SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
                                    FORM 10-K

       (Mark One)
       /X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 1997

       OR

       / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                         Commission file number   1-9848

                             CARETENDERS HEALTH CORP.
              (Exact name of registrant as specified in its charter)


                       Delaware                     06-1153720
          (State or other jurisdiction of         (IRS Employer
           incorporation or organization)       Identification No.)


     100 Mallard Creek Road, Suite 400, Louisville, Kentucky    40207
           (Address of principal executive offices)          (Zip Code)


                                  (502) 899-5355
               (Registrant's telephone number, including area code)


Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:


        Title of Each Class           Name of Each Exchange on Which Registered
      Common Stock, par value                  NASDAQ National Market
          $.10 per share  



       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      .
       
       Indicate by check mark if disclosure of delinquent filers pursuant
       to Item 405 of regulation S-K is not contained herein, and will not
       be contained, to the best of the Registrant's knowledge, in definitive 
       proxy or information statements incorporated by reference in Part III of
       this Form 10-K or any amendment to this Form 10-K.______

       As of June 23, 1997,  3,129,413 shares of the Registrant's Common
       Stock were outstanding.  The aggregate market value of Registrant's
       Common Stock held by non-affiliates of the Registrant as of June 23,
       1997 was approximately $ 25,622,069 (based on the last sale price of
       a share of the common stock as of June 23, 1997 ($8.1875), as
       reported by the National Association of Securities Dealers, Inc.
       Automated Quotation ("NASDAQ")  National Market system).


                       DOCUMENTS INCORPORATED BY REFERENCE

       The Registrant's definitive proxy statement, to be filed with the
       Commission no later than 120 days after March 31, 1997, is incorporated
       by reference in Part III of this report.


<PAGE>
                                TABLE OF CONTENTS



         PART I
            Item 1.     Business
            Item 2.     Properties
            Item 3.     Legal Proceedings
            Item 4.     Submission of Matters to a Vote of Security Holders



         PART II
            Item 5.     Market for Registrant's Common Equity and Related 
                        Stockholder Matters
            Item 6.     Selected Financial Data
            Item 7.     Management's Discussion and Analysis of Financial 
                        Condition and Results of Operation
            Item 8.     Financial Statements and Supplementary Data
            Item 9.     Changes in and Disagreements with Accountants on
                        Accounting and Financial Disclosure


         PART III
            Item 10.    Directors and Executive Officers of the Registrant
            Item 11.    Executive Compensation
            Item 12.    Security Ownership of Certain Beneficial Owners and
                        Management
            Item 13.    Certain Relationships and Related Transactions



         PART IV
            Item 14.    Exhibits, Financial Statement Schedules and Reports
                        on Form 8-K


<PAGE>

                                      PART I
        ITEM 1.  BUSINESS

       General Development of Business


       Incorporated in Delaware in November, 1985, Caretenders Health Corp.
       and subsidiaries (collectively "Caretenders" or the "Company") is one
       of the first companies to provide integrated adult day health services
       and home health care services for seniors and others with chronic and
       post-acute medical conditions who wish to remain in their homes and
       communities.  Today more than seven million senior Americans are in
       need of alternatives to long-term nursing home confinement and this
       number is expanding rapidly.  These individuals desire to remain in
       their homes and out of nursing homes and conserve their financial
       resources as long as possible.  The Company provides seniors in need
       with a lower-cost alternative to institutional care helping them gain
       economic security access to health care, mobility and independence
       without isolation.

       With its experience in home health care and leadership in adult day
       health center operations, the Company is implementing an expansion
       program offering integrated home and community based health care
       marketed under the name Caretenders' SeniorCare Solutions.

       The Company is positioning itself to take advantage of changes and
       reform activities in the healthcare industry by focusing its resources
       into its home and community based health care business units which
       consist of adult day health services and home health care (home health
       care includes nursing, infusion therapy and durable medical equipment).
       These businesses are involved with the delivery of health care in
       alternative settings which the Company believes are preferred by
       consumers and operate at lower costs than hospitals and nursing homes.
       The trend toward alternative site delivery of healthcare is increasing,
       as more payor organizations are seeking to reduce the costs of medical
       care.

       Utilizing its strengths in home health care and adult day health
       services, the Company is actively addressing the issue of senior care
       in America by its comprehensive strategy _ Caretenders SeniorCare
       Solutions.  Through care management by a Registered Nurse (RN),
       Caretenders helps families identify solutions for caring for loved ones
       who can no longer meet their own health and personal care needs.
       Through the Company's Care Manager, families can learn about long-term
       care options available for seniors and obtain assistance in choosing
       from Caretenders' SeniorCare Day and Home Health Care Centers or, if
       appropriate, other available community based resources.


       Home Health Care Services


       The Company's comprehensive strategy allows it to provide a full range
       of home health care services to a patient, enabling the physicians,
       payors and patients to deal with a single provider.  All Caretenders
       services are rendered through care management by a registered nurse,
       which coordinates nursing, home infusion and equipment services.

       Caretenders nursing provides a comprehensive range of both professional
       and para-professional services from highly-skilled infusion therapy
       nursing to custodial companion care. Professional staff including
       registered nurses, licensed practical nurses, physical, speech and
       occupational therapists, and medical social workers implement and
       monitor medical treatment plans prescribed by physicians.  Professional
       staff are subject to state licensing requirements in the particular
       states in which they practice.  Para-professional staff includes home
       health aides, homemakers and companions who assist patients with health
       related tasks and the activities of daily living.

       Home infusion therapy involves the intravenous or other administration
       of physician-prescribed nutrients, antibiotics, chemotherapeutic agents
       and other medications to patients in their homes.  Such therapy
       generally continues a plan of treatment initiated in the hospital, or
       as a substitute for hospitalization.  Home infusion costs are between
       30% and 70% less than the same therapy administered in an institutional
       setting.  There are five major categories of infusion therapy: total
       parenteral nutrition, enteral nutrition, antibiotic therapy,
       chemotherapy and pain management therapy.

       Caretenders sells and rents medical equipment for use in the home.
       While the Company provides a complete range of equipment, the
       businesses generally can be divided into two predominant categories:
       respiratory/oxygen services and rehabilitation products.

       Caretenders is compensated for its services through (i) private pay
       (paid by personal funds), (ii) Medicare, (iii) Medicaid, and (iv) other
       third party payors (e.g. insurance companies).  See "Item 1. Business -
       - Payment Sources".  Caretenders employs compensation specialists who
       advise patients as to the availability of sources of payment for its
       services.

<PAGE>
       Adult Day Health Services


       Adult day health services is an alternative method of providing care
       for seniors and other adults who without such care would likely be
       institutionalized.  The field has grown rapidly, from just 15 centers
       in the United States in the early 1970s to over 3,000 today. Still in
       its early stages, the industry is highly fragmented  with the majority
       operated by the non-profit sector. Caretenders is the largest for-
       profit provider of adult day care services in the U.S.

       The Company's adult day health centers provide professional, high
       quality adult day health services for disabled or frail adults who
       require some care or supervision, but who do not require intensive
       medical attention or institutionalization.  The average center provides
       care for over 60 guests per day, seven days a week.  Round-trip
       transportation is provided to each participant.

       The centers offer a range of therapeutic and medical services designed
       to promote the independence of participants and provide respite to
       families and caregivers.  On-site staff nurses administer medications
       and ensure attention to medical care.  Other services include (i) a
       light breakfast, a hot lunch, and an afternoon snack; (ii) a highly
       structured, individualized and creative activities program which
       includes recreation, education, field trips, sports, crafts, music and
       group conversations; and (iii) family counseling.

       Through care management by a Registered Nurse (RN), Caretenders
       helps families identify solutions for caring for loved ones who can
       no longer meet their own health and personal care needs.  Through
       the Company's Care Manager, families can learn about their choices
       for long-term care for seniors and choose from Caretenders'
       SeniorCare Day and Home Health Care Centers as well as other
       available community based resources.

       As of March 31, 1997, the Company's conducts its services in centers
       in the following locations:

<TABLE>

                       Home        Adult Day      Managed        
Locations             Heath          Health       Agencies       Total

<S>
Kentucky:            <C>          <C>            <C>           <C>
  Louisville area        5             1             9            15 
  Lexington area         8             1             3            12 
  Elizabethtown area     -             -             6             6 
Indiana:                                     
 Evansville              3             -             -             3 
  Indianapolis           1             -             -             1 
Ohio:                                        
  Cincinnati             1             1             -             2 
  Columbus               2             -             -             2 
  Cleveland              2             -             -             2 
  Youngstown             1             -             -             1 
Massachusetts:                                    
  Boston                 3             -             -             3 
Connecticut:             
  Stamford               1             1             -             2 
  Middlebury             -             1             -             1 
  Danbury                -             1             -             1 
Maryland:                                    
  Baltimore              -            10             -            10 
Virginia:                                    
  Richmond               2             -             -             2 
Alabama:                                     
  Birmingham             6             1             -             7 
Florida:                                     
  Fort Lauderdale        2             -             -             2 
  West Palm Beach        -             1             -             1 
Total                   37            18            18            73
                                        
</TABLE>
<PAGE>
       Capacity for the Company's adult day health centers was 976 guests
       per day at the beginning of the year and grew by 38% to 1,343 guests
       per day by the end of the year.

       The Company is currently engaged in an expansion strategy that began
       in late fiscal 1996 and will continue for the foreseeable future.
       During this expansion period the Company expects to add up to 28
       additional adult day health centers and 15 home health care centers.
       Since the inception of the expansion strategy, the Company has added
       5 adult day health services and 9 home health care centers.

       The following table details the change in the Company's centers
       during 1997:

<TABLE>
                              Home      Adult Day    Managed  
                              Health      Health     Agencies     Total
       
       <S>                   <C>       <C>         <C>         <C> 
       Centers as of 3/31/96   29          14          14         57
         Change:
             Acquired           2           1          -           3
             Opened             7           3          4          14
             Closed             -           -          -           -
             Sold              (1)          -          -          (1)
                             -----        ----       ----       -----
         Subtotal               8           4          4          16
                             -----        ----       ----       -----  
       Centers as of 3/31/97   37          18          18         73
                             =====        ====       ====       =====
</TABLE>



       Divestitures


       On February 18, 1995, the Company entered into an arrangement with
       Columbia/HCA Healthcare Corporation (_Columbia_), under which Columbia
       acquired the Company's Certificate of Need to provide nursing services
       to patients in eight counties in the Elizabethtown, Kentucky area and
       hired the Company to manage the operations until the year 2000.

<PAGE>
       Acquisition Policy

       The Company continually considers and reviews possible acquisitions of
       businesses that provide health care services similar to those currently
       offered by Caretenders' companies.  Factors which may affect future
       acquisition decisions include the quality and potential profitability
       of the company under consideration, and the Company's ability to
       finance the transaction.

       During 1997, the Company completed three transactions to acquire two
       intermittent home nursing services operations and an adult day health
       services operation.  These operations added to the Company's market
       presence in both Ohio and Florida.  No pro forma financial information
       has been provided as the acquisitions, individually and in the
       aggregate, are not significant compared to the Company's existing
       operations.

       Subsequent to March 31, 1997, the Company signed a letter of intent to
       purchase a business operating an adult day health center in Northern
       Ohio.




       Competition, Marketing and Customers


       Home Health Care


       The home health care industry is highly competitive but fragmented,
       with competition largely focused on individual products or services.
       The Company's competitors can be classified into three categories:
       nursing services, infusion therapy, and medical equipment.

       The Company believes competition is based primarily on the quality of
       service provided, and such quality is measured by responsiveness and
       the technical ability of the professional staff.  The scope of services
       offered, relationships with referral sources and price are also
       competitive considerations.  Caretenders competes with larger home
       health care providers through its comprehensive strategy, which
       facilitates focused accountability, quality, reduced administrative
       burdens and convenience for patients and physicians. Another
       competitive factor in the home health care industry is accreditation by
       JCAHO (Joint Commission on Accreditation of Healthcare Organizations),
       a not-for-profit accreditation organization.  All Caretenders offices
       are accredited by JCAHO.

<PAGE>
       In addition to the larger national companies, Caretenders also competes
       with numerous local and regional companies and pharmacies.  Many of the
       Company's competitors have greater resources than the Company.

       The Company's home health services are marketed by a direct sales force
       primarily to hospital discharge planners, physicians and insurance and
       managed care organizations. Referrals may also be sought through
       advertisements in several local specialty publications, attendance at
       major trade shows and voluntary participation in JCAHO.  The Company
       also utilizes consumer-direct sales, marketing and advertising programs
       designed to increase its private pay business.

       Adult Day Health Services


       Like the home health care industry, the adult day health services
       industry is also highly competitive but fragmented.  Competitors
       include: other adult day health centers, ancillary programs provided by
       nursing homes and hospitals; other government-financed facilities,
       retirement communities, and senior adult associations.

       The Company believes the primary competitive factors are quality of
       service and reputation among referral sources. However, competitors are
       increasingly focusing attention on providing alternative site health
       care services.  Caretenders competes by offering a high quality of care
       and by helping families identify and access solutions for care via
       Caretenders' SeniorCare Solutions.  Adult day care competitive
       advantages include transportation and superior facilities and guest
       activity programs.

       The Company markets its adult day health services through its adult day
       health center directors and the  marketing staff.  The directors
       contact referral sources in their areas to market the Company's
       services.  Major referral sources include: Offices on Aging, social
       workers, hospital discharge planners and group living facilities.

<PAGE>
Government Regulations

The health care industry has experienced extensive and dynamic change. 
In addition to economic forces and regulatory influences, continuing
political debate is subjecting the health care industry to significant
reform. Health care reform proposals have been formulated by
the current federal government administration, members of Congress,
and, periodically, state legislators. Government officials can be 
expected to continue to review and assess alternative health care 
delivery systems and payment methodologies. Changes in the law or new 
interpretations of existing laws may have a dramatic effect on the 
definition of permissible or impermissible activities, the relative cost
of doing business, and the methods and amounts of payments for medical
care by both governmental and other payors. Legislative changes to 
"balance the budget" and slow the annual rate of growth of Medicare and 
Medicaid are expected. Such changes may impact reimbursement for home 
health care. There can be no assurance that future legislation or regulatory
changes will not have a material adverse effect on the future operations
of the Company.

The Company's business is subject to extensive federal, state and local
regulation.

Permits and Licensure

Many states require companies providing certain home health care services 
to be licensed as home health agencies. The Company currently is licensed
as a home health agency where required by the law of the states in which
it operates. In addition, certain of the Company's pharmacy operations
require state licensure and are also subject to federal and other state laws
and regulations governing pharmacies and the packaging and repackaging and 
dispensing of drugs (including oxygen). Federal laws may require registration 
with the Drug Enforcement Administration of the United States Department of 
Justice and the satisfaction of certain requirements concerning security, 
record keeping, inventory controls, prescription order forms and labeling. 
In addition, certain health care practitioners employed by the Company
require state licensure and/or registration and must comply with laws and 
regulations governing standards of practice. The failure to obtain, renew 
or maintain any of the required regulatory approvals or licenses could 
adversely affect the Company's business. There can be no assurance that 
either the states or the federal government will not impose additional 
regulations upon the Company's activities which might adversely affect its 
business, results of operations or financial condition.

Certificates of Need

Certain states require companies providing home health care services to obtain
a certificate of need issued by a state health planning agency. Some states 
require such certificates of need only for Medicare-certified home health 
agencies. Where required by law, the Company has obtained certificates of 
need from those states in which it operates. There can be no assurance that 
the Company will be able to obtain any certificates of need which may be 
required in the future if the Company expands the scope of its services or 
if state laws change to impose additional certificate of need requirements, 
and any attempt to obtain additional certificates of need will cause the 
Company to incur certain expenses.

<PAGE>
Other Regulations

A series of laws and regulations dating back to the Omnibus Budget
Reconciliation Act of 1987 ("OBRA 1987") have been enacted and apply to the
Company's operation. Periodic changes have occurred from time to time since the
1987 Act including reimbursement reduction and changes to payment rules.

As a provider of services under the Medicare and Medicaid programs, the Company 
is subject to the Medicare and Medicaid anti-kickback statute, also known as the
"fraud and abuse law." This law prohibits any bribe, kickback, rebate or
remuneration of any kind in return for, or as an inducement for, the referral of
Medicare or Medicaid patients. The Company may also be affected by the federal
physician self-referral prohibition, known as the "Stark" law, which, with
certain exceptions,prohibits physicians from referring patients to entities in
which they have a financial interest. Many states in which the Company operates
have adopted similar self-referral laws, as well as laws that prohibit certain
direct or indirect payments or fee-splitting arrangements between health care
providers, if such arrangements are designed to induce or to encourage the
referral of patients to a particular provider.

Health care is an area of extensive and dynamic regulatory change. Changes in
laws or regulations or new interpretations of existing laws or regulations can
have a dramatic effect on permissible activities, the relative costs associated
with doing business, and the amount and availability of reimbursement by
government and third-party payors. Furthermore, the Company will be required to
comply with applicable regulations in each new state in which it desires to
provide services.

Management believes that the Company operations are in material compliance with 
applicable laws. The Company, however, is unable to predict what additional 
government regulations, if any, affecting its business may be enacted in the
future, how existing or future laws and regulations might be interpreted or
whether the Company will be able to comply with such laws and regulations either
in the markets in which it presently conducts, or wishes to commence, business.
The Company also is subject to routine and periodic surveys and audits by
various governmental agencies.


Potential Reimbursement Changes

In the fall of 1995, Congress proposed reductions in the Medicare reimbursement
rate for home oxygen therapy service and equipment, which legislation was vetoed
by President Clinton. Despite the presidential veto, Congress continues to
consider legislation affecting reimbursement of these items, and President
Clinton's proposed budget for 1998 includes a provision that would require
Medicare to obtain competitive bidding for all clinical laboratory services,
home medical equipment (including home oxygen)and orthotics. Consequently,
Medicare reimbursement rates for oxygen services and equipment could be reduced.
The Company cannot be certain of the timing or level of reductions for Medicare
oxygen and equipment reimbursement. Any such reductions could have a material
adverse effect on the operating results and cash flows of the Company.

<PAGE>
Congress is also currently considering establishing a prospective payment system
("PPS") for home health services.  Proposals include lowering cost limits over
the short-run and implementing a per-episode PPS for home health not later than
1999. Currently, HCFA is running a demonstration project to test per episode
reimbursement for home health services.  Any such prospective payment system 
could have a material effect on the operating results and cash flows of the
Company.

The Company is unable to predict whether the proposed Medicare prospective
payment system and/or Medicare reimbursement rates for oxygen services and
equipment will be enacted or what final form such legislation might take.
Furthermore, the Company cannot predict what additional government regulations,
if any, affecting its business may be enacted in the future, how existing or
future laws and regulations might be interpreted, or whether the Company will be
able to comply with such laws and regulations in its existing or future markets.


<PAGE>
       Payment Sources


       The Company receives payments from Medicare, Medicaid and other cost
       reimbursement programs, private pay and insurance policies as detailed
       below.  The Company's dependence on government sponsored reimbursement
       programs makes it vulnerable to possible legislative and administrative
       regulations and budget cut-backs that could adversely affect the number
       of persons eligible for such programs, the amount of allowed 
       reimbursements or other aspects of the program, any of which could
       materially affect the Company.  In addition, loss of certification or
       qualification under Medicare/Medicaid programs could materially affect
       the ability of the Company's adult day health and home health care
       businesses to effectively market their services.

       The Company's future operating results are dependent in part upon its
       ability to attract customers able to pay for the Company's charges from
       their own and their families' financial resources.  Circumstances which
       adversely affect the ability or desire of seniors to pay for the
       Company's services could have an adverse effect on the Company.

       The following table sets forth the Company's net revenues derived from
       each major class of payer during the following fiscal years (by
       percentage of net revenues):

<TABLE>
                                   1997                         1996 
                       ---------------------------  ---------------------------
                                         Insurance                    Insurance
       Business Unit   Medicare Medicaid & Private  Medicare Medicaid & Private
       
       <S>             <C>      <C>       <C>       <C>      <C>      <C>
       Home Health       47.3%     10.6%    42.1%     39.6%    12.3%     48.1%
       Services
       Adult Day Health   0.0%     80.2%    19.8%      0.0%    78.1%     21.9%
       Services
       Total - All       38.7%     23.3%    38.0%     30.2%    24.7%     45.1%
       Services

</TABLE>


       Changes in payment sources from 1996 to 1997 are primarily a result of
       the Company's acquisition and expansion activities.

       In determining charge rates for goods and services provided to
       customers, the Company evaluates several factors including cost and
       market competition.  The Company also negotiates contract rates with
       third party providers such as insurance companies.  The rates of
       reimbursement for a significant portion of the Company's charges are
       dictated by Federal or State programs such as Medicare, Medicaid and
       Workers Compensation.

<PAGE>
       Insurance


       The Company and its subsidiaries carry general liability and
       professional liability insurance.  The Company also carries product
       liability insurance associated with those operations requiring such
       coverage, including the durable medical equipment operations. The
       Company's properties are covered by casualty insurance policies.  The
       Company carries directors and officers liability with a $3,000,000
       limit.  The Company believes that its present insurance coverage is
       adequate.


       Employees and Labor Relations


       As of March 31, 1997, the Company had  approximately 2,600 employees.
       None of the Company's employees are represented by a labor
       organization.  Management believes its relationship with the Company's
       employees is satisfactory.


       Cautionary Statements


       Information provided herein by the Company contains, and from time to
       time the Company may disseminate material and make statements which may
       contain forward-looking information, as that term is defined by the
       Private Securities Litigation Reform Act of 1995 (the Act).  These
       cautionary statements are being made pursuant to the provisions of the
       Act and with the intention of obtaining the benefits of safe harbor
       provisions of the Act.  The Company cautions investors that any
       forward-looking statements made by the Company are not guarantees of
       future performance and that actual results may differ materially from
       those in the forward-looking statements as a result of various factors
       including but not limited to the following:

<PAGE>

       (i)  In recent years, an increasing number of legislative proposals
            have been introduced or proposed in Congress and in some state
            legislatures that would effect major changes in the health care
            system, either nationally or at the state level.  However, the
            Company cannot predict whether any of the proposals will be
            adopted, and if adopted, no assurance can be given that the
            implementation of such reforms will not have a material impact on
            the operations of the Company.

       (ii) The Company derives substantial portions of its revenues from
            third-party payors, including government reimbursement programs
            such as Medicare and Medicaid, and non-government sources such as
            commercial insurance companies, HMOs, PPOs and contract services.
            These payors have undertaken cost-containment measures designed to
            limit payments to health care providers.  There can be no
            assurance that payments under these programs will be sufficient to
            cover the costs allocable to patients eligible for reimbursement.
            The Company cannot predict whether and what proposals or cost
            containment measures will be adopted or, if adopted, what effect,
            if any, such proposals might have on the operations of the
            Company.

       (ii) The Company competes with numerous well established competitors
            which have substantially greater financial resources than the
            Company.  Competitors are increasingly focusing attention on
            providing alternative site health care services, specifically on
            adult day health services.  Such increasing competition may
            adversely affect revenues and profitability of Company operations.

       (iii)   The Company believes its present insurance coverage is
            adequate. However, there can be no assurance that such insurance
            will be available, or, if available, that such insurance will be
            either adequate to cover the Company's liabilities or available at
            affordable rates.  In addition, increasing insurance costs, and
            the increasing unwillingness of insurance companies to insure
            against certain types of losses, raise some questions as to
            whether the Company will be able to obtain or continue its present
            insurance coverage.  The inability to obtain adequate insurance
            coverage at affordable rates, or a loss of existing coverage,
            could have a material effect on the Company.

       (iv) The Company's future operating results are dependent in part upon
            its ability to attract customers able to pay for the Company's
            charges from their own and their families' financial resources.
            Circumstances which adversely affect the ability or desire of
            seniors to pay for the Company's services could have an adverse
            effect on the Company.  In the event that the Company encounters
            difficulty in attracting seniors with adequate resources to pay
            for the Company's services, the Company would be adversely
            affected.

       (iv) The Company provides its services to individuals in home and
            community settings.  Severe winter weather may hinder the
            Company's ability to provide its services and thus impact
            operating results.

<PAGE>

       (v)  During fiscal 1998, the Company plans to develop up to 11 new
            adult day health centers after which the Company plans to continue
            development efforts at a similar or accelerated pace.  The
            Company's ability to achieve its development plans will depend
            upon a variety of factors, many of which are beyond the Company's
            control.  There can be no assurance that the Company will not
            suffer delays in its development program, which could slow the
            Company's growth.  The successful development of additional
            operations will involve a number of risks including the
            possibility that the Company may be unable to locate suitable
            sites at acceptable prices or may be unable to obtain, or may
            experience delays in obtaining, necessary zoning, land use,
            building, occupancy, licensing and other required governmental
            permits and authorizations.



       ITEM 2.   PROPERTIES

       The Company's executive offices are located in Louisville, Kentucky in
       approximately 25,000 square feet of space leased from an unaffiliated
       party.

       The Company has 38 locations that each lease from approximately 600 to
       17,000 square feet of space in their respective locations.  The Company
       believes that its facilities are adequate to meet its current needs,
       and that additional or substitute facilities will be available if
       needed.



       ITEM 3.  LEGAL PROCEEDINGS

       The Company, from time to time, is subject to claims and suits
       arising in the ordinary course of its business, including claims for
       damages for personal injuries.  In the opinion of management, the
       ultimate resolution of any of these pending claims and legal
       proceedings will not have a material effect on the Company's
       financial position or results of operations.

<PAGE>

       On January 26, 1994 Franklin Capital Associates LP, Aetna Life and
       Casualty Company and Aetna Casualty and Surety Company, shareholders,
       who at one time held approximately 320,000 shares of the Company's
       common stock (approximately 13% of shares outstanding) filed suit in
       Chancery Court of Williamson County, Tennessee claiming unspecified
       damages not to exceed three million dollars in connection with
       registration rights they received in the Company's acquisition of
       National Health Industries in February 1991.  The suit alleges the
       Company failed to use its best efforts to register the shares held by
       the plaintiffs as required by the merger agreement.  The Company
       believes it has meritorious defenses to the claims and does not expect
       that the ultimate outcome of the suit will have a material impact on
       the Company's results of operations or financial position. The Company
       plans to vigorously defend its position in this case.  No amounts have
       been recorded in the accompanying financial statements related to this
       suit.

       In January 1997, Aetna Life and Casualty Company withdrew its claim
       against the Company without prejudice.



       ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

       Not applicable.



<PAGE>

                                     PART II

       ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
       STOCKHOLDER MATTERS

       The Company's common stock is traded on the National Association of
       Securities Dealers Automated Quotation System ("NASDAQ") under the
       symbol "CTND".  The prices shown below represent prices between
       dealers, do not indicate retail mark-ups, mark-downs or commissions,
       and do not necessarily represent actual transactions.  Set forth
       below are the high and low bid quotations for the common stock for
       the periods indicated.  The prices for the common stock were
       provided by NASDAQ.

       Closing Common Stock Prices

<TABLE>
              Quarter Ended:                 High           Low
         <S>                              <C>             <C>
                 June 30, 1995                6.75          5.25
                 September 30, 1995           8.38          5.75
                 December 31, 1995            8.13          5.75
                 March 31, 1996               8.38          5.88
                 June 30, 1996                9.63          6.50
                 September 30, 1996           7.75          5.25
                 December 31, 1996            7.00          5.37
                 March 31, 1997               6.75          5.37

</TABLE>

       On June 23, 1997, the last reported representative bid price for the
       Common Stock reported on the NASDAQ National Market System was $
       8.1875 and there were approximately 727 holders of record of the
       Company's Common Stock.  No cash dividends have been paid by the
       Company.


<PAGE>

       ITEM 6.  SELECTED FINANCIAL DATA

       The following table sets forth selected financial information derived
       from the consolidated financial statements of the Company for the
       periods and at the dates indicated.  This information has been restated
       to reflect the Company's 1 for 5 reverse stock split as further
       explained in Note 1 to the consolidated financial statements of the
       Company.  The information is qualified in its entirety by and should be
       read in conjunction with the consolidated financial statements and
       related notes included elsewhere in this and prior year Form 10-Ks.

<TABLE>
                     Consolidated Selected Financial Information

         (Dollar amounts in
                000's                     Year Ended March 31,
          except per share
                data)

                                  1997     1996      1995      1994     1993
         <S>                  <C>       <C>       <C>       <C>      <C>
         Results of Operations
         Net revenues          $76,773  $63,227   $60,836   $50,857  $36,527
         Net Income (loss):
          Continuing operations  1,759    1,575     1,248       627      611
          Discontinued operations   --       --        --        --   (1,339)
         
         Net Income (loss)       1,759    1,575     1,248       627     (728)

         Per share: (2)
           Primary:
             Number of shares    3,142    3,149     3,145     3,153    2,354 (1)
           Net Income  (loss)from:
            Continuing operations $.56     $.50      $.40      $.20     $.26 (1)
            Discontinued opeations  --       --        --        --    (0.57)
           Net Income (loss)      $.56     $.50      $.40      $.20   $(0.31)
         
           Fully diluted:
            Number of share      3,142    3,149     3,145     3,175      N/A (1)
           Net income from:
            Continuing operations $.56     $.50      $.40      $.20      N/A (1)
           Net Income             $.56     $.50      $.40      $.20      N/A


         Balance sheet  Data as of:           March 31,
         
                                  1997     1996      1995     1994      1993

         Working capital       $17,471  $13,844   $11,641   $8,001    $2,193
         Total assets           38,745   33,217    31,073   30,806    29,377
         Long term liabilites   10,689    6,805     7,094    7,367     1,690
         Total liabilities      18,081   14,313    13,744   14,731    13,929
         Stockholders'          20,663   18,904    17,329   16,075    15,448
         equity

<FN>
       (1)does not include convertible preferred shares due to accounting rules
          relating to calculation of loss per share

       (2) In March 1997, the Financial Accounting Standards Board issued
           Statement of Financial Accounting Standard No. 128, Earnings Per 
           Share.  The standard modifies disclosure requirements for companies
           required to report earnings per share to include presentations of
           Basic and, if applicable, Diluted Earnings per Share.  The impact of
           this standard was not significant for all years presented and,
           therefore, no additional earnings per share information has been
           included in this table.

</FN>
</TABLE>
<PAGE>


       ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
       FINANCIAL CONDITION AND RESULTS OF OPERATIONS

       OVERVIEW


       Strategic Focus

       The Company is positioning itself to take advantage of healthcare
       reform activities by focusing its resources into its home and
       community based health care business units which consist of adult
       day health services and home health care (home health care includes
       nursing, infusion therapy and durable medical equipment).  These
       businesses are involved with the delivery of health care in
       alternative settings which the Company believes are preferred by
       consumers and operate at lower costs than hospitals and nursing
       homes.  The trend toward alternative site delivery of healthcare is
       increasing, as more payor organizations are seeking to reduce the
       costs of medical care.

       Today more than seven million senior Americans are in need of
       alternatives to long-term nursing home confinement and this number
       is expanding rapidly.  These individuals desire to remain in their
       homes and out of nursing homes and conserve their financial
       resources as long as possible.  Caretenders SeniorCare Solutions
       provides seniors in need with a lower-cost alternative to
       institutional care helping them gain economic security access to
       health care, mobility and independence without isolation.

       Utilizing its strengths in home health care and adult day health
       services, the Company is actively addressing the issue of senior
       care in America by its comprehensive strategy _ Caretenders
       SeniorCare Solutions.  Through care management by a Registered Nurse
       (RN), Caretenders helps families identify solutions for caring for
       loved ones who can no longer meet their own health and personal care
       needs.  Through the Company's Care Manager, families can learn about
       long-term care options available for seniors and obtain assistance
       in choosing from Caretenders' SeniorCare Day and Home Health Care
       Centers or, if appropriate, other available community based
       resources.

       The Company is currently engaged in an expansion strategy that began
       in late 1996 and will continue for the foreseeable future.  During
       this expansion period the Company expects to add up to 28 additional
       adult day health centers and 15 home health care centers.  Since the
       inception of the expansion strategy, the Company has added 5 adult
       day health services and 9 home health care centers.

<PAGE>

       The following table details the change in the Company's centers
       during 1997:

<TABLE>
                              Home      Adult Day    Managed  
                              Health      Health     Agencies     Total
       <S>                  <C>         <C>         <C>         <C>
       Centers as of 3/31/96   29          14          14         57
         Change:
             Acquired           2           1          -           3
             Opened             7           3          4          14
             Closed             -           -          -           -
             Sold              (1)          -          -          (1)
                             -----        ----       ----       -----
         Subtotal               8           4          4          16
                             -----        ----       ----       -----  
       Centers as of 3/31/97   37          18          18         73
                             =====        ====       ====       =====

</TABLE>


       Earnings - 1997

       The Company experienced a 12% increase in net income despite
       investing approximately $1.2 million of initial operating losses
       related to geographic expansion.  The increase in net income was
       primarily a result of  a 21% increase in net revenues experienced by
       the Company due to increased volume.  Selling, General and
       Administrative costs improved  as a percent of revenue dropping 1.1%
       to 12.2% on increased revenues.  Earnings per share were $.56 in
       1997 as compared to $.50 for 1996.  Initial operating losses related
       to geographic expansion lowered 1997 earnings per share by $0.39
       versus $0.02 in 1996.

<PAGE>

       RESULTS OF OPERATIONS


Fiscal Year Ended March 31, 1997 Compared With Fiscal Year Ended March 31, 1996
                                 
<TABLE>

                               Caretenders Health Corp.
                                    Operating Data
                             for the Years Ended March 31,
                                (amounts in thousands)



                                 1 9 9 7          1 9 9 6          Change
                            ----------------  ----------------  --------------
                                      % of              % of        
                            Amount  Revenues  Amount  Revenues   Amount     %
                                            
     <S>                  <C>       <C>      <C>      <C>       <C>       <C>
      Net Revenues
       Home Health Care    $62,796    81.8%  $50,822    80.4%   $11,974   23.6%
       Adult Day Health
       Services             13,977    18.2%   12,405    19.6%     1,572   12.7%
                           -------   ------   ------   ------    ------  ------ 
                            76,773   100.0%   63,227   100.0%    13,546   21.4%
      
      Cost of Sales and Services
       Home Health Care     49,301    78.6%   39,399    77.5%     9,902   25.1%
       Adult Day Health     
       Services             10,968    78.4%    9,331    75.2%     1,637   17.5%
                           -------    -----   ------   ------    ------  ------
                            60,269    78.5%   48,730    77.1%    11,539   23.7%



      Center Contribution
       Home Health Care     13,495    21.4%   11,423    22.5%     2,072   18.1%
       Adult Day Health     
       Services              3,009    21.6%    3,074    24.8%       (65)  (2.1%)
                           -------   ------   ------    -----     ------  ------
                            16,504    21.5%   14,497    22.9%     2,007   13.8%
 

     Selling, General &         
     Administrative          9,363    12.2%    8,438    13.3%       925   11.0%
     Provision for   
      Uncollectible Accounts 2,216     2.9%    1,669     2.6%       547   32.8%
     Depreciation and 
      Amortization           2,239     2.9%    2,057     3.3%       182    8.8%
     Interest and Other, Net   771     1.0%      623     1.0%       148   23.8%
                            ------   ------   ------    -----    ------  ------
     Income Before Taxes    $1,915     2.5%   $1,710     2.7%      $205   12.0%
                            ======   ======   ======    =====    ======  ======

</TABLE>
<PAGE>

            Home Health Care Net Revenues.  Net revenue increases in the
            Company's existing markets were primarily the result of
            increased volume for nursing services.  Nursing volumes
            increased 38.7%.  Additional volumes in respiratory and
            durable medical equipment and infusion therapies drove a
            combined 17.1% increase for those two service lines.

            Home Health Care Cost of Sales and Services.  Cost of sales
            and services as a percent of net revenues increased primarily
            as a result of incurring $770,000 of initial operating losses
            from geographic expansion.

            Adult Day Health Services Net Revenues.  The increase of $1.6
            million in adult day health services revenues is primarily
            attributable to improved occupancy in existing markets.  Total
            days of service provided increased 9.9% from 214,600 in 1996
            to 236,000 in 1997.  As of March 31, 1997, the Company had 18
            centers in operation.

            Adult Day Health Services Cost of Sales and Services.  As a
            percent of net revenues, cost of sales and services increased
            primarily as a result of absorbing $495,000 of initial
            operating losses from geographic expansion.

            Selling, General and Administrative.  The increase of $925,000
            is due primarily to an increase in certain administrative
            staff levels and costs incurred related to the Company's
            geographic expansion.

<PAGE>
            Provision for Uncollectible Accounts.  The provision for
            uncollectible accounts for the year ended March 31, 1997 was
            recorded based on management's evaluation of collectibility.

            Depreciation and Amortization.  The increase of $182,000 is
            primarily due to capital investments made by the Company.
            These capital investments principally relate to geographic
            expansion and replacement of certain medical equipment.

            Interest and Other, Net.   The increase in interest and other,
            net is primarily a result of higher average outstanding debt
            levels associated with the Company's acquisition and expansion
            activities.

            Income Taxes.  As of March 31, 1997, the Company has net
            deferred tax assets of approximately $1,264,000.  The net
            deferred tax asset is composed of $1,647,000 of deferred tax
            assets and $383,000 of deferred tax liabilities.

            Although the Company has experienced losses in the past,
            management believes that the Company will be able to realize
            its recorded deferred tax assets.  The Company's ability to
            generate the expected amounts of taxable income from future
            operations is dependent upon general economic conditions,
            competitive pressures on revenues and margins and legislation
            and regulation at all levels of government.  There can be no
            assurances that the Company will meet its expectations of
            future taxable income.  However, management has considered the
            above factors in reaching its conclusions that it is more
            likely than not that future taxable income will be sufficient
            to fully utilize the deferred tax assets as of March 31, 1997.


<PAGE>

Fiscal Year Ended March 31, 1996 Compared With Fiscal Year Ended March 31, 1995

<TABLE>

                               Caretenders Health Corp.
                                    Operating Data
                             for the Years Ended March 31,
                                (amounts in thousands)



                                 1 9 9 6          1 9 9 5          Change
                            ----------------  ----------------  --------------
                                      % of              % of        
                            Amount  Revenues  Amount  Revenues   Amount     %
                                            
     <S>                  <C>       <C>      <C>      <C>       <C>       <C>
      Net Revenues
       Home Health Care    $50,822    80.4%  $50,330    82.7%   $   492    1.0%
       Adult Day Health
       Services             12,405    19.6%   12,405    17.3%     1,899   18.1%
                           -------   ------   ------   ------    ------  ------ 
                            63,227   100.0%   60,836   100.0%     2,391    3.9%
      
      Cost of Sales and Services
       Home Health Care     39,399    77.5%   40,246    80.0%      (847)  (2.1%)
       Adult Day Health     
       Services              9,331    75.2%    7,986    76.0%     1,345   16.8%
                           -------    -----   ------   ------    ------  ------
                            48,370    77.1%   48,232    79.3%       498    1.0%



      Center Contribution
       Home Health Care     11,423    22.5%   10,084    20.0%     1,339   13.3%
       Adult Day Health     
       Services              3,074    24.8%    2,520    24.0%       554   22.0% 
                           -------   ------   ------    -----     ------  -----
                            14,497    22.9%   12,604    20.7%     1,893   15.0%
 

     Selling, General &         
     Administrative          8,438    13.3%    6,642    10.9%     1,796   27.0%
     Provision for   
      Uncollectible Accounts 1,669     2.6%    1,689     2.8%       (20)  (1.2%)
     Depreciation and 
      Amortization           2,057     3.3%    2,300     3.8%      (243) (10.6%)
     Interest and Other, Net   623     1.0%      671     1.1%       (48)  (7.2%)
                            ------   ------   ------    -----    ------  ------
     Income Before Taxes    $1,710     2.7%   $1,302     2.1%      $408   31.4%
                            ======   ======   ======    =====    ======  ======
</TABLE>
<PAGE>


            Home Health Care Net Revenues. Net revenue increases in the
            Company's existing markets is primarily the result of
            increased volume for nursing services and durable medical
            equipment offset partially by decreased volume for infusion
            therapies.  Nursing volumes increased 12% while durable
            medical equipment volumes increased 23%.

            Net revenues for 1995 included $4,466,000 related to
            operations sold during 1995.  After adjusting 1995 revenues to
            remove operations sold, home health care net revenues
            increased 12.3%.  Contribution continues to be generated from
            these operations under management contracts.

            Home Health Care Cost of Sales and Services.  Cost of sales
            and services as a percent of net revenues decreased primarily
            as a result of improved volumes in all markets and reductions
            in cost as a result of operations sold.

            Adult Day Health Services Net Revenues.  The increase of $1.9
            million in adult day health services net revenues is
            attributable to improved occupancy in all markets, improvement
            in mix of payors and rate increases.  Total days of service
            provided increased 14% from 188,480 in 1995 to 214,600 in
            1996.  As of March 31, 1996, the Company had 14 centers in
            operation.

            Adult Day Health Services Cost of Sales and Services.  As a
            percent of net revenues, cost of sales and services decreased
            slightly as a result of better cost management, increased
            occupancy and fixed costs spread over higher volumes.

<PAGE>
            Selling, General and Administrative.  The increase of $1.8
            million is due primarily to an increase in certain
            administrative staff levels and costs incurred to centralize
            certain administrative functions.

            Provision for Uncollectible Accounts.  The provision for
            uncollectible accounts for the year ended March 31, 1996 was
            recorded based on management's evaluation of collectibility.

            Depreciation and Amortization.  The decrease of $243,000
            resulted primarily due to replacement of purchased
            transportation equipment with leased transportation equipment.

            Interest and Other, Net.   The decrease in interest and other,
            net is primarily the result of the lower average outstanding
            debt levels and a decrease in the interest rate associated
            with the Company's working capital credit facility.

            Income Taxes.  As of March 31, 1996, the Company has net
            deferred tax assets of approximately $1,072,000.  The net
            deferred tax asset is composed of $2,401,000 of deferred tax
            assets, $173,000 of deferred tax liabilities and a valuation
            allowance totaling approximately $1,156,000.  The deferred tax
            asset includes the tax benefit of net operating loss
            carryforwards of approximately $340,000.

<PAGE>
       Liquidity and Capital Resources


        Revolving Credit Facility


         The Company has a $12 million revolving credit facility with the
         Healthcare Financial Services Division of Heller Financial, Inc.
         Interest accrues on amounts drawn under the facility at a rate of 1
         percent over prime.  Availability is determined pursuant to a
         formula principally consisting of a percentage of accounts
         receivable subject to certain exclusions.  At March 31, 1997, the
         Company has total cash and unused borrowings of approximately $3.3
         million available for working capital and development.  The facility
         will remain in effect until October 13, 1998 and for annual one year
         terms thereafter unless either party to the credit agreement
         provides the other with a written notice of termination 60 days
         prior to the renewal date.

         This facility should provide working capital resources sufficient to
         support operations for the next year. Management will continuously
         pursue additional capital including possible debt and equity
         investments in the Company to support a more rapid development of
         the business than would be possible with internal funds.


        Cash Flows


            Key elements to the Consolidated Statements of Cash Flows were (in
            thousands):
            

            Net Change in Cash and Cash 
            Equivalents                        1997       1996         1995

            Provided by (used in)
                Operating activities        $   442    $ 1,817     $ (1,803)
                Investing activities         (4,257)      (993)        1,721
                Financing activities          3,269       (528)      (1,169)
            Net Change in Cash and  Cash
            Equivalents                      $ (546)    $  296     $ (1,251)



            1997

            Net cash provided by operating activities of approximately
            $442,000 resulted principally from current period earnings net of
            changes in accounts receivable and accounts payable and accrued
            expenses.  Net cash used in investing activities of approximately
            $4.3 million resulted principally from amounts invested in
            acquisition and expansion activities and capital expenditures
            related to purchase of certain durable medical equipment and real
            estate.  Net cash provided by financing activities of
            approximately $3.3 million resulted primarily from an increase in
            the Company's credit facility related to investments made in
            acquisitions and geographic expansion.

<PAGE>
            1996

            Net cash provided by operating activities of approximately $1.8
            million resulted principally from current period earnings net of
            changes in accounts receivable and accounts payable and accrued
            expenses.  Net cash used in investing activities of approximately
            $993,000 resulted principally from capital expenditures.  Net cash
            used in financing activities of approximately $528,000 resulted
            primarily from principal payments on term debt and capital leases.

            1995

            Net cash used in operating activities of approximately $1.8
            million resulted principally from current period earnings offset
            by increases in accounts receivable caused by revenue growth of
            20% and longer payment cycles for some payors.  Net cash provided
            from investing activities resulted principally from the proceeds
            from the sale of certain business offset by capital expenditures.
            Net cash used in financing activities resulted primarily from
            principal payments on term debt and capital leases.  The Company
            received proceeds of approximately $2.5 million from the
            disposition of business units during 1995 which was used largely
            to fund capital expenditures and working capital associated with
            the Company's growth.


<PAGE>
Health Care Reform
        
        
The health care industry has experienced extensive and dynamic change. 
In addition to economic forces and regulatory influences, continuing
political debate is subjecting the health care industry to significant
reform. Health care reform proposals have been formulated by
the current federal government administration, members of Congress,
and, periodically, state legislators. Government officials can be 
expected to continue to review and assess alternative health care 
delivery systems and payment methodologies. Changes in the law or new 
interpretations of existing laws may have a dramatic effect on the 
definition of permissible or impermissible activities, the relative cost
of doing business, and the methods and amounts of payments for medical
care by both governmental and other payors. Legislative changes to 
"balance the budget" and slow the annual rate of growth of Medicare and 
Medicaid are expected. Such changes may impact reimbursement for home 
health care. There can be no assurance that future legislation or regulatory
changes will not have a material adverse effect on the future operations
of the Company.


Impact of Inflation

Management does not believe that inflation has had a material effect
on income during the past several years.
<PAGE>


       ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME

<TABLE>

                                                  Year Ended March 31,

                                                    1997        1996       1995

     <S>                                     <C>            <C>           <C>  
     Net revenues                            $76,773,039    $63,226,968   $60,836,495
     Cost of sales and services               60,268,808     48,729,847    48,231,522
     Selling, general and administrative       9,363,031      8,438,050     6,641,921
     Depreciation and amortization expense     2,239,194      2,057,092     2,300,034
     Provision for uncollectible accounts      2,215,537      1,668,844     1,688,521

     Income before interest and other
     income (expense)and provision 
     for income taxes                          2,686,469      2,333,135     1,974,497
       

     Interest expense, net                      (771,099)      (622,852)     (770,294)
     Other income and expense, net                  -              -           97,500
     Income before provision for income taxes  1,915,370      1,710,283     1,301,703
     Provision for income taxes                  156,000        135,000        54,041
 
     Net income                              $ 1,759,370    $ 1,575,283   $ 1,247,662


     PER SHARE:
      Weighted average common and common
     equivalent shares
         outstanding                           3,141,865      3,148,707     3,144,518
     Net income per common and common       
       equivalent share                            $0.56          $0.50         $0.40
     Net income per common share - 
       assuming full dilution                      $0.56          $0.50         $0.40


</TABLE>

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

<PAGE>

<TABLE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS



                             ASSETS                      March 31,    March 31,
                                                            1997      1996
       <S>                                             <C>           <C> 
       CURRENT ASSETS:
          Cash and cash equivalents                     $1,014,604   $1,561,041
          Accounts receivable - net of allowance for
           uncollectible accounts of approximately
           $3,153,000 and $2,900,000, respectively      20,436,964   17,197,400
          Prepaid expenses and other current assets      1,765,168    1,487,876
          Deferred tax assets                            1,646,990    1,105,000

               TOTAL CURRENT ASSETS                     24,863,726   21,351,317

       PROPERTY AND EQUIPMENT - net                      4,959,217    3,981,934
       COST IN EXCESS OF NET ASSETS ACQUIRED - net of
        accumulated amortization of approximately
        $1,430,000 and $1,190,000, respectively          7,723,263    7,005,232
       OTHER ASSETS                                      1,198,367      878,351
                                                       -----------  -----------
                                                       $38,744,573  $33,216,834
                                                       ===========  ===========

              LIABILITIES AND STOCKHOLDERS' EQUITY

       CURRENT LIABILITIES:
         Accounts payable - trade                       $3,334,671   $3,306,484

          Accrued salaries, commissions, benefits and 
           other expenses                                3,696,350    3,661,967
          Current portion of term debt and capital lease 
           obligations                                     261,716      432,329
          Other current liabilities                        100,000      106,986
          
                 TOTAL CURRENT LIABILITIES               7,392,737    7,507,766
  
       LONG-TERM LIABILITIES:
          Revolving credit facility                      9,754,640    5,851,708
          Term debt and capital lease obligations          145,308      321,839
          Other liabilities                                788,616      631,619
          
                 TOTAL LONG-TERM LIABILITIES            10,688,564    6,805,166
                 
                 TOTAL LIABILITIES                      18,081,301   14,312,932


       COMMITMENTS AND CONTINGENCIES (Note 7)

       STOCKHOLDERS' EQUITY:
            Common stock, par value $.10;
            10,000,000 shares authorized; 3,129,436  
            issued and outstanding                         312,944      312,944
            Treasury stock, at cost, 10,000 shares         (95,975)     (95,975)
            Additional paid-in capital                   5,337,876   25,337,876
            Accumulated deficit                         (4,891,573)  (6,650,943)

                 TOTAL STOCKHOLDERS' EQUITY             20,663,272   18,903,902
                                                       -----------  -----------
                                                       $38,744,573  $33,216,834
                                                       ===========  ===========
</TABLE>

             The accompanying notes to consolidated financial statements
                    are an integral part of these balance sheets.

<PAGE>


CARETENDERS HEALTH CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED MARCH 31, 1997, 1996, and 1995

<TABLE>
                                   Covertible Voting Preferred Stockholders' Equity                       
              Common Stockholders' Equity                                                                         
                                                            Additional                                   
                     Additional                                Total  
                                       Preferred Stock        Paid-in                    Common Stock     
 Treasury Stock       Paid-in     Accumulated              Stockholders'  
                                      Shares      Amount      Capital      Total       Shares    Amount  
  Shares   Amount      Capital       Deficit        Total      Equity      
<S>                                 <C>          <C>        <C>         <C>         <C>         <C>      
 <C>      <C>        <C>           <C>           <C>        <C>
Balance, March 31, 1994              748,501      $37,425   $6,506,372  $6,543,797   2,380,155  $238,016 
  10,000  $(95,975)  $18,863,001   $(9,473,888)  $9,531,154 $16,074,951    

 Conversion of Preferred to Common  (748,501)     (37,425)  (6,506,372) (6,543,797)    748,501    74,850    
     -         -       6,468,947           -      6,543,797         -      
 Exercised options                       -            -            -           -           780        78   
     -         -           5,928           -          6,006       6,006    
 Net Income                              -            -            -           -           -         -      
     -         -             -       1,247,662    1,247,662   1,247,662    
                                                                                                                        
Balance, March 31, 1995                  -            -            -           -     3,129,436   312,944 
  10,000    (95,975)   25,337,876    (8,226,226)  17,328,619  17,328,619    
                                                                                                                        
 Net Income                              -            -            -           -           -         -    
     -          -             -       1,575,283    1,575,283   1,575,283    
                                                                                                                        
Balance, March 31, 1996                  -            -            -           -     3,129,436   312,944 
  10,000   (95,975)   25,337,876    (6,650,943)  18,903,902  18,903,902    
                                                                                                                        
 Net Income                              -            -            -           -           -         -   
     -         -             -       1,759,370    1,759,370   1,759,370    
                                                                                                                        
 Balance, March 31, 1997                 -         $  -         $  -        $  -     3,129,436  $312,944 
  10,000  $(95,975)  $25,337,876   $(4,891,573) $20,663,272 $20,663,272    


</TABLE>

The accompanying notes to consolidated financial statements
    are an integral part of these financial statements.
<PAGE>




<TABLE>
                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                            Year Ended March 31,

                                                          1997        1996       1995

   <S>                                              <C>          <C>        <C>
   Cash flows from operating activities:
    Net income                                      $ 1,759,370  $1,575,283 $1,247,662
    Adjustments to reconcile net income to net cash
    provided by (used in)operating activities:
        Gain on sale of assets                               -           -     (97,500)
        Depreciation and amortization                 2,239,194   2,057,092  2,300,034
        Deferred income tax benefit                    (192,000)   (492,000)  (580,000)
        Provision for uncollectible accounts          2,215,537   1,668,844  1,688,521

                                                      6,022,101   4,809,219  4,558,717

        Change in certain net current assets, net
         of the effects of acquisitions
        (Increase) decrease in:
            Accounts receivable                      (5,455,101) (3,588,432)(5,627,953)
            Prepaid expenses and other current assets  (274,784)   (551,879)    (6,346)
        Increase (decrease) in:
            Accounts payable and accrued expenses       156,628     999,625   (661,316)
            Other liabilities                            (6,985)    148,820    (65,517)

        Net cash provided by (used in) operating
         activities:                                    441,859   1,817,353 (1,802,415)
   
   Cash flows from investing activities:
        Proceeds from sale of businesses                   -        -  2,474,434

        Capital expenditures                         (2,620,942) (1,015,161)(1,222,781)
        Acquisitions, net of cash acquired           (1,084,846)       -          -
        Other assets                                   (551,245)     21,827    469,027 

     Net cash (used in) provided by investing
      activities:                                    (4,257,033)   (993,334) 1,720,680

   Cash flows from financing activities:

       Principal payments on term debt and capital
       leases                                          (441,202)  (607,959) (1,167,243)
       Issuance of term debt and capital leases            -          -         35,396
       Net revolving credit facility borrowings
        (repayments)                                  3,902,932     80,206     (43,498)
       Other                                           (192,993)      -          6,006

     Net cash provided by (used in) financing 
      activities:                                     3,268,737   (527,753) (1,169,339)

   Net (decrease) increase in cash                     (546,437)   296,266  (1,251,074)

   Cash and cash equivalents at beginning of year     1,561,041  1,264,775   2,515,849

   Cash and cash equivalents at end of year          $1,014,604 $1,561,041  $1,264,775


     Supplemental Information
        Cash paid for interest                         $690,851   $611,000    $736,000
        Cash paid for income taxes                      $52,000   $671,000     $93,700

</TABLE>

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

<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



       NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



       BASIS OF CONSOLIDATION AND DESCRIPTION OF BUSINESS


       The consolidated financial statements include the accounts of
       Caretenders Health Corp. and its wholly-owned subsidiaries ("the
       Company").  The Company provides adult day health services and home
       health care services to individuals in Alabama, Connecticut, Florida,
       Indiana, Kentucky, Maryland, Massachusetts, Ohio and Virginia.  All
       material intercompany transactions and accounts have been eliminated in
       consolidation.

       CASH AND CASH EQUIVALENTS



       The Company considers all highly liquid debt instruments purchased with
       an original maturity of three months or less to be cash equivalents.

       Uninsured deposits at March 31, 1997, and 1996 were approximately
       $1,015,000 and $1,561,000, respectively.

       PROPERTY AND EQUIPMENT


       Property and equipment are stated at cost. Depreciation is computed
       using the straight-line method over the estimated useful lives.  The
       estimated useful lives of depreciable assets are as follows:

                                                              Estimated
                                                            Useful Life

                      Building and Leasehold Improvements       5 - 30
                      Medical and Office Equipment              3 - 8
                      Transportation and Other Equipment        3 - 5
                      

       Included in Property and Equipment is rental equipment which may be
       sold.  Upon sale, the cost net of related accumulated depreciation is
       charged to costs of sales and services.



       COST IN EXCESS OF NET ASSETS ACQUIRED

       The costs in excess of fair value of net assets acquired are stated at
       cost and amortized on a straight-line basis over their estimated useful
       lives which range from 20 to 40 years.

<PAGE>


                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       Subsequent to its acquisitions, the Company evaluates whether later
       events and circumstances have occurred that indicate the remaining
       estimated useful life of goodwill may warrant revision or that the
       remaining balance of goodwill may not be recoverable.  At March 31,
       1997, no such events or circumstances existed warranting such revisions
       to the lives or recorded amounts of recorded goodwill.  When factors
       indicate that goodwill should be evaluated for possible impairment, the
       Company will utilize appropriate methods (such as discounted cash flows
       over the remaining life of the goodwill), in measuring whether or not
       the goodwill is recoverable.

       LONG-LIVED ASSETS

       On April 1, 1996, the Company adopted Statement of Financial Accounting
       Standards No. 121, Accounting for the Impairment of Long-Lived Assets
       and for Long-Lived Assets to be Disposed of (SFAS 121).  SFAS 121,
       under certain circumstances, requires a business to recognize an
       impairment related to its long-lived assets.  Application of this
       standard did not impact the financial position or results of operations
       of the Company.


       CAPITALIZATION POLICIES

       Maintenance, repairs and minor replacements are charged to expense as
       incurred.  Major renovations and replacements are capitalized to
       appropriate property and equipment accounts.  Upon sale or retirement
       of property, the cost and related accumulated depreciation are
       eliminated from the accounts and the related gain or loss is recognized
       in income.

       Construction costs incurred to ready a project for its intended use are
       capitalized for major development projects and are amortized over the
       lives of the related assets.  Pre-opening costs related to the start up
       of new operations and facilities are deferred and amortized over two
       years beginning with commencement of operations.  The unamortized
       balance of capitalized pre-opening costs as of March 31, 1997 and 1996
       was approximately $470,000 and $276,000, respectively and is included
       in other assets on the accompanying balance sheet.


       NET REVENUES

       Approximately 62%, 55%, and 57%, of net revenues  for  the fiscal years
       ended March 31, 1997, 1996, and 1995,  respectively, were derived under
       federal and state  third-party reimbursement programs.  These revenues

<PAGE>
                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       are  based, in part, on cost  reimbursement  principles and are subject
       to examination  and  retroactive adjustment by agencies  administering
       the programs.   Management continuously evaluates the outcome of these
       reimbursement examinations and provides allowances for losses based
       upon the best  available information.  In the opinion of management,
       adjustments, if any, would not be material to the financial position or
       the results of operations of the Company.


       NET INCOME PER SHARE

       Net income per common and common equivalent share is computed based on
       the weighted average number of common shares and common equivalent
       shares outstanding.  Common equivalent shares result from dilutive
       stock options, warrants, and convertible preferred stock.


       In March 1997, the Financial Accounting Standards Board issued
       Statement of Financial Accounting Standard No. 128, Earnings Per
       Share (SFAS 128).  The standard modifies disclosure requirements for
       companies required to report earnings per share (EPS) to include
       presentations of Basic EPS (which includes no dilution of common stock
       equivalents) and, if applicable, Diluted EPS (which reflects the
       potential dilution of common stock equivalents).  The pro forma Basic
       and Diluted EPS for March 31, 1997, 1996  and 1995 are as follows:
<TABLE>

                                        1997        1996        1995
       <S>                          <C>          <C>         <C>
       Earnings per share:
         Net Income
           Basic                        $ 0.56      $ 0.50      $ 0.40
           Diluted                      $ 0.56      $ 0.50      $ 0.40
       Weighted average  shares
       outstanding:
         Basic                       3,119,436   3,119,436   3,119,436
         Diluted                     3,141,865   3,148,707   3,144,518

</TABLE>


       REVERSE STOCK SPLIT

       On March 22, 1995, the shareholders approved and implemented a one (1)
       for five (5) reverse stock split.  Simultaneously, the par value per
       common share changed from $.02 per share to $.10.  Share and per share
       information have been restated for all periods presented to reflect
       this reverse stock split.


       HEALTHCARE REFORM LEGISLATION, REGULATIONS AND MARKET CONDITIONS

The health care industry has experienced extensive and dynamic change. 
In addition to economic forces and regulatory influences, continuing
political debate is subjecting the health care industry to significant
reform. Health care reform proposals have been formulated by
the current federal government administration, members of Congress,
and, periodically, state legislators. Government officials can be 
expected to continue to review and assess alternative health care 
delivery systems and payment methodologies. Changes in the law or new 
interpretations of existing laws may have a dramatic effect on the 
definition of permissible or impermissible activities, the relative cost
of doing business, and the methods and amounts of payments for medical
care by both governmental and other payors. Legislative changes to 
"balance the budget" and slow the annual rate of growth of Medicare and 
Medicaid are expected. Such changes may impact reimbursement for home 
health care. There can be no assurance that future legislation or regulatory
changes will not have a material adverse effect on the future operations
of the Company.

<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       USE OF ESTIMATES

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates
       and assumptions that affect the reported amounts of assets and
       liabilities and disclosure of contingent assets and liabilities at the
       date of the financial statements and reported amounts of revenues and
       expenses during the reported period.  Actual results could differ from
       those estimates.


       FINANCIAL STATEMENT RECLASSIFICATIONS

       Certain amounts have been reclassified in the 1996 and 1995 financial
       statements in order to conform to the 1997 presentation.  Such
       reclassifications had no effect on previously reported net income.


       FAIR VALUE OF FINANCIAL INSTRUMENTS

       The Company's financial instruments consist of cash, accounts
       receivable and payable and debt instruments.  The book values of cash
       and accounts receivable and payable are considered representative of
       their respective fair values.  The fair value of the Company's debt
       instruments approximate their carrying values as substantially all of
       such debt has rates which fluctuate with changes in market rates.

       NOTE 2 - PROPERTY AND EQUIPMENT

       Property and equipment, including equipment under capital leases,
       consist of the following:

<TABLE>
                                           March 31,     March 31,
                                             1997          1996

          <S>                            <C>           <C>
          Buildings and improvements     $   713,572   $   301,663
          Leasehold improvements           1,894,695     1,301,521
          Medical  equipment               5,291,958     4,143,983
          Office and other equipment       4,578,098     3,260,092
          Transportation equipment         1,763,843     1,825,866
                                        ------------   ------------
                                          14,242,166    10,833,125

          Less accumulated depreciation   (9,282,949)   (6,851,191)
                                        ------------   ------------ 
                                         $ 4,959,217   $ 3,981,934

</ABLE>

       Property and equipment acquired under capital leases consists
       principally of transportation, and office and other equipment, of
       $720,000 and $1,608,000 at March 31, 1997 and 1996, respectively
       against which obligations of approximately $165,000 and $434,000 were
       outstanding at those dates.

       Depreciation expense  was approximately  $1.8, $1.8, and $1.7 million
       for the fiscal periods ended March 31, 1997, 1996, and 1995,
       respectively.

<PAGE>


                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       NOTE 3 - REVOLVING CREDIT FACILITY


       The Company has a $12 revolving credit facility with the Healthcare
       Financial Services Division of Heller Financial, Inc..  Interest
       accrues on the facility at 1 percent over prime.  Availability is
       determined pursuant to a formula principally consisting of a percentage
       of accounts receivable subject to certain exclusions, as defined.  The
       facility is collaterialized by accounts receivable, inventory and a
       lien on the stock of the Company's subsidiaries.  $12 million was
       available under the formula on March 31, 1997.  The balance outstanding
       as of March 31, 1997 was approximately $9.8 million.  The credit
       agreement contains certain restrictive covenants.  The facility will
       remain in effect until October 13, 1998 and for annual one year terms
       thereafter unless either party to the credit agreement provides the
       other with a written notice of termination 60 days prior to the renewal
       date.



       NOTE 4 - TERM DEBT AND CAPITAL LEASE OBLIGATIONS



       Term debt and capital lease obligation borrowings consist of the
       following:

</TABLE>
<TABLE>
                                                  March 31,      March 31,
                                                     1997           1996
            <S>                                 <C>            <C> 
            The Company has various
            promissory notes and capital
            leases related to certain
            transportation and other     
            equipment expiring at various
            dates through 1999.                      407,024        754,168

            Less current portion                    (261,716)      (432,329)
                                                   ----------   ------------
            Non-current obligations                $ 145,308     $  321,839

</TABLE>

       As of March 31, 1997, future net minimum lease payments under capital
       leases and maturities of term debt are as follows:
<TABLE>

                                                   Capital       Long-term
                                                    Leases          Debt
            <S>                                   <C>           <C>
            1998                                   $ 136,316      $ 134,516
            1999                                      40,814         58,632
            2000                                           -         17,401
            2001                                           -         19,295
            2002                                           -         12,877
            Thereafter                                     -              -
            Total  minimum lease payments and       ----------   -----------
             maturities                               177,130    $   242,721
            Less amount representing interest         (12,827)   ===========
            Present  value  of  minimum  lease      ---------- 
             payments                                 164,303
            Less current portion                     (127,200)
                                                    ----------
            Long-term   portion   of   capital         
             lease obligations                      $  37,103
                                                    ==========

</TABLE>

       NOTE 5 - INCOME TAXES


       Statement of Financial Accounting Standards No. 109,  Accounting for
       Income Taxes (SFAS  109) requires recognition of deferred tax assets
       and liabilities for the expected future tax consequences of events that
       have been included in the financial statements or tax returns.  Under
       this method, deferred tax assets and liabilities are determined based
       on the difference between the Company's book and tax bases of assets
       and liabilities and tax carryforwards using enacted tax rates in effect
       for the year in which the differences are expected to reverse.  The
       principal tax carryforwards and temporary differences giving rise to
       the Company's deferred taxes consist of tax net operating loss
       carryforwards, differences in book and tax accounting for depreciation,
       bonuses, compensated absences, deferred compensation, and allowance for
       uncollectible accounts.



       The Company's deferred tax assets and liabilities were as follows:

<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
                                      March 31,     March 31,      March 31,
                                        1997           1996          1995
       <S>                           <C>           <C>           <C>
       Deferred tax assets

       Nondeductible reserves and
       allowances                     $1,338,000    $1,941,000    $1,871,000
       Net operating loss carryforwards  202,000       340,000       854,000
       AMT Credit                        107,000       120,000        90,000
                                      ----------    ----------    -----------
                                       1,647,000     2,401,000     2,815,000
       Valuation allowance                     -    (1,156,000)   (1,780,000)
                                      ----------    ----------    -----------
                                      $1,647,000    $1,245,000     $1,035,000

       Deferred tax liabilities

       Accelerated depreciation         
       and other                        $383,000      $173,000       $455,000
                                      ----------    ----------     ----------
       Net deferred tax assets        $1,264,000    $1,072,000       $580,000
                                      ==========    ==========     ==========
                                      
</TABLE>                              
                                      

       Provision for income taxes consist of the following:

<TABLE>
                                            Year Ended  March 31,

                                       1997          1996         1995
          <S>                        <C>           <C>          <C> 
          Federal - Current           $200,000     $  30,000    $  90,000
          State   and  local Current   148,000       135,000      242,000
          Deferred                    (192,000)      (30,000)    (277,959)
                                     ----------    ----------   ----------
                                       156,000      $135,000    $  54,041

</TABLE>
<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       A reconciliation of the statutory to the effective rate of the Company
       is as follows:
<TABLE>

                                   March 31, 1997  March 31, 1996  March 31, 1995 
 <S>                               <C>             <C>           <C>                                   
 Tax provision using statutory rate     $651,000     $555,900       $442,600 
 Goodwill                                $75,000      $71,400       $451,600 
 Valuation Allowance and other       ($1,156,000)   ($624,000)   ($1,048,000)
 State and local taxes, 
  net of federal benefit                $155,000      $89,100       $159,700 
 Other, net                             $431,000      $42,600        $48,141 
                                        --------     ---------    -----------
          Total                         $156,000     $135,000        $54,041    
   
</TABLE>

       Although the Company has experienced losses in the past, management
       believes that the Company will be able to realize its recorded
       deferred tax assets.  The Company's ability to generate the expected
       amounts of taxable income from future operations is dependent upon
       general economic conditions, competitive pressures on revenues and
       margins and legislation and regulation at all levels of government.
       There can be no assurances that the Company will meet its expectations
       of future taxable income.  However, management has considered the
       above factors in reaching its conclusions that it is more likely than
       not that future taxable income will be sufficient to fully utilize the
       deferred tax assets as of March 31, 1997.

<PAGE>

       NOTE 6 - STOCK OPTIONS AND WARRANTS


       Employee Stock Option Plans

       1.   The Company has a Nonqualified Stock Option Plan which  provides
       for the granting of options to key employees, officers, and directors,
       to purchase up to 220,000 shares of the Company's common stock.  The
       Board of Directors will determine  the amount and terms of the options
       which cannot exceed ten years.

       2.   The Company has an Incentive Stock Option Plan providing key
       employees, officers, and directors, options to purchase up to 80,000
       shares of the Company's common stock.   Generally, these options
       expire ten years after the date of grant, while options held by
       individuals owning more than 10% of the Company's common stock expire
       after five years.  The option price cannot be less than the fair
       market price of the common stock at the date granted and the options
       are not exercisable during the first year.

       3.   The Company has a Supplemental Nonqualified Stock Option Plan
       which provides options for the purchase up to 40,000 shares of the
       Company's common stock to key employees and non-employee consultants.
       The Board of Directors will determine the amount and terms of the
       options, which cannot exceed ten years.

       4.   The Company has a 1991 Long-term Incentive Nonqualified Stock
       Option Plan which provides options to purchase up to 500,000 shares of
       the Company's common stock to key employees, officers, and directors.
       The Board of Directors will determine the amount and terms of the
       options, which cannot exceed ten years.

       5.   The Company has a 1993 Stock Option Plan for Non-employee
       Directors which provides options to purchase up to 120,000 shares of
       the Company's common stock to directors who are not employees.  Each
       newly elected director or any director who does not possess options to
       purchase 10,000 shares of the Company's common stock will automatically
       be granted options to purchase 10,000 shares of common  stock at an
       exercise price based on the market price as of the date of grant.


       Changes in qualified options, non-qualified options, and supplemental
       non-qualified options and warrants outstanding are summarized as
       follows:
<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
                                  Warrants            Options
                              Shares  Wtd. Avg    Shares   Wtd. Avg
                                      Ex. Price            Ex. Price
             <S>             <C>      <C>        <C>       <C> 
             March 31, 1994   271,600 $12.13     557,220     $8.66
             Granted           15,000 $12.50      51,600     $8.24
             Exercised            -                  780     $1.54
             Terminated           -               56,460     $8.83
             March 31,1995    286,600 $12.15     551,580     $8.61
             Granted              -              135,000     $6.30
             Exercised            -                  -
             Terminated           -              163,280     $9.26
             March 31, 1996   286,600 $12.15     523,300     $7.82
             Granted              -               41,500     $6.30
             Exercised            -                  -
             Terminated        20,000 $13.75      26,000     $4.34
             March 31, 1997   266,600 $12.03     538,800     $7.87

</TABLE>

       At March 31, 1997 and 1996, approximately 266,600 and  286,600 warrants
       were exercisable, respectively.  The following table details
       exercisable options and related information:


                                            1997         1996
       Excercisable at end of year        420,000     404,000
       Weighted   Average  Exercise
       Price                                $8.18       $8.26

       Weighted  Average   of  Fair
       Value of options Granted             $4.26       $4.33
       


       The Company applies APB Opinion 25 and related interpretations in
       accounting for its stock option plans.  In 1995, Statement of Financial
       Accounting Standards No. 123 _Accounting for Stock Based Compensation_
       (SFAS 123) was issued and, if fully adopted, changes the method of
       recognition of costs on plans similar to the Company's.  The Company
       adopted the disclosure-only provisions of SFAS 123.  Accordingly, no
       compensation cost has been recognized for the Company's stock option
       plans.  Had compensation cost for the stock option plans been
       determined based upon the fair value at the grant date for the awards
       in 1997 and  1996 consistent with the provisions of SFAS 123, the
       effect on net income and earnings per share would have been reduced to
       the following pro forma amounts:

<PAGE>
<TABLE>
                                                  1997          1996 
                 <S>                 <C>          <C>           <C> 
                 Net Income:         As Reported  $1,759,370    $1,575,283
                                     Pro Forma     1,567,145     1,499,681
                 Primary EPS:        As Reported     $  0.56       $  0.50
                                     Pro Forma          0.50          0.48
                 Fully Diluted EPS:  As Reported     $  0.56       $  0.50
                                     Pro Forma          0.50          0.48

</TABLE>

       Because the SFAS 123 method of accounting has not been applied to
       options award prior to April 1, 1995, the resulting pro forma
       compensation cost may not be representative of that to be expected in
       future years.

       The following table summarizes information about stock options
       outstanding at March 31, 1997:

<TABLE>
Options Outstanding                                                       Options Exercisable           
 ------------------------------------------------------------------------  --------------------------------
<S>                <C>                    <C>                  <C>         <C>                   <C> 
                                              Wtd. Avg.                              
   Range of              Outstanding          Remaining          Wt. Avg.     Exercisable        Wtd. Avg. 
   Ex. Price         As of March 31, 1997  Contractual Life     Ex. Price  As of March 31, 1997  Ex. Price 
     1.95                  19,500                2.9             $1.95           19,500            $1.95 
  5.50 - 6.50             160,000                8.9              6.17           58,730             6.16 
  7.00 - 8.13              54,600                7.1              7.86           38,600             7.90 
  8.75 - 9.69             298,900                4.5              8.97          297,150             8.96 
 16.55 - 20.00              5,800                1.7             18.14            5,800            18.14 
  1.95 - 20.00            538,800                6.0              7.87          419,780             8.27 

</TABLE>
                                                  
       The fair value of each option award is estimated on the date of grant
       using the Black-Scholes option pricing model with the following
       weighted-average assumptions used for awards in 1997 and 1996
       respectively:  risk-free interest rates of 6.5% and 5.9%, expected
       volatility of approximately 59% and 62%, expected lives of 7.5 years
       for both 1997 and 1996, and no expected dividend yields for both 1997
       and 1996

<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       NOTE 7 - COMMITMENTS AND CONTINGENCIES


       (a)   Operating Leases


       The Company leases certain real estate, office space, and equipment
       under noncancellable operating leases expiring at various  dates
       through 2007. Rent expense amounted to approximately $3.1, $2.5, and
       $2.4 million for 1997, 1996, and 1995, respectively.   At March 31,
       1997 the minimum rental payments  under these leases are as follows:

                            1998           2,950,000
                            1999           2,607,000
                            2000           2,407,000
                            2001           1,987,000
                            2002           1,408,000

       (b)   Employment Contracts


       The Company has entered into an employment contract with an officer.
       In connection with this contract, the Company is contractually
       obligated to pay an annual base salary of $190,000 for three years.  In
       addition, the agreement contains contingent obligations associated with
       performance bonuses and severance.

       (c)   Medical Malpractice Claims


       The Company has insurance coverage  with respect to  medical
       malpractice risks.  The malpractice insurance coverage provides
       coverage up to $1,000,000 per occurrence, and has no deductible for
       which the Company would be responsible.

       It is the Company's policy to record losses from asserted and
       unasserted claims identified by the Company and unreported claims based
       on estimates that incorporate the Company's past experience, as well as
       other considerations including the nature of each claim or incident and
       relevant trend factors. Based on these factors and the Company's
       insurance coverage, no accrual for potential losses attributable to
       asserted and unasserted claims has been recorded in the accompanying
       financial statements.

       (d)   Legal Proceedings


       The Company is currently, and from time to time, subject to claims and
       suits arising in the ordinary course of its business, including claims
       for damages for personal injuries.  In the opinion of management, the
       ultimate resolution of any of these pending claims and legal

<PAGE>

                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

       proceedings will not have a material effect on the Company's financial
       position or results of operations.

       On January 26, 1994 Franklin Capital Associates, Aetna Casualty and
       Surety and Aetna Life and Casualty, shareholders, who at one time held
       approximately 320,000 shares of the Company's common stock
       (approximately 13% of shares outstanding) filed suit in Chancery Court
       of Williamson County, Tennessee claiming unspecified damages not to
       exceed three million dollars in connection with registration rights
       they received in the Company's acquisition of National Health
       Industries in February 1991.  The suit alleges the Company failed to
       use its best efforts to register the shares held by the plaintiffs as
       required by the merger agreement.  The Company believes it has
       meritorious defenses to the claims and does not expect that the
       ultimate outcome of the suit will have a material impact on the
       Company's results of operation or financial position. The Company plans
       to vigorously defend its position in this case.  No amounts have been
       recorded in the accompanying financial statements related to this suit.

       In January 1997, Aetna Life & Casualty withdrew its claim against the
       Company without prejudice.


       NOTE 8 - VOTING CONVERTIBLE PREFERRED STOCK


       On September 30, 1994, HEALTHSOUTH converted its shares of the
       Company's Series A voting convertible preferred stock into the same
       number of common shares.   Non-cash aspects of this transaction have
       been excluded from the accompanying statement of cash flows.




       NOTE 9 - RELATED PARTY TRANSACTIONS AND BALANCES


       The Company has an agreement with HEALTHSOUTH under which HEALTHSOUTH
       purchases  certain durable  medical  equipment and prosthetic and
       orthotic appliances (to fill HEALTHSOUTH's normal business requirements
       of such items) from the Company. During the years ended March 31, 1997,
       1996 and 1995, the Company realized sales of $15,000, $84,000 and
       $391,000 to HEALTHSOUTH, respectively, at terms the  Company  normally
       offers  its customers.   The outstanding receivable from HEALTHSOUTH
       was $7,965 and $17,000 as of March 31, 1997 and 1996.

       NOTE 10 - QUARTERLY FINANCIAL DATA (UNAUDITED)


       Summarized quarterly financial data for years ended March 31, 1997 and
       1996 are as follows (in thousands expect per share data):

<PAGE>


                      CARETENDERS HEALTH CORP. AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
                               1997                     1996

                      First  Second   Third  Fourth    First  Second   Third Fourth
       <S>          <C>     <C>     <C>     <C>      <C>     <C>     <C>     <C>
       Net Revenues $17,746 $19,158 $19,630 $20,239  $14,969 $15,999 $16,228 $16,031
       Gross Profit   3,699   4,305   4,253   4,247    3,392   3,682   3,821   3,574
       Net Income       368     465     512     414      362     456     507     250
       Per Share      $0.12   $0.15   $0.16   $0.13    $0.12   $0.15   $0.16   $0.07
</TABLE>


       NOTE 11 - Acquisitions and Divestitures


       On February 18, 1995, the Company entered into an arrangement with
       Columbia/HCA Healthcare Corporation (Columbia), under which Columbia
       acquired the Company's Certificate of Need license to provide nursing
       services to patients in eight counties in the Elizabethtown, Kentucky
       area and hired the Company to manage the operations until the year
       2000.  This transaction provided the Company with approximately
       $550,000 in cash.  Simultaneously, the Company's management agreement
       of Columbia's Louisville agency was extended for one year.


       In May 1996, the Company acquired the stock of Reliable Home Health
       Care, Inc. (Reliable), a provider of intermittent home nursing services
       in Cleveland, Ohio.  The acquisition was accounted for as a purchase.
       The Company paid a total purchase price, including fees and expenses,
       of approximately $520,000 in consideration for Reliable's stock.  The
       operations of Reliable were included in the Company's consolidated
       financial statements beginning May of 1996.  The excess purchase price
       over the estimated fair value of the net assets acquired of
       approximately $400,000 is being amortized using the straight-line
       method over 20 years.

       In June 1996, the Company acquired the stock of Pro-Care Home Health of
       Broward, Inc. (Pro-Care), an intermittent home nursing business in Ft.
       Lauderdale, Florida.  The acquisition was accounted for as a purchase.
       The Company paid a total purchase price, including fees and expenses,
       of approximately $500,000 in consideration for Pro-Care's stock. The
       operations of Pro-Care were included in the Company's consolidated
       financial statements beginning June of 1996.  The excess purchase price
       over the estimated fair value of the net assets acquired of
       approximately $470,000 is being amortized using the straight-line
       method over 20 years.
       
       
       The impact of the above acquisitions were not significant for any of
       the periods presented and, therefore, pro forma amounts are not
       presented illustrating the effects of such acquisitions.


<PAGE>


       Report of Independent Public Accountants



       To the Stockholders of Caretenders Health Corp.:

       We have audited the accompanying consolidated balance sheets of
       Caretenders Health Corp. (a Delaware corporation) and subsidiaries as
       of March 31, 1997 and 1996 and the related consolidated statements of
       income, stockholders' equity, and cash flows for each of the three
       years in the period ended March 31, 1997.  These financial statements
       are the responsibility of the Company's management.  Our responsibility
       is to express an opinion on these financial statements based on our
       audits.

       We conducted our audits in accordance with generally accepted auditing
       standards.  Those standards require that we plan and perform the audit
       to obtain reasonable assurance about whether the financial statements
       are free of material misstatement.  An audit includes examining, on a
       test basis, evidence supporting the amounts and disclosures in the
       financial statements.  An audit also includes assessing the accounting
       principles used and significant estimates made by management, as well
       as evaluating the overall financial statement presentation.  We believe
       that our audits provide a reasonable basis for our opinion.

       In our opinion, the financial statements referred to above present
       fairly, in all material respects, the financial position of Caretenders
       Health Corp. and subsidiaries as of March 31, 1997 and 1996, and the
       results of their operations and their cash flows for each of the three
       years in the period ended March 31, 1997 in conformity with generally
       accepted accounting principles.




                                               ARTHUR ANDERSEN LLP

       Louisville, Kentucky
       June 5, 1997



<PAGE>

       ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
       AND FINANCIAL DISCLOSURE

       None




<PAGE>

       PART III

       ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       The information required by this Item is set forth the Registrants
       definitive proxy materials of the Company to be filed with the
       Commission no later than 120 days after March 31, 1997, except for
       the information regarding executive officers of the Company, which
       is contained in Item 1 of Part I report. The information required by
       this Item contained in such definitive proxy materials is
       incorporated herein by reference.

       The following table sets forth certain information with respect to
       the Company's directors and executive officers.


Name                       Age            Position with the Company

William B. Yarmuth (1)      45            Chairman of the Board President
                                          and Chief Executive Officer

C. Steven Guenthner (2)     36            Senior Vice President and
                                                 Chief Financial Officer

Mary A. Yarmuth (3)         50            Senior Vice President and
                                          President - SeniorCare Solutions

W. Timothy Luckett (4)      41            Vice President - Human Resources

Helen Salvate-Simms (5)     40            Vice President - SeniorCare Solutions

Brenda S. Gaines (6)        40            Vice President - SeniorCare Solutions

Anne Liechty (7)            45            Vice President - Infusion Services

Michael P. Seltzer (8)      33            Vice President - HME Services

Stan C. Abromaitis (9)      50            Vice President - Government Relations

Mark R. Nail (10)           38            Vice President - Controller

Steven B. Bing (11)         50            Director

Patrick B. McGinnis (12)    50            Director

Donald G. McClinton (13)    63            Director

Tyree G. Wilburn (14)       45            Director

Jonathan Goldberg (15)      45            Director

Wayne T. Smith (16)         51            Director


<PAGE>

       Executive officers of the Company are elected by the Board of
       Directors for one year and serve at the pleasure of the Board of
       Directors with the exception of William B. Yarmuth who has an
       employment agreement with the Company.  See Item 11 -- William B.
       Yarmuth Employment Agreement.  Mary A. Yarmuth is married to William
       B. Yarmuth.  There are no other family relationships between any
       director or executive officer.

       Each Director is elected to hold office until the next annual
       meeting of stockholders and until a successor is elected and
       qualified.

       (1)  William B. Yarmuth has been a director of the Company since
            1991, when the Company acquired National, where Mr. Yarmuth was
            Chairman, President and Chief Executive Officer.  After the
            acquisition, Mr. Yarmuth became the President and Chief
            Operating Officer of the Company.  Mr. Yarmuth became Chairman
            and CEO in 1992.  He was Chairman of the Board, President and
            Chief Executive Officer of National from 1981 to 1991.

       (2)  C. Steven Guenthner has been Senior Vice President and Chief
            Financial Officer of the Company since 1992.  From 1983 through
            1992 Mr. Guenthner was employed as a CPA with Arthur Andersen
            LLP.  Prior to joining the Company he served as a Senior
            Manager in the firm's Accounting and Audit division
            specializing in mergers and acquisitions, public companies and
            the healthcare industry.

       (3)  Mary A. Yarmuth has served as Senior Vice President of the
            Company since 1991.  From 1985 to 1991 Ms. Yarmuth served as
            President of the Company's Nursing Division.  Ms. Yarmuth
            joined National in 1981.

       (4)  W. Timothy Luckett joined Caretenders Health Corp. in November
            1989 as the Director of Human Resources and became a Vice
            President on April 1, 1994.

       (5)  Helen Salvate-Simms has served as Vice President of the Company
            since 1991.  From 1989 to 1991 she was Operations Manager for
            the Company's Nursing Division.

       (6)  Brenda S. Gaines was selected as Vice President of the Company
            in 1997.  From 1995 to 1997 she was a Director of Operations.
            She joined the Company in 1991.

       (7)  Anne Liechty has served as Vice President of the Company since
            1992.  From 1987 to 1992 she served as the Company's Corporate
            Nursing Infusion Manager.

       (8)  Michael P. Seltzer was selected as Vice President of the
            Company in 1997.  From 1995 to 1997 he served as the Company's
            Director of HME Services.  Prior to 1995 Mr. Seltzer served in
            various capacities of home medical equipment management for
            Frazier Rehabilitation Center and Abbey Home Health.

       (9)  Stan C. Abromaitis was selected as Vice President of the
            Company in 1997.  From 1994 to 1997 he served as the Company's
            Director of Government Relations.  Prior to 1994 Mr. Abromaitis
            served as

<PAGE>
       (10) Mark R. Nail was selected as Vice President of the Company
            after joining the Company in 1997.  Prior to 1997 Mr. Nail
            served as chief financial officer for Girling Healthcare.

       (11) Steven B. Bing was elected a Director in January 1992.  Mr.
            Bing is an employee of R. Gene Smith, Inc., a private
            investment company located in Louisville, Kentucky.  From 1989
            to March 1992, Mr. Bing was President of ICH Corporation, an
            insurance holding company.  From 1984 to 1989, he served as
            Senior Vice President of ICH Corporation.  He is also a
            director of the University of Louisville, First Alliance
            Corporation, and various closely-held business entities.

       (12) Patrick B. McGinnis was elected a director in October 1994.
            Mr. McGinnis is the co-founder of Healthcare Recoveries, Inc.
            and serves as the company's chairman and CEO.  Healthcare
            Recoveries, Inc. is a provider of subrogation and other claims
            recovery services to the healthcare industry.  From 1979 to
            1988, Mr. McGinnis was Vice President-Finance and Planning for
            Humana, Inc.

       (13) Donald G. McClinton was elected a director in October 1994.
            From 1986 to 1994, Mr. McClinton was co-chairman of Interlock
            Industries, Inc., a privately held company engaged in metal
            fabrication, corrugated container manufacturing, aluminum
            processing and transportation.  Presently, Mr. Clinton is
            President and part owner of Skylight Thoroughbred Training
            Center. Inc., a thoroughbred course training center.  He is
            also a director of Jewish Hospital Systems, Inc., and Mid-
            America Bancorp.

       (14) Tyree G. Wilburn was elected a director in January 1996.  Mr.
            Wilburn is a private investor.  From 1992 to 1996, Mr. Wilburn
            was Chief Development Officer of Community Health Systems, Inc.
            and, most recently, Executive Vice President and Chief
            Financial and Development Officer.  From 1974 to 1992 Mr.
            Wilburn was with Humana Inc. where he held senior and executive
            positions in mergers and acquisitions, finance, planning,
            hospital operations, audit and investor relations.  He is also
            a director of Health Directions, Inc.
         
       (15) Jonathan Goldberg was elected a director in February 1997.  Mr.
            Goldberg is the managing partner of the law firm of Goldberg
            and Simpson and has served in that capacity for the last five
            years.

       (16) Wayne T. Smith was elected a director in March 1997.  Mr. Smith
            is President and Chief Executive Officer of Community Health
            Systems, Inc.  Mr. Smith was President and Chief Operating
            Officer of Humana, Inc. from 1993 to 1996 and has served with
            Humana from 1973 to 1993 in various capacities, including
            numerous vice president and divisional president positions.


<PAGE>

       ITEMS 11, 12 AND 13.  EXECUTIVE COMPENSATION; SECURITY OWNERSHIP OF
       CERTAIN BENEFICIAL OWNERS AND MANAGEMENT; AND CERTAIN RELATIONSHIPS
       AND RELATED TRANSACTIONS

       The Registrant intends to file a definitive proxy statement with the
       Commission pursuant to Regulation 14A (17 CFR 240.14a) not later
       than 120 days after the close of the fiscal year covered by this
       report.  In accordance with General Instruction G(3) to Form 10-K,
       the information called for by Items 11, 12 and 13 is incorporated
       herein by reference to the definitive proxy statement.  Neither the
       report on Executive Compensation nor the performance graph included
       in the Company's definitive proxy statement shall be deemed
       incorporated herein by reference.





<PAGE>
       PART IV

       Item 14.  Exhibits and Financial Statement Schedules and Reports on
       Form 8-K.

                                                                   Page Number

       (a)(1)  Index to Consolidated Financial Statements

               Consolidated Statements of Operations for the three years
               ended March 31, 1997, 1996, and 1995                    21
               Consolidated Balance Sheets - March 31, 1997 and 1996   22
               Consolidated Statements of Stockholders' Equity for
               the three years ended March 31, 1997, 1996, and 1995    23
               Consolidated Statements of Cash Flows for the three
                years ended March 31, 1997, 1996, and 1995             24
               Notes to Consolidated Financial Statements             25-36
               Report of Independent Public Accountants                37

       (a)(2)  Index to Financial Statement Schedule

               Report of Independent Public Accountants                 46
               Schedule II - Valuation and Qualifying Accounts         S-1


       All other Schedules have been omitted because they are either not
       required, not applicable or, the information has otherwise been
       supplied in the financial statements or notes thereto.


       (a)(3)  Exhibits  (* denotes filed herein)


         Exhibit
         Number              Description of Exhibit

          3.1    Certificate of Incorporation, as amended

          3.2    Amended and Restated By-laws

          4.1    Credit Agreement by and between the Company and First
                 National Bank of Louisville and AmSouth Bank, N.A., and
                 HEALTHSOUTH Rehabilitation Corporation, as guarantor,
                 dated as of June 29, 1992 with exhibits (incorporated by
                 reference to Exhibit 10.88 to the Registrant's Form S-1
                 Reg. 33-46565 dated April 23, 1993)

          4.2    Medical Claims, Revolving Loan Agreement, Revolving Credit
                 Note and exhibits between the Company and Heller Financial
                 dated June 20, 1994

          4.3    Other Debt Instruments -- copies of other debt instruments
                 for which the total debt is less than 10% of assets will
                 be furnished to the Commission upon request.

          10.1    Form of Lender's Notes and Lenders' Warrants
                 (Incorporated by Reference to Exhibit 10.3 to the
                 Registrant's Registration Statement on Form S-1 Reg. No.
                 33-8158 effective December 2, 1986)

          10.2    Stockholders and Noteholders Agreement, dated February
                 5, 1991, by and among the Company, Senior Kentucky, Inc.,
                 National Health Industries, Inc., Franklin Capital
                 Associates, L.P., Aetna Life and Casualty Company, The
                 Standard Fire Insurance Company and the holders of
                 National's common stock (Incorporated by reference to
                 Exhibit 2.3 to the Registrant's Report on Form 8-K, dated
                 February 5, 1991)

          10.3    Nonqualified Stock Option Plan, as amended (Incorporated
                 by reference to the Registrant's Registration Statement on
                 Form S-8 Reg. No. 33-20815)

          10.4    Supplemental Nonqualified Stock Option Plan
                 (Incorporated by reference to Exhibit 19.4 to the
                 Registrant's Report on Form 10-Q for the Quarter Ended
                 November 30, 1987 Commission File No. 15342)

          10.5   Incentive Stock Option Plan, as amended (Incorporated by
                 reference to the Registrant's Registration Statement on
                 Form S-8 Reg. No. 33-20815)

          10.6   Indemnity Agreement, effective as of October 15, 1987,
                 between Senior Service Corporation and Robert S. Shulman
                 (Incorporated by Reference to Exhibit 10.46 to the
                 Registrant's Post-Effective Amendment No. 3 to its
                 Registration Statement on Form S-1 Reg. No. 33-8158)

          10.7   Amendment to the Senior Service Corporation 1987
                 Nonqualified Stock Option Plan (Incorporated by reference
                 to Exhibit 19.3 to the Registrant's Report on Form 10-Q
                 for the quarter ended November 30, 1989)

          10.9   Provider Agreement, dated May 24, 1989, between the
                 Maryland State Department of Health and Mental Hygiene and
                 Towson Community Adult Day Care (Incorporated by reference
                 to Exhibit 10.70 to the Registrant's Post-Effective
                 Amendment No. 4 to its Registration Statement on Form S-1
                 File No. 33-8158)

          10.22  1991 Long-Term Incentive Plan


          10.23  Warrant Agreement, dated June 29, 1991, between the
                 Company and HEALTHSOUTH Rehabilitation Corporation
                 (incorporated by reference to Exhibit 10.88 to the
                 Registrant's Form S-1 Reg. 33-46565 dated April 23, 1993)

          10.24* Employment Agreement, dated January 1. 1996, between the
                 Company and William B. Yarmuth

          10.25  Asset Sale Agreements between the Company and Columbia/HCA
                 Healthcare Corporation

          11*    Schedule of Computation of Per Share Earnings

          22*    List of Subsidiaries of Caretenders Health Corp.

          24.1*  Consent of Arthur Andersen LLP

          27*    Financial Data Schedule

       (b)Reports on Form 8-K

          None.

       (c)Exhibits

          Described in Item 14(a)(3) of this report

       (d)Financial Statement Schedules

          Described in Item 14(a)(2) of this report




<PAGE>

       SIGNATURES

         Pursuant to the requirements of Section 13 or 15(d) 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.

       CARETENDERS HEALTH CORP.
       June 23, 1997

       By /s/ William B. Yarmuth

         William B. Yarmuth
         Chairman, President and  Chief Executive Officer

       By /s/ C. Steven Guenthner

         C. Steven Guenthner
         Senior Vice President and  Chief Financial Officer
         (Principal Financial and Accounting Officer)

       Pursuant to the requirements of the Securities Exchange Act of 1934,
       this report has been signed below by the following persons in the
       capacities and on the dates indicated:

       By /s/ William B. Yarmuth                             June 25, 1997
         William B. Yarmuth                                  Date
         Director

       By /s/ Patrick B. McGinnis                            June 25, 1997
         Patrick B. McGinnis                                 Date
         Director

       By /s/ Donald G. McClinton                            June 25, 1997
         Donald G. McClinton                                 Date
         Director

       By /s/ Steven B. Bing                                 June 25, 1997
         Steven B. Bing                                      Date
         Director 

       By /s/ Tyree Wilburn                                  June 25, 1997
         Tyree Wilburn                                       Date
         Director

       By /s/ Jonathan Goldberg                              June 25, 1997
         Jonathan Goldberg                                   Date
         Director

       By /s/ Wayne T. Smith                                 June 25, 1997
         Wayne T. Smith                                      Date
         Director


<PAGE>

       Report of Independent Public Accountants


       To the Stockholders of Caretenders Health Corp.:

       Our audits were made for the purpose of forming an opinion on the
       basic financial statements taken as a whole.  The schedule listed in
       the index to Financial Statement Schedule is presented for purposes
       of complying with the Securities and Exchange Commissions rules and
       is not part of the basic financial statements.  This schedule has
       been subjected to the auditing procedures applied in the audit of
       the basic financial statements and, in our opinion, fairly states in
       all material respects the financial data required to be set forth
       therein in relation to the basic financial statements taken as a
       whole.



                                            ARTHUR ANDERSEN LLP


       Louisville, Kentucky
       June 5, 1997










<PAGE>

<TABLE>



                                 CARETENDERS HEALTH CORP AND SUBSIDIARIES
                                     VALUATION AND QUALIFYING ACCOUNTS
                                                 SCHEDULE II

             Col. A                Col. B          Col. C            Col. D        Col. E
             
                                                  Additions                                                  
                                            -----------------------
                                                (1)
                                 Balance at  Charged to  Charged to 
                                Beginning of   Costs       Other       (2)       Balance at
      Description                 Period    and Expenses  Accounts  Deductions  End of Period
      <S>                       <C>         <C>           <C>       <C>         <C>  
      Year ended March 31, 1997:
       Allowance for bad debts   $2,884,743  $2,215,537    $    -   $1,947,135   $3,153,145

      Year ended March 31, 1996:
       Allowance for bad debts   $2,910,272  $1,668,844    $    -   $1,694,373   $2,884,743
      
      Year ended March 31, 1995:
       Allowance for bad debts   $1,955,621  $1,688,521    $    -     $733,870   $2,910,272
      
<FN>
                 (1) Charged to bad debt expense.
                 (2) Write-off of accounts.

</FN>
</TABLE>

                                        S-1

<PAGE>



                     CARETENDERS HEALTH CORP AND SUBSIDIARIES
                  SCHEDULE OF COMPUTATION OF EARNINGS PER SHARE
                                    EXHIBIT 11
<TABLE>
                                                   For the Fiscal Years Ended
                                                            March 31,

                                                   1997       1996       1995
<S>                                         <C>            <C>          <C>
        Primary earnings per share:

        Net income                              $1,759,370  $1,575,283  $1,247,662
                                                        
        Weighted average outstanding shares at
          year end                               3,119,436   3,119,436   3,119,436

        Add-common equivalent shares
        representing shares issuable upon
        exercise of dilutive options and            22,429      29,271      25,082
        warrants

        Weighted average number of shares used
        in calculation of primary earnings per   3,141,865   3,148,707   3,144,518
        share

         PER SHARE
              Net income per share                  $  .56      $  .50      $  .40

        Fully diluted earnings per share

        Weighted average outstanding shares      3,119,436   3,119,436   3,119,436
        during the period

        Add-common equivalent shares
        representing shares issuable upon
        exercise of dilutive options and            22,429      29,271      25,082

        Weighted average number of shares used
        in calculation of fully diluted          3,141,865  3,148,707   3,144,518
        earnings per share

          PER SHARE
        Fully diluted earnings per common           $  .56      $  .50      $  .40
        share

</TABLE>
<PAGE>



                             CARETENDERS HEALTH CORP
                               LIST OF SUBSIDIARIES
                               AS OF MARCH 31, 1997

                                    EXHIBIT 22


Subsidiaries of Caretenders Health Corp.

Adult Day Care of America, Inc.                   
Adult Day Care of Louisville, Inc.
Adult Day Care of Maryland, Inc.                  
HouseCalls, Inc.
Adult Day Clubs of America Joint Venture, Ltd.    
SEI Publishing Corporation
National Health Industries, Inc.                  
HHJC Holdings,Inc.
Pro-Care Home Health of Broward, Inc.


Subsidiaries of National Health Industries, Inc.

Freelife Medical Equipment,  Inc.                 
Caretenders Homecare, Inc.
Caretenders Infusion of Birmingham, Inc.          
Caretenders of Birmingham, Inc.
Caretenders of Boston, Inc.                       
Caretenders of Cincinnati, Inc.
Caretenders of Columbus, Inc.                     
Caretenders of Elizabethtown, Inc.
Caretenders of Indiana, Inc.                      
Caretenders of Indianapolis, Inc.
Caretenders of Lincoln Trail, Inc.                
Caretenders of Louisville, Inc.
Caretenders of New Jersey, Inc.                   
Caretenders of Northern Kentucky, Inc.
Caretenders of Richmond, Inc.                     
Caretenders of the Bluegrass, Inc.
Caretenders Visiting Services of Richmond, Inc.   
House Calls of America, Inc.
Caretenders Infusion Corp.                        
Metro Home Care, Inc.
National Orthopedic & Rehabilitation Services,Inc 
Physician Affiliates, Inc.
Special Healthcare Services, Inc.                 
Reliable Home Healthcare, Inc.
Caretenders Visiting Services of Cincinnati, Inc. 
Caretenders of Cleveland, Inc.
Caretenders Visiting Services of Columbus, Inc.   
Caretenders of Fort Lauderdale, Inc.
Caretenders of Evansville, Inc.                   
Caretenders of West Palm Beach, Inc.
Caretenders Visiting Services of Indianapolis,Inc 
Caretenders of Charlotte, Inc.

Subsidiary of HHJC Holdings, Inc.
Home Health of Jefferson County, Inc.             
Caretenders of Marshall County, Inc.


<PAGE>

       CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS




       As independent public accountants, we hereby consent to the
       incorporation of our reports included in this Form 10-K, into the
       Company's previously filed Registration Statement File No. 33-33601
       relating to the Company's Incentive Stock Option Plan, Registration
       Statement File No. 33-81122 related to the 1987 Nonqualified Stock
       Option Plan, Registration Statement No. 33-881100 related to the
       1993 Non-Employee Directors Stock Option Plan, and Registration
       Statement No. 33-81124 related to the 1991 Long-Term Incentive Plan.


                                                 ARTHUR ANDERSEN LLP


       Louisville, Kentucky
       June 26, 1997