<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


         [X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                   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 33-84692C 
                                               ---------

                                 CARE FIRST INC.
                                 ---------------
             (Exact name of registrant as specified in its charter)


<TABLE>
<CAPTION>
<S>                                                               <C>
    Minnesota                                                          41-0877001                      
--------------------------------------------                       ------------------------------------
(State or other jurisdiction of incorporation                      (I.R.S. Employer Identification No.)
         or organization)

</TABLE>

     3720 23rd Ave So
     Minneapolis, MN                                         55407
----------------------------------------    -----------------------------------
(Address of principal executive offices)                  (Zip Code)

                                (612) 724-5495
              ---------------------------------------------------
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed  by  Section  13 or 15 (d) of the  Securities  Exchange  Act of 1934
during the preceding 12 months (or for such shorter  period that the  registrant
was  required  to file such  reports),  and (2) has been  subject to such filing
requirements for the past 90 days: YES X  NO  
                                      ---    ---
At  December 31, 1997,  10,500 shares of Common Stock were outstanding.

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

         This Form 10-Q consists of 11 pages. Exhibits begin on page 11.


                                     -1-


<PAGE>   2



                               CARE FIRST INC.

                                 FORM 10-QSB

                       QUARTER ENDED DECEMBER 31, 1997


                                    INDEX
<TABLE>
<CAPTION>


PART I - FINANCIAL INFORMATION                                                                                        PAGE
                                                                                                                      ----
        <S>                                                                                                            <C>
         Item 1.           Condensed Financial Statements and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . 3

         Item 2.           Management's Discussion and Analysis of Financial
                           Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7



PART II - OTHER INFORMATION

         Item 1.           Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

         Item 2.           Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

         Item 3.           Defaults Upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

         Item 4.           Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . . . . .9

         Item 5.           Other information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9

         Item 6.           Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9



SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10

EXHIBITS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11

</TABLE>





                                      -2-


<PAGE>   3

                               CARE FIRST INC.
             NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
 
December 31, 1997

NOTE A - BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information and with the instructions to Form 10-QSB.  Accordingly,  they do not
include all of the  information  and  footnotes  required by generally  accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included.  For further  information,
refer  to  the  financial  statements  and  footnotes  thereto  included  in the
Company's annual report for the fiscal year ended September 30, 1997.

NOTE B - COMMON  STOCK  
     Authorized  and  outstanding  common stock shares are as follows at
     December 31, 1997:

<TABLE>
<CAPTION>
                                            Class A           Class B           Unclassified     Total
                                            ----------------------------------------------------------
         <S>                                <C>               <C>               <C>              <C>   
         Shares of Stock Authorized         500               10,000            4,500            15,000
         Shares of Stock Outstanding        500               10,000                0            10,500
         Par Value per Share                $0.01             $0.01             $0.01            N/A
         Voting Rights                      Yes               No                No               N/A
</TABLE>

NOTE C - OPERATIONS
         The Corporation  owns and operates the following:

<TABLE>
<CAPTION>

         Description          Address                   Operation
         --------------------------------------------------------
         <S>                  <C>                       <C>
         Nile Health Care     3720 23rd Ave South       256-Bed Nursing
         Center               Minneapolis  MN           Care Facility
                              
         Springs of Water     3720  23rd Ave South      (1) Home Health Services
         Home Care            Minneapolis  MN

</TABLE>

(1) Care First Home Health  Services,  a home health  agency and division of the
Corporation,  legally  changed  its name to  Springs  of Water Home Care in May,
1997,  when it commenced  operations to provide home health  services to elderly
persons  in  the   surrounding   community.   Springs  of  Water  Home  Care  is
Medicare-certified and licensed by the State of Minnesota.

NOTE D - SERIES 1994 BONDS

In December  1994,  the City of  Minneapolis  issued  $4,725,000  of Health Care
Facilities  Refunding  Revenue  Bonds and  $8,500,000  of  Taxable  Health  Care
Facilities  Revenue  Bonds to refund  the Series  1983 Tax  Exempt  Bonds and to
finance  construction and equipping of a 131-bed  Addition to the  Corporation's
125-bed Existing Facility.  The proceeds from the Taxable Health Care Facilities
Revenue  Bonds remain in Trustee Held Funds until  certified  draw  requests are
processed for construction  costs,  including building  construction,  equipment
installation, capitalized interest and other Project costs.





                                     -3-
<PAGE>   4

                                 CARE FIRST INC.
                            CONDENSED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                         DECEMBER 31,             SEPTEMBER 30,
                                                                                             1997                      1997
                                                                                         (UNAUDITED)


                ASSETS

<S>                                                                                       <C>                      <C>      
      CURRENT ASSETS:
      Cash and Cash Equivalents                                                           $     214,283            $     501,765
      Securities Available-for-sale                                                           1,095,500                  858,806
      Accounts Receivable, net                                                                  767,758                  800,577
      Restricted Trust Funds                                                                    212,049                  615,563
      Note Receivable - Stockholders, net                                                             0                        0
      Prepaid Expenses                                                                                -                   15,409
      Deferred Tax Asset                                                                         17,000                   17,000
                                                                                          -------------            -------------
                Total Current Assets                                                        $ 2,306,590            $   2,809,120

      RESTRICTED FUNDS, NET OF CURRENT PORTION                                                1,027,218                1,013,672

      PROPERTY AND EQUIPMENT, NET                                                             9,977,197               10,059,137

      INTANGIBLE ASSETS, NET                                                                    930,684                  957,247

      DEFERRED TAX ASSET                                                                         69,000                   69,000
                                                                                          -------------             ------------
                                                                                          $  14,310,689             $ 14,908,176
                                                                                          =============             ============


                LIABILITIES AND STOCKHOLDERS' DEFICIT


      CURRENT LIABILITIES:
      Current Portion of Long-Term Debt                                                   $     155,340             $    150,340
      Accounts Payable                                                                          270,364                  322,808
      Accrued Payroll, Vacation and Payroll Taxes                                               345,612                  388,845
      Accrued Interest                                                                          111,987                  449,554
      Accrued Real Estate Taxes                                                                 484,516                  659,040
      Accrued Expense                                                                            21,497                   12,272
      Resident Trust Funds Payable                                                               54,638                   47,303
                                                                                          -------------             ------------
                Total Current Liabilities                                                 $   1,443,954             $  2,030,162

      LONG-TERM DEBT, NET OF CURRENT PORTION                                                 12,702,568               12,778,904
      DEFERRED COMPENSATION                                                                      88,210                   86,059
      DEFERRED REVENUE                                                                          148,527                  148,527

                                                                                           ------------             ------------
                Total Liabilities                                                         $  14,383,259             $ 15,043,652
                                                                                          -------------             ------------

      STOCKHOLDERS' DEFICIT:
      Class A Voting Common Stock, $.01 par value, 500
        shares authorized, issued and outstanding                                         $           5             $          5
      Class B Non-voting Common Stock, $.01 par value,
        10,000 shares authorized, issued and outstanding                                            100                      100
      Additional Paid-in Capital                                                                 17,660                   17,660
      Accumulated Deficit                                                                       (90,335)                (153,241)
                                                                                          -------------             ------------
                Total Stockholders' Deficit                                               $     (72,570)            $   (135,476)
                                                                                          -------------             ------------
                                                                                          $  14,310,689             $ 14,908,176
                                                                                          =============             ============
</TABLE>


                                     -4-
<PAGE>   5


                                 CARE FIRST INC.
            CONDENSED STATEMENTS OF OPERATIONS AND RETAINED (DEFICIT)


<TABLE>
<CAPTION>

                                                                                            For the Three Months Ended
                                                                                                    December 31
                                                                                   -----------------------------------------  

                                                                                         1997                      1996
                                                                                     (Unaudited)               (Unaudited)

                REVENUES
<S>                                                                                   <C>                      <C>        
Resident Services                                                                     $ 2,368,365              $ 2,533,911
Home Health Services                                                                            0                        0
                                                                                      -----------              ----------- 
          Total Revenue                                                               $ 2,368,365              $ 2,533,911
                                                                                      -----------              ----------- 



OPERATING EXPENSES
Resident Services                                                                     $ 1,842,899              $ 2,225,859
Home Health Services                                                                       20,940                        0
                                                                                      -----------              ----------- 
          Total Operating Expenses                                                    $ 1,863,839              $ 2,225,859
                                                                                      -----------              ----------- 

INCOME  FROM OPERATIONS BEFORE
  DEPRECIATION, AMORTIZATION AND INTEREST                                             $   504,526              $   308,052

DEPRECIATION AND AMORTIZATION                                                             122,597                   98,412

INTEREST                                                                                  319,263                  339,597
                                                                                      -----------              ----------- 
INCOME (LOSS) FROM OPERATIONS                                                         $    62,666              $  (129,957)

OTHER INCOME                                                                               42,177                   30,390
                                                                                      -----------              ----------- 
INCOME (LOSS) BEFORE INCOME TAXES                                                     $   104,843              $   (99,567)

PROVISION FOR INCOME TAXES                                                                 41,937                  (39,827)
                                                                                      -----------              ----------- 
NET INCOME (LOSS)                                                                     $    62,906              $   (59,740)

Retained Deficit - Beginning                                                             (153,241)                (280,038)
                                                                                      ===========              =========== 
RETAINED DEFICIT - ENDING                                                             $   (90,335)             $  (339,778)
                                                                                      ===========              =========== 
</TABLE>

                                     -5-
<PAGE>   6


                                 CARE FIRST INC.
                            STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                              For the Three Months Ended
                                                                                                      December 31
                                                                                       ------------------------------------------
                                                                                             1997                      1996
                                                                                         (Unaudited)               (Unaudited)

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                                         <C>                      <C>        
        Cash Received from Resident Services                                                $ 2,401,184              $ 2,688,791
        Cash Paid to Suppliers and Employees                                                 (2,099,920)              (2,727,236)
        Interest Paid                                                                          (656,830)                (339,597)
        Interest Received                                                                        23,394                   13,729
        Miscellaneous Cash Received                                                              18,783                   16,661
        Income Taxes Paid                                                                       (41,937)                       0
                                                                                            -----------              -----------  
                Cash Flows from Operating Activities                                        $  (355,326)             $  (347,652)
                                                                                            -----------              ----------- 


CASH FLOWS FROM INVESTING ACTIVITIES
        Purchases of Property and Equipment                                                 $   (40,657)             $   (10,272)
        Purchases of Investments                                                               (236,694)                (103,767)
        Principal Payments Received on Notes Receivable - Stockholders                                0                    4,542
        Deposits to Restricted Debt Trust Funds                                                (368,526)                (440,060)
        Disbursements from Restricted Debt Trust Funds                                          764,489                  957,806
        Increase in Accrued Interest Receivable                                                  20,568                        0
                                                                                            -----------              ----------- 
                Cash Flows from Investing Activities                                        $   139,180              $   408,249
                                                                                            -----------              -----------

CASH FLOWS FROM FINANCING ACTIVITIES
        Principal Payments on Long-Term Debt                                                $   (71,336)             $   (65,000)
                                                                                            -----------              ----------- 
                                                                                       
                Cash Flows from Financing Activities                                        $   (71,336)             $   (65,000)
                                                                                            -----------              ------------ 

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                            $  (287,482)             $    (4,403)

CASH AND CASH EQUIVALENTS, BEGINNING                                                            501,765                  505,128

                                                                                            -----------              ----------- 
CASH AND CASH EQUIVALENTS, ENDING                                                           $   214,283              $   500,725
                                                                                            ===========              =========== 

RECONCILIATION OF NET INCOME (LOSS) TO NET CASH FLOWS
 FROM OPERATING ACTIVITIES
  Net Income (Loss)                                                                         $    62,906              $   (59,740)
  Depreciation and Amortization                                                                 122,597                   98,412
  Changes in Operating Assets and Liabilities:
    Accounts Receivable, net                                                                     32,819                  154,880
    Other Current Assets                                                                         15,409                   49,349
    Accounts Payable                                                                            (52,444)                (221,953)
    Accrued Expenses                                                                           (536,613)                (368,600)
                                                                                            -----------              ----------- 
      Cash Flows from Operating Activities                                                  $  (355,326)             $  (347,652)
                                                                                            ===========              =========== 
</TABLE>

                                     -6-

<PAGE>   7

MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL
CONDITION 

Following is the analysis of the results of operations  and financial  condition
of the  Corporation  as of December 31, 1997 and  September 30, 1997 and for the
three months ended December 31, 1997 and 1996.


DEPENDENCE ON MINNESOTA MEDICAID PROGRAM

Substantially  all revenues of the  Corporation  are derived from daily resident
rates  established  by the  Department of Human  Services  (DHS) for its nursing
facility pursuant to the Rate-setting System. Changes in the Rate-setting System
are  anticipated  but the effects of such changes on the  Corporation  cannot be
predicted. For instance, in 1995, the State of Minnesota, by statute, authorized
the DHS to  establish  a  contractual  alternative  payment  system,  called the
"Nursing Home Contract Project". (See Other Information)

Comparison of the three months ended December 31, 1997 to the three months ended
December 31, 1996.

For the unaudited  three months ended December 31, 1997, the  Corporation's  net
income was $62,906 in comparison  with a net loss of $59,740 for the same period
in 1996, or an increase of $122,646. The income can be attributed to a concerted
effort in reducing staff hours while still meeting regulation requirements,  and
also a reduction in both workers' compensation premiums and property taxes.

Resident services revenue decreased by $165,546 or 6.5%, from $2,533,911 for the
three months ended  December 31, 1996, to $2,368,365  for the three months ended
December 31, 1997. The decrease in revenue is due to a census  decrease in 1997.
At December 31, 1997,  total occupancy was 72.1%,  compared to 85.5% at December
31,  1996.  Management  is  continually   developing  more  extensive  marketing
strategies in an effort to fill the beds.

Operating expenses, which include salaries and benefits, supplies, utilities,   
food, purchased services, and general and administrative expenses, decreased
$362,020 or 16.3% from $2,225,859 for the three months ended December 31, 1996
to $1,863,839 for the three months ended December 31, 1997. The net decrease is
a blend of a census reduction of 13.4% from the prior year, a reduction in staff
hours, and reduced workers' compensation premiums and property taxes.

Depreciation,  amortization and interest expense, increased $3,851 or .9% from
$438,009 for the three months ended December 31, 1996 to $441,860 for the three
months ended December 31, 1997.

The Corporation's  estimated income taxes recoverable for the three months ended
December 31, 1996 was $39,827 based on a pretax loss of $99,567 and for the
three months ended December 31, 1997, estimated income taxes payable were
$41,937, based on pretax income of $104,843, based on an effective income tax
rate of 40%.




                                     -7-
<PAGE>   8

LIQUIDITY AND CAPITAL RESOURCES


The Corporation  does not maintain any line of credit or other external  sources
of liquidity.

At December 31, 1997, the Corporation had $214,283 in cash and cash equivalents,
and working  capital of $862,636  based upon current  assets of  $2,306,590  and
current liabilities of $1,443,954 and at September 30, 1997, the Corporation had
$501,765 in cash,  and working  capital of $778,958 based upon current assets of
$2,809,120 and current liabilities of $2,030,162.  During the three months ended
December  31,  1997,  cash  decreased  $287,482.  Net  cash  used  by  operating
activities   was  $354,623  for  the  three  months  ended  December  31,  1997,
principally  as a result of cash used to pay  interest  payments and real estate
taxes.

Accounts  payable has decreased  $52,444 from September 30, 1997 to December 31,
1997. As of December 31, 1997, total outstanding debt of the Corporation equaled
$12,857,908 consisting of the Series 1994 Taxable Health Care Facilities Revenue
Bonds and the Series 1994 Health Care Facility  Refunding Revenue Bonds, both of
which are secured  equally and ratably on parity by a mortgage lien on, security
interest in and an assignment  of leases and rents of the Addition,  and a three
year capital lease for a copy machine.

Unamortized  financing  costs  consist of financing  costs  associated  with the
issuance of the City of  Minneapolis,  Minnesota  Taxable Health Care Facilities
Revenue  Bonds and the City of  Minneapolis,  Minnesota  Health Care  Facilities
Refunding Revenue Bonds.

Restricted  funds decreased a net $389,265 from $1,629,235 at September 30, 1997
to $1,239,970 at December 31, 1997 as a result of payments of bond principal and
interest of $372,691 net with interest  earnings and deposits to the Bond Funds.
The net proceeds of the 1994 Taxable Health Care Facilities Bonds are being held
by the  trustee in accounts  whose use is limited  until they are  expended  for
their designated purposes.

The Corporation has not entered into any material agreements or commitments with
respect to acquisitions or development.

On  June  19,  1997,  the  Local  113  Union  was  voted  in  to  represent  the
non-professional  staff of Nile Health Care  Center.  As of December  31,  1997,
negotiations are in progress but no contract has been signed.

The Corporation believes that cash flows from its existing operations,  together
with existing  capital  resources,  will be sufficient to make the  indebtedness
repayments,  to purchase capital additions and  improvements,  and to meet other
working capital needs for the next twelve months.


IMPACT OF INFLATION
 
The health care industry is labor intensive.  Wages and other expenses  increase
more rapidly  during periods of inflation and when shortages in the labor market
occur.  In  addition,  suppliers  pass along  rising costs in the form of higher
prices.  Increases in daily rates under the  Rate-setting  System  generally lag
behind actual cost increases,  so the  Corporation may have difficulty  covering
them in a timely  fashion,  despite  an  inflation  factor  in the  rate-setting
process.  This is due to the lag between the "reporting  period" (when costs are
incurred)  and the "rate year" when costs are actually  reflected in daily rates
paid to the Corporation for services provided.



                                     -8-

<PAGE>   9

PART II:  OTHER INFORMATION

Item 1.           LEGAL PROCEEDINGS

                  None

Item 2.           CHANGES IN SECURITIES

                  None

Item 3.           DEFAULTS UPON SENIOR SECURITIES

                  None

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

                  None

Item 5.           OTHER INFORMATION
 
                  None

Item 6.           EXHIBITS AND REPORTS ON FORM 8-K
 
                  Exhibit 27 - Financial Data Schedule










                                     -9-

<PAGE>   10

                                  SIGNATURES



In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.



                                            CARE FIRST INC.


Dated:  February 10, 1998           By  Jack E. Nugent
                                        -------------------------------------
                                        Jack E. Nugent, President



Dated:  February 10, 1998           By  Tamara J. Austin
                                        -------------------------------------
                                        Tamara J. Austin, Director of Finance







                                     -10-