 million shares of
common stock were  included in the  computation  of diluted  earnings per common
share  because the option  price was less than the average  market  price of the
common  shares  during the period ended March 31, 2003.  The dilutive  effect of
approximately 5.7 million  outstanding common stock options and warrants for the
period ended March 31, 2003,  have been excluded from the computation of diluted
net income per share as the effect would be antidilutive.

     At March 31, 2002,  the dilutive  effect  (49,000 shares using the treasury
stock  method) of stock  options to  purchase  approximately  272,000  shares of
common stock were  included in the  computation  of diluted  earnings per common
share  because the option  price was less than the average  market  price of the
common  shares  during the period ended March 31, 2002.  The dilutive  effect of
approximately 3.6 million  outstanding common stock options and warrants for the
period ended March 31, 2002,  have been excluded from the computation of diluted
net income per share as the effect would be antidilutive.

                                       8
<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 provider of PBM services and supplemental  benefits.  The
Company's clients include managed-care  organizations,  self-insured  employers,
third party administrators, as well as individual customers. The PBM segment now
generates  the  significant  majority of our  revenues and is expected to be the
primary source of growth and profit potential in the future. The acquisitions of
International  Pharmacy  Management,   Inc.  ("IPM"),  Catalyst  and  PNNC  have
contributed significantly to the growth of our PBM business.

  PHARMACY BENEFIT MANAGEMENT

     We have established a nationwide  network of over 50,000 retail pharmacies.
In general,  clients  contract with us to access our negotiated  retail pharmacy
network rates,  participate in certain rebate  arrangements  with  manufacturers
based on formulary design and benefit from the other care enhancement  protocols
in our  system.  Our  primary  PBM  services  consist  of the  automated  online
processing of prescription claims on behalf of our clients. When a member of one
of our clients 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-payment to the retail pharmacy and the pharmacist  fills the
prescription.  On behalf of our clients,  we electronically  aggregate  pharmacy
benefit claims, which include prescription costs plus our claims processing fees
for consolidated  billing and payment.  We receive payments from clients,  remit
the amounts owed to the retail  pharmacies  pursuant to our negotiated rates and
retain the difference, including claims processing fees.

     Pharmacy  benefit claim payments from our clients are recorded as revenues,
and prescription costs to be paid to pharmacies are recorded as direct expenses.
Under our network contracts, we have an independent obligation to pay pharmacies
for the drugs dispensed and  accordingly,  have assumed that risk independent of
our clients. When the Company administers pharmacy  reimbursement  contracts and
does not assume a credit risk, the Company  records only its  administrative  or
processing  fees as revenue.  Member  co-payments  are not  recorded as revenue.
Rebates earned under arrangements with manufacturers are recorded as a reduction
of direct  expenses.  The  portion  of  manufacturer  rebates  due to clients is
recorded as a reduction of revenue.

  SUPPLEMENTAL BENEFITS PROGRAMS

     The Company's supplemental benefits segment generates revenue from the sale
of membership  programs which provide insurance and other benefits.  The Company
has  distribution  agreements  with  many  of  the  nation's  largest  financial
institutions  (the  "distributors"),  along  with  leading  affinity  groups and
associations.  Additionally,  HealthExtras  has a  relationship  with  actor and
advocate Christopher Reeve to promote these benefits programs.

     Revenue is  generated by payments  for program  benefits and payments  from
certain  distributors.  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  distributor  for their  specific
membership program. The program revenue recognized by HealthExtras  includes the
cost of the  membership  benefits  supplied by others,  including  the insurance
components.  Payments from the  distributors  related to new member  enrollments
were recorded as revenue to the extent of the related  direct  expenses  through
September 30, 2002.  These payments by  distributors  were  discontinued at that
time under restructured marketing agreements.

                                       9
<PAGE>


     Direct  expenses  consist  principally of the cost of benefits  provided to
program members,  distributors'  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. 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 the  Company  with out any
related revenue.  The Company believes that current enrollment trends will allow
the  minimum  future  commitments  at March 31,  2003,  to be fully  utilized by
current enrollment levels.

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

THREE MONTHS ENDED MARCH 31, 2003, COMPARED TO THREE MONTHS ENDED MARCH 31, 2002

     REVENUE. Revenue from operations for the three months ended March 31, 2003,
was $91.7 million consisting of $78.4 million in revenue associated with the PBM
segment and $13.3 million in revenue  attributable to the supplemental  benefits
segment. PBM segment revenue increased by $43.9 million, including $26.1 million
from PNNC,  while the supplemental  benefits  segment revenue  decreased by $6.8
million.  Revenue for the first quarter of 2002 was $54.6 million  consisting of
approximately  $34.5 million and $20.1 million  attributable  to the PBM and the
supplemental benefits segments, respectively.

     DIRECT EXPENSES. Direct expenses for the three months ended March 31, 2003,
were $82.5 million  consisting of $72.4  million in direct  expenses  associated
with the PBM  segment  and $10.1  million  in direct  expenses  attributable  to
supplemental  benefits segment.  PBM segment direct expenses  increased by $40.2
million,  including  $24.6 million from PNNC,  while the  supplemental  benefits
segment direct expenses decreased by $2.4 million. Direct expenses for the first
quarter of 2002 were $44.7 million consisting of approximately $32.2 million and
$12.5  million  attributable  to the PBM  and  supplemental  benefits  segments,
respectively.  The direct  expenses of $82.5  million and $44.7  million for the
three month period ended March 31, 2003, and March 31, 2002,  represented  93.1%
and 82.6% of operating expenses for the respective periods.

     SELLING,  GENERAL AND ADMINISTRATIVE.  Selling,  general and administrative
expenses for the three month  period ended March 31, 2003,  totaled $6.1 million
or 6.9% of  operating  expenses,  $3.6  million  of  which  was  related  to the
Company's  PBM  services  segment,  $1.1  million  of which was  related  to the
management  of the  supplemental  benefits  segment,  while the  remaining  $1.4
million  related to corporate  overhead.  These expenses  include  approximately
$438,000 for creative development, product endorsement and market research, $2.5
million in compensation and benefits,  $814,000 in professional fees,  insurance
and taxes, $1.0 million in other expenses,  $406,000 in facility costs, $260,000
in travel expenses and $599,000 in depreciation  and  amortization.  The Company
has no  direct  marketing  expense  in the  first  quarter  of 2003,  as  direct
marketing expenses are now paid by the distributor.

     Selling,  general and  administrative  expenses  for the three month period
ended March 31, 2002 were approximately $9.4 million or 17.4% of total operating
expenses,  $1.6  million of which was  related  to the  Company's  PBM  services
segment,  $6.9 million of which related to the  management  of the  supplemental
benefits segment,  while the remaining  $900,000 related to corporate  overhead.
These expenses  included  approximately  $1.3 million for creative  development,
product endorsements and market research, $4.1 million in direct marketing, $1.9
million in compensation and benefits,  $342,000 in professional fees,  insurance
and taxes,  $400,000 in other expenses,  $672,000 in consolidation and shut down
costs of the Birmingham Alabama location,  $335,000 in facility costs,  $128,000
in travel expenses, and $222,000 in depreciation and amortization.


     INTEREST INCOME (EXPENSE) NET. Interest income (expense), net for the three
months ended March 31, 2003, was approximately $(149,000), compared to
approximately $56,000 of interest income for the three month period ended March
31, 2002. This was principally due to lower interest rates and interest owed on
an increased line of credit initiated in the fourth quarter of 2002. Interest
expense on borrowings for the first quarter of 2003 was approximately $184,000.

                                       10

<PAGE>


     PROVISION FOR INCOME TAXES.  Through the third quarter of 2002, the Company
maintained a full valuation  allowance against the Company's deferred tax assets
due to the uncertainty as to their ultimate realization. Due to the recording of
the full valuation allowance,  no provision for income taxes was recorded in the
first  quarter of 2002. As the Company  released its valuation  allowance in the
fourth  quarter of 2002,  the  Company,  using an  effective  tax rate of 38.6%,
recorded a provision  for income taxes of $1.2  million in the first  quarter of
2003.  See Note 8 to the  Notes to the  Consolidated  Financial  Statements  for
further information.

     MINORITY  INTEREST.  There was no  minority  interest  charge for the three
month  period  ended  March 31,  2003,  while the  Company  recorded  a minority
interest charge of approximately  $45,000 for the three month period ended March
31, 2002. The $45,000 charge  represents the net income  attributable to the 20%
minority  interest  holder of Catalyst  for the months of January  and  February
2002. As the Company purchased the remaining minority interest in March 1, 2002,
no additional  minority charge for Catalyst will appear on the Company's  future
financial statements.

         NET INCOME. Net income for the three month period ended March 31, 2003,
was $1.9 million compared to $584,000 for the three month period ended March 31,
2002. As a percentage of revenue net income increased from 1.1% to 2.0%.


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

     Cash and cash equivalents at March 31, 2003, totaled $23.9 million compared
to $31.0  million at March 31,  2002.  During the three month period ended March
31, 2003, the Company generated $9.5 million in cash from operating  activities,
paid   approximately   $50,000  in  cash  for   capital   expenditures,   repaid
approximately  $1.1  million  in  cash  to  satisfy  the  Catalyst   acquisition
promissory  note  and  repaid  $2.0  million  in  cash on the  revolving  credit
facility.

     CASH  PROVIDED BY OPERATING  ACTIVITIES.  The Company's  overall  operating
activities  generated $9.5 million of net cash from operations  during the first
quarter ended March 31, 2003, a $15.5  million or 258.1%  increase from the $6.0
million of net cash  utilized in the first  quarter  ended March 31,  2002.  The
increase is primarily  due to a $2.5 million  increase in income  before  income
taxes and the timing of payments to vendors  included in accounts payable offset
somewhat by the timing of payments from clients included in accounts receivable.

     CASH USED IN INVESTING  ACTIVITIES.  Cash used in investing  activities for
the three months ended March 31, 2003, was $1.1 million compared to $8.5 million
for the three months ended March 31, 2002. The decrease is due to a reduction in
capital  expenditures  and repayments  due on the promissory  note regarding the
Catalyst  acquistion  in the  2002  first  quarter.  As of March  1,  2003,  the
promissory note on the Catalyst acquistion has been satisfied.

     CASH FROM FINANCING  ACTIVITIES.  Cash used in financing activities for the
first  three  months  of 2003 was $2.0  million  compared  to cash  provided  by
investing  activities  of $12.5  million in the first three  months of 2002.  In
March 2003, the Company made a $2.0 million payment on the Company's outstanding
revolving  credit  facility;  while in the first  quarter of 2002,  the  Company
arranged  for a line of  credit  with a  financial  institution,  of which  $4.5
million was outstanding at March 31, 2002, and an $8.0 million  revolving credit
facility, of which $8.0 million was outstanding at March 31, 2002.

     The Company  anticipates  continuing to generate  positive  operating  cash
flow, which combined with available cash resources, should 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.

                                       11
<PAGE>



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

ITEM 4.  CONTROLS AND PROCEDURES
         -----------------------

     a) Evaluation of disclosure controls and procedures.  The Company maintains
control  and  procedures  designed  to ensure  that  information  required to be
disclosed in the reports that the Company files or submits under the  Securities
Exchange Act of 1934 is recorded, processed,  summarized and reported within the
time  periods  specified in the rules and forms of the  Securities  and Exchange
Commission.  Based  upon  their  evaluation  of those  controls  and  procedures
performed within 90 days of the filing date of this report,  the chief executive
officer  and the chief  financial  officer  of the  Company  concluded  that the
Company's disclosure controls and procedures were adequate.

     b) Changes in internal controls. The Company made no significant changes in
its internal controls or in other factors that could significantly  affect these
controls subsequent to the date of the evaluation of those controls by the chief
executive officer and chief financial officer.


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

     None

Item 3.  DEFAULTS UPON SENIOR SECURITIES

     None

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None

Item 5.  OTHER INFORMATION

     None


                                       12
<PAGE>



Item 6.  EXHIBITS AND REPORTS ON FORMS 8-K

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

     Exhibit No.                                          Description
     --------------------------------------------------------------------------
       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)
       11.1       Computation of Per Share Earnings (Incorporated by reference
                  in Part I, hereto)
       99.1       Certifications pursuant to Section 906 of the Sarbanes Oxley
                  Act of 2002.
--------------
(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.
(5)      Incorporated herein by reference into this document from the Exhibits
         to the Form 10-K filed on April 2, 2001.

2.       Reports on Form 8-K

     On February 3, 2003,  the Company filed an amended  Current  Report on Form
8-K/A which  provided the financial  statements  relating to the  acquisition of
Pharmacy Network National  Corporation which was initially reported on a Current
Report on Form 8-K on December 16, 2002.

     On  February  4,  2003,  the  Company  filed a  Current  Report on Form 8-K
reporting  financial  results for the quarter ended and year-ended  December 31,
2002.

     On February 5, 2003,  the Company filed an amended  Current  Report on Form
8-K/A to correct an error that was  inadvertently  caused in the  conversion  to
EDGAR  format on the Form 8-K/A that was filed by the  Company  on  February  3,
2003.


                                       13

<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, 2003              By: /s/ David T. Blair
                                     -------------------------------
                                     David T. Blair
                                     Chief Executive Officer and Director


Date:  May 15, 2003              By: /s/ Michael P. Donovan
                                     -------------------------------
                                     Michael P. Donovan
                                     Chief Financial Officer and
                                     Chief Accounting Officer

                                       14

<PAGE>


                 CERTIFICATIONS UNDER RULES 13a-14 AND 15d-14 OF
                       THE SECURITIES EXCHANGE ACT OF 1934

I, David T. Blair certify that:

 1.  I have reviewed this quarterly report on Form 10-Q of HealthExtras, Inc.

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

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

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

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

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c.  Presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosure  controls and procedures  based on our
         evaluation as of the Evaluation Date;

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

     a.  All  significant  deficiencies  in the design or  operation of internal
         controls  which  could  aversely  affect  the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

     b.  Any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

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

Date:    May 15, 2003                /s/ David T. Blair
                                     -----------------------
                                     David T. Blair
                                     Chief Executive Officer




<PAGE>



                 CERTIFICATIONS UNDER RULES 13a-14 AND 15d-14 OF
                       THE SECURITIES EXCHANGE ACT OF 1934

I, Michael P. Donovan, certify that:

 1.  I have reviewed this quarterly report on Form 10-Q of HealthExtras, Inc.

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

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

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

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

     b.  Evaluated the effectiveness of the registrant's disclosure controls and
         procedures as of a date within 90 days prior to the filing date of this
         quarterly report (the "Evaluation Date"); and

     c.  Presented  in  this  quarterly   report  our   conclusions   about  the
         effectiveness  of the disclosures  controls and procedures based on our
         evaluation as of the Evaluation Date;

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

     a.  All  significant  deficiencies  in the design or  operation of internal
         controls  which  could  adversely  affect the  registrant's  ability to
         record,   process,   summarize  and  report  financial  data  and  have
         identified  for the  registrant's  auditors any material  weaknesses in
         internal controls; and

     b.  Any fraud,  whether or not material,  that involves management or other
         employees  who have a  significant  role in the  registrant's  internal
         controls; and

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

Date:    May 15, 2003                   /s/ Michael P. Donovan
                                        ------------------------
                                        Michael P. Donovan
                                        Chief Financial Officer