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                       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 March 31, 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 of                        (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 May 13, 1997, there were 7,235,328 shares  outstanding of the registrant's
Common Stock, $.01 par value.

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

<PAGE>



                           ADVANCED HEALTH CORPORATION

                                      INDEX

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


ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS
         Consolidated Balance Sheets-
         March 31, 1997 and December 31, 1996..................................1

         Consolidated Statement of Operations-
         Three months ended March 31, 1996 and 1997............................2

         Consolidated Statements of Cash Flows-
         Three months ended March 31, 1997 and 1996............................3

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

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS.............................................5


PART II - OTHER INFORMATION


SIGNATURES.....................................................................7




 
<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)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                    
                                                               March 31,        December 31,
                                                                  1997              1996
                                                                  ----              ----

      ASSETS                                                          
CURRENT ASSETS:
<S>                                                            <C>              <C>    
     Cash                                                          $3,748           $12,086
     Investments in marketable securities                           7,391             7,390
     Accounts receivable                                           14,890             8,637
     Prepaid expenses                                                 112               182
     Advances to affiliates                                         2,594               647
     Deferred income taxes                                            977               977
                                                        -----------------  ----------------
         Total current assets                                      29,712            29,919
PROPERTY AND EQUIPMENT, net                                         2,099             2,053
INTANGIBLE ASSETS, net                                              1,831             1,858
OTHER ASSETS                                                        2,898             1,570
                                                        -----------------  ----------------
         Total assets                                             $36,540           $35,400
                                                        =================  ================


     LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
     Accounts payable                                              $1,087            $1,968
     Accrued expenses                                               2,376               913
     Deferred revenue                                                 150               200
     Loan  payable related to acquisitions                             23                23
     Current portion of capital lease obligations                      70               131
                                                        -----------------  ----------------
         Total current liabilities                                  3,706             3,235
                                                        -----------------  ----------------
DEFERRED REVENUE                                                      200               200
CAPITAL LEASE OBLIGATIONS                                              81                81
                                                        -----------------  ----------------
         Total liabilities                                          3,987             3,516
                                                        -----------------  ----------------
COMMITMENTS
SHAREHOLDERS' EQUITY (DEFICIT)
     Preferred stock, $.01 par value, 5,000,000 shares  
         authorized; 0 shares issued and outstanding
     Common stock, $.01 par value; 15,000,000 shares 
         authorized; 7,169,444 and 7,166,941 shares
         issued and outstanding, respectively                          72                72
     Additional paid-in capital                                    42,078            42,069
     Accumulated deficit                                           (9,582)          (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)                      32,553            31,884
                                                        -----------------  ----------------
         Total liabilities and shareholders' equity 
               (deficit)                                          $36,540           $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)


                                              For the Three Months Ended
                                          -----------------------------------
                                              March 31,         March 31,
                                                 1997              1996
                                                -----              ----

REVENUE                                          $3,840            $1,074
REVENUE FROM MSOs                                 6,167             2,618
                                          -------------       -----------
         Total Revenues                          10,007             3,692
COST OF REVENUES                                  6,401             1,932
                                          -------------       -----------
         Gross profit                             3,606             1,760
OPERATING EXPENSES                                3,082             2,942
                                          -------------       -----------
         Operating income/(loss)                    524            (1,182)
OTHER INCOME/(EXPENSE)                              202               (19)
                                          -------------       -----------
         Net Income(Loss) Before Taxes              726            (1,201)
PROVISION FOR TAXES                                  66                --
                                          -------------       -----------
         Net Income (Loss)                         $660           ($1,201)
                                          =============       ===========


PER SHARE
     INFORMATION
Net income (loss) per share                       $0.08            ($0.27)

Weighted average common
     shares and equivalents outstanding           8,110             4,482


         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 Three Months Ended
                                                                    -----------------------------------
                                                                         March 31,         March 31,
                                                                           1997              1996
                                                                          -----              ----

CASH FLOWS FROM OPERATING ACTIVITIES                                       
<S>                                                                    <C>            <C>     
  Net income/(loss)                                                        $660           ($1,201)
  Adjustments to reconcile net loss to net cash
      used in operating activities
      Depreciation and amortization                                         228               216
      Changes in operating assets and liabilities
         Accounts receivable                                             (6,253)           (1,427)
         Note receivable                                                    ---               110
         Prepaids                                                            70               (66)
         Advances to affiliates                                          (1,947)              ---
         Other assets                                                    (1,328)                2
         Accounts payable                                                  (881)             (171)
         Accrued expenses                                                 1,463               381
         Deferred revenue                                                   (50)             (275)
                                                                    -----------------  ----------------
            Net cash used in operating activities                        (8,038)           (2,431)
                                                                    -----------------  ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment, net                                   (247)             (206)
                                                                    -----------------  ----------------
            Net cash provided by (used in) investing activities            (247)             (206)
                                                                    -----------------  ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment of) proceeds from loans payable
      related to acquisitions                                               ---               (69)
Net proceeds from sale and issuance of common stock                           9               ---
Net proceeds from promissory notes                                          ---             1,500
Repayment of capital lease obligations                                      (62)             (118)
                                                                    -----------------  ----------------
            Net cash provided by (used in) financing activities             (53)            1,313
                                                                    -----------------  ----------------
            Net change in cash                                           (8,338)           (1,324)
CASH, beginning of period                                                12,086             1,464
                                                                    -----------------  ----------------
CASH, end of period                                                      $3,748              $140
                                                                    =================  ================
</TABLE>

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

                                       (3)

<PAGE>

                         ADVANCED HEALTH CORPORATION AND SUBSIDIARIES
                          NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


                                       March 31,1997
                           (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.  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 because the Company was a development stage company
                     investing in  technology  development  and did  not provide
                     significant   physician  practice  and  network  management
                     services prior to December 11, 1995.


                  2. In March 1997,  the  Financial  Accounting  Standards Board
                     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 MSOs,  the results of which MSOs are
consolidated in the Consolidated Financial Statements.

RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996

Net revenue for the three months ended March 31, 1997 increased to $10.0 million
from $3.7 million in the comparable period ended March 31, 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  $6.6  million of  the  Company's net revenue for the three months
ended March 31, 1997 as compared to $2.9 million in the comparable  period ended
March 31, 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 $3.4 million for the three months ended
March 31, 1997, as compared to $.8 million in the comparable  period ended March
31, 1996.

Cost of revenues  for the three  months  ended March 31, 1997  increased to $6.4
million from $1.9 million for the  comparable  period ended March 31, 1996.  The
increase in cost of revenues  related  primarily to the  non-medical  and system
expenses  outsourced  to  the  Company  from  physician  group  practices  under
management.

Operating  expenses for the three months ended March 31, 1997  increased to $3.1
million from $2.9 million for the  comparable  period ended March 31, 1996.  The
increase in operating  expenses  reflected  expenses  related to the incremental
provision of physician group practice management and related services.

Other  income/expense  for the three months ended March 31, 1997 was $.2 million
and related to interest  earned 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 approximatley  $19,000 for
the comparable  period ended March 31, 1996, which related primarily to interest
on $1.5 million of indebtedness issued on February 28, 1996 bearing interest at
8% 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 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  March 31, 1997 was $.7  million
compared to a net loss of $1.2 million for the three months ended March 31, 1996
due to the factors described above.

LIQUIDITY AND CAPITAL RESOURCES

Effective  October 2, 1996, the Company completed its IPO of 2,645,000 shares of
Common  Stock,  including  the  underwriter's  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.  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, 1996,  respectively.  The Company issued six 9% promissory notes in
the aggregate  principal  amount of $2.0 million on June 19 and August 13, 1996.
All such notes were repaid in October 1996 using proceeds from the IPO.

For the three months ended March 31,  1997,  the Company had negative  cash flow
from its  operating  activities  of $8.0  million,  compared  with  $2.4 for the
comparable period ended March 31, 1996. Net cash provided by (used in) investing
activities  was ($.2) million for the three months ended March 31, 1997 compared
with ($.2) million for the comparable period ended March 31, 1996, both relating
to the purchase of fixed  assets.  Net cash (used in) financing  activities  was
($.1) million for the three months ended March 31, 1997 and related primarily to
the  repayment  of capital  lease  obligations.  Net cash  provided by financing
activities  for the  three  months  ended  March  31,  1996  was  $1.3  million,
principally  attributable  to net  proceeds  from  issuance  of $1.5  million in
indebtedness in February 1996.

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 is planning to acquire a minority  interest in a developer of
disease management software tools, which are complementary to products developed
and licensed by the Company.  Initially  the Company will provide a bridge loan,
secured by all of the assets,  both tangible and  intangible,  of the developer,
which  is  convertible  into  preferred  stock,  and  the  Company  may  acquire
additional preferred stock in connection with this transaction.  The bridge loan
and  investment  is not  expected to be  material in amount.  The Company has no
other planned material capital expenditures or capital commitments.


                                       (6)

<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.

May 15, 1997                 ADVANCED HEALTH COPORATION


                               By:  /s/ Jonathan Edelson
                                    ------------------------------------
                                    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)

                                       (7)