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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
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                                    FORM 8-K

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                                 CURRENT REPORT
     Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

       Date of Report (Date of earliest event reported): February 21, 2006

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                             Dynacq Healthcare, Inc.
             (Exact name of registrant as specified in its charter)
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          Delaware                     000-21574                76-0375477
(State or other jurisdiction of  (Commission File Number)    (I.R.S. Employer
incorporation or organization)                               Identification No.)

                       10304 Interstate 10 East, Suite 369
                              Houston, Texas 77029
              (Address of principal executive offices and zip code)

                                 (713) 378-2000
              (Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:

[ ]  Written communications pursuant to Rule 425 under the Securities Act
     (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act
     (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the
     Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))

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Item 1.01.  Entry into a Material Definitive Agreement

On February 21, 2006 (the "Effective Date"),  Vista Hospital of Baton Rouge, LLC
dba Vista Surgical Hospital, and Vista Holdings, LLC (collectively,  "Sellers"),
each an affiliate  majority  owned and  controlled  by Dynacq  Healthcare,  Inc.
("Registrant"),  entered into a Purchase and Sale  Agreement  (the  "Agreement")
with Physicians  Medical Centre of Baton Rouge, LLC, a limited liability company
of East Baton Rouge Parish,  Louisiana ("Buyer"),  to sell the hospital owned by
Sellers at 9032 Perkins Road in Baton Rouge, Louisiana, the facility in which it
is located,  the  equipment  used therein,  a 6,900 square foot office  building
located  nearby  and the 20 acres of land on which the  facilities  are  located
(collectively,  the  "Assets").  Excluded from the Assets agreed to be sold were
the accounts  receivable  for services  provided by Sellers prior to the Closing
Date,  employee  benefit plans,  cash and investments  held by the Sellers.  The
Buyer agreed to assume  certain  liabilities  of Sellers in the operation of the
hospital and to pay to Sellers cash in the amount of $26.5 million.

In the  Agreement,  the Sellers made  customary  representations  and warranties
regarding the Assets and agreed to indemnify the Buyer from any loss incurred by
it as a result of the breach of any of those representations and warranties, the
operation  of the hospital  prior to the closing of the sale,  or the failure of
any covenant or agreement  of Sellers in the  Agreement.  Sellers have agreed to
operate the hospital in the ordinary course of business until the closing of the
transaction  contemplated  by the  Agreement.  Sellers also  received  customary
representations  and warranties from the Buyer as well as indemnification in the
event of breach.

Among the  conditions  to the closing of the  Agreement are the receipt of third
party   consents,   including   regulatory   approvals,   the   execution  of  a
noncompetition  agreement by the Sellers,  and the expiration of a 90 day period
after the Effective Date (the "Inspection and Financing Period"). The closing is
projected to occur on or before May 20, 2006, but may be postponed at the option
of the Sellers to no later than June 20,  2006.  The  Inspection  and  Financing
Period may be extended only by mutual written consent of the Buyer and Sellers.

Buyer  has  agreed  to  provide,  within  ten  days of the  Effective  Date,  an
irrevocable  letter of credit in the amount of  $100,000,  and within 40 days of
the  Effective  Date an  additional  letter of credit in the amount of $250,000,
each  conditioned  only on the terms of the Agreement.  Only if the Agreement is
terminated because of Sellers' failure to meet its contingencies, e.g. obtaining
a title commitment or survey or satisfying  Buyer's  environmental  concerns and
physical inspection of the property,  by the end of the Inspection and Financing
Period, would the deposits made up to the date of termination be refunded to the
Buyer.  If the  Agreement  is  terminated  for any  other  reason,  including  a
determination  by the Buyer that the Assets are not in good condition,  feasible
for their intended use or the failure by Buyer to obtain financing, the deposits
made up to the date of  termination  shall be retained by the  Sellers.  In such
event,  the  amount  paid to the  Sellers  would be zero if  termination  of the
Agreement  occurs  before the first  deposit is made,  $100,000  if  termination
occurs  after the first and before the second  deposit is made,  and $350,000 if
termination  occurs  after the second  deposit is made.  Buyer is  obligated  to
notify  Sellers at the end of the  Inspection  and Financing  Period whether any
contingencies  to the closing have not been satisfied or waived.  Payment of the
deposit is in addition to any other remedies available at law to the parties for
the  termination  of the  Agreement.  If the  Agreement is terminated by a party




because  of the  breach  by the  other  party  or  because  a  condition  to the
terminating party's obligations under the Agreement is not satisfied as a result
of the other party's failure to comply with its obligations under the Agreement,
the  terminating  party  has the right to pursue  all legal  remedies  and to be
reimbursed for its expenses incurred prior to the date of such termination.

     The Chairman of the Buyer is a minority investor in Vista Hospital of Baton
Rouge, LLC.

Item 9.01.  Financial Statements and Exhibits.

(d)  Exhibits

The Purchase and Sale  Agreement will be filed as an exhibit to the next regular
periodic  report filed by the Registrant  under the  Securities  Exchange Act of
1934.

                                   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 hereunto duly authorized.

                                                Dynacq Healthcare, Inc.

                                                By: /s/ Philip S. Chan
                                                    ----------------------------
                                                    Philip S. Chan,
                                                    Chief Financial Officer

Date: February 22, 2006