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 December 31, 1996

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 January 24, 1997, there were 15,217,811 shares of the Registrant's  Common
Stock, $0.01 par value per share, outstanding.





                                       1
<PAGE>
                                                      
HPR INC.
Form 10-Q for the Three Months Ended December 31, 1996


                                                 Table of Contents

                                                                        

                                    PART I.  FINANCIAL INFORMATION

Item 1.   Financial Statements (unaudited):                             Page No.

Consolidated Balance Sheets as of
December 31, 1996 and June 30, 1996 . . . . . . . . . . . . . . . . . . .      3

Consolidated Statements of Operations for the Three and Six
Months Ended December 31, 1996 and 1995 .. . . . . . . . . . . . . . . . .     4

Consolidated Statements of Cash Flows for the Six
Months Ended December 31, 1996 and 1995. . . . . . . . . . . . . . . . . .     5

Notes to Interim Consolidated Financial Statements. . . . . . . . .. . . .     6

Item 2.

Management's Discussion and Analysis of
Financial Condition and Results of Operation     . . . . . . . . .. . . .      7





                                    PART II.  OTHER INFORMATION

Item 4.      Submission of Matters to a Vote of Security Holders. . . . .     13

Item 6.      Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . .    14


Signatures   . . . . . . . . . . . . . . . . . . . . . . . . . . . .  . .     15





                                       2
<PAGE>




PART I.  FINANCIAL INFORMATION
Item 1.  Financial Statements


<TABLE>
                                                      HPR Inc.

                                       CONSOLIDATED BALANCE SHEETS
                                               (unaudited)
<CAPTION>
      

                                                                         December 31,       June 30,
                                                                             1996             1996
      <S>                                                              <C>               <C>
                                                                       --------------    ---------------
      ASSETS:
      Current Assets:
        Cash and cash equivalents..........................             $3,960,754        $8,479,122
        Investments in marketable securities...............             16,890,556         9,016,146
        Accounts receivable, net of allowances for doubtful
        accounts of $628,000, and $603,000 for December 31, 1996
        and June 30, 1996, respectively....................              8,597,538         4,491,065
        Contract receivables...............................              3,761,417         3,142,680
        Prepaid and deferred income tax expense............              1,232,978           415,149
        Prepaid expenses and other current assets..........                853,493           727,044
                                                                       ------------      --------------
               Total current assets........................             35,296,736        26,271,206
      Investments in marketable securities.................              1,810,123         5,394,340
      Property and equipment, net..........................              1,953,214         1,964,164
      Software development costs, net......................                968,704           873,427
      Other assets.........................................                104,309           100,332
                                                                       ------------      --------------
               Total assets................................            $40,133,086       $34,603,469
      LIABILITIES AND STOCKHOLDERS' EQUITY:
      Current Liabilities:
        Accounts payable...................................               $729,068          $607,259
        Accrued expenses...................................              1,682,376         1,038,045
        Accrued support costs..............................              1,670,850         1,425,191
        Accrued employee compensation and benefits.........                979,072         1,323,973
        Deferred revenue...................................                834,431           698,029
        Income taxes payable...............................                     --           438,758
        Sales taxes payable................................                415,110           275,022
                                                                       ------------      --------------
               Total current liabilities...................              6,310,907         5,806,277
      Deferred income taxes................................                882,173           882,173
                                                                       ------------      --------------
               Total liabilities...........................              7,193,080         6,688,450
                                                                       ------------      --------------
      Stockholders' Equity:
        Convertible   preferred  stock,   par  value  $0.10,
         3,000,000  shares authorized; zero shares issued and 
         outstanding at December 31, 1996 and June 30, 1996                                 --                --
        Common stock, par value $0.01, 35,000,000 shares
          authorized; 18,066,300 and 17,918,625 shares issued
          and 15,152,550 and 15,012,375 shares outstanding at
          December 31, 1996 and June 30, 1996, respectively                180,663           179,185
        Additional paid-in capital.........................             17,817,621        15,972,680
        Less treasury stock, at cost: 2,913,750 and 2,906,250
         shares at December 31, 1996 and June 30, 1996,
         respectively......................................            (2,848,775)       (2,843,900)
        Retained earnings..................................             17,790,497        14,607,054
                                                                   ----------------      --------------
               Total stockholders' equity..................             32,940,006        27,915,019
                                                                   ----------------      --------------
               Total liabilities and stockholders' equity..            $40,133,086       $34,603,469

The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>

<TABLE>

                                       3
<PAGE>

                                                 HPR Inc.

                                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                               (unaudited)
<CAPTION>

                                      Three Months Ended December 31,  Six Months Ended December 31,
                                         1996              1995            1996            1995
<S>                                   <C>              <C>            <C>              <C>  

Revenues.........................     $10,203,658      $7,624,796     $17,274,652      $12,944,311
Expenses:
  Cost of revenues...............       2,016,033       1,808,615       3,656,063        3,194,371
  Marketing and sales............       1,930,534       1,377,867       3,517,122        2,697,625
  Research and development.......       1,640,483       1,005,742       3,171,452        1,903,717
  General and administrative.....       1,046,860         969,177       2,062,672        1,759,783
Total expenses...................       6,633,910       5,161,401      12,407,309        9,555,496
Operating income.................       3,569,748       2,463,395       4,867,343        3,388,815
Interest income, net.............         273,038         178,340         574,456          323,560
Income before provision for
income taxes.....................       3,842,786       2,641,735       5,441,799        3,712,375
Provision for income taxes.......       1,594,766       1,122,692       2,258,357        1,574,875
Net income.......................      $2,248,020      $1,519,043      $3,183,442        2,137,500
Net income per share (1).........           $0.14           $0.10           $0.20            $0.14
Weighted average common shares
and equivalents (1)..............      16,097,000      15,818,000      16,098,000       15,528,000

<FN>

(1)  All share and earnings per share  amounts have been restated to reflect the
     stock split  effected in the form of a 100% stock  dividend  paid on May 6,
     1996 to all shareholders of record as of April 26, 1996.

</FN>
</TABLE>

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


                                       4
<PAGE>




--------------------------------------------------------------------------------
                                                 HPR Inc.
--------------------------------------------------------------------------------
<TABLE>

                                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                                               (unaudited)
<CAPTION>

                                                       Six Months Ended December 31,
                                                            1996                1995
<S>                                                     <C>                 <C>

Cash flows from (for) operating activities:
  Net income........................                               $                  $
                                                           3,183,442          2,137,500
  Adjustments to reconcile net income to
     cash provided by (used in) operating
     activities:
     Depreciation and amortization..                         705,656            603,868
     Provision for doubtful accounts                         200,000            165,000
     Loss on disposal of equipment..                           2,565                 --
     Amortization of discount on
       investments..................                        (54,394)           (92,046)
  Change in operating assets and
     liabilities:
     Accounts and contract receivables                   (4,925,210)        (2,350,502)
     Prepaid expenses and other current assets               790,032           (38,263)
     Other assets...................                         (3,977)                 --
     Accounts payable and other accrued
       liabilities..................                         666,898          (113,714)
     Sales taxes payable............                         140,088             83,881
     Deferred revenue...............                         136,402             18,576
     Income taxes payable...........                       (438,758)            305,902
                                                        -------------       ------------
       Net cash provided by (used in)
          operating activities......                         402,744            720,202
                                                        -------------       ------------
Cash flows from (for) investing activities:
  Capitalized software development
     costs..........................                       (362,992)          (239,967)
   Proceeds from disposal of fixed assets                     15,903                 --
  Capital expenditures..............                       (445,829)        (1,261,298)
  Sale of marketable securities                            6,200,000                 --
  Purchase of marketable securities.                    (10,435,799)        (7,313,966)
                                                        -------------       ------------
       Net cash provided by (used in)
         investing activities.......                     (5,028,717)        (8,815,231)
                                                        -------------       ------------
Cash flows from (for) financing
  activities:
  Proceeds from initial public
     offering.......................                              --          8,013,348
  Expenses related to initial public
     offering.......................                              --          (858,896)
  Proceeds from exercise of stock
     options........................                         112,480             18,978
  Payments to acquire treasury stock                         (4,875)                 --
                                                        -------------       ------------
       Net cash provided by financing
          activities................                         107,605          7,173,430
                                                        -------------       ------------
Net increase (decrease) in cash and cash
  equivalents.......................                     (4,518,368)          (921,599)
                                                        -------------       ------------
Cash and cash equivalents, beginning of
  period............................                       8,479,122          8,486,062
                                                        -------------       ------------
Cash and cash equivalents provided by the
  acquisition of The Integrity Group, Inc.                        --             28,193
Adjusted cash and cash equivalents,
  beginning of period...............                       8,479,122          8,514,255
                                                        -------------       ------------
Cash and cash equivalents, end of
  period............................                      $3,960,754         $7,592,656




The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
</TABLE>


                                       5
<PAGE>



--------------------------------------------------------------------------------
                                                 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  December 31,
         1996 and 1995, 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,  1996,  which  are
         contained in the  Company's  Annual  Report on Form 10-K filed with the
         Securities and Exchange Commission on September 23, 1996.


 (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.  Debt  securities  for which the Company has the intent or
         ability to hold to maturity are  classified  as held to  maturity.  The
         Company holds no investments in equity  securities at December 31, 1996
         and June 30, 1996. Securities held to maturity are carried at amortized
         cost which  approximates  fair market  value.  At December 31, 1996 and
         June 30, 1996 the Company had no investments  that qualified as trading
         or available for sale.




                                       6
<PAGE>





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



See Safe Harbor  Statement  for  Forward-Looking  Statements  at the end of this
item.

Overview

         HPR  Inc.  licenses  its  products  primarily  pursuant  to  multi-year
agreements  that, in general,  provide payment of equal annual license fees over
their terms.  Revenues from software  license  agreements  are  recognized  upon
execution  of  a  contract  and  shipment  of  the  software  provided  that  no
significant  vendor obligations remain outstanding and collection of the related
receivable is deemed probable by management.  For annual recurring license fees,
revenues are recognized on the contract anniversary date.

         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  increased 33.8% to $10,204,000  from $7,625,000 for the
three months ended  December 31, 1996 versus the same period in 1995,  and 33.5%
to  $17,275,000  from  $12,944,000  for the six months  ended  December 31, 1996
versus  1995.  The  Company  attributed  the  significant  growth in revenues to
continued  license  activity  associated with the Company's  existing  products,
CodeReview,  Patterns  Review,  and  Episode  Profiler,  as well as the  Quality
Profiler and Referral  Profiler  products which were introduced to the market in
fiscal 1996 and early fiscal 1997, respectively.

Cost of Revenues

         Cost of revenues for the three months ended December 31, 1996 increased
to  $2,016,000  or 19.8% of revenues  from  $1,809,000  or 23.7% during the same
three month period a year ago. For the six months ended December 31, 1996,  cost
of revenues  increased to  $3,656,000  or 21.2% of revenues  from  $3,194,000 or
24.7% for the same  period one year  earlier.  The  increase  in expense was due
mainly to certain royalty  payments made to third parties for software  products
licensed by the Company which are incorporated into the Company's products, most
notably Episode Profiler and Referral Profiler.  The Company expects to continue
to invest in support resources and as a result the cost of revenues are expected
to remain relatively constant or increase slightly as a percentage of revenues.

Marketing and Sales

         Marketing  and  sales  expenses  increased  40.1%  to  $1,931,000  from
$1,378,000  for the three months ended  December 31, 1996 versus the same period
one year  earlier.  As a percentage of revenues,  marketing  and sales  expenses
increased to 18.9% from 18.1% for the three  months ended  December 31, 1996 and
1995,  respectively.  For the six months ended  December 31, 1996  marketing and
sales expenditures increased 30.4% to $3,517,000 from $2,698,000 at December 31,
1995. As a percentage of revenues,  marketing  and sales  expenses  decreased to
20.4%  from  20.8%  for the  six  months  ended  December  31,  1996  and  1995,
respectively.

         The Company has  continued its expansion of the 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 fiscal 1996 and early
fiscal 1997 were strong  contributing  factors to the increase in the  Company's
overall  revenues.  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.

                                       7
<PAGE>

Research and Development

         Research and development  expenses  increased to $1,640,000 or 16.1% of
revenues for the three months ended  December 31, 1996 from  $1,006,000 or 13.2%
of  revenues  for the same period in the prior  year.  For the six month  period
ended  December  31,  1996  research  and  development   expenses  increased  to
$3,171,000 or 18.4% of revenues  versus  $1,904,000 or 14.7% for the same period
last year.  During the three and six month period ending  December 31, 1996, the
Company capitalized software development  expenditures in an amount equal to 13%
and 10%,  respectively,  of total research and development  costs which compares
with a  capitalization  rate of 8% and 11% for the three  and six  month  period
ended December 31, 1995, respectively.  The increase in research and development
expenditures  is a result  of work  being  performed  on HEDIS  Reporter,  a new
product  scheduled for release during the second half of fiscal 1997, and on the
Company's next suite of products,  the Clinical Care  Management  System (CCMS),
currently under  development.  The Company expects that as work continues on the
CCMS  product  line  and as new  product  development  efforts  are  undertaken,
research  and  development  expenses as a  percentage  of  revenues  will remain
substantially the same or increase slightly for the foreseeable future.

General and Administrative

         General and administrative expenses for the three months ended December
31, 1996  increased to $1,047,000 or 10.3% of revenue from $969,000 or 12.7% for
the same period in the prior year. General and  administrative  expenses for the
six months ended December 31, 1996 were $2,063,000 or 11.9% of revenue  compared
to $1,760,000 or 13.6% for the six months ended December 31, 1995. The increased
expenditures  are a factor  of the  increased  growth of the  Company.  Although
general and  administrative  expenditures will increase as the Company grows, it
is believed that if revenues  continue to increase,  general and  administrative
expenses will decrease slightly as a percentage of revenues.

Net Interest

         Net interest  income  increased to $273,000 from $178,000 for the three
months ended  December 31, 1996 compared with the prior year. For the six months
ended December 31, 1996 net interest income  increased to $574,000 from $323,000
during the same period last year. The increase was primarily due to the interest
earned on the cash balances the Company  generated from  operations and from the
proceeds of the Company's  initial public  offering of Common Stock completed in
August 1995 and the second public offering completed in February 1996.

Liquidity and Capital Resources

         The Company had working  capital as of December 31, 1996 of $28,986,000
compared with $20,465,000 in working capital as of June 30, 1996. The change was
mainly due to cash provided by operations  and  investment  income earned during
the three month period.

              The Company  believes  that the net proceeds from the common stock
sold by the Company in its initial and second  public  offerings,  together with
available funds,  cash generated from operations and an available unused line of
credit of $5,000,000  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.



                                       8
<PAGE>





Safe Harbor Statement for 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. When used in this report, the words "believes,"  "anticipates," "expects,"
"plans," "intends,"  "estimates,"  "continue,"  "could," "may" or "will" (or the
negative of such  words),  and  similar  expressions,  are  intended to identify
forward-looking  statements.  Investors are cautioned that information contained
in the  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:

    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  HEDIS Reporter and
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  option 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.

                                       9
<PAGE>

    Risk of Inability to Grow Through Acquisitions.

    The Company has grown,  and  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.

    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.  Many of these competitors have
substantial  installed customer bases in the healthcare industry and the ability
to fund significant  product  development and acquisition  efforts.  The Company
believes  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, Patterns Review, Episode Profiler, Quality Profiler,
Referral Profiler,  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,  having a
material  adverse  effect on the  Company's  results  of  operations,  financial
condition or business.


                                       10
<PAGE>

    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.  Certain  proposals to
reform the United States healthcare system are currently under  consideration by
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.

                                       11
<PAGE>

    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.



                                       12
<PAGE>




--------------------------------------------------------------------------------
PART II.          OTHER INFORMATION
--------------------------------------------------------------------------------

Item 4    Submission of matters to a vote of security holders

          (a)  The annual meeting of shareholders was held on November 1, 1996.

          (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 2-4 please 
              reference the HPR Inc. Proxy Statement filed with the Securities 
              and Exchange Commission on September 23, 1996)

              (1) To fix the number of persons constituting the full
                  Board  of  Directors  at  five  and to  elect  the
                  following nominees as Directors.
<TABLE>
                                                                          
                                                       Number of Shares
                            
<CAPTION>
                                                                                
                                                               Withheld     
                                                    For        Authority        Broker Non-Vote
                  <S>                            <C>             <C>                <C>
                  
                  Marcia J. Radosevich           11,204,079      80,664             11,000
                  Harris A. Berman               11,204,079      80,664             11,000
                  Howard E. Cox, Jr.             11,204,079      80,664             11,000
                  Richard H. Egdahl              11,204,079      80,664             11,000
                  William G. Nelson              11,239,889      44,854             11,000
</TABLE>

              (2)  To approve amendments to the HPR 1995 Stock Plan.

                                  Number of Shares
                          For               8,501,173
                          Against           2,609,942
                          Abstain              17,341
                          Broker Non-Vote     167,287

              (3)  To approve amendments to the HPR 1991 Stock Plan.
                                  Number of Shares
                          For              10,869,365
                          Against             186,141
                          Abstain              72,951
                          Broker Non-Vote     167,286

              (4)  To approve amendments to the HPR 1995 Eligible Directors
                   Stock Plan. 
                                  Number of Shares
                          For              8,815,886
                          Against          2,294,534
                          Abstain             18,037
                          Broker Non-Vote    167,286

              (5)  To ratify the selection of Coopers & Lybrand L.L.P. as 
                   auditors of the Company for the fiscal year ending 
                   June 30, 1997.

                                  Number of Shares
                          For             11,276,639
                          Against              5,340
                          Abstain                904
                          Broker Non-Vote     12,860


          (d)  Not applicable.


                                       13
<PAGE>


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 December 31, 1996.





                                       14
<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.

                             HPR INC.
                             (Registrant)

Dated:        January 30, 1997          /s/ Marcia J. Radosevich
                                        Marcia J. Radosevich
                                        Chairman of the Board, Chief Executive
                                        Officer, and President
                                        (Principal Executive Officer)


Dated:         January 30, 1997         /s/ Brian D. Cahill
                                        Brian D. Cahill
                                        Vice President, Corporate Finance and 
                                        Planning, and Chief Financial Officer
                                        (Principal Financial and Accounting
                                         Officer)



                                       15
<PAGE>