<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                   FORM 10-Q
 
(Mark One)

     [X]  Quarterly report under Section 13 or 15(d) of the Securities
          Exchange Act of 1934 For the quarterly period ended March 31, 1997
                                                              --------------
 
     [ ]  Transition report under Section 13 or 15(d) of the Exchange Act
          For the transition period from ______________ to _________________
 
     Commission file number  0-26794
                             -----------------------------------------------
 
                           Enterprise Systems, Inc.
--------------------------------------------------------------------------------
            (Exact Name of Registrant as Specified in Its Charter)

                Delaware                                    36-3130103
--------------------------------------------------------------------------------
    (State or Other Jurisdiction                         (I.R.S. Employer
  of Incorporation or Organization)                     Identification No.)

             1400 South Wolf Road, Wheeling, Illinois  60090-6524
--------------------------------------------------------------------------------
         (Address of Principal Executive Offices, Including Zip Code)
 
                                (847) 537-4800
--------------------------------------------------------------------------------
             (Registrant's Telephone Number, Including Area Code)
 
                                      N/A
--------------------------------------------------------------------------------
        (Former Name, Former Address and Former Fiscal Year, if Changed
                              Since Last Report)

     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 past 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
    -----------   ----------

     At May 1, 1997, there were 8,270,922 shares of Common Stock of the
registrant outstanding.

<PAGE>
 
                           ENTERPRISE SYSTEMS, INC.

                         QUARTER ENDED MARCH 31, 1997

                                     INDEX

<TABLE>
<CAPTION>
                                                              PAGE
                                                             ------
PART I - FINANCIAL INFORMATION
<S>                                                          <C> 
     Item 1.  Financial Statements

              Independent Auditors' Review Report               3
 
              Consolidated Balance Sheets as of March 31,
              1997 (unaudited) and December 31, 1996            4
 
              Consolidated Statements of Income for the
              three months ended March 31, 1997 and 1996
              (unaudited)                                       5
 
              Consolidated Statements of Cash Flows for
              the three months ended March 31, 1997 and
              1996 (unaudited)                                  6
 
              Notes to Consolidated Financial Statements
              (unaudited)                                       7
 
     Item 2.  Management's Discussion and Analysis of
              Financial Condition and Results of Operations     8
 
PART II - OTHER INFORMATION
 
     Item 6.  Exhibits and Reports on Form 8-K                  11
 
SIGNATURES                                                      12

</TABLE> 

                                      2 
<PAGE>
 
                      INDEPENDENT AUDITORS' REVIEW REPORT

The Board of Directors
Enterprise Systems, Inc.:

We have reviewed the consolidated balance sheet of Enterprise Systems, Inc. and
subsidiary as of March 31, 1997, and the related consolidated statements of
income and cash flows for the three-month periods ended March 31, 1997 and 1996.
These consolidated financial statements are the responsibility of the Company's
management.

We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements for them to be in
conformity with generally accepted accounting principles.

We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Enterprise Systems, Inc. and
subsidiary as of December 31, 1996, and the related consolidated statements of
operations, stockholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 10, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.


                                                           KPMG PEAT MARWICK LLP

Chicago, Illinois
April 22, 1997

                                       3
<PAGE>
 
PART I - FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS.

                            ENTERPRISE SYSTEMS, INC.

                          CONSOLIDATED BALANCE SHEETS
           (amounts in thousands except share and per share amounts)

<TABLE>
<CAPTION>
 
                                             MARCH 31,          DECEMBER 31, 
                 ASSETS                        1997                1996   
                 ------                    -------------        ------------
                                            (UNAUDITED)
<S>                                        <C>             <C>
Current assets
 Cash and cash equivalents..............      $15,640             $15,510
 Receivables............................       24,844              25,318
 Deferred income taxes..................        4,598               4,598
 Other current assets...................        4,309               3,479
                                              -------             -------
   Total current assets.................       49,391              48,905
                                              -------             -------

 Investment securities..................        4,166               4,486
 Property and equipment.................        4,549               4,108
 Purchased and developed software.......        4,531               4,216
 Other assets...........................        4,705               4,516
                                              -------             -------
                                              $67,342             $66,231
                                              =======             =======

  LIABILITIES AND STOCKHOLDERS' EQUITY
  ------------------------------------
Current liabilities
 Accounts payable.......................      $ 1,241             $   543
 Accrued liabilities....................        4,048               3,930
 Unearned revenue.......................        4,405               4,947
                                              -------             -------
   Total current liabilities............        9,694               9,420
                                              -------             -------

Deferred income taxes...................        1,985               1,985

Stockholders' equity
 Preferred stock, $.01 par value;
   authorized 1,000,000 shares;
   none outstanding.....................        -                   -
 Common stock, $.01 par value;
  authorized 30,000,000 shares;
  issued and outstanding 8,262,589 and
  8,131,248 shares......................           83                  81
 Additional paid-in capital.............       54,169              53,830
 Retained earnings                              1,458                 971
 Deferred compensation..................          (47)                (56)
                                              -------             -------
   Total stockholders' equity...........       55,663              54,826
                                              -------             -------
                                              $67,342             $66,231
                                              =======             =======
</TABLE>


         See accompanying notes to consolidated financial statements.

                                       4
<PAGE>
 
                           ENTERPRISE SYSTEMS, INC.

                       CONSOLIDATED STATEMENTS OF INCOME
               (amounts in thousands, except per share amounts)
                                  (unaudited)

<TABLE>
<CAPTION>
                                          THREE MONTHS ENDED
                                               MARCH 31,
                                               ---------
 
                                            1997      1996
                                           -------   ------ 
<S>                                       <C>      <C> 
Revenues
 Software................................  $ 6,221   $4,284
 Services................................    7,238    4,922
 Hardware................................      442      391
                                           -------   ------ 
 
   Total revenues........................   13,901    9,597
                                           -------   ------ 
Operating costs and expenses
 Software development....................    2,648    1,933
 Services and support....................    4,678    2,782
 Hardware................................      371      369
 Sales and marketing.....................    3,735    2,594
 Administration..........................    1,857    1,579
                                           -------   ------ 
   Total operating costs and expenses....   13,289    9,257
                                           -------   ------ 
 
Income from operations...................      612      340
Interest income, net.....................      246      276
                                           -------   ------ 
Income before income taxes...............      858      616
Income tax expense.......................      356      260
                                           -------   ------ 
Net income...............................  $   502   $  356
                                           -------   ------ 

Net income per share.....................  $  0.06   $ 0.04
                                           =======   ======
 
Shares used in computing net income per     
 share ..................................    8,621    8,030
                                           =======   ====== 
</TABLE>



         See accompanying notes to consolidated financial statements.

                                       5
<PAGE>
                           ENTERPRISE SYSTEMS, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (amounts in thousands)
                                  (unaudited)
<TABLE>
<CAPTION>
                                                      THREE MONTHS ENDED 
                                                          MARCH 31,  
                                                      ------------------
                                                        1997     1996
                                                      -------    -------
<S>                                                   <C>        <C>
Cash flows from operating activities 
  Net income.....................................     $   502    $   356
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities, 
    net of acquisition...........................
    Depreciation.................................         600        430
    Amortization.................................         541        123
    Changes in assets and liabilities
      Receivables................................         474        623
      Refundable and prepaid income taxes........           -        272
      Other current assets.......................        (810)      (108)
      Accounts payable...........................         685       (432)
      Accrued liabilities........................          81       (763)
      Unearned revenue...........................        (542)      (404)
      Other, net.................................        (394)      (121)
                                                      -------    ------- 
        Net cash provided by (used in) operating                        
          activities.............................       1,137        (24)
                                                      -------    ------- 
Cash flows from investing activities
  Maturities of investment securities............         320     (5,080)
  Purchase of property and equipment.............      (1,027)      (868)
  Capitalized software development...............        (641)      (300)
                                                      -------    ------- 
        Net cash used in investing activities....      (1,348)    (6,248)
                                                      -------    ------- 
Cash flows from financing activities
  Proceeds from exercise of stock options........         341        638
                                                      -------    ------- 
        Net cash provided by financing activities         341        638
                                                      -------    ------- 
Increase (decrease) in cash and cash equivalents.         130     (5,634)
Cash and cash equivalents at beginning of period.      15,510     11,403
                                                      -------    -------
Cash and cash equivalents at end of the period...     $15,640    $ 5,769
                                                      =======    ======= 
 
Supplemental disclosures of cash flow information
  Interest paid..................................     $     8    $     7
                                                      =======    =======  
 
</TABLE>

         See accompanying notes to consolidated financial statements.

                                       6
<PAGE>
 
                           ENTERPRISE SYSTEMS, INC.

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

     The accompanying unaudited interim consolidated financial statements of
Enterprise Systems, Inc. (the Company) reflect all adjustments which, in the
opinion of management, are necessary for a fair presentation of the results of
the interim periods presented. All such adjustments are of a normal recurring
nature.

     These consolidated financial statements should be read in conjunction with
the Company's audited consolidated financial statements and notes thereto for
the year ended December 31, 1996, included in the Form 10-K filed by the Company
with the Securities and Exchange Commission.

     The results of operations for the three months ended March 31, 1997, are
not necessarily indicative of the results to be expected for the entire fiscal
year ending December 31, 1997.

NOTE 2 - COMPUTATION OF NET INCOME PER SHARE

     Net income per share is based on the weighted average number of shares
outstanding and includes the dilutive effect of unexercised stock options using
the treasury stock method.

NOTE 3 - MERGER WITH HBO & COMPANY

     On March 13, 1997, the Company signed a definitive agreement to be acquired
by HBO & Company (HBOC). HBOC delivers enterprise-wide patient care, clinical,
financial and strategic management software solutions, as well as networking
technologies, electronic data interchange, outsourcing and other services to
healthcare organizations throughout the world. The acquisition, which is subject
to regulatory and stockholder approval, will be accounted for as a pooling of
interests and is scheduled to close during the second quarter of 1997. Terms of
the acquisition will provide for Company stockholders to receive shares of HBOC
common stock. The purchase price will be determined by averaging the closing
HBOC stock price for a period of twenty trading days ending shortly before the
close of the transaction.

NOTE 4 - ACQUISITION OF DBE, INC.

     On March 31, 1997, the Company acquired DBE, Inc. of Minneapolis, Minnesota
in a stock transaction valued at approximately $2 million. DBE, Inc. provides
software and a unique cross referencing database designed to assist large
hospitals, medical suppliers, and other healthcare organizations in better
managing their costs by increasing product purchase compliance and providing
more accurate information. The transaction was accounted for under the pooling
of interests method.

                                       7
<PAGE>
 
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

     Results of Operations. The following table sets forth revenue and expense
items as a percentage of total revenues:
<TABLE>
<CAPTION>
 
                                                  THREE MONTHS ENDED 
                                                       MARCH 31,
                                                  1997          1996
                                                  ----          ----
<S>                                               <C>           <C>
Revenues
  Software................................          45%           45%
  Services................................          52            51
  Hardware................................           3             4
                                                  ----          ----

    Total revenues........................         100           100
                                                  ----          ----

Operating costs and expenses                                     
  Software development....................          19            20  
  Service and support.....................          34            29
  Hardware................................           3             4
  Sales and marketing.....................          27            27
  Administration..........................          13            16
                                                  ----          ----

    Total operating costs and expenses....          96            96
                                                  ----          ----

Income from operations....................           4             4       
Interest income, net......................           2             3
                                                  ----          ----

Income before income taxes................           6             7
Income tax expense........................           3             3 
                                                  ----          ----

Net income................................           3%            4%
                                                  ====          ====
</TABLE>

REVENUES

     The Company derives its revenues from software licenses, installation
services, ongoing support, maintenance and enhancement services, product
education, consulting and the sale of computer hardware. Total revenues for the
first quarter of 1997 were $13,901,000, an increase of $4,304,000, or 45%, as
compared to $9,597,000 for the same period in 1996.

     Software. Software revenues for the first quarter of 1997 increased
$1,937,000, or 45%, as compared to the first quarter of 1996. The increases are
primarily attributable to expansion of the Company's sales force, product
offerings and marketing efforts.

     Services. Services revenues for the first quarter of 1997 increased
$2,316,000, or 47%, as compared to the first quarter of 1996. The increases in
services revenues are related to the increase in software revenues coupled with
an increase in consulting services revenues and growth in recurring support
fees.

     Hardware. Hardware revenues for the first quarter of 1997 increased $51,000
as compared to the first quarter of 1996. The increases in hardware revenues are
principally attributable to TS2000 sales.

                                       8
<PAGE>
 
COSTS AND EXPENSES
 
     Software Development.  Software development expenses for the first quarter
of 1997 increased $715,000, or 37%, as compared to the first quarter of 1996.
The increases in these expenses are primarily related to development work on new
releases of each of the Company's product lines and the ongoing conversion of
its DOS-based products to a Windows-based platform.

     For the first quarter of 1997, the Company capitalized $463,000 of software
development costs net of related amortization expense, in accordance with
Statement of Financial Accounting Standards No. 86.  Capitalized software
development costs are amortized over the estimated life of the related products
(up to four years). For the first quarter of 1996, the Company capitalized
$183,000 of software development costs, net of related amortization expense.
Amounts capitalized, net of amounts amortized, represent 14% and 9% of total
software development expenditures for the three months ended March 31, 1997 and
1996, respectively.

     Service and Support.  Service and support expenses for the first quarter of
1997 increased $1,896,000, or 68%, as compared to the first quarter of 1996.
The increases in these expenses are primarily attributable to the hiring of
additional support personnel.

     Hardware.  Hardware costs for the first quarter of 1997 increased $2,000 as
compared to the first quarter of 1996. The increase in hardware costs is
attributable to the proportionate increase in hardware revenues.

     Sales and Marketing.  Sales and marketing expenses for the first quarter of
1997 increased $1,141,000, or 44%, as compared to the first quarter of 1996.
The increases in these expenses are primarily attributable to the expansion of
the Company's sales force and related commissions earned, which increased due to
the revenue growth over the prior year.

     Administration.  Administration expenses for the first quarter of 1997
increased $278,000, or 18%, as compared to the first quarter of 1996.  The
increases in administration expenses are primarily a result of an increase in
public company related expenses and amortization of intangible assets (acquired
in the purchase of the materials management division of Continental Healthcare
Systems, Inc.).

     Interest.  Net interest income for the first quarter of 1997 was $246,000
as compared to net interest income of $276,000 in the first quarter of 1996.
The decrease in net interest income in 1997 is attributable to a lower cash and
cash equivalents and investment balances in the first quarter of 1997 compared
with the same period last year.

     Income Taxes.  For the first quarter of 1997, income tax expense was
$356,000, compared to income tax expense of $260,000 in the first quarter of
1996.

Liquidity and Capital Resources

     The seasonality of the Company's business has historically necessitated the
use of short-term borrowings at various times during the year.  The Company
currently has an $18 million unsecured revolving credit line bearing interest at
the prime rate less 0.5% or LIBOR plus 1.25% to 1.75%, which is available to
fund short-term liquidity needs and other general corporate purposes.  As of
March 31, 1997, there were no outstanding amounts under the line of credit.

     On October 18, 1996, the Company completed a private placement of its
common stock in which 600,000 shares were sold by the Company, resulting in net
proceeds to the Company of approximately $13 million.  Management believes that
the net proceeds from the offering, together with existing cash and cash
equivalents, cash flow from operations and borrowings under its line of credit,
will be sufficient to meet the Company's currently anticipated working capital
and capital expenditure requirements for at least the next twelve months.

                                       9
<PAGE>
    
     The Company has no outstanding material purchase commitments.   The Company
is obligated to make minimum royalty payments in the aggregate amount of
approximately $4.5 million under certain license agreements, of which
approximately $1.5 million has been paid through March 31, 1997.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

     In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share"
("EPS"). Implementation of SFAS No. 128 is required for the periods ending after
December 15, 1997. The standard establishes new methods for computing and
presenting EPS and replaces the presentation of primary and fully-diluted EPS
with basic and diluted EPS. The new methods under this standard are not expected
to have a significant impact on the Company's EPS amounts.

                                      10
<PAGE>
 
PART II - OTHER INFORMATION



ITEM 6.   EXHIBITS

     (a)  Exhibits

          2.1    Agreement of merger by and among HBO & Company, HBO & Company
                 of Georgia, and Enterprise Systems, Inc., dated March 13, 1997.

          15.1   Letter regarding unaudited interim financial information

          27.    Financial data schedule


                                      11
<PAGE>
 
                                 SIGNATURES


     Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                               Enterprise Systems, Inc.
 
 
Date: May 14, 1997             BY:  /s/ Glen E. Tullman
                               ------------------------------------------
                               Glen E. Tullman, Chief Executive Officer
 
 
Date: May 14, 1997             BY:  /s/ David B. Mullen
                               ------------------------------------------
                               David B. Mullen, Chief Financial Officer

                                      12
<PAGE>
 

                           ENTERPRISE SYSTEMS, INC.

                         QUARTER ENDED MARCH 31, 1997

                                 EXHIBIT INDEX


<TABLE>
<CAPTION>
                                                                           
                                                                          
<S>              <C>

  Exhibit 2.1    Agreement of merger by and among HBO & Company,
                 HBO & Company of Georgia, and Enterprise
                 System, Inc., dated March 13, 1997.

  Exhibit 15.1   Letter regarding unaudited interim financial               
                 information                                               
                                                                 
  Exhibit 27     Financial data schedule                                    
</TABLE>