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                                    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 JULY 31, 1997


[ ]  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 September 8, 1997, the Registrant had outstanding 5,035,833 shares of
its common stock, $.01 par value.

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                             INNOSERV TECHNOLOGIES, INC.
                                      FORM 10-Q
                                    JULY 31, 1997


                                  TABLE OF CONTENTS


                                                                            Page
                                                                            ----
PART I - FINANCIAL INFORMATION

    Item 1.  Financial Statements

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

       Consolidated Statements of Operations for the three months ended 
        July 31, 1997 and 1996                                                4

       Consolidated Statements of Cash Flows for the three months ended 
        July 31, 1997 and 1996                                                5

       Notes to Consolidated Financial Statements                             6


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


PART II - OTHER INFORMATION

    Item 1.  Legal Proceedings                                               10

    Item 2.  Changes in Securities                                           10

    Item 6.  Exhibits and Reports on Form 8-K                                10

SIGNATURES                                                                   11

INDEX TO EXHIBITS                                                            12


                                       2

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                             INNOSERV TECHNOLOGIES, INC.
                             CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share amounts)
                                           
                                           
                                                         July 31,     April 30,
                                                           1997         1997
                                                        ----------   ----------
                                                        (Unaudited)
ASSETS
Current assets
  Cash and cash equivalents                              $ 2,548       $ 1,806
  Receivables                                              2,871         3,693
    Inventory:                                                  
    Spare parts and supplies, net                          4,404         4,484
    Inventory held for sale                                  987           772
  Prepaid expenses                                           328           453
                                                         -------       -------
    Total current assets                                  11,138        11,208

Equipment, net                                             4,143         4,491
Goodwill, net                                              3,354         3,392
Other assets                                                   9            11
                                                         -------       -------
                                                         $18,644       $19,102
                                                         -------       -------
                                                         -------       -------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
  Current portion of long-term debt                      $   670       $   629
  Accounts payable                                         4,026         3,658
  Accrued liabilities                                      1,915         2,224
  Deferred revenues                                        3,575         3,719
                                                         -------       -------
    Total current liabilities                             10,186        10,230

Long-term debt, less current portion                         317           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; 5,035,833 issued                       51            51
  Paid-in capital                                         17,303        17,303
  Accumulated deficit                                     (9,213)       (8,961)
                                                         -------       -------
    Total shareholders' equity                             8,141         8,393
                                                         -------       -------
                                                         $18,644       $19,102
                                                         -------       -------
                                                         -------       -------

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


                                       3

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

                                                  Three Months Ended
                                                       July 31,
                                                  ------------------
                                                   1997        1996
                                                  ------      -------
Revenues:
  Service revenues                                $8,518      $10,394
  Sale of parts                                      626        1,394
                                                  ------      -------
  Total revenues                                   9,144       11,788
Costs:
  Cost of services                                 7,502        8,998
  Cost of parts                                       99        1,025
                                                  ------      -------
  Total cost of operations                         7,601       10,023

    Gross profit                                   1,543        1,765

Depreciation and amortization                        394          511
Selling and administrative                         1,384        1,854
                                                  ------      -------

Loss from operations                                (235)        (600)

Interest expense, net                                 17           27
                                                  ------      -------

Loss before income taxes                            (252)        (627)
Provision (benefit) for income taxes                  --           --
                                                  ------      -------

Net loss                                          $ (252)     $  (627)
                                                  ------      -------
                                                  ------      -------

Per share information:
  Net loss                                        $ (.05)     $  (.12)
                                                  ------      -------
                                                  ------      -------

Weighted average shares outstanding                5,036        5,036
                                                  ------      -------
                                                  ------      -------

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

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                          INNOSERV TECHNOLOGIES, INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
                                 (In thousands)
                                       
                                                           Three Months Ended
                                                                July 31,
                                                           ------------------
                                                            1997        1996
                                                           ------      ------
Cash flows from operating activities:
Net loss                                                   $ (252)     $ (627)
Adjustments to reconcile net loss to net cash flows
 from operations:
  Depreciation and amortization                               394         511
  Changes in assets and liabilities:
   Receivables                                                822        (228)
   Inventory                                                 (135)        825
   Prepaid expenses                                           125          48
   Accounts payable                                           368         (77)
   Accrued liabilities                                       (309)       (329)
   Other assets                                                 2         (25)
   Deferred revenues                                         (144)       (503)
                                                           ------      ------
Net cash provided by (used for) operations                    871        (405)

Cash flows from investing activities:
  Purchase of equipment                                        (8)        (83)
                                                           ------      ------
Net cash used for investments and acquisitions                 (8)        (83)

Cash flows from financing activities:
  Increase in borrowings from line of credit                   --         776
  Payments on long-term debt                                 (121)       (187)
                                                           ------      ------
Net cash provided by (used for) financing activities         (121)        589
                                                           ------      ------

Net increase in cash and cash equivalents                     742         101

Cash and cash equivalents at beginning of period            1,806         941
                                                           ------      ------

Cash and cash equivalents at end of period                 $2,548      $1,042
                                                           ------      ------
                                                           ------      ------

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

                                       5
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                             INNOSERV TECHNOLOGIES, INC.
                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                    JULY 31, 1997
                                     (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 ended July 31, 1997 and 1996,
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 regulation.  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 three months ended July 31, 1997, are not necessarily
indicative of the results that may be expected for the year ending April 30,
1998.

2.  INTEREST EXPENSE, NET

    Interest expense is net of interest income of $16,000 and $15,000 for the
periods ended July 31, 1997 and 1996, respectively.

3.  SUPPLEMENTAL CASH FLOW DISCLOSURE

    Interest and income taxes paid in the three months ended July 31, 1997 and
1996 were as follows:

                                         Three Months Ended
                                               July 31,
                                       ----------------------
                                         1997           1996
                                       -------        -------
         Interest                      $25,000        $36,000
         Income taxes                   $4,000        $13,000

4.  EARNINGS PER SHARE

    Earnings per share amounts are computed based upon the weighted average
shares of common stock and common stock equivalents outstanding during each
period.  Outstanding stock

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options are included as common stock equivalents using the treasury stock
method.  If the computation of fully diluted earnings per share is
anti-dilutive, only primary earnings per share amounts are presented.

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

RESULTS OF OPERATIONS

FIRST QUARTER FISCAL 1998 COMPARED TO FIRST QUARTER FISCAL 1997

    Consolidated revenues for the first quarter of fiscal 1998 were 
$9,144,000 as compared to $11,788,000 in the same period of fiscal 1997, a 
decline of $2,644,000, or 22%.  The decline in revenues is partially 
attributable to a decrease of approximately $1,700,000 resulting from the 
disposition of substantially all of the revenue producing assets of Advanced 
Imaging Technologies (AIT), a wholly owned subsidiary of InnoServ on March 
17, 1997. Revenues from computerized tomography ("CT") maintenance service 
agreements decreased approximately $700,000 primarily as a result of the 
continued decline in the number and average contract amount of CT maintenance 
service agreements in effect as older equipment is being upgraded or removed 
from service by customers and InnoServ's decision to not renew certain CT 
maintenance agreements in unprofitable locations.  Additionally, revenues 
from equipment sales declined approximately $600,000 due to the nature of 
equipment sales which are provided on an as needed basis to InnoServ's 
customers.  Asset Management and multi-vendor services and mobile diagnostic 
imaging operations increased approximately $150,000 compared with the same 
period of fiscal 1997.  In addition, after taking into effect the disposal of 
AIT, sale of spare parts increased by approximately $250,000.

    Cost of operations decreased $2,422,000 from the same period in the prior
fiscal year.  Gross profit as a percentage of revenues increased to 17% in the
first quarter of fiscal 1998 as compared to gross profit of 15% in the prior
year's first quarter.  The increase in gross profit as a percentage of revenues
is the result of spare parts sales which no longer include AIT's lower spare
parts sales margins, offset by a decline in service revenue margins primarily
attributed to the disposition of AIT which had higher service margins.

    Selling and administrative expenses decreased $470,000, or 25%, from the
prior year primarily as a result of reductions in InnoServ's administrative
functions resulting primarily from the disposal of AIT and lower bad debt and
selling expenses. Depreciation and amortization expenses decreased $117,000 from
the same period in the prior fiscal year primarily due to the completed
depreciation of 6 mobile CT scanners and the sale of assets of AIT during
fiscal 1997.

    The loss before income taxes for the first quarter of fiscal 1998 was
$252,000 as compared to a $627,000 loss in the first quarter of fiscal 1997.
This loss was primarily the result of unfavorable operating margins associated
with InnoServ's services under CT maintenance agreements.  Because InnoServ
employs field service engineers over a wide geographic area, the current level
of revenues are not sufficient in certain locations to cover the direct and
indirect costs of providing maintenance

                                     7
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and repair services.  InnoServ continues to manage its service operations and
overhead to more cost effectively provide the services required by its
customers and to discontinue service in selected locations upon the expiration
of the existing maintenance agreements in those locations.  InnoServ believes
these actions, coupled with strategic changes in the operations of the CT and
Asset Management business and planned increased revenues, will improve
InnoServ's operations during fiscal 1998.

    InnoServ did not recognize a tax benefit from the operating loss for the
first quarter of fiscal 1998.  Under Statement of Financial Accounting Standard
No. 109 ("SFAS 109"), "Accounting for Income Taxes," net operating losses enter
into the calculation of deferred tax assets and liabilities.  At July 31, 1997,
InnoServ had a net deferred tax asset, primarily as a result of net operating
losses.  In accordance with SFAS 109, InnoServ recorded a valuation allowance
for the full amount of the net deferred tax asset.  The ultimate realization of
the net deferred tax asset depends on the ability of InnoServ to generate
sufficient taxable income in the future.  While InnoServ believes the net
deferred tax asset will be substantially realized by future operating results,
due to the cumulative losses incurred in recent years the deferred tax assets do
not currently meet the criteria for recognition under SFAS 109.

LIQUIDITY AND CAPITAL RESOURCES

    At July 31, 1997, InnoServ had working capital of $952,000, of which
$2,548,000 was in cash and cash equivalents.  Operations provided $871,000 of
cash for the three month period ended July 31, 1997, primarily as a result of
reductions of outstanding accounts receivable and prepaid expenses, and a net
increase in accounts payable and accrued liabilities.  These cash increases were
offset by an increase in spare parts and tube inventory and a reduction in
deferred revenue as services were provided in the period for which payment had
been received in a prior period.

    InnoServ's allowance for doubtful accounts at July 31, 1997, was $846,000,
or 23% of gross accounts receivable.  InnoServ's customers include hospitals,
physician practices, outpatient clinics and entrepreneurial operations.  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 changes occurring in the
healthcare industry, primarily the move to managed care, which has weakened
healthcare providers' ability to pay their debts and have forced some 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 July 31, 1997) plus 1% per annum with monthly
principal installments of $54,000 plus interest required through January 8,
1999.  Obligations under the loan agreement are secured by a security interest
in InnoServ's accounts receivable, inventory and 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, with which InnoServ was in compliance at July 31, 1997.

                                     8
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    InnoServ does not foresee the need to make significant amounts of capital
purchases in the next twelve months and believes sufficient funds will be
available from its operations to meet its working capital requirements.  Should
cash flows from operations not be sufficient to meet all of InnoServ's cash
requirements, InnoServ would attempt to obtain a line of credit to provide the
necessary funds.

CAUTIONARY STATEMENT

    The statements in this Management's Discussion and Analysis and elsewhere
in this report that are forward looking are based on current expectations which
involve numerous risks and uncertainties. InnoServ's future results of
operations and financial condition may differ materially due to many factors
including InnoServ's ability to attract and retain Asset Management contracts,
competitive and regulatory conditions in the healthcare industry generally, and
other factors, many of which are beyond the control of InnoServ.




                                     9

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PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

    InnoServ is party to a lawsuit filed on April 12, 1995 in Superior Court in
the County of Riverside, California by two former employees who have claimed
wrongful termination in retaliation for filing a claim with the U.S. Department
of Labor.  The plaintiffs have sought damages in the amount of approximately
$1,000,000 in the aggregate.  Near the end of July 1997, one of the plaintiffs
accepted an offer of compromise made by InnoServ for significantly less than the
damages sought by such plaintiff.  InnoServ funded this settlement in early
September 1997.  The amount of the settlement was accrued in a previous period
and did not impact the earnings of the quarter ended July 31, 1997.  InnoServ
continues to vigorously defend itself against the other plaintiff and believes
the ultimate liability related to this matter will not exceed amounts currently
accrued in the financial statements.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

    In April 1997 InnoServ converted its prior revolving line of credit and
term loan agreement into a new term loan aggregating $1,198,000.  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 InnoServ's accounts receivable, inventory
and equipment.

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 12.

    (b)  Reports on Form 8-K:

    During the three months ended July 31, 1997, no reports were filed by the
Registrant on Form 8-K.

                                     10
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                                 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:  September 15, 1997

                                       INNOSERV TECHNOLOGIES, INC.

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


                                     11
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                                  INDEX TO EXHIBITS

    Exhibit
      No.                       Description of Exhibit

     10.1     Loan agreement dated as of April 14, 1997 in the principal amount
              of $1,197,573.00 payable by the Registrant to Overton Bank &
              Trust, NA (1)

     11.1     Computation of Per Share Earnings.

     27.1     Financial Data Schedule.

(1) Previously filed as exhibit 10.40 to the Registrant's Annual Report on
    Form 10-K for the year ended April 30, 1997 and incorporated herein by
    reference.


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