UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------


                                   FORM 10-Q/A

    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934

For the quarter ended: June 30, 1999              Commission File Number: 1-8147
                       -------------                                      ------

                               MEDIQ Incorporated
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              Delaware                                           51-0219413
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)

One MEDIQ Plaza, Pennsauken, New Jersey                              08110
----------------------------------------                          ----------
(Address of principal executive offices)                          (Zip Code)

Registrant's telephone number, including area code: (856) 662-3200
                                                    --------------

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 requirements
for the past 90 days. YES  X  NO ____
                          ---

As of August 9, 1999, there were outstanding 1,119,048 shares of Common Stock,
par value $.01.

                                       1
<PAGE>



                       MEDIQ INCORPORATED AND SUBSIDIARIES
                           Quarter Ended June 30, 1999

                                      INDEX

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                     Number
                                                                                     ------
<S>                                                                                     <C>
Introductory Statement                                                                  3

PART I.  FINANCIAL INFORMATION

  Item 1.  Financial Statements

         Condensed Consolidated Statements of Operations-                               4
         Three and Nine Months Ended June 30, 1999 and 1998

         Condensed Consolidated Balance Sheets-                                         5
         June 30, 1999 and September 30, 1998

         Condensed Consolidated Statements of Cash Flows-                               6
         Nine Months Ended June 30, 1999 and 1998

         Notes to Condensed Consolidated Financial   Statements                     7 - 9

  Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations                        10 - 14

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk                  14

PART II.  OTHER INFORMATION

  Item 1.  Legal Proceedings                                                           15

  Item 2.  Changes in Securities                                                       15

  Item 6.  Exhibits and Reports on Form 8-K                                            15
</TABLE>

                                       2
<PAGE>



                       MEDIQ INCORPORATED AND SUBSIDIARIES
                           Quarter Ended June 30, 1999


                             Introductory Statement

This Form 10-Q/A is filed to amend the Form 10-Q for the quarter ended June 30,
1999 as filed on August 16, 1999. The purpose of this amended filing is to
restate certain amounts within the financial statements and applicable footnotes
thereto, and to conform applicable portions of Management's Discussion and
Analysis of Financial Condition and Results of Operations and amounts within the
Financial Data Schedule to the restated amounts. The effects of the restatement
to the financial statements are more fully described in Note B of the Notes to
Condensed Consolidated Financial Statements. All disclosures herein are as of
the date of the original filing except as amended for the effects of the
restatements.









                          PART I. FINANCIAL INFORMATION

                          Item 1. Financial Statements

                                       3
<PAGE>

                       MEDIQ INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                    (in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                 Three Months Ended                  Nine Months Ended
                                                                       June 30,                           June 30,
                                                                1999              1998             1999           1998
                                                              --------          --------         --------       --------
                                                              (as restated,                     (as restated,
                                                               see Note B)                       see Note B)
<S>                                                           <C>               <C>              <C>            <C>
Revenues:
  Rental                                                      $ 39,670          $ 33,706         $122,288       $103,700
  Sales                                                         12,848             6,692           28,925         20,671
  Other                                                          4,005             2,543            9,311          7,549
                                                              --------          --------         --------       --------
                                                                56,523            42,941          160,524        131,920

Expenses of Operations:
  Cost of sales                                                 10,197             5,455           22,589         16,725
  Operating                                                     19,592            14,415           55,638         42,864
  Selling                                                        7,062             3,912           20,128         11,469
  General and administrative                                     6,005             5,186           18,380         14,534
  Merger charges                                                    --            34,204               --         34,567
  Depreciation and amortization                                 11,301            15,064           31,600         31,650
                                                              --------          --------         --------       --------
                                                                54,157            78,236          148,335        151,809
                                                              --------          --------         --------       --------

Operating Income (Loss)                                          2,366           (35,295)          12,189        (19,889)

Other (Charges) and Credits:
  Interest expense                                             (13,956)           (7,098)         (40,768)       (14,333)
  Other-net                                                         72               235              465            714
                                                              --------          --------         ---------      --------

Loss from Continuing Operations before
  Income Taxes and Extraordinary Item                          (11,518)          (42,158)         (28,114)       (33,508)
Income Tax Benefit                                              (2,396)          (15,632)          (8,152)       (11,744)
                                                              --------          --------         --------       --------

Loss before Extraordinary Item                                  (9,122)          (26,526)         (19,962)       (21,764)
Extraordinary Item - Early Retirement of Debt
  (net of taxes)                                                    --            (4,098)              --         (4,098)
                                                              --------          --------         --------       --------

Net Loss                                                        (9,122)          (30,624)         (19,962)       (25,862)
Dividends on Preferred Stock                                    (4,802)           (1,600)         (13,900)        (1,600)
                                                              --------          --------         --------       --------

Net Loss Attributable to Common Shareholders                  $(13,924)         $(32,224)        $(33,862)      $(27,462)
                                                              ========          ========         ========       ========

Basic and Diluted Per Share Amount:
  Continuing operations, net of preferred dividends           $ (12.86)         $  (1.68)        $ (31.44)      $  (1.03)
  Extraordinary item                                                --              (.25)              --           (.18)
                                                              --------          --------         --------       --------
  Attributable to common shareholders                         $ (12.86)         $  (1.93)        $ (31.44)      $  (1.21)
                                                              ========          ========         ========       ========

Weighted Average Number of Common Shares Outstanding:
  Basic and Diluted                                              1,083            16,702            1,077         22,650
                                                              ========          ========         ========       ========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

                                       4
<PAGE>

                       MEDIQ INCORPORATED AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                             June 30,            September 30,
                                                                               1999                  1998
                                                                            ----------           ------------
                                                                        (Unaudited)             (See note below)
                                                                       (as restated,
                                                                        see Note B)
                                            Assets
<S>                                                                         <C>                    <C>
Current Assets:
  Cash                                                                      $      --              $   2,411
  Accounts receivable (net of allowance of $17,693 and
    $11,432, respectively)                                                     65,765                 52,659
  Inventories - net                                                            24,751                 21,820
  Other current assets                                                         13,061                  9,923
                                                                            ---------              ---------
         Total Current Assets                                                 103,577                 86,813

Property, Plant and Equipment (net of accumulated depreciation
  and amortization of $180,647 and $155,749, respectively)                    109,017                103,917
Goodwill (net of accumulated amortization of $21,201
  and $16,658, respectively)                                                  153,200                 91,121
Deferred Financing Costs (net of accumulated amortization
  of $2,650 and $862, respectively)                                            19,523                 20,013
Other Assets                                                                   10,354                  7,354
                                                                            ---------              ---------

Total Assets                                                                $ 395,671              $ 309,218
                                                                            =========              =========

                           Liabilities and Stockholders' Deficiency
Current Liabilities:
  Accounts payable                                                          $  20,631              $  14,152
  Accrued expenses                                                             16,535                 20,569
  Other current liabilities                                                     1,147                    281
  Current portion of long term debt                                             8,273                  2,037
                                                                             --------              ---------
         Total Current Liabilities                                             46,586                 37,039

Senior Debt                                                                   371,335                277,490
Subordinated Debt                                                             190,514                190,514
Deferred Income Taxes                                                           7,493                 14,019
Other Liabilities                                                               5,055                  2,472

Mandatorily Redeemable Preferred Stock                                        131,676                113,037

Stockholders' Deficiency                                                     (356,988)              (325,353)
                                                                            ---------              ---------

Total Liabilities and Stockholders' Deficiency                              $ 395,671              $ 309,218
                                                                            =========              =========
</TABLE>

Note: The balance sheet at September 30, 1998 has been condensed from the
audited financial statements at that date.


            See Notes to Condensed Consolidated Financial Statements

                                       5
<PAGE>




                       MEDIQ INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                                     Nine Months Ended June 30,
                                                                                      1999                 1998
                                                                                   ---------            ---------
                                                                                   (as restated,
                                                                                    see Note B)
<S>                                                                                   <C>                   <C>
Cash Flows From Operating Activities

Net loss                                                                           $ (19,962)            $ (25,862)
Adjustments to reconcile net loss to net cash
  provided by (used in) operating activities                                          26,099                23,943
                                                                                   ---------             ---------
Net cash provided by (used in) operating activities                                    6,137                (1,919)

Cash Flows From Investing Activities

Purchases of equipment                                                               (16,231)              (17,909)
Acquisitions                                                                         (82,947)              (11,032)
Collection of notes receivable                                                            --                 2,250
Other                                                                                    328                   654
                                                                                   ---------             ---------
Net cash used in investing activities                                                (98,850)              (26,037)

Cash Flows From Financing Activities

Borrowings                                                                            93,000               151,499
Debt repayments                                                                       (1,400)             (133,872)
Deferred financing fees                                                               (1,298)              (20,056)
Issuance of subordinated notes                                                            --               190,000
Issuance of common and preferred stocks                                                   --               148,235
Issuance of units                                                                         --                75,000
Repurchases of common and preferred stocks                                                --              (377,416)
Other                                                                                     --                   130
                                                                                   ---------             ---------
Net cash provided by financing activities                                             90,302                33,520
                                                                                   ---------             ---------

(Decrease) increase in cash                                                           (2,411)                5,564
Cash:
  Beginning balance                                                                    2,411                 3,639
                                                                                   ---------             ---------
  Ending balance                                                                   $      --             $   9,203
                                                                                   =========             =========

Noncash investing and financing activity:
  Capital stock issued in an acquisition                                           $  10,000             $      --
                                                                                   =========             =========
</TABLE>

            See Notes to Condensed Consolidated Financial Statements

                                       6
<PAGE>


                       MEDIQ INCORPORATED AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


Note A - Condensed Consolidated Financial Statements

The condensed consolidated balance sheet as of June 30, 1999 and the condensed
consolidated statements of operations and cash flows for the three and nine
months ended June 30, 1999 and 1998 have been prepared by the Company, without
audit. In the opinion of management, all adjustments (consisting only of normal,
recurring adjustments) necessary to present fairly the financial position,
results of operations and cash flows at June 30, 1999 and for all periods
presented have been made.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's September 30, 1998 Annual Report on Form 10-K.
The results of operations for the period ended June 30, 1999 are not necessarily
indicative of the operating results for the full year.

Certain reclassifications have been made to conform prior year balances to the
current year presentation.

Note B - Restatement

Subsequent to the issuance of the financial statements for the periods ended
June 30, 1999, the Company performed an extensive review of the adequacy of the
reserves for doubtful accounts and excess and obsolete inventories. The Company
also reviewed the capitalization of accessories for its medical equipment. As a
result of these reviews, the Company determined that certain adjustments should
have been made. These adjustments in the aggregate for the three and nine month
periods ended June 30, 1999, respectively, increased the net loss attributable
to common shareholders by $2.9 million, net of tax of $.8 million, or $2.71 per
share and $9.6 million, net of tax of $4.4 million, or $8.92 per share. The
restatement on a pretax basis for the respective periods consisted of charges of
$.5 million and $9.4 million in additional provisions for doubtful accounts,
$2.6 million in each period in provisions for excess and obsolete inventories
and $.6 million and $2.0 million for the write off of accessory costs previously
capitalized. Additional restatement effects on the financial statements were:
statement of operations for the three and nine month periods ended June 30,
1999, respectively - rental revenues reduced by $1.9 million and $6.5 million,
operating expenses increased by $1.8 million and $7.5 million; balance sheet at
June 30, 1999 - allowance for doubtful accounts increased and accounts
receivable decreased by $9.4 million, property, plant and equipment decreased by
$2.0 million, deferred income tax liability decreased by $4.4 million.


Note C - Inventory

The components of inventory were as follow:

<TABLE>
<CAPTION>
                                                                 June 30,                  September 30,
                                                                    1999                       1998
                                                                 --------                  -------------
                                                                            (in thousands)
<S>                                                              <C>                         <C>
         Raw materials                                           $ 1,587                     $  2,791
         Finished goods                                           25,787                       19,703
                                                                 -------                     --------
                                                                  27,374                       22,494
         Reserves for excessive quantities and obsolescence       (2,623)                        (674)
                                                                 -------                     --------
                                                                 $24,751                     $ 21,820
                                                                 =======                     ========
</TABLE>

                                       7
<PAGE>


Note D - Per Share Amounts

Warrants to purchase shares of the Company's Common Stock were excluded from the
computation of per share amounts for the three and nine months ended June 30,
1999 and 1998 because they were antidilutive in each period. At June 30, 1999
and 1998, the total number of shares of Common Stock underlying the warrants was
91,209. Options to purchase shares of the Company's Common Stock were also
excluded from the computation of per share amounts for the three and nine months
ended June 30, 1999 because they were antidilutive. The number of options
outstanding at June 30, 1999 was 51,853. No options were outstanding at June 30,
1998. The disparity in per share amounts for the respective periods presented in
the Condensed Consolidated Statements of Operations was attributable to the
Company's recapitalization in connection with its merger that occurred in May
1998.

Note E - Long Term Debt

In May 1999, MEDIQ/PRN Life Support Services, Inc. ("MEDIQ/PRN"), a wholly owned
subsidiary of the Company, amended its $325.0 million credit agreement with a
consortium of lenders led by Banque Nationale de Paris ("BNP") by reducing the
borrowing capacity under the acquisition facility from $75.0 million to $50.0
million and establishing a subfacility B under the revolving credit facility
with a borrowing capacity of $25.0 million. Borrowings under subfacility B bear
interest at a floating rate based upon, at MEDIQ/PRN's option, (i) the higher of
the prime rate of BNP or the Federal funds effective rate plus 0.5%, plus a
margin of 1.0% or (ii) the London Interbank Offered Rate, plus a margin of
2.25%. Principal amounts outstanding on November 30, 1999 under subfacility B
amortize quarterly starting March 31, 2000 in increasing increments as scheduled
in the modified credit agreement. Any remaining principal balance is due on the
facility's termination date of June 30, 2004. Other terms and conditions of
subfacility B are generally the same as those existing for the acquisition and
revolving credit facilities.

In June 1999, MEDIQ/PRN borrowed $22.2 million available under the $50.0 million
acquisition facility, $25.0 million under subfacility B and approximately $2.5
million under the revolving credit facility to fund the cash portion of the
acquisition of HTD Corporation ("HTD"). (see Note F)

Note F - Acquisitions

On June 15, 1999, the Company, through MEDIQ/PRN, acquired all of the issued and
outstanding common stock of HTD and certain of its subsidiaries pursuant to an
Agreement and Plan of Merger dated June 14, 1999. Total consideration paid by
the Company was estimated at approximately $59.7 million, comprising $49.7
million in cash and an estimated $10.0 million aggregate value of capital stock
of the Company. The estimated value per share of the Common Stock was $17.12 and
$10.00 for each preferred stock. The value of the capital stock issued in the
acquisition is subject to adjustment based on a final appraisal. The capital
stock of the Company issued consisted of 44,225 shares of Common Stock, 513,548
shares of Series A 13.0% Cumulative Compounding Preferred Stock ("Series A"),
146,303 shares of Series B 13.25% Cumulative Compounding Perpetual Preferred
Stock ("Series B") and 264,438 shares of Series C 13.5% Cumulative Compounding
Preferred Stock ("Series C"). HTD specialized in sales of disposable products,
rentals of movable medical equipment and biomedical repair services to the acute
care, alternate care and home care marketplaces. Following the acquisition, HTD
was merged into MEDIQ/PRN. Contemporaneously with the Company's acquisition of
HTD, HTD sold to an unrelated third party its subsidiaries not acquired by
MEDIQ/PRN.

The acquisition of HTD was accounted for by the purchase method and,
accordingly, the estimated cost of the acquisition was allocated to the assets
acquired and liabilities assumed based on their estimated fair values on May 28,
1999, the effective date of the acquisition for accounting purposes.
Accordingly, operations of HTD were included in the Company's results of
operations effective May 28, 1999. The excess of the estimated cost over the
estimated fair values of net assets acquired of $41.5 million was recorded as
goodwill amortizable on a straight line basis over 20 years. The following pro
forma financial information presents the consolidated results of operations of
the Company as if the acquisition had occurred on October 1 of the respective
periods presented. This unaudited pro forma information is presented for
comparative purposes only and does not necessarily reflect the results of
operations of the Company had the acquisition existed on the prescribed dates.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                          Nine Months Ended June 30,
                                                        1999                      1998
                                                     ----------                ----------
                                                                   unaudited
                                                 (in thousands, except per share amounts)

<S>                                                  <C>                        <C>
Revenues                                             $208,500                   $173,230
Loss before extraordinary item                        (19,542)                   (23,840)
Loss per share amount                                  (17.46)                     (1.05)
Net loss                                              (19,542)                   (27,938)
Loss per share amount                                  (17.46)                     (1.23)
</TABLE>

The initial allocation of the estimated cost of the HTD acquisition and the
associated goodwill was estimated based on information available at the date of
the acquisition. The final determination and allocation of the acquisition cost
is contingent upon findings and valuations not completed at August 16, 1999.

The Company purchased the assets of one business in the first quarter and
acquired two businesses in the second quarter of fiscal 1999. The aggregate
purchase price and associated goodwill were $32.5 million and $24.4 million,
respectively. The assets and businesses acquired principally relate to medical
equipment and support surface rentals. The acquisitions were accounted for by
the purchase method and, accordingly, the purchase prices were allocated to the
assets acquired based on their estimated fair values on the dates of purchase.
The aggregate excess of purchase prices over estimated fair values of net assets
acquired was recorded as goodwill amortizable on a straight line basis over 20
years. Operations of the acquired assets and businesses have been included in
the Company's results of operations from the respective acquisition dates. Pro
forma results of operations of the Company giving effect to these acquisitions
were not included in the above pro forma presentation because these acquisitions
in the aggregate were not material.

Note G - Capital Stock

Including the issuance of capital stock in connection with the acquisition of
HTD, the number of shares of capital stock outstanding at June 30, 1999 was:
Common Stock - 1,119,048; Series A Preferred Stock - 8,336,310; Series B
Preferred Stock - 3,146,302; and Series C Preferred Stock - 3,264,438. The
number of shares outstanding for Series A Preferred Stock has been adjusted in a
minor amount to reflect fractional shares that will occur in future exchanges
for capital stock that existed prior to the Company's merger in May 1998.

Issued and outstanding warrants in the amount of 140,885 for the purchase of
91,209 shares of the Company's Common Stock became exercisable on May 30, 1999.

Note H - Income Taxes

The estimated annual effective income tax rate for fiscal 1999 was 29.0% at June
30, 1999. This rate is lower than the overall statutory rate for the Company of
40.0% due to estimated nondeductible costs associated with the Company's
acquisitions and valuation allowances against net operating losses available for
state income taxes. These items lower the tax benefit associated with the
expected annual tax loss. The annual effective rate was adjusted in the third
quarter from the rate estimated at March 31, 1999 as a result of adjustments in
the third quarter for the estimated impacts of increased nondeductible goodwill
and other costs related to acquisitions made in fiscal 1999.

                                        9
<PAGE>


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


The Following discussion addresses the financial condition of the Company as of
June 30, 1999 and results of operations for the three and nine months ended
June 30, 1999 and 1998, and addresses other circumstances through, or that
could be reasonably expected at, August 16, 1999. This discussion should be
read in conjunction with the financial statements included elsewhere herein and
the Management's Discussion and Analysis and financial statement sections of
the Company's Annual Report on Form 10-K for the year ended September 30, 1998.
This discussion has been revised to conform to the restatements discussed in
Note B of the Notes to Condensed Consolidated Financial Statements.

The following information contains forward looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that are
subject to risks and uncertainties. Unless otherwise specified, the forward
looking statements contained herein were made at August 16, 1999. Although the
Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations as existed, or
that could be reasonably expected, at August 16, 1999, there can be no assurance
that actual results will not differ materially from its expectations. Readers
are cautioned not to place undue reliance on these forward looking statements,
which only address the circumstances that existed, or that could be reasonably
expected, at August 16, 1999.

Seasonality

In the past, the Company's rentals have been somewhat seasonal, with demand
historically peaking during periods of increased hospital census, which
generally occur in the winter months during the Company's second fiscal quarter.

Restatement of Quarterly Financial Information

Subsequent to the issuance of the financial statements for the periods ended
June 30, 1999, the Company performed an extensive review of the adequacy of the
reserves for doubtful accounts and excess and obsolete inventories. The Company
also reviewed the capitalization of accessories for its medical equipment. As a
result of these reviews, the Company determined that certain adjustments should
have been made. These adjustments in the aggregate for the three and nine month
periods ended June 30, 1999, respectively, increased the net loss attributable
to common shareholders by $2.9 million, net of tax of $.8 million, or $2.71 per
share and $9.6 million, net of tax of $4.4 million, or $8.92 per share. The
restatement on a pretax basis for the respective periods consisted of charges of
$.5 million and $9.4 million in additional provisions for doubtful accounts,
$2.6 million in each period in provisions for excess and obsolete inventories
and $.6 million and $2.0 million for the write off of accessory costs previously
capitalized. Additional restatement effects on the financial statements were:
statement of operations for the three and nine month periods ended June 30,
1999, respectively - rental revenues reduced by $1.9 million and $6.5 million,
operating expenses increased by $1.8 million and $7.5 million; balance sheet at
June 30, 1999 - allowance for doubtful accounts increased and accounts
receivable decreased by $9.4 million, property, plant and equipment decreased by
$2.0 million, deferred income tax liability decreased by $4.4 million.

Results of Operations

Fiscal 1999 Compared to Fiscal 1998

Changes for the current year periods are with respect to the corresponding prior
year periods unless otherwise indicated.

Total revenues increased in the three months and nine months ended June 30, 1999
by $13.6 million, or 31.6%, and $28.6 million, or 21.7%, respectively. These
increases were attributed to increases in rental revenues of $6.0 million, or
17.7%, and $18.6 million, or 17.9%. The increases in rentals were primarily
related to incremental revenues from six acquisitions made since May 1998 of
businesses specializing in rentals. Rentals of support surfaces increased by
$6.4 million in the three months to $10.7 million and $23.0 million in the

                                       10
<PAGE>

nine months ended to $32.3 million principally due to acquisitions, partially
offset by increased charges for reserves for doubtful accounts. Rentals of
medical equipment decreased by $.4 million in the three months to $28.9 million
and $4.4 million in the nine months ended to $89.9 million principally as a
result of increased charges for reserves for doubtful accounts, pricing
concessions granted to a large national account and the termination of the
Company's largest revenue share arrangement in June 1999, partially offset by
increased volume of 4.6% and 3.2% in the respective periods in total average
units on rent, increased revenues from other revenue share arrangements and
incremental revenues from acquisitions. The Company experienced pricing
pressures as a result of increased competition from other rental providers, and
expects this pressure to continue for the remainder of fiscal 1999. The
increases in sales and other revenues primarily resulted from the incremental
revenues from sales of disposables and biomedical repair services, respectively,
provided by the HTD acquisition, and to a lesser extent internal growth.

The Company's acquisitions prior to HTD focused on expanding the Company's
rental revenues, principally those for support surfaces. The acquisition of HTD
focused on expanding the parts and disposables business while also contributing
to increases in medical equipment rental and biomedical repair revenues. The
Company anticipates that the HTD acquisition will provide incremental annual
revenues of approximately $60.0 million and that the three other acquisitions
made by the Company in fiscal 1999 will provide incremental annual revenues of
approximately $11.0 million. However, there is no assurance that such annual
revenues from any of these acquisitions will materialize.

The increase in cost of sales in each current year period was consistent with
the increase in sales in each period. Sales margin was 20.6% and 21.9% in the
three and nine months fiscal 1999, respectively, compared to 18.5% and 19.1% in
the respective prior year periods. The increased margins resulted from a
combination of the higher margins associated with direct sales to customers that
had been previously subject to a revenue share arrangement and more higher
margin equipment sales in fiscal 1999 than in fiscal 1998. Selling expenses in
the three months fiscal 1999 increased $3.2 million, or 80.5%, and in the nine
months fiscal 1999 increased $8.7 million, or 75.5%. The increase in each period
was due to increased sales support related to the Company's expanded operations
for support surfaces and parts and disposables. Operating and general and
administrative expenses are viewed together because each covers a broad spectrum
of expenses that crosses functions within the Company. These expenses increased
by $6.0 million, or 30.6% in the three months ended and $16.7 million, or 29.0%,
in the nine months ended. These increases were primarily due to: (i) increased
infrastructure and employee costs associated with larger and expanded operations
primarily related to the growth in the support surfaces and parts and
disposables businesses; (ii) increased service and repair and maintenance
requirements associated with a larger and expanded equipment and product
inventory; (iii) $.2 million and $.9 million in each respective period for
management fees initiated in May 1998; (iv) increased provisions for bad debts
of $.6 million and $2.0 million in each respective period; (v) write off of
accessory costs of $.6 million and 2.0 million in each respective period; and
provisions for excess and obsolete inventories of $2.6 million in each period.
Depreciation and amortization decreased in each current year period by $3.8
million and $50 thousand, respectively. Included in each fiscal 1998 period was
$6.0 million for the write down of certain under utilized equipment to net
realizable value. Otherwise, depreciation and amortization for the current year
increased due to additional depreciable equipment purchased and obtained in
acquisitions and increased amortization of goodwill due to additional amounts
incurred in acquisitions made since May 1998.

Interest expense was $14.0 million and $40.8 million in the three and nine
months of fiscal 1999, respectively, compared to $7.1 million and $14.3 million
in the respective corresponding prior year periods. The increases in the current
year periods were principally due to the amount of time the substantially higher
level of debt incurred in connection with the Company's recapitalization and an
acquisition in May 1998 was outstanding during each period, and the additional
debt undertaken in fiscal 1999 to fund acquisitions. The cash portion of this
interest expense was $10.6 million and $30.8 million for the three and nine
months of fiscal 1999, respectively. The remaining interest expense primarily
represented noncash accretion of the Company's 13% Senior Discount Debentures
and amortization of deferred debt issuance costs.

The estimated annual effective income tax rate associated with the loss from
continuing operations for the nine months fiscal 1999 was 29.0%. This rate is
lower than the overall statutory rate of 40.0% for the Company due to estimated

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<PAGE>

nondeductible costs associated with the Company's acquisitions and valuation
allowances against net operating losses available for state income taxes. The
effective rate for the nine months fiscal 1999 is estimated to be more
reflective of the expected annual effective tax rate for all of fiscal 1999.
This rate was adjusted in the third quarter from the estimated annual effective
rate for the six months fiscal 1999 due to adjustments for the estimated impacts
of increased nondeductible goodwill and other costs related to acquisitions made
in fiscal 1999.

Accreted but unpaid dividends on preferred stock for the current year periods
were $4.8 million and $13.9 million, respectively, compared to $1.6 million in
each of the corresponding prior year periods. The variance was due to the amount
of time the related preferred stock issued in May 1998 was outstanding in each
period.

For the nine months fiscal 1999, there was a loss attributable to common
shareholders of $33.9 million. Due to the amount of cash and noncash interest
and preferred stock dividend requirements combined with noncash depreciation and
amortization expected to be incurred in the future, it is likely that the
Company will continue to report a net loss attributable to common shareholders
for the foreseeable future. The disparity in the weighted average number of
common shares used in the earnings per share computations in each period
primarily resulted from the Company's merger and recapitalization in May 1998.

Liquidity and Capital Resources

Net cash provided by operating activities in the nine months fiscal 1999 was
$6.1 million, compared to net cash used in operating activities of $1.9 million
in the corresponding prior year period. Included in the nine months fiscal 1998
were nonrecurring cash payments related to merger and acquisition expenses
totaling approximately $34.3 million. Adjusting for the nonrecurring items, cash
provided by operating activities in the nine months fiscal 1999 decreased
principally due to interest payments in the current year substantially exceeding
those in the prior year due to the considerably greater amounts of indebtedness
outstanding since May 1998.

The Company used its acquisition facility to fund $50.0 million of acquisitions
and its revolving credit facilities to fund $43.0 million of acquisitions,
certain purchases of equipment and general corporate purposes. At June 30, 1999,
borrowings outstanding under the acquisition and revolving credit facilities
were $50.0 million and $43.0 million, respectively. At June 30, 1999, borrowings
under the acquisition facility equaled the maximum amount available for the
facility. Availability under the revolving credit facility at June 30, 1999 was
approximately $15.0 million.

The variable rate of interest on the term facility at June 30, 1999 was
effectively 8.06% compared to 7.88% at March 31, 1999 and 8.50% at September 30,
1998. The term rate of 8.06% is fixed until December 10, 1999. The weighted
average variable rate of interest on the revolving credit facility during the
third quarter fiscal 1999 was 7.70%, and the combined rate at June 30, 1999 was
7.77% compared to 7.57% at March 31, 1999 and 9.00% at September 30, 1998. The
weighted average variable rate of interest on the acquisition facility during
the third quarter fiscal 1999 was 7.40%, and the combined rate at June 30, 1999
was 7.42% compared to 7.31% at March 31, 1999. The changes in the rates of
interest at the period ended dates indicated above reflect the movement in short
term market rates of interest. All of the above noted rates of interest include
applicable margins.

MEDIQ/PRN modified its $325.0 million credit agreement with BNP. This
modification reduced the borrowing capacity under the acquisition facility from
$75.0 million to $50.0 million and established a subfacility B under the
revolving credit facility with a borrowing capacity and availability of $25.0
million. MEDIQ/PRN utilized all of the $25.0 million borrowing capacity under
subfacility B to fund the HTD acquisition. Borrowings outstanding under
subfacility B are subject to variable rates of interest. Principal amounts
outstanding on November 30, 1999 under subfacility B amortize quarterly starting
March 31, 2000 in increasing increments as scheduled in the modified credit
agreement. Any remaining principal balance is due on the facility's termination
date of June 30, 2004.

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<PAGE>

Year 2000

The Company continues to evaluate the risks associated with its operations as a
result of Year 2000 compliance issues. The Company has evaluated these risks on
three levels: internal and existing computer programs and applications; rental
equipment and customers and suppliers. In evaluating these risks, the Company
considered the material implications of each of these items on its operations on
and subsequent to January 1, 2000. The Company's internal business information
systems have been analyzed for Year 2000 compliance and the Company believes
that these systems are Year 2000 compliant. The Company commenced testing of the
compliance readiness of the internal business information systems in January
1999, and will continue testing on an ongoing basis. The Company utilizes
certain third party network equipment and software products, which may or may
not be Year 2000 compliant. While delays in the implementation of the Year 2000
solutions for such systems which may not be Year 2000 compliant could adversely
effect the Company's operations, at this time, the Company believes that
resolution of this Year 2000 issue will not have a material adverse effect on
the Company's operations or results of operations.

A significant portion of the Company's revenues and operating income is directly
related to the Company's ability to rent its equipment. Should a material
portion of such equipment not be Year 2000 compliant and, therefore, not
suitable for its designed purpose, there could be a material adverse effect on
the Company's results of operations. The Company believes that support surfaces
rental equipment that has been manufactured by the Company is fully Year 2000
compliant. The Company has been conducting formal communications with the
equipment manufacturers for products the Company maintains in its inventory to
determine the extent to which the Company's purchased rental equipment may be
vulnerable to Year 2000 issues. To date, approximately 97% of the equipment
manufacturers have responded to the Company's requests. As of June 30, 1999,
based on the responses received from manufacturers of the related equipment,
approximately 87% of the Company's rental fleet is fully Year 2000 compliant, as
represented by the manufacturers. The Company has relied on representations made
by the manufacturers. An internal evaluation of Year 2000 compliance was made on
some of the equipment for which the Company could not locate the manufacturers.
This evaluation concluded that an additional 4% of the rental fleet is Year 2000
compliant, making 91% the total amount of rental equipment that is Year 2000
compliant. For manufacturers that have not yet responded, the Company has a
formal follow up plan that is currently being executed. The Company expects to
complete the evaluation process of its rental fleet by September 30, 1999. To
date, based on responses from the equipment manufacturers and its internal
evaluation, the Company believes it would need to spend approximately $4.0
million to bring its entire rental fleet into Year 2000 compliance. The Company
may decide not to modify its entire rental fleet. Such decision will be based on
yet to be determined anticipated utilization of compliant equipment. This
determination would impact the amount expended on modifications and the timing
of completion thereof. Currently, the Company is not able to estimate the costs
associated with Year 2000 issues for rental equipment whose manufacturers have
not yet replied. Percentages and anticipated timetables mentioned above have
been adjusted from those contained in previous disclosures to conform to the
pace of compliance efforts of certain suppliers to the Company and as a result
of other compliance efforts performed thus far, and due to additional equipment
obtained by the Company in recent acquisitions. The status of compliance is
subject to further adjustment in accordance with future changing circumstances
that cannot now be reliably known or anticipated.

Although the Company has significant relationships with certain of its customers
and suppliers, the Company has determined that no one individual customer or
supplier could create a material adverse effect for the Company as a result of
not being Year 2000 compliant. However, should a number of individual customers
and/or suppliers be noncompliant, there could be a material adverse effect on
the Company's operations and results of operations. The Company cannot predict
the extent or dollar amount, if any, of such effect.

Should a material portion of the Company's rental fleet not be Year 2000
compliant and, therefore, not suitable for its designed purpose, an interruption
in or a failure of certain normal business activities or operations could occur.
There can be no assurance that the systems of other companies on which the
Company relies will be Year 2000 compliant and, therefore, not have a material
adverse effect on the Company. The Company cannot predict the extent or dollar
amount, if any, of such effect.

                                       13
<PAGE>

The cost of compliance and the date on which the compliance will be completed
are based on estimates, which were derived utilizing numerous assumptions of
future events including the continued availability of certain resources and
other factors. However, there can be no assurance that these estimates will be
achieved. Actual results could differ materially from the projections. Specific
factors that might cause a material change include, but are not limited to, the
availability and cost of personnel trained in this area, the ability to obtain
all necessary components or upgrade parts and similar uncertainties.

The Company has investigated developing contingency plans for dealing with worst
case scenarios regarding its rental fleet and overall operations. With respect
to its equipment rentals, the Company believes that it is not necessary or
practical to implement contingency measures; however, the Company will make
available all of its Year 2000 compliant equipment to customers that desire to
have sufficient back up units on hand for their own contingency plans.
Concerning its internal systems, the Company performs ongoing testing of these
and believes them to be Year 2000 compliant, so the Company believes that a
contingency plan for their operation is not necessary. With respect to other
operational aspects, the Company believes that developing a contingency plan for
a worst case scenario is not feasible, and based on representations made by
external service providers to the Company (for example, electricity and
telecommunications), circumstances creating such an event are considered by the
Company to be remote. Nevertheless, the absence of a contingency plan could have
a material adverse effect on the Company's operations.

Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There were no changes during the three and nine months ended June 30, 1999 in
the way the Company managed its interest rate risk. Also, there were no material
amounts associated with the Company's interest rate swap and collar instruments
during the nine months fiscal 1999.

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<PAGE>

                       MEDIQ INCORPORATED AND SUBSIDIARIES
                           Quarter Ended June 30, 1999


PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings

As reported in the Company's most recent Form 10-K, the Company filed a
complaint against Siemens Medical Systems, Inc. ("Siemens") in connection with
Siemens' attempted termination of a distribution agreement between the parties.
Siemens filed a motion to dismiss the complaint, which was denied. Discovery has
not yet commenced.

On July 8, 1999, SizeWise Rentals, Inc. ("SizeWise") filed a suit against the
Company in the United States District Court, District of Kansas. The suit is in
connection with the purported termination by SizeWise of a rental arrangement
with the Company due to an alleged breach of the arrangement by the Company. The
complaint seeks a declaratory judgment and damages. The Company believes that
the allegations in the complaint are without merit and intends to vigorously
defend this case. Based on the information currently available, the Company
believes that resolution of the suit will not have a material adverse effect on
the operations or financial condition of the Company.

Item 2.  Changes in Securities

On June 15, 1999, the Company issued (i) 44,225 shares of Common Stock, par
value $.01 per share, (ii) 513,548 shares of Series A 13.0% Cumulative
Compounding Preferred Stock, par value $.01 per share, (iii) 146,303 shares of
Series B 13.25% Cumulative Compounding Perpetual Preferred Stock, par value $.01
per share, and (iv) 264,438 shares of Series C 13.5% Cumulative Compounding
Preferred Stock, par value $.01 per share to PENMAN Private Equity and Mezzanine
Fund, L.P. ("PENMAN"). The shares of the Company were issued in a private
placement pursuant to Section 4(2) of the Securities Act of 1933 in exchange for
1,218,763 shares of common stock of HTD owned by PENMAN in connection with the
acquisition of HTD by the Company through MEDIQ/PRN.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

27       Financial Data Schedule appears on page 17.

(b)      Reports on Form 8-K

         The Company filed the following report on Form 8-K during the quarter
ended June 30, 1999:

         Date of Earliest Event Requiring a Report:  June 15, 1999
         Date of Filing:  June 28, 1999
         Items Reported:  Item 2 and Item 7
         Subject:  Acquisition of HTD by MEDIQ/PRN.

                                       15

<PAGE>

                       MEDIQ INCORPORATED AND SUBSIDIARIES
                           Quarter Ended June 30, 1999


                                    SIGNATURE



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.







                                                       MEDIQ Incorporated
                                                   --------------------------
                                                           (Registrant)



July 20, 2000                                      /s/ Kenneth K. Kreider
-------------                                      ---------------------------
     (Date)                                        Kenneth K. Kreider
                                                   Senior Vice President
                                                   and Chief Financial Officer

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