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

                                    FORM 10-Q


|X|          QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 2006

                                       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: 001-32361

                       METROPOLITAN HEALTH NETWORKS, INC.
             (Exact name of registrant as specified in its charter)

               Florida                                      65-063574
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                      Identification No.)

    250 Australian Avenue, Suite 400
          West Palm Beach, FL                                  33401
(Address of principal executive offices)                     (Zip Code)

                          (561) 805-8500 (Registrant's
                     telephone number, including area code)

                                      None
      (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 by check mark whether the registrant is a large accelerated filer,
       an accelerated filer, or a non-accelerated filer. See definition of
        "accelerated filer and large accelerated filer" in Rule 12b-2 of
                                the Exchange Act.

Large accelerated filer [_]   Accelerated filer [X]   Non-accelerated filer [_]

 Indicateby check mark whether the registrant is a shell company (as defined in
                        Rule 12b-2 of the Exchange Act).

                        Yes [_]                        No [X]

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

                 Class                           Outstanding at July 31, 2006
---------------------------------------        --------------------------------
Common Stock, $.001 par value per share                50,106,526 shares





                       METROPOLITAN HEALTH NETWORKS, INC.

                                      INDEX


Part I.   FINANCIAL INFORMATION                                           Page

Item 1.   Condensed Consolidated Financial Statements (Unaudited):

              Condensed Consolidated Balance Sheets
              as of June 30, 2006 and December 31, 2005                        4

              Condensed Consolidated Statements of
              Operations for the Three and Six Months Ended
              June 30, 2006 and 2005                                           5

              Condensed Consolidated Statements of
              Cash Flows for the Six Months Ended
              June 30, 2006 and 2005                                           6

              Notes to Condensed Consolidated
              Financial Statements                                          7-17

Item 2.   Management's Discussion and Analysis of
           Financial Condition and Results of
           Operations                                                      18-28

Item 3.   Quantitative and Qualitative Disclosures About Market Risk       28-29

Item 4.   Controls and Procedures                                             29

PART II.  OTHER INFORMATION

Item 1.       Legal Proceedings                                               30

Item 1A.      Risk Factors                                                    30

Item 2.       Changes in Securities and Use of Proceeds                       30

Item 3.       Default Upon Senior Securities                                  30

Item 4.       Submission of Matters to a Vote of Security Holders          30-31

Item 5.       Other Information                                               31

Item 6.       Exhibits                                                     31-32

SIGNATURES                                                                    33



                                       2


PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS



                                       3



               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
================================================================================



                                                JUNE 30, 2006      DECEMBER 31, 2005
                                                 (UNAUDITED)           (AUDITED)
                                              -----------------    -----------------
                                     ASSETS

                                                            
CURRENT ASSETS
  Cash and equivalents                        $      15,633,283    $      15,572,862
  Short-term investments
                                                      5,677,050                   --
  Accounts receivable, net of allowance
                                                      5,155,658            4,183,974
  Inventory
                                                        241,263              201,430
  prepaid expenses
                                                      1,070,721              473,286
  Deferred income taxes
                                                      3,400,000            3,500,000
  Other current assets
                                                        251,082              547,976
                                              -----------------    -----------------
  TOTAL CURRENT ASSETS
                                                     31,429,057           24,479,528

PROPERTY AND EQUIPMENT, net                           1,139,907              899,998

INVESTMENTS                                             940,757              627,819

GOODWILL, net                                         1,992,133            1,992,133

DEFERRED INCOME TAXES                                 3,680,000            4,493,000

OTHER ASSETS                                          1,012,774              622,628
                                              -----------------    -----------------
  TOTAL ASSETS                                $      40,194,628    $      33,115,106
                                              =================    =================

                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
 Accounts payable                             $         645,831    $         969,184
  Advance and unearned premiums
                                                      3,337,226                   --
  Estimated medical expenses payable
                                                      2,601,708              694,410
  Accrued payroll and payroll taxes
                                                      1,147,750            1,459,098
  Accrued expenses
                                                        742,980              293,552
                                              -----------------    -----------------
  TOTAL CURRENT LIABILITIES
                                                      8,475,495            3,416,244
                                              -----------------    -----------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred  stock,  par value  $.001 per
    share;  stated  value  $100 per share;
    10,000,000 shares authorized; 5,000
    issued and outstanding
                                                        500,000              500,000
  Common stock, par value $.001 per share;
   80,000,000 shares authorized;
   50,106,526 and 49,851,526 issued and
   outstanding, respectively
                                                         50,106               49,851
  Additional paid-in capital
                                                     40,712,061           40,182,889
  Accumulated deficit
                                                     (9,543,034)         (11,033,878)
                                              -----------------    -----------------
  TOTAL STOCKHOLDERS' EQUITY
                                                     31,719,133           29,698,862
                                              -----------------    -----------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $      40,194,628    $      33,115,106
                                              =================    =================


         The accompanying notes are an integral part of these Condensed
                       Consolidated Financial Statements.


                                       4



               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================



                               FOR THE SIX MONTHS ENDED JUNE 30,   FOR THE THREE MONTHS ENDED JUNE 30,
                                    2006              2005               2006               2005
                                (UNAUDITED)        (UNAUDITED)        (UNAUDITED)        (UNAUDITED)
                              ---------------    ---------------    ---------------    ---------------

                                                                           
REVENUES, net                 $   112,981,144    $    91,688,772    $    57,547,610    $    46,169,207
                              ---------------    ---------------    ---------------    ---------------

OPERATING EXPENSES
  Direct medical costs             95,297,419         77,332,404         48,334,576         38,799,286
  Other medical costs
                                    5,144,944          5,210,820          2,559,277          2,573,845
                              ---------------    ---------------    ---------------    ---------------
    Total medical expenses        100,442,363         82,543,224         50,893,853         41,373,131
 Administrative payroll,
  payroll taxes andbenefits         5,003,185          2,682,290          2,555,386          1,416,029
 Marketing and advertising
                                    1,995,854            156,189          1,021,924            155,819
 General and administrative
                                    3,549,237          2,739,344          1,977,221          1,371,308
                              ---------------    ---------------    ---------------    ---------------
       TOTAL EXPENSES             110,990,639         88,121,047
                                                                         56,448,384         44,316,287
                              ---------------    ---------------    ---------------    ---------------


OPERATING INCOME                    1,990,505          3,567,725          1,099,226          1,852,920
                              ---------------    ---------------    ---------------    ---------------

OTHER INCOME
  Interest income, net                412,138            137,049            222,700             71,975
  Other                                 1,201            129,614                 21             67,891
                              ---------------    ---------------    ---------------    ---------------
        TOTAL OTHER INCOME
                                      413,339            266,663            222,721            139,866
                              ---------------    ---------------    ---------------    ---------------


INCOME BEFORE INCOME TAXES          2,403,844          3,834,388          1,321,947          1,992,786

INCOME TAXES                         (913,000)        (1,447,000)          (502,800)          (750,000)
                              ---------------    ---------------    ---------------    ---------------
NET INCOME                    $     1,490,844    $     2,387,388    $       819,147    $     1,242,786
                              ===============    ===============    ===============    ===============

NET EARNINGS PER SHARE:
 Basic                        $          0.03    $          0.05    $          0.02    $          0.03
                              ===============    ===============    ===============    ===============
 Diluted                      $          0.03    $          0.05    $          0.02    $          0.02
                              ===============    ===============    ===============    ===============


         The accompanying notes are an integral part of these Condensed
                       Consolidated Financial Statements.


                                       5



               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
================================================================================



                                                                  FOR THE SIX MONTHS ENDED JUNE 30,
                                                                        2006             2005
                                                                  --------------    --------------

                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:
 Net income                                                       $    1,490,844    $    2,387,388
                                                                  --------------    --------------
 Adjustments to reconcile net income to
  net cash provided by operating
    activities:
    Depreciation and amortization                                        214,973           164,972
    Deferred income taxes                                                913,000           870,000
    Stock-based compensation expense                                     363,502                --
    Tax benefit on exercise of stock options                                  --           577,000
    Loss on disposal of assets                                               103                --
    Amortization of securities issued for professional services           26,175            88,375
    Changes in operating assets and liabilities:
      Accounts receivable, net                                          (971,684)       (2,125,986)
      Inventory                                                          (39,833)           17,872
      Prepaid expenses                                                  (597,435)         (549,788)
      Other current assets                                               296,895           236,624
      Other assets                                                         3,367          (287,947)
      Accounts payable                                                  (323,352)         (294,258)
      Advance and unearned premiums                                    3,337,226                --
      Estimated medical expenses payable                               1,907,298                --
      Accrued payroll                                                   (311,348)         (619,519)
      Accrued expenses                                                   449,427           467,303
                                                                  --------------    --------------
        Total adjustments                                              5,268,314        (1,455,352)
                                                                  --------------    --------------
           Net cash provided by operating activities                   6,759,158           932,036
                                                                  --------------    --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Short-term investments                                              (5,677,050)        1,500,000
  Investments                                                           (312,938)         (601,783)
  Pedemption of restricted certificates of deposit                            --         1,000,000
  Capital expenditures                                                  (848,499)         (160,322)
                                                                  --------------    --------------
           Net cash (used in)/provided by investing activities        (6,838,487)        1,737,895
                                                                  --------------    --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayments on notes payable                                                 --          (991,000)
  Repurchase of warrants                                                      --           (85,000)
  Proceeds from exercise of stock options and warrants                   139,750           384,435
  Net proceeds from issuance of common stock                                  --           134,750
                                                                  --------------    --------------
           Net cash provided by/(used in) financing activities           139,750          (556,815)
                                                                  --------------    --------------


NET INCREASE IN CASH AND EQUIVALENTS                                      60,421         2,113,116

CASH AND EQUIVALENTS - BEGINNING                                      15,572,862        11,344,113
                                                                  --------------    --------------
CASH AND EQUIVALENTS - ENDING                                     $   15,633,283    $   13,457,229
                                                                  ==============    ==============



         The accompanying notes are an integral part of these Condensed
                       Consolidated Financial Statements.


                                       6


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

================================================================================
NOTE 1.  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------------

    The accompanying  unaudited condensed consolidated financial statements have
    been prepared in accordance with accounting principles generally accepted in
    the United States of America for interim financial  information and with the
    instructions  to Form  10-Q.  Accordingly,  they do not  include  all of the
    information  and  footnotes  required  by  accounting  principles  generally
    accepted in the United States of America for complete financial  statements.
    In the opinion of management,  all  adjustments  considered  necessary for a
    fair  presentation  have been included and such  adjustments are of a normal
    recurring nature.  Operating results for the three and six months ended June
    30, 2006 are not necessarily  indicative of the results that may be expected
    for the year ending December 31, 2006.

    The audited  financial  statements at December 31, 2005, which were included
    in the  Company's  Form  10-K  filed on March  16,  2006,  should be read in
    conjunction with these condensed consolidated financial statements.

    Unless otherwise  indicated or the context requires,  all references in this
    Form 10-Q to the "Company" refers to Metropolitan Health Networks,  Inc. and
    its consolidated subsidiaries.

    SEGMENT REPORTING

    The Company applies Financial Accounting Standards Boards ("FASB") Statement
    No.  131,   "Disclosure   about   Segments  of  an  Enterprise  and  Related
    Information."  The Company has  considered its operations and has determined
    that,  in 2005,  it  operated,  and  continues  to operate  in 2006,  in two
    segments for purposes of presenting  financial  information  and  evaluating
    performance,  a Provider  Service  Network  (managed care and direct medical
    services), operated through its wholly owned subsidiary, Metcare of Florida,
    Inc. (the "PSN"),  and a Medicare Advantage HMO, operated through its wholly
    owned subsidiary Metcare Health Plans, Inc. (the "HMO").

    As such, the  accompanying  financial  statements  present  information in a
    format that is consistent with the financial  information used by management
    for internal use. See "Note 6. Business Segment  Information" for additional
    information regarding the Company's business segments.

    CASH AND EQUIVALENTS

    The Company considers all highly liquid investments with original maturities
    of three  months  or less to be cash  equivalents.  From  time to time,  the
    Company  maintains  cash balances with financial  institutions  in excess of
    federally insured limits.

    SHORT-TERM INVESTMENTS

    All  investments  with  original  maturities  of  greater  than 90 days  are
    accounted for in accordance with Statement of Financial Accounting Standards
    ("SFAS") No. 115,  "Accounting  for Certain  Investments  in Debt and Equity
    Securities." The Company  determines the appropriate  classification  at the
    time of purchase. As of June 30, 2006, the Company's short-term  investments
    consisted of  commercial  paper and  certificates  of deposit  classified as
    available-for-sale.  All income generated from these short-term  investments
    during the three and six months ended June 30, 2006 was recorded as interest
    income.

    LONG-TERM INVESTMENTS

    Long-term  investments,  which consist  primarily of an equity interest in a
    non-assessable  reciprocal insurance  organization through which the Company
    has renewed its malpractice insurance, are carried at cost. If an impairment
    occurs that is not considered temporary, the investment will be written down
    to net realizable value. Also included in long-term investments were certain
    certificates of deposit with original  maturities in excess of one year. All
    income  generated from these  long-term  certificates  of deposit during the
    three and six months ended June 30, 2006 was recorded as interest income.


                                       7


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    INCOME TAXES

    The Company  accounts  for income  taxes  pursuant to Statement of Financial
    Accounting  Standards No. 109,  "Accounting  for Income Taxes" ("SFAS 109"),
    which  requires  income  taxes to be  accounted  for  under  the  asset  and
    liability  method.  Under  this  method,  deferred  income  tax  assets  and
    liabilities  are  determined  based upon  differences  between the financial
    statement  carrying  amounts of existing  assets and  liabilities  and their
    respective tax bases using enacted tax rates in effect for the year in which
    the differences  are expected to reverse.  The effect on deferred tax assets
    and  liabilities  of a change in tax rates is  recognized in earnings in the
    period that includes the enactment date.

    SFAS No. 109  requires a  valuation  allowance  to reduce the  deferred  tax
    assets  reported if, based on the weight of the evidence,  it is more likely
    than not that some  portion or all of the  deferred  tax assets  will not be
    realized.  After  consideration  of all  the  evidence,  both  positive  and
    negative  (including,  among others,  projections of future taxable  income,
    current year net operating loss  carryforward  utilization and the Company's
    profitability  in  recent  years),   the  Company   determined  that  future
    realization  of its  deferred  tax assets was more  likely  than not. In the
    event it is  determined  that it is more  likely  than not that the  Company
    would not be able to realize all or part of its net  deferred  tax assets in
    the future, an adjustment to record a deferred tax asset valuation allowance
    would be charged to income in the period such  determination  would be made.
    Changes in deferred tax assets are reflected in the "Income  Taxes"  expense
    line of the Company's Condensed Consolidated Statements of Operations.

    Due to the  availability  of  deferred  tax assets  during the three and six
    months ended June 30, 2006, the Company has not recorded any amounts payable
    for U.S.  federal  income  taxes and does not expect  any cash  outlay to be
    required in connection with the income tax provisions.

    REVENUE RECOGNITION

    The Company's PSN is a party to two managed care contracts with Humana, Inc.
    (the "Humana  Agreements") and provides medical care to its patients through
    wholly-owned  and  contracted  independent  medical  practices and providers
    (collectively, the "Affiliated Providers").  Accordingly, the PSN receives a
    monthly fee for each patient that chooses one of the Affiliated Providers as
    his or her primary care  physician in exchange for the PSN's  assumption  of
    responsibility  for the provision of all necessary  medical services to such
    patient,  even those  medical  services not directly  provided by one of the
    Affiliated Providers. Fees received by the PSN under these Humana Agreements
    are  reported  as  revenues.  The  cost  of  both  Affiliated  Provider  and
    non-Affiliated  Provider  services  under these  Humana  Agreements  are not
    included as a deduction to net revenues of the Company,  but are reported as
    an  operating  expense.  Changes in  revenues  resulting  from the  periodic
    changes in risk  adjustment  scores are  recognized  when the amounts become
    determinable and the  collectibility  is reasonably  assured.  In connection
    with the Humana  Agreements,  the Company is exposed to losses to the extent
    of the PSN's share of deficits,  if any, on its  Affiliated  Providers.  The
    PSN's share of deficits is 100% for Medicare  Part A in the Central  Florida
    market,  50% for Medicare  Part A in the South  Florida  market and 100% for
    Medicare  Part B in both the  Central  Florida  and  South  Florida  market.
    Revenues  generated under the Humana Agreements  accounted for approximately
    88% and 99% of the Company's  total revenues for the quarters ended June 30,
    2006 and 2005, respectively,  and approximately 90% and 99% of the Company's
    total   revenues   for  the  six  months  ended  June  30,  2006  and  2005,
    respectively.

    Humana may immediately  terminate either of the Humana Agreements and/or any
    individual physician credentialed under the Humana Agreements,  upon written
    notice,  (i) if the PSN and/or any of its  Affiliated  Provider's  continued
    participation  may  adversely  affect the  health,  safety or welfare of any
    Humana  member or bring Humana into  disrepute;  (ii) in the event of one of
    the  PSN's  physician's  death or  incompetence;  (iii) if any of the  PSN's
    physicians fail to meet Humana's credentialing  criteria; (iv) in accordance
    with Humana's  policies and procedures as specified in Humana's manual,  (v)
    if the PSN engages in or acquiesces to any act of  bankruptcy,  receivership
    or  reorganization;  or (vi) if Humana loses its authority to do business in
    total or as to any limited  segment or business (but only to that  segment).
    The PSN and Humana may also terminate each of the Humana  Agreements upon 90
    days' prior written notice (with a 60 day  opportunity to cure, if possible)
    in the  event  of the  other's  material  breach  of the  applicable  Humana
    Agreement.


                                       8


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    Failure to  maintain  the Humana  Agreements  on  favorable  terms,  for any
    reason,  would  adversely  affect the Company's  results of  operations  and
    financial condition.

    The Company also  recognizes  non-Humana  fee-for-service  revenues,  net of
    contractual allowances,  as medical services are provided to patients by the
    Company's  wholly-owned  medical  practices.  These  services are  typically
    billed to patients, Medicare, Medicaid, health maintenance organizations and
    insurance  companies.  The Company  provides an allowance for  uncollectible
    amounts and for contractual  adjustments  relating to the difference between
    standard charges and agreed upon rates paid by certain third party payers.

    Effective  July 1, 2005 the  Company had the  requisite  Florida and federal
    licenses, approvals and contract to begin marketing, enrolling and providing
    services to Medicare  beneficiaries  through its own Medicare Advantage HMO.
    The contract  with the Centers for Medicare  and Medicaid  Services  ("CMS")
    renews on an annual  basis.  The HMO  receives  a monthly  premium  for each
    enrollee in its plan and is  responsible  for the  provision  of all covered
    medical  services for that  enrollee.  Premium  revenues are  recognized  as
    income in the period members are entitled to receive  services,  and are net
    of retroactive  membership  adjustments.  Retroactive membership adjustments
    result from  enrollment  changes not yet  processed,  or not yet reported by
    CMS.  Changes in revenues  from CMS resulting  from the periodic  changes in
    risk  adjustment  scores for the HMO's  membership are  recognized  when the
    amounts become determinable and the collectibility is reasonably assured.

    MARKETING AND ADVERTISING COSTS

    Marketing  and  advertising  costs are expensed as incurred.  Marketing  and
    advertising  expense was  approximately  $1.0  million and  $156,000 for the
    quarters  ended June 30, 2006 and 2005,  respectively,  and $2.0 million and
    $156,000 for the six months ended June 30, 2006 and 2005, respectively.

    RECLASSIFICATION

    Certain amounts reported in the comparative  financial  statements have been
    reclassified  to conform to the  presentation  for the period ended June 30,
    2006.

    USE OF ESTIMATES

    Revenue, Expense and Receivables

    The  preparation  of financial  statements  in  conformity  with  accounting
    principles  generally  accepted  in the United  States of  America  requires
    management  to make  estimates  and  assumptions  that  affect  the  amounts
    reported in the accompanying financial statements. The most significant area
    requiring  estimates  relates to the PSN's  arrangements  with Humana.  Such
    estimates are based on knowledge of current  events and  anticipated  future
    events,  and accordingly,  actual results may ultimately  differ  materially
    from those estimates.

    With regard to revenues,  expenses and  receivables  arising from the Humana
    Agreements, the Company estimates the amounts it believes will ultimately be
    realizable  based in part upon estimates of claims incurred but not reported
    ("IBNR") and estimates of retroactive  adjustments or unsettled  costs to be
    applied by Humana. The IBNR estimates are made by Humana utilizing actuarial
    methods and are  continually  evaluated by  management  of the Company based
    upon its specific claims experience.  It is reasonably possible that some or
    all of these estimates could change in the near term by an amount that could
    be material to the financial statements.

    From time to time,  Humana  charges  the PSN for certain  medical  expenses,
    which the Company  believes are erroneous or are not supported by the Humana
    Agreements.  Management's  estimate of recovery  on these  contestations  is
    based upon its judgment and its  consideration of several factors  including
    the  nature  of the  contestations,  historical  recovery  rates  and  other
    qualitative factors.

    During  2005,  the Company  incurred  approximately  $4.0 million of medical
    costs  related  to  the  implantation  of  certain   Implantable   Automatic
    Defibrillators  ("AICD's").  CMS directed that the costs of certain of these
    procedures  that met 2005  eligibility  requirements  be paid by CMS, rather
    than billed to Medicare  Advantage plans. The Company is working with Humana
    and the related  providers to secure  reimbursement  for these amounts,  and
    estimated a recovery of  approximately  $2.2  million at December  31, 2005.
    Approximately  $379,000 of this amount was  collected  during the six months
    ended June 30,  2006,  while an  additional  $500,000 was written off due to
    revised  guidance  issued by CMS in July 2006 regarding the costs payable by
    CMS in  connection  with these  procedures.  Accordingly,  related  accounts
    receivable in the accompanying consolidated balance sheets were $1.3 million
    and $2.2 million at June 30, 2006 and December 31, 2005, respectively. It is
    reasonably  possible that this estimate  could change in the near term by an
    amount that could be material to the financial statements.


                                       9


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    Included in revenues for the quarter and six months ended June 30, 2006 were
    estimated  amounts  payable to the Company as a result of funding  increases
    under the Medicare risk adjustment  ("MRA") program.  The purpose of the MRA
    program is to use  health  status  indicators  to improve  the  accuracy  of
    payments and establish incentives for plans to enroll and treat less healthy
    Medicare  beneficiaries.   From  2000  to  2003,  risk  adjustment  payments
    accounted  for only 10% of the payment  made by CMS to the  Medicare  health
    plans,  with the remaining  90% based on  demographic  factors.  In 2004 and
    2005,  the  percentage  of  payment  attributable  to  risk  adjustment  was
    increased  to  30%  and  50%,   respectively.   The  percentage  of  payment
    attributable to risk has increased to 75% in 2006, with the 100% phase-in of
    risk-adjusted  payment  anticipated  to be completed  in 2007.  Based on the
    Company's  applicable risk scores,  the Company accrued  approximately  $3.5
    million  during the six months  ended June 30, 2006  related to  incremental
    revenues  anticipated  to  be  received  as a  result  of  the  MRA  funding
    increases.  These amounts,  which are included in accounts receivable in the
    accompanying  consolidated  balance sheets at June 30, 2006, are expected to
    be received by the Company in the second half of the year,  consistent  with
    the timing of prior  year  payments.  It is  reasonably  possible  that this
    estimate  could  change in the near term by an amount that could be material
    to the financial statements.

    Non-Humana fee-for-service accounts receivable, aggregating to approximately
    $1,145,000   and   $797,000  at  June  30,  2006  and   December  31,  2005,
    respectively,   relate   principally  to  medical  services  provided  on  a
    non-capitated   basis,   and  are  reduced  by  amounts   estimated   to  be
    uncollectible  (approximately  $755,000  and  $555,000  at June 30, 2006 and
    December 31, 2005,  respectively).  Management's  estimate of  uncollectible
    amounts is based  upon its  analysis  of  historical  collections  and other
    qualitative  factors,  however it is  possible  the  Company's  estimate  of
    uncollectible  amounts could change in the near term. In addition,  accounts
    receivable  at June 30, 2006 and  December 31, 2005  includes  approximately
    $299,000  and  $159,000,  respectively,  due to the  HMO  from  CMS  and HMO
    enrollees.

    With regards to the HMO, the cost of medical  benefits is  recognized in the
    period in which services are provided and includes an IBNR estimate based on
    management's  best estimate of medical  benefits  payable.  It is reasonably
    possible that some or all of these  estimates  could change in the near term
    by an amount that could be material to the financial statements.

    The HMO memberships'  average risk adjustment  factor declined from December
    2005 to June 2006 as a result of a large influx of new members in 2006. This
    decline resulted in decreased average member monthly  premiums.  The Company
    believes that the actual average risk  adjustment  factor for its population
    during  this  period was higher and that an increase  will be  reflected  as
    claims  and  health  data for these new  members  are  entered  into the CMS
    system, which is expected to result in retroactive premium adjustments.  The
    Company cannot estimate the amount of the anticipated  increase at this time
    but believes this amount may be material to the results of the HMO.


    Accounting for Prescription Drug Benefits under Medicare Part D

    On January  1, 2006,  the HMO and the PSN,  through  the Humana  Agreements,
    began   covering   prescription   drug  benefits  in  accordance   with  the
    requirements  of Medicare Part D, to the HMO's and PSN's Medicare  Advantage
    members.  The benefits  covered under Medicare Part D are in addition to the
    benefits covered by the HMO and the PSN under Medicare Parts A and B.

    In general, pursuant to Medicare Part D, pharmacy benefits may vary in terms
    of  coverage  levels  and  out-of-pocket  costs  for  beneficiary  premiums,
    deductibles and  co-insurance.  However,  all Part D plans must offer either
    "standard   coverage"  or  its  actuarial   equivalent  (with  out-of-pocket
    threshold  and  deductible  amounts  that do not  exceed  those of  standard
    coverage).  These "defined standard" benefits represent the minimum level of
    benefits mandated by Congress. In addition to defined standard plans offered
    by the HMO, the PSN, through the Humana Agreements, offers prescription drug
    plans containing benefits in excess of the standard coverage limits.

    The payment the Company's HMO receives monthly from CMS generally represents
    its bid amount for  providing  insurance  coverage.  The Company  recognizes
    premium revenue for providing this insurance  coverage ratably over the term
    of its  annual  contract.  However,  its CMS  payment  is subject to 1) risk
    corridor  adjustments and 2) subsidies in order for the HMO and CMS to share
    the risk associated with financing the ultimate costs of the Part D benefit.


                                       10


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    The  amount of revenue  payable  to a plan by CMS is subject to  adjustment,
    positive or negative,  based upon the  application  of risk  corridors  that
    compare a plan's revenues targeted in their bids ("target amount') to actual
    prescription drug costs.  Variances  exceeding certain thresholds may result
    in CMS making additional payments to the HMO or require the HMO to refund to
    CMS a portion of the payments it received.  Actual  prescription  drug costs
    subject to risk sharing with CMS are limited to the costs that are, or would
    have  been,   incurred  under  the  CMS  "defined   standard"  benefit  plan
    ("allowable risk corridor  costs").  The Company estimates and recognizes an
    adjustment  to  premium  revenues  related  to  the  risk  corridor  payment
    adjustment  based upon pharmacy  claims  experience to date as if the annual
    contract were to end at the end of each reporting period. Accordingly,  this
    estimate provides no consideration to future pharmacy claims experience.  It
    is reasonably  possible that this estimate  could change in the near term by
    an amount that could be material.

    Certain subsidies represent  reimbursements from CMS for claims the HMO paid
    for which it assumes no risk, including  reinsurance payments and low-income
    cost  subsidies.   Claims  paid  above  the  out-of-pocket  or  catastrophic
    threshold for which the HMO is not at risk are all reimbursed by CMS through
    the  reinsurance   subsidy  plans.   Low-income  cost  subsidies   represent
    reimbursements  from  CMS  for  all  or a  portion  of the  deductible,  the
    coinsurance  and the co-payment  amounts for low-income  beneficiaries.  The
    Company  accounts for these subsidies as current  liabilities in its balance
    sheet and as an  operating  activity in its  statement  of cash  flows.  The
    Company  does not  recognize  premium  revenue or claims  expense  for these
    subsidies.

    The HMO recognizes pharmacy benefit costs as incurred.  It has subcontracted
    the  pharmacy  claims  administration  to a  third  party  pharmacy  benefit
    manager.

    With  regards  to the PSN,  the  Company  receives  Medicare  Part D revenue
    pursuant to the  applicable  percent of premium  provided  for in the Humana
    Agreements.  Humana does not provide the Company with a separate  accounting
    for Part D premium and  expense.  As with its HMO,  the  Company  recognizes
    pharmacy  benefit  costs as such costs are incurred by the PSN. With regards
    to the estimated  amount of any risk corridor  adjustments,  the Company has
    relied upon  estimates  provided by Humana to the Company and has recorded a
    downward  adjustment  to premium  revenue  based on these  estimates.  It is
    reasonably  possible that this estimate  could change in the near term by an
    amount that could be material.

    Deferred Tax Asset

    The Company has recorded a deferred tax asset of approximately  $7.1 million
    at June 30,  2006.  Realization  of the  deferred  tax asset is dependent on
    generating  sufficient  taxable  income  in the  future.  The  amount of the
    deferred tax asset  considered  realizable  could change in the near term if
    estimates of future  taxable  income are modified and those changes could be
    material.

    ACCOUNTS RECEIVABLE

    Accounts receivable at June 30, 2006 and December 31, 2005 were as follows:



                                                JUNE 30, 2006     DECEMBER 31, 2005
                                              -----------------   -----------------

                                                            
        Humana accounts receivable, net       $       4,467,000   $       3,782,000
        Non-Humana accounts receivable, net             689,000             402,000
                                              -----------------   -----------------
        Accounts receivable, net              $       5,156,000   $       4,184,000
                                              =================   =================


    EARNINGS PER SHARE

    The Company  applies  Statement of Financial  Accounting  Standards No. 128,
    "Earnings Per Share" ("SFAS 128") which requires  presentation of both basic
    net income per share and diluted net income per share.  Basic  earnings  per
    share is  computed  using the  weighted  average  number  of  common  shares
    outstanding during the period.  Diluted earnings per share is computed using
    the weighted average number of common shares  outstanding  during the period
    adjusted  for  incremental  shares  attributed  to  outstanding  options and
    warrants,  convertible  debt and preferred stock  convertible into shares of
    common stock.


                                       11


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)



                                                   FOR THE SIX MONTHS ENDED JUNE 30,      FOR THE THREE MONTHS ENDED JUNE 30,
                                                       2006                2005                2006                2005
                                                 ----------------    ----------------    ----------------    ----------------

                                                                                                 
Net Income                                       $      1,491,000    $      2,387,000    $        819,000    $      1,243,000

Less:  Preferred stock dividend                           (25,000)            (25,000)            (13,000)            (13,000)
                                                 ----------------    ----------------    ----------------    ----------------
Income available to common shareholders          $      1,466,000    $      2,362,000    $        806,000    $      1,230,000
                                                 ================    ================    ================    ================
Denominator:

Weighted average common shares outstanding             49,916,000          48,435,000          49,971,000          48,745,000
                                                 ================    ================    ================    ================
Basic earnings per common share                  $           0.03    $           0.05    $           0.02    $           0.03
                                                 ================    ================    ================    ================

Income available to common shareholders          $      1,466,000    $      2,362,000    $        806,000    $      1,230,000
                                                 ================    ================    ================    ================

Denominator:

Weighted average common shares outstanding             49,916,000          48,435,000          49,971,000          48,745,000
Common share equivalents of outstanding stock:
  Options and warrants                                  1,356,000           2,351,000           1,369,000           2,135,000
                                                 ----------------    ----------------    ----------------    ----------------

Weighted average common shares outstanding             51,272,000          50,786,000          51,340,000          50,880,000
                                                 ================    ================    ================    ================
Diluted earnings per common share                $           0.03    $           0.05    $           0.02    $           0.02
                                                 ================    ================    ================    ================



    NEW ACCOUNTING PRONOUNCEMENTS

    In November 2004, the Financial  Accounting  Standards Board ("FASB") issued
    Statement of  Financial  Accounting  Standards  No. 151,  "Inventory  Costs"
    ("SFAS No. 151"), which is effective for fiscal periods beginning after June
    15, 2005.  This statement  clarifies the accounting for abnormal  amounts of
    idle facility expense,  freight,  handling costs, and wasted material. These
    items are required to be recognized as current period charges  regardless of
    whether they meet the criterion of "so  abnormal."  The adoption of SFAS No.
    151 did not have a material impact on the Company's financial statements.

    In  December  2004,  the  FASB  issued  Statement  of  Financial  Accounting
    Standards No. 153, "Exchange of Non-Monetary Assets" ("SFAS No. 153"), which
    is effective for fiscal periods  beginning after June 15, 2005. In the past,
    the net book value of the assets relinquished in a non-monetary  transaction
    was used to measure the value of the assets  exchanged.  Under SFAS No. 153,
    assets exchanged in a non-monetary transaction will be at fair value instead
    of the net book value of the asset relinquished,  as long as the transaction
    has  commercial  substance  and the fair  value of the assets  exchanged  is
    determinable  within reasonable limits. The adoption of SFAS No. 153 did not
    have a material effect on the Company's financial statements.

    SFAS No. 154,  Accounting Changes and Error  Corrections,  was issued in May
    2005 and  replaces  APB Opinion No. 20  (Accounting  Changes) and SFAS No. 3
    (Reporting Accounting Changes in Interim Financial Statements). SFAS No. 154
    requires  retrospective  application  for  voluntary  changes in  accounting
    principle in most  instances and is required to be applied to all accounting
    changes made in fiscal years  beginning after December 15, 2005. The Company
    adopted  SFAS No.  154 on  January  1,  2006 and it did not have a  material
    impact on the  Company's  consolidated  financial  condition  or  results of
    operations.

    In July 2006, the FASB issued FASB  Interpretation  No. 48,  "Accounting for
    Uncertainty in Income Taxes-an Interpretation of FASB Statement 109", or FIN
    48.  FIN 48  prescribes  a  comprehensive  model  for how a  company  should
    recognize,  measure,  present,  and  disclose  in its  financial  statements
    uncertain tax  positions  that the company has taken or expects to take on a
    tax return.  FIN 48 also revises  disclosure  requirements  and introduces a
    prescriptive, annual, tabular roll-forward of the unrecognized tax benefits.
    FIN 48, which will become  effective  for the Company  beginning  January 1,
    2007, requires the change in net assets that results from the application of
    the new  accounting  model to be  reflected  as an  adjustment  to  retained
    earnings. The Company currently is evaluating the impact of adopting FIN 48.


                                       12


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

================================================================================
NOTE 2.  DEBT
--------------------------------------------------------------------------------

    On May 6, 2005 the Company  executed an unsecured  commercial line of credit
    agreement with a bank, which provided for borrowings and issuance of letters
    of credit of up to $1.0  million.  The credit line expired on March 31, 2006
    and was automatically  renewed with a new expiration date of March 31, 2007.
    The  outstanding  balance,  if any, bears interest at the bank's prime rate.
    The credit  facility  requires the Company to comply with certain  financial
    covenants,  including a minimum liquidity  requirement of $2.0 million.  The
    availability  under the line of  credit  secures  a $1.0  million  letter of
    credit that the  Company  has caused to be issued in favor of Humana.  As of
    June 30, 2006, the Company has not utilized this commercial line of credit.

================================================================================
NOTE 3.  STOCK BASED COMPENSATION
--------------------------------------------------------------------------------

    The  Company  has three  stock  option  plans that are  administered  by the
    Compensation Committee of the Board of Directors. The 2001 Stock Option Plan
    and  the  Supplemental  Stock  Option  Plan  have  1,110,110  and  1,365,400
    outstanding  options granted under the plans,  respectively,  as of June 30,
    2006.  The Company does not intend to issue  additional  options from either
    plan in the  future.  The Omnibus  Equity  Compensation  Plan (the  "Omnibus
    Plan")  provides for the grant of  non-qualified  or incentive stock options
    and other stock based awards to directors,  executives  and key employees of
    the Company,  as well as to any other persons  approved by the  Compensation
    Committee.  A total of 6,000,000 shares of  Metropolitan's  common stock are
    authorized  for  issuance  pursuant the Omnibus  Plan.  As of June 30, 2006,
    options granted pursuant to the Omnibus Plan to purchase 2,780,033 shares of
    the  Company's  common stock are  currently  outstanding.  Under the Omnibus
    Plan,  options are granted at the fair market value of the stock at the date
    of grant and expire no later than 10 years after the date of grant.  Options
    granted  under this  Omnibus  Plan  generally  vest over  periods up to four
    years.

    Prior to January 1, 2006, the Company followed  Accounting  Principles Board
    Opinion No. 25, ("APB No. 25"),  "Accounting for Stock Issued to Employees,"
    and related  Interpretations  in accounting  for its employee stock options.
    Under APB No. 25, when the exercise  price of the Company's  employee  stock
    options equaled or exceeded the market price of the underlying  stock on the
    date of grant, no compensation expense was recognized.  Stock options issued
    to independent  contractors or consultants  were accounted for in accordance
    with Statement of Financial  Accounting  Standards  ("SFAS") No. 123, ("SFAS
    No. 123"),  "Accounting for Stock-Based  Compensation."  For the quarter and
    six months ended June 30, 2005, no stock-based employee compensation expense
    was  recognized  in the  accompanying  condensed  consolidated  statement of
    income.

    Effective  January 1, 2006,  the Company  adopted SFAS No. 123(R) ("SFAS No.
    123(R)"),  "Share-Based Payment," which is a revision of SFAS No. 123, using
    the modified  prospective  transition  method and therefore has not restated
    prior   periods'   results.   Under  the  transition   method,   stock-based
    compensation   expense  for  the  first  quarter  of  fiscal  2006  included
    compensation  expense for all stock-based  compensation awards granted prior
    to, but not yet vested as of, January 1, 2006,  based on the grant date fair
    value estimated in accordance  with the original  provision of SFAS No. 123.
    Stock-based  compensation expense for all share-based payment awards granted
    after  January 1, 2006 is based on the  grant-date  fair value  estimated in
    accordance  with the provisions of SFAS No. 123(R).  The Company  recognizes
    these compensation costs net of an estimated  forfeiture rate and recognizes
    the  compensation  costs for only those shares expected to vest. The Company
    calculates  the fair value of employee  stock options using a  Black-Scholes
    option  pricing  model at the time the stock  options  are  granted and that
    amount is amortized on a straight-line  basis over the vesting period of the
    stock options,  which is generally up to four years.  The Company  estimated
    the forfeiture rate based on its historical experience.

    The fair value for  employee  stock  options  granted  during the six months
    ended  June 30,  2006 was  calculated  based on the  following  assumptions:
    risk-free  interest  rate  from  4.80%  to  4.99%;  dividend  yield  of  0%;
    volatility factor of the expected market price of the Company's common stock
    of 50%; and expected  option  lives of two years.  The expected  life of the
    options  is based  on the  historical  exercise  behavior  of the  Company's
    employees.  The  expected  volatility  factor  is  based  on the  historical
    volatility of the market price of the Company's  common stock. The risk-free
    rate for periods within the  contractual  life of the option is based on the
    U.S. Treasury yield curve in effect at the time of grant.


                                       13


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    As a result of adopting SFAS No. 123(R) on January 1, 2006,  for the quarter
    and six month  periods  ended June 30, 2006,  the  Company's  income  before
    income taxes was  approximately  $162,000 and $364,000 lower,  respectively,
    and  net  income  was  lower  by   approximately   $101,000  and   $227,000,
    respectively,   than  if  it  had  continued  to  account  for   share-based
    compensation  under APB No. 25. The total income tax benefit  recognized  in
    the income statement for share-based  compensation was approximately $61,000
    and  $137,000  for the quarter and six month  periods  ended June 30,  2006.
    Basic and diluted  earnings  per share for the quarter and six months  ended
    June 30, 2006 would have remained unchanged at $.02 and $.03,  respectively,
    if the Company had not adopted SFAS No. 123(R).

    SFAS No. 123(R)  requires the tax benefits  resulting from tax deductions in
    excess of the compensation cost recognized for options (excess tax benefits)
    to be  classified  as financing  cash flows.  For the quarter and six months
    ended June 30, 2006,  the Company had net operating loss  carryforwards  and
    did not  recognize  any tax  benefits  resulting  from the exercise of stock
    options  because  the related tax  deductions  would not have  resulted in a
    reduction of income taxes  payable.  During the quarter and six months ended
    June 30, 2006, the Company issued 170,000 and 195,000 shares of common stock
    resulting  from the exercise of stock options,  respectively.  Cash received
    from the option  exercises was  approximately  $131,000 and $140,000 for the
    quarter and six months ended June 30, 2006.

    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 No.  123 for the  quarter  and six  months  ended  June 30,  2005.  For
    purposes of this pro forma disclosure,  the fair value of these options were
    estimated at the date of grant using a  Black-Scholes  option  pricing model
    based on the following assumptions for the quarter and six months ended June
    30, 2005: risk-free interest rate from 2.82% to 4.24%; dividend yield of 0%;
    volatility factor of the expected market price of the Company's common stock
    of 50%;  and  expected  option  lives  ranging from one to four and one-half
    years, depending on the vesting provisions of each option. The expected life
    of the options is based on the historical exercise behavior of the Company's
    employees.  The  expected  volatility  factor  is  based  on the  historical
    volatility of the market price of the Company's  common stock. The risk-free
    rate for periods within the  contractual  life of the option is based on the
    U.S.  Treasury yield curve in effect at the time of grant. The Company's pro
    forma information follows:



                                                      SIX MONTHS ENDED    THREE MONTHS ENDED
                                                        JUNE 30, 2005         JUNE 30, 2005
                                                     ------------------   ------------------
                                                                    
    Net income, as reported                          $        2,387,000   $        1,243,000
    Less:  Total stock-based employee compensation
           expense determined under SFAS No. 123
           for all awards, net of related tax                  (482,000)            (219,000)
                                                     ------------------   ------------------

    Pro forma net income                             $        1,905,000            1,024,000
                                                     ==================   ==================

    Earnings per share:
            Basic, as reported                       $             0.05   $             0.03
                                                     ==================   ==================
            Basic, pro forma                         $             0.04   $             0.02
                                                     ==================   ==================
            Diluted, as reported                     $             0.05   $             0.02
                                                     ==================   ==================
            Diluted, pro forma                       $             0.04   $             0.02
                                                     ==================   ==================



                                       14


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    Stock option  activity as of June 30, 2006 and changes during the six months
    ended June 30, 2006 were as follows:



                                 OPTIONS         EXERCISE PRICE        VALUE
                             ---------------    ---------------   ---------------

                                                                      
Balance, December 31, 2005         6,385,810    $          1.63                --
Granted                               50,000    $          2.08                --
Exercised and returned              (195,000)   $          0.72                --
Forfeited and expired               (985,267)   $          2.49                --
                             ---------------
Balance, June 30, 2006             5,255,543    $          1.51   $     7,314,287

                             ===============
Exercisable, June 30, 2006         3,125,870    $          1.25   $     5,397,830
                             ===============



    The weighted-average grant-date fair value of options granted during the six
    months ended June 30, 2006 and 2005 was $0.65 and $0.93,  respectively.  The
    aggregate  intrinsic  value in the table above  represents  the total pretax
    intrinsic value (the difference between the Company's closing stock price on
    the last  trading day of the first  quarter of fiscal 2006 and the  exercise
    price,  multiplied  by the number of  in-the-money  options) that would have
    been received by the option holders had all option holders  exercised  their
    options on June 30,  2006.  This amount will change based on the fair market
    value of the Company's stock. Total intrinsic value of options exercised for
    the six months ended June 30, 2006 and 2005 was  approximately  $382,000 and
    $1,532,000,  respectively.  Total fair  value of options  vested for the six
    months ended June 30, 2006 and 2005 was approximately  $87,000 and $101,000,
    respectively.

    As of June 30, 2006, there was $833,446 of total  unrecognized  compensation
    cost related to non-vested stock options, which is expected to be recognized
    over a weighted-average period of 1.34 years.

    The following table summarizes  information about stock options  outstanding
    and exercisable at June 30, 2006:



                         OPTIONS OUTSTANDING                                         OPTIONS EXERCISABLE
                        --------------------                                         -------------------
                                WEIGHTED      WEIGHTED AVERAGE                 WEIGHTED       WEIGHTED AVERAGE
                 NUMBER OF      AVERAGE          REMAINING       NUMBER OF      AVERAGE          REMAINING
EXERCISE PRICE    OPTIONS    EXERCISE PRICE   CONTRACTUAL LIFE    OPTIONS    EXERCISE PRICE   CONTRACTUAL LIFE
--------------   ---------   --------------   ----------------   ---------   --------------   ----------------
                                                                                     
$0.35 - $1.00    2,040,510   $         0.51               2.51   1,990,510             0.50               2.43
$1.14 - $1.98    2,383,233   $         1.82               7.92      90,785             1.78               6.99
$2.05 - $2.69      631,800   $         2.26               8.55      44,575             2.45               6.06
$4.00 - $6.50      200,000   $         5.63               0.68     200,000             5.63               0.68
                 ---------                                       ---------
                 5,255,543   $         1.51               5.62   3,125,870             1.25               3.64
                 =========                                       =========


    Non-vested  stock option  awards as of June 30, 2006 and changes  during the
    six months ended June 30, 2006 were as follows:

                                                            WEIGHTED AVERAGE
                                             NUMBER OF        GRANT-DATE
                                              SHARES          FAIR VALUE
                                         ----------------   ----------------

        Non-vested, December 31, 2005          2,337,782    $           0.94
        Granted                                   50,000    $           0.65
        Vested                                  (137,075)   $           0.63

        Forfeited and expire                    (121,034)   $           1.13
                                         ----------------
        Non-vested, June 30, 2006              2,129,673    $           0.94
                                         ================


                                       15


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

    Non-vested  restricted  stock awards as of June 30, 2006 and changes  during
    the six months ended June 30, 2006 were as follows:

                                                        WEIGHTED AVERAGE
                                        RESTRICTED         GRANT-DATE
                                          SHARES           FAIR VALUE
                                     ----------------   ----------------

        Balance, December 31, 2005                 --   $             --
        Granted                                60,000   $           2.08
        Vested                                     --   $             --
        Forfeited and expired                      --   $             --
                                     ----------------   ----------------
        Balance, June 30, 2006                 60,000   $           2.08
                                     ================   ================

    In the quarter and six months ended June 30, 2006,  there was  approximately
    $26,000 of compensation costs related to non-vested restricted stock awards.
    As of June 30, 2006,  there was $98,325 of total  unrecognized  compensation
    cost related to non-vested  restricted stock awards, which is expected to be
    recognized over a weighted-average period of 0.79 years.

================================================================================
NOTE 4.  STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

    The Company  issued  195,000  shares of common stock in connection  with the
    exercise of stock options  during the first six months of 2006. In addition,
    an aggregate of 60,000 shares of restricted  common stock were issued to two
    new members of the Company's  Board of Directors  upon their  appointment to
    the Board of Directors in the second quarter.

================================================================================
NOTE 5.  COMMITMENTS AND CONTINGENCIES
--------------------------------------------------------------------------------

    LITIGATION

    The Company is party to certain  claims  arising in the  ordinary  course of
    business.  Management  believes  that the outcome of these  matters will not
    have a material  adverse effect on the financial  position or the results of
    operations of the Company.

================================================================================
NOTE 6.  BUSINESS SEGMENT INFORMATION
--------------------------------------------------------------------------------

    In 2006, the Company is operating in two segments for purposes of presenting
    financial information and evaluating  performance,  the PSN and the HMO. The
    HMO commenced operations effective July 1, 2005.



SIX MONTHS ENDED JUNE 30, 2006                       PSN             HMO           TOTAL
------------------------------                   ------------   ------------    ------------
                                                                       
Revenues from external customers                 $101,645,000   $ 11,336,000    $112,981,000

Segment gain (loss) before allocated overhead       9,823,000     (4,170,000)      5,653,000
Allocated corporate overhead                        1,818,000      1,431,000       3,249,000
Segment gain (loss) after allocated overhead
  and before income taxes                           8,005,000     (5,601,000)      2,404,000
Segment assets                                     19,900,000     16,169,000      36,069,000

SIX MONTHS ENDED JUNE 30, 2005                       PSN             HMO           TOTAL
------------------------------                   ------------   ------------    ------------
Revenues from external customers                 $ 91,689,000   $         --      91,689,000
Segment gain (loss) before allocated overhead       8,027,000     (1,732,000)      6,295,000
Allocated corporate overhead                        1,927,000        534,000       2,461,000
Segment gain (loss) after allocated overhead
  and before income taxes                           6,100,000     (2,266,000)      3,834,000
Segment assets                                     22,596,000      3,460,000      26,056,000


                                       16


               METROPOLITAN HEALTH NETWORKS, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

THREE MONTHS ENDED JUNE 30, 2006                     PSN             HMO           TOTAL
------------------------------                   ------------   ------------    ------------
                                                                        
Revenues from external customers                 $ 50,902,000   $  6,646,000     457,548,000
Segment gain (loss) before allocated overhead       5,203,000     (2,242,000)      2,961,000
Allocated corporate overhead                          877,000        762,000       1,639,000
Segment gain (loss) after allocated overhead
  a nd before income taxes                          4,326,000     (3,004,000)      1,322,000

THREE MONTHS ENDED JUNE 30, 2005                     PSN             HMO           TOTAL
------------------------------                   ------------   ------------    ------------
Revenues from external customers                 $  6,169,000   $         --      46,169,000
Segment gain (loss) before allocated overhead       4,239,000     (1,032,000)      3,207,000
Allocated corporate overhead                          910,000        304,000       1,214,000
Segment gain (loss) after allocated overhead a
  nd before income taxes                            3,329,000     (1,336,000)      1,993,000



                                       17



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

THE FOLLOWING DISCUSSION SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S ANNUAL
REPORT  ON FORM  10-K FOR THE  YEAR  ENDED  DECEMBER  31,  2005,  AS WELL AS THE
FINANCIAL STATEMENTS AND NOTES THERETO.


              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS


Sections of this Quarterly  Report contain  statements that are  forward-looking
statements  within the meaning of Section 27A of the Securities Act of 1933 (the
"Securities  Act") and Section 21E of the  Securities  Exchange Act of 1934 (the
"Exchange Act"), and the Company intends that such forward-looking statements be
subject  to  the  safe  harbors  created  thereby.  Statements  in  this  Report
containing the words "estimate,"  "project,"  "anticipate,"  "expect," "intend,"
"believe,"  "will,"  "could,"  "should,"  "may," and similar  expressions may be
deemed to  create  forward-looking  statements.  Accordingly,  such  statements,
including without  limitation,  those relating to the Company's future business,
prospects,  revenues, working capital, liquidity,  capital needs, interest costs
and income,  wherever  they may appear in this  document or in other  statements
attributable to the Company,  involve  estimates,  assumptions and uncertainties
which could cause actual results to differ  materially  from those  expressed in
the  forward-looking  statements.  Specifically,  this Quarterly Report contains
forward-looking statements, including the following:

     o    the PSN's  ability to renew the Humana  Agreements  and  maintain  the
          Humana Agreements on favorable terms;

     o    the  Company's  ability to  adequately  predict  and  control  medical
          expenses  and to  make  reasonable  estimates  and  maintain  adequate
          accruals for incurred but not reported, or IBNR, claims; and

     o    the HMO's ability to renew,  maintain or to successfully rebid for its
          agreement with CMS.

The  forward-looking  statements reflect the Company's current view about future
events and are  subject to risks,  uncertainties  and  assumptions.  The Company
wishes to caution readers that certain  important  factors may have affected and
could in the future affect its actual  results and could cause actual results to
differ significantly from those expressed in any forward-looking  statement. The
following  important  factors could prevent the Company from achieving its goals
and cause the  assumptions  underlying  the  forward-looking  statements and the
actual results to differ  materially from those expressed in or implied by those
forward-looking statements:

     o    reductions in government funding of Medicare programs;

     o    disruptions in the HMO's or Humana's healthcare provider networks;

     o    failure  to  receive  claims   processing,   billing  services,   data
          collection and other information on a timely basis from Humana;

     o    future legislation and changes in governmental regulations;

     o    increased operating costs;

     o    the impact of  Medicare  Risk  Adjustments  on  payments  the  Company
          receives for its managed care operations;

     o    loss of significant contracts;

     o    general economic and business conditions;

     o    increased competition;

     o    the relative health of the Company's patients;

     o    changes  in  estimates  and  judgments  associated  with our  critical
          accounting policies;

     o    federal and state investigations;


                                       18


     o    the  Company's   ability  to  successfully   recruit  and  retain  key
          management personnel and qualified medical professionals; and

     o    impairment charges that could be required in future periods.

Additional  information  concerning  these and other risks and  uncertainties is
contained in the Company's  filings with the Securities and Exchange  Commission
(the "Commission"),  including the section entitled "Risk Factors" in its Annual
Report on Form 10-K for the year ended December 31, 2005.

Forward-looking  statements  should not be relied upon as a prediction of actual
results.  Subject to any  continuing  obligations  under  applicable  law or any
relevant  listing  rules,  the Company  expressly  disclaims  any  obligation to
disseminate,  after the date of this Quarterly  Report on Form 10-Q, any updates
or revisions  to any such  forward-looking  statements  to reflect any change in
expectations or events, conditions or circumstances on which any such statements
are based.

BACKGROUND

Through  its  provider  service  network  ("PSN")  and  its  health  maintenance
organization  ("HMO"),  Metropolitan  currently provides  healthcare benefits to
Medicare  beneficiaries in Florida. As of June 1, 2006, the PSN and HMO provided
healthcare  benefits  to  approximately  26,000  and  3,100  Medicare  Advantage
beneficiaries, respectively (collectively, the "Participating Members").

As of June 30, 2006,  substantially all of the Company's  revenues were directly
or indirectly derived from reimbursements generated by Medicare Advantage health
plans. As a result,  the Company's  revenue and  profitability  are dependent on
government funding levels for Medicare Advantage programs.

Provider Service Network

Pursuant to two  contracts  with Humana,  Inc.  (the "Humana  Agreements"),  the
second largest participant in the Medicare Advantage program ("Humana"), the PSN
provides,   on  a   non-exclusive   basis,   healthcare   services  to  Medicare
beneficiaries  in Flagler  and Volusia  Counties  ("Central  Florida")  and Palm
Beach,  Broward and Miami-Dade  Counties  ("South  Florida") who have elected to
receive benefits from Humana's Medicare  Advantage Plan. As of June 1, 2006, the
Humana Agreements covered  approximately  19,400 Humana Plan Members (as defined
below) in Central Florida and 6,500 Humana Plan Members in South Florida.

The PSN is comprised both of medical  practices  owned by the Company as well as
independently  owned medical practices and providers with whom it has contracted
("IPs").  The Company  currently  owns and operates eight primary care physician
practices and a medical oncology physician practice.  The Company also contracts
with twenty-nine  primary care IPs. Through its Humana  Agreements,  the PSN has
established referral relationships with a large number of specialist physicians,
ancillary service  providers and hospitals  throughout South Florida and Central
Florida.

Humana  directly  contracts with the Centers for Medicare and Medicaid  Services
("CMS") and is paid a fixed  monthly  premium  payment for each member  ("Humana
Plan Member") enrolled in Humana's  Medicare  Advantage Plan. The monthly amount
varies by patient,  county,  age and severity of health status.  Pursuant to the
Humana  Agreements,  the PSN provides or arranges  for the  provision of covered
medical  services to each  Humana  Plan Member who selects one of the  Company's
affiliated   providers  as  his  or  her  primary  care   physician  (a  "Humana
Participating  Member").  In return for the provision of these medical services,
the PSN receives from Humana a monthly fee, also known as a "capitated fee", for
each Humana Participating Member. The fee rates are established by the contracts
between the PSN and Humana and comprise a vast majority of the monthly  premiums
received by Humana from CMS with respect to Humana Participating Members.

The PSN assumes  the full  financial  responsibility  for the  provision  of all
Medicare-covered  medical care to Humana Participating Members,  including those
medical  services that the PSN does not itself provide.  To the extent the costs
of providing  such medical  care are less than the related  premiums  receivable
from Humana, the PSN generates an operating profit.  Conversely,  if the medical
costs exceed the fees receivable  from Humana,  the PSN experiences an operating
loss.


                                       19


The vast  majority of the PSN's  revenues come from the Humana  Agreements.  The
Company does receive  additional  revenue for providing primary care services to
non-Humana Plan Members on a  fee-for-service  basis in the medical practices it
owns and operates.

For the three and six months ended June 30, 2006,  approximately  88% and 90% of
Metropolitan's revenue came from the Humana Agreements, respectively. The Humana
Agreements  have  one-year  terms and renew  automatically  each December 31 for
additional  one-year  terms unless  terminated for cause or upon 180 days' prior
notice.  Failure to maintain  the Humana  Agreements  on  favorable  terms would
adversely affect Metropolitan's results of operations and financial condition.

Health Maintenance Organization

Effective July 1, 2005,  METCARE Health Plans,  Inc., the Company's wholly owned
subsidiary ("HMO"), became licensed as a Medicare Advantage HMO and entered into
a contract with CMS (the "CMS  Contract") to begin offering  Medicare  Advantage
plans to Medicare beneficiaries in six Florida counties which include the cities
of Fort Pierce, Port St. Lucie, Fort Myers, Port Charlotte and Sarasota. The HMO
has been marketing its  "AdvantageCare"  branded plan since July 2005 and, as of
June 1, 2006, there were approximately 3,145 enrollees in its plan.

In addition to growth  within  existing  service  areas,  the HMO has applied to
expand its HMO business into additional Florida counties. However,  Metropolitan
does not intend to provide HMO services in the  geographic  markets with respect
to which the PSN has a contract with Humana. Metropolitan views its HMO business
as an extension of its existing core competencies.

The HMO's revenues are generated by premiums  consisting of monthly payments per
member that are  established  by the CMS  Contract.  The HMO  recorded its first
revenues in the third quarter of fiscal 2005.

The Humana  Agreements and the CMS Contract are risk agreements  under which the
PSN and HMO, respectively,  receive monthly payments per Participating Member at
a rate established by the agreements, also called a capitated fee. In accordance
with the  agreements,  the total monthly  payment is a function of the number of
Participating  Members,  regardless  of the actual  utilization  rate of covered
services.

To the  extent  that  the  Participating  Members  require  more  care  than  is
anticipated,  aggregate  capitation rates may be insufficient to cover the costs
associated  with the treatment of such members.  If medical  expenses exceed the
Company's estimates, except in very limited circumstances,  it will be unable to
increase the premiums it receives under these contracts  during the then-current
terms.

Relatively  small changes in the Company's  ratio of medical  expense to revenue
can  create  significant  changes in its  financial  results.  Accordingly,  the
failure  to  adequately  predict  and  control  medical  expenses  and  to  make
reasonable  estimates  and  maintain  adequate  accruals  for  incurred  but not
reported,  or IBNR,  claims, may have a material adverse effect on the Company's
financial condition, results of operations and/or cash flows.

Although the Company has  operated as a risk  provider  since 1997,  it has only
operated  the HMO since July 1,  2005.  While the  Company's  HMO  business  has
continued  to grow,  such growth has  continued to require  capital.  In the six
months ended June 30, 2006, the Company's HMO business  generated a $4.2 million
segment loss before  allocated  overhead  and income taxes and projects  that in
fiscal  2006 its HMO  business  will  generate  a loss of $5.0  million  to $7.0
million before allocated  overhead and income taxes. The amount of the loss will
be determined by a number of factors including  membership,  medical utilization
and related costs, and the Company's  decisions  related to expansion and growth
efforts.  The Company is still not in a position to meaningfully  estimate when,
if ever,  its HMO business  will become  profitable  and/or  generate  cash from
operations and may be required to fund the  development and expansion of the HMO
business,  including  any  associated  losses,  for an extended  period of time.
Nonetheless,  the Company  anticipates  that the on-going  development  efforts,
reserve  requirements  and operating costs for its still developing HMO business
can be funded by the Company's  current  resources and projected cash flows from
operations until at least June 30, 2007.

To successfully  operate the HMO, the Company  believes it will have to continue
its  development  of  the  following  capabilities,   among  others:  sales  and
marketing,  customer  service and  regulatory  compliance.  No assurances can be
given that the Company  will be  successful  in  operating  this  segment of its
business  despite its  allocation of a substantial  amount of resources for this
purpose. If the HMO does not develop as anticipated or planned,  the Company may
have to devote additional  managerial and/or capital resources to the HMO, which
could limit the Company's ability to manage and/or grow its PSN. There can be no
assurances  that, if for any reason,  the Company elects to discontinue  the HMO
business  and/or seeks to sell such business,  the Company will be able to fully
recoup its expenditures to date with respect to the HMO business.


                                       20


CRITICAL ACCOUNTING POLICIES

Our  significant  accounting  policies are  described in Note 1 of the "Notes to
Condensed  Consolidated  Financial  Statements"  included in this Form 10-Q.  We
believe our most  critical  accounting  policies  include the policies set forth
below.

Use of Estimates, Revenue, Expense and Receivables

The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States of America requires  management to make
estimates and assumptions  that affect the amounts  reported in the accompanying
financial  statements.  The most significant area requiring estimates relates to
the PSN's  arrangements  with Humana.  Such  estimates are based on knowledge of
current events and anticipated  future events,  and accordingly,  actual results
may ultimately differ materially from those estimates.

With  regard to  revenues,  expenses  and  receivables  arising  from the Humana
Agreements,  the Company  estimates the amounts it believes  will  ultimately be
realizable  based in part upon  estimates  of claims  incurred  but not reported
("IBNR")  and  estimates of  retroactive  adjustments  or unsettled  costs to be
applied by Humana.  The IBNR  estimates are made by Humana  utilizing  actuarial
methods and are  continually  evaluated by  management of the Company based upon
its specific claims  experience.  It is reasonably  possible that some or all of
these  estimates  could  change  in the near  term by an  amount  that  could be
material to the financial statements.

From time to time,  Humana charges the PSN for certain medical  expenses,  which
the  Company  believes  are  erroneous  or  are  not  supported  by  the  Humana
Agreements.  Management's  estimate of recovery on these  contestations is based
upon its judgment and its  consideration of several factors including the nature
of the contestations, historical recovery rates and other qualitative factors.

During 2005, the Company  incurred  approximately  $4.0 million of medical costs
related to the  implantation  of certain  Implantable  Automatic  Defibrillators
("AICD's").  CMS directed that the costs of certain of these procedures that met
2005  eligibility  requirements  be paid by CMS,  rather than billed to Medicare
Advantage plans. The Company is working with Humana and the related providers to
secure   reimbursement   for  these   amounts,   and  estimated  a  recovery  of
approximately $2.2 million at December 31, 2005.  Approximately $379,000 of this
amount  was  collected  during  the six months  ended  June 30,  2006,  while an
additional  $500,000  was written off due to revised  guidance  issued by CMS in
July  2006  regarding  the  costs  payable  by  CMS  in  connection  with  these
procedures.   Accordingly,  related  accounts  receivable  in  the  accompanying
consolidated  balance sheets were $1.3 million and $2.2 million at June 30, 2006
and  December  31,  2005,  respectively.  It is  reasonably  possible  that this
estimate  could  change in the near term by an amount  that could be material to
the financial statements.

Included  in revenues  for the  quarter and six months  ended June 30, 2006 were
estimated  amounts payable to the Company as a result of funding increases under
the Medicare risk adjustment ("MRA") program.  The purpose of the MRA program is
to use health  status  indicators  to  improve  the  accuracy  of  payments  and
establish  incentives  for  plans to  enroll  and treat  less  healthy  Medicare
beneficiaries.  From 2000 to 2003, risk adjustment  payments  accounted for only
10% of the payment made by CMS to the Medicare health plans,  with the remaining
90% based on  demographic  factors.  In 2004 and 2005, the percentage of payment
attributable to risk adjustment was increased to 30% and 50%, respectively.  The
percentage of payment  attributable  to risk has increased to 75% in 2006,  with
the 100% phase-in of risk-adjusted  payment anticipated to be completed in 2007.
Based on the Company's applicable risk scores, the Company accrued approximately
$3.5 million  during the six months  ended June 30, 2006 related to  incremental
revenues  anticipated  to be received as a result of the MRA funding  increases.
These  amounts,  which are included in accounts  receivable in the  accompanying
consolidated balance sheets at June 30, 2006, are expected to be received by the
Company in the second half of the year, consistent with the timing of prior year
payments.  It is reasonably possible that this estimate could change in the near
term by an amount that could be material to the financial statements.

Accounting for Prescription Drug Benefits under Medicare Part D

On January 1, 2006, the HMO and the PSN,  through the Humana  Agreements,  began
covering  prescription  drug benefits in  accordance  with the  requirements  of
Medicare Part D, to the HMO's and PSN's Medicare Advantage members. The benefits
covered under Medicare Part D are in addition to the benefits covered by the HMO
and the PSN under Medicare Parts A and B.


                                       21


In general,  pursuant to Medicare Part D, pharmacy benefits may vary in terms of
coverage levels and out-of-pocket  costs for beneficiary  premiums,  deductibles
and  co-insurance.  However,  all  Part D  plans  must  offer  either  "standard
coverage"  or  its  actuarial  equivalent  (with  out-of-pocket   threshold  and
deductible  amounts  that do not  exceed  those  of  standard  coverage).  These
"defined  standard" benefits represent the minimum level of benefits mandated by
Congress.  In addition to defined  standard  plans  offered by the HMO, the PSN,
through  the  Humana  Agreements,  offers  prescription  drug  plans  containing
benefits in excess of the standard coverage limits.

The payment the Company's HMO receives monthly from CMS generally represents its
bid amount for providing insurance  coverage.  It recognizes premium revenue for
providing this insurance  coverage ratably over the term of its annual contract.
However,  its CMS  payment  is subject to 1) risk  corridor  adjustments  and 2)
subsidies  in  order  for the HMO and CMS to  share  the  risk  associated  with
financing the ultimate costs of the Part D benefit.

The  amount  of  revenue  payable  to a plan by CMS is  subject  to  adjustment,
positive or negative,  based upon the application of risk corridors that compare
a  plan's  revenues   targeted  in  their  bids  ("target   amount')  to  actual
prescription drug costs.  Variances  exceeding certain  thresholds may result in
CMS making additional  payments to the HMO or require the HMO to refund to CMS a
portion of the payments it received.  Actual  prescription drug costs subject to
risk  sharing  with CMS are  limited to the costs that are,  or would have been,
incurred under the CMS "defined standard" benefit plan ("allowable risk corridor
costs").  The Company estimates and recognizes an adjustment to premium revenues
related to the risk  corridor  payment  adjustment  based upon  pharmacy  claims
experience  to date  as if the  annual  contract  were to end at the end of each
reporting period. Accordingly, this estimate provides no consideration to future
pharmacy claims experience.  It is reasonably  possible that this estimate could
change in the near term by an amount that could be material.

Certain subsidies represent  reimbursements from CMS for claims the HMO paid for
which it assumes no risk,  including  reinsurance  payments and low-income  cost
subsidies.  Claims paid above the  out-of-pocket  or catastrophic  threshold for
which the HMO is not at risk are all  reimbursed by CMS through the  reinsurance
subsidy plans.  Low-income cost subsidies represent  reimbursements from CMS for
all or a portion of the deductible,  the coinsurance and the co-payment  amounts
for  low-income  beneficiaries.  The Company  accounts  for these  subsidies  as
current  liabilities  in its balance  sheet and as an operating  activity in its
statement  of cash flows.  The Company  does not  recognize  premium  revenue or
claims expense for these subsidies.

The HMO recognizes pharmacy benefit costs as incurred.  It has subcontracted the
pharmacy claims administration to a third party pharmacy benefit manager.

With regards to PSN, the Company  receives  Medicare Part D revenue  pursuant to
the applicable percent of premium provided for in the Humana Agreements.  Humana
does not provide the Company with a separate  accounting  for Part D premium and
expense.  As with its HMO, the Company recognizes pharmacy benefit costs as such
costs are incurred by the PSN. With regards to the estimated  amount of any risk
corridor  adjustments,  the Company has relied upon estimates provided by Humana
to the Company and has recorded a downward  adjustment to premium  revenue based
on these estimates. It is reasonably possible that this estimate could change in
the near term by an amount that could be material.

Use of Estimates, Deferred Tax Asset

The Company has recorded a deferred tax asset of  approximately  $7.2 million at
June 30, 2006.  Realization of the deferred tax asset is dependent on generating
sufficient  taxable  income in the future.  The amount of the deferred tax asset
considered  realizable  could  change  in the near term if  estimates  of future
taxable  income are modified and those  changes could be material (see "Notes to
Consolidated  Financial  Statements,"  Note 1 - "Use of Estimates,  Deferred Tax
Asset" and Note 1 - "Income Taxes").

Stock-Based Compensation Expense

Effective  January 1, 2006,  the Company  adopted SFAS 123(R) using the modified
prospective  transition  method.  SFAS 123(R)  requires the Company to recognize
compensation costs related to share-based payment transactions with employees in
its financial  statements.  SFAS 123(R)  requires the Company to calculate  this
cost based on the grant date fair  value of the  equity  instrument.  Consistent
with its prior  disclosures under SFAS 123, the Company elected to calculate the
fair value of its employee stock options using the Black-Scholes  option pricing
model.  Based  on the  Black-Scholes  model  and its  assumptions,  the  Company
recognized  stock-based employee compensation expense of approximately  $162,000
and $364,000  for the quarter and six months  ended June 30, 2006,  respectively
(See "Notes to Condensed Consolidated Financial Statements," Note 3.").


                                       22


SFAS 123(R) does not require the use of any particular  option  valuation model.
Because the Company's stock options have characteristics significantly different
from traded options and because changes in the subjective input  assumptions can
materially  affect the fair value estimate,  it is possible that existing models
may not  necessarily  provide  a  reliable  measure  of the  fair  value  of the
Company's employee stock options.  It selected the Black-Scholes  model based on
prior experience with it, its wide use by issuers comparable to the Company, and
the  Company's  review of  alternate  option  valuation  models.  Based on these
factors,  the Company believes that the Black-Scholes  model and the assumptions
it made in  applying it provide a  reasonable  estimate of the fair value of its
employee stock options.

The effect of applying the fair value method of accounting  for stock options on
reported  net income for any period might not be  representative  of the effects
for future periods because  outstanding  options typically vest over a period of
several years and additional awards may be made in future periods.

RESULTS OF OPERATIONS

The Company recognized  revenues of $57.5 million for the quarter ended June 30,
2006 compared to $46.2  million in the prior year quarter,  an increase of $11.4
million,  or 24.6%.  Net income for the quarter ended June 30, 2006 was $819,000
compared to $1.2 million for the quarter ended June 30, 2005.

For the six months  ended June 30,  2006,  the  Company  recognized  revenues of
$113.0 million  compared to $91.7 million in the prior year period,  an increase
of $21.3  million,  or 23.2%.  Net income for the six months ended June 30, 2006
was $1.5  million  compared to $2.4  million  for the six months  ended June 30,
2005.

Basic  earnings per share were $0.02 and $0.03 for the  quarters  ended June 30,
2006 and 2005,  respectively.  The weighted  average shares  outstanding for the
quarter  increased from 48,745,000 at June 30, 2005 to 49,971,000 in the current
year.

For the six months ended June 30, 2006 and 2005,  basic  earnings per share were
$0.03 and $0.05,  respectively.  The weighted average shares outstanding for the
six months  increased  from  48,435,000  at June 30, 2005 to  49,916,000  in the
current year.

As discussed above, the Company  recognized  stock-based  employee  compensation
expense of $162,000  and  $364,000 for the quarter and six months ended June 30,
2006, respectively, compared to none in the prior year periods.

The current year  operations  include both the PSN segment and the operations of
the Company's  start-up  Medicare  Advantage HMO segment,  which began enrolling
members  effective July 1, 2005. The PSN reported  Segment gain before allocated
overhead of $5.2  million and $9.8  million for the quarter and six months ended
June 30, 2006,  respectively,  compared to $4.2 million and $8.0 million for the
quarter and six months  ended June 30,  2005,  respectively.  The HMO incurred a
Segment loss before allocated  overhead of $2.2 million and $4.2 million for the
quarter and six months  ended June 30,  2006,  compared to $1.0 million and $1.7
million for the quarter and six months ended June 30, 2005, respectively. Formal
operations of the HMO business commenced July 1, 2005.

MEMBERSHIP

Total Medicare Advantage lives, the number of Medicare  beneficiaries  cared for
in either the PSN or HMO, increased  approximately  2,300 members from June 2005
to a membership of over 29,000 in June 2006. June 1, 2006 membership for the PSN
and HMO was 25,875 and 3,145,  respectively.  Member months,  the combined total
membership for each month of the measurement  period, were 86,012 and 79,816 for
the 2006 and 2005 quarters,  respectively.  For the six months  periods,  member
months were  169,462 and  159,366 for 2006 and 2005,  respectively.  Included in
these numbers were  approximately  8,441 and 14,373 member months related to the
HMO for the quarter and six months ended June 30, 2006, respectively.

During 2005, the Company discontinued its contractual relationship with a number
of its  South  Florida  physician  practices  due  to  non-compliance  with  the
Company's  policies and procedures.  These centers  accounted for  approximately
2,200 and 4,400 member months in the quarter and six months ended June 30, 2005,
respectively, Corresponding revenues for these practices for the quarter and six
months  ended June 30, 2005 were $1.1  million and $2.7  million,  respectively,
while medical expenses attributable to these practices for the same periods were
$1.2 million and $2.8 million, respectively.


                                       23


COMPARISON OF THE QUARTERS ENDED JUNE 30, 2006 AND JUNE 30, 2005

REVENUES

Revenues for the quarter ended June 30, 2006 increased $11.4 million,  or 24.6%,
over the prior year quarter,  from $46.2 million to $57.5 million.  PSN revenues
from Humana increased 10.3%, from $45.8 million to $50.6 million.  Approximately
$6.0 million in  incremental  quarterly  revenues were generated by 2006 premium
increases,  inclusive of Part D premium, that averaged  approximately 13.5% over
the  prior  year  quarter.   These  increases  were  partially   offset  by  the
abovementioned decreases due to discontinued medical practices.

Revenues for the  Company's  HMO,  which began  enrolling  members in July 2005,
amounted  to $6.6  million  for the 2006  quarter.  Included  in this amount was
approximately $658,000 of revenue attributable to Medicare Part D premiums.

The HMO memberships'  average risk adjustment factor declined from December 2005
to June 2006 as a result of a large influx of new members in 2006.  This decline
resulted in decreased average member monthly premiums. The Company believes that
the actual average risk adjustment  factor for its population during this period
was higher and that an increase  will be reflected as claims and health data for
these new members are entered  into the CMS system,  which is expected to result
in retroactive  premium  adjustments.  The Company cannot estimate the amount of
the  anticipated  increase at this time but believes this amount may be material
to the results of the HMO.

OPERATING EXPENSES

Total Medical Expenses

Medical  expenses  represent  the total costs of providing  patient care and are
comprised of two  components.  Direct medical costs  represent costs incurred in
the PSN and HMO operations  that are paid or payable to third parties  including
physicians,  hospitals and ancillary service providers on a capitated or fee for
service  basis.  Other medical costs  represents the costs  associated  with the
operations of the Company's wholly owned physician practices and oncology center
including  salaries and  benefits,  supplies,  malpractice  insurance and office
related  expenses.  Medical expenses totaled $50.9 million and $41.4 million for
the quarters ended June 30, 2006 and 2005,  respectively.  The Company's medical
expense ratio ("MER"),  the ratio of total medical expense to revenue,  improved
to 88.4% in the second quarter of 2006 from 89.6% in the second quarter of 2005,
with the Company's PSN reporting a 2006 second quarter MER of 88.1%.

Due to its small membership, the HMO's operations are relatively volatile from a
medical utilization  standpoint.  The second quarter 2006 results were adversely
affected by several high-cost hospital  admissions,  resulting in a MER of 90.7%
for the segment.  Management  expects that volatility will decline as membership
grows and that the HMO's MER will decrease in future periods.

All of the  Company's  Medicare  Advantage  members  are  enrolled in plans that
include the new prescription  drug benefit,  or Medicare Part D ("Part D"). With
regard to the HMO operations,  Part D generated a gross margin of  approximately
9.6% in the quarter ended June 30, 2006.

With  regard  to the PSN  business,  the  accounting  for  Part D by  Humana  is
integrated with Medicare Parts A and B results. The Company is unable to isolate
the discrete Part D margin,  however it is management's  expectation that Part D
will not materially affect its overall MER in 2006 in this business.

Administrative Payroll, Payroll Taxes and Benefits

Administrative payroll,  payroll taxes and benefits include salaries and related
costs for the Company's executive and administrative  staff. For the 2006 second
quarter,  administrative payroll,  payroll taxes and benefits were $2.6 million,
compared to the prior year quarter  total of $1.4  million.  The  Company's  HMO
segment  accounted for $605,000 of the incremental  current  quarter's  expense,
with an  additional  $50,000  due to 401(k)  and  bonus  accruals  and  $162,000
attributable  to the expensing of stock options.  The balance of the increase is
due to new hires, salary increases and increased benefit costs.


                                       24


Marketing and Advertising

Marketing and advertising  expense for the 2006 second quarter was $1.0 million,
compared  to an expense of $156,000 in the prior year  quarter.  This  primarily
represents  the costs  and sales  commissions  incurred  to market  and sell the
Company's HMO AdvantageCare product.

General and Administrative

General and  administrative  expenses for the second quarter of 2006 amounted to
$2.0  million,  an increase  of $606,000  over the prior  year's  quarter.  This
increase is primarily  attributable to expenses  incurred in connection with the
HMO,   primarily  with  respect  to  costs  associated  with  outsourced  claims
processing  and  member  services,  insurance,  rents and  leases  and legal and
accounting.  Included  in the 2006  second  quarter's  costs were  approximately
$144,000 of actuarial,  consulting  and legal costs related to filing  expansion
applications and plan bids for 2007's operations.

OTHER INCOME AND EXPENSE

Other income and expenses for the 2006 quarter  increased  $83,000 over the 2005
quarter.  Over the year between the quarters the Company's  cash and  investment
balances increased,  as did prevailing interest rates, accounting for a $151,000
increase in interest and investment income.

COMPARISON OF THE SIX MONTHS ENDED JUNE 30, 2006 AND JUNE 30, 2005

REVENUES

Revenues  for the six months ended June 30, 2006  increased  $21.3  million,  or
23.2%,  over the prior year period,  from $91.7 million to $113.0  million.  PSN
revenues from Humana  increased  11.2%,  from $90.8  million to $101.0  million.
Approximately  $12.5  million in  incremental  revenues  were  generated by 2006
premium  increases,  inclusive of Part D premium,  that  averaged  approximately
14.2% over the prior year period.  These increases were partially  offset by the
abovementioned decreases due to discontinued medical practices.

Revenues for the  Company's  HMO,  which began  enrolling  members in July 2005,
amounted  to $11.3  million  for the 2006  period.  Included  in this amount was
approximately $1.1 million of revenue attributable to Medicare Part D premiums.

The HMO memberships'  average risk adjustment factor declined from December 2005
to June 2006 as a result of a large influx of new members in 2006.  This decline
resulted in decreased average member monthly premiums. The Company believes that
the actual average risk adjustment  factor for its population during this period
was higher and that an increase  will be reflected as claims and health data for
these new members are entered  into the CMS system,  which is expected to result
in retroactive  premium  adjustments.  The Company cannot estimate the amount of
the  anticipated  increase at this time but believes this amount may be material
to the results of the HMO.

OPERATING EXPENSES

Total Medical Expenses

Medical  expenses  represent  the total costs of providing  patient care and are
comprised of two  components.  Direct medical costs  represent costs incurred in
the PSN and HMO operations  that are paid or payable to third parties  including
physicians,  hospitals and ancillary service providers on a capitated or fee for
service  basis.  Other medical costs  represents the costs  associated  with the
operations of the Company's wholly owned physician practices and oncology center
including  salaries and  benefits,  supplies,  malpractice  insurance and office
related expenses.  Medical expenses totaled $100.4 million and $82.5 million for
the six months ended June 30, 2006 and 2005, respectively. The Company's medical
expense ratio ("MER"),  the ratio of total medical expense to revenue,  improved
to 88.9% in the first half of 2006 from  90.0% in the first  half of 2005,  with
the Company's PSN reporting a 2006 six month MER of 88.7%.


                                       25


Due to its small membership, the HMO's operations are relatively volatile from a
medical  utilization  standpoint.  The 2006 first half  results  were  adversely
affected by several high-cost hospital  admissions,  resulting in a MER of 90.8%
for the segment.  Management  expects that volatility will decline as membership
grows and that the HMO's MER will decrease in future periods.

All of the  Company's  Medicare  Advantage  members  are  enrolled in plans that
include the new prescription  drug benefit,  or Medicare Part D ("Part D"). With
regard to the HMO operations,  Part D generated a gross margin of  approximately
10.7% in the six months ended June 30, 2006.

With  regard  to the PSN  business,  the  accounting  for  Part D by  Humana  is
integrated with Medicare Parts A and B results. The Company is unable to isolate
the discrete Part D margin,  however it is management's  expectation that Part D
will not materially affect its overall MER in 2006 in this business.

Administrative Payroll, Payroll Taxes and Benefits

Administrative payroll,  payroll taxes and benefits include salaries and related
costs for the Company's  executive and administrative  staff. For the six months
ended June 30, 2006,  administrative  payroll,  payroll  taxes and benefits were
$5.0 million,  compared to the prior year total of $2.7  million.  The Company's
HMO  segment  accounted  for $1.1  million  of the  incremental  current  year's
expense,  with an  additional  $200,000  due to  incremental  401(k)  and  bonus
accruals and  $364,000  attributable  to the  expensing  of stock  options.  The
balance of the  increase is due to new hires,  salary  increases  and  increased
benefit costs.

Marketing and Advertising

Marketing  and  advertising  expense for the six months  ended June 30, 2006 was
$2.0  million,  compared to $156,000 in the prior year  period.  This  primarily
represents  the costs  and sales  commissions  incurred  to market  and sell the
Company's HMO AdvantageCare product.

General and Administrative

General and administrative expenses for the first six months of 2006 amounted to
$3.5 million,  an increase of $810,000 over the prior year period. This increase
is  primarily  attributable  to expenses  incurred in  connection  with the HMO,
primarily with respect to costs associated with outsourced claims processing and
member services, insurance, rents and leases and legal and accounting.  Included
in the 2006 period costs were  approximately  $157,000 of actuarial,  consulting
and legal  costs  related  to filing  expansion  applications  and plan bids for
2007's operations.

OTHER INCOME AND EXPENSE

Other  income and  expenses  for the six months  ended June 30,  2006  increased
$147,000 over the 2005 period.  Over the year between periods the Company's cash
and investment balances increased,  as did prevailing interest rates, accounting
for a $275,000 increase in interest and investment income.

LIQUIDITY AND CAPITAL RESOURCES

Total cash and equivalents  and short-term  investments at June 30, 2006 totaled
approximately  $21.3  million as  compared  to  approximately  $15.6  million at
December 31, 2005. The Company had a working  capital  surplus of  approximately
$23.0 million as of June 30, 2006,  compared to a surplus of approximately $21.1
million as of December 31, 2005.

The Company  received an  additional  monthly  premium  payment  from CMS in the
amount of approximately $2.6 million,  representing premium due for the month of
July 2006.  This  amount is included  as advance  and  unearned  premiums on the
Company's balance sheet.

The Company's total  stockholder  equity increased  approximately  $1.8 million,
from  approximately  $29.7 million at December 31, 2005 to  approximately  $31.7
million at June 30, 2006.

At June 30, 2006, the Company had no outstanding debt.


                                       26


Net cash provided by operating activities for the six months ended June 30, 2006
was approximately $6.8 million,  of which net income accounted for approximately
$1.5 million. Other large sources of cash from operating activities were:

     o    an increase in advance and unearned premiums of $3.3 million;
     o    an increase in estimated medical expenses payable of $1.9 million;
     o    a decrease  in deferred  income  taxes of  $913,000;
     o    an increase in accrued expenses of $449,000;
     o    stock-based compensation expense of $364,000;
     o    a decrease in other current assets of $297,000; and
     o    depreciation and amortization of $215,000.

These sources of cash were partially offset by the following uses of cash:

     o    an increase in accounts receivable of $972,000;
     o    an increase in prepaid expenses of $597,000;
     o    a decrease in accounts payable of $323,000; and
     o    a decrease in accrued payroll of $311,000.

Approximately $3.4 million of the $5.2 million balance in accounts receivable at
June 30, 2006 was collected in July 2006.

During 2005, the Company  incurred  approximately  $4.0 million of medical costs
related to the  implantation  of certain  Implantable  Automatic  Defibrillators
("AICD's").  CMS directed that the costs of certain of these procedures that met
2005  eligibility  requirements  be paid by CMS,  rather than billed to Medicare
Advantage plans. The Company is working with Humana and the related providers to
secure   reimbursement   for  these   amounts,   and  estimated  a  recovery  of
approximately $2.2 million at December 31, 2005.  Approximately $379,000 of this
amount  was  collected  during  the six months  ended  June 30,  2006,  while an
additional  $500,000  was  written  off due to  revised  guidance  issued by CMS
regarding the costs payable by CMS in connection with these procedures.

Net cash used in investing activities for the six months ended June 30, 2006 was
approximately  $6.8 million.  The Company  purchased  $5.7 million of short-term
investments,  $313,000 of long-term investments and incurred $848,000 in capital
expenditures during the six month period.

The  Company's  financing  activities  for the six months  ended  June 30,  2006
provided  approximately  $140,000  of cash in  connection  with the  issuance of
common stock upon the exercise of outstanding options.

On May 6, 2005 the  Company  executed  an  unsecured  commercial  line of credit
agreement with a bank,  which provided for borrowings and issuance of letters of
credit of up to $1.0 million.  The credit line expired on March 31, 2006 and was
automatically  renewed  with a new  expiration  date  of  March  31,  2007.  The
outstanding balance, if any, bears interest at the bank's prime rate. The credit
facility  requires  the  Company to comply  with  certain  financial  covenants,
including a minimum  liquidity  requirement  of $2.0 million.  The  availability
under  the line of  credit  secures a $1.0  million  letter  of credit  that the
Company  has caused to be issued in favor of Humana.  As of June 30,  2006,  the
Company has not utilized this commercial line of credit.

Although the Company has  operated as a risk  provider  since 1997,  it has only
operated  the HMO since July 1,  2005.  While the  Company's  HMO  business  has
continued  to grow,  such growth has  continued to require  capital.  In the six
months ended June 30, 2006, the Company's HMO business  generated a $4.2 million
segment loss before  allocated  overhead  and income taxes and projects  that in
fiscal  2006 its HMO  business  will  generate  a loss of $5.0  million  to $7.0
million before allocated  overhead and income taxes. The amount of the loss will
be determined by a number of factors including  membership,  medical utilization
and related costs, and the Company's  decisions  related to expansion and growth
efforts.  The Company is still not in a position to meaningfully  estimate when,
if ever,  its HMO business  will become  profitable  and/or  generate  cash from
operations and may be required to fund the  development and expansion of the HMO
business,  including  any  associated  losses,  for an extended  period of time.
Nonetheless,  the Company  anticipates  that the on-going  development  efforts,
reserve  requirements  and operating costs for its still developing HMO business
can be funded by the Company's  current  resources and projected cash flows from
operations until at least June 30, 2007.


                                       27


To successfully  operate the HMO, the Company  believes it will have to continue
its  development  of  the  following  capabilities,   among  others:  sales  and
marketing,  customer  service and  regulatory  compliance.  No assurances can be
given that the Company  will be  successful  in  operating  this  segment of its
business  despite its  allocation of a substantial  amount of resources for this
purpose. If the HMO does not develop as anticipated or planned,  the Company may
have to devote additional  managerial and/or capital resources to the HMO, which
could limit the Company's ability to manage and/or grow its PSN. There can be no
assurances  that, if for any reason,  the Company elects to discontinue  the HMO
business  and/or seeks to sell such business,  the Company will be able to fully
recoup its expenditures to date with respect to the HMO business.

In  2004,  Metropolitan  adopted  an  investment  policy  with  respect  to  the
investment of its cash and equivalents.  The investment policy goal is to obtain
the highest yield possible while  investing only in highly rated  instruments or
investments with nominal risk of loss of principal.  The investment  policy sets
forth a list of "Permitted  Investments"  and provides that the Chief  Financial
Officer or the Chief  Executive  Officer  must  approve  any  exceptions  to the
policy.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any Off-Balance  Sheet  Arrangements  that have or are
reasonably likely to have a current or future effect on the Company's  financial
condition,  changes in financial  condition,  revenues or  expenses,  results of
operations,  liquidity,  capital  expenditures  or  capital  resources  that are
material to investors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

MARKET RISK

Market  risk  generally  represents  the risk of loss that may  result  from the
potential change in value of a financial  instrument as a result of fluctuations
in interest  rates and market  prices.  At June 30,  2006,  the Company had only
commercial paper,  certificates of deposit and cash equivalents invested in high
grade,  short-term and long-term securities,  which are not typically subject to
material  market  risk.  The  Company  has  established  policies  and  internal
processes related to the management of market risks, which it uses in the normal
course of its business operations.

INTEREST RATE RISK


The Company believes a change in interest rates would not have a material impact
on its financial condition, future results of operations or cash flows.


INTANGIBLE ASSET RISK

The Company has a  substantial  amount of intangible  assets.  It is required to
perform goodwill impairment tests whenever events or circumstances indicate that
the carrying value may not be recoverable from estimated future cash flows. As a
result  of  its  periodic  evaluations,  the  Company  may  determine  that  the
intangible  asset  values need to be written  down to their fair  values,  which
could result in material charges that could be adverse to its operating  results
and  financial  position.  Although at June 30, 2006 the  Company  believes  its
intangible  assets were  recoverable,  changes in the  economy,  the business in
which it operates and its own relative  performance could change the assumptions
used to evaluate  intangible  asset  recoverability.  The Company  continues  to
monitor those  assumptions and their effect on the estimated  recoverability  of
its intangible assets.

EQUITY PRICE RISK

The Company does not own any equity investments, other than in its subsidiaries.
As a result, it does not currently have any direct equity price risk.

COMMODITY PRICE RISK

The  Company  does  not  enter  into  contracts  for  the  purchase  or  sale of
commodities.  As a result, it does not currently have any direct commodity price
risk.


                                       28


ITEM 4. CONTROLS AND PROCEDURES

The Company's  management,  which includes its Chief  Executive  Officer and its
Chief Financial  Officer,  conducted an evaluation of the  effectiveness  of its
disclosure  controls and  procedures (as defined in Rule 13a-15(e) and 15d-15(e)
promulgated  under the Exchange Act as of the end of the period  covered by this
report.  Based  upon that  evaluation,  its Chief  Executive  Officer  and Chief
Financial  Officer  concluded  that its  disclosure  controls and procedures are
effective to ensure that information  required to be disclosed by the Company in
the  reports  that it files or submits  under the  Exchange  Act,  is  recorded,
processed,  summarized  and reported,  within the time periods  specified in the
SEC's rules and forms, and that such information is accumulated and communicated
to its  management,  including its Chief  Executive  Officer and Chief Financial
Officer,   as  appropriate,   to  allow  timely  decisions   regarding  required
disclosure.

There have been no significant  changes made in the Company's  internal controls
over financial  reporting that occurred during its last fiscal quarter that have
materially  affected or are reasonably  likely to materially affect its internal
control over financial reporting.


                                       29


PART II   OTHER INFORMATION


ITEM 1.  SUMMARY OF LEGAL PROCEEDINGS

         The Company is a party to various  legal  proceedings  which are either
         immaterial  in amount to the  Company and its  subsidiaries  or involve
         ordinary routine  litigation  incidental to the business of the Company
         and its subsidiaries.  There are no material pending legal proceedings,
         other than routine litigation incidental to the business of the Company
         and its  subsidiaries,  to which the Company or any of its subsidiaries
         is a party of or which any property of the Company or its  subsidiaries
         is the subject.

ITEM 1A.  RISK FACTORS

         There  have been no  material  changes in our risk  factors  from those
         disclosed  in our Annual  Report on Form 10-K for the fiscal year ended
         December 31, 2005.

ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

          NONE

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          NONE

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

         The Annual Meeting of Shareholders  (the "Annual  Meeting") was held at
         the Marriott Hotel, 1001 Okeechobee Blvd., West Palm Beach, Florida, on
         June 8, 2006 for the following purposes:

          o    To elect eight  members to  Metropolitan's  Board of Directors to
               hold office  until the next  Annual  Meeting of  Shareholders  or
               until their successors are duly elected and qualified; and

          o    To consider and vote upon a proposal to approve of and ratify the
               selection of Kaufman,  Rossin & Co. as the Company's  independent
               auditors for the fiscal year ending December 31, 2006.

         The number of  outstanding  shares of the Company's  Common Stock as of
         April 14, 2006, the record date for the Annual Meeting,  was 49,876,526
         shares. 43,220,888 shares of Common Stock were represented in person or
         by proxy at the Annual Meeting.

         Pursuant to the Company's  Articles of Incorporation,  shareholders are
         entitled to one vote for each share of Common Stock.

         The following directors were elected at the Annual Meeting: (i) Michael
         M. Earley, (ii) Debra A. Finnel,  (iii) Martin W. Harrison,  M.D., (iv)
         Barry T. Zeman, (v) Karl M. Sachs,  (vi) Eric Haskell,  (vii) Robert E.
         Shields and (viii) David A. Florman.

         The following  table sets forth the number of votes cast for,  against,
         or  withheld  for  each  director  nominee,  as well as the  number  of
         abstentions and broker non-votes as to each such director nominee:



                              Votes Cast   Votes Cast    Votes                     BrokerNon-
Director Nominee                  For       Against     Withheld    Abstentions      Votes
-------------------           ----------   ---------   ----------   -----------   ------------
                                                                              
Michael M. Earley             43,122,578           -       98,310             -              -
Debra A. Finnel               43,109,938           -      110,950             -              -
Martin W. Harrison            39,265,100           -    3,955,788             -              -
Barry T. Zeman                41,601,550           -    1,619,338             -              -
Karl M. Sachs                 38,366,434           -    4,854,454             -              -
Eric Haskell                  43,013,142           -      207,746             -              -
Robert E. Shields             43,129,678           -       91,210             -              -
David A. Florman              43,131,678           -       89,210             -              -



                                       30


         With respect to the proposal to approve of and ratify the  selection of
         Kaufman,  Rossin & Co. as the Company's  independent  registered public
         accountants   for  the  fiscal  year  ending  December  31,  2006:  (i)
         43,119,971  votes were cast for such  proposal,  (ii) 95,860 votes were
         cast against such proposal and (iii) 5,057 shares abstained from voting
         on such  proposal.  No votes  were  withheld  nor were there any broker
         non-votes with respect to such proposal.  Accordingly,  the proposal to
         approve  of  and  ratify  Kaufman,   Rossin  &  Co.  as  the  Company's
         independent  registered  public  accountants for the fiscal year ending
         December 31, 2006, was approved by the shareholders.

ITEM 5.  OTHER INFORMATION

          NONE

ITEM 6.  EXHIBITS

3.1   Articles of Incorporation, as amended (1)
3.2   Amended and Restated Bylaws (2)
10.1  Physician Practice  Management  Participation  Agreement,  dated August 2,
      2001, between Metropolitan of Florida, Inc. and Humana, Inc. (3)
10.2  Letter of Agreement, dated February 2003, between Metropolitan of Florida,
      Inc. and Humana, Inc. (4)
10.3  Physician  Practice  Management  Participation  Agreement,  dated December
      1,1998, between Metcare of Florida, Inc. and Humana, Inc. (9)
10.4  Supplemental Stock Option Plan (5)
10.5  Omnibus Equity Compensation Plan (6)
10.6  Amended and Restated Employment Agreement between Metropolitan and Michael
      M. Earley dated January 3, 2005 (8)
10.7  Amended and Restated Employment  Agreement between  Metropolitan and David
      S. Gartner dated January 3, 2005 (8)
10.8  Amended and Restated Employment Agreement between Metropolitan and Roberto
      L. Palenzuela dated January 3, 2005 (8)
10.9  Amended and Restated Employment  Agreement between  Metropolitan and Debra
      A. Finnel dated January 3, 2005 (8)
10.10 Employment Agreement between Metcare of Florida, Inc. and Jose A. Guethon,
      M.D. (9)
10.11 Form of Option Award Agreement for Option Grants to Directors  pursuant to
      the Omnibus Compensation Plan (9)
10.12 Form of Option Award Agreement for Option Grants to Key Employees pursuant
      to the Omnibus Compensation Plan (9)
10.13 Form of Option Award Agreement for Option Grants to Employees  pursuant to
      the Omnibus Compensation Plan (9)
10.14 Agreement  between  Metcare of Florida,  Inc. and the Centers for Medicare
      and Medicaid Services (10)
10.15 Code of Business Conduct and Ethics (9)
31.1  Certification  of the Chief Executive  Officer  pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002*
31.2  Certification  of the Chief Financial  Officer  pursuant to Section 302 of
      the Sarbanes-Oxley Act of 2002*
32.1  Certification  of the Chief Executive  Officer  pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002**
32.2  Certification  of the Chief Financial  Officer  pursuant to Section 906 of
      the Sarbanes-Oxley Act of 2002**
-------------------------------------------
* filed herewith
**furnished herewith

(1)   Incorporated by reference to Metropolitan's Registration Statement on Form
      8-A12B filed with the Commission on November 19, 2004 (No. 001-32361).
(2)   Incorporated  by reference to  Metropolitan's  Current  Report on Form 8-K
      filed with the Commission on September 30, 2004.
(3)   Incorporated  by reference  to  Metropolitan's  Amendment to  Registration
      Statement on Form SB-2/A filed with the  Commission on August 2, 2001 (No.
      333-61566).  Portions  of  this  document  were  omitted  and  were  filed
      separately  with the SEC on or about August 2, 2001  pursuant to a request
      for confidential treatment.


                                       31


(4)   Incorporated by reference to Metropolitan's Amendment to Annual Report for
      the fiscal year ended  December  31,  2003 on Form  10-K/A  filed with the
      Commission  on July 28, 2004.  Portions of this document have been omitted
      and were filed  separately  with the SEC on July 28,  2004  pursuant  to a
      request for confidential treatment.
(5)   Incorporated by reference to Metropolitan's Amendment to Annual Report for
      the fiscal year ended  December  31,  2003 on Form  10-K/A  filed with the
      Commission on July 28, 2004.
(6)   Incorporated by reference to Metropolitan's Registration Statement on Form
      S-8 filed with the Commission on February 24, 2005 (No. 333-122976).
(7)   Incorporated by reference to the Company's  Annual Report on Form 10-K for
      the fiscal year ended  December 31, 2003, as filed with the  Commission on
      March 22, 2004.
(8)   Incorporated by reference to the Company's  Annual Report on Form 10-K for
      the fiscal year ended  December 31, 2004, as filed with the  Commission on
      March 22, 2005.
(9)   Incorporated by reference to the Company's  Annual Report on Form 10-K for
      the fiscal year ended  December 31, 2005, as filed with the  Commission on
      March 22, 2006.
(10)  Incorporated by reference to the Company's  Quarterly  Report on Form 10-Q
      for the fiscal  quarter ended March 31, 2006, as filed with the Commission
      on May 15, 2006.


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SIGNATURES

Pursuant  to the  requirements  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.


Registrant

Date:  August 8, 2006                    METROPOLITAN HEALTH NETWORKS, INC.


                                         /s/ Michael M. Earley
                                         ---------------------

                                         Michael M. Earley
                                         Chairman and
Date:  August 8, 2006                    Chief Executive Officer


                                         /s/ David S. Gartner
                                         --------------------

                                         David S. Gartner
                                         Chief Financial Officer


                                       33