SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



                               __________________

                                    FORM 10-Q


(Mark One)

                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 number: 0-26348

                                    HPR Inc.
             (Exact name of registrant as specified in its charter)

                    Delaware                                      04-2985551
         (State or other jurisdiction of                     (I.R.S. Employer
         incorporation or organization)                     Identification No)

                                245 First Street
                               Cambridge, MA 02142
                    (Address of principal executive offices)

                                 (617) 679-8000
              (Registrant's telephone number, including area code)



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 ___

As of October 31, 1997, there were 15,387,719 shares of the Registrant's  Common
Stock, $0.01 par value per share, outstanding.




                                                        5
                                    HPR INC.
             Form 10-Q for the Three Months Ended September 30, 1997



                                Table of Contents

                                                                     Page No.

                          PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements (unaudited):

         Consolidated Balance Sheets as of
         September 30, 1997 and June 30, 1997 . . . . . . . . . . .     3

         Consolidated Statements of Operations for the Three
         Months Ended September 30, 1997 and 1996 .. . . . . . . .      4

         Consolidated Statements of Cash Flows for the Three
         Months Ended September 30, 1997 and 1996. . . . . . . . .      5

         Notes to Interim Consolidated Financial Statements. . . .      6

Item 2.  Management's Discussion and Analysis of
         Financial Condition and Results of Operation     . . . . .     8





                           PART II. OTHER INFORMATION

Item 2.   Changes in Securities and Use of Proceeds . . . . . . . . .. .14

Item 4.   Submission of Matters to a Vote of Security Holders. . . . . .14

Item 5.   Other Information. . . . . . . . . . . . . . . . . . . . .    15

Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . .   16

Signatures                 . . . . . . . . . . . . . . . . . . . . . .  18





PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements
<TABLE>

<CAPTION>

                                    HPR Inc.

                           CONSOLIDATED BALANCE SHEETS
                                   (unaudited)

<S>                                                                         <C>              <C>

                                                                            September 30,        June 30,
                                                                                     1997            1997 

ASSETS:
Current Assets:
  Cash and cash equivalents ..............................................   $  7,410,152    $ 13,943,693
  Investments in marketable securities ...................................     14,095,815      10,842,696
  Accounts receivable, net of allowances for doubtful
     accounts of $608,000 and $651,500 for September
     30, 1997 and June 30, 1997, respectively ............................      5,804,276       6,952,573
  Contract receivables ...................................................      7,767,721       6,890,342
  Deferred income taxes ..................................................        698,022         698,022
  Prepaid expenses and other current assets ..............................      1,458,593       1,257,276
         Total current assets ............................................     37,234,579      40,584,602
Investments in marketable securities, long term...........................      5,582,122       2,984,465
Property and equipment, net ..............................................      2,602,666       2,509,775
Software development costs, net ..........................................      1,611,818       1,347,654
Other assets .............................................................        177,785         104,570
         Total assets ....................................................   $ 47,208,970    $ 47,531,066
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
  Accounts payable .......................................................   $  1,085,776    $    749,138
  Accrued royalties ......................................................      1,017,798       1,025,979
  Accrued expenses .......................................................        985,809       1,181,450
  Accrued support costs ..................................................      1,875,391       1,792,584
  Accrued employee compensation and benefits .............................      1,252,835       2,247,295
  Deferred revenue .......................................................        913,467       1,498,147
  Income taxes payable ...................................................         99,250            --
  Sales taxes payable ....................................................        114,419         209,067
         Total current liabilities .......................................      7,344,745       8,703,660
Deferred income taxes ....................................................        558,791         558,791
         Total liabilities ...............................................      7,903,536       9,262,451

Stockholders' Equity:
  Convertible preferred stock, par value $0.10,
    3,000,000 shares authorized; zero shares
    outstanding at September 30, 1997 and
    June 30, 1997, respectively ..........................................           --              --
  Common stock, par value $0.01, 35,000,000 shares
    authorized; 15,352,722 and 15,325,303 shares
    issued and outstanding at September 30, 1997 and
    June 30, 1997, respectively...........................................        153,527         153,253
  Additional paid-in capital .............................................     18,450,740      18,335,055
  Unrealized net losses on investments ...................................        (77,777)           --
  Retained earnings ......................................................     20,778,944      19,780,307
         Total stockholders' equity ......................................     39,305,434      38,268,615
         Total liabilities and stockholders' equity ......................   $ 47,208,970    $ 47,531,066

</TABLE>



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

<TABLE>
<CAPTION>

                                    HPR Inc.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)



                                                             Three Months Ended September 30
<S>                                                                <C>           <C>   

                                                                          1997          1996 

Revenues .......................................................   $ 9,300,228   $ 7,070,994
Expenses:
  Cost of revenues .............................................     2,242,771     1,640,030
  Marketing and sales ..........................................     2,213,515     1,586,588
  Research and development .....................................     1,620,086     1,530,969
  General and administrative ...................................     1,207,775     1,015,812
  Cost of Acquisition ..........................................       670,726            --   
                                                                                 
Total expenses .................................................     7,954,873     5,773,399
Operating income ...............................................     1,345,355     1,297,595
Interest income, net ...........................................       361,891       301,418
Income before provision for
income taxes ...................................................     1,707,246     1,599,013
Provision for income taxes .....................................       708,609       663,591
Net income .....................................................   $   998,637   $   935,422
Net income per share ...........................................   $      0.06   $      0.06
Weighted average common shares
and equivalents ................................................    16,324,000    16,098,000

</TABLE>






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

<TABLE>
<CAPTION>

                                                 HPR Inc.

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (unaudited)

                                                                                     Three Months Ended September 30,
<S>                                                                                      <C>             <C>    

                                                                                                 1997            1996 

Cash flows from (for) operating activities:
  Net income .........................................................................   $    998,637    $    935,422
  Adjustments to reconcile net income to
     cash provided by (used in) operating
     activities:
     Depreciation and amortization ...................................................        344,118         351,849
     Provision for doubtful accounts .................................................           --           125,000
     Loss on disposal of equipment ...................................................           --             2,565
     Amortization of discount on
       investments ...................................................................       (129,029)        (27,630)
  Change in operating assets and
     liabilities:
     Accounts and contract receivables ...............................................        270,918        (652,560)
     Prepaid expenses and other current assets .......................................       (201,317)       (577,375)
     Other assets ....................................................................        (73,215)         (3,977)
     Accounts payable and other accrued
       liabilities ...................................................................       (778,837)         23,362
     Sales taxes payable .............................................................        (94,648)       (151,939)
     Deferred revenue ................................................................       (584,680)       (468,161)
     Income taxes payable ............................................................         99,250        (438,758)
                                                                                         ------------    ------------
       Net cash used in
          operating activities .......................................................       (148,803)       (882,202)
                                                                                         ------------    ------------
Cash flows from (for) investing activities:
  Capitalized software development
     costs ...........................................................................       (347,207)       (131,847)
   Proceeds from disposal of fixed assets ............................................           --            15,903
  Capital expenditures ...............................................................       (353,966)       (202,912)
  Sale of marketable securities ......................................................      5,400,000       2,500,000
  Purchase of marketable securities ..................................................    (11,199,524)     (2,165,680)
                                                                                         ------------    ------------
       Net cash provided by (used in)
         investing activities ........................................................     (6,500,697)         15,464
                                                                                         ------------    ------------
Cash flows from (for) financing
  activities:
  Proceeds from exercise of stock
     options .........................................................................        115,959          89,247
  Payments to acquire treasury stock .................................................           --            (4,875)
                                                                                         ------------    ------------
       Net cash provided by financing
          activities .................................................................        115,959          84,372
                                                                                         ------------    ------------
Net decrease in cash and cash
  equivalents ........................................................................     (6,533,541)       (782,366)
                                                                                         ------------    ------------
Cash and cash equivalents, beginning of
  period .............................................................................     13,943,693       8,479,122
                                                                                         ------------    ------------
Cash and cash equivalents, end of
  period .............................................................................   $  7,410,152    $  7,696,756
                                                                                         ============    ============


</TABLE>



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



                                    HPR INC.

               NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)


 (1) Description of Business

     HPR Inc.  (the  "Company")  was formed in 1987.  The Company  develops  and
     markets software and proprietary database products  incorporating  clinical
     knowledge  that enable  payors and providers to better manage the financial
     risk  associated  with the delivery of healthcare  and the quality of care.
     The  Company's  products  are used to contain  the costs of  healthcare  by
     clinically evaluating claims for payment; measuring efficiency, quality and
     outcomes;   determining  appropriate  utilization;   influencing  physician
     referral  patterns and  profiling  providers.  The  Company's  products are
     developed and maintained in consultation  with board  certified  physicians
     serving on Company-organized panels.


(2)  Summary of Significant Accounting Policies

     Accounting

     The accompanying  consolidated  financial statements are unaudited and have
     been prepared in accordance with generally accepted accounting  principles.
     These statements include the accounts of HPR and its subsidiaries.  Certain
     information  and footnote  disclosures  normally  included in the Company's
     annual  consolidated  financial  statements have been condensed or omitted.
     The  interim  consolidated   financial   statements,   in  the  opinion  of
     management,  reflect all adjustments  (consisting  only of normal recurring
     accruals)  necessary  for a fair  statement  of the results for the interim
     periods ended September 30, 1997 and 1996, respectively.

     The  results of  operations  for the interim  periods  are not  necessarily
     indicative of the results of operations to be expected for the entire year.
     It is suggested  that these interim  consolidated  financial  statements be
     read in conjunction with the audited consolidated  financial statements for
     the year ended June 30, 1997,  which are contained in the Company's  Annual
     Report on Form 10-K/A filed with the Securities and Exchange  Commission on
     September 8, 1997.


 (3)  Investment in Marketable Securities

     In  accordance  with  FAS  115,   management   determines  the  appropriate
     classification of its investments in debt and equity securities at the time
     of purchase and reevaluates such  determination at each balance sheet date.
     On July 1, 1997, the Company  transferred  all of its debt  securities from
     the held to maturity  classification  to available for sale. At the date of
     the  transfer,  the  Company  recorded  its  investments  at fair value and
     recognized  the  unrealized   holding  loss  as  a  separate  component  of
     stockholders'  equity.  Any  subsequent  changes  in fair  value  have been
     recorded as a separate component of stockholders' equity. The Company holds
     no  investments  in equity  securities  at September  30, 1997 and June 30,
     1997.

 
(4)  Merger

     On  September  29,  1997 the  Company  announced  that it had signed a
     definitive agreement to be acquired by HBO & Company ("HBOC").  Pursuant to
     the Agreement of Merger dated September 27, 1997 (the "Merger  Agreement"),
     the  Company  will merge into a  wholly-owned  subsidiary  of HBOC and each
     outstanding share of common stock of the Company will be converted into the
     right to receive  six-tenths  (0.6) of a share of common stock of HBOC (all
     such  actions  collectively,  the  "Merger").  All  outstanding  options to
     purchase the Company's common stock will be assumed by HBOC and will become
     options  to  purchase  shares of HBOC  common  stock.  The  transaction  is
     intended to be accounted  for as a pooling of interests and to qualify as a
     tax-free  reorganization.  The  Merger has been  approved  by the Boards of
     Directors  of the  Company  and  HBOC,  but is  still  subject  to  various
     conditions,  including regulatory review and approval, stockholder approval
     and other  conditions  to closing.  A proxy  statement of the Company and a
     prospectus of HBOC will be delivered to the  stockholders of the Company in
     connection  with the special meeting of stockholders of the Company to vote
     on the Merger.

     Pursuant to Section 10.1 of the Merger Agreement, the Merger Agreement
     may be terminated by either party under certain circumstances.  The Company
     has  agreed  that if the Merger  Agreement  is  terminated  by the Board of
     Directors of the Company in the exercise of its good faith determination as
     to its fiduciary duties to the Company's  stockholders  imposed by law that
     such  termination  is required,  the Company will pay HBOC (i) a fee in the
     amount of $10,000,000  and (ii) the amount of HBOC's  reasonable  costs and
     expenses in connection  with the  negotiation and performance of the Merger
     Agreement. Payment of the foregoing amounts shall not be in lieu of damages
     incurred if the Company breaches certain covenants in the Merger Agreement.




(5)   New Accounting Pronouncement

     In February 1997, the FASB issued Statement No. 128 ("SFAS 128"), "Earnings
     per Share," which  modifies the way in which  earnings per share ("EPS") is
     calculated and disclosed.  Currently,  the Company  discloses  primary EPS.
     Upon adoption of this standard for the period ending December 31, 1997, the
     Company  will be required to  disclose  either  basic EPS or both basic and
     dilutive EPS, the principal  difference being that common stock equivalents
     would not be considered in the  computation of basic EPS. Basic EPS for the
     Company would have been $0.07 and $0.05 for the quarter ended September 30,
     1997 and  September 30, 1996,  respectively.  The impact of SFAS No. 128 on
     the  calculation of diluted EPS is not expected to be materially  different
     than primary EPS.

      

Item 2.

          Management's Discussion And Analysis of Financial Condition
                           and Results of Operations



See Risk Factors Relating to Forward-Looking Statements at the end of this item.

Overview

     The  Company  licenses  its  products   primarily  pursuant  to  multi-year
     non-cancellable  agreements that, in general,  provide for payment of equal
     annual license fees over their terms. This type of arrangement provides the
     Company with a significant  recurring  component to its revenues each year.
     Revenue from software license  agreements is recognized upon execution of a
     contract and shipment of the software  provided that no significant  vendor
     obligations remain outstanding and the related receivable is due within one
     year of the contract date and collection is deemed  probable by management.
     For  recurring  license  fees,  revenues  are  recognized  on the  contract
     anniversary date. The Company accrues  incidental  support costs associated
     with these  licenses when revenues are  recognized.  Revenues from services
     are recognized  when the services are delivered.  There can be no assurance
     that the Company will be able to enter into new license  agreements  at the
     current rate or to maintain the current pricing for its products.

     The Company has  experienced a seasonal  pattern in its  operating  results
     with the second and fourth  fiscal  quarters  typically  having the highest
     revenues  and net  income,  while  the  first  and  third  fiscal  quarters
     typically  have lower  revenue and net income.  The  Company  believes  the
     seasonality of its revenue and net income will continue for the foreseeable
     future. In order to account for the effect of seasonal  revenues,  comments
     with respect to prospective  expenses as a percentages of revenues  reflect
     annualized  estimates and are not  necessarily  representative  of expected
     interim results.
 
Revenues

     Total  revenues  for the three months ended  September  30, 1997  increased
     31.5% to  $9,300,000  from  $7,071,000  for the same  period  in 1996.  The
     Company   attributed  the  growth  in  revenues  to  new  license  activity
     associated with existing  products within the Clinical  Payment  Management
     System (CPMS) and Clinical Resource Management System (CRMS) product lines,
     as well as revenues  generated from two new products  released in the first
     quarter of fiscal  1998.  During the first  quarter  CRMS  Fundamentals,  a
     client server  software  application  that generates  per-member-per  month
     (PMPM) and  rates-per-1000  reports was released to the market,  as well as
     the CCMS Core  application,  which is the first in a suite of Clinical Care
     Management System products.

Cost of Revenues

     Cost of revenues for the three months ended  September  30, 1997  increased
     36.8% to  $2,243,000  or  24.1% of  revenues  from  $1,640,000  or 23.2% of
     revenues  during the same three month  period a year ago.  The  increase in
     expense was due  primarily  to  personnel  growth in the  customer  support
     function  necessary to support a product line which has increased in number
     to twelve,  covering  three distinct  product  families.  In addition,  the
     Company  recognized  incremental costs for  co-development  partner royalty
     payments  associated  with the release of CCMS Core.  Both of these factors
     are the result of an increase in the Company's product offerings as well as
     an increase in the Company's  number of customers from the same period last
     year. The Company expects cost of revenues to remain  relatively  constant,
     or increase  slightly,  as a  percentage  of revenues  for the  foreseeable
     future.

Marketing and Sales

     Marketing and sales expenses  increased 39.5% to $2,214,000 from $1,587,000
     for the three  months ended  September  30, 1997 versus the same period one
     year  earlier.  As a percentage of revenues,  marketing and sales  expenses
     increased to 23.8% from 22.4% for the three months ended September 30, 1997
     and 1996, respectively. The Company has continued to expand its sales force
     in response to increased demand for its products.  The increase in the size
     of the sales  force,  along with the  addition of new product  lines in the
     past  year,  were  strong  contributing  factors  to  the  increase  in the
     Company's overall revenues for the quarter. The Company expects to continue
     its  investment in marketing and sales in line with demand for its products
     and as a result the Company expects  marketing and sales expenses to remain
     constant or increase slightly as a percentage of sales.

Research and Development

     Research  and  development  expenses  increased to  $1,620,000  or 17.4% of
     revenues for the three months ended  September 30, 1997 from  $1,531,000 or
     21.7% of revenues  for the same period in the prior year.  During the three
     month period ending  September 30, 1997, the Company  capitalized  software
     development  expenditures  in an amount equal to 18% of total  research and
     development  costs which compares with a capitalization  rate of 8% for the
     three month period ended  September 30, 1996.  The increase in research and
     development  expenditures  resulted from efforts to successfully bring CCMS
     Core and CRMS  Fundamentals  to market in the first quarter of fiscal 1998.
     As recently released products mature in their development life cycles,  and
     work continues on the CCMS product line offerings, the Company expects that
     research and  development  expenses as a percentage of revenues will remain
     substantially the same, or decrease slightly, for the foreseeable future.
 
General and Administrative

     General and  administrative  expenses for the three months ended  September
     30, 1997  increased to  $1,879,000  or 20.2% of revenue from  $1,016,000 or
     14.4% for the same period in the prior year. The current period's  expenses
     include  $670,000 of incremental  costs incurred by the Company  related to
     its proposed merger with HBO & Company.  Excluding these incremental costs,
     general and  administrative  expenses decreased as a percentage of revenues
     to 13.0% for the current period.  The increased  expenditures  quarter over
     quarter,  excluding  merger related  costs,  are primarily the result of an
     increase  in  costs  associated  with  the  recruiting  and  hiring  of new
     employees  in the first  quarter of fiscal  1998.  It is  believed  that as
     revenues  continue  to  increase,   general  and  administrative   expenses
     (excluding   expenses   related  to  the   proposed   merger)  will  remain
     substantially the same, or decrease  slightly,  as a percentage of revenues
     for the foreseeable future.

Net Interest

     Interest  income  increased to $362,000  from $301,000 for the three months
     ended September 30, 1997 compared with the prior year. The increase was due
     to the  interest  earned on the cash  balances the Company  generated  from
     operations during the twelve months ended September 30, 1997.

Liquidity and Capital Resources

     The  Company's  working  capital as of  September  30, 1997 of  $29,890,000
     decreased compared with $31,881,000 in working capital as of June 30, 1997.
     The  change  was  mainly due to the  maturing  of  current  investments  in
     marketable  securities,  which were  reinvested in  securities  with longer
     maturity periods.

     The  Company  believes  that  available  funds,  cash  generated  from
     operations  and an available  unused line of credit of  $7,500,000  will be
     sufficient  to meet  the  Company's  operating  and  capital  requirements,
     assuming no change in the  operations  of the Company's  business,  for the
     foreseeable future.


Risk Factors Relating to Forward-Looking Statements

     Statements  in this report  concerning  the future  results of  operations,
     financial  condition  and  business of the  Company  are  "forward-looking"
     statements  as defined  in the  Securities  Act of 1933 and the  Securities
     Exchange Act of 1934. Investors are cautioned that information contained in
     these forward-looking  statements is inherently uncertain,  and that actual
     performance and results may differ materially due to numerous risk factors,
     including but not limited to the following:

  Announcement of the Proposed Combination with HBOC.

     Various risks related to the  announcement of the proposed Merger with HBOC
     could  have  a  material  adverse  effect  on  the  Company's   results  of
     operations,  financial condition or business. Among other things, there can
     be no assurance  customers of the Company will  continue  their  current or
     historical  licensing  patterns without regard to the proposed  Merger,  or
     that certain customers will not defer licensing decisions as they evaluate,
     among other  things,  the proposed  Merger,  or that  certain  existing and
     prospective  customers  will  not  decide  to  license  products  from  the
     Company's  competitors  instead of licensing  the Company's  products.  The
     Company's  continued  success  depends  to a  significant  degree  upon the
     continuing contribution of key employees in management, development, sales,
     technical support and administration. Existing employees are likely to have
     uncertainty as to their future roles within HBOC.  Persons being  recruited
     for  positions  in the Company may have  similar  uncertainty  and defer or
     reverse  decisions  to  become  employed  by  the  Company.   In  addition,
     competitors  of the Company may use this  uncertainty to attempt to recruit
     such employees or prospective  employees and make it more difficult for the
     Company  to  retain  and  attract  key  employees.  If  the  Merger  is not
     consummated,  the foregoing factors could have a material adverse effect on
     the Company's results of operations,  financial  condition or business.  In
     addition,  the Company expects to incur significant  expenses in connection
     with the proposed Merger,  whether or not it is consummated.  If the Merger
     is not consummated,  such expenses,  which may include the expenses of HBOC
     and the  "break-up"  fee  described  under  "Merger"  above,  could  have a
     material adverse effect on the Company's results of operations.

     If the proposed  Merger  occurs,  each share of the Company's  common stock
     outstanding  at the time of the Merger will be converted  into the right to
     receive 0.6 of a share (the "Exchange Ratio") of HBOC common stock. Because
     the  Exchange  Ratio is fixed,  it will not  increase  or  decrease  due to
     fluctuations  in the market  price of either HBOC or the  Company's  common
     stock.  However,  because the Exchange Ratio is fixed,  the market price of
     the Company's  common stock will likely move in the same general  direction
     as does HBOC's stock before the effective time of the Merger. If the market
     price of HBOC common stock decreases or increases before the effective time
     of the Merger,  the market value of the HBOC common stock to be received by
     Company  stockholders  at the effective  time of the proposed  Merger would
     correspondingly decrease or increase.

     After the announcement of the proposed  Merger,  the Company's stock price,
     as reported on the Nasdaq National Market, increased significantly.  If for
     any reason the proposed  merger is  terminated,  the  announcement  of such
     termination may trigger an equivalent or greater  decrease in the Company's
     stock price.


  Seasonality and Variable Operating Results.

     The Company has  experienced a seasonal  pattern in its operating  results,
     with the fourth and second  fiscal  quarters  typically  having the highest
     revenues and net income and the first and third fiscal  quarters  typically
     having lower revenues and net income.  The timing of revenues is influenced
     by a number of  factors,  including  the  timing of  individual  orders and
     shipments,  seasonal  customer  buying  patterns  and  changes  in  product
     development and sales and marketing expenditures.  The Company believes the
     seasonality  of its revenues and net income for the fourth  fiscal  quarter
     can be attributed  to due dates for payment  obligations  under  multi-year
     license agreements, renewals of existing agreements and the Company's sales
     compensation  program,  which is based  significantly  on fiscal year sales
     levels. The Company believes the seasonality of its revenues and net income
     in the second fiscal  quarter can be attributed to the seasonal  purchasing
     patterns of its customers. The Company most recently reported a net loss in
     the first and third  quarters of fiscal 1994 and there can be no  assurance
     that the Company will be profitable  during future  quarters.  In addition,
     although the Company has no present agreements or commitments to enter into
     any major contracts, the signing of a major contract could generate a large
     increase in revenues  and net income for any given  quarter or fiscal year,
     which increase may prove anomalous when compared to changes in revenues and
     net income in other periods. Furthermore, the Company typically experiences
     long sales cycles for new customers, which may extend over several quarters
     before a sale is  consummated.  As a  result,  the  Company  believes  that
     quarterly  results of operations will continue to be subject to significant
     fluctuations and that its results of operations for any particular  quarter
     or fiscal year may not be indicative  of results of  operations  for future
     periods.

  Dependence Upon New Product Development, Acceptance and Enhancement.

     The  market  for  the  Company's   products  is   characterized   by  rapid
     technological  progress and changing  customer needs.  The Company believes
     that as the markets for CodeReview and Pattern Review mature, the continued
     growth of the Company  will  require  the  successful  introduction  of new
     products.  Accordingly,  the  Company's  future  success will depend on its
     ability to  successfully  develop and  introduce  new  products,  including
     HealthPlan Reporter,  CCMS Core, and the other modules of the Clinical Care
     Management System ("CCMS"), and to enhance its existing products. There can
     be no  assurance  that  the  Company  will  be  successful  in  developing,
     introducing on a timely basis,  and marketing such products or enhancements
     or that they will be  accepted  by the  market.  Significant  research  and
     development  expenditures  will be required in the future.  There can be no
     assurance  that the  Company's  expected  new product  releases and product
     enhancements will adequately address customer  requirements for performance
     and  functionality  or that its software will not contain "bugs" that would
     delay product introduction or shipment.

  Dependence on Third Party for Component of Episode Profiler.

     A principal  component of Episode Profiler,  the "Episode Treatment Groups"
     product,  is  licensed  from a  third-party  vendor,  Symmetry  Health Data
     Systems,  Inc.  ("Symmetry"),  under the terms of a 63-month  license which
     commenced  November  17,  1994 and has a  24-month  renewal  term  which is
     contingent on the Company meeting minimum  royalty  requirements.  Symmetry
     has agreed, subject to certain conditions, that it will not license Episode
     Treatment  Groups to certain  other  companies  which  might be  considered
     competitors  of the Company.  While the Company  believes that the terms of
     such license are adequate to protect the  Company's  investment  in Episode
     Profiler,  any factor adversely  affecting the Company's  ability to retain
     the  benefits of such  license or to obtain the updated  Episode  Treatment
     Groups would have a material  adverse  effect on the  Company's  results of
     operations, financial condition and business.

  Risk of Inability to Grow Through Acquisitions.

     The  Company has grown,  and (if the  proposed  merger is not  consummated)
     intends to continue to grow,  in part  through  acquisitions  of  products,
     technologies and businesses.  The Company's ability to expand  successfully
     through  acquisitions  depends on many factors,  including  the  successful
     identification and acquisition of products, technologies and businesses and
     management's ability to effectively integrate and operate the new products,
     technologies   or  businesses.   There  is  significant   competition   for
     acquisition  opportunities  in the  industry,  which may  intensify  due to
     consolidation in the industry, increasing the costs of capitalizing on such
     opportunities.  The Company  competes for  acquisition  opportunities  with
     other companies that have  significantly  greater  financial and management
     resources.

  Management of Growth.

     The  Company  is  currently  experiencing  a  period  of rapid  growth  and
     expansion which could place a significant strain on the Company's personnel
     and  resources.  The  Company's  growth has  resulted in an increase in the
     level of responsibility for both existing and new management personnel. The
     Company has sought to manage its current and anticipated growth through the
     recruitment  of  additional  management  and  technical  personnel  and the
     implementation  of internal systems and controls.  However,  the failure to
     manage growth  effectively  could adversely affect the Company's results of
     operations, financial condition or business.

  Inability to Retain or Attract Customers Due to Competition and Consolidation.

     The market in which HPR's products are licensed is highly competitive. Most
     of  the  Company's   competitors  have  significantly   greater  financial,
     technical,  product  development and marketing  resources than the Company.
     The  Company's  potential  competitors  for  customers  include  healthcare
     information  companies and large data processing and information  companies
     that may have more diverse product offerings covering a broader spectrum of
     the  healthcare  industry.  Many  of  these  competitors  have  substantial
     installed customer bases in the healthcare industry and the ability to fund
     significant product development and acquisition  efforts. In addition,  the
     Company has noted a trend  towards  consolidation  of customers  within its
     market. While this consolidation  results in substantially larger potential
     customers,  the  Company  also is faced with a risk of  existing  customers
     being  acquired by entities that use a  competitor's  product.  The Company
     continues to believe that the principal  competitive  factors in its market
     are  clinical  credibility  and  integrity  and product  innovation.  These
     factors  address  both  customer  needs  for  cost  containment  tools  and
     increasing  industry  concerns  about  quality  control.   Other  important
     competitive  factors include  product  reputation and  reliability,  system
     features,  client service,  price,  and the  effectiveness of marketing and
     sales efforts.  There can be no assurance that future  competition will not
     have a material  adverse  effect on the  Company's  results of  operations,
     financial condition or business.

  Dependence on Proprietary Software and Clinical Knowledge-Bases.

     The Company's  success is dependent to a significant  extent on its ability
     to  maintain  the  proprietary  and  confidential   software  and  clinical
     knowledge-bases  incorporated  in CodeReview,  ProMatch,  Patterns  Review,
     Episode Profiler, Quality Profiler, Referral Profiler, HealthPlan Reporter,
     Patterns Profiler, CRMS Fundamentals,  CCMS Core and other products as they
     are released.  The Company relies on a combination of patent, trade secret,
     copyright  and  contractual   protections  to  establish  and  protect  its
     proprietary  rights.  There can,  however,  be no assurance  that the legal
     protections  and the  precautions  taken by the Company will be adequate to
     prevent  misappropriation of the Company's technology.  Any infringement or
     misappropriation  of  the  Company's   proprietary  software  and  clinical
     knowledge-bases would disadvantage the Company in its efforts to retain and
     attract new customers in a highly  competitive  market, and could cause the
     Company  to lose  revenues  or incur  substantial  litigation  expense.  In
     addition,  these  protections  and  precautions do not prevent  independent
     third-party development of competitive technology or products. Further, the
     Company  depends on  third-party  suppliers  to  license  to HPR  necessary
     technology  that is  incorporated  into certain of the Company's  products,
     including Episode Profiler.  The inability of the Company for any reason to
     continue  using  or  otherwise   acquire  such  technology   could  prevent
     distribution of such products,  which would have a material  adverse effect
     on the Company's results of operations, financial condition or business.


  Dependence on Certain Key Personnel.

     The Company depends to a significant  extent on key  management,  technical
     and  marketing  personnel.  The  Company's  growth and future  success will
     depend in large part on its ability to attract,  motivate and retain highly
     qualified personnel.  The Company does not have employment  agreements with
     any of its officers or key employees providing for their employment for any
     specific term. The Company does not have "key person" life insurance on any
     of its personnel other than Marcia J. Radosevich, the Company's Chairman of
     the  Board,  Chief  Executive  Officer,  and  President.  The  loss  of key
     personnel or the inability to hire or retain qualified personnel could have
     a material adverse effect on the Company's results of operations, financial
     condition or business.

  Uncertainty in the Healthcare Industry.

     The  healthcare  industry is subject to changing  political,  economic  and
     regulatory  influences  that  may  affect  the  procurement  practices  and
     operation of healthcare organizations.  The Company's products are designed
     to  function  within  the  structure  of the  current  national  healthcare
     financing  and  reimbursement  system  currently  being  used in the United
     States.  The Company  believes that the commercial  value and appeal of its
     products  may be  adversely  affected if that system were to be  materially
     changed.  During  the past  several  years,  the United  States  healthcare
     industry has been  subject to an increase in  governmental  regulation  of,
     among other  things,  reimbursement  rates.  Proposals to reform the United
     States healthcare  system are from time to time under  consideration by the
     U.S. Congress.  These programs may contain proposals to increase government
     involvement  in healthcare and otherwise  change the operating  environment
     for the Company's  customers.  Healthcare  organizations may react to these
     proposals and the uncertainty  surrounding  such proposals by curtailing or
     deferring investments in cost containment tools and related technology such
     as the Company's products.  The Company cannot predict what impact, if any,
     such factors might have on its results of operations,  financial  condition
     or business.  In addition,  many healthcare  providers are consolidating to
     create integrated  healthcare delivery systems with greater regional market
     power. As a result,  these emerging  systems could have greater  bargaining
     power,  which may lead to price  erosion  of the  Company's  products.  The
     failure of the  Company to  maintain  adequate  price  levels  would have a
     material adverse effect on the Company's  results of operations,  financial
     condition or business.  Other  legislative or  market-driven  reforms could
     have  unpredictable   effects  on  the  Company's  results  of  operations,
     financial condition or business.

  Risk of Product Liability Claims.

     The  Company's  products  provide  information  that  relates to payment of
     healthcare  claims  and to the  appropriateness  of  medical  treatment  in
     particular cases and in general.  Any failure by the Company's  products to
     process such claims or to review such treatments accurately could result in
     claims against the Company by its customers. Further, successful use of the
     Company's products could influence the treatments rendered by providers and
     give rise to claims  against  the Company by  patients  or  providers.  The
     Company  maintains  insurance to protect against certain claims  associated
     with  the use of its  products,  but  there  can be no  assurance  that its
     insurance  coverage would  adequately  cover any claim asserted against the
     Company.  A successful  claim brought  against the Company in excess of, or
     excluded from, its insurance  coverage could have a material adverse effect
     on the Company's  results of operations,  financial  condition or business.
     Even unsuccessful claims could result in the Company's expenditure of funds
     in litigation and management time and resources.  While to date the Company
     has not experienced any product liability claims against it, the Company is
     aware of claims made  against  payors by patients  for  coverage  decisions
     which adversely  influenced  medical  treatment.  There can be no assurance
     that the Company will not be subject to product liability claims, that such
     claims will not result in  liability in excess of its  insurance  coverage,
     that the  Company's  insurance  will cover such claims or that  appropriate
     insurance  will  continue to be  available  to the Company in the future at
     commercially  reasonable  rates.  In addition,  if liability of the Company
     were to be  established,  substantial  revisions to its  products  could be
     required  that may  cause the  Company  to incur  additional  unanticipated
     research and development expenses.

  Possible Volatility of Stock Price.

     Prior to August 10, 1995,  there was no public market for the Common Stock,
     and  there  can be no  assurance  that an  active  trading  market  will be
     sustained  or that the market  price of the Common  Stock will not  decline
     below its current  price.  The stock market  historically  has  experienced
     volatility  which has  affected  the  market  price of  securities  of many
     companies  and  which  has  sometimes   been  unrelated  to  the  operating
     performance of such companies.  The trading price of the Common Stock could
     also be subject to  significant  fluctuations  in response to variations in
     quarterly   results  of  operations,   announcements  of  new  products  or
     acquisitions  by the Company or its  competitors,  governmental  regulatory
     action,  other developments or disputes with respect to proprietary rights,
     general  trends in the industry and overall  market  conditions,  and other
     factors. The market price of the Common Stock may be significantly affected
     by  factors  such  as  announcements  of  new  products  by  the  Company's
     competitors,  as well as variations in the market conditions in the medical
     cost  containment or software  industries in general.  The market price may
     also be affected by movements in prices of equity securities in general.



PART II.          OTHER INFORMATION

Item 2 Changes in Securities

       (a)  Not applicable.

       (b)  Not applicable.

       (c)  Not applicable.

       (d)  Use of Proceeds

     Use of proceeds  information  is disclosed  with  respect to the  Company's
     registration  statement on Form S-1, Securities and Exchange Commission No.
     33-94132,  which became effective on August 10, 1995. There were no changes
     to information to Form SR since its last filing on November 10, 1996.

Item 4  Submission of matters to a vote of security holders

       (a)  The annual meeting of shareholders was held on October 31, 1997.

       (b)  The meeting involved the election of the following directors:  
            Marcia J. Radosevich,  Ph.D.,  Harris A. Berman,  M.D., Howard E. 
            Cox, Jr., Richard H. Egdahl, M.D., and William G. Nelson, Ph.D.

       (c)  The matters voted upon and the results of the voting were as 
            follows:
            (for a more detailed description of items 2 please reference the 
            Company's Proxy Statement filed with the Securities and Exchange 
            Commission on September 26, 1997)

            (1)  To fix the number of persons constituting the full Board of 
                 Directors at five and to elect the following nominees as 
                 Directors.

                                                          Number of Shares

                                                                       Withheld
                                                            For        Authority
                          Marcia J. Radosevich        12,572,448         449,840
                          Harris A. Berman            12,571,448         450,840
                          Howard E. Cox, Jr.          12,571,448         450,840
                          Richard H. Egdahl           12,569,948         452,340
                          William G. Nelson           12,577,448         444,840

            (2)  Approval of amendment to HPR 1995 Stock Plan.

                                                                Number of Shares
                          For                                          6,943,281
                          Against                                      3,868,781
                          Abstain                                         22,212
                          Broker Non-Vote                              2,188,014

            (3)  Ratification of the selection of Coopers & Lybrand L.L.P. as 
                 accountants for fiscal year ending June 30, 1998.

                                                                Number of Shares
                          For                                         13,001,207
                          Against                                         17,000
                          Abstain                                          4,081

Item 5  Other Information

     On  September  29,  1997 the  Company  announced  that it had signed a
     definitive agreement to be acquired by HBO & Company ("HBOC").  Pursuant to
     the Agreement of Merger dated September 27, 1997 (the "Merger  Agreement"),
     the  Company  will merge into a  wholly-owned  subsidiary  of HBOC and each
     outstanding share of common stock of the Company will be converted into the
     right to receive  six-tenths  (0.6) of a share of common stock of HBOC (all
     such  actions  collectively,  the  "Merger").  All  outstanding  options to
     purchase the Company's common stock will be assumed by HBOC and will become
     options  to  purchase  shares of HBOC  common  stock.  The  transaction  is
     intended to be accounted  for as a pooling of interests and to qualify as a
     tax-free  reorganization.  The  Merger has been  approved  by the Boards of
     Directors  of the  Company  and  HBOC,  but is  still  subject  to  various
     conditions,  including regulatory review and approval, stockholder approval
     and other  conditions  to closing.  A proxy  statement of the Company and a
     prospectus of HBOC will be delivered to the  stockholders of the Company in
     connection  with the special meeting of stockholders of the Company to vote
     on the Merger.

     Pursuant to Section 10.1 of the Merger Agreement, the Merger Agreement
     may be terminated by either party under certain circumstances.  The Company
     has  agreed  that if the Merger  Agreement  is  terminated  by the Board of
     Directors of the Company in the exercise of its good faith determination as
     to its fiduciary duties to the Company's  stockholders  imposed by law that
     such  termination  is required,  the Company will pay HBOC (i) a fee in the
     amount of $10,000,000  and (ii) the amount of HBOC's  reasonable  costs and
     expenses in connection  with the  negotiation and performance of the Merger
     Agreement. Payment of the foregoing amounts shall not be in lieu of damages
     incurred if the Company breaches certain covenants in the Merger Agreement.


Item 6  Exhibits and Reports on Form 8-K


     (a)    Exhibits

            11.1    Statement re Computation of Earnings Per Share



     (b)    Reports on Form 8-K

            There were no reports on Form 8-K filed during the three months
            ended September 30, 1997.

                                           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.
                                                     HPR INC.
                                                     (Registrant)

Dated:        November 12, 1997           /s/ Marcia J. Radosevich              
                                          Marcia J. Radosevich
                                          Chairman of the Board, Chief Executive
                                          Officer, and President
                                          (Principal Executive Officer)


Dated:         November 12, 1997          /s/ Brian D. Cahill                   
                                          Brian D. Cahill
                                          Chief Operating Officer and Chief 
                                          Financial Officer(Principal Financial
                                          and Accounting Officer)