<PAGE>
 
                                 UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   Form 10-Q

     (Mark One)


          ( X )  QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934

                For the quarterly period ended December 31, 1997


                                       or


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

   For the transition period from ___________________ to ___________________



                       Commission File Number:   0-26938


                    HOME HEALTH CORPORATION OF AMERICA, INC.
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                Pennsylvania                                23-2224800
------------------------------------------------   ---------------------------
        (State or other jurisdiction of                   (IRS Employer
        incorporation or organization)                  Identification No.)


         2200 Renaissance Boulevard
                 Suite 300
            King of Prussia, PA                                 19406
------------------------------------------------   ----------------------------
  (Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code - (610) 272-1717


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 the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date:

            Class                              Outstanding at January 31, 1998
------------------------------                ---------------------------------
Common stock, no par value                                9,269,592


Exhibit index is located on page 21
<PAGE>
 
           HOME HEALTH CORPORATION OF AMERICA, INC. AND SUBSIDIARIES

                               TABLE OF CONTENTS

                                                                      PAGE
                                                                     NUMBER
                                                                     ------

PART I:  FINANCIAL INFORMATION

     ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE 
          THREE AND SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996         3

          CONDENSED CONSOLIDATED BALANCE SHEETS AS OF  JUNE 30, 1997
          AND DECEMBER 31, 1997                                         4


          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX
          MONTHS ENDED DECEMBER 31, 1997 AND 1996                       5



          NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL 
          STATEMENTS                                                    6

     ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                     10


PART II:   OTHER INFORMATION

     ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                        19


SIGNATURES                                                             20


EXHIBIT INDEX                                                          21

                                       2
<PAGE>
 
           HOME HEALTH CORPORATION OF AMERICA, INC. AND SUBSIDIARIES            

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                        
                                  (Unaudited)

                     (in thousands, except per share data)



<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED               SIX MONTHS ENDED
                                                             DECEMBER 31,                    DECEMBER 31,
                                                     ---------------------------    ----------------------------
                                                        1996             1997          1996              1997
                                                     -----------      ----------    -----------       ----------
<S>                                                  <C>              <C>           <C>               <C>
Net revenues                                             $32,967         $45,742        $60,085          $92,788

Operating costs and expenses:
   Patient care costs                                     15,700          21,659         28,959           43,587
   General and administrative                             11,784          18,875         21,227           36,284
   Provision for doubtful accounts                         1,274           1,404          2,369            2,876                    

  Depreciation                                               338             593            617            1,096
  Amortization                                               465             833            820            1,584
  Interest expense, net                                      701           1,795          1,170            3,634
  Merger and other nonrecurring expenses                   1,584           4,880          1,584            4,880
  Writedown of goodwill                                        -          23,516              -           23,516
                                                     -----------      ----------    -----------       ----------
        Total operating costs and expenses                31,846          73,555         56,746          117,457
                                                     -----------      ----------    -----------       ----------
Income (loss) before income taxes                          1,121         (27,813)         3,339          (24,669)
Provision (benefit)for income taxes                          432          (3,957)         1,295           (2,841)
                                                     -----------      ----------    -----------       ----------
        Net income (loss)                                   $689        $(23,856)        $2,044         $(21,828)
                                                     ===========      ==========    ===========       ==========
Other data, including per share data:
Basic per share data:                                           
  Net income (loss) available to common                          
    stockholders                                            $689        $(23,856)        $2,038         $(21,828)
                                                     ===========      ==========    ===========       ========== 
  Net income (loss) per common share                       $0.08          $(2.60)         $0.25           $(2.38)
                                                     ===========      ==========    ===========       ==========
  Weighted average shares used in computing                    
    net income (loss) per common share                     8,377           9,158          8,201            9,153
                                                     ===========      ==========    ===========       ==========
Diluted per share data:                                       
  Net income (loss) available to common                        
    stockholders                                            $711        $(23,856)        $2,121         $(21,828)
                                                     ===========      ==========    ===========       ==========
  Net income (loss) per common share                       $0.08          $(2.60)         $0.24           $(2.38)
                                                     ===========      ==========    ===========       ==========
 Weighted average shares used in computing                    
    net income (loss) per common share                     8,732           9,158          8,684            9,153
                                                     ===========      ==========    ===========       ==========
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       3
<PAGE>
 
           HOME HEALTH CORPORATION OF AMERICA, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                        
                                  (Unaudited)

                                 (in thousands)



<TABLE>
<CAPTION>
                                                                                                  
                                                                                JUNE 30,             DECEMBER 31,
                            ASSETS                                                1997                  1997
                            ------                                           -------------          -------------  
<S>                                                                          <C>                    <C>
Current assets:                                                                            
  Cash and cash equivalents                                                           $464                 $2,129
  Accounts receivable, net of allowance for doubtful accounts of                           
   $10,847 and $12,461, respectively                                                56,410                 58,497
  Inventories                                                                        3,262                  3,109
  Prepaid expenses and other                                                         2,018                  3,685
  Income taxes                                                                       2,566                  5,185
                                                                             -------------          -------------  
       Total current assets                                                         64,720                 72,605
Property and equipment, net                                                         18,261                 17,150
Goodwill                                                                            68,202                 48,068
Other assets, net                                                                    2,080                  2,380
                                                                             -------------          -------------  
       Total assets                                                               $153,263               $140,203
                                                                             =============          =============                  
                                                                                           
                 LIABILITIES AND STOCKHOLDERS' EQUITY                                      
                 ------------------------------------                                      
Current liabilities:                                                                       
  Current maturities of long-term debt                                              $6,263                 $4,976
  Accounts payable                                                                   5,705                  5,242
  Accrued salaries and related employee benefits                                     4,788                  5,304
  Restructuring and other nonrecurring liabilities                                     764                  4,172
  Other current  liabilities                                                         3,996                  5,563
                                                                             -------------          -------------  
       Total current liabilities                                                    21,516                 25,257
Long-term debt, net of current portion                                              78,793                 81,163
Restructuring and other nonrecurring liabilities                                       386                  2,162
Other liabilities                                                                    1,996                  2,685
                                                                                           
Stockholders' equity:                                                                      
  Preferred stock (undesignated), no par value, 10,000 shares                                
  Authorized; no shares issued and outstanding                                           -                      -
  Common stock, no par value, 20,000 shares authorized; 9,221 and 9,250                     
   shares issued, 9,129 and 9,158 outstanding at June 30 and December                       
   31, respectively                                                                 43,927                 44,119
  Retained earnings (accumulated deficit)                                            6,645                (15,183)
                                                                             -------------          -------------  
       Total stockholders' equity                                                   50,572                 28,936
                                                                             -------------          -------------  
        Total liabilities and stockholders' equity                                $153,263               $140,203
                                                                             =============          =============  
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       4
<PAGE>
 
           HOME HEALTH CORPORATION OF AMERICA, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                        
                                  (Unaudited)

                                 (in thousands)


<TABLE>
<CAPTION>
 
                                                                           SIX MONTHS ENDED DECEMBER 31,
                                                                         ---------------------------------
                                                                              1996                 1997
                                                                         -----------          ------------
<S>                                                                      <C>                  <C>
Cash flows provided by (used in) operating activities:                               
 Net income (loss)                                                            $2,044               (21,828)
 Adjustments to reconcile net income to net cash provided by (used                    
  in) operating activities:                                                           
  Depreciation and amortization                                                2,386                 4,379
  Provision for doubtful accounts                                              2,369                 2,876
  Deferred income taxes                                                           52                     -
  Writedown of goodwill                                                            -                23,516
  Write-off of terminated merger costs                                             -                 1,202
Net changes in certain assets and liabilities, net of acquisitions:                               
  Accounts receivable                                                         (8,412)               (7,726)
  Inventories                                                                   (613)                  153
  Prepaid expenses and other                                                    (609)               (1,666)
  Income taxes                                                                   (27)               (2,620)
  Restructuring and other nonrecurring                                         1,150                 2,843
  Accounts payable, accrued expenses and other                                (4,903)                1,619
                                                                         -----------          ------------
    Net cash flows provided by (used in) operating activities                 (6,563)                2,748
                                                                         -----------          ------------
Cash flows used in investing activities:                                             
  Purchases of property and equipment                                         (2,107)               (1,345)
  Cash paid for acquisitions, net of cash acquired                           (14,141)                 (372)
  Increase in other assets                                                      (585)                 (273)
                                                                         -----------          ------------
    Net cash flows used in investing activities                              (16,833)               (1,990)                 
                                                                         -----------          ------------
Cash flows provided by financing activities:                                         
  Proceeds from long-term debt                                                24,969                 4,000
  Repayments of long-term debt                                                (1,080)               (3,285)
  Payment of deferred financing fees                                            (209)                    -
  Proceeds from issuance of common stock                                           -                   192
                                                                         -----------          ------------
    Net cash flows provided by financing activities                           23,680                   907
                                                                         -----------          ------------
Net increase in cash and cash equivalents                                        284                 1,665      
Cash and cash equivalents, beginning of period                                 1,695                   464       
                                                                         -----------          ------------
Cash and cash equivalents, end of period                                      $1,979                $2,129 
                                                                         ===========          ============
</TABLE>

See accompanying notes to unaudited condensed consolidated financial statements.

                                       5
<PAGE>
 
           HOME HEALTH CORPORATION OF AMERICA, INC. AND SUBSIDIARIES
        Notes to Unaudited Condensed Consolidated Financial Statements

1.   Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Home
Health Corporation of America, Inc. and Subsidiaries (the "Company" or "HHCA")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission.  Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements.  Additionally, although the June
30, 1997 condensed consolidated balance sheet was derived from audited financial
statements, it does not include all disclosures required by generally accepted
accounting principles.  In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included.  Operating results for the three and six months
ended December 31, 1997 are not necessarily indicative of the results that may
be expected for the fiscal year ending June 30, 1998.  The unaudited condensed
consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended June 30,
1997 included in the Company's Form 10-K/A filed with the Securities and
Exchange Commission.

2.  PER SHARE DATA

The Company adopted Statement of Financial Accounting Standard No. 128 ("SFAS
128"), "Earnings Per Share," during the quarter ended December 31, 1997.  The
adoption of SFAS 128 did not have a material effect on the Company's earnings
per share.  Earnings per share and common shares outstanding for the three and
six months ended December 31, 1996 have been restated for comparative purposes.

  Basic earnings per share.  Basic earnings per share is calculated by dividing
income available to common stockholders (the basic numerator) by the weighted-
average number of common shares outstanding (the basic denominator) during the
period. Income available to common stockholders is computed by deducting
dividends declared in the period on preferred stock (whether or not paid) and
dividends accumulated for the period on cumulative preferred stock.

  Diluted earnings per share. Diluted earnings per share is calculated by
adjusting the basic numerator to add back the after-tax amount of dividends and
interest recognized in the period associated with potentially issuable common
shares and for any other changes in income or loss that would result from the
assumed conversion or exercise of potentially issuable common shares.
Additionally, the basic denominator is increased to include the additional
number of common shares that would have been outstanding if the potentially
issuable common shares had been issued, if dilutive. The treasury stock method
is used to reflect the dilutive effect of outstanding options and warrants.

Under SFAS 128, the computation of diluted EPS does not assume the conversion or
exercise of securities that have an antidilutive effect on earnings per share
(i.e., increase the earnings-per-share amount or decrease the loss-per-share
amount).

                                       6
<PAGE>
 
3.  MEDICARE REIMBURSEMENT REDUCTIONS AND RELATED RESTRUCTURING

In 1997, Congress approved the Balanced Budget Act of 1997 (the "Budget Act").
The Budget Act established an interim payment system (the "IPS") that provided
for the lowering of reimbursement limits for home health visits. For cost
reporting periods beginning on or after October 1, 1997, Medicare-reimbursed
home health agencies will have their cost limits determined as the lesser of (i)
their actual costs, (ii) cost limits based on 105% of median costs of
freestanding home health agencies, or (iii) an agency-specific per-patient cost
limits, based on 98% of 1994 costs adjusted for inflation. The new IPS cost
limits will apply to the Company for the cost reporting period beginning July 1,
1998, except for the Company's Medicare-certified nursing agency located in
Texas, for which the new cost limits will apply for the cost reporting period
beginning January 1, 1998. During the three months ended December 31, 1997,
various regulations and interpretations of the Budget Act were published which
enabled the Company to calculate the potential impact on reimbursement of the
new IPS cost limits. Management's analysis, without giving effect to the
restructuring discussed below, estimated the aggregate impact on reimbursement
to exceed $5.0 million for certain of the Company's Medicare-certified nursing
agencies. After giving effect to the restructuring, management estimates that
the aggregate impact on reimbursement will be between $2.0 to $4.5 million,
assuming no additional cost reductions are made during the remainder of fiscal
1998 or during fiscal 1999. Management is reviewing potential additional cost
reductions to reduce the estimated impact of the IPS.

The Budget Act also provided for a 25% reduction in home oxygen reimbursement
from the 1997 fee schedule effective January 1, 1998 and a further reduction of
5% effective January 1, 1999.  Compounding these reductions was a freeze on
consumer price index increases in oxygen reimbursement rates until the year
2003.  Approximately 5.8% of the Company's net revenues are derived from
reimbursement of oxygen services affected by the reduction in the fee schedule,
which may result in a significant impact on the profitability of these services.

During the three months ended December 31, 1997, the Company developed a
restructuring plan to aggressively respond to the above reductions in Medicare
reimbursement by fundamentally reshaping the Company for long-term growth in the
changing environment. This plan, as well as management's assessment of the
continuing value of goodwill under the changing reimbursement environment,
resulted in pre-tax accounting charges during the three months ended December
31, 1997 of $28.4 million which was comprised of a writedown of goodwill of
$23.5 million, restructuring costs of $3.7 million and the write-off of deferred
costs aggregating $1.2 million related to a terminated acquisition.

The writedown of goodwill was required under Statement of Financial Accounting
Standard No. 121 ("SFAS 121), "Accounting for the Impairment of Long-lived
Assets and for Long-lived Assets to Be Disposed of," based upon management's
estimate of the impact of the announced reductions in oxygen reimbursement and
the expected impact of the IPS on the Company's continuing operations.
Management determined that these impacts indicated the carrying value of
goodwill should be written down by $23.5 million, which is comprised of $9.0
million related to certain durable medical equipment, respiratory therapy and
infusion therapy companies and $14.5 million related to certain Medicare-
certified nursing agencies. This writedown is reflected in the accompanying
condensed consolidated statement of operations.

The restructuring costs of $3.7 million are comprised of (i) the closure and
consolidation of certain branch locations, including the accrual of estimated
facility exit costs and future lease costs, the 

                                       7
<PAGE>
 
write-off of leasehold improvements, and other exit costs aggregating $1.6
million, (ii) estimated employee severance costs in connection with the related
termination of employees, including certain former owners of businesses
acquired, aggregating $1.7 million and (iii) certain other costs related to the
restructuring aggregating $370,000. The restructuring plan is expected to be
substantially implemented by March 1998. The cash portion of the pre-tax
accounting charge is estimated to be approximately $3.7 million. No material
amounts were charged against the related accruals during the three months ended
December 31, 1997. The restructuring costs have been included in merger and
other nonrecurring expenses in the accompanying condensed consolidated statement
of operations.

On February 11, 1998, the Company and U.S. HomeCare Corporation ("USHO") agreed
to the termination of the proposed merger (the "Terminated Merger") between the
two companies.  Deferred costs associated with the Terminated Merger of $1.2
million were written-off during the three months ended December 31, 1997 and
included in merger and other nonrecurring expenses in the accompanying
condensed consolidated statement of operations.

4.  SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental disclosure of cash flow information for the six months ended
December 31:
 
<TABLE>
<CAPTION>
                                                                1996                 1997
                                                           ---------------      ---------------
                                                                      (in thousands)
<S>                                                        <C>                  <C>
Non-cash investing and financing activities:
Acquisitions:
  Assets acquired and amounts paid to former owners               $27,656               $  372
  Less:
    Liabilities assumed and acquisition costs                       7,940                    -
    Issuance of  subordinated seller notes                          3,625                    -
    Issuance of common stock                                        1,950                    -
                                                         ----------------     -----------------
  Cash paid, net of cash acquired                                 $14,141               $  372
                                                         ================     =================
 
Capital lease obligations incurred                                $   755                 $ 744
                                                         ================     =================
 
Conversion of HHSI convertible notes into the Company's
 common stock:
  Common stock, no par                                              2,042                     -
  Additional paid-in capital                                         (104)                    -
                                                         ----------------     -----------------
                                                                  $ 1,938                     -
                                                         ================     =================

Exchange of HHSI shares for the Company's common stock
                                                                  $ 1,250                     -
                                                         ================     =================
</TABLE>

                                       8
<PAGE>
 
5. CREDIT FACILITY

On February 17, 1998, the Company's senior credit facility (the "Credit 
Facility") was amended to limit aggregate borrowings under the Credit Facility, 
increase the interest rate on such borrowings, and waived and amended certain 
financial covenants. See "Managements Discussion and Analysis of Financial 
Condition and Results of Operations - Liquidity and Capital Resources."





                                       9

<PAGE>
 
Item 2.    Management's Discussion and Analysis of Financial Condition and
Results of Operations

FORWARD OUTLOOK AND RISKS

The Company is subject to significant external factors which could significantly
impact its business, including changes in Medicare reimbursement, government
fraud and abuse initiatives and other such factors which are beyond the control
of the Company. Certain of these factors are discussed herein. Refer to the
Company's Form 10K/A for the year ended June 30, 1997 for a discussion of
additional factors which management believes may significantly impact the
Company. These factors, as well as future changes in reimbursement and changes
in interpretations of regulations, could cause future results to differ
materially from historical trends.

GENERAL

The financial condition and results of operations of the Company for the three
and six months ended December 31, 1997 compared with the three and six months
ended December 31, 1996 have been affected by both acquisitions and internal
growth.

ACQUISITIONS

The results of operations of the companies acquired during fiscal 1997 are
included in the Company's consolidated results of operations from their
respective acquisition dates, which occurred at various times during fiscal
1997. Accordingly, the operating results for any fiscal quarter are not
necessarily comparable with the results for any past or future fiscal quarter.
During fiscal 1997, the Company entered the Texas and New England regions with
five acquisitions, expanding its operations into Texas, Massachusetts, New
Hampshire, Rhode Island and Maine. Additionally, during fiscal 1997, the Company
expanded its ongoing operations in Pennsylvania, New Jersey, Maryland and the
Tampa/St. Petersburg, Florida market with five acquisitions, and also expanded
into Illinois as a result of a merger transaction. There were no acquisitions
from July 1, 1997 through December 31, 1997. The Company is required to make
certain payments to former owners of businesses acquired in prior periods as
part of the consideration paid for these acquisitions. The Company paid $372,000
in additional consideration for certain acquisitions during the six months ended
December 31, 1997. As a result of the changing reimbursement environment,
management expects a slowing of growth through acquisition. Additionally, the 
Company is currently restricted by its senior credit facility from, 
acquisitions. See "Liquidity and Capital Resources."

On February 11, 1998, the Company and U.S. HomeCare Corporation ("USHO") agreed
to the termination of the proposed merger (the "Terminated Merger") between the
two companies. Deferred costs associated with the Terminated Merger of $1.2
million were written-off during the three months ended December 31, 1997 and
included in merger and other nonrecurring expenses in the accompanying condensed
consolidated statement of operations.

INTERNAL GROWTH

Three months ended December 31, 1997 compared to the three months ended December
31. 1996. The Company experienced a decrease in its internal growth rate during
the three months ended December 31, 1997 to 4.2% from 14.5% for the comparable
period in fiscal 1997. Internal growth for the three months ended December 31,
1997 was comprised of an increase of 12.8%, or $1.5 million, in same-branch
Medicare cost-reimbursed nursing and related patient services net revenues,
offset by a decrease of 1.3% or $234,000, in net revenues for services and
products and non-Medicare nursing services (i.e., non-Medicare nursing and
related patient services, durable medical equipment and respiratory and
infusion therapy services). The increase in net revenues relating to Medicare
cost-reimbursed nursing and related patient services resulted from a 10.7%
increase in visits from same-branch Medicare cost-reimbursed nursing branches
and increased costs incurred by these branches resulting in additional cost
reimbursement. The decrease in net revenues relating to services and products
and non-Medicare nursing services was due to various factors such as the Company
ceasing to provide services and products to selected managed care companies due
to their protracted payment terms, a reduction in reimbursement rates by certain
managed care companies and losing certain contracts due to the Company's
unwillingness to agree to rate reductions with certain managed care contracts.
These events primarily impacted the branches which provide durable medical
equipment and respiratory services, which experienced an aggregate decrease in
net revenue for these services for the three months ended December 31, 1997 of
15.9%, or $1.4 million. This decrease was offset by an increse in non-Medicare
nursing and infusion therapy services of 12.0%, or $1.2 million, which resulted

                                      10
<PAGE>
 
from cross-selling of these services and increased patient referrals.

Six months ended December 31, 1997 compared to the six months ended December 31.
1996. The Company experienced an increase in its internal growth rate during the
six months ended December 31, 1997 of 13.3% as compared to 10.4% for the
comparable period in fiscal 1997. This increase was comprised of an increase of
3.2%, or $4.8 million, in same-branch Medicare cost-reimbursed nursing and
related patient services net revenues and an increase of 7.1%, or $2.3 million,
in net revenues for services and products and non-Medicare nursing services. The
increase in net revenues relating to Medicare cost-reimbursed nursing and
related patient services for these periods resulted from an 11.8% increase in
visits from same-branch Medicare cost-reimbursed nursing branches and increased
costs incurred by these branches resulting in additional cost reimbursement. The
increase in net revenues relating to services and products non-Medicare nursing
services was comprised of an increase of 16.7%, or $2.9 million, in non-Medicare
nursing and infusion therapy services, offset by a decrease of 4.0%, or
$601,000, in durable medical equipment and respiratory therapy services. The
increase in non-Medicare nursing and infusion therapy services resulted from
effective cross-selling of these services and increased patient referrals. The
decrease in durable medical equipment and respiratory therapy services was due
to various factors such as the Company ceasing to provide services and products
to selected managed care companies due to their protracted payment terms, a
reduction in reimbursement rates by certain managed care companies and losing
certain contracts due to the Company's unwillingness to agree to rate reductions
with certain managed care contracts.

The Company may continue to experience a decrease in the internal growth rate
related to respiratory therapy services as a result of the reduction on January
1, 1998 in Medicare reimbursement for oxygen services. Additionally, the Company
may experience a decrease in the internal growth rate for its Medicare-certified
nursing agencies when it is subject to the IPS. Because of matters discussed
herein that may be beyond the control of the Company, there can be no assurance
that the Company can increase or maintain the internal growth rates at levels
experienced in previous years.

                                       11
<PAGE>
 
RESULTS OF OPERATIONS

<TABLE>
<CAPTION>
                                        PERCENTAGE  OF  NET REVENUE FOR          PERCENTAGE  OF  NET REVENUE FOR
                                            THE THREE MONTHS  ENDED                   THE SIX MONTHS ENDED 
                                                  DECEMBER 31,                              DECEMBER 31,
                                      ---------------------------------       ----------------------------------
                                           1996                1997                 1996                1997
                                      ------------       --------------       -------------       --------------
<S>                                     <C>                <C>                   <C>                <C>
Net revenues                                 100.0%               100.0%              100.0%               100.0%
Operating costs and expenses:
      Patient care costs                      47.6                 47.4                48.2                 47.0
      General and administrative              35.7                 41.3                35.3                 39.1
      Provision for doubtful accounts          3.9                  3.1                 3.9                  3.1
      Depreciation                             1.0                  1.3                 1.0                  1.2
      Amortization                             1.4                  1.8                 1.4                  1.7
      Interest expense, net                    2.1                  3.9                 1.9                  3.9
      Merger and restructuring costs           4.8                 10.7                 2.6                  5.3
      Writedown of goodwill                      -                 51.4                   -                 25.3
                                      ------------       --------------       -------------       --------------
 
Income (loss) before income taxes              3.5                (60.9)                5.7                (26.6)
 
Income tax expense (benefit)                   1.3                 (8.7)                2.2                 (3.1)
                                      ------------       --------------       -------------       --------------
 
Net income (loss)                              2.2%               (52.2)%               3.5%               (23.5)%
                                      ============       ==============       =============       ==============
</TABLE>

THREE MONTHS ENDED DECEMBER 31, 1997 COMPARED WITH THE THREE MONTHS ENDED
DECEMBER 31, 1996.

Net revenues. For the three months ended December 31, 1997, net revenues
increased to $45.7 million.  This represented an increase of $12.8 million, or
38.8%, over the three months ended December 31, 1996.  Of this increase, $11.5
million, or 90.2%, was attributable to acquisitions completed during the second,
third and fourth quarters of fiscal 1997.  The balance of the increase was due
to internal growth of 4.2%, or $1.3 million. See "Internal Growth."  Net
revenues from nursing and related patient services increased from $20.8 million
for the three months ended December 31, 1996 to $30.6 million for the three
months ended December 31, 1997, a 47% increase. Total Medicare nursing visits
increased 56% to 264,000 visits for the three months ended December 31, 1997.
Total non-Medicare nursing hourly and visit volume increased 40% and 11%,
respectively, to 305,000 hours and 53,000 visits, respectively, for the three
months ended December 31, 1997.  Acquisitions, effective cross-selling of other
services and increased referrals contributed to these volume increases.
Respiratory therapy, infusion therapy and durable medical equipment net revenues
increased $3.0 million, or 24.3%, to $15.2 million for the three months ended
December 31, 1997, from $12.2 million for the three months ended December 31,
1996, primarily as a result of acquisitions, as well as increased referrals and
effective cross-selling of infusion therapy services to the Company's nursing
patients. Durable medical equipment and respiratory therapy net revenues,
excluding net revenues from acquisitions, decreased $1.4 million, or 15.9%, for
the three months ended December 31, 1997 from the three months ended December
31, 1996.  See "Internal Growth."

Patient care costs. For the three months ended December 31, 1997, patient care
costs increased to $21.7 million.  This represented an increase of $6.0 million,
or 38.0%, over the three months 

                                       12
<PAGE>
 
ended December 31, 1996. This increase principally related to increases in net
revenues of $12.8 million. These costs decreased slightly as a percentage of net
revenues from 47.6% to 47.4%. The Company may experience an increase in patient
care costs as a percentage of net revenues in the future as a result of the
reduction on January 1, 1998 in Medicare oxygen reimbursement, continued
pressure by managed care payors to reduce their reimbursement to the Company for
its products and services and the lower IPS cost limits for the Medicare-
certified nursing agencies. Conversely, as the Company continues to cease
providing services and products to selected managed care companies whose
contracted rates are marginally profitable, the Company may experience a
decrease in patient care costs as a percentage of net revenues.

General and administrative expenses. For the three months ended December 31,
1997, general and administrative expenses increased to $18.9 million. This
represented an increase of $7.1 million, or 60.2%, over the three months ended
December 31, 1996. These costs increased as a percentage of net revenues from
35.7% to 41.3%. These increases were due to various factors including $4.3
million related to the acquisitions completed during the second, third and
fourth quarters of fiscal 1997, with the balance resulting from increases in
costs such as increased staffing in certain departments, including credit and
collections, management information services and key management positions within
the Company to support the Company's current and anticipated future growth,
increased costs associated with implementing the Company's regional coordinated
care centers, and increases in insurance, telecommunication and other operating
expenses as a result of the growth in net revenues and volumes. In an effort to
reduce operating costs in the future, the Company recorded a restructuring
charge during the three months ended December 31, 1997. See "Merger and Other
nonrecurring expenses."

Provision for doubtful accounts. For the three months ended December 31, 1997,
provision for doubtful accounts increased to $1.4 million. This represented an
increase of $130,000, or 10.2%, over the three months ended December 31, 1996.
Provision for doubtful accounts decreased slightly as a percentage of net
revenues from 3.9% to 3.1%. This was due principally to the increase in Medicare
cost-reimbursed nursing and related patient services net revenues as a
percentage of total net revenues to 43.5% for the three months ended December
31, 1997 from 38.8% for the three months ended December 31, 1996, which
do not require a provision for doubtful accounts.

Depreciation.  For the three months ended December 31, 1997, depreciation
expense increased to $593,000. This represented an increase of $255,000, or
75.4%, over the three months ended December 31, 1996. This increase was
attributable to fixed assets acquired in connection with acquisitions and
capital expenditures related to vehicles, management information systems and
equipment to support the Company's internal growth.

Amortization.  For the three months ended December 31, 1997, amortization
increased to $833,000.  This represented an increase of $368,000, or 79.1%, over
the three months ended December 31, 1996.  This increase was attributable to
amortization of goodwill arising from acquisitions in fiscal 1997.

Interest expense, net.   Interest expense, net, increased $1.1 million, or
156.1%, to $1.8 million during the three months ended December 31, 1997 compared
with the three months ended December 31, 1996.  This increase resulted from
increased borrowings for acquisitions in fiscal 1997 and increased borrowings to
finance working capital requirements for internal growth.

Merger and other nonrecurring expenses During the three months ended December
31, 1997, the Company recorded a charge in connection with restructuring of the
Company's operations. The Company evaluated the impact of reductions in
reimbursement for oxygen services and the IPS and, where appropriate, is closing
offices and reducing administrative personnel resulting in an

                                       13
<PAGE>
 
an expected annual reduction in operating costs aggregating $4 million. As a
result of these restructuring activities, the Company recorded a pre-tax charge
of $3.7 million in connection with (i) the closure and consolidation of certain
branch locations, including the accrual of estimated facility exit costs and
future lease costs, the write-off of leasehold improvements, and other exit
costs aggregating $1.6 million, (ii) estimated employee severance costs in
connection with the related termination of employees, including certain former
owners of businesses acquired, aggregating $1.7 million, and (iii) certain other
costs related to the restructuring aggregating $370,000. Management believes
that the restructuring plan, which is expected to be substantially implemented
by the end of March 1998, will position the Company as a lower cost provider
under the Medicare prospective payment system that is scheduled to be
implemented October 1, 1999, as well as reduce the impact on the Company of the
reduction in Medicare reimbursement for oxygen services and the IPS limits.

Additionally, deferred costs aggregating $1.2 million associated with the
Terminated Merger have been written off during the quarter ended December 31,
1997.

For the three months ended December 31, 1996, certain nonrecurring expenses of
$1.6 million were recorded as a result of a merger which occurred in November
1996.  Such costs were comprised of transaction fees, legal and accounting costs
and other nonrecurring expenses associated with the merger.

Writedown of Goodwill. The Company recorded a writedown of goodwill previously
recorded in connection with certain acquisitions. The Company determined the
writedown of goodwill was required under SFAS 121 based upon management's
estimate of the impact of the announced reductions in Medicare reimbursement for
oxygen services and the expected impact of the IPS on the Company's continuing
operations. Management determined that these impacts indicated that the
carrying value of goodwill should be written down by $23.5 million, which is
comprised of $9.0 million related to certain durable medical equipment, and
respiratory and infusion therapy companies and $14.5 million related to certain
Medicare-certified nursing agencies.

The Company will continue to evaluate the continuing value of goodwill in
accordance with SFAS 121.  There can no assurance that the remaining balance of
goodwill of $48.1 million at December 31, 1997 will not be reduced for possible
impairments which may occur in the future as a result of changes in
reimbursement or other issues. Additionally, reimbursement regulations have been
issued related to reimbursement for certain mobile diagnostic services. These
regulations could eliminate payment for mobile diagnostic services to the
Company.  Goodwill associated with mobile diagnostic services acquisitions
aggregates approximately $1.1 million at December 31, 1997. Mobile diagnostic
services represent less than 3% of the Company's current net revenues.


Provision (Benefit) for Income Taxes.  The Company recorded a tax benefit of
14.2% of pretax income for the three months ended December 31, 1997, principally
as a result of the merger and restructuring charges and the writedown of
goodwill recorded during this period. The writedown of goodwill included
approximately $15.6 million of nondeductible goodwill recorded in connection
with certain acquisitions, for which the Company receives no income tax benefit.

                                       14
<PAGE>
 
SIX MONTHS ENDED DECEMBER 31, 1997 COMPARED WITH THE SIX MONTHS ENDED DECEMBER
31, 1996.

Net revenues. For the six months ended December 31, 1997, net revenues increased
to $92.8 million.  This represented an increase of $32.7 million, or 54.4%, over
the six months ended December 31, 1996.  Of this increase, $25.6 million, or
78.3%, was attributable to acquisitions completed during fiscal 1997.  The
balance of the increase was due to internal growth of 13.3%, or  $7.1 million.
See "Internal Growth."  Net revenues from nursing and related patient services
increased from $37.0 million for the six months ended December 31, 1996 to $61.4
million for the six months ended December 31, 1997, a 65.8% increase. Total
Medicare nursing visits increased 80% to 538,000 visits for the six months ended
December 31, 1997. Total non-Medicare nursing hourly and visit volume increased
61% and 69%, respectively, to 627,000 hours and 105,000 visits, respectively,
for the six months ended December 31, 1997.  Acquisitions, effective cross-
selling of other services and increased referrals contributed to these volume
increases. Respiratory therapy, infusion therapy and durable medical equipment
net revenues increased $8.3 million, or 36.1%, to $31.4 million for the six
months ended December 31, 1997, from $23.1 million for the six months ended
December 31, 1996 as a result of acquisitions, and increased referrals and
effective cross-selling of infusion therapy services to the Company's nursing
patients. Durable medical equipment and respiratory therapy net revenues,
excluding net revenues from acquisitions, decreased $601,000, or 4%, for the six
months ended December 31, 1997 from the six months ended December 31, 1996.  See
"Internal Growth."

Patient care costs. For the six months ended December 31, 1997, patient care
costs increased to $43.6 million.  This represented an increase of $14.6
million, or 50.5%, over the six months ended December 31, 1996.  This increase
principally related to increases in net revenues.  These costs decreased
slightly as a percentage of net revenues from 48.2% to 47.0%. The Company may
experience an increase in patient care costs as a percentage of net revenues in
the future as a result of the reduction on January 1, 1998 in Medicare oxygen
reimbursement, a continued pressure by managed care payors to reduce their
reimbursement to the Company for its products and services and the lower IPS
cost limits for the Medicare-certified nursing agencies.  Conversely, as the
Company continues to cease providing services and products to selected managed
care companies whose contracted rates are marginally profitable, the Company may
experience a decrease in patient care costs as a percentage of net revenues.

General and administrative expenses. For the six months ended December 31, 1997,
general and administrative expenses increased to $36.3 million. This represented
an increase of $15.1 million, or 70.9%, over the six months ended December 31,
1996. These costs increased as a percentage of net revenues from 35.3% to 39.1%.
These increases were due to various factors including $8.6 million related to
the acquisitions completed during the second, third and fourth quarters of
fiscal 1997, with the balance resulting from increases in costs such as
increased staffing in credit and collections, management information services
and key management positions within the Company to support the Company's current
and anticipated future growth, increased costs associated with implementing the
Company's regional coordinated care centers, and increases in insurance,
telecommunication and other operating expenses as a result of the growth in net
revenues and volumes. In an effort to reduce operating costs, the Company
recorded a restructuring charge during the three months ended December 31, 1997.
See "Merger and other nonrecurring expenses."

                                       15
<PAGE>
 
Provision for doubtful accounts. For the six months ended December 31, 1997,
provision for doubtful accounts increased to $2.9 million. This represented an
increase of $507,000, or 21.4%, over the six months ended December 31, 1996.
This increase was due to increases in net revenues for the six months ended
December 31, 1997. Provision for doubtful accounts decreased slightly as a
percentage of net revenues from 3.9% to 3.1%. This was due principally to the
increase in Medicare cost-reimbursed nursing and related patient services net
revenues as a percentage of total net revenues to 43.3% for six months ended
December 31, 1997, from 37.3% for the six months ended December 31, 1996, which
do not require a provision for doubtful accounts.

Depreciation.  For the six months ended December 31, 1997, depreciation expense
increased to $1.1 million.  This represented an increase of $480,000, or 77.8%,
over the six months ended December 31, 1996. This increase was attributable to
fixed assets acquired in connection with acquisitions and capital expenditures
related to vehicle, management information systems and equipment to support the
Company's internal growth.

Amortization.  For the six months ended December 31, 1997, amortization
increased to $1.6 million.  This represented an increase of $764,000, or 93.2%
over the six months ended December 31, 1996.  This increase was attributable to
amortization of goodwill arising from acquisitions in fiscal 1997.

Interest expense, net.   Interest expense, net, increased $2.4 million, or
210.5%, to $3.6 million during the six months ended December 31, 1997 compared
with the six months ended December 31, 1996.  This increase resulted from
increased borrowings for acquisitions in fiscal 1997 and increased borrowings to
finance working capital requirements for internal growth.

Merger and Other Nonrecurring expenses. See "Three Months Ended December 31,
1997 Compared with the Three Months Ended December 31, 1996 - Merger and Other
Nonrecurring expenses."

Writedown of Goodwill. See "Three Months Ended December 31, 1997 Compared with
the Three Months Ended December 31, 1996 - Writedown of Goodwill."

Provision (Benefit) for Income Taxes.  The Company recorded a tax benefit of
11.5% of pretax income for the six months ended December 31, 1997, principally
as a result of the merger and restructuring charges and the writedown of
goodwill recorded during the second quarter of fiscal 1998. The writedown of
goodwill included approximately $15.6 million of nondeductible goodwill recorded
in connection with certain acquisitions, for which the Company receives no
income tax benefit. 

LIQUIDITY AND CAPITAL RESOURCES

Working capital increased to $47.3 million at December 31, 1997 from $43.2
million at June 30, 1997, an increase of $4.1 million. The increase primarily
resulted from an increase in current assets of $7.9 million, offset by an
increase in current liabilities of $3.7 million. Accounts receivable, net,
increased $2.1 million from June 30, 1997 to December 31, 1997. This increase
was principally due to acquisitions, internal growth and an increase in days net
revenues outstanding from 92 to 110 for this period. The increase in days net
revenues outstanding resulted from a decrease in net revenue of $2.1 million
from the three months ended June 30, 1997 to the three months ended December 31,
1997, as well as an increase of $2.1 million in net accounts receivable from
June 30, 1997 to December 31, 1997. The increase in accounts

                                       16
<PAGE>
 
receivable is due principally to certain managed care payors continuing to
subject the Company to protracted payment terms and increasing attempts by these
and other third-party payors to deny payments for appropriate products and
services furnished to their subscribers. Cash flow provided by operations was
$2.7 million for the six months ended December 31, 1997 compared with $6.6
million used in operations in the six months ended December 31, 1996.

Cash expenditures for acquisitions were $14.1 million for the six months ended
December 31, 1996. There were no acquisitions consummated during the six months
ended December 31, 1997. During the six months ended December 31, 1997, the
Company paid $372,000 in additional consideration for acquisitions consummated 
prior to fiscal 1998. As a result of the changing reimbursement environment,
management expects a slowing of growth through acquisition.

Goodwill was $48.1 million at December 31, 1997, after a $23.5 million writedown
recorded during the three months ended December 31, 1997. The Company will
continue to evaluate the continuing value of goodwill in accordance with SFAS
121. There can be no assurance that the remaining balance of goodwill at
December 31, 1997 will not be reduced for possible impairments which may occur
in the future as a result of changes in reimbursement or other issues.
Additionally, reimbursement regulations have been issued related to
reimbursement for certain mobile diagnostic services. These regulations could
eliminate payment for mobile diagnostic services to the Company. Goodwill
associated with mobile diagnostic services acquisitions aggregates approximately
$1.1 million at December 31, 1997. Mobile diagnostic services represent less
than 3% of the Company's current net revenues.

Expenditures for purchases of capital equipment were $1.3 million and $2.1
million for the six months ended  December 31, 1997 and 1996, respectively,
including $744,000 of purchases in fiscal 1998 funded through a secured master
lease agreement.  The Company expects to spend approximately $5.8 million for
capital expenditures for the remainder of fiscal 1998. The Company typically
funds a significant portion of its capital expenditures through a secured master
lease arrangement.

     The Company's Medicare-certified nursing agencies are subject to the
Medicare surety bond requirement imposed by the Budget Act. The Company is
required to have surety bonds in place no later than February 27, 1998 for these
agencies and is in the process of complying with these requirements. Management
estimates the aggregate cost of these surety bonds to be between $100,000 to
$500,000 for the first six months of coverage. A date has not been established
for surety bond coverage for durable medical equipment providers as the proposed
rules for such providers have not been finalized yet. Due to the nature of the
surety bonds serving as a Medicare fraud and abuse deterrent and the potential
for insurers to have significant risk under the bonds, many insurers are
unwilling to provide surety bond coverage that complies with all the
specifications of the regulation. As a result, there can be no assurance the
Company will be able to obtain surety bond coverage that complies with the
regulations or that such coverage will be adequate or available to the Company
in the future on satisfactory terms, if at all. Additionally, there can be no
assurance that any judgments, settlements or costs relating to pending or future
claims under these surety bonds will not have a material adverse effect on the
Company's results of operations or financial condition.

                                       17
<PAGE>
 
The Company had a $100 million senior credit facility (the "Credit
Facility")available for acquisitions, working capital and other general
corporate purposes. As a result of the merger and restructuring costs and
writedown of goodwill which were recorded during the three months ended December
31, 1997, the Company was not in compliance with certain covenants of the Credit
Facility. The Company received a waiver of these covenants and is in compliance
at December 31, 1997. Additionally, on February 17, 1998, the Credit Facility
was amended to limit aggregate borrowings for working capital purposes to $48
million and no longer permits the Company to borrow for acquisition purposes
until it meets certain criteria as defined by the Credit Facility. Additionally,
the interest rates available to the Company on borrowings under the Credit
Facility were increased by 0.5% per annum. On February 17, 1998, the Company had
$79.1 million outstanding under the Credit Facility bearing interest at a
weighted average interest rate of 8.0% and $9.9 million of unused commitment
available for working capital purposes.

Management anticipates the Company's available lines of credit and cash flow
generated from operations will be adequate to enable the Company to fund its
operations, capital expenditures and anticipated internal growth for at least
the next twelve months. However, the Company will be unable to continue to
acquire other businesses due to, among other factors, limitations on access to
additional funds which have been imposed by the Credit Facility financial
covenants. The Company is currently reviewing long-term financing alternatives.


                                       18
<PAGE>
 
ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

(a)  The exhibits filed with this report are listed in the index on page 20.

(b)  Reports on Form 8-K

     The registrant filed a report on Form 8-K on October 7, 1997 and under Item
     5 therein disclosed its proposed merger with U.S. HomeCare Corporation.

                                       19
<PAGE>
 
SIGNATURES

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

 
                       HOME HEALTH CORPORATION OF AMERICA, INC.

<TABLE>
 
Date:   February 17, 1998     /s/ Bruce J. Feldman
                              -----------------------------------------
<S>                           <C>
                              President and Chief  Executive Officer
                                (Duly Authorized Officer and Principal Financial Officer)

</TABLE>

                                       20
<PAGE>
 
<TABLE>
<CAPTION>

EXHIBIT INDEX

  Exhibit No.   DESCRIPTION
--------------  -----------
<S>             <C>
*          3.1  Amended and Restated Articles of Incorporation of the Company.
*          3.2  Amended and Restated Bylaws of the Company.
**        10.1  Stock Purchase Agreement among HHCA, Home Health Corporation of New Hampshire, Randy DiSalvo,
                 R.S.D. Management Services, Inc., Nursing Services Home Care, Inc. and Nursing Services Home Care, Ltd.
***       10.2  Asset Acquisition Agreement Among Home Health Corporation of America, Inc. and its Nominees, LHS
                 Holdings, Inc., Liberty Health Services, Inc., Nurses Today M/C, Inc. and Mark H. O'Brien.
***       10.3  Asset Acquisition Agreement Among Home Health Corporation of America, Inc. and its Nominees,
                 PDN, Inc., Medical I.V., Inc. and Mark H. O'Brien.
***       10.4  Indemnification Agreement Among Home Health Corporation of America, Inc. and its Nominees, LHS
                 Holdings, Inc., Liberty Health Services, Inc., Nurses Today M/C, Inc., PDN, Inc., Medical I.V.,
                 Inc. and Mark H. O'Brien.
*         10.5  Asset Acquisition Agreement among Home Care Medical Supply and Equipment, Inc., Alpha Home Care 
                 Services, Inc., Joel Schreiber, and Joseph J. D'Alessandro, including schedules and exhibits thereto.
*         10.6  Subordination Agreement among CoreStates Bank, N.A., Summit Ventures II, L.P., Summit Investors II, L.P., CoreStates
                 Enterprise Fund, and Alpha Home Care Services, Inc.
*         10.7  Stock Purchase Agreement by and between Home Health Corporation of Delaware, Inc.,William Moses, Milton Altshuler,
                 Steven R. Altshuler, and Jane Altshuler, relating to Delaware Acquisition.
*         10.8  Asset Acquisition Agreement between HHCDME, Inc., and Master Medical Supply Co., Inc., relating to Delaware
                 Acquisition.
*         10.9  Asset Acquisition Agreement between HHCD, Inc., and Professional Home Health Care Agency, Inc.,  
                 relating to Delaware Acquisition.
*         10.10 Indemnification Agreement relating to Delaware Acquisition.
*         10.11 Agreement among Home Health Care Corporation of Delaware Inc., HHCD, Inc., HHCDME, Inc., Master Medical Supply Co.,
                 Inc., Professional Home Health Services, Inc., Professional Home Health Care Agency, Inc., William Moses, Andra H.
                 Moses, Steven R. Altshuler, and Jane Altshuler, relating to Delaware Acquisition.
*         10.12 Full Payment Guaranty of the Company relating to Delaware Acquisition.
*         10.13 Subordination Agreement among CoreStates Bank, N.A., Summit Ventures II, L.P., Summit Investors II, L.P., CoreStates
                 Enterprise Fund, and parties to Delaware Acquisition transaction documents.
*         10.14 Separation Agreement among Home Health Corporation of America, Inc., Home Health Corporation of Delaware, Inc.,
                 HHCD, Inc., HHCDME, Inc., Steven R. Altshuler, Jane E. Altshuler, William W. Moses and Andra H. Moses
*         10.15 Asset Purchase Agreement between Pennsylvania Home Care, Inc. and Healthcare Professionals, Inc.
****      10.16 Third Amended and Restated Credit Agreement.
*****     10.17 Amendment No. 1 to the Third Amended and Restated Credit Agreement.
*         10.18 Lease between the Company and Swedeland Road Corporation, relating to the Company's principal executive offices.
*         10.19 Employment Agreement between the Company and Bruce J. Feldman. (a)

</TABLE> 
                                       21
<PAGE>
 
<TABLE> 
<S>              <C>  
*         10.20  Employment Agreement between the Company and Fred J. Nicholas. (a)
*****     10.21  Employment Agreement between the Company and Bruce Colburn. (a)
*         10.22  Employment Agreement between the Company and Joseph Grilli. (a)
*         10.23  1995 Employee and Consultant Equity Plan. (a)
*         10.24  1984 Employee Stock Option Plan (Qualified and Non-Qualified), as amended and restated. (a)
*         10.25  Consent and Amendment to Note and Stock Purchase Agreement, dated September 29, 1995, among the company, certain
                  subsidiaries of the Company, Summit Ventures II, L.P., Summit Investors II, L.P.
*         10.26  Subordination Agreement, dated September 29, 1995, among CoreStates Bank, N.A., Summit Ventures II, L.P., Summit
                  Investors II, L.P., Summit Subordinated Debt Fund, L.P., CoreStates Enterprise Fund and Preferred Diagnostic
                  Services, Inc.
*         10.27  Asset Acquisition Agreement among the Company, Home Health Corporation of America, Inc. - Tampa, Preferred
                  Diagnostic & Medical Services, Inc., Preferred Diagnostic Services, Inc., G&S Industries, Inc., and Joel M.
                  Grossman, Jeffrey Grossman, Joseph Sterensis, Barbara Sterensis and Richard Levitt.
*         10.28  Registration Rights Agreement, dated September 28, 1995, among the Company, a subsidiary of the Company, Preferred
                  Diagnostic & Medical Services, Inc. and Preferred Diagnostic Services, Inc.
******    10.29  Amended and Restated Agreement and Plan of Merger among Home Health Corporation of America, Inc., HHCA Acquisition
                  Corporation, Inc. and U.S. HomeCare Corporation.
          10.30  Termination of Amended and Restated Agreement and Plan of Merger among Home Health Corporation of America, Inc.,  
                 HHCA Acquisition Corporation, Inc. and U.S. HomeCare Corporation.
          10.31  Amendment No. 3 to Third Amended and Restated Credit Agreement
          11.1   Computation of basic and diluted loss per share for the three and six months ended December 31, 1997.
          11.2   Computation of basic and diluted earnings per share for the three and six months ended December 31, 1996.
          27.1   Financial data schedule for the six month period ended December 31, 1997.
------------------------ 
*       Incorporated by reference to the Company's Registration Statement on Form S-1 (Registration No. 33-96888) dated November 8,
         1995, as amended.
**      Incorporated by reference to the Company's Form 10-Q dated September 30, 1996 and filed November 14, 1996.
***     Incorporated by reference to the Company's Form 8-K dated January 10, 1997 and filed January 24, 1997.
****    Incorporated by reference to the Company's Form 10-Q dated March 31, 1997 and filed May 14, 1997.
*****   Incorporated by reference to the Company's Form 10-K/A dated June 30, 1997 and filed October 28, 1997.
******  Incorporated by reference to the Company's Form 8-K dated September 26, 1997 and filed October 7, 1997.
(a)     Represents management contract or compensatory plan

</TABLE>
 

                                       22