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

FORM 10-Q

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

For
the quarterly period ended April 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
0-12927

|                                                                        | NATIONAL HOME HEALTH CARE CORP.
(Exact name of Registrant as Specified in Its Charter)                  |                                             
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | --------------------------------------------
|                                                                        |                                                                                                         |                                             
|Delaware
(State or Other Jurisdiction of
Incorporation or Organization) |                                                                                                         | 22-2981141
(IRS Employer Identification No.)
|                                                                        |                                                                                                         |                                             
|                                                                        | 700 White Plains Road, Scarsdale, New York 10583
(Address of Principal Executive Offices with Zip Code) |                                             
|                                                                        |                                                                                                         |                                             
|                                                                        | Registrant's Telephone Number Including Area Code: 914-722-9000                                         |                                             
|                                                                        |                                                                                                         |                                             
|                                                                        | 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
(as defined in Rule 12b-2 of the Exchange Act).   Large Accelerated Filer 
Accelerated Filer   Non-Accelerated Filer

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     
Yes     No X

# APPLICABLE ONLY TO
CORPORATE ISSUERS:

The number of shares of Common Stock
outstanding as of June 14, 2006 was 5,662,531.



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# NATIONAL HOME HEALTH CARE CORP. 
Form 10-Q 
For the Quarter Ended April 30, 2006
Table of Contents

|PART I        |  | FINANCIAL INFORMATION                                           |  |  | Page 
|------------- |  | --------------------------------------------------------------- |  |  | -----
|              | 
|Item 1        |  | Financial Statements                                            | 
|              | 
|              |  | Condensed Consolidated Balance Sheets as of April 30, 2006 and  |  |  | 3-4  
|              |  | July 31, 2005 (unaudited)                                       | 
|              | 
|              |  | Condensed Consolidated Statements of Operations for the three   |  |  | 5    
|              |  | months and nine months ended April 30, 2006 and April 30,       | 
|              |  | 2005 (unaudited)                                                | 
|              | 
|              |  | Condensed Consolidated Statements of Cash Flows for the nine    |  |  | 6    
|              |  | months ended April 30, 2006 and April 30, 2005 (unaudited)      | 
|              | 
|              |  | Notes to Condensed Consolidated Financial Statements            |  |  | 7-9  
|              | 
|Item 2        |  | Management's Discussion and Analysis of Financial Condition and |  |  | 10-15
|              |  | Results of Operations                                           | 
|              | 
|Item 3        |  | Quantitative and Qualitative Disclosure About Market Risk       |  |  | 15   
|              | 
|Item 4        |  | Controls and Procedures                                         |  |  | 15-16
|              | 
|PART II       |  | OTHER INFORMATION                                               | 
|              | 
|Item 1        |  | Legal Proceedings                                               |  |  | 17   
|              | 
|Item 6        |  | Exhibits                                                        |  |  | 18   
|              | 
|SIGNATURES    |  |                                                                 |  |  | 19   
|              | 
|EXHIBIT INDEX |  |                                                                 |  |  | 20   

-2-



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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)

|                                                |  | 
|----------------------------------------------- |  | 
|                                                |  | 
|                                                |  | 
|ASSETS                                          |  | 
|                                                |  | 
|Current:                                        |  | 
|Cash and cash equivalents                       |  | 
|Investments                                     |  | 
|Accounts receivable-less allowance for possible |  | 
|losses of $1,492,000 and $1,866,000             |  | 
|Prepaid expenses and other                      |  | 
|Income taxes receivable                         |  | 
|Deferred income taxes                           |  | 
|                                                |  | 
|                                                |  | 
|Total current assets                            |  | 
|                                                |  | 
|                                                |  | 
|                                                |  | 
|                                                |  | 
|Furniture, equipment and leasehold              |  | 
|improvements, net                               |  | 
|Goodwill                                        |  | 
|Other intangible assets, net                    |  | 
|Deposits and other assets                       |  | 
|                                                |  | 
|                                                |  | 
|TOTAL                                           |  | 
|                                                |  | 

(continued)

-3-



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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(UNAUDITED)

|                                                              |  | 
|------------------------------------------------------------- |  | 
|                                                              |  | 
|                                                              |  | 
|                                                              |  | 
|LIABILITIES AND STOCKHOLDERS' EQUITY                          |  | 
|                                                              |  | 
|Current liabilities:                                          |  | 
|Accounts payable and accrued expenses                         |  | 
|Estimated third-party payor settlements                       |  | 
|Deferred revenue                                              |  | 
|Dividend payable                                              |  | 
|                                                              |  | 
|                                                              |  | 
|Total current liabilities                                     |  | 
|                                                              |  | 
|                                                              |  | 
|                                                              |  | 
|Stockholders' equity:                                         |  | 
|Common stock, $.001 par value; authorized                     |  | 
|20,000,000 shares, issued 7,125,544 shares                    |  | 
|Additional paid-in capital                                    |  | 
|Retained earnings                                             |  | 
|                                                              |  | 
|                                                              |  | 
|                                                              |  | 
|Less: treasury stock (1,462,953 and 1,461,360 shares) at cost |  | 
|                                                              |  | 
|                                                              |  | 
|Total stockholders' equity                                    |  | 
|                                                              |  | 
|                                                              |  | 
|TOTAL                                                         |  | 
|                                                              |  | 

See accompanying notes to consolidated financial statements.

-4-



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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                                     | For the three months
ended April 30, |  | For the nine months
ended April 30, |           
|------------------------------------ | ------------------------------------ |  | ----------------------------------- | ----------
|
|Net patient revenue                  |                                      |  | $                                   | 25,032,000
|                                     |                                      |  |                                     |           
|                                     |                                      |  |                                     |           
|Operating expenses:                  |                                      | 
|Cost of revenue                      |                                      |  |                                     | 16,906,000
|General and administrative           |                                      |  |                                     | 6,807,000 
|Amortization of intangibles          |                                      |  |                                     | 98,000    
|Provision for possible losses        |                                      |  |                                     | 132,000   
|                                     |                                      |  |                                     |           
|Total operating expenses             |                                      |  |                                     | 23,943,000
|                                     |                                      |  |                                     |           
|Income from operations               |                                      |  |                                     | 1,089,000 
|Other income:                        |                                      | 
|Interest                             |                                      |  |                                     | 128,000   
|                                     |                                      |  |                                     |           
|Income before income taxes           |                                      |  |                                     | 1,217,000 
|                                     |                                      |  |                                     |           
|Provision for income taxes           |                                      |  |                                     | 495,000   
|                                     |                                      |  |                                     |           
|Net income                           |                                      |  | $                                   | 722,000   
|                                     |                                      |  |                                     |           
|Net income per common share:         |                                      | 
|Basic                                |                                      |  | $                                   | 0.13      
|                                     |                                      |  |                                     |           
|Diluted                              |                                      |  | $                                   | 0.13      
|                                     |                                      |  |                                     |           
|                                     |                                      |  |                                     |           
|Weighted average shares outstanding: |                                      | 
|Basic                                |                                      |  |                                     | 5,662,531 
|                                     |                                      |  |                                     |           
|Diluted                              |                                      |  |                                     | 5,741,722 
|                                     |                                      |  |                                     |           
|Dividends declared per share         |                                      |  | $                                   | 0.075     
|                                     |                                      |  |                                     |           

See
accompanying notes to consolidated financial statements.

-5-



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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
(UNAUDITED)

|                                                            |                                    | 
|----------------------------------------------------------- | ---------------------------------- | 
|                                                            | For the nine months endedApril 30,
|                                                            |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Cash flows from operating activities:                       |                                    | 
|Net income                                                  |                                    | 
|Adjustments to reconcile net income                         |                                    | 
|to net cash provided by operating activities:               |                                    | 
|Depreciation and amortization                               |                                    | 
|Allowance for possible losses, net of writeoffs             |                                    | 
|Deferred income taxes                                       |                                    | 
|Loss on sale of assets                                      |                                    | 
|Changes in assets and liabilities:                          |                                    | 
|Accounts receivable                                         |                                    | 
|Prepaid expenses and other                                  |                                    | 
|Income taxes receivable                                     |                                    | 
|Accounts payable and accrued expenses                       |                                    | 
|Estimated third-party payor settlements                     |                                    | 
|Deferred revenue                                            |                                    | 
|                                                            |                                    | 
|Net cash provided by operating activities                   |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Cash flows from investing activities:                       |                                    | 
|Purchase of furniture, equipment and leasehold improvements |                                    | 
|Proceeds from sale of investments                           |                                    | 
|Purchase of assets of business                              |                                    | 
|                                                            |                                    | 
|Net cash used in investing activities                       |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Cash flows from financing activities:                       |                                    | 
|Purchase of treasury shares                                 |                                    | 
|Payment of cash dividends                                   |                                    | 
|Proceeds from exercise of stock options                     |                                    | 
|                                                            |                                    | 
|Net cash used in financing activities                       |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Net increase (decrease) in cash and cash equivalents        |                                    | 
|                                                            |                                    | 
|Cash and cash equivalents-beginning of period               |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Cash and cash equivalents-end of period                     |                                    | 
|                                                            |                                    | 
|                                                            |                                    | 
|Supplemental disclosures of cash flow information:          |                                    | 
|Cash paid during the period for:                            |                                    | 
|Income taxes                                                |                                    | 
|Interest                                                    |                                    | 
|Dividends declared and not paid                             |                                    | 
|                                                            |                                    | 

See
accompanying notes to consolidated financial statements.

-6-



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NATIONAL HOME HEALTH CARE
CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1  BASIS OF
PRESENTATION

The
accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial information
and with instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine-month periods
ended April 30, 2006 are not necessarily indicative of the results that may be expected
for the year ending July 31, 2006. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Companys annual report on
Form 10-K for the year ended July 31, 2005.

NOTE 2  ACQUISITIONS

On
October 6, 2004, the Company, through a wholly-owned subsidiary in Connecticut, acquired
certain assets from On Duty Metropolitan Connecticut, LLC (On Duty). On Duty
provided home health care services in New Haven and Fairfield Counties. The purchase price
of $1,078,000, including acquisition costs of $103,000, was financed using internal funds.
The acquisition was accounted for as a purchase.

On
May 22, 2005, the Company, through a wholly-owned subsidiary in New Jersey, acquired
certain assets from Helping Hands Health Care (Helping Hands), a licensed home
health care company that provided home health aide services in Bergen, Hudson, Passaic,
Essex, Morris, Union, Middlesex, Somerset and Ocean Counties, New Jersey. The purchase
price of $3,171,000, including acquisition costs of $152,000, was financed using internal
funds. The acquisition was accounted for as a purchase.

NOTE 3  RECLASSIFICATIONS

Certain
reclassifications have been made in prior periods financial statements to conform to
classifications used in the current period.

-7-



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NOTE 4  NET INCOME
PER SHARE DATA

A
reconciliation of shares used in calculating basic and diluted net income per share is as
follows:

|                              | For the three months ended
April 30,
(unaudited) | 
|----------------------------- | ------------------------------------------------ | 
|
|Basic EPS                     |                                                  | 
|Effect of dilutive securities |                                                  | 
|                              |                                                  | 
|Diluted EPS                   |                                                  | 
|                              |                                                  | 

|                              | For the nine months ended
April 30,
(unaudited) | 
|----------------------------- | ----------------------------------------------- | 
|
|Basic EPS                     |                                                 | 
|Effect of dilutive securities |                                                 | 
|                              |                                                 | 
|Diluted EPS                   |                                                 | 
|                              |                                                 | 

NOTE 5  STOCK-BASED COMPENSATION

In
December of 2004, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standards (SFAS) No. 123 (revised), Share-Based
Payment. SFAS No. 123R will provide investors and other users of financial
statements with more complete and neutral financial information by requiring that the
compensation cost relating to share-based payment transactions be recognized in financial
statements. The Company adopted SFAS No. 123R in the first quarter of fiscal 2006. This
standard requires that the Company measure the cost of employee services received in
exchange for any award of equity instruments based on the grant date fair value of the
award. That cost will be recognized over the period in which the employee is required to
provide the services  the requisite service period (usually the vesting period)
 in exchange for the award. The grant date fair value for options and similar
instruments will be estimated using option pricing models. Under SFAS No. 123R, the
Company is required to select a valuation technique or option pricing model that meets the
criteria as stated in the standard, which includes a binomial model and the Black-Scholes
model. At the present time, the Company is continuing to use the Black-Scholes model. The
adoption of SFAS No. 123R, applying the modified prospective method, as
elected by the Company, requires the Company to value stock options prior to its adoption
of SFAS No. 123R under the fair value method and expense these amounts over the remaining
vesting period of the stock options. SFAS No. 123R requires that the Company estimate
forfeitures for stock options and reduce compensation expense accordingly. The adoption of
SFAS No. 123R did not have any impact on the Companys overall results of operations
for the nine months ended, or financial position as of, April 30, 2006.

NOTE 6  LEGAL
PROCEEDINGS

In
October 2003, New England Home Care, Inc. (New England) received a subpoena
from the United States Attorneys Office in New Haven, Connecticut. The subpoena
sought production of documents in connection with an investigation into possible
violations of certain federal health care laws. New England has produced documents in
response to the subpoena to cooperate with the investigation. In April 2006 the Company
was advised that the United States Attorneys Office had closed its investigation
into possible violations of certain federal health care laws by New England.

A
class action lawsuit entitled Lerai Jones, Individually and on Behalf of All Other Persons
Similarly Situated v. National Home Health Care Corp., was filed on February 28, 2006 in
the Supreme Court of the State of New York, County of New York, Index No. 06-102757,
alleging violations of the New York Labor Law for unpaid overtime under state law. The
complaint asserts that all hourly employees of the Company within New York were not paid
time and one-half their regular rate of pay for all hours worked in excess of forty (40)
hours per week, as required under State law. The applicable statute of limitations is six
(6) years. On January 23, 2006, the United States Supreme Court vacated and remanded for
further consideration the decision of the United States Court of Appeals for the Second
Circuit in Evelyn Coke v. Long Island Care At Home, Ltd., 126 S.Ct. 1189 (2006) (a case
unrelated to the Company), in which the Second Circuit reversed the determination of a
lower court finding an exemption from the payment of overtime under Section 13(a)(15)
under the Fair Labor Standards Act (the FLSA) for employees of third parties
who provide companionship services. The Second Circuits decision in Coke
invalidated this overtime exemption for employees of third parties. In vacating the Second
Circuits decision, the Supreme Court remanded with instructions to consider a
Department of Labor Wage and Hour Advisory Memorandum which found that the overtime
exemption is applicable for employees employed by third parties performing
companionship services. While the Company cannot predict how the Second
Circuit will rule on reconsideration, the Company is confident that, in light of the
Supreme Courts instruction to consider the Department of Labor Memorandum, the
Second Circuit will uphold the applicable overtime exemption. Under New York State Law, if
an exemption under the FLSA is applicable, employers are only obligated to pay overtime at
a rate of time and one-half the statutory minimum rate of pay, not an employees
regular rate. In view of the significance of the decision by the Second Circuit on remand,
on March 27, 2006 plaintiff and the Company entered into a Stipulation and Order Staying
Action which stays further proceedings pending the decision by the Second Circuit. The
Company believes that it has meritorious defenses to the class action.

-8-



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ITEM 2  Managements
Discussion and Analysis of Financial Condition and Results of Operations.

General

The
following discussion and analysis provides information which the Companys management
believes is relevant to an assessment and understanding of the Companys results of
operations and financial condition. This discussion and analysis should be read in
conjunction with the attached unaudited consolidated financial statements and notes
thereto, and with the Companys audited financial statements and notes thereto for
the fiscal year ended July 31, 2005 included with the Companys annual report on Form
10-K with respect to such fiscal year.

Certain
matters set forth in this report are forward-looking statements that are dependent on
certain risks and uncertainties, including but not limited to risks and uncertainties
relating to whether the Company can identify, consummate and integrate on favorable terms
acquisitions or market penetrations, market acceptance, pricing and demand for the
Companys services, changing regulatory environment, changing economic conditions,
whether the Company can attract and retain qualified personnel, the ability to manage the
Companys growth, and other risks detailed in the Companys other filings with
the Securities and Exchange Commission.

The
Company is subject to external factors that could significantly impact its business,
including potential reductions in reimbursement rates by Medicare, Medicaid and other
third party payors for the Companys services, retroactive adjustments due to prior
year audits, reviews and investigations, government fraud and abuse initiatives and other
such factors that are beyond the control of the Company. These factors could cause future
results to differ materially from historical results.

As
a Medicaid provider, the Company is subject to routine, unscheduled audits. These audits
may result in the application of a statistically-derived adjustment factor to the
Companys revenues, which may have an adverse impact on the Companys results of
operations. Although the audits to date have not resulted in any material adjustments,
such audits were conducted at a time when the Company had significantly lower Medicaid
revenues. There can be no assurance that future Medicaid audits will not have a material
adverse impact on the Company.

The
Balanced Budget Act (the Act) was signed into law in August 1997. The Act made
significant changes in the reimbursement system for Medicare home health care services.
The primary change that affects the Company is the restructuring of the reimbursement
system related to Medicare certified home health care agencies. Prior to the Act, Medicare
reimbursed providers on a reasonable cost basis subject to program-imposed cost per visit
limitations.

Under
the Act, changes in Medicare home care reimbursement were scheduled in two phases. A
temporary or interim payment system (IPS) took effect for cost reports
beginning on or after October 1, 1997. Under IPS, home health care providers were
reimbursed the lowest of (i) their actual costs, (ii) cost limits based on 105% of median
costs of freestanding home health agencies, or (iii) an agency-specific per patient cost
limit, based on 1994 costs adjusted for inflation. Under IPS, most Medicare providers were
actually reimbursed under an agency-specific per patient cost limit. Effective October 1,
2000, under the prospective payment system, Medicare now reimburses providers a
predetermined base payment. The payment is adjusted for the health condition and care
needs of the beneficiary and is also adjusted for geographic differences in wages across
the country. Medicare provides home health agencies with payments for 60-day
episodes of care.

-9-



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The
final phase of the Act implemented a 15% cut in Medicare reimbursement rates effective
October 1, 2002. In two of the last three fiscal years, less than five percent of the
Companys net patient revenue was derived directly from Medicare, and accordingly the
change to the prospective payment system has not, to date, had a material adverse effect
on the Company. However, there can be no assurance that the Medicare prospective payment
system will not adversely impact the Companys reimbursement rates in the future or
otherwise have a material adverse effect on the Company. The Companys operations in
New York are dependent upon referrals, primarily from Medicare certified home health care
agencies, whose reimbursement has been adversely affected by the prospective payment
system. Under the prospective payment system, there can be no assurance that the
Companys future referrals will not result in reduced reimbursement rates or reduced
volume of business.

The
Company derives a substantial amount of revenue from state sponsored Medicaid programs.
Approximately 46%, 43% and 42% of net patient revenue for the fiscal years ended July 31,
2005, 2004 and 2003, respectively, were derived from state law under federal guidelines.
States differ as to reimbursement policies and rates. The Company is a licensed Medicaid
provider in Connecticut, Massachusetts, New Jersey and in Nassau and Westchester Counties,
New York.

From
March 1, 2004 through August 23, 2005, the Division of Health Systems Regulation for the
Connecticut Department of Public Health (the DPH) conducted various licensing
and certification inspections of New England, the Companys Medicare certified and licensed home health care subsidiary in
Connecticut. In December 2005, New England and DPH entered into a Consent Order for the
purpose of resolving DPHs findings at the conclusion of those inspections. The
Consent Order provides for the adoption of certain policies and procedures pursuant to a
Plan of Correction approved by DPH. The terms of the Consent Order will generally remain
in effect until the fall of 2007.

In
December 6, 2004, the New York State Senate voted to override the Governors veto of
legislation that will increase the State minimum wage from the then $5.15 per hour to
$7.15 over a two-year period. The law increased the minimum wage to $6.00 per hour
starting January 1, 2005. The minimum wage was raised to $6.75 on January 1, 2006 and will
be raised again on January 1, 2007 to $7.15 per hour. This minimum wage legislation has
impacted and will continue to impact the Companys New York operations on two fronts.
Firstly, the Company has been paying higher base wages and secondly, overtime in New York
is computed at 1.5 times the state minimum wage, thus increasing overtime costs to the
Company.

On
May 13, 2005, Accredited Health Services, Inc., (Accredited), the
Companys New Jersey wholly-owned subsidiary, received a copy of a Petition for
Certification of Representative, pursuant to the provisions of the National Labor
Relations Act. On March 21, 2006 the home health aides of Accredited, in a mail ballot
election, rejected union representation by SEIU 1199 New Jersey.

On
July 1, 2005, the State of New Jersey Medicaid Program introduced a revised Personal Care
Assistant (PCA) Beneficiary Tool (the Tool). The Tool is used to
determine the weekly hours a PCA Beneficiary receives. As a result of the implementation
of the new assessment Tool, Accredited has experienced and will continue to experience a
reduction in the amount of total hours per week that each PCA Beneficiary receives. For
the fiscal year ended July 31, 2005, the State of New Jersey Medicaid Program accounted
for approximately 84% of Accrediteds revenue.

In
October 2005, the Department of Social Services in Connecticut increased the rates for all
home health care services provided to state-aided persons by 4%. These rates were
increased retroactive to July 1, 2005 and at current levels of operations, the Company
estimates that the rate change will result in an increase in net patient revenue of
approximately $1,000,000 annually.

-10-



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Results of Operations and
Effects of Inflation

Three Months Ended April
30, 2006 Compared to Three Months Ended April 30, 2005.

Net
Patient Revenue.For the three months ended April 30, 2006, net patient revenue increased
$831,000, or 3.4%, to $25,032,000 from $24,201,000 for the three months ended April 30,
2005. This increase was attributable to (i) an increase of $847,000 in New Jersey as a
result of the acquisition of Helping Hands and (ii) an increase of $1,594,000 resulting
from the expansion of operations in Massachusetts and additional hours being subcontracted
in New York. The increase in net patient revenue was partially offset by a decrease in
Connceticut of $1,610,000, primarily the result of the above mentioned inspections and the
elimination of small margin revenue.

Gross
Profit.  Gross profit margin remained at 32.5% for both the three months ended April 30,
2006 and three months ended April 30, 2005. This was attributable to the Company
offsetting increased direct wages paid to all caregivers with increases in reimbursement
rates.

General
and Administrative.  General and administrative expenses increased $192,000, or 2.9%, to
$6,807,000 for the three months ended April 30, 2006 from $6,615,000 for the three months
ended April 30, 2005. This increase is primarily attributable to (i) increases in
administrative personnel and occupancy related costs resulting from the acquisition of
Helping Hands in New Jersey, (ii) increased legal and consulting fees as a result of the
above mentioned inspections in Connecticut and the union election in New Jersey and (iii)
increases in administrative personnel in Massachusetts and New York resulting from the
expansion of operations. As a percentage of net patient revenue, general and
administrative expenses decreased slightly to 27.2% for the three months ended April 30,
2006 from 27.3% for the three months ended April 30, 2005.

Amortization.
Amortization of intangibles decreased $41,000, or 29.5%, to $98,000 for the
three months ended April 30, 2006 from $139,000 for the three months ended April
30, 2005. This decrease is attributable to intangibles from previous
acquisitions that have now been fully amortized.

Provision
for Possible Losses.The Company recorded a provision for possible losses of $132,000 for
the three months ended April 30, 2006 as compared to $88,000 for the three months ended
April 30, 2005. This increase is attributable to the Company increasing reserves for
possible losses from certain payor sources.

Income
from Operations.As a result of the foregoing, income from operations increased $57,000,
or 5.5%, to $1,089,000 for the three months ended April 30, 2006 from $1,032,000 for the
three months ended April 30, 2005.

Interest
Income.Interest income increased $46,000, or 56.1%, to $128,000 for the three months
ended April 30, 2006 from $82,000 for the three months ended April 30, 2005. This increase
is attributable to higher interest rates.

Income
Taxes.The Companys effective tax rate increased to 40.6% for the three months ended
April 30, 2006 from 31.7% for the three months ended April 30, 2005. This increase is
attributable to a decrease in work opportunity tax credits in the current three-month
period and an over accrual of taxes recorded in the fiscal year ended July 31, 2004 that
reduced income taxes in the prior three-month period.

-11-



---

Net
Income.Net income decreased $39,000, or 5.1%, to $722,000, or $.13 per diluted share, in
the three months ended April 30, 2006 from $761,000, or $.13 per diluted share, in the
three months ended April 30, 2005.

Nine Months Ended April
30, 2006 Compared to Nine Months Ended April 30, 2005

Net
Patient Revenue.For the nine months ended April 30, 2006, net patient revenue increased
$4,433,000, or 6.1%, to $77,023,000 from $72,590,000 for the nine months ended April 30,
2005. This increase was attributable to (i) an increase of $3,021,000 in New Jersey as a
result of the acquisition of Helping Hands and (ii) an increase of $4,690,000 resulting
from the expansion of operations in Massachusetts and additional hours being subcontracted
in New York. The increase in net patient revenue was partially offset by a decrease in
Connecticut of $3,278,000, primarily the result of the above-mentioned inspections and the
elimination of small margin revenue business.

Gross
Profit.Gross profit margin decreased slightly to 33.5% for the nine months ended April
30, 2006 from 33.7% for the nine months ended April 30, 2005. This decrease was
attributable to higher direct wages paid to all caregivers, offset partially by increases
in reimbursement rates.

General
and Administrative.General and administrative expenses increased $1,670,000, or 8.7%, to
$20,908,000 for the nine months ended April 30, 2006 from $19,238,000 for the nine months
ended April 30, 2005. This increase is primarily attributable to (i) increases in
administrative personnel and occupancy related costs resulting from the acquisition of
Helping Hands in New Jersey, (ii) increased legal and consulting fees in as a result of
the above mentioned inspections in Connecticut and the union election in New Jersey and
(iii) increases in administrative personnel in Massachusetts and New York resulting from
the expansion of operations. As a percentage of net patient revenue, general and
administrative expenses increased to 27.1% for the nine months ended April 30, 2006 from
26.5% for the nine months ended April 30, 2005.

Amortization.  
Amortization of intangibles decreased $104,000, or 25.3%, to $307,000 for the
nine months ended April 30, 2006 from $411,000 for the nine months ended April
30, 2005. This decrease is attributable to intangibles from previous
acquisitions that have now been fully amortized.

Provision
for Possible Losses.The Company recorded a provision for possible losses of $410,000 for
the nine months ended April 30, 2006, as compared to $258,000 for the nine months ended
April 30, 2005. This increase is attributable to the Company increasing reserves for
possible losses from certain payor sources.

Income
from Operations.As a result of the foregoing, income from operations decreased $368,000,
or 8%, to $4,205,000 for the nine months ended April 30, 2006 from $4,573,000 for the nine
months ended April 30, 2005.

Interest
Income.Interest income increased $152,000, or 78.8%, to $345,000 for the nine months
ended April 30, 2006 from $193,000 for the nine months ended April 30, 2005. This increase
is attributable to higher interest rates.

Income
taxes.The Companys effective tax rate increased to 39.5% for the nine months ended
April 30, 2006 from 37.6% for the nine months ended April 30, 2005. This increase is
attributable to a decrease in work opportunity tax credits in the current nine-month
period and an over accrual of taxes recorded in the fiscal year ended July 31, 2004 that
reduced income taxes in the prior nine-month period.

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Net
Income.Net income decreased $220,000, or 7.4%, to $2,755,000, or $.48 per diluted share,
in the nine months ended April 30, 2006 from $2,975,000, or $.52 per diluted share, in the
nine months ended April 30, 2005.

The
rate of inflation had no material effect on operations for the nine months ended April 30,
2006.

Financial Condition and
Capital Resources

Current
assets increased to $38,744,000 and current liabilities decreased to $4,239,000 at April
30, 2006. This resulted in an increase in working capital of $1,776,000 from $32,729,000
at July 31, 2005 to $34,505,000 at April 30, 2006. Cash and cash equivalents increased
$1,532,000 to $17,716,000 at April 30, 2006 from $16,184,000 at July 31, 2005. The
increase in cash and working capital was primarily attributable to the cash generated by
operating activities, offset by the payments of cash dividends.

The
Company provided net cash from operating activities of $3,170,000 for the nine months
ended April 30, 2006 as compared to net cash provided by operating activities of
$2,728,000 for the nine months ended April 30, 2005. The increase in net cash provided by
operating activities of $442,000 is attributable to an increase in operating cash flow of
$531,000 and a decrease in operating assets of $173,000, offset by a decrease in operating
liabilities of $262,000 over the comparable period for the nine months ended April 30,
2005.

The
net cash used in investing activities for the nine months ended April 30, 2006 consisted
of the purchase of equipment offset by the proceeds from the sale of investments. The net
cash used in investing activities for the nine months ended April 30, 2005 consisted of
the purchase of assets of businesses and the purchase of equipment.

The
net cash used in financing activities for the nine months ended April 30, 2006 consisted
of the purchase of treasury shares and the payment of cash dividends. The net cash used in
financing activities for the nine months ended April 30, 2005 consisted of the purchase of
treasury shares and the payment of cash dividends, offset by the proceeds from stock
option exercises.

The
nature of the Companys business requires weekly payments to health care personnel at
the time services are rendered. The Company typically receives payment for these services
in 90 to 150 days with respect to contracted and insurance business and 8 to 45 days with
respect to certain governmental payers, such as Medicare and Medicaid programs. Accounts
receivable turnover was 72 days at April 30, 2006 as compared to 75 days at April 30,
2005.

The
Company closed on a new $7,500,000 revolving credit facility (the credit
facility) on April 28, 2006 with Bank of America. The credit facility provides for
the Companys subsidiaries to borrow up to $7,500,000 at the banks prime rate
or LIBOR plus 1.5%. The credit facility expires on April 2, 2007 and requires the Company
to meet certain financial covenants and ratios. At April 30, 2006, there was no
outstanding balance under the credit facility. Borrowings are secured by a pledge of all
of the assets of the Company and its subsidiaries and guaranteed by the Company.

In
September 2005, the Board of Directors extended the Companys program to repurchase
its Common Stock for an additional year. Purchases of up to $3,000,000 may be made from
time to time in the open market and through privately negotiated transactions, subject to
general market and other conditions. The buyback program will be financed out of existing
cash or cash equivalents.

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The
Company intends to incur capital expenditures of approximately $500,000 during the fiscal
year ending July 31, 2006 in connection with the proposed implementation of new computer
hardware, telephone equipment and networking equipment. These expenditures would be
designed to, among other things, update certain data input capability regarding services
rendered at certain locations. The Company believes that these expenditures will provide
efficiencies in data organization, retrieval and analysis, both for continuing operations
and in connection with certain audits. The Company intends to fund these expenditures,
acquisitions and cash dividends declared by the Board of Directors and otherwise meet its
short term and long term liquidity needs from its current cash balances, cash flow from
operations and its new credit facility.

Contractual Obligations

The
Company rents various office facilities through 2009 under terms of several lease
agreements that include escalation clauses. At April 30, 2006, minimum rental commitments
under noncancellable operating leases are as follows:

|                 |             | 
|---------------- | ----------- | 
|Operating Leases |             | 
|                
|Less than 1 year | $   995,000 | 
|                
|1-3 years        | 1,106,000   | 
|                
|3-5 years        | -0-         | 
|                 |            
|Total            | $ 2,101,000 | 
|                

Item 3.  Quantitative and Qualitative Disclosure About Market Risk.

None.

Item 4.   Controls and Procedures.

The
Company maintains disclosure controls and procedures that are designed to ensure that
information required to be disclosed in the reports that the Company is required to file
under the Securities Exchange Act of 1934 (the Exchange Act Reports) 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 the Companys
management, including the principal executive officer and principal financial officer, as
appropriate, to allow timely decisions regarding required disclosure. The Companys
management necessarily has applied its judgment in assessing the costs and benefits of
such controls and procedures, which, by their nature, can provide only reasonable
assurance regarding managements control objectives. Management believes that there
are reasonable assurances that our controls and procedures will achieve managements
control objectives.

Prior
to the filing date of this report, the Company carried out an evaluation, under the
supervision and with the participation of its management, including the President and
Chief Executive Officer and the Vice President of Finance and Chief Financial Officer, of
the effectiveness of the design and operation of the Companys disclosure controls
and procedures pursuant to Exchange Act Rule 13a-15

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as of April 30, 2006. Based upon
that evaluation, the President and Chief Executive Officer and the Vice President of
Finance and Chief Financial Officer concluded that the Companys disclosure controls
and procedures are effective in timely alerting them to material information relating to
the Company (and its consolidated subsidiaries) required to be included in its Exchange
Act Reports.

Changes in Internal
Controls Over Financial Reporting

The
evaluation referred to above did not identify any changes in the Companys internal
controls over financial reporting that occurred during the quarter ended April 30, 2006
that have materially affected, or are reasonably likely to materially affect, the
Companys internal control over financial reporting.

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PART II    OTHER INFORMATION

Item 1.     Legal
Proceedings.

In
October 2003, New England received a subpoena from the United States Attorneys
Office in New Haven, Connecticut. The subpoena sought production of documents in
connection with an investigation into possible violations of certain federal health care
laws. New England has produced documents in response to the subpoena to cooperate with the
investigation. In April 2006 the Company was advised that the United States
Attorneys Office had closed its investigation into possible violations of certain
federal health care laws by New England.

A
class action lawsuit entitled Lerai Jones, Individually and on Behalf of All Other Persons
Similarly Situated v. National Home Health Care Corp., was filed on February 28, 2006 in
the Supreme Court of the State of New York, County of New York, Index No. 06-102757,
alleging violations of the New York Labor Law for unpaid overtime under state law. The
complaint asserts that all hourly employees of the Company within New York were not paid
time and one-half their regular rate of pay for all hours worked in excess of forty (40)
hours per week, as required under State law. The applicable statute of limitations is six
(6) years. On January 23, 2006, the United States Supreme Court vacated and remanded for
further consideration the decision of the United States Court of Appeals for the Second
Circuit in Evelyn Coke v. Long Island Care At Home, Ltd., 126 S.Ct. 1189 (2006) (a case
unrelated to the Company), in which the Second Circuit reversed the determination of a
lower court finding an exemption from the payment of overtime under Section 13(a)(15)
under the Fair Labor Standards Act (the FLSA) for employees of third parties
who provide companionship services. The Second Circuits decision in Coke
invalidated this overtime exemption for employees of third parties. In vacating the Second
Circuits decision, the Supreme Court remanded with instructions to consider a
Department of Labor Wage and Hour Advisory Memorandum which found that the overtime
exemption is applicable for employees employed by third parties performing
companionship services. While the Company cannot predict how the Second
Circuit will rule on reconsideration, the Company is confident that, in light of the
Supreme Courts instruction to consider the Department of Labor Memorandum, the
Second Circuit will uphold the applicable overtime exemption. Under New York State Law, if
an exemption under the FLSA is applicable, employers are only obligated to pay overtime at
a rate of time and one-half the statutory minimum rate of pay, not an employees
regular rate. In view of the significance of the decision by the Second Circuit on remand,
on March 27, 2006 plaintiff and the Company entered into a Stipulation and Order Staying
Action which stays further proceedings pending the decision by the Second Circuit. The
Company believes that it has meritorious defenses to the class action.

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Item 6.    Exhibits.

The
following exhibits are filed herewith:

|               |                                                                       
|-------------- | ----------------------------------------------------------------------
|Exhibit
Number | Description                                                           
|31.1           | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
|31.2           | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
|32.1           | Section 1350 Certification of Principal Executive Officer.            
|32.2           | Section 1350 Certification of Principal Executive Officer.            

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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.

|                    | NATIONAL HOME HEALTH CARE CORP.                                                                          
|------------------- | ---------------------------------------------------------------------------------------------------------
|Date: June 14, 2006 | /s/ Robert P. Heller                                                                                     
|                    | Robert P. Heller
Vice President of Finance (principal financial officer and
principal accounting officer)

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EXHIBIT INDEX

|               |                                                                       
|-------------- | ----------------------------------------------------------------------
|Exhibit
Number | Description                                                           
|31.1*          | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
|31.2*          | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
|32.1*          | Section 1350 Certification of Principal Executive Officer.            
|32.2*          | Section 1350 Certification of Principal Executive Officer.            

---

*      Filed herewith

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