<PAGE>   1

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (MARK ONE)

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

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2001

                                       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 000-25769

                          ACCREDO HEALTH, INCORPORATED

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                DELAWARE                                    62-1642871
     -------------------------------                   -------------------
     (STATE OR OTHER JURISDICTION OF                   (I.R.S. EMPLOYER
     INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)

             1640 CENTURY CENTER PKWY, SUITE 101, MEMPHIS, TN 38134

                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
                                   (ZIP CODE)

                                 (901) 385-3688

              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

              (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 [ ]


<PAGE>   2

                APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes [ ] No [ ]

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

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

<TABLE>
<CAPTION>
                      CLASS                                OUTSTANDING AT April 30, 2001
         <S>                                               <C>
         COMMON STOCK, $0.01 PAR VALUE................                25,849,064
                                                                      ----------
         TOTAL COMMON STOCK...........................                25,849,064
                                                                      ==========
</TABLE>


<PAGE>   3

                          ACCREDO HEALTH, INCORPORATED
                                      INDEX


<TABLE>
<S>      <C>
Part I - FINANCIAL INFORMATION

Item 1.  Financial Statements

         Condensed Consolidated Statements of Income (unaudited) For
             the three months and nine months ended March 31,
             2000 and 2001

         Condensed Consolidated Balance Sheets
             June 30, 2000 and March 31, 2001 (unaudited)

         Condensed Consolidated Statements of Cash Flows (unaudited)
             For the nine months ended March 31, 2000 and 2001

         Notes to Condensed Consolidated Financial Statements (unaudited)

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

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

Part II - OTHER INFORMATION

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K
</TABLE>

Note:    Items 1, 2, 3 and 4 of Part II are omitted because they are not
         applicable


<PAGE>   4

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                          ACCREDO HEALTH, INCORPORATED
                  CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (000'S OMITTED, EXCEPT SHARE DATA)
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                       Nine Months Ended March 31,                Three Months Ended March 31,
                                                       ---------------------------                ----------------------------
                                                          2001              2000                     2001               2000
                                                       ---------         ---------                ---------          ---------
<S>                                                    <C>               <C>                      <C>                <C>
Net patient service revenue                            $ 325,814         $ 241,413                $ 120,406          $  86,788
Other revenue                                             11,075            11,483                    3,551              4,092
Equity in net income of joint ventures                       838             1,722                      323                512
                                                       ---------         ---------                ---------          ---------
Total revenues                                           337,727           254,618                  124,280             91,392

Cost of services                                         289,320           217,450                  106,861             77,669
                                                       ---------         ---------                ---------          ---------
Gross profit                                              48,407            37,168                   17,419             13,723

General & administrative                                  21,861            17,089                    7,650              6,011
Bad debts                                                  4,729             4,549                    1,535              1,587
Depreciation and amortization                              3,061             2,404                    1,021                939
                                                       ---------         ---------                ---------          ---------
Income from operations                                    18,756            13,126                    7,213              5,186

Interest (income) expense, net                            (2,126)            1,498                     (870)               714
Minority interest in consolidated subsidiary                 476                --                      170                 --
                                                       ---------         ---------                ---------          ---------
Income before income taxes                                20,406            11,628                    7,913              4,472

Provision for income taxes                                 8,086             4,580                    3,124              1,740
                                                       ---------         ---------                ---------          ---------
Net income                                             $  12,320         $   7,048                $   4,789          $   2,732
                                                       =========         =========                =========          =========

Cash dividends declared on common stock                 $     --          $     --                $      --          $      --
                                                       =========         =========                =========          =========

Earnings per share:
    Basic                                              $    0.50         $    0.34                $    0.19          $    0.13
    Diluted                                            $    0.48         $    0.32                $    0.18          $    0.12
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


<PAGE>   5

                          ACCREDO HEALTH, INCORPORATED
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       (000'S OMITTED, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                                       (Unaudited)
                                                                                         March 31,          June 30,
                                                                                           2001               2000
                                                                                       ------------------------------
<S>                                                                                    <C>                 <C>
ASSETS

Current assets:
        Cash and cash equivalents                                                      $   69,998          $   10,204
        Marketable securities                                                               1,499                  --
        Patient accounts receivable, less allowance for
            doubtful accounts of $11,297 at March 31, 2001
            and $8,395 at June 30, 2000                                                    78,619              68,417
        Due from affiliates                                                                 3,262               1,634
        Other accounts receivable                                                           9,458               7,420
        Inventories                                                                        33,239              32,342
        Prepaids and other current assets                                                     556                 770
        Deferred income taxes                                                               4,619               3,133
                                                                                       ----------          ----------
Total current assets                                                                      201,250             123,920

Property and equipment, net                                                                 7,296               6,992
Other assets:
        Joint venture investments                                                           2,499               2,056
        Goodwill and other intangible assets, net                                          70,960              72,261
                                                                                       ----------          ----------
Total assets                                                                           $  282,005          $  205,229
                                                                                       ==========          ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
        Accounts payable                                                               $   89,024          $   79,677
        Accrued expenses                                                                    6,054               7,115
        Income taxes payable                                                                  640               1,289
        Line of credit                                                                         --                 200
                                                                                       ----------          ----------
Total current liabilities                                                                  95,718              88,281

Long-term notes payable                                                                        --              37,000
Deferred income taxes                                                                       1,903               1,355
Minority interest in consolidated joint venture                                             1,286               1,049
Stockholders' equity:
        Undesignated Preferred Stock, 5,000,000 shares
            authorized, no shares issued                                                       --                  --
        Common Stock, $.01 par value; 50,000,000 shares authorized;
            25,849,064 and 21,160,452 shares issued and outstanding
            at March 31, 2001 and June 30, 2000, respectively                                 258                 141
        Additional paid-in capital                                                        159,956              66,838
        Retained earnings                                                                  22,884              10,565
                                                                                       ----------          ----------
Total stockholders' equity                                                                183,098              77,544
                                                                                       ----------          ----------

Total liabilities and stockholders' equity                                             $  282,005          $  205,229
                                                                                       ==========          ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


<PAGE>   6

                          ACCREDO HEALTH, INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (000'S OMITTED)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         Nine Months Ended
                                                                                             March 31,
                                                                                       2001            2000
                                                                                  -----------------------------
<S>                                                                               <C>               <C>
OPERATING ACTIVITIES:
Net income                                                                        $   12,320       $    7,048

Adjustments to reconcile net income to net cash provided by operating
  activities:
        Depreciation and amortization                                                  3,061            2,404
        Provision for losses on accounts receivable                                    4,729            4,549
        Deferred income tax benefit                                                     (989)            (998)
        Compensation resulting from stock transactions                                   139              138
        Tax benefit of disqualifying disposition of stock options                      2,506            1,469
        Minority interest in income of consolidated joint venture                        476               --
Changes in operating assets and liabilities:
        Patient receivables and other                                                (16,969)         (16,802)
        Due from affiliates                                                           (1,628)          (1,110)
        Inventories                                                                     (898)         (11,477)
        Prepaids and other current assets                                                 89              (91)
        Accounts payable and accrued expenses                                          8,286           23,216
        Income taxes payable                                                            (649)            (336)
                                                                                  ----------       ----------
Net cash provided by operating activities                                             10,473            8,010

INVESTING ACTIVITIES:
Purchases of marketable securities                                                   (11,499)              --
Proceeds from maturities of marketable securities                                     10,000               --
Purchases of property and equipment                                                   (1,419)          (2,876)
Business acquisitions and joint venture investments                                     (520)         (22,490)
Change in joint venture investments, net                                                (683)          (1,712)
                                                                                  ----------       ----------
Net cash used in investing activities                                                 (4,121)         (27,078)

FINANCING ACTIVITIES:
Increase (decrease) in long-term notes payable                                       (37,200)          21,000
Issuance of common stock                                                              91,225            1,493
Payment of costs related to public offerings                                            (583)            (467)
                                                                                  ----------       ----------
Net cash provided by financing activities                                             53,442           22,026

                                                                                  ----------       ----------
Increase in cash and cash equivalents                                                 59,794            2,958

Cash and cash equivalents at beginning of period                                      10,204            5,542
                                                                                  ----------       ----------
Cash and cash equivalents at end of period                                        $   69,998       $    8,500
                                                                                  ==========       ==========
</TABLE>

     See accompanying notes to condensed consolidated financial statements.


<PAGE>   7

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                 MARCH 31, 2001

1.       BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial information and with the 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 accounting principles generally
accepted in the United States for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary to present fairly the condensed consolidated financial
position, results of operations and cash flows of Accredo Health, Incorporated
(the "Company" or "Accredo") have been included. Operating results for the three
and nine-month periods ended March 31, 2001, are not necessarily indicative of
the results that may be expected for the fiscal year ended June 30, 2001.

         Certain amounts in the period ended March 31, 2000 have been
reclassified to conform to the March 31, 2001 presentation.

         The balance sheet at June 30, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements.

         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 June 30, 2000.

2.       STOCKHOLDERS' EQUITY

         During the quarter ended March 31, 2001, employees exercised stock
options to acquire 389,471 shares of Accredo common stock at a weighted exercise
price of $3.355 per share.

3.       STOCK SPLIT

         On January 29, 2001, the Company announced a three-for-two stock split
in the form of a 50% stock dividend for shareholders of record on February 9,
2001. Shareholders received one additional share of common stock on February 23,
2001 for every two shares held on the record date. The Company has adjusted
earnings per share and all other share related information to reflect the stock
split.


<PAGE>   8

4.       EARNINGS PER SHARE

         The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except share data):

<TABLE>
<CAPTION>
                                                            Nine Months Ended March 31,            Three Months Ended March 31,
                                                         ---------------------------------       ---------------------------------
                                                               2001              2000                 2001               2000
                                                         ---------------------------------       ---------------------------------
<S>                                                      <C>                 <C>                 <C>                 <C>
Numerator for basic and diluted income per
  share to common stockholders:

       Net income                                        $      12,320       $       7,048       $       4,789       $       2,732
                                                         =============       =============       =============       =============

Denominator:

       Denominator for basic income per
         share to common stockholders -
         weighted-average shares                            24,700,863          20,647,116          25,662,716          20,854,646
       Effect of dilutive stock options                      1,197,028           1,464,947           1,073,131           1,422,342
                                                         -------------       -------------       -------------       -------------

       Denominator for diluted income per
         share to common stockholders -
         adjusted weighted-average shares                   25,897,891          22,112,063          26,735,847          22,276,988
                                                         =============       =============       =============       =============

Earnings per common share:

       Basic                                             $        0.50       $        0.34       $        0.19       $        0.13
       Diluted                                           $        0.48       $        0.32       $        0.18       $        0.12
</TABLE>


<PAGE>   9

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

FORWARD LOOKING STATEMENTS

Some of the information in this quarterly report contains forward-looking
statements that involve substantial risks and uncertainties. You can identify
these statements by forward-looking words such as "may," "will," "expect,"
"anticipate," "believe," "intend," "estimate" and "continue" or similar words.
You should read statements that contain these words carefully for the following
reasons:

         -        the statements discuss our future expectations;

         -        the statements contain projections of our future earnings or
                  of our financial condition; and

         -        the statements state other "forward-looking" information.

There may be events in the future that we are not accurately able to predict or
over which we have no control. The risk factors discussed below, as well as any
cautionary language in this quarterly report, provide examples of risks,
uncertainties and events that may cause our actual results to differ materially
from the expectations we describe in our forward-looking statements. Examples of
these risks, uncertainties and events include the availability of new drugs, our
relationships with the manufacturers whose drugs we handle, competitive or
regulatory factors affecting the drugs we handle or their manufacturers, the
demand for our services, our ability to expand through joint ventures and
acquisitions, our ability to maintain existing pricing arrangements with
suppliers, the impact of government regulation, our need for additional capital,
the seasonality of our operations and our ability to implement our strategies
and objectives.

Investors in our common stock should be aware that the occurrence of any of the
events described in the risk factors discussed elsewhere in this quarterly
report and other events that we have not predicted or assessed could have a
material adverse effect on our earnings, financial condition and business. In
such case, the trading price of our common stock could decline and you may lose
all or part of your investment.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

REVENUES

Total revenues increased 36% from $91.4 million to $124.3 million from the three
months ended March 31, 2000 to the three months ended March 31, 2001. Net
patient service revenues increased 39% from $86.8 million to $120.4 million from
the three months ended March 31, 2000 to the three months ended March 31, 2001.
We continue to experience growth in our treatments for growth hormone
disorders, hemophilia and Multiple Sclerosis as a result of the
addition of new patients as well as additional sales to existing patients. We
also had a significant increase in our seasonal drug SYNAGIS(R) for the
treatment of Respiratory Synctial Virus as a result of increased patient volume.

Equity in net income of joint ventures decreased $189,000 from the three months
ended March 31, 2000 to the three months ended March 31, 2001 primarily due to
the acquisition of an additional 30% interest in the joint venture Childrens
Hemophilia Services effective April 1, 2000. The results of operations of the
joint venture have been consolidated with the Company's results of operations
since the date of acquisition and, therefore, are no longer recorded using the
equity method of accounting.

COST OF SERVICES

Cost of services increased from $77.7 million to $106.9 million, or 38%, from
the three months ended March 31, 2000 to the three months ended March 31, 2001,
which is commensurate with the increase in revenues discussed above. As a
percentage of revenues, cost of services increased from 85.0% to 86.0% from the
three months ended March 31, 2000 to the three months ended March 31, 2001.
Gross margins for the individual product lines have remained relatively stable;
however, a change in product mix resulted in a decrease in the composite gross
margin this quarter. The primary drivers of the change in product mix were
SYNAGIS(R) and hemophilia factor. SYNAGIS(R), which has a higher acquisition
cost as a percentage of revenues than most of our other products, represented a
larger percentage of net revenues than in previous quarters. Conversely,
hemophilia factor, which has a lower acquisition cost as a percentage of
revenues than most of our other products, represented a lower percentage of net
revenues.


<PAGE>   10

GENERAL AND ADMINISTRATIVE

General and administrative expenses increased from $6.0 million to $7.7 million,
or 28%, from the three months ended March 31, 2000 to the three months ended
March 31, 2001. This increase was primarily the result of increased salaries and
benefits associated with the expansion of our reimbursement, sales and
marketing, administrative and support staffs and the addition of office space
and related furniture and fixtures to support the revenue growth. General and
administrative expenses represented 6.6% and 6.2% of revenues for the three
months ended March 31, 2000 and 2001, respectively.

BAD DEBTS

Bad debts decreased from $1,587,000 to $1,535,000, or 3%, from the three months
ended March 31, 2000 to the three months ended March 31, 2001. As a percentage
of revenues, bad debt expense decreased from 1.7% to 1.2% from the three months
ended March 31, 2000 to the three months ended March 31, 2001. The decrease in
bad debts as a percentage of revenues is primarily due to the increased
percentage of our revenues that was reimbursed by Pharmacy Benefit Managers
versus a major medical benefit plan. The majority of reimbursement for both
AVONEX(R) and SYNAGIS(R) (which represented a larger percentage of our revenues
in the third quarter) is being provided by Pharmacy Benefit Managers, and
therefore is subject to lower co-payment and deductible amounts (typically $10
to $15). In addition, hemophilia factor, which has higher co-payment and
deductible amounts, represented a lower percentage of our revenues.

DEPRECIATION AND AMORTIZATION

Depreciation expense increased from $302,000 to $367,000 from the three months
ended March 31, 2000 to the three months ended March 31, 2001 as a result of
purchases of property and equipment associated with our revenue growth and
expansion of our leasehold facility improvements. Amortization expense
associated with goodwill and other intangible assets increased from $637,000 to
$654,000 from the three months ended March 31, 2000 to the three months ended
March 31, 2001 due to acquisitions made in fiscal year 2000.

INTEREST INCOME/EXPENSE, NET

Interest expense, net, amounted to $714,000 for the three months ended March 31,
2000 compared to interest income, net, of $870,000 for the three months ended
March 31, 2001. This change, amounting to $1,584,000, is due to the repayment of
our debt with the proceeds of the stock offering completed during the first
quarter of fiscal 2001, the investment of the excess cash from the offering and
the sale of an interest rate swap for $350,000. We generated interest income of
approximately $48,000 and $879,000 in the three months ended March 31, 2000 and
2001, respectively.

INCOME TAX EXPENSE

The effective tax rate was 38.9% and 39.5% for the three months ended March 31,
2000 and 2001, respectively. The difference between the recognized tax rate and
the statutory tax rate was primarily attributed to approximately $204,000 and
$197,000 of nondeductible amortization expense in the three months ended March
31, 2000 and 2001, respectively, and state income taxes.

NINE MONTHS ENDED MARCH 31, 2001 COMPARED TO NINE MONTHS ENDED MARCH 31, 2000

REVENUES

Total revenues increased 33% from $254.6 million to $337.7 million from the nine
months ended March 31, 2000 to the nine months ended March 31, 2001. Net patient
service revenues increased 35% from $241.4 million to $325.8 million from the
nine months ended March 31, 2000 to the nine months ended March 31, 2001. We
continue to experience growth in our treatments for growth harmone disorders,
hemophilia, Gaucher Disease and Multiple Sclerosis as a result of the addition
of new patients as well as additional sales to existing patients. We also had a
significant increase in our seasonal drug SYNAGIS(R) for the treatment of
Respiratory Synctial Virus as a result of increased patient volume.

Equity in net income of joint ventures decreased $0.9 million from the nine
months ended March 31, 2000 to the nine months ended March 31, 2001 primarily
due to the acquisition of an additional 30% interest in the joint venture
Childrens Hemophilia Services effective April 1, 2000. The results of operations
of the joint venture have been consolidated with the Company's results of
operations since the date of acquisition and, therefore, are no longer recorded
using the equity method of accounting.


<PAGE>   11

COST OF SERVICES

Cost of services increased from $217.5 million to $289.3 million, or 33%, from
the nine months ended March 31, 2000 to the nine months ended March 31, 2001,
which is commensurate with the increase in revenues discussed above. As a
percentage of revenues, cost of services increased from 85.4% to 85.7% from the
nine months ended March 31, 2000 to the nine months ended March 31, 2001. This
increase is primarily the result of changes in the revenue mix by therapy type
and more specifically increased sales of SYNAGIS(R) which has a higher
acquisition cost as a percentage of revenues than many of the other drugs we
distribute.

GENERAL AND ADMINISTRATIVE

General and administrative expenses increased from $17.1 million to $21.9
million, or 28%, from the nine months ended March 31, 2000 to the nine months
ended March 31, 2001. This increase was primarily the result of increased
salaries and benefits associated with the expansion of our reimbursement, sales
and marketing, administrative and support staffs and the addition of office
space and related furniture and fixtures to support the revenue growth. General
and administrative expenses represented 6.7% and 6.5% of revenues for the nine
months ended March 31, 2000 and 2001, respectively.

BAD DEBTS

Bad debts increased from $4,549,000 to $4,729,000, or 4%, from the nine months
ended March 31, 2000 to the nine months ended March 31, 2001 primarily due to
the increase in revenues. However, bad debt expense decreased from 1.8% of
revenues to 1.4% of revenues from the nine months ended March 31, 2000 to the
nine months ended March 31, 2001. The decrease in bad debts as a percentage of
revenues is primarily due to the increased percentage of our revenues that was
reimbursed by Pharmacy Benefit Managers versus a major medical benefit plan. The
majority of reimbursement for both AVONEX(R) and SYNAGIS(R) is being provided by
Pharmacy Benefit Managers, and therefore is subject to lower co-payment and
deductible amounts (typically $10 to $15) resulting in lower bad debt.

DEPRECIATION AND AMORTIZATION

Depreciation expense increased from $750,000 to $1,115,000 from the nine months
ended March 31, 2000 to the nine months ended March 31, 2001 as a result of
purchases of property and equipment associated with our revenue growth and
expansion of our leasehold facility improvements. Amortization expense
associated with goodwill and other intangible assets increased from $1,654,000
to $1,946,000 from the nine months ended March 31, 2000 to the nine months ended
March 31, 2001 due to acquisitions made in fiscal year 2000.

INTEREST INCOME/EXPENSE, NET

Interest expense, net, amounted to $1,498,000 for the nine months ended March
31, 2000 compared to interest income, net, of $2,126,000 for the nine months
ended March 31, 2001. This change, amounting to $3,624,000, is due to the
repayment of our debt with the proceeds of the stock offering completed during
the first quarter of fiscal 2001, the investment of the excess cash from the
offering and the sale of an interest rate swap for $350,000. We generated
interest income of approximately $157,000 and $2,582,000 in the nine months
ended March 31, 2000 and 2001, respectively.

INCOME TAX EXPENSE

The effective tax rate was 39.4% and 39.6% for the nine months ended March 31,
2000 and 2001, respectively. The difference between the recognized tax rate and
the statutory tax rate was primarily attributed to approximately $612,000 and
$591,000 of nondeductible amortization expense in the nine months ended March
31, 2000 and 2001, respectively, and state income taxes.

LIQUIDITY AND CAPITAL RESOURCES

At March 31, 2001, our working capital was $105.5 million, cash and cash
equivalents were $70.0 million, marketable securities were $1.5 million and the
current ratio was 2.1 to 1.0.

Cash provided by operations was $10.5 million for the nine months ended March
31, 2001. During the nine months ended March 31, 2001, accounts receivable
increased $12.2 million, inventories increased $0.9 million and accounts


<PAGE>   12

payable and accrued expenses increased $8.3 million. The changes are primarily
due to our revenue growth and the timing of the collection of receivables,
purchases of inventory and payments of accounts payable.

Net cash used in investing activities was $4.1 million for the nine months ended
March 31, 2001. Cash used in investing activities primarily consisted of $1.5
million for net purchases of marketable securities, which have an initial
maturity date of greater than 90 days, and $1.4 million for purchases of
property and equipment.

Net cash provided by financing activities was $53.4 million for the nine months
ended March 31, 2001. Net cash provided by financing activities consisted
primarily of $88.3 million of net proceeds from the common stock offering
completed in the first quarter plus $2.3 million from the proceeds of stock
option exercises less $37.2 million of net repayments on the revolving line of
credit.

Historically, we have funded our operations and continued internal growth
through cash provided by operations. We anticipate that our capital expenditures
for the year ending June 30, 2001 will consist primarily of additional computer
hardware, leasehold improvements and a fully integrated pharmacy and
reimbursement software system to meet the needs of our growth. We expect the
cost of our capital expenditures in fiscal year 2001 to be approximately $5.5
million, exclusive of any acquisitions of businesses, and expect to fund these
expenditures through cash provided by operating activities and/or borrowings
under our revolving credit agreement.

We have amended our $60,000,000 revolving credit facility under the terms of our
existing credit agreement. The amendment has allowed us to reduce the nonuse
fees by decreasing the commitment on which fees are paid to $30,000,000 and by
reducing the nonuse fee interest rate. We may increase the commitment up to
$60,000,000 upon (i) 15 days written notice, (ii) the payment of an additional
commitment fee and (iii) delivery of a current compliance certificate
demonstrating no event of default exists and will not exist following the
increase in the commitment. The amendment also includes changes to the
applicable London Inter-Bank Offered Rate and Prime Rate margins, a change in
the funded debt to cash flow ratio to not more than 2.75 to 1.0, and a two-year
extension to the loan termination date to December 1, 2003.

Interest on loans under the credit agreement accrues at a variable rate index
based on the prime rate or the London Inter-Bank Offered Rate for one, two,
three or six months (as selected by us), plus a margin depending on the amount
of our debt to cash flow ratio as defined by the credit agreement and measured
at the end of each quarter for prospective periods. As of March 31, 2001, there
were no borrowings outstanding under the line of credit.

Our obligations under the credit agreement are secured by a lien on
substantially all of our assets, including a pledge of all of the common stock
or partnership interest of each of our subsidiaries in which we own an 80% or
more interest.

The credit agreement contains operating and financial covenants, including
requirements to maintain a certain debt to equity ratio and minimum leverage and
debt service coverage ratios. In addition, the credit agreement includes
customary affirmative and negative covenants, including covenants relating to
transactions with affiliates, use of proceeds, restrictions on subsidiaries,
limitations on indebtedness, limitations on liens, limitations on capital
expenditures, limitations on mergers, acquisitions and sales of assets,
limitations on investments, prohibitions on payment of dividends and stock
repurchases, and limitations on debt payments (including payment of subordinated
indebtedness) and other distributions. The credit agreement also contains
customary events of default, including certain events relating to changes in
control of our company.

We have used interest rate swap agreements to manage our interest rate exposure
under the credit agreement. We had effectively converted, for the period through
October 31, 2001, $25.0 million of floating-rate borrowings to fixed rate
borrowings. We had secured a 5.5% fixed interest rate (exclusive of the margin
rate) using this interest rate swap agreement. On August 21, 2000, in
conjunction with the repayment of the outstanding principal balance of our
revolving line of credit, we surrendered our swap agreement and received
$350,000 in consideration for the early termination of the agreement.

While we anticipate that our cash from operations, along with the short term use
of the revolving credit facility and the net proceeds received from our recent
stock offering will be sufficient to meet our internal operating requirements
and growth plans for at least the next 12 months, we expect that additional
funds may be required in the future to successfully continue our growth beyond
such period. We may be required to raise additional funds through sales of
equity or debt securities or seek additional financing from financial
institutions. There can be no assurance, however, that financing will be
available on terms that are favorable to us or, if obtained, will be sufficient
for our needs.


<PAGE>   13

RISK FACTORS

You should carefully consider the risks and uncertainties we describe below
before investing in Accredo. The risks and uncertainties described below are NOT
the only risks and uncertainties that could develop. Other risks and
uncertainties that we have not predicted or evaluated could also affect our
company.

If any of the following risks occur, our earnings, financial condition or
business could be materially harmed, and the trading price of our common stock
could decline, resulting in the loss of all or part of your investment.

WE ARE HIGHLY DEPENDENT ON OUR RELATIONSHIPS WITH A LIMITED NUMBER OF
BIOPHARMACEUTICAL SUPPLIERS AND THE LOSS OF ANY OF THESE RELATIONSHIPS COULD
SIGNIFICANTLY IMPACT OUR ABILITY TO SUSTAIN OR GROW OUR REVENUES.

         We derive a substantial majority of our revenue and profitability from
our relationships with Biogen, Genzyme and Genentech. The table below shows the
concentration of our revenue derived from these relationships as a percentage of
revenue for the periods indicated:

<TABLE>
<CAPTION>
                                NINE MONTHS                                FISCAL YEAR ENDED
                                   ENDED                ----------------------------------------------------------
                              March 31, 2001            JUNE 30, 2000          JUNE 30, 1999         JUNE 30, 1998
                              --------------            -------------          -------------         -------------
<S>                           <C>                       <C>                    <C>                   <C>
Biogen, Genzyme,
and Genentech                      66%                       71%                    72%                   75%
</TABLE>

         Our agreements with these suppliers are short-term and cancelable by
either party without cause on 60 to 90 days prior notice. These agreements also
generally limit our ability to handle competing drugs during and, in some cases,
after the term of the agreement, but allow the supplier to distribute through
channels other than us. Further, these agreements provide that pricing and other
terms of these relationships be periodically adjusted for changed market
conditions or required service levels. Any termination or adverse adjustment to
any of these relationships could have a material adverse effect on a significant
portion of our business, financial condition and results of operations.

OUR ABILITY TO GROW COULD BE LIMITED IF WE DO NOT EXPAND OUR EXISTING BASE OF
DRUGS OR IF WE LOSE PATIENTS.

         We focus almost exclusively on a limited number of complex and
expensive drugs that serve small patient populations. The drugs that we
currently sell are prescribed for Multiple Sclerosis, Gaucher Disease,
Hemophilia and Autoimmune Disorders, Growth Hormone-Related Disorders, Crohn's
Disease, and Respiratory Syncytial Virus.

         Due to the small patient populations that use the drugs we handle, our
future growth is highly dependent on expanding our base of drugs. Further, a
loss of patient base or reduction in demand for any reason of the drugs we
currently handle could have a material adverse effect on a significant portion
of our business, financial condition and results of operation.

OUR BUSINESS WOULD BE HARMED IF DEMAND FOR OUR PRODUCTS AND SERVICES IS REDUCED.

         Reduced demand for our products and services could be caused by a
number of circumstances, including:

         -        patient shifts to treatment regimens other than those we
                  offer;

         -        new treatments or methods of delivery of existing drugs that
                  do not require our specialty products and services;

         -        a recall of a drug;

         -        adverse reactions caused by a drug;

         -        the expiration or challenge of a drug patent;

         -        competing treatment from a new drug or a new use of an
                  existing drug;

         -        the loss of a managed care or other payor relationship
                  covering a number of high revenue patients;

         -        the cure of a disease we service; or

         -        the death of a high-revenue patient.

THERE IS SUBSTANTIAL COMPETITION IN OUR INDUSTRY, AND WE MAY NOT BE ABLE TO
COMPETE SUCCESSFULLY.

         The specialty pharmacy industry is highly competitive and is continuing
to become more competitive. All of the drugs, supplies and services that we
provide are also available from our competitors. Our current and potential
competitors include:

         -        other specialty pharmacy distributors;

         -        specialty pharmacy divisions of wholesale drug distributors;

         -        pharmacy benefit management companies;

         -        hospital-based pharmacies;

         -        retail pharmacies;

         -        home infusion therapy companies;


<PAGE>   14

         -        comprehensive hemophilia treatment centers; and

         -        other alternative site health care providers.

         Many of our competitors have substantially greater resources and more
established operations and infrastructure than we have. We are particularly at
risk from any of our suppliers deciding to pursue its own distribution and
services and not outsource these needs to companies like us. A significant
factor in effective competition will be an ability to maintain and expand
relationships with managed care companies, pharmacy benefit managers and other
payors who can effectively determine the pharmacy source for their enrollees.

IF ANY OF OUR RELATIONSHIPS WITH MEDICAL CENTERS ARE DISRUPTED OR CANCELLED, OUR
BUSINESS COULD BE HARMED.

         We have significant relationships with five medical centers that
provide services primarily related to hemophilia, growth hormone-related
disorders and respiratory syncytial virus. For the fiscal years ended June 30,
1999 and 2000 and the nine months ended March 31, 2001, we received
approximately 23%, 12% and 4%, respectively, of our earnings before income taxes
and extraordinary item from equity in the net income of unconsolidated joint
ventures associated with these relationships.

         As of April 1, 2000, our ownership was increased to 80% in one of our
joint ventures with Children's Home Care, Inc. and the financial results of this
joint venture are now included in our consolidated financial results. This
consolidated joint venture represented approximately 9% of our income before
income taxes for the nine months ended March 31, 2001.

         Our agreements with medical centers have terms of between one and five
years, and may be cancelled by either party without cause upon notice of between
one and twelve months. Adverse changes in our relationships with those medical
centers could be caused, for example, by:

         -        changes caused by consolidation within the hospital industry;

         -        changes caused by regulatory uncertainties inherent in the
                  structure of the relationships; or

         -        restrictive changes to regulatory requirements.

         Any termination or adverse change of these relationships could have a
material adverse effect on our business, financial condition and results of
operations.

IF ADDITIONAL PROVIDERS OBTAIN ACCESS TO FAVORABLY PRICED DRUGS WE HANDLE, OUR
BUSINESS COULD BE HARMED.

         We are not eligible to participate directly in the federal pricing
program of the Public Health Service, commonly known as PHS, which allows
hospitals and hemophilia treatment centers to obtain discounts on clotting
factor. The federal Health Resources and Services Administration recently issued
a notice that we expect will broaden the number of facilities purchasing PHS
priced clotting factor. Increased competition from hospitals and hemophilia
treatment centers may reduce our profit margins.

OUR ACQUISITION AND JOINT VENTURE STRATEGY MAY NOT BE SUCCESSFUL, WHICH COULD
CAUSE OUR BUSINESS AND FUTURE GROWTH PROSPECTS TO SUFFER.

         As part of our growth strategy, we continue to evaluate joint venture
and acquisition opportunities, but we cannot predict or provide assurance that
we will complete any future acquisitions or joint ventures. Acquisitions and
joint ventures involve many risks, including:

         -        difficulty in identifying suitable candidates and negotiating
                  and consummating acquisitions on attractive terms;

         -        difficulty in assimilating the new operations;

         -        increased transaction costs;

         -        diversion of our management's attention from existing
                  operations;

         -        dilutive issuances of equity securities that may negatively
                  impact the market price of our stock;

         -        increased debt; and

         -        increased amortization expense related to goodwill and other
                  intangible assets that would decrease our earnings.

         We could also be exposed to unknown or contingent liabilities resulting
from the pre-acquisition operations of the entities we acquire, such as
liability for failure to comply with health care or reimbursement laws.

FLUCTUATIONS IN OUR QUARTERLY FINANCIAL RESULTS MAY CAUSE OUR STOCK PRICE TO
DECLINE.

         Our results of operations may fluctuate on a quarterly basis, which
could adversely affect the market price of our common stock. Our results may
fluctuate as a result of:

         -        lower prices paid by Medicare or Medicaid for the drugs that
                  we sell, including lower prices resulting from recent
                  revisions in the method of establishing AWP;

         -        below-expected sales or delayed launch of a new drug;

         -        price and term adjustments with our drug suppliers;


<PAGE>   15

         -        increases in our operating expenses in anticipation of the
                  launch of a new drug;

         -        product shortages;

         -        inaccuracies in our estimates of the costs of ongoing
                  programs;

         -        the timing and integration of our acquisitions;

         -        changes in governmental regulations;

         -        the annual renewal of deductibles and co-payment requirements
                  that affect patient ordering patterns;

         -        our provision of drugs to treat seasonal illnesses, such as
                  respiratory syncytial virus;

         -        physician prescribing patterns; and

         -        general economic conditions.

OUR BUSINESS WOULD BE HARMED IF THE BIOPHARMACEUTICAL INDUSTRY CEASES RESEARCH,
DEVELOPMENT AND PRODUCTION OF THE TYPES OF DRUGS THAT ARE COMPATIBLE WITH THE
SERVICES WE PROVIDE.

         Our business is highly dependent on continued research, development,
manufacturing and marketing expenditures of biopharmaceutical companies, and the
ability of those companies to develop, supply and generate demand for drugs that
are compatible with the services we provide. Our business would be materially
and adversely affected if those companies stopped outsourcing the services we
provide or failed to support existing drugs or develop new drugs. Our business
could also be harmed if the biopharmaceutical industry undergoes any of the
following developments:

         -        supply shortages;

         -        adverse drug reactions;

         -        drug recalls;

         -        increased competition among biopharmaceutical companies;

         -        an inability of drug companies to finance product development
                  because of capital shortages;

         -        a decline in product research, development or marketing;

         -        a reduction in the retail price of drugs from governmental or
                  private market initiatives;

         -        changes in the FDA approval process; or

         -        governmental or private initiatives that would alter how drug
                  manufacturers, health care providers or pharmacies promote or
                  sell products and services.

OUR BUSINESS COULD BE HARMED IF THE SUPPLY OF ANY OF THE PRODUCTS THAT WE
DISTRIBUTE BECOMES SCARCE.

         The biopharmaceutical industry is susceptible to product shortages.
Some of the products that we distribute, such as IVIG and blood-related
products, are collected and processed from human donors. Accordingly, the supply
of these products is highly dependant on human donors and their availability
have been constrained from time to time. If these products, or any of the other
drugs that we distribute, are in short supply for long periods of time, our
business could be harmed.

IF SOME OF THE DRUGS THAT WE PROVIDE LOSE THEIR "ORPHAN DRUG" STATUS, WE COULD
FACE MORE COMPETITION.

         Our business could also be adversely affected by the expiration or
challenge to the "orphan drug" status that has been granted by the Food and Drug
Administration, FDA, to some of the drugs that we handle. When the FDA grants
"orphan drug" status, it will not approve a second drug for the same treatment
for a period of seven years unless the new drug is chemically different or
clinically superior. The "orphan drug" status applicable to drugs that we handle
expires as follows:

         -        Cerezyme(R) expires May 2001;

         -        AVONEX(R) expires May 2003; and

         -        REMICADE(TM) expires September 2005.

         The loss of orphan drug status could result in competitive drugs
entering the market, which could harm our business.

OUR ABILITY TO CONTINUE TO PROVIDE AVONEX(R) COULD BE AFFECTED BY A PENDING
CHALLENGE THAT BIOGEN IS INFRINGING ON A PATENT.

         Our ability to continue to service AVONEX(R) could also be affected by
a pending challenge by Berlex Laboratories, Inc. that Biogen is infringing on a
Berlex patent in the production of AVONEX(R). Berlex is seeking, among other
things, a permanent injunction restraining Biogen from manufacturing AVONEX(R).
If the permanent injunction is granted or if Biogen is unable to continue to
supply AVONEX(R) on terms favorable to us, our business could be harmed. In
August 2000 the Federal District Court for the District of Massachusetts granted
summary judgment in Biogen's favor ruling that AVONEX(R) does not infringe on a
Berlex patent, and in September 2000 the Court entered a final judgement in
favor of Biogen dismissing the District Court Case. Berlex has appealed this
decision to the U.S. Federal District Court of Appeals.

RECENT INVESTIGATIONS INTO REPORTING OF AVERAGE WHOLESALE PRICES COULD REDUCE
OUR PRICING AND MARGINS.

         Many government payors, including Medicare and Medicaid, pay us
directly or indirectly at the drug's average wholesale price (or AWP) or at a
percentage off AWP. We have also contracted with a number of private payors to
sell drugs at AWP or at a percentage off AWP. AWP for most drugs is compiled and
published by a private company, First DataBank, Inc. Various federal and state
government agencies have been investigating whether the reported AWP of many
drugs, including some that we sell, is an appropriate or accurate measure of the
market price of the drugs. As reported in the Wall Street Journal, there are
also several whistleblower lawsuits pending against various drug manufacturers.
These government investigations and lawsuits involve allegations that
manufacturers reported artificially inflated AWP prices of various drugs to
First DataBank. Bayer Corporation, one of the Company's suppliers of clotting
factor, recently agreed to pay $14 million in a settlement with the federal
government and 45 states regarding these charges. Bayer also entered into a 5
year corporate integrity agreement with the government, in which Bayer agreed to
provide average selling prices of its drugs to the government. In February 2000,
First DataBank published a Market Price Survey of 437 drugs, which was
significantly lower than the historic AWP for a number of the clotting factor
and IVIG products that we sell.

         A number of state Medicaid agencies have revised their payment
methodology as a result of the Market Price Survey. The Health Care Financing
Administration (or HCFA) had also announced that Medicare intermediaries should
calculate the amount that they pay for certain drugs by using the lower prices
on the First DataBank Market Price Survey. However, the proposal to include
clotting factor in the lower Medicare pricing has been withdrawn. Instead, HCFA
has announced that it will seek legislation that would establish payments to
cover the administrative costs of suppliers of clotting factor as a supplement
to lower AWP pricing for factor.

         We cannot predict the eventual results of the government investigations
and the changes made by First DataBank. If the reduced average wholesale prices
published by First DataBank for the drugs that we sell are ultimately adopted as
the standard by which we are paid by government payors or private payors, this
could have a material adverse effect on our business, financial condition and
results of operation, including reducing the pricing and margins on certain of
our products.

OUR BUSINESS COULD BE HARMED BY CHANGES IN MEDICARE OR MEDICAID.

         Changes in the Medicare, Medicaid or similar government programs or the
amounts paid by those programs for our services may adversely affect our
earnings. For example, these programs could revise their pricing based on new
methods of calculating the AWP


<PAGE>   16

for drugs we handle. We estimate that approximately 18% of our gross patient
service revenues for the fiscal years ended June 30, 1999 and 2000 and 20% of
our gross patient service revenues for the nine months ended March 31, 2001
consisted of reimbursements from federal and state programs, excluding sales to
private physicians whose ultimate payor is typically Medicare. Any reductions in
amounts reimbursable by government programs for our services or changes in
regulations governing such reimbursements could materially and adversely effect
our business, financial condition and results of operations.

OUR BUSINESS WILL SUFFER IF WE LOSE RELATIONSHIPS WITH PAYORS.

         We are highly dependent on reimbursement from non-governmental payors.
For the fiscal years ended June 30, 1999 and 2000 and the nine months ended
March 31, 2001 we derived approximately 82%, 82% and 80% respectively of our
gross patient service revenue from non-governmental payors (including self-pay),
which included 6%, 5% and 4%, respectively for those periods, from sales to
private physician practices whose ultimate payor is typically Medicare.

         Many payors seek to limit the number of providers that supply drugs to
their enrollees. For example, we were selected by Aetna U.S. Healthcare, Inc.(R)
as one of three providers of injectible medications. From time to time, payors
with whom we have relationships require that we and our competitors bid to keep
their business, and there can be no assurance that we will be retained or that
our margins will not be adversely affected when that happens. The loss of a
payor relationship, for example, our relationship with Aetna (which is
terminable on 90 days notice), could result in the loss of a significant number
of patients and have a material adverse effect on our business, financial
condition and results of operations.

WE RELY HEAVILY ON A SINGLE SHIPPING PROVIDER, AND OUR BUSINESS WOULD BE HARMED
IF OUR RATES ARE INCREASED OR OUR PROVIDER IS UNAVAILABLE.

         Almost all of our revenues result from the sale of drugs we deliver to
our patients and principally all of our products are shipped by a single
carrier, FedEx. We depend heavily on these outsourced shipping services for
efficient, cost effective delivery of our product. The risks associated with
this dependence include:

         -        any significant increase in shipping rates;

         -        strikes or other service interruptions by our primary carrier,
                  FedEx, or by another carrier that could affect FedEx; or

         -        spoilage of high cost drugs during shipment, since our drugs
                  often require special handling, such as refrigeration.

OUR BUSINESS COULD BE HARMED IF PAYORS DECREASE OR DELAY THEIR PAYMENTS TO US.

         Our profitability depends on payment from governmental and
non-governmental payors, and we could be materially and adversely affected by
cost containment trends in the health care industry or by financial difficulties
suffered by non-governmental payors. Cost containment measures affect pricing,
purchasing and usage patterns in health care. Payors also influence decisions
regarding the use of a particular drug treatment and focus on product cost in
light of how the product may impact the overall cost of treatment. Further, some
payors, including large managed care organizations and some private physician
practices, have recently experienced financial trouble. The timing of payments
and our ability to collect from payors also affects our revenue and
profitability. If we are unable to collect from payors or if payors fail to pay
us in a timely manner, it could have a material adverse effect on our business
and financial condition.

IF WE ARE UNABLE TO MANAGE OUR GROWTH EFFECTIVELY, OUR BUSINESS WILL BE HARMED.

         Our rapid growth over the past several years has placed a strain on our
resources, and if we cannot effectively manage our growth, our business,
financial condition and results of operations could be materially and adversely
affected. We have experienced a large increase in the number of our employees,
the size of our programs and the scope of our operations. Our ability to manage
this growth and be successful in the future will depend partly on our ability to
retain skilled employees, enhance our management team and improve our management
information and financial control systems.

WE COULD BE ADVERSELY AFFECTED BY AN IMPAIRMENT OF THE SIGNIFICANT AMOUNT OF
GOODWILL ON OUR FINANCIAL STATEMENTS.

         Our formation and our acquisitions of Southern Health Systems, Inc.,
Hemophilia Health Services, Inc., Sunrise Health Management, Inc. and the
specialty pharmacy businesses of Home Medical of America, Inc. resulted in the
recording of a significant amount of goodwill on our financial statements. The
goodwill was recorded because the book value of the tangible and intangible
assets owned by those companies at the time they were acquired was less than the
purchase price. We have determined that the goodwill recorded as a result of
those acquisitions will benefit us for a period of no less than 40 years and, as
a result, we amortize this goodwill evenly over a 40-year period. There can be
no assurance that we will realize the full value of this goodwill. We evaluate
on an on-going basis whether events and circumstances indicate that all or some
of the carrying value of goodwill is no longer recoverable, in which case we
would write off the unrecoverable goodwill in a charge to our earnings.

         If the amortization period for a material portion of goodwill is overly
long, it causes an overstatement of earnings in periods immediately following
the transaction in which the goodwill was recorded. In later periods, it causes
earnings to be understated because of an amortization charge for an asset that
no longer provides a corresponding benefit. Earnings in later periods could also
be significantly affected if the remaining balance of goodwill is impaired and
written off as a charge against earnings. We are not presently aware of any
persuasive evidence that any material portion of our goodwill will be impaired
and written off against


<PAGE>   17

earnings. As of March 31, 2001, we had goodwill, net of accumulated
amortization, of approximately $68.2 million, or 24% of total assets and 37% of
stockholders' equity.

         Since our growth strategy may involve the acquisition of other
companies, we may record additional goodwill in the future. The amortization and
possible write-off of this goodwill could negatively impact our future earnings.
Also, in future acquisitions we will be required to allocate a portion of the
purchase price to the value of non-competition agreements, patient base and
contracts that are acquired. The value of any amounts allocated to these items
could be amortized over a period much shorter than 40 years. As a result, our
earnings and market price of our common stock could be negatively impacted.

WE RELY ON A FEW KEY EMPLOYEES WHOSE ABSENCE OR LOSS COULD ADVERSELY AFFECT OUR
BUSINESS.

         We depend on a few key executives, and the loss of their services could
cause a material adverse effect to our company. We do not maintain "key person"
life insurance policies on any of those executives. As a result, we are not
insured against the losses resulting from the death of our key executives.
Further, we must be able to attract and retain other qualified, essential
employees for our technical operating and professional staff, such as
pharmacists. If we are unable to attract and retain these essential employees,
our business could be harmed.

WE MAY NEED ADDITIONAL CAPITAL TO FINANCE OUR GROWTH AND CAPITAL REQUIREMENTS,
WHICH COULD PREVENT US FROM FULLY PURSUING OUR GROWTH STRATEGY.

         In order to implement our growth strategy, we will need substantial
capital resources and will incur, from time to time, additional short- and
long-term indebtedness, the terms of which will depend on market and other
conditions. We cannot be certain that existing or additional financing will be
available to us on acceptable terms, if at all. As a result, we could be unable
to fully pursue our growth strategy. Further, additional financing may involve
the issuance of equity securities that would reduce the percentage ownership of
our then current stockholders.

OUR INDUSTRY IS SUBJECT TO EXTENSIVE GOVERNMENT REGULATION AND NONCOMPLIANCE BY
US OR OUR SUPPLIERS COULD HARM OUR BUSINESS.

         The marketing, sale and purchase of drugs and medical supplies is
extensively regulated by federal and state governments, and if we fail or are
accused of failing to comply with laws and regulations, we could suffer a
material adverse effect on our business, financial condition and results of
operations. Our business could also be materially and adversely affected if the
suppliers or clients we work with are accused of violating laws or regulations.
The applicable regulatory framework is complex, and the laws are very broad in
scope. Many of these laws remain open to interpretation, and have not been
addressed by substantive court decisions.

         The health care laws and regulations that especially apply to our
activities include:

         -        The federal "Anti-Kickback Law" prohibits the offer or
                  solicitation of compensation in return for the referral of
                  patients covered by almost all governmental programs, or the
                  arrangement or recommendation of the purchase of any item,
                  facility or service covered by those programs. The Health
                  Insurance Portability and Accountability Act of 1996, or
                  HIPAA, created new violations for fraudulent activity
                  applicable to both public and private health care benefit
                  programs and prohibits inducements to Medicare or Medicaid
                  eligible patients. The potential sanctions for violations of
                  these laws range from significant fines, to exclusion from
                  participation in the Medicare and Medicaid programs, to
                  criminal sanctions. Although some "safe harbor" regulations
                  attempt to clarify when an arrangement will not violate the
                  Anti-Kickback Law, our business arrangements and the services
                  we provide may not fit within these safe harbors. Failure to
                  satisfy a safe harbor requires analysis of whether the parties
                  intended to violate the Anti-Kickback Law. The finding of a
                  violation could have a material adverse effect on our
                  business.

         -        The Department of Health and Human Services recently issued
                  regulations implementing the Administrative Simplification
                  provision of HIPAA concerning the maintenance and transmission
                  and security of electronic health information, particularly
                  individually identifiable information. The new regulations,
                  when effective, will require the development and
                  implementation of security and transaction standards for all
                  electronic health information and impose significant use and
                  disclosure obligations on entities that send or receive
                  individually identifiable electronic health information.
                  Failure to comply with these regulations, or wrongful
                  disclosure of confidential patient information could result in
                  the imposition of administrative or criminal sanctions,
                  including exclusion from the Medicare and state Medicaid
                  programs. In addition, if we choose to distribute drugs
                  through new distribution channels such as the Internet, we
                  will have to comply with government regulations that apply to
                  those distribution channels, which could have a material
                  adverse effect on our business.

         -        The Ethics in Patient Referrals Act of 1989, as amended,
                  commonly referred to as the "Stark Law," prohibits physician
                  referrals to entities with which the physician or their
                  immediate family members have a "financial relationship." A
                  violation of the Stark Law is punishable by civil sanctions,
                  including significant fines and exclusion from participation
                  in Medicare and Medicaid.

         -        State laws prohibit the practice of medicine, pharmacy and
                  nursing without a license. To the extent that we assist
                  patients and providers with prescribed treatment programs, a
                  state could consider our activities to constitute the practice
                  of medicine. If we are found to have violated those laws, we
                  could face civil and criminal penalties and be required to
                  reduce, restructure, or even cease our business in that state.


<PAGE>   18

         -        Pharmacies and pharmacists must obtain state licenses to
                  operate and dispense drugs. Pharmacies must also obtain
                  licenses in some states to operate and provide goods and
                  services to residents of those states. If we are unable to
                  maintain our licenses or if states place burdensome
                  restrictions or limitations on non-resident pharmacies, this
                  could limit or affect our ability to operate in some states
                  which could adversely impact our business and results of
                  operations.

         -        Federal and state investigations and enforcement actions
                  continue to focus on the health care industry, scrutinizing a
                  wide range of items such as joint venture arrangements,
                  referral and billing practices, product discount arrangements,
                  home health care services, dissemination of confidential
                  patient information, clinical drug research trials and gifts
                  for patients.

         -        The False Claims Act encourages private individuals to file
                  suits on behalf of the government against health care
                  providers such as us. Such suits could result in significant
                  financial sanctions or exclusion from participation in the
                  Medicare and Medicaid programs.

THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE SUBSTANTIAL FLUCTUATIONS FOR
REASONS OVER WHICH WE HAVE LITTLE CONTROL.

         Our common stock is traded on the Nasdaq National Market. Since our
common stock has only been publicly traded for a short time, an active trading
market for the stock may not develop or be maintained. Also, the market price of
our common stock could fluctuate substantially based on a variety of factors,
including the following:

         -        future announcements concerning us, our competitors, the drug
                  manufacturers with whom we have relationships or the health
                  care market;

         -        changes in government regulations;

         -        overall volatility of the stock market;

         -        changes in earnings estimates by analysts; and

         -        changes in operating results from quarter to quarter.

         Furthermore, stock prices for many companies fluctuate widely for
reasons that may be unrelated to their operating results. These fluctuations,
coupled with changes in our results of operations and general economic,
political and market conditions, may adversely affect the market price of our
common stock.

SOME PROVISIONS OF OUR CHARTER DOCUMENTS MAY HAVE ANTI-TAKEOVER EFFECTS THAT
COULD DISCOURAGE A CHANGE IN CONTROL, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL
TO OUR STOCKHOLDERS.

         Our certificate of incorporation, our bylaws and Delaware law contain
provisions that could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to the impact of financial market risk is currently not
significant. Our primary financial market risk exposure consists of interest
rate risk related to interest income from our short term investments in money
market and high quality short term debt securities with maturities of twelve
months or less that we intend to hold to maturity. We have invested and expect
to continue to invest a substantial portion of our excess cash in such
securities. Generally, if the overall average return on such securities had
decreased 10% from the average return during the nine months and quarter ended
March 31, 2001, then our interest income would have decreased, and pre-tax
income would have decreased approximately $258,000 and $88,000 respectively for
those periods. This amount was determined by considering the impact of a
hypothetical change in interest rates on our interest income. Actual changes in
rates may differ from the hypothetical assumptions used in computing this
exposure.

In prior periods, we have used derivative financial instruments to manage our
exposure to rising interest rates on our variable-rate debt, primarily by
entering into variable-to-fixed interest rate swap agreements. Since we
currently do not have an outstanding balance on our revolving line of credit nor
any outstanding interest rate swap agreements, we do not have an exposure to
financial market risk associated with our revolving line of credit or any
derivative financial instruments.


<PAGE>   19

                           PART II - OTHER INFORMATION

ITEM 5.  OTHER INFORMATION.

         On January 29, 2001, the Company announced a three-for-two stock split
in the form of a 50% stock dividend for shareholders of record on February 9,
2001. Shareholders received one additional share of common stock on February 23,
2001 for every two shares held on the record date. The Company has adjusted
current and historical earnings per share and other share related information to
reflect the stock split.

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

(a)      Exhibits

<TABLE>
         <S>               <C>
         Exhibit 10.1      Amendment No. 6 dated as of January 1, 2001 to Loan and Security Agreement as amended dated
                           as of June 5, 1997 among Accredo Health, Incorporated and its Subsidiaries and Bank of America,
                           N.A., and First Tennessee Bank National Association and Brown Brothers Harriman & Co. and Bank
                           of America, N.A., as Agent.
</TABLE>

(b)      Reports on Form 8-K

         None.

                                    Signature

         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.

May 15, 2001                           Accredo Health, Incorporated



                                       /s/ David D. Stevens
                                       ----------------------------------------
                                       David D. Stevens
                                       Chairman of the Board and
                                       Chief Executive Officer



                                       /s/ Joel R. Kimbrough
                                       ----------------------------------------
                                       Joel R. Kimbrough
                                       Senior Vice President, Chief
                                       Financial Officer and Treasurer


<PAGE>   20

                                  Exhibit Index

<TABLE>
<CAPTION>
Exhibit
Number                                                   Description of Exhibits
-------                                                  -----------------------
<S>               <C>
10.1              Amendment No. 6 dated as of January 1, 2001 to Loan and Security Agreement as amended dated as of
                  June 5, 1997 among Accredo Health, Incorporated and its Subsidiaries and Bank of America, N.A., and First
                  Tennessee Bank National Association and Brown Brothers Harriman & Co. and Bank of America, N.A., as Agent.
</TABLE>