<PAGE>
 
                                   FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


             (X)  QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                 FOR THE QUARTER PERIOD ENDED JANUARY 31, 1997
                                              ----------------

                                       OR

       ( )     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934
                                        
          For the transition period from                to 
                                         --------------    ---------------

                            Commission File Number 
                                    0-14003
                             ---------------------



                         ROTECH  MEDICAL  CORPORATION
                          -----------------------------
             (Exact name of Registrant as specified on its Charter)
 
 
        Florida                                          59-2115892
---------------------------                -------------------------------------
(State of jurisdiction of                      (I.R.S. Employer Identification
 incorporation or                                            No.)
 organization)
 
4506 L.B. McLeod Road, Suite F, Orlando, Florida           32811
-------------------------------------------------------------------------------
(Address of principal executive offices)                 (Zip Code)

 
Registrant's telephone number, including area code:    (407) 841-2115
-------------------------------------------------------------------------------

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 and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES   X    NO
   ------    ------

Indicate the number of shares outstanding of each class of issuer's classes of
common stock as of  March 10, 1997: 25,860,783
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Index
                                                                      PAGE 
                                                                      ---- 
Part I.           Financial Information                        

Item 1.           Financial Statements                         

                  Condensed Consolidated Balance                           
                  Sheets,  Interim at January 31,                          
                  1997 and Year End at July 31, 1996                     1 
                                                                           
                                                                           
                  Condensed Consolidated Interim                           
                  Statements of Income for the                             
                  Three Months and Six Months Ended                        
                  January 31, 1997 and 1996                              2 
                                                                           
                                                                           
                  Condensed Consolidated Interim                           
                  Statements of Shareholders'                              
                  Equity for the Six Months Ended                          
                  January 31, 1997 and 1996                              3 
                                                                           
                                                                           
                  Condensed Consolidated Interim                           
                  Statements of Cash Flows for the                         
                  Six Months Ended January 31, 1997                        
                  and 1996                                               4 
                                                                           
                                                                           
                  Notes to Condensed Consolidated                        5 
                  Interim Financial Statements                             

Item 2.           Management's Discussion and                                
                  Analysis of Financial Condition                            
                  and Results of Operations                             10   
                                                                             
                                                                             
Part II.          Other Information                                     13   

Signature                                                               14   

<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Condensed Consolidated Balance Sheets
<TABLE> 
<CAPTION> 

                                                          January 31       July 31
                                                            1997             1996
                                                        -----------------------------
<S>                                                     <C>             <C> 
                     ASSETS                              (Unaudited)
Current Assets:
    Cash                                                $  3,440,224    $ 6,438,760

    Accounts Receivable:
      Trade, less allowance for
      contractual adjustments and                         98,010,717     83,486,610
      doubtful accounts
 
      Other                                                3,758,427      3,468,193
    Inventories                                           17,996,518     15,191,011
    Income taxes receivable                                               3,883,830
                                                        ------------   ------------
      Total Current Assets                               123,205,886    112,468,404
 
Property and equipment, less accumulated depreciation    102,019,542     85,414,544
Intangible assets, less accumulated amortization         227,148,828    168,101,082
Other assets                                               5,062,353      8,630,288
                                                        ------------   ------------
                                                        $457,436,609   $374,614,318
                                                        ============   ============
 
       LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
     Accounts payable, accrued                      
      expenses and other liabilities                    $ 20,268,854   $ 24,330,808
     Notes payable to banks                              116,954,675     52,055,008
     Deferred income taxes                                   105,799         75,299
                                                         -----------   ------------
       Total Current Liabilities                         137,329,328     76,461,115
 
Deferred Income Taxes                                     15,303,218     11,831,155
 
Convertible Subordinated Debentures                      110,000,000    110,000,000
 
Redeemable Common Stock                                    3,148,878      1,646,933
 
Shareholders' equity:
    Common Stock, par value $.0002
      per share, 50,000,000
      shares authorized, 23,624,666                              
      shares in 1997 and
      23,303,586 in 1996 issued and
      outstanding                                              4,733         4,669
 
    Treasury stock, at cost                                 (814,535)      (814,535)
    Additional paid-in capital                           126,110,490    122,757,377
    Retained earnings                                     66,354,497     52,727,604
                                                        ------------   ------------
                                                         191,655,185    174,675,115
                                                        ------------   ------------
                                                        $457,436,609   $374,614,318
                                                        ============   ============

</TABLE> 
 
Note: The consolidated balance sheet at July 31, 1996 has been condensed from
      the audited financial statements at that date.

See notes to condensed consolidated interim financial statements.


<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Condensed Consolidated Interim Statements of Income
<TABLE>
<CAPTION>
 
                                                           Three Months Ended           Six Months Ended
                                                         January 31    January 31    January 31    January 31
                                                           1997          1996          1997          1996
                                                        -------------------------------------------------------
                                                                  (Unaudited)            (Unaudited)
<S>                                                     <C>            <C>          <C>           <C> 
Operating revenue                                       $97,835,317   $61,463,199  $188,142,800  $106,582,378
 
Cost and expenses:
    Cost of revenue                                      26,308,334    16,782,626    50,612,933    29,030,503
    Selling, general and administrative                  46,367,256    30,091,030    90,678,739    51,739,877
                                                        -----------   -----------  ------------  ------------
 
 
Income before interest, taxes, 
  depreciation and amortization                          25,159,727    14,589,543    46,851,128    25,811,998
                                                        -----------   -----------  ------------  ------------
    Depreciation and amortization                        10,307,198     5,864,991    19,316,714     9,762,514
    Interest                                              3,135,106       895,758     5,565,018     1,336,721
                                                        -----------   -----------  ------------  ------------
 
Income before income taxes                               11,717,423     7,828,794    21,969,396    14,712,763
 
Income tax expense                                        4,442,003     2,897,599     8,342,503     5,458,435
                                                        -----------   -----------  ------------  ------------
 
    Net income                                          $ 7,275,420   $ 4,931,195  $ 13,626,893  $  9,254,328
                                                        ===========   ===========  ============  ============
Net Income per Share:
    Primary                                                   $0.28         $0.20         $0.52  $       0.38
    Fully diluted                                             $0.27         $0.20         $0.51  $       0.37
 
Weighted Average Number
 of Shares Outstanding:
    Primary                                              26,432,054    24,488,814    25,989,312    24,445,104
    Fully diluted                                        30,944,238    25,204,005    30,496,314    24,793,020
                                        

See notes to condensed consolidated interim financial statements.
</TABLE>

                                       2
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Condensed Consolidated Interim Statements of Shareholders' Equity
<TABLE>
<CAPTION>
 
                                                                      
                                              Common Stock                    Additional             
                                        -----------------------   Treasury      Paid-In       Retained 
                                             Shares     Amount     Stock        Capital       Earnings
                                        ---------------------------------------------------------------
                                                                    (Unaudited)
<S>                                       <C>          <C>       <C>        <C>            <C>    
Balance, August 1, 1995                   22,843,642   $4,586   $(814,535)  $118,029,198   $32,439,271
 
Issuance of Common Stock in acquisition
 of subsidiaries                             239,848       48                  2,441,273
 
 
Issuance of Common Stock pursuant
 to Employee Stock
 Compensation Plan                            28,060        6                    198,618
 
Net income for the six months
 ended January 31, 1996                                                                      9,254,328
                                          ----------    ------  ---------   ------------   -----------

Balance, January 31, 1996                 23,111,550    $4,640  $(814,535)  $120,669,089   $41,693,599
                                          ==========    ======  =========   ============   ===========
 
 
 
 
Balance, August 1, 1996                   23,303,586    $4,669  $(814,535)  $122,757,377   $52,727,604
 
Issuance of Common Stock in
   acquisition of subsidiaries               261,407        52                 3,041,488
 
Issuance of Common Stock pursuant
   to exercise of stock options               50,000        10                   182,280
 
 
Issuance of Common Stock pursuant to
   Employee Stock
   Compensation plan                           9,673         2                   129,345
 
 
Net income for the six months ended
   January 31, 1997                                                                         13,626,893
                                          ----------    ------  ---------   ------------   -----------
                                    
Balance, January 31, 1997                 23,624,666    $4,733  $(814,535)  $126,110,490   $66,354,497
                                          ==========    ======  =========   ============   ===========
 
</TABLE>


See notes to condensed consolidated interim financial statements.

                                      3
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Condensed Consolidated Interim Statements of Cash Flows
<TABLE>
<CAPTION>
 
                                                                             SIX MONTHS ENDED
                                                                JANUARY 31                     JANUARY 31
                                                                    1997                           1996
                                                              ----------------------------------------------
                                                                                (Unaudited0
<S>                                                            <C>                            <C>    

Net Cash Provided by Operating Activities                      $ 13,934,013                   $  6,389,754
 
Investing Activities
    Purchases of property and equipment                         (21,742,726)                   (11,915,906)
    Advances and deposits                                          (140,719)                    (1,236,080)
    Payments for acquisition of net assets and
     assumption of liabilities, net of cash                                                   
     acquired                                                   (60,174,398)                   (80,486,888)
 
                                                               ------------                   ------------
        Net Cash Used in Investing Activities                   (82,057,843)                   (93,638,874)
       
Financing Activities
    Net proceeds from long-term debt and notes   
     payable                                                     64,899,667                     90,219,176
    Proceeds from issuance of Common Stock                          225,627
                                                               ------------                   ------------
        Net Cash Provided by Financing Activities                65,125,294                     90,219,176
                                                               ------------                   ------------
 
 
     Increase (Decrease) in Cash                               (  2,998,536)                     2,970,056
     Cash at Beginning of Period                                  6,438,760                        577,283
                                                               ------------                   ------------
     Cash at End of Period                                     $  3,440,224                   $  3,547,339
                                                               ============                   ============
 
 
</TABLE>


See notes to condensed consolidated interim financial staetments.

                                       4
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)

Note A - Basis of Reporting

The condensed consolidated interim balance sheet as of January 31, 1997 and the
condensed consolidated interim statements of income, shareholders' equity and
cash flows for the three months and six months ended January 31, 1997 and 1996
are unaudited.  In the opinion of management, these statements have been
prepared on the same basis as the audited consolidated financial statements and
include all adjustments, consisting only of normal recurring accruals, necessary
for the fair statement of the results of the interim periods.

Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted.  These condensed consolidated financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's consolidated audited financial statements as
of and for the year ended July 31, 1996.  The results of operations for the
interim period are not necessarily indicative of the results which may be
expected for an entire year.

Note B - Shareholders' Equity

On May 21, 1996, the Company distributed a 100% common stock dividend to
shareholders of record as of April 30, 1996 to effect a 2-for-1 stock split.
Shareholders' equity has been restated to give retroactive recognition to the
stock split for all periods presented by reclassifying from additional paid in
capital to common stock the par value of the additional shares arising from the
split.  In addition, for all periods presented, all references in the
consolidated financial statements and footnotes thereto to number of shares, per
share amounts, weighted average shares outstanding, as well as stock option and
related price information have been restated to give retroactive effect to the
split.

During the six months ended January 31, 1997, the Company issued 261,407 shares
of its Common Stock as partial consideration for the purchase of several home
health care companies.  The Company holds 1,850,322 shares in escrow related to
acquisitions as contingent shares to be released upon the development of future
events, with such measurement dates from March 1,1997 to December 31, 1998.

During the six months ended January 31, 1997, options were granted to certain
employees for the purchase of 360,000 shares of Common Stock at prices ranging
from $13.875 to $18.00 per share subject to the terms stated in the Company's
Stock Option Plans.

Note C - Subsequent Events

During the period from February 1, 1997 through February 28, 1997, the Company
completed the acquisitions of the net assets or stock of 16 companies in 14
states, using a combination of $21,684,000 cash and 85,692 shares of its Common
Stock.

                                       5
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Notes to Condensed Consolidated Interim Financial Statements-Continued
(UNAUDITED)

NOTE D - Pro Forma Condensed Combined Statements of Income - Continued
<TABLE>
<CAPTION>
 
                                                                                 FOR THE YEAR ENDED JULY 31, 1996
                                                                   --------------------------------------------------------------
                                                                                         (UNAUDITED)
                                                                                                                   ROTECH MEDICAL 
                                                                       ROTECH                                       CORPORATION   
                                                                       MEDICAL      COMBINED                          COMBINED    
                                                                    CORPORATION     ACQUIRED     PRO FORMA           PRO FORMA    
                                                                    CONSOLIDATED    ENTITIES    ADJUSTMENTS           RESULTS      
                                                                    -------------  -----------  -----------         -------------
<S>                                                                  <C>           <C>          <C>                <C>
Operating revenue                                                    $263,029,963  $57,353,260                       $320,383,223
Cost and expenses:
     Cost of revenue                                                   71,012,877   17,662,310                         88,675,187
     Selling, general and administrative                              127,357,013   28,985,366                        156,342,379
                                                                     ------------  -----------                       ------------
Income before interest, taxes,
      depreciation and amortization                                    64,660,073   10,705,584                         75,365,657
                                                                     ------------  -----------  -----------          ------------
     Depreciation and amortization                                     26,519,480    2,052,468    3,485,762   (a)      32,057,710
     Interest                                                           5,228,318      597,123    4,959,014   (b)      10,784,455
                                                                     ------------  -----------  -----------          ------------
 
Income before income taxes                                             32,912,275    8,055,993   (8,444,776)           32,523,492
Income tax expense                                                     12,356,500       96,239     (256,430)  (c)      12,196,309
                                                                     ------------  -----------  -----------          ------------
 
          Net income                                                 $ 20,555,775  $ 7,959,754  $(8,188,346)         $ 20,327,183
                                                                     ============  ===========  ===========          ============
 
 
Net income per share:
     Primary                                                         $       0.83                                    $       0.81
     Fully diluted                                                   $       0.82                                    $       0.79
Weighted average number of shares
     Outstanding:
     Primary                                                           24,657,000                   391,686   (d)      25,048,686
     Fully diluted                                                     25,206,000                   391,686   (d)      25,597,686
</TABLE>

                                                    6
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
------------------------------------------------------------------------------
Notes to Condensed Consolidated Interim Financial Statements-Continued
(Unaudited)

Note D - Pro Forma Condensed Combined Statements of Income - Continued
<TABLE>
<CAPTION>
 
                                                    FOR THE SIX MONTHS ENDED JANUARY 31, 1997
                                       --------------------------------------------------------------------------
                                                                   (UNAUDITED)
                                                                                                   ROTECH
                                                                                                   MEDICAL
                                          ROTECH                                                 CORPORATION
                                          MEDICAL              COMBINED                            COMBINED
                                        CORPORATION            ACQUIRED           PRO FORMA        PRO FORMA
                                        CONSOLIDATED           ENTITIES          ADJUSTMENTS       RESULTS
                                     -------------------------------------------------------------------------

<S>                                    <C>                  <C>                  <C>            <C>
Operating revenue                       $188,142,800          $13,689,584                         $201,832,384

Cost and expenses:                                 0
     Cost of revenue                      50,612,933            3,808,356                           54,421,289
     Selling, general and                 
      administrative                      90,678,739            7,121,629                           97,800,368
                                        ------------          -----------                         ------------
Earnings before interest, taxes,   
  depreciation and amortization           46,851,128            2,759,599                           49,610,727
                                        ------------          -----------                         ------------
     Depreciation and amortization        19,316,714              532,822        888,354   (a)      20,737,890
     Interest                              5,565,018              115,419      1,264,374   (b)       6,944,811
                                        ------------           ----------     ----------           -----------
Income before income taxes                21,969,396            2,111,358     (2,152,728)           21,928,026
Income tax expense                         8,342,503                9,718       (129,211)  (c)       8,223,010
                                        ------------           ----------     ----------           -----------
          Net income                    $ 13,626,893          $ 2,101,640    ($2,023,517)         $ 13,705,016
                                        ============          ===========    ===========          ============

Net income per share:
     Primary                                   $0.52                                                     $0.52
     Fully diluted                             $0.51                                                     $0.51

Weighted average number of shares
      outstanding:
     Primary                              25,989,312                             391,686   (d)      26,380,998
     Fully diluted                        30,496,314                             391,686   (d)      30,888,000

</TABLE>

                                              7

<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIAIRES
-----------------------------------------------------------------------------
Notes to condensed Consolidated Interim Fiancial Statements
(Unaudited)-Continued



Note D - Pro Forma Condensed Combined Statements of Income-continued

  The pro forma condensed combined statement of income for the year ended July
31, 1996 has been prepared to illustrate the estimated combined effects of the
various Agreements of Purchase and Sale (Agreements) upon RoTech Medical
Corporation (the Company) for those acquisition transactions consummated between
August 1, 1996 and February 28, 1997. The pro forma condensed combined statement
of income was derived by adjusting the historical statement for the year ended
July 31, 1996 of the Company and the unaudited historical statements of income
for the most recent fiscal year end of the unaudited acquired entities.

  The pro forma condensed combined interim statement of income for the six
months ended January 31, 1997 was derived by adjusting the unaudited interim
historical statement of income for the six months ended January 31, 1997 of
the Company and the unaudited interim historical statements of income of the
acquired entities for the period prior to their respective inclusion in the
unaudited interim historical statement of income of the Company for the six
months ended January 31, 1997. The entities acquired prior to January 31, 1997
are included in the Company's balance sheet as of January 31, 1997. 

  The operations of any entities acquired subsequent to January 31, 1997 are not
included in the Company's historical interim statement of income as presented
herein. The net assets of any entities acquired subsequent to January 31, 1997
are not included in the Company's balance sheet as of January 31, 1997.
 
  The pro forma condensed combined statements of income were prepared as if the
purchases and sales had occurred on the first day of the respective periods
presented. The pro forma condensed combined statements of income presented are
not necessarily indicative of the results of operations that might have occurred
had such transactions been completed as of the date specified or of the results
of operations of the Company and its subsidiaries for any future period.
 
  No changes in operating revenue and expenses have been made to reflect the
results of any modification to operations that might have been made had the
Agreements been consummated on the aforesaid assumed effective date for purposes
of presenting pro forma results. The proforma condensed combined statements of
income include amortization of goodwill as if the Agreements had been completed
on the assumed effective date referred to above.
 
  The pro forma condensed combined statements of income should be read in
conjunction with the audited consolidated financial statements and related notes
thereto.


(a) Amortization on intangibles recorded in the combined acquisitions (amortized
    over various lives from 5 to 25 years).

(b) Additional interest expense related to borrowings for cash paid to acquire
    combined entities; assumed borrowed on the first day of the respective
    periods presented.

                                       8

<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
Notes to Condensed Consolidated Interim Financial Statements
(Unaudited)--Continued


Note D - Pro Forma Condensed Combined Statements of Income - Continued

(c)  Adjustment to income tax expense for the tax expense relating to the net
     income as adjusted for the combined acquired entities. Income taxes are
     calculated on the basis that operations of the consolidated company could
     be combined as one company for federal income tax purposes at the actual
     historical rate for the period.

(d)  Additional shares of the Company's Common Stock issued pursuant to the
     Agreements; assumed issued on the first day of the respective periods
     presented.

                                      9
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of 
Operations
 

Results of Operations
For the Three Months and Six Months Ended
January 31, 1997 and 1996
 
  Operating revenue increased 59% to $97,835,000 for the three months ended
January 31, 1997 from $61,463,000 for the three months ended January 31, 1996.
Operating revenue increased 77% to $188,143,000 for the six months ended January
31, 1997 from $106,582,000 for the six months ended January 31, 1996. The
increase in operating revenue is attributable to acquisitions and expanded
product and service lines in existing areas of operation. The Company employs a
single sales force to maintain and develop both the home respiratory and other
medical equipment and home infusion therapy and other pharmacy related lines of
business.
 
  Operating revenue from home respiratory therapy and equipment increased
101% to $90,309,000 for the six months ended January 31, 1997 from $45,021,000
for the six months ended January 31, 1996. Operating revenue from home medical
equipment increased 60% to $54,561,000 for the six months ended January 31, 1997
from $34,102,000 for the six months ended January 31, 1996. These increases were
due mainly to increases in patient bases throughout the Company's locations and
increased marketing efforts in certain locations acquired during the fiscal year
1996 and the first six months of fiscal year 1997.
 
  Operating revenue from home infusion therapy and other pharmacy-related
products and services increased 78% to $31,984,000 for the six months ended
January 31, 1997 from $18,069,000 for the six months ended January 31, 1996.
Growth in this line of business should continue as the Company expands both its
service areas and available products and services in different geographic
regions.
 
  Operating revenue from physician practices represented 6% of total operating
revenue for the six month period ended January 31, 1997 and 8.5% for the six
month period ended January 31, 1996. The Company currently owns 25 physician
practices and employs 29 primary care physicians. These practices are clustered
in two rural marketplaces. Growth in this line of business should continue as
the Company continues to acquire primary care practices in these two geographic
regions.
                                     10
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of 
Operations (Continued)

  Cost of revenue as a percentage of operating revenue remained relatively
stable at 27% for the three months and the six months ended January 31, 1997 and
January 31, 1996. Selling, general and administrative expenses as a percentage
of operating revenue declined to 48.2% for the six months ended January 31, 1997
from 48.5% for the six months ended January 31, 1996 due to the Company's
internal growth pace. Changes in the Company's mix of business also affect these
categories; for example, physician practices have no cost of revenue as all
expenses are of a selling, general and administrative nature.
 
  Depreciation and amortization expense increased 76% to $10,307,000 for the
three months ended January 31, 1997 from $5,865,000 for the three months ended
January 31, 1996. Depreciation and amortization expense increased 98% to
$19,317,000 for the six months ended January 31, 1997 from $9,763,000 for the
six months ended January 31, 1996. Depreciation and amortization expense as a
percentage of revenue was 10.3% for the six months ended January 31, 1997
compared to 9.2% for the six months ended January 31, 1996. The increase was
attributable to growth in the Company's patient bases, expansion of rental-based
product lines and the Company's significant acquisition activities resulting in
depreciable and intangible assets.
 
  Interest expense, net of interest income, increased to $3,135,000 for the
three months ended January 31, 1997 from $896,000 for the three months ended
January 31, 1996. Net interest expense increased to $5,565,000 for the six
months ended January 31, 1997 from $1,337,000 for the six months ended January
31, 1996. This increase resulted from the Company borrowing monies to fund its
acquisition and expansion activities and the debt service on the convertible
subordinated debentures.
 
  Income tax expense was provided at a 38% effective rate, comparable to actual
rates experienced in prior periods. Net income for the six months ended January
31, 1997 was $13,627,000, a 47% increase over the same period in fiscal 1996.
Net income per share on a fully diluted basis increased 38% to $0.51 for the six
months ended January 31, 1997 compared to $0.37 for the six months ended January
31, 1996. The weighted average number of shares on a fully diluted basis
increased 23% to 30,496,000 at January 31, 1997 from 24,793,000 at January 31,
1996, primarily as a result of the dilutive effect of Company's May 1996 public
debt offering in which it issued convertible subordinated debentures. The
Company issued 261,000 shares of its Common Stock in conjunction with
acquisitions in the six months ended January 31, 1997.
 
Liquidity and Capital Resources
 
  At January 31, 1997, total current assets were $123,206,000 and total current
liabilities were $137,329,000, resulting in negative working capital of
$14,123,000. The Company's current ratio of 1.47 to 1 at July 31, 1996 has
decreased, as short term borrowings from banks have increased to $116,955,000
from $52,055,000. The Company has long term debt of $110,000,000 in seven year
term 5.25% convertible subordinated debentures and utilized $60,174,000 in
proceeds from its borrowings from banks to fund acquisitions in the six months
ended January 31, 1997, which consist of primarily long term assets.
 
                                      11
 
<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
Management's Discussion and Analysis of Financial Condition and Results of 
Operations


  Net trade accounts receivable increased 17% to $98,011,000 from $83,487,000 at
July 31, 1996 due to acquisitions and the Company's growth in operating revenue.
As a result, the Company's days revenue outstanding on net accounts receivable
remained stable at 92 at January 31, 1997 and July 31, 1996. Acquired
receivables remaining outstanding account for approximately 13 days revenue
outstanding at January 31, 1997 and 16 days revenue outstanding at July 31,
1996.

  During the six months ended January 31, 1997, the Company generated cash of
$13,934,000 from operating activities, primarily as a result of net income
of $13,627,000, the increase in accounts receivable and the timing of purchases
of and payments for operating items. As of January 31, 1997, the Company had
borrowed $116,955,000 on its working capital line of credit of $200,000,000 to
fund certain acquisitions. Management believes the Company's credit capacity is
sufficient to support the projected growth of the Company.

                                      12
<PAGE>
 
Part II.    Other Information
--------    -----------------
 
 
            Item 1.            Legal proceedings
                               NOT APPLICABLE

            Item 2.            Changes in securities
                               NOT APPLICABLE
 
            Item 3.            Defaults upon senior securities
                               NOT APPLICABLE
 
            Item 4.            Submission of matters to a vote
                               of security holders
 
                               The annual meeting of shareholders was held on
                               December 9, 1996. William P. Kennedy, Stephen P.
                               Griggs, William A. Walker II, Leonard E. Williams
                               and Jack T. Weaver were elected as directors.

                               A proposal to amend the Company's Articles of
                               Incorporation was rejected by a vote of 7,758,997
                               against, 6,987,397 for, 109,453 abstaining and
                               2,199,572 broker no vote.

            Item 5.            Other information
                               NOT APPLICABLE

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<PAGE>
 
ROTECH MEDICAL CORPORATION AND SUBSIDIARIES
-----------------------------------------------------------------------------
Signature



  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.


                             ROTECH MEDICAL CORPORATION
                               a Florida Corporation

 
 
Dated:    March 17, 1997                By:  /s/  Rebecca R. Irish
        ------------------                 --------------------------------
                                           Rebecca R. Irish, Treasurer
                                           and Chief Financial Officer


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