FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   (Mark One)

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended September 30, 1997

                                       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 No. 1-13690

                             PolyMedica Corporation
             (Exact name of registrant as specified in its charter)

        Massachusetts                                             04-3033368
 State or other jurisdiction of                                (I.R.S. Employer
 incorporation or organization                               Identification No.)

 11 State Street, Woburn, Massachusetts                              01801
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code               (781) 933-2020
                                                                 --------------

Securities registered pursuant to Section 12(b) of the Act:  None

                 Securities registered pursuant to Section 12(g)
                                  of the Act:

                     Common Stock, $.01 par value per share
                                (Title of class)

                         Preferred Stock Purchase Rights
                                (Title of class)

     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

     The number of shares  outstanding of the registrant's class of Common Stock
as of October 28,  1997 was  8,902,318  which  includes  161,942  shares held in
treasury.


                                        1

<PAGE>




                             POLYMEDICA CORPORATION
                                TABLE OF CONTENTS

                                      Page

PART I  -         FINANCIAL INFORMATION

Item 1  -         Unaudited Financial Statements

                  Consolidated Balance Sheets at
                           September 30 and March 31, 1997                   3

                  Consolidated Statements of Operations
                           for the three months and six months
                           ended September 30, 1997 and 1996                 5

                  Consolidated Statements of Cash Flows
                           for the six months ended
                           September 30, 1997 and 1996                       6

                  Notes to Consolidated Financial Statements                 7

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

PART II -         OTHER INFORMATION

Item 4   -        Submission of Matters to a Vote of Security Holders       19

Item 6  -         Exhibits and Reports on Form 8-K                          20

Signatures                                                                  21

Exhibit Index                                                               22


                                        2

<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.           Unaudited Financial Statements


                             POLYMEDICA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)


                                                  Sept. 30,            March 31,
                                                    1997                 1997
                                                (unaudited)

ASSETS


Current assets:
    Cash and cash equivalents                     $13,620               $11,028
    Accounts receivable -- trade (net of
      allowance for doubtful accounts of
      $1,086 and $538 as of September 30
      and March 31, 1997, respectively)            14,455                 6,202
    Inventories                                     3,799                 5,481
    Prepaid expenses and other
      current assets                                1,560                   958
                                                 --------              --------

             Total current assets                  33,434                23,669

Property, plant, and equipment, net                 5,756                 6,271
Intangible assets, net                             40,694                42,024
Direct-response advertising, net                    5,992                 1,620
Deferred tax asset                                     --                 1,133
Other assets, net                                     445                   516
                                                 --------              --------

             Total assets                         $86,321               $75,233
                                                   ======                ======





















         The accompanying notes are an integral part of these unaudited
                       consolidated financial statements.

                                        3

<PAGE>



                             POLYMEDICA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                 (In thousands, except share and per share data)



                                              Sept. 30,               March 31,
                                                1997                    1997
                                            (unaudited)


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Current liabilities:
    Accounts payable -- trade                 $ 4,698                $  2,982
    Accrued expenses                            5,771                   3,403
    Senior debt and notes payable               2,658                   2,658
                                               ------                 -------

         Total current liabilities             13,127                   9,043

  Senior debt and notes payable, net           21,533                  22,818
  Deferred income taxes                         1,744                      --
                                              -------                --------

         Total liabilities                     36,404                  31,861

Shareholders' equity:
    Preferred stock $.01 par value; 
     2,000,000 shares
       authorized, none issued or 
          outstanding                              --                     --
    Common stock, $.01 par value; 20,000,000
       shares authorized, 8,898,648 and 
       8,583,001 issued as of September 30
       and March 31, 1997, respectively            89                     86
    Treasury stock, at cost, (161,942 and
       172,559 shares as of September 30
       and March 31, 1997, respectively)       (1,020)                (1,115)
    Additional paid-in capital                 54,673                 53,338
    Accumulated deficit                        (3,037)                (7,783)
    Notes receivable from officers               (788)                  (929)
    Currency translation adjustment                --                   (225)
                                               ------                -------

         Total shareholders' equity            49,917                 43,372
                                               ------                 ------

         Total liabilities and
            shareholders' equity              $86,321                $75,233
                                               ======                 ======














  The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.

                                        4

<PAGE>





                             POLYMEDICA CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                 (In thousands, except share and per share data)


                                     Three Months Ended      Six Months Ended
                                    Sept. 30,   Sept. 30,   Sept. 30, Sept. 30,
                                      1997        1996        1997      1996
Revenues:
  Net product sales                 $17,643      $ 7,063    $31,601    $11,888
  Royalties, exclusivity,
   development and license fees          --           40         --        208
                                    -------      -------    -------    -------
                                     17,643        7,103     31,601     12,096

Cost of product sales                 7,979        2,691     14,707      4,518
                                     ------       ------     ------    -------

Total revenues, less cost 
  of product sales                    9,664        4,412     16,894      7,578

Operating expenses:
  Selling, general, and 
   administrative                     7,285        3,122     12,573      5,269
  Research and development               88          197        211        317
                                    -------       ------   --------    -------
                                      7,373        3,319     12,784      5,586

Income from operations                2,291        1,093      4,110      1,992

Other income and expense:
  Gain on sale of wound care
   business                           4,126           --      4,126         --
  Investment income                     193          228        332        511
  Interest expense                     (678)        (689)    (1,377)    (1,370)
                                     ------       ------     ------     ------
                                      3,641         (461)     3,081       (859)

Income before tax provision           5,932          632      7,191      1,133
Provision for income taxes            2,017           19      2,445         34
                                     ------      -------    -------    -------

Net income                          $ 3,915     $    613   $  4,746    $ 1,099
                                      =====       ======     ======      =====

Net income per common share         $   .39    $     .07   $    .50    $   .13
                                    =======      =======   ========    =======

Weighted average number of
   common shares outstanding          9,965        8,361      9,493      8,421



















  The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.

                                        5

<PAGE>



                             POLYMEDICA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)
                                                         Six Months Ended
                                                      Sept. 30,     Sept. 30,
                                                        1997          1996
                                                    ------------   ----------
Cash flows from operating activities:
    Net income                                        $ 4,746       $ 1,099
    Adjustments to reconcile net income
     to net cash flows from operating activities:
         Gain on sale of wound care business           (4,126)           --
         Depreciation and amortization                  1,657         1,389
         Amortization of direct-response advertising      721            --
         Deferred income taxes                          2,877            --
         Provision for bad debts                          889            33
         Provision for sales allowances                 1,117           444
         Provision for inventory obsolescence              31            33
         Changes in assets and liabilities:
             Accounts receivable--trade               (10,107)       (1,518)
             Inventories                                 (350)           37
             Prepaid expenses and other current assets   (777)         (197)
             Direct-response advertising               (5,092)           --
             Other assets                                 (63)           (1)
             Accounts payable -- trade                  1,718          (813)
             Accrued expenses                           2,019        (1,097)
                                                       ------       -------

                Total adjustments                      (9,486)       (1,690)
                                                       ------        ------

                Net cash flows from operating
                 activities                            (4,740)         (591)

Cash flows from investing activities:
    Sale of wound care business, net of
     related expenses                                   8,428            --
    Purchase of property, plant, and equipment         (1,343)         (329)
    Acquisition, net of cash acquired                      --        (6,648)
    Spinoff of CardioTech International, Inc.              --        (3,830)
                                                      -------       -------

                Net cash flows from
                  investing activities                  7,085       (10,807)
                                                       ------       -------

Cash flows from financing activities:
    Repayment of senior debt and notes payable         (1,329)           --
    Proceeds from issuance of common stock              1,464           848
    Repayment of officers notes receivable                110            --
                                                       ------       -------

                Net cash flows from
                  financing activities                    245           848
                                                       ------       -------

                Net increase (decrease)
                  in cash and cash equivalents          2,590       (10,550)
                                                       ------       -------

                Effect of exchange rate changes
                  on cash                                   2            16

                Cash and cash equivalents at
                  beginning of period                  11,028        23,302
                                                       ------        ------

                Cash and cash equivalents
                  at end of period                    $13,620       $12,768
                                                       ======        ======






              The accompanying notes are an integral part of these
                  unaudited consolidated financial statements.

                                        6

<PAGE>



                             POLYMEDICA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1. The unaudited  consolidated  financial  statements  included herein have been
prepared by PolyMedica  Corporation  ("PolyMedica"  or the  "Company"),  without
audit,  pursuant to the rules and  regulations  of the  Securities  and Exchange
Commission  and  include,  in  the  opinion  of  management,   all  adjustments,
consisting of normal,  recurring adjustments,  necessary for a fair presentation
of interim period results. Certain information and footnote disclosures normally
included in financial  statements prepared in accordance with generally accepted
accounting  principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that its disclosures are adequate to
make the  information  presented  not  misleading.  The  results for the interim
periods  presented are not necessarily  indicative of results to be expected for
the full fiscal year. It is suggested that these interim consolidated  financial
statements  be read in  conjunction  with  the  audited  consolidated  financial
statements  for the year  ended  March  31,  1997,  which  are  incorporated  by
reference in the Company's Annual Report on Form 10-K.

        The  preparation  of financial  statements in conformity  with generally
accepted accounting principles requires management to make certain estimates and
assumptions  that  effect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements and the reported  amounts of revenue and expenses during the reported
period.
Actual results could differ from those estimates.

2. Inventories consist of the following:
   (In thousands)
                                         Sept. 30,               March 31,
                                           1997                    1997
                                        -----------              ---------

              Raw materials              $   909                  $2,168
              Work in process                547                     845
              Finished goods               2,343                   2,468
                                          ------                 -------
                                          $3,799                  $5,481
                                          ======                  ======

3. Advertising, promotional and other marketing costs are charged to earnings in
the period in which  they are  incurred.  Promotional  and  sample  costs  whose
benefit is expected to assist future sales are expensed as the related materials
are used.  In  accordance  with  Statement  of  Position  93-7,  direct-response
advertising  and related  costs are  capitalized  and amortized to expense on an
accelerated  basis over a seven-year  period,  which matches the expected future
stream of revenues  generated from new customers as a result of  direct-response
advertising.  The amortization  rate is such that 55% of such costs are expensed
after  two  years  from the date  they are  incurred.  Management  assesses  the
realizability of the amounts of  direct-response  advertising  costs reported as
assets at each  balance  sheet date by comparing  the  carrying  amounts of such
assets to the probable  remaining  future  benefits  expected to result directly
from such advertising.

   The  Company  has  capitalized  direct-response advertising  of  which  $2.79
million  and $5.09  million  was  incurred  in the three  and six  months  ended
September  30,  1997,  respectively.  As  of  September  30,  1997,  accumulated
amortization was $840,000,  which resulted in a net capitalized  direct-response
advertising  asset of  $5.99  million.  A total  of  $476,000  and  $721,000  in
direct-response  advertising  was  amortized  in the three and six months  ended
September 30, 1997, respectively.

4. In July 1997, the Company sold certain assets of its U.S. and U.K. wound care
operations. Under the terms of the sale, the purchaser,  Innovative Technologies
Group Plc ("IT"),  paid the Company $9 million in cash and issued to the Company
an unsecured promissory note in the face amount of $4 million. The Company could
realize an additional $4.5 million if IT achieves certain  milestones,  based on
the performance of IT's stock and the performance of the acquired business.  The
Company will recognize as income additional proceeds in excess of the $9 million
cash received only when and to the extent realized. The net book value of assets
sold and pretax gain as a result of this  transaction were $4.9 million and $4.1
million,  respectively.  Gain on the sale for the  three  and six  months  ended
September 30, 1997, is as follows:

                                             Three Months Ended Six Months Ended
                                                 Sept. 30,          Sept. 30,
                                                   1997               1997
                                                   ----               ----

Gain on sale of wound care business               $4,126             $4,126
Provision for income taxes related to gain         1,403              1,403
                                                   -----              -----
Gain on sale, net of income taxes                 $2,723             $2,723
                                                   =====              =====
Income per common share related to
  gain on sale of wound care business             $  .27             $  .29
                                                 =======            =======

5. In February 1997, the Financial  Accounting Standards  Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128 "Earnings per Share."SFAS No.
128 establishes a different method of computing net income  per  share  than  is
currently  required  under the  provisions  of the  Accounting Principles  Board
Opinion No. 15 ("APB 15").  Under SFAS No. 128, PolyMedica  will  be required to
present  both  basic  net income per share and diluted net income per share (the
principal difference being that common stock equivalents would not be considered
in the computation of basic EPS).  PolyMedica plans to adopt SFAS No. 128 in its
fiscal quarter ending December  31, 1997  and  at  that time all  historical net
income per share data presented will be restated to conform to the provisions of
SFAS No. 128.

   Proforma  net  income  per share for the  three  and six  months  ended
Septemer 30, 1997 and 1996, respectively,  as computed under the new standard is
as follows:

                                  Three Months Ended        Six Months Ended
                                 Sept. 30,   Sept. 30,    Sept. 30,   Sept. 30,
                                   1997        1996         1997         1996
                                   ----        ----         ----         ----
Net income per weighted average
 share, basic                     $0.45       $0.07        $0.56        $0.14

Net income per weighted average
 share, diluted                   $0.39       $0.07        $0.50        $0.13

6. Certain   amounts  in  the  prior  period  financial  statements  have   been
reclassified to conform with the current year presentation.

                                       7

<PAGE>



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

Overview

Business

PolyMedica  is a leading  provider of targeted  medical  products  and  services
primarily  focused in the diabetes  supplies and  consumer  healthcare  markets.
PolyMedica sells diabetes supplies through its wholly-owned  subsidiary  Liberty
Medical  Supply,  Inc.  ("Liberty  Medical").   Liberty  Medical  is  a  leading
patient-focused,  direct-mail  distributor of more than 200 name-brand  diabetes
products to insulin-using,  Medicare-eligible seniors with diabetes.  PolyMedica
holds a leading  position  in the  over-the-counter  urinary  health  market and
distributes  a  broad  range  of  other  medical  products,   including  digital
thermometers and compliance  products,  primarily to food and drug retailers and
mass  merchandisers  nationwide.  The Company  also  markets,  manufactures  and
distributes a line of prescription urological and suppository products.

In September 1997, the Company changed its name from PolyMedica Industries, Inc.
to PolyMedica Corporation.

Diabetes Supplies

Liberty  Medical  is one of the  leading  mail-order  distributors  of  diabetes
testing  supplies  to  patients  who use  insulin  and have  Medicare or private
insurance coverage.  Liberty Medical provides a simple, reliable way for seniors
to obtain  their  diabetes  testing  supplies  and the  Medicare  and  insurance
benefits  to which they are  entitled.  Liberty  Medical  offers a wide array of
products from a full range of name-brand  manufacturers,  contacts the patient's
doctor  to  obtain   the   required   prescription   information   and   written
documentation,  files the  appropriate  insurance  forms and bills  Medicare and
private insurers directly. This service frees the patient from paying for his or
her diabetes-related expenses out-of-pocket,  and offers the convenience of free
home delivery of supplies.

Consumer Healthcare

The Company's consumer  healthcare  products are focused on three areas:  female
urinary  tract  discomfort,   digital  thermometers  and  medication  compliance
products.  In the urinary tract  discomfort area, the Company's two products are
AZO-STANDARD(R),  which  provides  relief from  urinary  tract  discomfort,  and
AZO-CRANBERRY(R),  a dietary  supplement  which helps maintain a healthy urinary
tract.

The  Company's  consumer  healthcare  products  also  include  digital,  digital
flexible tip, basal and glass  thermometers,  as well as  approximately 40 other
home-use  diagnostic  and  compliance  products.  PolyMedica  has  patented  and
introduced a new flexible tip  thermometer  that is available for this cough and
cold season.  The Company  custom  manufacturers  and/or  distributes  its other
consumer  healthcare  products  under private label and under the brand names of
BASIS(R), MEDI-AID(R), and PeeDee Dose(TM).

                                        8

<PAGE>



Professional Products

PolyMedica's  professional  products  represent  one of the  broadest  lines  of
prescription   urology  products   available,   including  urinary   analgesics,
anti-spasmodics,  local anesthetics and suppositories.  URISED(R),  CYSTOSPAZ(R)
and CYSTOSPAZ-M(R)  analgesics and anti-spasmodics provide effective symptomatic
relief for urinary pain,  burning and spasms.  Many urology offices,  as well as
hospitals,  purchase the local  anesthetic  ANESTACON(R)  for use in  diagnostic
procedures  and  the   catheterization   process.   B&O(R)  and   AQUACHLORAL(R)
suppositories  are used by patients  unable to tolerate oral dosages of systemic
analgesics and sedatives.

Recent Transactions

In May 1996, the Company's Board of Directors  declared a stock dividend for the
purpose of making a distribution to the Company's shareholders of all its shares
of CardioTech  International,  Inc.  ("CardioTech").  In June 1996, certificates
representing  CardioTech common stock were mailed to the Company's shareholders.
The Company believes that this  distribution  qualified as a "tax-free"  spinoff
under Section 355 of the Code. CardioTech, which is listed on the American Stock
Exchange,  develops,  manufactures  and markets its  polymer  technologies  with
particular  emphasis on the  development of implantable  synthetic  grafts for a
broad variety of  applications,  including  vascular  access grafts,  peripheral
grafts and coronary artery bypass grafts.  CardioTech's operations are accounted
for as discontinued  operations in the Company's fiscal 1996 and prior financial
statements  and  consequently,  net revenues,  operating  costs and expenses and
other  income and expense have been  reclassified  for amounts  associated  with
CardioTech's discontinued operations.

On August 30, 1996, the Company acquired all of the outstanding stock of Liberty
Medical in a transaction  accounted for under the purchase method of accounting.
Accordingly, the net assets and operations of Liberty Medical have been included
in the  Company's  financial  statements  since  the  date of  acquisition.  The
acquisition  agreement,  as amended in March  1997,  provided  for an  aggregate
purchase  price of $10.26  million  (including  $490,000  of related  expenses),
comprised of (i) $7.35 million in cash, (ii) two-year 7% subordinated promissory
notes in the aggregate  amount of $1.30 million and (iii) 224,400  shares of the
Company's Common Stock.

In July 1997,  the Company sold certain  assets of its U.S. and U.K.  wound care
operations. Under the terms of the sale, the purchaser,  Innovative Technologies
Group Plc  ("IT"),  paid the  Company  $9.00  million  in cash and issued to the
Company an unsecured  promissory  note in the face amount of $4.00 million.  The
Company  could  realize  an  additional  $4.50  million if IT  achieves  certain
milestones,  based on the  performance of IT's stock and the  performance of the
acquired business.  The Company will recognize  additional proceeds in excess of
the $9.00 million cash received only when and to the extent realized.

Other

Advertising,  promotional  and other  marketing costs are charged to earnings in
the period in which  they are  incurred.  Promotional  and  sample  costs  whose
benefit is expected to assist future sales are expensed as the related materials
are used.  In  accordance  with  Statement  of  Position  93-7,  direct-response
advertising  and related  costs are  capitalized  and amortized to expense on an

                                        9

<PAGE>



accelerated basis  over a seven-year period, which matches the  expected  future
stream of revenues   generated   from new customers  as  a  result  of   direct-
response advertising.  The amortization  rate is such that 55% of such costs are
expensed after two years from the date they are  incurred.  Management  assesses
the realizability of the amounts of  direct-response advertising  costs reported
as assets at each balance sheet date by comparing  the carrying  amounts of such
assets to the probable  remaining  future  benefits  expected to result directly
from such advertising.

Although the use of certain of the  Company's  products is somewhat  seasonal in
nature,  the Company does not believe its net product  sales,  in the aggregate,
are generally subject to material seasonal fluctuations.

The  Company  operates  from   manufacturing,   distribution  and  research  and
development facilities located in Massachusetts, Florida and Colorado. Virtually
all of the  Company's  product  sales  are  denominated  in  U.S.  dollars.  The
Company's research and development activities are funded from ongoing operations
and consist primarily of pilot production of pharmaceutical products.

Period to period comparisons of changes in net product sales are not necessarily
indicative of results to be expected for any future period.

Results of Operations

Three Months Ended  September 30, 1997 Compared to Three Months Ended  September
30, 1996.

The Company generated $17.64 million of total revenues in the three months ended
September  30, 1997,  as compared  with $7.10  million in the three months ended
September 30, 1996, when the Company had owned Liberty Medical for one month.

Net product sales of diabetes  supplies were $10.86  million in the three months
ended September 30, 1997. This performance compares with $4.58 million and $8.31
million in the three months ended March 31, and June 30, 1997, respectively.  As
the Company  purchased  Liberty Medical in August 1996, there was only one month
of sales of diabetes supplies in the three months ended September 30, 1996. This
growth is  largely a result of the  Company's  increased  advertising  spending,
including its  initiation of television  advertising  at the end of fiscal 1997.
The Company  expects its  promotional  and  advertising  spending to continue in
order to further the expansion of Liberty Medical's customer base.

Net product sales of consumer  healthcare  products  increased by 11.5% to $2.85
million in the three  months  ended  September  30, 1997 as compared  with $2.56
million  in the  three  months  ended  September  30,  1996.  Sales of  advanced
thermometry products increased during the three months ended September 30, 1997,
offset by a decline in sales of  AZO-STANDARD.  The  Company  believes  that the
decline  in sales  of  AZO-STANDARD  is due to an  inventory  oversupply  at the
distribution level.

Net product sales of the Company's  professional  products  increased by 8.0% to
$3.93  million in the three months  ended  September  30, 1997 as compared  with
$3.64  million in the three months ended  September  30, 1996.  This increase is

                                       10

<PAGE>


primarily  due  to  additional  shipments  of URISED  in  the three months ended
ended  September 30, 1997,  which  the  Company  believes  is  the  result  of a
reduction in the supply of generic products in the marketplace, partially offset
by the effect of product line price  increases in October 1996,  which  prompted
increased  shipments in the three months ended  September  30, 1996 to customers
buying in advance of the price increases.

As a percentage  of net product  sales,  overall gross margins were 54.8% in the
three  months  ended  September  30,  1997 and 61.9% in the three  months  ended
September 30, 1996.  Gross margins in the three months ended  September 30, 1997
decreased   primarily   due  to  the   inclusion   of   significant   sales   of
diabetes-related  products,  whose  gross  margins  are lower  than the  Company
average for  products  sold during the three months  ended  September  30, 1996,
which included only one month of sales of diabetes supplies.

As a  percentage  of net product  sales,  selling,  general  and  administration
expenses  ("SG&A  expenses") were 41.3% for the three months ended September 30,
1997 as compared with 44.2% for the three months ended  September 30, 1996. SG&A
expenses  increased by 133.3% in the three months  ended  September  30, 1997 to
$7.29 million as compared with $3.12 million in the three months ended September
30, 1996. This increase is primarily  attributable  to SG&A expenses  related to
Liberty Medical,  which the Company owned for only one month in the three months
ended  September 30, 1996. In addition,  during the three months ended September
30, 1997, the Company  increased  marketing and advertising costs related to its
consumer healthcare products.

Research  and  development  expenses  were  $88,000  in the three  months  ended
September 30, 1997 as compared with $197,000 in the three months ended September
30, 1996.  This  decrease in research and  development  costs is a result of the
Company's July 1997 sale of certain assets related to its wound care business.

Investment  income  decreased  by 15.4% to  $193,000 in the three  months  ended
September 30, 1997 as compared with $228,000 in the three months ended September
30, 1996, as the Company  earned  interest on lower average cash balances due to
cash paid for the purchase of Liberty Medical in August 1996,  partially  offset
by cash  received  in July 1997 in  connection  with the sale of certain  assets
related to the Company's wound care business.  Interest  expense was $678,000 in
the three months ended September 30, 1997 as compared with $689,000 in the three
months ended September 30, 1996, as the Company accrued interest expense in both
periods on the Hancock Notes. In July 1997, the Company made its first principal
repayment of $1 million on the Hancock Notes.

In three months ended  September 30, 1997, the Company  recorded a $4.13 million
pretax gain on the sale of certain  assets  related to the Company's  wound care
business.

Pretax  income was $5.93  million in the three months ended  September 30, 1997.
Excluding the $4.13 million pretax gain described above, pretax income was $1.81
million as compared with $632,000 in the three months ended  September 30, 1996.
The Company's net income was $3.92  million,  or $0.39 per common share,  in the
three months ended  September  30, 1997.  Excluding  the $2.72 million after tax
gain from the sale of the wound care business, or $0.27 per common share, income
was $1.19 million,  or $0.12 per common share. This performance  compares to net
income  of  $613,000,  or $.07 per  common  share,  in the  three  months  ended
September 30, 1996.


                                       11

<PAGE>



Six Months Ended  September 30, 1997 Compared to Six Months Ended  September 30,
1996.

The Company  generated  $31.60 million of total revenues in the six months ended
September  30,  1997,  as compared  with $12.10  million in the six months ended
September  30,  1996,  when the Company had owned  Liberty  Medical for only one
month.

Net product  sales of diabetes  supplies  were $19.17  million in the six months
ended  September 30, 1997. This  performance  compares with $8.65 million in net
product sales in the seven months ended March 31, 1997. As the Company purchased
Liberty  Medical  on  August  30,  1996,  there  was only one  month of sales of
diabetes  supplies in the six months ended  September  30, 1996.  This growth is
largely a result of the Company's increased advertising spending,  including its
initiation  of  television  advertising  at the end of fiscal 1997.  The Company
expects its promotional and advertising spending to continue in order to further
the expansion of Liberty Medical's customer base.

Net product  sales of consumer  healthcare  products  increased by 5.6% to $4.79
million  in the six months  ended  September  30,  1997 as  compared  with $4.54
million  in  the  six  months  ended  September  30,  1996.  Sales  of  advanced
thermometry  products  increased during the six months ended September 30, 1997,
offset by a decline in sales of  AZO-STANDARD.  The  Company  believes  that the
decline  in sales  of  AZO-STANDARD  is due to an  inventory  oversupply  at the
distribution level.

Net product sales of the Company's  professional  products increased by 14.8% to
$7.64 million in the six months ended  September 30, 1997 as compared with $6.66
million in the six months ended  September 30, 1996.  This increase is primarily
due to  additional  shipments  of URISED in the six months ended  September  30,
1997,  which the Company  believes is the result of a reduction in the supply of
generic products in the  marketplace,  partially offset by the effect of product
line price increases in October 1996 which prompted  increased  shipments in the
six months ended September 30, 1996 to customers  buying in advance of the price
increases.

As a percentage  of net product  sales,  overall gross margins were 53.4% in the
six months ended  September 30, 1997 and 62.0% in the six months ended September
30, 1996.  Gross margins in the six months ended  September  30, 1997  decreased
primarily  due  to  the  inclusion  of  significant  sales  of  diabetes-related
products,  whose gross  margins are lower than the Company  average for products
sold during the six months ended  September  30, 1996,  which  included only one
month of sales of diabetes supplies.

As a  percentage  of net product  sales,  SG&A  expenses  were 39.8% for the six
months ended  September 30, 1997 as compared with 44.3% for the six months ended
September 30, 1996.  SG&A  expenses  increased by 138.6% in the six months ended
September  30, 1997 to $12.57  million as compared with $5.27 million in the six
months ended September 30, 1996. This increase is primarily attributable to SG&A
expenses related to Liberty Medical,  which the Company owned for only one month
in the six months ended  September 30, 1996. In addition,  during the six months
ended September 30, 1997, the Company increased  marketing and advertising costs
related to its consumer healthcare products.


                                       12

<PAGE>



Research  and  development  expenses  were  $211,000  in the  six  months  ended
September 30, 1997 as compared  with $317,000 in the six months ended  September
30,  1996.  This  decrease in  research  and  development  costs is a result the
Company's July 1997 sale of certain assets related to its wound care business.

Investment  income  decreased  by  35.0% to  $332,000  in the six  months  ended
September 30, 1997 as compared  with $511,000 in the six months ended  September
30, 1996, as the Company  earned  interest on lower average cash balances due to
the June 1996 cash transfer to CardioTech, cash paid for the purchase of Liberty
Medical in August 1996, and investments in direct-response advertising. This use
of cash was partially  offset by cash  received in July 1997 in connection  with
the sale of  certain  assets  related  to the  Company's  wound  care  business.
Interest expense was $1.38 million in the six months ended September 30, 1997 as
compared with $1.37  million in the six months ended  September 30, 1996, as the
Company accrued  interest  expense in both periods on the Hancock Notes. In July
1997,  the  Company  made its first  principal  repayment  of $1  million on the
Hancock Notes.

In the six months ended September 30, 1997, the Company recorded a $4.13 million
pretax gain on the sale of certain  assets  related to the Company's  wound care
business.

Pretax  income was $7.19  million in the six months  ended  September  30, 1997.
Excluding the $4.13 million pretax gain described above, pretax income was $3.06
million as compared  with $1.13  million in the six months ended  September  30,
1996. The Company's net income was $4.75 million,  or $0.50 per common share, in
the six months ended  September 30, 1997.  Excluding the $2.72 million after tax
gain from the sale of the wound care business, or $0.29 per common share, income
was $2.02 million,  or $0.21 per common share. This performance  compares to net
income of $1.10  million,  or $0.13 per common  share,  in the six months  ended
September 30, 1996.

Liquidity and Capital Resources

Since its  inception,  the Company  has raised  $53.46  million in gross  equity
capital,  of which $7.16 million was from venture capital  financing  before the
Company's  initial public  offering,  $39.00 million from its March 1992 initial
public offering, $4.55 million from a November 1995 public Common Stock offering
and $2.75  million  from a March 1996  private  placement  of common  stock.  In
January 1993,  the Company sold to John Hancock  Mutual Life  Insurance  Company
("Hancock") $25.00 million of Hancock Notes.

As of September  30, 1997,  the Company had working  capital of $20.31  million,
including  cash and cash  equivalents  of $13.62  million,  which  compares with
working  capital of $18.89  million as of September 30, 1996, and $14.63 million
as of March 31,  1997.  The major factor which  affected  working  capital as of
September 30, 1997,  when compared to September 30, 1996 and March 31, 1997, was
the receipt by the Company in July 1997 of $9 million in cash in connection with
the sale of certain assets related to its wound care business.

The Company  expects that its current  working  capital and funds generated from
future   operations   will  be  adequate  to  meet  its  liquidity  and  capital
requirements for current operations. In the event that the Company undertakes to
make  acquisitions of complementary  businesses,  products or technologies,  the
Company may require substantial additional funding beyond currently available

                                       13

<PAGE>



working capital and funds generated from  operations.  The Company is conducting
an active  search for the strategic  acquisition  of  complementary  businesses,
products or technologies  which leverage its marketing,  sales and  distribution
infrastructure.  The Company  currently has no  commitments  or agreements  with
respect to any such acquisition.

Factors Affecting Future Operating Results

The  statements  contained  in this  Report that are not purely  historical  are
forward-looking  statements  within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities  Exchange Act of 1934,  including,
but not limited to,  statements  regarding  the Company's  expectations,  hopes,
intentions  or  strategies  regarding  the  future.  Forward-looking  statements
include,  among  others:  statements  regarding  possible  future  expansion  of
diabetes coverage under Medicare;  statements regarding future benefits from the
Company's advertising and promotional expenditures;  statements regarding future
product revenue levels;  statements regarding product development,  introduction
and marketing; and statements regarding future acquisitions. All forward-looking
statements  included in this Report are based on  information  available  to the
Company on the date hereof,  and the Company assumes no obligation to update any
such  forward-looking  statements.  It is important  to note that the  Company's
actual  results  could  differ  materially  from  those in such  forward-looking
statements.

The future  operating  results of the Company remain  difficult to predict.  The
Company  continues to face many risks and  uncertainties  which could affect its
operating results, including without limitation, those described below.

Healthcare Reimbursement

Political,  economic and  regulatory  influences  are  resulting in  fundamental
changes in the healthcare industry in the United States. The Company anticipates
that  Congress  and  state  legislatures  will  continue  to review  and  assess
alternative  healthcare  delivery systems and payment methods.  Sales of a large
portion  of  the  Company's  products  depend  to a  significant  extent  on the
availability  of  reimbursement  to the Company's  customers by  government  and
private insurance plans.

Any  reduction  in the  reimbursement  provisions  currently  in effect  for the
Company's diabetes supplies products which are reimbursable under Medicare would
reduce the Company's revenues and earnings.

The processing of third-party  reimbursements is a labor-intensive  effort,  and
delays in  processing  claims for  reimbursement  may increase  working  capital
requirements.  Final  determination  of  reimbursements  are subject to audit by
Medicare.  Medicare  audits  of the  Company  to date have not  resulted  in any
significant  adjustments.  Future  audits may,  however,  result in  retroactive
adjustments  for past charges for products and  services,  and such  adjustments
could affect the future  operations  and  earnings of the Company.  The Balanced
Budget Act of 1997 expands Medicare coverage to seniors with diabetes who do not
use  insulin.  Any  delay  in the  expected  July  1998  implementation  of this
legislation  would  correspondingly  delay the anticipated  expansion of Liberty
Medical's market.


                                       14

<PAGE>



Ability to Manage Growth

The Company has expanded its operations  rapidly,  which has created significant
demands on the Company's systems, its administrative,  operational,  development
and financial  personnel and its other  resources.  Additional  expansion by the
Company  may  further  strain  the  Company's  management,  financial  and other
resources,  including its working  capital  resources,  as a result of delays in
processing  claims for  third-party  reimbursement.  Although  the  Company  has
recently  upgraded its systems and other steps have been taken to address  these
issues, there can be no assurance that such steps will be effective.

Direct-Response Advertising

In accordance  with  generally  accepted  accounting  principles,  for financial
statement  purposes,  the Company  capitalizes  direct-response  advertising and
related  costs  and  amortizes  such  costs  over  a  seven-year  period  on  an
accelerated  basis,  which  matches  the  expected  future  stream  of  revenues
generated  from  new  customers  as a  result  of this  advertising.  Management
assesses the realizability of the amounts of  direct-response  advertising costs
reported as assets at each balance sheet date by comparing the carrying  amounts
of such assets to the  probable  remaining  future  benefits  expected to result
directly  from such  advertising.  The Company  expects that it will continue to
incur  substantial  direct-response  advertising and related costs in connection
with the further expansion of its diabetes supplies business.

Competition

The  Company  is  engaged in rapidly  evolving  and highly  competitive  fields.
Competition from other sellers of diabetes supplies, manufacturers of healthcare
products, pharmaceutical companies and other competitors is intense and expected
to  increase.  Many  of  these  companies  have  substantially  greater  capital
resources,  research and  development  staffs and  facilities  and experience in
marketing and  distribution  of products than does the Company.  There can be no
assurance that the Company's competitors will not succeed in developing products
and services that are more effective  than any that are being  developed or sold
by the Company.

The Company  believes that the principal  competitive  factors in the healthcare
products industry include the ability to identify and respond to customer needs,
quality  and  breadth of service  and  product  offerings,  price and  technical
expertise. The Company believes that its ability to compete also depends in part
on a number of competitive factors outside its control, including the ability to
hire and retain  employees,  the  development by others of products and services
that are  competitive  with the Company's  products and  services,  the price at
which  others  offer  comparable  products  and  services  and the extent of its
competitors' responsiveness to customer needs.

Dependence on Reorders - Change in Demand for Diabetes Supplies

The Company  generally incurs negative cash flow with respect to the first order
for its diabetes supplies from a customer due primarily to customer  acquisition
costs,  including  advertising and Medicare and secondary  insurance  compliance
costs.  Accordingly,  the  profitability  of  the  Company's  diabetes  supplies
business depends on recurring orders. Reorder rates are inherently uncertain and
are  subject  to several  factors,  many of which are  outside of the  Company's


                                       15

<PAGE>



control, including customer shifts to  nursing homes or other  forms of  managed
care, customer  mortality,  changing  customer   preferences,  general  economic
conditions  and  customer  satisfaction.  Furthermore, efforts  are  underway to
improve treatment of, and to seek a cure for, diabetes. Significant developments
in either area  could  substantially  reduce  or  eliminate  the  demand for the
diabetes  supplies sold by the Company.

Dependence on Suppliers

The Company purchases several of its consumer healthcare products, including its
thermometers,  from suppliers based in the People's  Republic of China,  usually
using molds and tooling  owned by or committed  exclusively  to the Company.  To
date, the Company has not experienced  difficulties in obtaining timely delivery
from these suppliers.  Although the Company believes there are alternate sources
available for these  products,  there can be no assurance that the Company would
be able to acquire  products  from other  sources on a timely or  cost-effective
basis in the event  current  foreign  suppliers  were  unable  to  supply  these
products on a timely basis.

Although the Company has three long-term  purchase contracts with respect to its
diabetes supplies business,  it operates principally on a purchase-order  basis.
Each of the Company's over-the-counter products for urinary tract discomfort and
urinary tract health is manufactured by a single supplier. Some of the Company's
professional  products also are manufactured by single suppliers.  PolyMedica is
currently taking steps to provide  alternate sources of supply for both of these
lines of products, but such efforts are not yet complete.

Dependence on Single Manufacturing Facility for Professional Products

A  majority  of the  Company's  professional  products  is  manufactured  at its
headquarters  facility in Woburn,  Massachusetts.  While the  Company  maintains
business  interruption  insurance,  any  prolonged  inability  to  utilize  this
facility  as a result of fire,  natural  disaster  or other  event  would have a
material  adverse  effect on the  Company's  business,  financial  condition and
results of operations.  The Company complies with Good  Manufacturing  Practices
("GMP") regulations,  prescribed by the Food and Drug Administration ("FDA"), in
its internal  manufacturing  facilities.  The FDA  enforces the GMP  regulations
through its plant  inspection  program.  If the Company fails to comply with GMP
regulations,  the Company  could be required to make material  expenditures  and
could experience manufacturing delays to return to compliance.

Product Liability

The testing, manufacturing,  marketing and sale of medical and consumer products
entail an inherent risk that product  liability  claims will be asserted against
the Company or its third-party distributors. Certain manufacturers of healthcare
products  have been  subjected  to  significant  claims  for  damages  allegedly
resulting from their products. The Company currently maintains product liability
insurance  coverage  which it believes to be adequate for its present  purposes,
but there can be no  assurance  that in the future the  Company  will be able to
maintain  such  coverage  on  acceptable  terms  or that  current  insurance  or
insurance  subsequently  obtained will provide adequate  coverage against any or
all potential claims.


                                       16

<PAGE>



Reliance on Distributors  for  Consumer  Healthcare  and Professional  Products;
Limited Direct Marketing Experience

The Company has a limited direct marketing and sales organization, and relies on
its current  distributors,  for the sale of consumer healthcare and professional
products. The Company's ability to sell its consumer healthcare and professional
products  will  depend  in part on its  ability  to  enter  into  marketing  and
distribution  agreements with pharmaceutical,  medical device, personal care and
other  distributors  in the United  States and other  countries.  If the Company
enters into any such  agreements,  there can be no assurance  that the Company's
third-party   distributors  will  be  able  to  market  the  Company's  products
effectively.

Integration of Other Businesses, Products and Technologies

As part of its growth strategy,  the Company currently intends to expand through
the  acquisition of other  businesses,  products and  technologies.  The Company
regularly  reviews such potential  acquisitions,  some of which may be material.
There  can be no  assurance  that the  Company  will  successfully  acquire  any
businesses,  products or  technologies,  or that any such  acquired  businesses,
products or technologies will be profitable. The Company does not currently have
any commitments or agreements with respect to any such acquisition.

Government Regulation

Certain  aspects of the  Company's  business  are  subject to federal  and state
regulation.  Federal regulation  covers,  among other things, the manufacturing,
distribution  and sale of the Company's drugs and medical  devices.  The Company
believes that its operations  comply with applicable  federal and state laws and
regulations  in all  material  respects.  However,  changes  in  the  law or new
interpretations  of  existing  laws  could  have a  material  adverse  effect on
permissible  activities of the Company,  and the relative costs  associated with
doing business.



                                       17

<PAGE>



                           PART II - OTHER INFORMATION

                             PolyMedica Corporation


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

At the Company's Annual Meeting of Stockholders  held on September 11, 1997, the
following proposals were adopted by the vote specified below:

Proposal
                                         For           Against        Abstain
Election of Directors:
 Steven J. Lee                        7,524,639                      54,224(1)
 Daniel S. Bernstein                  7,499,575                      79,288(1)
 Peter K. Hoffman                     7,523,539                      55,324(1)

Amendment to the Company's
 Articles of Organization for the
 purpose of changing the name of
 the Company from "PolyMedica
 Industries, Inc." to "PolyMedica
 Corporation"                         7,519,401         13,846       45,616

Amendment to the Company's
 1992 Employee Stock Purchase  Plan,
 extending the termination date of 
 the Plan from May 1, 1998
 to May 1, 2000                       7,414,684        100,029       64,150

Ratification of
 Coopers & Lybrand L.L.P.
 as independent public
 accountants                          7,524,312          9,091       45,460

----------------------

(1)      Represents votes "withheld" from each respective director.


                                       18

<PAGE>



                           PART II - OTHER INFORMATION

                             PolyMedica Corporation



Item 6.          Exhibits and Reports on Form 8-K

         (a)     See Exhibit Index
         (b)     The Company filed a  report  on  Form 8-K,  dated September 22,
                 1997, under Item 5 -  Other Events, relating to  the  Company's
                 name change.


                                       19

<PAGE>



                                   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.


                                             PolyMedica Corporation
                                                  (registrant)



                                            /s/ Steven J. Lee
                                            Steven J. Lee
                                            Chairman and Chief Executive Officer
                                            (Principal Executive Officer)



                                            /s/ Eric G. Walters
                                            Eric G. Walters
                                            Chief Financial Officer, Treasurer,
                                            and Clerk (Principal Financial and
                                             Accounting Officer)





Dated: October 30, 1997

                                       20

<PAGE>


                                  Exhibit Index

                             PolyMedica Corporation


Exhibit                          Description


10.80  -  Letter  Agreement amendment by and between the Registrant and Randy M.
          Sloan dated September 16, 1997.

27     -  Financial Data Schedule

                                       21