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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549



                                    FORM 10-Q

(Mark One)

     [X]  Quarterly  report  pursuant  to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934. 
          For the quarterly period ended June 30, 1997.

                                       OR

     [ ]  Transition  report  pursuant to Section 13 or 15(d) of the  Securities
          Exchange Act of 1934.
          For the transition period _____________ to _______________.



                         Commission File Number: 0-21209

                           ADVANCED HEALTH CORPORATION
             (Exact name of registrant as specified in its charter)

                      Delaware                                   13-3893841
          (State or other jurisdiction or                       (IRS Employer
           incorporation or organization)                    Identification No.)

                              555 White Plains Road
                            Tarrytown, New York 10591
          (Address of principal executive offices, including zip code)

                                 (914) 524-4200
              (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  August  12,  1997,  there  were  7,333,485  shares  outstanding  of  the
registrant's Common Stock, $.01 par value.

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


<PAGE>

                           ADVANCED HEALTH CORPORATION

                                      INDEX

<TABLE>
<S>                                                                                  <C>

PART I - FINANCIAL INFORMATION                                                       Page No.
---------------------------------------------------------------------------------------------

ITEM 1.   Consolidated Financial Statements
                  Consolidated Balance Sheets -
                  June 30, 1997 (unaudited) and December 31, 1996........................1

                  Consolidated Statement of Operations-
                  Three and six months ended June 30, 1996 and 1997 (unaudited)..........2

                  Consolidated Statements of Cash Flows-
                  Six months ended June 30, 1997 and 1996 (unaudited)....................3

                  Notes to Consolidated Financial Statements.............................4

ITEM 2.   Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..............................................5

ITEM 3.    Quantitative and Qualitative Disclosures About Market Risk....................8


PART II - OTHER INFORMATION

ITEM 4.     Submission of Matter to a Vote of Security Holders...........................8


SIGNATURES...............................................................................9



------------------------------------------------------------------------------------------
</TABLE>

<PAGE>
PART I -- FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
                                                                                        As Of
                                                                               -------------------------
                                                                                June 30,    December 31,
                                                                                  1997         1996
                                                                                  ----          ----
                                                                               (unaudited)
       ASSETS
<S>                                                                             <C>         <C>     
CURRENT ASSETS:
       Cash                                                                     $  4,840    $ 12,086
       Investments in marketable securities                                        7,336       7,390
       Accounts receivable                                                         7,870       8,637
       Note receivable                                                                60           -
       Prepaid expenses                                                              124         182
       Advances to affiliates                                                      3,372         647
       Deferred income taxes                                                         977         977
                                                                                --------    --------
            Total current assets                                                  24,579      29,919
PROPERTY AND EQUIPMENT, net                                                        2,644       2,053
INTANGIBLE ASSETS, net                                                             5,259       1,858
OTHER ASSETS                                                                       4,517       1,570
                                                                                ========    ========
            Total assets                                                        $ 36,999    $ 35,400
                                                                                ========    ========

       LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
       Accounts payable                                                         $  1,942    $  1,968
       Accrued expenses                                                              739         913
       Deferred revenue                                                              200         200
       Loan payable related to acquisitions                                            -          23
       Current portion of capital lease obligations                                   53         131
                                                                                --------    --------
            Total current liabilities                                              2,934       3,235
DEFERRED REVENUE                                                                     100         200
CAPITAL LEASE OBLIGATIONS                                                              -          81
                                                                                --------    --------
            Total liabilities                                                      3,034       3,516
                                                                                --------    --------
COMMITMENTS
SHAREHOLDERS' EQUITY (DEFICIT)
       Preferred stock, $0.01 par value, 5,000,000 shares authorized;
            0 shares issued and outstanding                                            -           -
       Common stock, $.01 par value; 15,000,000 shares authorized;
            7,201,600 and 7,166,941 shares issued and
            outstanding, respectively                                                 72          72
       Additional paid-in capital                                                 42,339      42,069
       Accumulated deficit                                                        (8,431)    (10,242)
       Unrealized gain on marketable securities, net of deferred income taxes         60          60
       Less: Treasury stock, at cost (8,937 and 8,937 shares, respectively)          (75)        (75)
                                                                                --------    --------
            Total shareholders' equity (deficit)                                  33,965      31,884
                                                                                ========    ========
            Total liabilities and shareholders' equity (deficit)                $ 36,999    $ 35,400
                                                                                ========    ========
</TABLE>

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

                                       (1)


<PAGE>
                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)
                                   (unaudited)
<TABLE>
<CAPTION>
                                            For the Three    Months Ended     For the Six  Months Ended
                                            -----------------------------   -----------------------------
                                                 June 30,       June 30,       June 30,        June 30,
                                                   1997          1996            1997           1996
                                                   ----         -----           ----            ----
                                                                                            
<S>                                            <C>            <C>             <C>            <C>    
REVENUE                                        $13,021        $ 3,925         $23,028        $ 7,617
COST OF REVENUES                                 9,908          2,569          17,309          5,580
                                               -------        -------         -------        -------
            Gross profit                         3,113          1,356           5,719          2,037
OPERATING EXPENSES                               2,103          1,977           4,185          3,840
                                              --------        -------         -------        -------
            Operating income/(loss)              1,010           (621)          1,534         (1,803)
OTHER INCOME/(EXPENSE)                             141            (34)            343            (53)
                                              --------        -------         -------        -------
            Net Income(Loss) Before Taxes      $ 1,151        ($  655)        $ 1,877        ($1,856)
PROVISION FOR INCOME TAXES                           0              0              66              0
                                              ========        =======         =======        =======
            Net Income (Loss)                  $ 1,151        ($  655)        $ 1,811        ($1,856)
                                              ========        =======         =======        =======
                                                                                            
                                                                                            
PER SHARE INFORMATION                                                                          
Net income (loss) per share                    $  0.14        ($ 0.15)        $  0.22        ($ 0.41)
                                                                                            
Weighted average common                                                                     
       shares and equivalents outstanding        8,338          4,491           8,190          4,487
                                                                                            
                                                                                         
</TABLE>



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

                                       (2)
<PAGE>
                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (In thousands, except per share amounts)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                      For the Six Months Ended
                                                                                    June 30,            June 30,
                                                                                      1997                1996
                                                                                      ----                ----
<S>                                                                                   <C>               <C>     
CASH FLOWS FROM OPERATING ACTIVITIES:

       Net income/(loss)                                                              $1,811            ($1,856)
       Adjustments to reconcile net loss to net cash
            used in operating activities
            Depreciation and amortization                                                483                423
            Changes in operating assets and liabilities
                 Accounts receivable                                                     767             (2,282)
                 Note receivable                                                         (60)               110
                 Prepaid expenses                                                         58                (58)
                 Advances to affiliates                                                 (125)                50
                 Other assets                                                         (2,085)               (15)
                 Accounts payable                                                        (26)              (341)
                 Accrued expenses                                                       (174)               445
                 Deferred revenue                                                       (100)              (550)
                                                                                   ----------         ----------
                       Net cash used in operating activities                             549             (4,074)
                                                                                   ----------         ----------
CASH FLOWS FROM INVESTING ACTIVITIES:

Minority investment in affiliated entity                                                (500)                 -
Advances to affiliates                                                                (2,600)                 -
Investment in affiliate                                                               (3,763)                 -
Purchases of property and equipment, net                                              (1,020)              (249)
                                                                                   ----------         ----------
                       Net cash provided by (used in) investing activities            (7,883)              (249)
                                                                                   ----------         ----------
CASH FLOWS FROM FINANCING ACTIVITIES:

(Repayment of) proceeds from loans payable
       related to acquisitions                                                           (23)               (95)
Net proceeds from exercise of stock options                                              270
Net proceeds from promissory notes                                                         -              4,000
Repayment of capital lease obligations                                                  (159)              (209)
                                                                                   ----------         ----------
                       Net cash provided by financing activities                          88              3,696
                                                                                   ----------         ----------
                       Net change in cash                                             (7,246)              (627)
CASH, beginning of period                                                             12,086              1,464
                                                                                   ==========         ==========
CASH, end of period                                                                   $4,840               $837
                                                                                   ==========         ==========
</TABLE>





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

                                       (3)
<PAGE>

                  ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                  June 30, 1997
                      (in thousands, except per share data)
                                   (unaudited)

1.   Reference  is  made  to the  Notes  to  Consolidated  Financial  Statements
     contained in the Company's December 31, 1996 audited consolidated financial
     statements  as filed with the  Securities  and Exchange  Commission on Form
     10-K.  In the  opinion  of  Management,  the  interim  unaudited  financial
     statements included herein reflect all adjustments necessary, consisting of
     normal  recurring  adjustments,  for a fair  presentation of such data on a
     basis consistent with that of the audited data presented  therein.  Certain
     prior  period  expenses  have  been  reclassified  to  conform  to the 1997
     presentation.  Amounts  advanced to an affiliate  during the current period
     have been  classifed as an  investment  in such  affiliate  and included in
     other assets in the  accompanying  balance sheet at June 30, 1997 under the
     terms and conditions of the applicable agreement. The Company believes that
     its  historical  results  of  operations  from  period  to  period  are not
     comparable and that such results are not necessarily  indicative of results
     for any future periods.



2.   In March 1997, the Financial Accounting Standard Boards issued Statement of
     Financial  Accounting  Standards (SFAS) No. 128,  Earnings Per Share.  This
     Statement  establishes  standards for computing and presenting earnings per
     share (EPS),  replacing the presentation of currently  required primary EPS
     with a  presentation  of Basic  EPS.  For  entities  with  complex  capital
     structures,  the statement requires the dual presentation of both Basic EPS
     and Diluted EPS on the face of the statement of operations.  Under this new
     standard,   Basic  EPS  is  computed  based  on  weighted   average  shares
     outstanding  and  excludes  any  potential  dilution.  Diluted EPS reflects
     potential  dilution  from the exercise or  conversion  of  securities  into
     common  stock or from other  contracts to issue common stock and is similar
     to the  currently  required  fully  diluted EPS.  SFAS 128 is effective for
     financial  statements  issued for periods  ending after  December 15, 1997,
     including  interim periods and earlier  application is not permitted.  When
     adopted, the Company will be required to restate its EPS data for all prior
     periods  presented.  The Company does not expect the impact of the adoption
     of this statement to be material to previously reported EPS amounts.

                                       (4)


<PAGE>




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

OVERVIEW

Advanced Health Corporation (the "Company")  provides a full range of integrated
management  services  and  clinical   information  systems  to  physician  group
practices and physician  networks.  The Company generates revenues from (i) fees
for managing and providing  consulting  services to physician  group  practices,
(ii) fees for managing  physician networks and (iii) fees for use and support of
its  clinical  information  systems,   including  recurring  license,   software
installation,  software  integration,  training and data  conversion  fees.  The
Company  contracts with its physician  practice and network  management  clients
pursuant to long term  agreements  with its  Management  Services  Organizations
(each,  an "MSO"),  the  financial  results of such  MSO's are  included  in the
Consolidated Financial Statements.

RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997 AND 1996

Net revenue for the three months ended June 30, 1997  increased to $13.0 million
from $3.9 million in the comparable  period ended June 30, 1996,  primarily as a
result of the  addition  of new  physician  group  practices  under  management,
provision of incremental  network  management  services and fees for the use and
support of clinical  information  systems.  The  provision  of  physician  group
practice  management  and  related  services  and  network  management  services
accounted for  approximately  $10.4 million of the Company's net revenue for the
three months  ended June 30, 1997 as compared to $3.2 million in the  comparable
period ended June 30, 1996.  The Company  earned fees for the use and support of
its clinical information systems,  including the recognition of license revenues
and software and training revenues,  of approximately $2.6 million for the three
months ended June 30, 1997, as compared to $.7 million in the comparable  period
ended June 30, 1996.

Cost of revenues  for the three  months  ended June 30, 1997  increased  to $9.9
million from $2.6  million for the  comparable  period ended June 30, 1996.  The
increase in cost of revenues related primarily to the expenses outsourced to the
Company from physician group practices under  management and expenses related to
Med-E-System sales.

Operating  expenses for the three  months ended June 30, 1997  increased to $2.1
million from $2.0  million for the  comparable  period ended June 30, 1996.  The
modest  increase in operating  expenses  related to the  increased  provision of
physician group practice management and related services.

For the three  months  ended June 30,  1997,  the Company  also earned  interest
income in the amount of $.1 million from investments in marketable securities as
a result  of the  investment  of  proceeds  from the  Company's  initial  public
offering (the "IPO").  The Company  incurred  interest  expense of approximately
$34,000 for the comparable  period ended June 30, 1996, which related  primarily
to interest on $4.0 million of then-outstanding indebtedness bearing interest at
8% per annum and interest on capital lease obligations.

                                       (5)



<PAGE>



Provision  for income taxes  represents  the net effect of a full forty  percent
effective  income tax rate on the  Company's  pre-tax  income  for the  quarter,
largely offset by a reduction in the Company's reserve on previously  generated,
fully-reserved deferred income tax assets due to the Company's expectations with
regard to future  taxable  income.  No income tax  benefit  was  recorded by the
Company in the first or second  quarter of 1996 due to the  uncertainty  at that
time as to the Company's  ability to generate  future  taxable income to provide
for the realization of related deferred income tax assets.

The net  income  for the  three  months  ended  June 30,  1997 was $1.2  million
compared to a net loss of $655,000  for the three months ended June 30, 1996 due
to the factors described above.

RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996

Net revenue for the six months ended June 30, 1997  increased  to $23.0  million
from $7.6 million in the comparable  period ended June 30, 1996,  primarily as a
result of the  addition  of new  physician  group  practices  under  management,
provision of incremental  network  management  services and fees for the use and
support of clinical  information  systems.  The Company began providing  network
management  services in September 1995 and physician  group practice  management
and related services in December 1995. The provision of physician group practice
management and related services and network  management  services  accounted for
approximately  $17.0  million of the  Company's  net  revenue for the six months
ended June 30, 1997 as compared to $6.1 million in the  comparable  period ended
June 30, 1996.  The Company  earned fees for the use and support of its clinical
information systems,  including the recognition of license revenues and software
and training  revenues,  of approximately  $6.0 million for the six months ended
June 30, 1997, as compared to $1.5 million in the  comparable  period ended June
30, 1996.

Cost of  revenues  for the six months  ended June 30,  1997  increased  to $17.3
million from $5.6  million for the  comparable  period ended June 30, 1996.  The
increase in cost of revenues related primarily to the expenses outsourced to the
Company from physician group practices under  management and expenses related to
Med-E-System sales.

Operating  expenses  for the six months  ended June 30, 1997  increased  to $4.2
million from $3.8 for the comparable period ended June 30, 1996. The increase in
operating  expenses  related  to the  increased  provision  of  physician  group
practice management and related services.

For the six months ended June 30, 1997, the Company also earned  interest income
in the amount of $.3 million from  investments  in  marketable  securities  as a
result of the investment of proceeds from the IPO. The Company incurred interest
expense of approximately  $53,000 for the comparable period ended June 30, 1996,
which  related  primarily  to  interest  on  $4.0  million  of  then-outstanding
indebtedness  bearing  interest at 8% per annum and  interest  on capital  lease
obligations.

The net income for the six months ended June 30, 1997 was $1.8 million  compared
to a net loss of $1.8  million for the six months ended June 30, 1996 due to the
factors described above.

                                       (6)



<PAGE>



As of June 30, 1997, the Company had net operating loss  carryforwards  ("NOLs")
available to offset future book and taxable income of approximately $8.3 million
and $6.8 million respectively, which will expire in 2011. The difference between
the book and tax NOLs relates  principally to the  differences  between book and
tax accounting  with respect to start-up  costs,  depreciation  of fixed assets,
amortization of intangible assets and recognition of deferred revenue.  The book
income tax  benefits of $3.3  million and $2.7 as of June 30, 1997 and  December
31, 1996  respectively  have been fully reserved due to the uncertainty of their
future realization, although management is evaluating these reserve levels based
on expected earnings, and they may be revised in the future.

LIQUIDITY AND CAPITAL RESOURCES

Effective  October 2, 1996, the Company completed its IPO of 2,645,000 shares of
Common  Stock,  including  the  underwriters'  over-allotment  option.  The  IPO
generated  proceeds  to  the  Company  of  approximately  $31  million,  net  of
underwriting  expenses.  Prior to the IPO and since its  inception,  the Company
financed  its  capital   requirements  through  the  sale  of  equity  and  debt
securities.  In  1996,  the  Company  issued  three 8%  promissory  notes in the
principal amounts of $1.5 million, $.75 million and $.75 million on February 28,
April 26 and June 28, respectively, and six 9% promissory notes in the aggregate
principal  amount of $2.0  million on June 19 and August 13. All such notes were
repaid in October 1996 using proceeds from the IPO.

For the six months ended June 30, 1997,  the Company had positive cash flow from
its operating  activities of $.5 million,  compared with a negative $4.1 million
for the  comparable  period ended June 30, 1996.  Net cash provided by (used in)
investing  activities  was ($7.9) million for the six months ended June 30, 1997
compared  with ($.2)  million for the  comparable  period  ended June 30,  1996,
primarily relating to a minority investment in Caresoft,  a developer of disease
management  tools,  advances to, and investments in, affiliates and purchases of
fixed assets. Net cash provided by financing  activities was $.1 million for the
six months  ended June 30,  1997 and related to  proceeds  from the  exercise of
stock options and the repayment of capital lease obligations.  Net cash provided
by financing activities for the six months ended June 30, 1996 was $3.7 million,
principally  attributable  to net  proceeds  from  issuance  of $4.0  million in
indebtedness  in February,  April and June 1996 and  repayment of capital  lease
obligations.

The  Company's  operating  plan for the  remainder  of 1997  includes  continued
development  of  the  Company's  integrated  management  services  and  clinical
information  systems.  The principal categories of expenditures include research
and development of the Company's clinical information systems as well as ongoing
business  development and marketing.  The Company believes that the net proceeds
of the IPO, cash on hand,  interest  income and revenues from operations will be
sufficient to fund planned operations of the Company through at least the end of
1998.  The  Company  has no planned  material  capital  expenditures  or capital
commitments.

                                      (7)


<PAGE>




ITEM 3.      QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
                     RISK.

                      Not applicable.



PART II - Other Information

ITEM 4.      SUBMISSION OF MATTER TO VOTE OF SECURITY HOLDERS.

               (a)  The Company's  Annual  Meeting of  Stockholders  was held on
                    June 6, 1997.

               (b)  Proxies for the Annual  Meeting were  solicited  pursuant to
                    Regulation  14 under the  Securities  Act of 1934.  Jonathan
                    Lieber was  listed in the proxy  statement  as  management's
                    nominee  for  election  as  director  of the  Company and no
                    candidates   were  offered  in  opposition  to  management's
                    nominee and the nominee was elected. The following directors
                    terms continued  after the Annual Meeting:  James T. Carney,
                    Barry Kurokawa, Jonathan Edelson and Steven Hochberg.

               (c)  The  Company's  stockholders  approved the  amendment of the
                    Company's  Stock  Option Plan (the  "Plan") to increase  the
                    number of shares  available for grant under the Plan.  There
                    were 3,835,633  affirmative votes and 674,104 negative votes
                    cast with respect to the amendment of the Plan.








                                       (8)



<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 therewith duly authorized.

August 14,1997             ADVANCED HEALTH CORPORATION


                           By: /s/  Jonathan Edelson, M.D.
                              -------------------------------------
                                 Jonathan Edelson, M.D.
                                 Chairman of the Board and
                                 Chief Executive Officer
                                 (Principal Executive Officer)


                           By: /s/ Alan B. Masarek 
                              -------------------------------------
                                 Alan B. Masarek
                                 Chief Operating Officer and
                                 Chief Financial Officer
                                 (Principal Financial and Accounting Officer)






                                       (9)