SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q



[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
    Exchange Act of 1934. For the quarterly period ended March 31, 1998.

[ ] 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: 0-19815
                                                 -------

                             CAREMATRIX CORPORATION
                             ----------------------
             (Exact name of Registrant as specified in its charter)


          Delaware                                      04-3069586
     -------------------                                ----------
(State of other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

                       197 First Avenue, Needham, MA 02194
                       -----------------------------------
              (Address of principal executive offices) (Zip Code)

                                 (781) 433-1000
                                 --------------
              (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
    ---

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

          Class                                      Outstanding at May 11, 1998
          -----                                      ---------------------------
Common Stock, $.05 par value                              17,592,839 shares

<PAGE>

                             CAREMATRIX CORPORATION

                                Table of Contents


                         PART I - FINANCIAL INFORMATION


FINANCIAL STATEMENTS                                                        Page
                                                                            ----
         Consolidated Balance Sheets as of March 31, 1998
              and December 31, 1997                                          3

         Consolidated Statements of Earnings for the quarters ended
              March 31, 1998 and March 31, 1997                              4

         Consolidated Statements of Cash Flows for the quarters ended
              March 31, 1998 and March 31, 1997                              5

         Notes to Consolidated Financial Statements                          6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS                                          8



                           PART II - OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

ITEM 2:  CHANGES IN SECURITIES

ITEM 6:  EXHIBITS AND REPORTS ON FORM 8-K

                                       2

<PAGE>

CAREMATRIX CORPORATION
CONSOLIDATED BALANCE SHEETS
as of March 31, 1998 and December 31, 1997

<TABLE>
<CAPTION>
                                                           March 31, 1998   December 31, 1997
                                                           --------------   -----------------
<S>                                                         <C>               <C>
ASSETS                                                      (unaudited)
Current assets:
   Cash and cash equivalents                                $133,628,807      $152,619,435
   Restricted cash                                            16,926,482         3,102,468
   Receivables:
      Accounts receivable, net                                15,364,568        12,461,704
      Accounts receivable-related party                       13,105,931         9,096,479
      Other receivables                                               --           730,584
   Prepaid expenses and other current assets                   3,409,756         3,488,592
                                                            ------------      ------------
          Total current assets                               182,435,544       181,499,262
Lease acquisition costs, net                                   7,767,424         4,240,733
Property and equipment, net                                    5,054,005         4,650,823
Due from shareholder                                                  --         2,622,383
Other long-term assets, net                                   21,634,394        17,262,630
Goodwill, net                                                 21,543,464        21,772,649
                                                            ------------      ------------
          Total assets                                      $238,434,831      $232,048,480
                                                            ============      ============

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of long-term debt                        $         --      $  2,000,000
   Accounts payable                                            3,324,906         3,819,719
   Accrued compensation                                        1,445,597         1,103,308
   Accrued liabilities                                         7,992,976         7,925,147
   Other current liabilities                                   1,637,306           827,594
                                                            ------------      ------------
          Total current liabilities                           14,400,785        15,675,768
Convertible subordinated notes                               115,000,000       115,000,000
Other long-term liabilities                                    1,844,372         2,211,412

Commitments and contingencies

Shareholders' equity                                         107,189,674        99,161,300
                                                            ------------      ------------
          Total liabilities and shareholders' equity        $238,434,831      $232,048,480
                                                            ============      ============
</TABLE>

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

                                       3

<PAGE>

CAREMATRIX CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS (unaudited) 
for the quarters ended March 31, 1998 and March 31, 1997

<TABLE>
<CAPTION>
                                                                           Quarter Ended
                                                             -------------------------------------------
                                                               March 31, 1998          March 31, 1997
                                                             ------------------     --------------------
<S>                                                             <C>                     <C>
Revenues:
   Resident operations                                          $21,161,980             $ 9,455,101
   Resident operations - related party                            2,586,386                 406,668
   Development fee income                                           974,202               1,394,678
   Development fee income - related party                         4,923,135               1,835,071
                                                                -----------             -----------
          Total revenue                                          29,645,703              13,091,518
                                                                -----------             -----------

Expenses:
   Facility operating expenses                                   15,466,910               6,611,389
   Facility lease expense                                           582,574                 564,920
   Facility lease expense - related party                         3,117,293                 882,370
   General and administrative                                     4,464,136               3,648,934
   Depreciation and amortization                                    735,458                 509,822
                                                                -----------             -----------
          Total expenses                                         24,366,371              12,217,435
                                                                -----------             -----------

Earnings from operations                                          5,279,332                 874,083

Interest income (expense):
   Interest income                                                2,328,942                 773,658
   Interest expense                                              (1,838,128)               (275,442)
                                                                -----------             -----------
          Total interest income                                     490,814                 498,216
                                                                -----------             -----------

Earnings before income taxes and preferred dividends              5,770,146               1,372,299
Income taxes                                                      2,400,381                 551,474
                                                                -----------             -----------
Earnings before preferred dividends                               3,369,765                 820,825
Preferred dividends                                                   4,575                   6,225
                                                                -----------             -----------
Net earnings                                                    $ 3,365,190             $   814,600
                                                                ===========             ===========

Basic shares outstanding                                         17,377,463              17,109,978
                                                                ===========             ===========
Basic earnings per share                                        $      0.19             $      0.05
                                                                ===========             ===========

Diluted shares outstanding                                       18,013,269              17,299,859
                                                                ===========             ===========
Diluted earnings per share                                      $      0.19             $      0.05
                                                                ===========             ===========
</TABLE>



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

                                       4

<PAGE>

CAREMATRIX CORPORATION 
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
for the quarters ended March 31, 1998 and March 31, 1997

<TABLE>
<CAPTION>
                                                                       Quarter Ended
                                                       ----------------------------------------------
                                                          March 31, 1998           March 31, 1997
                                                       ---------------------    ---------------------
<S>                                                      <C>                       <C>
Cash flows from operating activities:
   Net earnings                                          $  3,365,190              $   814,600
   Noncash items included in net earnings:
      Depreciation of fixed assets                            298,773                  157,053
      Amortization of intangible assets                       330,018                  257,769
      Amortization of lease acquisition costs                 106,667                   95,000
      Accretion of bargain purchase option                         --                   84,101
      Changes in current assets                            (3,961,094)              (3,676,820)
      Changes in current liabilities                          682,165                 (733,171)
      Other noncash items                                      28,350                   21,688
                                                         ------------              -----------
          Net cash provided (used) by 
            operating activities                              850,069               (2,979,780)
                                                         ------------              -----------

Cash flows from investing activities:
   Additions to property and equipment                       (701,954)                (221,597)
   Net change in assets held for sale                              --                 (325,272)
   Change in other long-term assets                        (4,119,013)                 (57,217)
   Change in restricted cash                              (13,824,014)                (146,785)
   Increase in lease acquisition costs                     (3,633,358)                (373,918)
                                                         ------------              -----------
          Net cash used by investing activities           (22,278,339)              (1,124,789)
                                                         ------------              -----------

Cash flows from financing activities:
   Net increase in amounts due shareholder                         --                  736,501
   Exercise of stock options and warrants                   2,663,184                       --
   Repayment of debt                                         (267,590)                (224,898)
   Other, net                                                  42,048                   (1,899)
                                                         ------------              -----------
          Net cash provided by financing activities         2,437,642                  509,704
                                                         ------------              -----------

Decrease in cash and cash equivalents                     (18,990,628)              (3,594,865)
Cash and cash equivalents, beginning of period            152,619,435               57,966,360
                                                         ------------              -----------
Cash and cash equivalents, end of period                 $133,628,807              $54,371,495
                                                         ============              ===========

Other noncash items:
   Conversion of convertible debentures into equity      $  2,000,000
                                                         ============
</TABLE>


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

                                       5

<PAGE>

                            CAREMATRIX CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   BASIS OF PRESENTATION

     CareMatrix Corporation (the "Company") develops, manages and operates
assisted living facilities and various other health care facilities.

     The accompanying interim unaudited financial statements have been prepared
by the Company pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such regulations. The
financial statements reflect all adjustments and disclosures which are, in the
opinion of management, necessary for a fair presentation of the financial
position and results of operations for the periods presented. All such
adjustments are of a normal recurring nature. The interim financial statements
should be read in conjunction with the Company's Form 10-K and Form 10-K/A for
the year ended December 31, 1997, for additional disclosures. The results of
operations for the interim periods presented are not necessarily indicative of
the results that may be achieved for the full year.

PRINCIPLES OF CONSOLIDATION

     The consolidated financial statements include the accounts of the Company
and its subsidiaries. All significant intercompany balances and transactions
have been eliminated in consolidation.

2.   RESTRICTED CASH

     In connection with the acquisition of the management and lease rights for
four facilities in Connecticut, the Company deposited $10.6 million into escrow.
Interest on the funds accrues to the benefit of the Company. The money,
comprised of lease deposits and lease acquisition costs, will be released from
escrow when the certificate of occupancy is obtained for each facility.

3.   RELATED PARTY TRANSACTIONS

     As used herein, a "Chancellor Entity" is Chancellor Senior Housing Group,
Inc. (a company primarily owned by Abraham D. Gosman and certain members of the
Company's senior management) or a company in which Mr. Gosman and certain
members of the Company's senior management exercise significant control.

     General and administrative expenses includes a reduction in rent expense of
$44,814 for periods ending March 31, 1998 and 1997, to reflect Meditrust
Corporation's portion of the rent at the Company's principal office space in
Needham, Massachusetts. Mr. Gosman is the Chairman of the Board of Meditrust
Corporation, a publicly-traded real estate investment trust.

     In January 1998, the Company purchased, for $0.8 million, a management
agreement for a skilled nursing facility located in Florida from PhyMatrix
Corp., a publicly-owned physician practice management company of which Mr.
Gosman is Chairman of the Board and of which he, together with his two sons,
beneficially owns approximately 24.6%.

     In January 1998, the Company paid a Chancellor Entity $2.5 million for the
lease rights to a skilled nursing facility in Connecticut which the Company had
been managing.

                                       6

<PAGE>

                            CAREMATRIX CORPORATION

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

3.   RELATED PARTY TRANSACTIONS (continued)

     In March 1998, the Company purchased from a Chancellor Entity the lease
rights to two facilities in Arizona for $1.1 million. The Company also made a
lease deposit of $4.0 million for these facilities.

4.   CONVERTIBLE DEBENTURES

     In February 1998, the Company's 8.5% Convertible Debentures were converted
into 133,333 shares of the Company's common stock at $15.00 per share (see Note
8 in Notes to Financial Statements in the Company's Annual Report on Form 10-K
for the year ended December 31, 1997, as amended).

5.   EARNINGS PER SHARE

     Earnings per share has been computed in accordance with Statement of
Financial Accounting Standards No. 128, "Earnings per share." Accordingly, all
earnings per share information reflects the adoption of this statement.

<TABLE>
<CAPTION>
                                                                  Quarter ended March 31, 1998
                                                 ---------------------------------------------------------------
Basic earnings per share                             Earnings                Shares               Per Share
------------------------                             --------                ------               ---------
<S>                                                 <C>                    <C>                      <C>  
Earnings available to common shareholders           $3,365,190             17,377,463               $0.19
    Effect of dilutive securities:
    Stock options and warrants                              --                564,696                  --
    8.5% convertible debentures                         12,961                 71,110                  --
                                                 ------------------    -------------------    -------------------
Diluted earnings per share                          $3,378,151             18,013,269               $0.19
                                                 ==================    ===================    ===================
</TABLE>

<TABLE>
<CAPTION>

                                                                  Quarter ended March 31, 1997
                                                 ---------------------------------------------------------------
Basic earnings per share                             Earnings                Shares               Per Share
------------------------                             --------                ------               ---------
<S>                                                  <C>                   <C>                      <C>  
Earnings available to common shareholders            $814,600              17,109,978               $0.05
    Effect of dilutive securities:
    Stock options and warrants                             --                 189,881                  --
                                                 ------------------    -------------------    -------------------
Diluted earnings per share                           $814,600              17,299,859               $0.05
                                                 ==================    ===================    ===================
</TABLE>


6.   NEWLY ISSUED ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income," ("FAS 130"). FAS
130 is effective for fiscal years beginning after December 15, 1997. FAS 130
establishes standards for the reporting and display of all changes in
shareholders' equity during a reporting period except those resulting from
investments by or distributions to shareholders. For the periods included in
this Form 10-Q, the Company does not have items of comprehensive income
requiring reporting or disclosure.

                                       7

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Overview

     The Company is a provider of assisted living services to the elderly. At
March 31, 1998, the Company operated 28 facilities in ten states with a capacity
of 3,069 residents. Of the facilities, two are owned, 16 are leased, and ten are
managed. In addition, the Company currently has under development 77 facilities
with a capacity of approximately 9,300 residents. The Company provides
assistance with the activities of daily living and other personalized support
services in a residential setting for elderly residents who cannot live
independently but who do not need the level of medical care provided in a
skilled nursing facility. The Company also provides additional specialized care
and services to residents with certain low acuity medical needs and residents
with Alzheimer's disease or other forms of dementia. By offering this full range
of services, the Company is able to accommodate the changing needs of residents
as they age within a facility and develop further physical or cognitive
frailties.

     The Company derives its revenues from three primary sources: (i) resident
fees for the delivery of assisted living services; (ii) management services
income for management of facilities; and (iii) fee income from the development
and construction of facilities. Resident fees typically are paid monthly by
residents, their families or other responsible parties. Resident fees and
management fees are recognized as revenues when services are provided.
Development fee revenue is recognized on the percentage of completion basis.

     The following discussion, as well as other portions of this document,
includes certain statements which are or may be construed as forward looking
about the Company's business, sales and expenses, and operating and capital
requirements. Any such statements are subject to risks that could cause the
actual results or requirements to vary materially.

  The quarter ended March 31, 1998 compared to the quarter ended March 31, 1997

     REVENUES. Resident operations revenue increased by $13.9 million for the
first quarter of 1998 compared to the same period in 1997. The increase is
comprised of $11.6 million from facilities leased for less than one year and
$2.3 million from fees related to new management contracts as a result of the
increase in the number of facilities under construction and in operation.

     Development fee income was $5.9 million in the first quarter of 1998 versus
$3.2 million in the same period in 1997. The increase is primarily due to higher
number of projects in development in 1998 compared to the number of projects in
1997.

     FACILITY EXPENSES. Facility expenses for the first quarter of 1998
increased by $11.1 million compared to the same period in 1997. The increase in
facility expenses is comprised of an increase in lease expense of $2.3 million
and an increase in operating expenses of $8.8 million.

     Facility lease expense was $3.7 million in the first quarter of 1998
compared to $1.4 million in the same period in 1997. The increase of $2.3
million is primarily due to facilities leased less than one year.

     Facility operating expenses were $15.4 million in the first quarter of 1998
compared to $6.6 million in the same period of 1997, an increase of $8.8
million. The increase is primarily due to $8.3 million of operating expenses
from facilities leased less than one year. Comparable facility operating
expenses increased $0.6 million.

     GENERAL AND ADMINISTRATIVE. General and administrative expenses for the
first quarter of 1998 increased to $4.5 million from $3.6 million in the same
period of 1997. As a percentage of operating revenue,

                                       8

<PAGE>


                      MANAGEMENT'S DISCUSSION AND ANALYSIS

           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

The quarter ended March 31, 1998 compared to the quarter ended March 31, 1997
(continued)

general and administrative expenses in the first quarter of 1998 declined to
15.1% from 27.9% in the first quarter of 1997. The increase in expense is
primarily due to an increase in salary and benefits expenses relating to the
hiring of additional corporate staff in anticipation of the Company's growth
plans.

     DEPRECIATION AND AMORTIZATION. Depreciation and amortization for the first
quarter of 1998 increased $0.2 million compared to the same period in 1997. The
increase is due primarily to $0.1 million of amortization of debt issuance costs
and $0.1 million of amortization of other intangible assets.

     INTEREST INCOME. Interest income for the first quarter of 1998 was $2.3
million compared to $0.8 million for the same period in 1997. The increase is
primarily due to higher average cash balances due to the issuance in 1997 of
$115.0 million of 6 1/4% Convertible Subordinated Notes (the "Notes") (see Note
8 of the Notes to Financial Statements in the Company's Annual Report on Form
10-K for the year ended December 31, 1997, as amended).

     INTEREST EXPENSE. Interest expense for the first quarter of 1998 increased
to $1.8 million from $0.3 million for the same period in 1997. The increase is
primarily due to interest expense on the Notes.

     INCOME TAXES. The Company's effective tax rate during the first quarter of
1998 was 41.6% compared to 40.2% in 1997. The increase in the effective tax rate
is due to the expected increase in the level of income subject to the federal
tax rate of 35.0% for 1998, as compared to 34.0% for 1997, and the utilization
in 1997 of certain tax benefits that had been fully reserved in 1996.

LIQUIDITY AND CAPITAL RESOURCES

     Cash and cash equivalents at March 31, 1998 were $133.6 million compared to
$152.6 million at December 31, 1997, a decrease of approximately $19.0 million.

     Cash provided by operations was $0.9 million in the first quarter of 1998
compared to a use of $3.0 million for the same period in 1997. The increase in
cash provided by operations is due primarily to an increase in net earnings
before depreciation and amortization of $2.8 million and a net increase in
current liabilities of $1.4 million which is primarily due to the acquisition of
new facilities.

     Cash used in investing activities was $22.3 million in the first quarter of
1998 compared to a use of $1.1 million for the same period in 1997. The increase
in the use of cash is due primarily to an increase of $13.8 million in
restricted cash, primarily from $10.6 million paid for the acquisition of the
management and lease rights to four facilities, $3.6 million paid for the
lease rights to two facilities and $4.0 million paid as a lease deposit for two
facilities.

     Cash flows provided by financing activities were $2.4 million in the first
quarter of 1998 compared to $0.5 million for the same period in 1997. This
increase is due primarily to the exercise of stock options and warrants.

     The Company will require resources in the future to fund the planned
acquisition and development of additional assisted living, supportive
independent and extended care facilities as well as its working capital

                                       9

<PAGE>

                      MANAGEMENT'S DISCUSSION AND ANALYSIS

           OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)

LIQUIDITY AND CAPITAL RESOURCES  (continued)

requirements. The Company expects to partially fund these resource requirements
with its cash on hand as well as related party or third-party financing of
assisted living facilities. The Company and certain related parties are
presently in discussions with a number of third parties to secure commitments
regarding sources of additional financing. Furthermore, the Company intends to
seek bank borrowings and other debt or equity financings to provide additional
sources of capital in the future.

                                       10

<PAGE>

                           PART II - OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

         The Company is a party to litigation in the ordinary course of
         business. The Company does not believe that any such litigation will
         have a material adverse effect on its business, financial position or
         results of operations.

ITEM 2.  CHANGES IN SECURITIES

         In February 1998, Natwest Securities Corporation converted $2.0 million
         in principal amount of the Company's 8.5% Convertible Debentures (the
         "Debentures") into 133,333 shares of the Company's Common Stock on a
         $15.00 per share basis pursuant to the terms of such Debentures. The
         shares were issued by the Company pursuant to an exemption from
         registration under Section 4(2) of the Securities Act of 1933, as
         amended (the "Act").

         In connection with the exercise of warrants issued by the Company, the
         following parties were issued shares of the Company's Common Stock
         pursuant to an exemption from registration under Section 4(2) of the
         Act:

<TABLE>
<CAPTION>
                                                                         Shares of
                                                  Date exercised        Common Stock     Exercise Price
                                               --------------------- ------------------- ----------------
<S>                                            <C>                          <C>              <C>
         Robert A. Schneider                   January 14, 1998              7,858           $18.60
         The Manold Group (1)                  January 18, 1998             11,605            17.75
         Roger O. Peterkin III                 January 22, 1998              1,000            18.90
         John DeShazo                          January 29, 1998              3,749            18.90
         Roger O. Peterkin III                 February 2, 1998              1,000            18.90
         Robert A. Schneider                   March 15, 1998               11,184            19.00
         Neil G. Berkman                       March 19, 1998                6,000            20.80
         Robert A. Schneider                   March 23, 1998               10,000            18.00
         The Equity Group, Inc.                March 25, 1998               11,875            22.40
         Edward M. Mulherin                    March 26, 1998                3,000            20.65
                                                                     -------------------

         Total shares of Common Stock:                                      67,271
                                                                     ===================
</TABLE>

         (1) The Manold Group is an affiliated group of 11 individuals
         and trustees for the benefit of such affiliated persons.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

 (a).    The following exhibits are filed as part of this report:

  3.01   Corrected Third Restated Certificate of Incorporation of CareMatrix
         Corporation (2)

  3.02   By-laws of CareMatrix Corporation, as amended through
         December 9, 1996 (1)

 10.00   Assignment agreement dated January 1, 1998 between PhyMatrix Corp.
         and CareMatrix of Massachusetts, Inc. (*)

 10.01   Facility lease agreement dated as of January 1, 1998 between Continuum
         Care of Connecticut, Inc. and CareMatrix of Ridgefield (SNF), Inc. (*)

                                       11

<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K  (continued)

 10.02   Facility lease agreement dated as of March 16, 1998 between
         Desert Amethyst Phase II Limited Partnership and CareMatrix of
         the Inn at the Amethyst, Inc. (*)

 10.03   Management agreement dated as of March 16, 1998 between
         CareMatrix of the Inn at the Amethyst, Inc. and NetWest
         Development Corporation (*)

 27.1    Financial Data Schedule

 27.2    Restated Financial Data Schedule

 27.3    Restated Financial Data Schedule

 -------------------------------
(*)  Filed herewith.
(1)  Filed as an Exhibit to the Company's Annual Report on Form 10-K for
     the year ended December 31, 1996.
(2)  Filed as an Exhibit to the Company's Annual Report on Form 10-K for
     the year ended December 31, 1997.


 (b).     Reports on Form 8-K

No report on Form 8-K was filed by the Registrant during the quarter
ended March 31, 1998.


                                       12

<PAGE>



                                   SIGNATURES


         Pursuant to the requirements of Section 13 or Section 15(d) of the
Securities and Exchange Act of 1934, as amended, the Registrant has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                                     CAREMATRIX CORPORATION



                                                     By: /s/ Robert M. Kaufman
                                                     -------------------------
                                                     Robert M. Kaufman
                                                     Chief Executive Officer