<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 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 QUARTER ENDED JANUARY 31, 1998


[ ]  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  0-13608
                                       
                          INNOSERV TECHNOLOGIES, INC.
            (Exact name of Registrant as specified in its charter)
                                       
                                       
            CALIFORNIA                                 95-3619990
  (State or other jurisdiction of                    (I.R.S. Employer
   incorporation or organization)                  Identification No.)


320 WESTWAY, SUITE 530, ARLINGTON, TEXAS                 76018
(Address of principal executive offices)               (Zip Code)


      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 twelve 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 March 16, 1998, the Registrant had outstanding 3,009,395 shares of
its common stock, $.01 par value.

<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                                   FORM 10-Q
                               JANUARY 31, 1998
                                       
                                       
                                       
                               TABLE OF CONTENTS
                                       
                                       
<TABLE>
                                                                                  Page
                                                                                  ---- 
<S>                                                                               <C>
PART I - FINANCIAL INFORMATION

     Item 1.  Financial Statements

          Consolidated Balance Sheets as of January 31, 1998 and April 30, 1997     3

          Consolidated Statements of Operations for the three months
            ended January 31, 1998 and 1997                                         4

          Consolidated Statements of Operations for the nine months ended 
            January 31, 1998 and 1997                                               5

          Consolidated Statements of Cash Flows for the nine months ended 
            January 31, 1998 and 1997                                               6 

          Notes to Consolidated Financial Statements                                7

     Item 2.  Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                                      10


PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings                                                    14

     Item 2.  Changes in the Rights of Security Holders                            14

     Item 6.  Exhibits and Report on Form 8-K                                      14

SIGNATURE                                                                          15

INDEX TO EXHIBITS                                                                  16
</TABLE>


                                       2

<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                          CONSOLIDATED BALANCE SHEETS
                     (In thousands, except share amounts)

<TABLE>
                                                 January 31,
                                                    1998         April 30,
                                                 (Unaudited)       1997
                                                 -----------     --------- 
<S>                                              <C>             <C>
ASSETS
Current assets
  Cash and cash equivalents                       $  2,107       $  1,806
  Receivables                                        4,423          3,693
  Inventory:
    Spare parts and supplies, net                    4,303          4,484
    Inventory held for sale                            779            772
  Prepaid expenses                                     160            453
                                                  --------       -------- 
    Total current assets                            11,772         11,208

Capital equipment, net                               3,430          4,491
Goodwill, net                                        3,278          3,392
Other assets                                             6             11
                                                  --------       -------- 
                                                  $ 18,486       $ 19,102
                                                  --------       -------- 
                                                  --------       -------- 

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Current portion of long-term debt               $    641       $    629
  Accounts payable                                   5,728          3,658
  Accrued liabilities                                1,708          2,224
  Deferred revenues                                  3,579          3,719
                                                  --------       -------- 
    Total current liabilities                       11,656         10,230

Long-term debt, less current portion                    --            479

Shareholders' equity
  Preferred stock, $.01 par value:  5,000,000
    shares authorized; no shares issued                 --             --
  Common stock, $.01 par value:  10,000,000
    shares authorized; 3,009,395 issued                 30             51
  Paid-in capital                                   17,324         17,303
  Accumulated deficit                              (10,524)        (8,961)
                                                  --------       -------- 
    Total shareholders' equity                       6,830          8,393
                                                  --------       -------- 
                                                  $ 18,486       $ 19,102
                                                  --------       -------- 
                                                  --------       -------- 
</TABLE>

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


                                       3

<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (In thousands, except per share data)

<TABLE>
                                                    Three Months Ended
                                                        January 31,
                                                 ----------------------- 
                                                    1998          1997
                                                 --------       -------- 
<S>                                              <C>            <C>
Revenues :
  Service                                        $  8,014       $  8,321
  Sale of parts and equipment                       1,196          1,910
                                                 --------       -------- 
  Total revenues                                    9,210         10,231

Costs:
  Cost of service                                   7,620          7,033
  Cost of parts and equipment                         699          1,096
                                                 --------       -------- 
  Total cost of operations                          8,319          8,129

Depreciation and amortization                         424            499
Selling and administrative expenses                 1,318          1,524
                                                 --------       -------- 
Income (loss) from operations                        (851)            79
Interest expense (income), net                         (6)            43
                                                 --------       -------- 
Income (loss) before income taxes                    (845)            36
Provision for income taxes                             --             --
                                                 --------       -------- 
Net income (loss)                                $   (845)      $     36
                                                 --------       -------- 
                                                 --------       -------- 
Net income (loss) per share - basic and diluted  $   (.26)      $    .01
                                                 --------       -------- 
                                                 --------       -------- 
Weighted average shares - basic and diluted         3,274          5,036
                                                 --------       -------- 
                                                 --------       -------- 
</TABLE>

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


                                       4

<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (Unaudited)
                     (In thousands, except per share data)

<TABLE>
                                                Nine Months Ended
                                                    January 31,
                                             ------------------------ 
                                                1998           1997
                                             ---------      --------- 
<S>                                          <C>            <C>
Revenues:
  Service                                    $  23,309      $  26,104
  Sale of parts and equipment                    4,252          6,599
                                             ---------      --------- 
  Total revenues                                27,561         32,703

Costs:
  Cost of service                               22,013         23,198
  Cost of parts and equipment                    1,841          4,075
                                             ---------      --------- 
  Total cost of operations                      23,854         27,273

Depreciation and amortization                    1,248          1,515
Selling and administrative expenses              4,009          4,823
                                             ---------      --------- 
Loss from operations                            (1,550)          (908)

Interest expense, net                               14            139
                                             ---------      --------- 
Loss before income taxes                        (1,564)        (1,047)

Provision for income taxes                          --             --
                                             ---------      --------- 
Net loss                                     $  (1,564)     $  (1,047)
                                             ---------      --------- 
                                             ---------      --------- 

Net loss per share - basic and diluted       $    (.35)     $    (.21)
                                             ---------      --------- 
                                             ---------      --------- 
Weighted average shares - basic and diluted      4,448          5,036
                                             ---------      --------- 
                                             ---------      --------- 
</TABLE>


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


                                       5

<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                (In thousands)
                                       


<TABLE>
                                                      Nine Months Ended
                                                          January 31,
                                                   -------------------------
                                                       1998           1997
                                                   ----------     ---------- 
<S>                                                <C>            <C>
Cash flows from:
Operations -
Net loss                                           $  (1,564)     $  (1,047)
Adjustments to reconcile net loss to
  net cash flows from operations:
    Depreciation and amortization                      1,248          1,515
    Changes in assets and liabilities:
      Receivables                                       (730)           793
      Inventory                                          174          1,509
      Prepaid expenses                                   293             82
      Other assets                                         5             68
      Accounts payable                                 2,070           (568)
      Accrued liabilities                               (516)          (286)
      Deferred revenues                                 (140)        (1,070)
                                                   ---------      --------- 
Net cash provided by operations                          840            996

Investments and acquisitions -
  Purchase of capital equipment                          (72)          (160)
                                                   ---------      --------- 
Net cash used for investments and acquisitions           (72)          (160)

Financing activities -
  Borrowings from line of credit                          --            242
  Principal payments of long-term debt                  (467)          (468)
                                                   ---------      --------- 
Net cash used for financing activities                  (467)          (226)
                                                   ---------      --------- 
Net increase in cash and cash equivalents                301            610

Cash and cash equivalents at beginning of period       1,806            941
                                                   ---------      --------- 
Cash and cash equivalents at end of period         $   2,107      $   1,551
                                                   ---------      --------- 
                                                   ---------      --------- 
</TABLE>


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


                                       6
<PAGE>

                                       
                          INNOSERV TECHNOLOGIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               JANUARY 31, 1998
                                  (UNAUDITED)


1.   GENERAL

     The consolidated financial statements included herein have been prepared 
by InnoServ Technologies, Inc. ("InnoServ") 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 months and nine 
months ended January 31, 1998 and 1997, pursuant to the rules and regulations 
of the Securities and Exchange Commission, and include the accounts of 
InnoServ 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 regulations, however, InnoServ believes that the disclosures 
in such financial statements are adequate to make the information presented 
not misleading.  These financial statements should be read in conjunction 
with InnoServ's annual report on Form 10-K for the fiscal year ended April 
30, 1997, filed with the Securities and Exchange Commission.  The results of 
operations for the nine months ended January 31, 1998, are not necessarily 
indicative of the results that may be expected for the year ending April 30, 
1998.

     Certain reclassifications have been made in the prior year's 
consolidated financial statements to conform to the fiscal 1998 presentation.

2.   INTEREST EXPENSE (INCOME), NET

     Interest expense (income) is net of interest income of $22,000 and 
$5,000 for the three months ended January 31, 1998 and 1997, respectively.

     Interest expense is net of interest income of $57,000 and $28,000 for 
the nine months ended January 31, 1998 and 1997, respectively.




                                       7
<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               JANUARY 31, 1998
                                  (UNAUDITED)


3.   SUPPLEMENTAL CASH FLOW DISCLOSURE

     Interest and income taxes paid in the nine months ended January 31, 1998 
and 1997 were as follows:

<TABLE>
                                        Nine Months Ended
                                           January 31,
                                      ----------------------
                                        1998          1997
                                      -------       --------
<S>                                   <C>           <C>
              Interest                $67,000       $174,000
              Income taxes            $ 5,000       $ 53,000
</TABLE>

4.   NET INCOME (LOSS) PER SHARE

     In 1997, the Financial Accounting Standards Board issued Statement of 
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share". SFAS 
No. 128 replaced the previously reported primary and fully diluted earnings 
per share with basic and diluted earnings per share.  Unlike primary earnings 
per share, basic earnings per share excludes any dilutive effects of options, 
warrants and convertible securities.  Diluted earnings per share is very 
similar to the previously reported fully diluted earnings per share.  All 
earnings per share amounts for all periods have been presented and, where 
necessary, restated to conform to the SFAS No. 128 requirements.

     Basic and diluted per share amounts were the same for all periods 
presented, as stock options to purchase shares of common stock were not 
included in the computation of diluted earnings per share as they were 
antidilutive.








                                       8
<PAGE>

                          INNOSERV TECHNOLOGIES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               JANUARY 31, 1998
                                  (UNAUDITED)


5.   LONG-TERM DEBT

      On April 14, 1997 InnoServ entered into a new loan agreement with a bank 
pursuant to which amounts outstanding under InnoServ's prior revolving line 
of credit and term loan agreements with the bank were converted into a new 
term loan aggregating $1,198,000. Borrowings under the new term loan bear 
interest at the rate of prime (8.5% at January 31, 1998) plus 1% per annum.  
Monthly principal installments of $54,000 plus interest are required through 
January 8, 1999.  Obligations under the loan agreement are secured by a 
security interest in InnoServ's accounts receivable, inventory and capital 
equipment.  The loan agreement contains financial covenants including 
maintenance of certain financial ratios, net worth requirements and 
restrictions on future borrowings and payment of dividends.  As a result of 
the loss for the period, InnoServ failed to meet the cash flow ratio under 
the loan agreement as of January 31, 1998. InnoServ's bank waived this event 
of default effective January 31, 1998 and through July 30, 1998.

6.    SHARES AND WARRANT REACQUISITION

      Pursuant to a Stock Purchase Agreement dated November 13, 1997 
("Agreement"), among InnoServ, a California corporation, MEDIQ Incorporated 
("MEDIQ") and MEDIQ Investment Services, Inc. ("MIS" and together with MEDIQ, 
collectively the "Seller"), each a Delaware corporation, InnoServ reacquired 
from Seller 2,026,438 shares of InnoServ's common stock ("Shares") and a 
warrant to purchase 325,000 shares of InnoServ's common stock ("Warrant"). 
Such 2,026,438 shares represented approximately 40% of the then outstanding 
shares of common stock of InnoServ.  The Shares and Warrant had been issued 
to MEDIQ in connection with InnoServ's acquisition of MEDIQ Equipment and 
Maintenance Services, Inc., a wholly-owned subsidiary of MEDIQ, in August 
1994.

      Under the terms of the Agreement, no cash payment was made for the 
reacquisition of the Shares and Warrant.  However, in the event InnoServ 
enters into or consummates a change of control, as defined in the Agreement, 
of InnoServ prior to April 1, 1998, Seller will be entitled to payment from 
the acquiring party as if 100% of the Shares remained outstanding.  In the 
event InnoServ enters into or consummates a change of control, as defined in 
the Agreement, of InnoServ from and after April 1, 1998 and through September 
30, 1998, Seller will be entitled to payment as if 50% of the Shares remained 
outstanding.

      Additionally, in connection with the transaction, MEDIQ and InnoServ 
agreed to terminate certain continuing arrangements including the right to 
designate two directors.  Consequently, Thomas E. Carroll, President and 
Chief Executive Officer of MEDIQ, who had been serving at MEDIQ's 
designation, resigned from InnoServ's Board of Directors.  Michael Sandler, 
the former Chief Financial Officer of MEDIQ, who also had been serving at 
MEDIQ's designation, continues as a director of InnoServ.

                                       9
<PAGE>

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

RESULTS OF OPERATIONS

THIRD QUARTER FISCAL 1998 COMPARED TO THIRD QUARTER FISCAL 1997

     Consolidated revenues for the third quarter of fiscal 1998 were
$9,210,000 as compared to $10,231,000 in the same period of fiscal 1997, a
decline of $1,021,000.  Included in the third quarter of fiscal 1997 were
$1,260,000 in revenues from Advanced Imaging Technologies, Inc. ("AIT"), a
wholly-owned subsidiary of InnoServ.  Substantially all of the revenue
producing assets of AIT were sold to a third party on March 17, 1997.
Excluding the revenues of AIT, revenues from InnoServ's on-going
operations increased $239,000, or three percent.  Revenues from asset
management and multi-vendor services increased approximately $750,000 as
InnoServ has continued to focus on the growing market for these type of
services.  In addition, after taking into effect the disposal of AIT,
sales of parts and equipment increased by approximately $180,000 as
InnoServ has experienced a greater demand for its spare parts and x-ray
tubes from other service providers and distributors.  Offsetting these
increases, revenues from computed tomography ("CT") and magnetic resonance
imaging ("MRI") maintenance service agreements decreased approximately
$370,000 and $200,000, respectively, primarily as a result of the
continued decline in the number and average contract amount of maintenance
service agreements in effect as older equipment is being upgraded or
removed from service by customers.  In addition, revenues from InnoServ's
diagnostic mobile imaging operations declined approximately $180,000 due
to lower customer demand for these units.

     Cost of operations, excluding the costs of AIT, increased $1,240,000
from the same period in the prior year.  As a percent of on-going
revenues, cost of operations for the third quarter of 1998 was 90 percent
as compared to 79 percent for the same period of fiscal 1997.  This
increase was attributed to a higher failure rate of equipment under
maintenance service agreements than previously experienced, an increasing
utilization of other service providers to supplement InnoServ's own staff
of field engineers to service equipment under maintenance service
agreements, a greater need to source repair parts from third parties
rather than utilizing InnoServ's existing inventory of spare parts, and
lower gross margins generally on asset management contracts awarded to
InnoServ during the last year due to competitive pricing in the
marketplace.

     Selling and administrative expenses decreased $206,000, or 14
percent, from the prior year primarily as a result of reductions in
InnoServ's administrative functions resulting from the disposal of AIT.
Depreciation and amortization expenses decreased by $75,000 due to the
completed depreciation of certain capital equipment.

     The loss before income taxes for the third quarter of fiscal 1998 was
$845,000 as compared to income before income taxes of $36,000 in the third
quarter of fiscal 1997.  The loss for fiscal 1998 was primarily the result
of the factors identified in the discussion of cost of operations above.

                                     10
<PAGE>

     In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share".  InnoServ adopted SFAS No. 128 in the third quarter
of fiscal 1998.  The adoption of this standard does not materially impact
InnoServ's earnings per share calculations.  The adoption had no impact on
InnoServ's results of operations.

     In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", and No. 131, "Disclosures about Segments of an Enterprise and
Related Information."  SFAS No. 130 requires that an enterprise report, by
major component and as a single total, the change in its equity during the
period from nonshareholder sources, and SFAS No. 131 establishes annual
and interim reporting requirements for an enterprise's operating segments
and related disclosures about its products and services, geographical
areas in which it operates and major customers.  Both statements are
effective for fiscal years beginning after December 15, 1997, with earlier
application permitted. Adoption of these statements is not expected to
materially impact InnoServ's consolidated financial position or statements
of operations, shareholders' equity and cash flows.  Effects of the
adoption of these statements, if any, will primarily be limited to the
form and content of InnoServ's disclosures.

NINE MONTHS FISCAL 1998 COMPARED TO NINE MONTHS FISCAL 1997

     Consolidated revenues for the first nine months of fiscal 1998 were
$27,561,000 as compared to $32,703,000 in the same period of fiscal 1997,
a decline of $5,142,000, or 16 percent.  The decline in revenues is
primarily attributable to a decrease of $4,140,000 resulting from the
disposition of substantially all of the revenue producing assets of AIT on
March 17, 1997.  Revenues from CT and MRI maintenance service agreements
decreased approximately $2,230,000 and $240,000, respectively, primarily
as a result of the continued decline in the number and average contract
amount of maintenance service agreements in effect as older equipment is
being upgraded or removed from service by customers.  Revenues from
InnoServ's diagnostic mobile imaging operations declined approximately
$150,000 due to lower customer demand for these units.  Offsetting these
declines, revenues from asset management and multi-vendor services
increased approximately $1,210,000 as InnoServ continues to focus on the
growing market for these type of services.  In addition, after taking into
effect the disposal of AIT, sale of spare parts and equipment increased
by approximately $570,000 as InnoServ has experienced a greater demand for
its spare parts and x-ray tubes from other service providers and
distributors.

     Cost of operations, excluding the costs of AIT, increased $70,000
from the same period in the prior fiscal year.  As a percent of on-going
revenues, cost of operations for the first nine months of fiscal 1998 was
87 percent as compared to 83 percent for the first nine months of fiscal
1997.  This increase was attributed to a higher failure rate of equipment
under maintenance service agreements than previously experienced, an
increasing utilization of other service providers to supplement InnoServ's
own staff of field engineers to service equipment under maintenance
service agreements, a greater need to source repair parts from third
parties rather than utilizing InnoServ's existing inventory of spare
parts, and lower gross margins generally on asset management contracts
awarded to InnoServ during the last year due to competitive pricing in the
marketplace.

     Selling and administrative expenses decreased $814,000, or 17
percent, from the prior year primarily as a result of reductions in
InnoServ's administrative functions resulting from the disposal of AIT and
cost containment activities.  Depreciation and amortization expenses
decreased $267,000 from fiscal 1997 due to the completed depreciation of
certain capital equipment.

                                     11
<PAGE>

     The loss before income taxes for the first nine months of fiscal 1998
was $1,564,000 as compared to a loss of $1,047,000 in the first nine months
of fiscal 1997.  The loss in fiscal 1998 was primarily the result of the
factors identified in the discussion of cost of operations above.  InnoServ
is continuing to implement plans to reorganize its operations and to
develop means to more cost effectively provide the services required by its
customers, particularly as it concerns the use of other service providers
and the sourcing of spare parts and other materials to repair customers'
equipment, and to expand its revenue base in instances where it can do so
profitably.  At the same time, InnoServ is investigating alternative
strategies to deliver maintenance and repair services while capitalizing on
its core competencies.

     InnoServ did not recognize a tax benefit from the operating loss for
the first nine months of fiscal 1998.  Under SFAS No. 109, "Accounting for
Income Taxes," net operating losses enter into the calculation of deferred
tax assets and liabilities.  At January 31, 1998, InnoServ had an
estimated net deferred tax asset of $6,138,000, primarily as a result of
net operating losses.  Due to the cumulative losses incurred in recent
years the deferred tax assets do not currently meet the criteria for
recognition under SFAS No. 109 and, accordingly, InnoServ has recorded a
valuation allowance for the full amount of the net deferred tax asset.

LIQUIDITY AND CAPITAL RESOURCES

     At January 31, 1998, InnoServ had working capital of $116,000, of
which $2,107,000 was in cash and cash equivalents.  Operations provided
$840,000 of cash for the nine months ended January 31, 1998, primarily as
a result of the non-cash effect of depreciation and amortization of
$1,248,000 on the net loss of $1,564,000, an increase in accounts payable
of $2,070,000 due to timing of payments, a reduction in prepaid expenses
of $293,000, and a $174,000 reduction in inventory due to the amortization
of spare parts inventory partially offset by additional purchases of spare
parts and x-ray tubes required to service newer technology CT and MRI
scanners.  Receivables increased by $730,000 as a result of the timing of
cash receipts from customers and accrued liabilities decreased by $516,000
due to a lower liability for unused vacation and the settlement of certain
lawsuits.

                                     12
<PAGE>

     InnoServ's allowance for doubtful accounts at January 31, 1998 was 
$906,000, or 17 percent of gross accounts receivable.  InnoServ's customers 
include hospitals, physician practices, outpatient clinics and imaging 
centers.  Some of these customers are thinly capitalized, operate on small 
margins and experience cash flow difficulties due to the lengthy time 
required to receive reimbursements from Medicare and insurance companies.  
Factors impacting InnoServ's allowance for doubtful accounts include the 
timing of account write-offs and the changes occurring in the healthcare 
industry, primarily the move to managed care, which has weakened healthcare 
providers' ability to honor their debts and have forced some of the providers 
out of business.

     On April 14, 1997 InnoServ entered into a new loan agreement with a
bank pursuant to which amounts outstanding under InnoServ's prior
revolving line of credit and term loan agreements with the bank were
converted into a new term loan aggregating $1,198,000. Borrowings under
the new term loan bear interest at the rate of prime (8.5% at January 31,
1998) plus 1% per annum.  Monthly principal installments of $54,000 plus
interest are required through January 8, 1999.  Obligations under the loan
agreement are secured by a security interest in InnoServ's accounts
receivable, inventory and capital equipment.  The loan agreement contains
financial covenants including maintenance of certain financial ratios, net
worth requirements and restrictions on future borrowings and payment of
dividends.  As a result of the loss for the period, InnoServ failed to
meet the cash flow ratio under the loan agreement as of January 31, 1998.
InnoServ's bank waived this event of default effective January 31, 1998
and through July 30, 1998.

     InnoServ does not anticipate making any significant capital purchases
in the next twelve months.  If InnoServ is unsuccessful in reducing the
level of losses it is currently experiencing through reorganizing its
operations, developing means to provide services more cost effectively,
expanding its revenue base and developing alternative strategies to
deliver maintenance and repair services, InnoServ may be unable to meet
its working capital requirements.  Should this occur, InnoServ would
attempt to obtain asset-based financing and/or to sell certain assets to
provide necessary funds.  In such event, the failure to obtain such
financing and/or to successfully sell such assets would have a material
adverse effect on InnoServ.

CAUTIONARY STATEMENT

     The statements in this Management's Discussion and Analysis and
elsewhere in this report that are not based on historical fact are forward
looking statements, which involve numerous risks and uncertainties.
InnoServ's future results of operations and financial condition may differ
materially from these expectations due to many factors, including
InnoServ's ability to attract and retain maintenance service contracts,
InnoServ's ability to implement its operating plans to reduce costs while
providing an increasing array of services to its customers, and competitive
and regulatory conditions in the healthcare industry generally, and other
factors, many of which are beyond the control of InnoServ.

                                     13
<PAGE>

PART II - OTHER INFORMATION

ITEM 1.     LEGAL PROCEEDINGS

       InnoServ was party to a lawsuit filed on April 12, 1995 in Superior
Court in the County of Riverside, California, by two former employees who
claimed wrongful termination in retaliation for filing a claim with the
U.S. Department of Labor.  The plaintiffs sought damages of approximately
$1,000,000 in the aggregate.  In July 1997 and January 1998 each plaintiff
accepted separate offers of compromise made by InnoServ for significantly
less than the damages sought by such plaintiffs. InnoServ funded these
settlements in September 1997 and January 1998, respectively.  The amount
of the settlements were accrued in a previous period and did not impact
the earnings of the three and nine months ended January 31, 1998.

ITEM 2.     CHANGES IN THE RIGHTS OF SECURITY HOLDERS

       Pursuant to the Stock Purchase Agreement dated November 13, 1997 as
described in Note 6 in the Notes to Consolidated Financial Statements, in
the event InnoServ enters into or consummates a change of control, as
defined in the Agreement, of InnoServ prior to April 1, 1998, Seller will
be entitled to payment from the acquiring party as if 100% of the Shares
remained outstanding.  In the event InnoServ enters into or consummates a
change of control, as defined in the Agreement, of InnoServ from and after
April 1, 1998 and through September 30, 1998, Seller will be entitled to
payment as if 50% of the Shares remained outstanding.

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

     (a)    Exhibits:

     The information required by this portion of Item 6 is set forth in
the Index to Exhibits beginning on page 16.

     (b)         Report on Form 8-K:

     The Registrant filed a report on Form 8-K on November 20, 1997 to
report the reacquistion of 2,026,438 shares and a warrant to purchase
325,000 shares of the Registrant's common stock.

                                     14
<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 16, 1998

                                   INNOSERV TECHNOLOGIES, INC.



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


                                     15
<PAGE>

                               INDEX TO EXHIBITS

  Exhibit
    No.                 Description of Exhibit
  -------               ----------------------

   10.1   Letter Agreement dated March 6, 1998 waiving the violation
          of the cash flow covenant of the Loan Agreement dated as of
          April 14, 1997 by and between Registrant and Overton Bank &
          Trust, N.A.

   27.1   Financial Data Schedule.

   99.1   Stock Purchase Agreement dated November 13, 1997 among
          Registrant, MEDIQ Incorporated and MEDIQ Investment Services,
          Inc. (Incorporated by reference from Registrant's Form 8-K dated
          November 13, 1997).



                                     16