<PAGE>

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

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


                                    FORM 10-Q

                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

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


For Quarter Ended                                           Commission File No.
 January 31, 1996                                                0-13608


                           INNOSERV TECHNOLOGIES, INC.


          California                                             95-3619990
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

                 320 Westway, Suite 520, Arlington, Texas 76018
                    (Address of principal executive offices)

Registrant's telephone number including area code (817) 468-3377.

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.

                X
               ---
               YES                           NO

     Shares of Registrant's common stock, $.01 par value,
     outstanding at March 14, 1996 - 5,035,833

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
                                    FORM 10-Q
                                JANUARY 31, 1996



                                TABLE OF CONTENTS


                                                                          PAGE
PART I - FINANCIAL INFORMATION                                            ----


Item 1.  Financial Statements (Unaudited)

     Condensed Consolidated Balance Sheets                                 3

     Condensed Consolidated Statements of Operations                       4

     Consolidated Statements of Cash Flows                                 6

     Notes to Condensed Consolidated Financial Statements                  7


Item 2.  Management's Discussion and Analysis of
     Financial Condition and Results of Operations                        12


PART II - OTHER INFORMATION

Item 2.  Changes in Securities                                            16

Item 5.  Other Information                                                16

Item 6.  Exhibits and Reports on Form 8-K                                 16


SIGNATURES                                                                17

INDEX TO EXHIBITS                                                         18


                                        2

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                        ($000's, except par value amount)
<TABLE>
<CAPTION>

                                                     January 31, 1996     April 30,1995
                                                       (Unaudited)        (Reclassified)
                                                       -----------        --------------
<S>                                                  <C>                  <C>
ASSETS
Current assets
  Cash and cash equivalents                             $     612           $   1,827
  Receivables                                               6,266               7,284
  Inventory                                                10,095               9,199
  Deferred income taxes                                     1,249               1,192
  Prepaid expenses                                            624                 532
                                                        --------------------------------
  Total current assets                                     18,846              20,034

Equipment, net                                              5,710               6,056

Deferred income taxes                                       2,155               2,155
Goodwill, net                                               3,583               3,698
Long-term notes receivable & other assets                   1,728               1,310
                                                        --------------------------------
                                                        $  32,022           $  33,253
                                                        --------------------------------
                                                        --------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                                      $   3,922           $   2,916
  Accrued liabilities                                       3,280               4,258
  Deferred revenues                                         6,395               5,521
  Current portion of long-term debt                           728               3,262
                                                        --------------------------------

  Total current liabilities                                14,325              15,957

Long-term debt                                              1,010                 141

Shareholders' equity
  Common stock, $.01 par value:
  authorized shares - 10,000;
  issued and outstanding shares - 5,036                        51                  51
  Paid-in capital                                          17,303              17,303
  Retained deficit                                           (667)               (199)
                                                        --------------------------------
     Total shareholder's equity                            16,687              17,155
                                                        --------------------------------
                                                        $  32,022           $  33,253
                                                        --------------------------------
                                                        --------------------------------
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.


                                       3

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                         ($000's, except per share data)
<TABLE>
<CAPTION>

                                                               Three Months Ended
                                                               ------------------
                                                      January 31, 1996    January 27, 1995
                                                      ----------------    ----------------
<S>                                                   <C>                 <C>
Revenues                                                $  11,062           $  12,343

Costs and expenses
  Cost of operations                                        9,263               9,575
  Depreciation                                                493                 610
  Selling and administrative                                2,222               1,844
  Interest expense (income)                                   (14)                115
                                                        --------------------------------

Total costs and expenses                                   11,964              12,144
                                                        --------------------------------

Income (loss) before income taxes                            (902)                199

Provision (benefit) for income taxes                         (362)                 78
                                                        --------------------------------

Net income (loss)                                       $    (540)          $     121
                                                        --------------------------------
                                                        --------------------------------

Net income (loss) per share                             $    (.11)          $     .02
                                                        --------------------------------
                                                        --------------------------------
Weighted average shares                                     5,037               5,058
                                                        --------------------------------
                                                        --------------------------------
</TABLE>


See accompanying Notes to Condensed Consolidated Financial Statements.


                                       4

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)
                         ($000's, except per share data)
<TABLE>
<CAPTION>

                                                                Nine Months Ended
                                                                -----------------
                                                     January 31, 1996    January 27, 1995
                                                     ----------------    ----------------
<S>                                                  <C>                 <C>
Revenues                                                $  34,928           $  34,398

Costs and expenses
  Cost of operations                                       27,976              28,422
  Depreciation                                              1,479               1,748
  Selling and administrative                                6,185               5,825
  Interest expense                                             70                 116
                                                        --------------------------------

Total costs and expenses                                   35,710              36,111
                                                        --------------------------------

Loss before income taxes                                     (782)             (1,713)

Benefit for income taxes                                     (313)               (686)
                                                        --------------------------------
Net loss                                                $    (469)          $  (1,027)
                                                        --------------------------------
                                                        --------------------------------

Net loss per share                                      $    (.09)          $    (.24)
                                                        --------------------------------
                                                        --------------------------------
Weighted average shares                                     5,037               4,340
                                                        --------------------------------
                                                        --------------------------------
</TABLE>


See accompanying Notes to Condensed Consolidated Financial Statements.


                                        5

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                    ($000's)
<TABLE>
<CAPTION>

                                                                 Nine Months Ended
                                                                 -----------------
                                                      January 31, 1996    January 27, 1995
                                                      ----------------    ----------------
<S>                                                   <C>                 <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                                $    (469)          $  (1,027)
Adjustments to reconcile net loss
to net cash flows from operations:
    Depreciation and amortization                           1,479               1,748
    Deferred income taxes                                     (57)                 (8)
    Changes in assets and liabilities:
     Receivables                                            1,019              (2,873)
     Inventory                                               (896)                544
     Prepaid expenses                                         (92)               (189)
     Accounts payable                                       1,006                 441
     Accrued liabilities                                   (1,101)             (1,404)
     Other assets                                            (342)                  -
     Deferred revenues                                        876                  33
                                                        --------------------------------
Net cash provided by (used in) operating activities         1,423              (2,735)

CASH FLOWS FROM INVESTING ACTIVITIES
   Acquisition of business operations                           -                (296)
   Net book value of equipment sold                           112                 223
   Purchase of equipment                                   (1,085)               (248)
                                                        --------------------------------
Net cash used in investing activities                        (973)               (321)

CASH FLOWS FROM FINANCING ACTIVITIES
   Borrowings from line of credit                             800               4,005
   Proceeds from long-term debt                             1,500                  --
   Principal payments of long-term debt                    (3,965)             (1,333)
   Exercise of stock options                                    -                 218
   Payment of dividends                                         -                (767)
                                                        --------------------------------
Net cash provided by (used in) financing activities        (1,665)              2,123
                                                        --------------------------------

Decrease in cash                                           (1,215)               (933)

Cash at beginning of period                                 1,827               1,341
                                                        --------------------------------

Cash at end of period                                   $     612           $     408
                                                        --------------------------------
                                                        --------------------------------
</TABLE>

See accompanying Notes to Condensed Consolidated Financial Statements.


                                        6

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1996
                                   (UNAUDITED)

1.   GENERAL

The condensed consolidated financial statements included herein have been
prepared by the Company without audit, include all adjustments which are, in the
opinion of management, necessary for a fair presentation of the results of
operations for the three and nine months ended January 31, 1996 and January 27,
1995, pursuant to the rules and regulations of the Securities and Exchange
Commission, and include the accounts of the Company and its consolidated
subsidiaries.  All significant intercompany accounts and transactions have been
eliminated. Any and all adjustments made are of a normal and recurring nature in
accordance with Rule 10-01(b)(8) of Regulation S-X.  Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulation, however, the Company believes
that the disclosures in such financial statements are adequate to make the
information presented not misleading.  These condensed financial statements
should be read in conjunction with the Company's annual report on Form 10-K for
the fiscal year ended April 30, 1995, filed with the Securities and Exchange
Commission.  The results of operations for the three and nine months ended
January 31, 1996 and January 27, 1995, are not necessarily indicative of the
results for the full year.

2.   RECLASSIFICATIONS

The fiscal 1996 presentation includes reclassifications from that previously
presented.  Such reclassifications are comprised of advance billings, previously
classified as a reduction in receivables, which are presently classified as
deferred revenues as well as the classification of the Company's Advanced
Imaging Technologies, Inc. subsidiary ("AIT") as a continuing operation (see
Note 3).

3.   DISCONTINUED OPERATION

In October 1994, the Company announced the adoption by the Company's Board of
Directors of a plan to dispose of the operations of AIT.  Thereafter, the
Company actively marketed AIT but was unable to locate a buyer.  At January 27,
1995 and April 30, 1995, AIT was classified as a discontinued operation in the
Company's financial statements.  Concurrent with the election to dispose of AIT,
the Company made certain changes in the operations of AIT including closing
certain offices and warehouse facilities, reducing personnel approximately 50
percent, and raising the price of x-ray film  sold to customers, all of which
resulted in improved profitability.  Additionally, as InnoServ's Asset
Management service program continues to grow, AIT's capability to repair and
maintain a variety of x-ray film processors, which are serviced under the Asset
Management program, enables AIT to play a strategic role in support of such
growth.  In the first quarter of fiscal 1996, as a result of both improved
profitability and the strategic capabilities of AIT, the Company's Board of
Directors elected not to dispose of AIT.  Accordingly, AIT has been reclassified
back to continuing operations in the Company's financial statements included
with this report.


                                        7

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1996
                                   (UNAUDITED)


Summarized results of operations of AIT for the three and nine months ended
January 27, 1995 were:

<TABLE>
<CAPTION>

                                      Three Months Ended       Nine Months Ended
                                       January 27, 1995         January 27,1995
                                       ----------------         ---------------
     <S>                               <C>                      <C>
     Revenues                           $    1,751,000           $    5,837,000
     Income (loss) before income taxes  $       25,000           $    (396,000)
</TABLE>


The following summarizes the net assets of AIT as of April 30, 1995:

<TABLE>
<CAPTION>

                                                                 April 30, 1995
                                                                 --------------
     <S>                                                         <C>
     Current assets                                              $    1,544,000
     Current liabilities                                              (527,000)
     Equipment (net)                                                    114,000
                                                                 --------------
      Total net assets                                           $    1,131,000
                                                                 --------------
                                                                 --------------

</TABLE>


A loss on the disposition of AIT was not expected and, therefore, no loss
provision was recorded.


4.   LONG-TERM DEBT

The Company entered into a loan agreement with a bank effective December 15,
1995 to borrow up to $4,500,000.  The loan agreement contains a $1,500,000 term
loan expiring January 30, 1999, a $1,500,000 revolving credit line for working
capital expiring August 15, 1996 and a $1,500,000 note, which was not funded by
the bank at January 31, 1996, to acquire inventory and equipment.  As a result
of the loss recorded for the three months ended January 31, 1996, the Company
does not expect the bank to fund the remaining $1,500,000 until the Company
returns to profitability.  The loan agreement contains financial covenants
including maintenance of certain financial ratios, net worth requirements and
restrictions on future borrowings and payment of dividends with which the
Company was in compliance at January 31, 1996.  Obligations under the loan
agreement are secured by a security interest in the Company's accounts
receivable, inventory and equipment.  Interest is payable quarterly on all
obligations under the loan agreement based on varying interest rates above the
prime rate and the term loan requires quarterly principal payments of $125,000.
The interest rate at January 31, 1996 on the term loan was 9.0 percent.  No
borrowings were outstanding on the revolving credit line at January 31, 1996.

The Company has terminated its former $2,000,000 line of credit agreement with
another bank.  The outstanding obligations of $2,000,000 were repaid principally
from the proceeds of the $1,500,000 term loan.


                                        8

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1996
                                   (UNAUDITED)


5.   SUPPLEMENTAL CASH FLOW DISCLOSURE

Interest and income taxes paid in the nine months ended January 31, 1996 and
January 27, 1995 were as follows:

<TABLE>
<CAPTION>

                                                      Nine Months Ended
                                                 ---------------------------
                                                 January 31,     January 27,
                                                    1996            1995
                                                 ---------------------------
                    <S>                          <C>             <C>
                    Interest                      $ 111,000      $185,000
                    Income taxes                  $  17,000      $     --
</TABLE>


6.   NAME CHANGE

On October 6, 1995, the Company changed its name from MMI Medical, Inc. to
InnoServ Technologies, Inc.

7.   INTERIM PRO FORMA FINANCIAL INFORMATION

On August 3, 1994, the Company acquired (the "Acquisition") MEDIQ Equipment and
Maintenance Services, Inc. ("MEMS"), a wholly owned subsidiary of MEDIQ
Incorporated in exchange for 2,006,438 shares of the Company's common stock and
a warrant to purchase 325,000 shares thereof at an exercise price of $6.25 per
share exercisable through August 3, 1998.  An additional 20,000 shares of the
Company's common stock was issued to MEDIQ in connection with a noncompetition
agreement which became effective as of the closing of the Acquisition.  The
estimated aggregate purchase price, including expenses of the Acquisition, was
approximately $6,565,000.  Following the Acquisition, the Company combined the
operations of its R Squared subsidiary with those of MEMS and changed the name
of R Squared to InnoServ Technologies Maintenance Services, Inc.

The Acquisition was accounted for as a purchase and, accordingly, the purchase
price was allocated to the assets acquired based on their appraised fair market
values.  Costs in excess of net assets acquired related to the Acquisition of
approximately $1,637,000 is being amortized on a straight-line basis over 20
years.  The results of operations of MEMS have been reflected in the
Consolidated Financial Statements of the Company since the date of the
Acquisition.

The following Pro Forma Consolidated Statements of Operations for the nine
months ended January 27, 1995 give effect to the Acquisition as if it occurred
as of April 30, 1994.  The Pro Forma Consolidated Statements of Operations for
the nine months ended January 27, 1995 are unaudited, but in the opinion of the
Company include all adjustments, consisting of normal recurring adjustments,
necessary for a fair presentation of the results of operation for the periods
presented.


                                        9

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1996
                                   (UNAUDITED)


The historical data of the Company included in the pro forma financial
statements is as of the periods presented.  The historical data of MEMS included
in Pro Forma Consolidated Statements of Operations is for the three months ended
August 2, 1994.

The Pro Forma Consolidated Statements of Operations for the nine months ended
January 27, 1995 are not necessarily indicative of the results of operations
that actually would have taken place had the Acquisition been consummated as of
the date indicated, or that may be achieved in the future and should be read in
conjunction with the notes in such statements.

<TABLE>
<CAPTION>


                                                   Nine Months Ended January 27, 1995
                                                  (In $000's, except per share amounts)
                                       -------------------------------------------------------------
                                                                      Pro Forma      Consolidated
                                         INNOSERV     MEMS (1)       Adjustments        Total
                                       -------------------------------------------------------------
<S>                                    <C>            <C>                 <C>           <C>
Revenues                               $34,398        $4,576              $             $38,974
Costs and expenses
   Cost of operations                   28,422         4,023               (606)  (2)    31,839
   Depreciation and amortization         1,748           360               (201)  (3)     1,907
   Selling and administrative            5,825           494               (166)  (4)     6,153
   Interest expense, net                   116            54                 --             170
                                       -------------------------------------------------------------
Total costs and expenses                36,111         4,931               (973)         40,069
                                       -------------------------------------------------------------
Income (loss) before taxes              (1,713)         (355)               973          (1,095)
Provision (benefit) for income taxes      (686)         (101)               348   (5)      (439)
Net income (loss)                      $(1,027)       $ (254)             $ 625         $  (656)
                                       -------------------------------------------------------------
                                       -------------------------------------------------------------

Net loss per share                     $  (.24)          N/A                            $  (.15)
                                       -------------------------------------------------------------
                                       -------------------------------------------------------------
</TABLE>


--------------------------------------
NOTES:
(1)  Historical data of MEMS is for the three months ended August 2, 1994.

(2)  Reflects the elimination of certain duplicate positions, resulting in a
reduction in cost of operations of approximately $482,000 in salaries and
benefits for the period.  Amortization of the spare parts inventory over a seven
year period, consistent with that of InnoServ, is expected to result in reduced
amortization expenses of $495,000, annually.

(3)  As a result of purchase accounting adjustments, depreciation and
amortization expense will change.  Depreciating the new basis over a five year
period will result in a reduction to such expense of $922,000 annually.
Amortization of the additional goodwill and covenant not to compete will result
in increased amortization expense of $117,000 annually.

(4)  Reflects the elimination of certain duplicate positions, resulting in a
reduction in selling and administrative expense of approximately $166,000 in
salaries and benefits for the period.

(5)  Consolidated provision for income taxes is calculated at 40%.


                                       10

<PAGE>

                           INNOSERV TECHNOLOGIES, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                JANUARY 31, 1996
                                   (UNAUDITED)


8.   RESTRUCTURING

In the third quarter of fiscal 1996, the Company relocated its headquarters
operations from Corona, California to Arlington, Texas.  As a result of the
relocation, the Company recorded restructuring charges of $411,000 in the
quarter of which $98,000 were included in cost of operations and $313,000 were
included in selling and administrative expenses.  The major components of these
charges, the amount paid to date and the remaining payments are:

<TABLE>
<CAPTION>

                                                      Amounts
                                                      Paid at
                                        Total        January 31,    Payments
                                       Charges          1996       Remaining
                                     ----------     ------------   ---------
     <S>                             <C>            <C>            <C>
     Employee termination benefits   $  115,000     $   39,000     $  76,000
     Employee relocation                169,000        103,000        66,000
     Employee training                   67,000         67,000            --
     Office equipment relocation         30,000         30,000            --
     Facility closing costs              30,000             --        30,000
                                     ----------     ------------   ---------
                                     $  411,000     $  239,000     $ 172,000
                                     ----------     ------------   ---------
                                     ----------     ------------   ---------
</TABLE>

The termination benefits relate to 12 employees, all of whom were terminated as
of January 31, 1996.


                                       11

<PAGE>

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

GENERAL


ACQUISITION OF MEDIQ EQUIPMENT & MAINTENANCE SERVICES, INC.

On August 3, 1994, the Company acquired (the "Acquisition") MEDIQ Equipment and
Maintenance Services, Inc. ("MEMS"), a wholly owned subsidiary of MEDIQ
Incorporated in exchange for 2,006,438 shares of the Company's common stock and
a warrant to purchase 325,000 shares thereof at an exercise price of $6.25 per
share exercisable through August 3, 1998.  An additional 20,000 shares of the
Company's common stock were issued to MEDIQ in connection with a noncompetition
agreement which became effective as of the closing of the Acquisition.  The
estimated aggregate purchase price, including expenses of the Acquisition, was
approximately $6,565,000.  Following the Acquisition, the Company combined the
operations of its R Squared subsidiary with those of MEMS and changed the name
of R Squared to InnoServ Technologies Maintenance Services, Inc.

DISCONTINUED OPERATION

In October 1994, the Company announced the adoption by the Company's Board of 
Directors of a plan to dispose of the operations of Advanced Imaging 
Technologies ("AIT").  Thereafter, the Company actively marketed AIT but was 
unable to locate a buyer.  At January 27, 1995 and April 30, 1995, AIT was 
classified as a discontinued operation in the Company's financial statements. 
Concurrent with the election to dispose of AIT, the Company made certain 
changes in the operations of AIT including closing certain offices and 
warehouse facilities, reducing personnel approximately 50 percent, and 
raising the price of x-ray film sold to customers, all of which resulted in 
improved profitability.  Additionally, as InnoServ's Multi-vendor Asset 
Management Service Program ("Asset Management") continues to grow, AIT's 
capability to repair and maintain a variety of x-ray film processors, which 
are serviced under Asset Management, enables AIT to play a strategic role in 
support of such growth.  In the first quarter of fiscal 1996, as a result of 
both improved profitability and the strategic capabilities of AIT, the 
Company's Board of Directors elected not to dispose of AIT.  Accordingly, AIT 
has been reclassified back to continuing operations in the Company's 
financial statements included with this report (see Note 3 to the Notes to 
Condensed Consolidated Financial Statements).

NAME CHANGE

Effective October 6, 1995, the Company changed its name from MMI Medical, Inc.
to InnoServ Technologies, Inc.


                                       12

<PAGE>

REALIZATION OF ASSETS

The Company hired a new chief executive officer and a new chief financial
officer in late December, 1995 and late January, 1996, respectively.  A complete
evaluation of the business is currently being performed to determine the future
strategic direction of the Company.  The realization of assets, in particular
inventory, goodwill, equipment and the net deferred tax asset, will be assessed
as they relate to the new strategy.  The evaluation and the adjustments to the
book value of the assets, if any, is expected to be completed in the fourth
quarter of fiscal 1996.


RESULTS OF OPERATIONS


THIRD QUARTER FISCAL 1996 COMPARED TO THIRD QUARTER FISCAL 1995

Consolidated revenues decreased $1,281,000 to $11,062,000 from $12,343,000 as a
result of strategic changes at both AIT and the Company's diagnostic imaging
operation, as well as the continued declines in the number and average contract
amount of Computed Tomography ("CT") maintenance agreements in effect as older
equipment is being upgraded or removed from service.  Revenues at AIT declined
$279,000, primarily from lower sales of x-ray film, chemistry and related
accessories as a result of AIT's planned exit from the traditionally low-margin
institutional x-ray film market.  Revenues at the Company's diagnostic imaging
operation declined $439,000 resulting from the discontinuance of its fee-for-
service operations, decreased utilization of rental equipment and fewer rental
units in the fleet.  The decline in revenues related to CT maintenance
agreements was $2,268,000.  These declines were offset by an increase in
revenues from Asset Management of $898,000, or 116 percent, and revenues from
Magnetic Resonance Imaging ("MRI") maintenance agreements increased $247,000, or
30 percent.  Additionally, the Company recorded $612,000 in revenues from the
sale of equipment in the third quarter of fiscal 1996, while no such sales
occurred in the third quarter of fiscal 1995 due to the timing of the sales.

Complete implementation of the Company's Asset Management service program at the
24 hospitals of Intermountain Health Care, Inc. in Salt Lake City, Utah, began
on January 1, 1996.  Partial implementation of the program began on October 1,
1995.  The Company also began providing its Asset Management program for
biomedical and laboratory repair services to Children's Hospital in Columbus,
Ohio, on January 1, 1996.

Cost of operations decreased $312,000, or three percent, from the cost of
operations for the same period in the prior fiscal year.  The cost of parts,
supplies and materials related to the provision of CT maintenance services and
cost of x-ray film, chemistry and related accessories sold at AIT decreased
$568,000.  Cost of operations was favorably impacted in the quarter by a payment
received against an insurance claim of $359,000, net of related costs.  The
claim was the result of damage to a MRI unit while it was being transported to a
customer under a sale agreement.  The replacement unit was fully costed at the
time the sale was recorded in the second quarter of fiscal 1996.  The Company
recorded a $701,000 charge in the third quarter of fiscal 1996 for physical
inventory adjustments and unfavorable production variances associated with the
reloading and rework of its CT tube inventory.  Additionally, there were $98,000
of restructuring expenses incurred in the quarter as a result of the relocation
of the Company's headquarters operations from Corona, California to Arlington,
Texas.


                                       13

<PAGE>

Depreciation costs decreased from the prior year $117,000 primarily as a result
of purchase accounting adjustments recorded in the fourth quarter of fiscal 1995
associated with the Acquisition.  Selling and administrative expenses increased
$378,000 from the third quarter of fiscal 1995 primarily as a result of $313,000
in restructuring costs associated with relocation of the Company's headquarters
operations.  The Company recorded $14,000 in net interest income in the quarter
compared to net interest expense of $115,000 for the same period of the previous
fiscal year as a result of lower debt outstanding during the period.  The
interest income for the quarter relates primarily to interest earned on
receivables from sales-type leases.

The effective tax rate remained at 40 percent and the benefit from income taxes
increased $440,000 from  a provision of $78,000 in the third quarter of fiscal
1995 to a benefit of $362,000 in fiscal 1996 as a result of the loss before
income taxes.


NINE MONTHS FISCAL 1996 COMPARED TO NINE MONTHS FISCAL 1995

The net increase in consolidated revenues of $530,000 to $34,928,000 from
$34,398,000 resulted primarily from the Acquisition.  Revenues from Asset
Management and MRI service agreements increased $4,456,000 and $1,063,000,
respectively.  The Company experienced a decrease in revenues from CT
maintenance service agreements of $3,736,000.  Revenues at the Company's
diagnostic imaging operation decreased $561,000 due to the discontinuance of its
fee-for-service operations, decreased utilization of rental equipment and fewer
rental units in the fleet.  Revenues at AIT declined $1,129,000 resulting
primarily from lower sales of x-ray film, chemistry and related accessories to
institutional customers.

On a pro forma basis (see Note 7 to the Notes to Condensed Consolidated
Financial Statements), consolidated revenues decreased $4,046,000 primarily from
a substantial decline in the number and average contract amount of CT
maintenance agreements in effect in the first nine months of fiscal 1996
compared to the total of such agreements in effect for R Squared and MEMS
combined in the first nine months of fiscal 1995.  The Company continues to
experience a decline in the number of such agreements in effect and expects this
trend to continue primarily as a result of customer's older CT equipment being
upgraded or removed from service and not replaced.  Asset Management revenues
increased on a pro forma basis by $3,102,000, or 65 percent, and revenues from
MRI maintenance agreements increased $701,000, or 30 percent.

Cost of operations decreased $446,000 as the costs for the first nine months of
fiscal 1995 were 83 percent  of revenues, declining to 80 percent of revenues
for the same period of fiscal 1996.  This decline as a percent of revenues  is
due primarily to the increase in Asset Management revenues which have higher
operating margins than the operating margins of the declining revenues from CT
maintenance agreements.  Depreciation costs decreased from the prior year
$269,000 primarily as a result of certain rental units operated by the imaging
operations becoming fully depreciated at the end of fiscal 1995 as well as
certain purchase accounting adjustments associated with the Acquisition.
Selling and administrative expenses increased $360,000, or six percent, from the
first nine months of fiscal 1995 primarily due to the inclusion of labor expense
associated with the Acquisition for the full nine months in fiscal 1996 compared
to only six months in fiscal 1995.  Selling and administrative expenses also
included $313,000 in restructuring costs associated with the relocation of the
Company's headquarters operations.  Interest expense declined $46,000


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<PAGE>

for the nine months of fiscal 1996 due to lower debt outstanding during the
period than was outstanding during the same period of fiscal 1995.

The loss before income taxes declined to $782,000, an improvement of $931,000
from the same period of the previous year as a result of improved operating
margins as all operating units reduced operating infrastructure costs and the
shift in revenues from CT maintenance agreements with lower operating margins to
Asset Management and MRI service agreements which have higher operating margins.

The effective tax rate remained at 40 percent and the benefit from income taxes
decreased $373,000 from a benefit of $686,000 for the first nine months of
fiscal 1995 to a benefit of $313,000 for fiscal 1996 as a result of the decline
in the loss before income taxes.


LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents as of January 31, 1996 totaled $612,000.  The
principal source of cash for the first nine months of fiscal 1996 were operating
activities which generated $1,423,000 due primarily to the noncash adjustment to
the net loss for depreciation and amortization and the timing of cash
collections and cash payments for accounts receivable and accounts payable,
respectively.  These funds financed $973,000 in purchases of new equipment,
primarily diagnostic hardware and software to maintain customer's equipment. The
Company also decreased its outstanding bank borrowings and obligations under
capital leases by $1,665,000.

The Company entered into a loan agreement with a bank effective December 15,
1995 to borrow up to $4,500,000.  The loan agreement contains  a $1,500,000 term
loan expiring January 30, 1999, a $1,500,000 revolving line of credit for
working capital expiring August 15, 1996 and a $1,500,000 note, which was not
funded by the bank at January 31, 1996, to acquire inventory and equipment.  As
a result of the loss recorded for the three months ended January 31, 1996, the
Company does not expect the bank to fund the remaining $1,500,000 until the
Company returns to profitability.  The Company was in compliance with all
financial covenants  required by such agreement at January 31, 1996.  Interest
is payable quarterly on all obligations under the loan agreement and the term
loan requires quarterly principal payments of $125,000 beginning April 30, 1996.
The interest rate on the term loan at January 31, 1996 was 9.0 percent  No
borrowings were outstanding on the revolving credit line at January 31, 1996.

The Company has terminated its former $2,000,000 line of credit agreement with
another bank.  The outstanding obligations of $2,000,000 were repaid principally
from the proceeds of the $1,500,000 term loan.

The Company believes that internally generated funds and its existing credit
facility will provide sufficient capital resources to finance operations and to
make principal and interest payments on outstanding borrowings in both the short
and long term.  The Company does not expect to make any significant capital
purchases in the foreseeable future.


                                       15

<PAGE>

PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES

In December, 1995 the Company entered into a $4,500,000 loan agreement.  The
loan agreement contains financial covenants including the maintenance of certain
financial ratios, net worth requirements, and restrictions on future borrowings
and payment of dividends.  In addition, the obligations under the loan agreement
are secured by a security interest in the Company's accounts receivable,
inventory and equipment.

The Company's former $2,000,000 line of credit agreement has been repaid and
terminated.  The agreement contained certain financial covenants relating to
tangible net worth, profitability, future borrowings and the payment of
dividends absent bank approval.  The Company had pledged its assets as security
for the line of credit.

ITEM 5.  OTHER INFORMATION.

(a)    Effective October 6, 1995, the Company changed its name from MMI Medical,
       Inc. to InnoServ Technologies, Inc.

(b)    On December 14, 1995, the Company announced the appointment of Michael G.
       Puls as President and Chief Executive Officer of the Company.  Mr. Puls
       assumed his duties on December 27,1995.


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

(a)    Index to Exhibits included herewith at page 18.

(b)    Report on Form 8-K.

       On November 6, 1995 the Company filed a Report on Form 8-K dated October
       30, 1995 to change its name from MMI Medical, Inc. to InnoServ
       Technologies, Inc.


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<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.


                                        DATED:  March 15, 1996

                                        INNOSERV TECHNOLOGIES, INC.




                                        By: /s/ Thomas Hoefert
                                           --------------------------
                                           Thomas Hoefert
                                           Vice President and Chief Financial
                                              Officer
                                           (Duly Authorized Officer and
                                           Principal Financial Officer)


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<PAGE>

                                INDEX TO EXHIBITS
                                -----------------

Exhibit                                                                    PAGE
-------                                                                    ----

10.1      Loan Agreement  dated as of December 15, 1995 by and              19
          between the Company and Overton Bank & Trust, N.A.

10.2      Term Loan Agreement dated as of January 12, 1996 in the           25
          principal amount of $1,500,000 payable by the Company to
          Overton Bank & Trust, N.A.

10.3      Security Agreement dated as of January 12, 1996 by and            31
          between the Company  and Overton Bank & Trust, N.A.

10.4      Revolving Credit Agreement dated as of January 12, 1996 in        40
          the principal amount of $1,500,000 payable by the Company to
          Overton Bank & Trust, N.A.

10.5      Security Agreement dated as of January 12, 1996 by and            46
          between the Company and Overton Bank & Trust, N.A.

10.6      Indemnity Agreement dated as of January 25, 1996 by and           55
          between the Company and Michael G. Puls

10.7      Indemnity Agreement dated as of January 25, 1996 by and           58
          between the Company and Thomas E. Hoefert

11.1      Computation of Per Share Earnings                                 61

27.1      Financial Data Schedules (EDGAR filing only)                      --


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