<PAGE>   1
 
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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 QUARTERLY PERIOD ENDED JUNE 30, 1998
 
                                       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 1-11343
 
                             -------------------------
 
                            CORAM HEALTHCARE CORPORATION
               (Exact name of registrant as specified in its charter)
 
<TABLE>
<S>                                            <C>
                   DELAWARE                                      33-0615337
       (State or other jurisdiction of                        (I.R.S. Employer
        incorporation or organization)                      Identification No.)
           1125 SEVENTEENTH STREET                                 80202
                  SUITE 2100                                     (Zip Code)
                  DENVER, CO
   (Address of principal executive offices)
</TABLE>
 
       Registrant's telephone number, including area code: (303) 292-4973
 
                             ---------------------
 
     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes  [X]  No  [ ]
 
     The number of shares outstanding of the Registrant's Common Stock, $.001
par value, as of August 11, 1998, was 48,887,107.
 
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<PAGE>   2
 
                                     PART I
 
                             FINANCIAL INFORMATION
 
ITEM 1. FINANCIAL STATEMENTS
 
                          CORAM HEALTHCARE CORPORATION
 
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                               JUNE 30,     DECEMBER 31,
                                                                 1998           1997
                                                              -----------   ------------
                                                              (UNAUDITED)
<S>                                                           <C>           <C>
Current assets:
  Cash and cash equivalents.................................   $   2,116     $ 108,950
  Cash limited as to use....................................       1,789         1,029
  Accounts receivable, net of allowance of $17,743 and
     $24,047................................................      93,429        86,142
  Inventories...............................................      19,130        14,277
  Other current assets......................................      11,583        12,587
                                                               ---------     ---------
          Total current assets..............................     128,047       222,985
Property and equipment, net.................................      20,203        20,050
Other assets................................................      24,989        22,253
Other deferred costs........................................         796         7,668
Goodwill, net of accumulated amortization of $63,480 and
  $57,937...................................................     239,227       243,864
                                                               ---------     ---------
          Total assets......................................   $ 413,262     $ 516,820
                                                               =========     =========
 
                          LIABILITIES AND STOCKHOLDERS' EQUITY
 
Current liabilities:
  Accounts payable..........................................   $  25,633     $  39,084
  Current maturities of long-term debt......................         598       150,225
  Other current liabilities.................................      48,998        45,296
                                                               ---------     ---------
          Total current liabilities.........................      75,229       234,605
Long-term debt, including revolving lines of credit.........     238,511       150,428
Minority interest in consolidated joint ventures............       2,021         1,016
Other liabilities...........................................       2,343         1,588
Deferred income taxes, non-current..........................       4,157         4,157
Stockholders' equity:
  Preferred stock, par value $.001, authorized 10,000
     shares, none issued....................................          --            --
  Common stock, par value $.001, authorized 100,000 shares
     at June 30, 1998 and December 31, 1997, issued and
     outstanding 48,887 at June 30, 1998 and 48,069 at
     December 31, 1997......................................          49            48
  Additional paid-in capital................................     423,234       437,608
  Accumulated deficit.......................................    (332,282)     (312,630)
                                                               ---------     ---------
          Total stockholders' equity........................      91,001       125,026
                                                               ---------     ---------
          Total liabilities and stockholders' equity........   $ 413,262     $ 516,820
                                                               =========     =========
</TABLE>
 
                            See accompanying notes.
 
                                        2
<PAGE>   3
 
                          CORAM HEALTHCARE CORPORATION
 
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                  (IN THOUSANDS, EXCEPT PER COMMON SHARE DATA)
 
<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED      SIX MONTHS ENDED
                                                         JUNE 30,               JUNE 30,
                                                   --------------------   --------------------
                                                     1998       1997        1998       1997
                                                   --------   ---------   --------   ---------
<S>                                                <C>        <C>         <C>        <C>
Net revenue......................................  $117,173   $ 120,379   $224,862   $ 244,294
Cost of service..................................    87,882      85,304    168,382     169,229
                                                   --------   ---------   --------   ---------
Gross profit.....................................    29,291      35,075     56,480      75,065
Operating expenses:
  Selling, general and administrative expenses...    21,625      22,826     42,698      46,478
  Provision for estimated uncollectible
     accounts....................................     3,577       4,104      7,243       8,392
  Amortization of goodwill.......................     2,778       3,597      5,543       7,209
  Income from litigation settlement..............        --    (156,792)        --    (156,792)
                                                   --------   ---------   --------   ---------
          Total operating expense................    27,980    (126,265)    55,484     (94,713)
                                                   --------   ---------   --------   ---------
Operating income.................................     1,311     161,340        996     169,778
Other income (expense):
  Interest income................................       218         425        662         610
  Interest expense...............................    (6,083)    (18,230)   (20,258)    (39,726)
  Termination fee................................        --      15,182         --      15,182
  Other income, net..............................       728         632      1,061       1,094
                                                   --------   ---------   --------   ---------
Income (loss) before income taxes and minority
  interests......................................    (3,826)    159,349    (17,539)    146,938
  Income tax expense.............................       400         201      1,400         250
  Minority interests in net income of
     consolidated joint ventures.................       302       2,377        713       4,505
                                                   --------   ---------   --------   ---------
Net income (loss)................................  $ (4,528)  $ 156,771   $(19,652)  $ 142,183
                                                   ========   =========   ========   =========
Earnings (loss) per common share.................  $  (0.09)  $    3.29   $  (0.40)  $    3.03
                                                   ========   =========   ========   =========
Earnings (loss) per common share -- assuming
  dilution.......................................  $  (0.09)  $    2.99   $  (0.40)  $    2.73
                                                   ========   =========   ========   =========
</TABLE>
 
                            See accompanying notes.
 
                                        3
<PAGE>   4
 
                          CORAM HEALTHCARE CORPORATION
 
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (UNAUDITED)
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                SIX MONTHS ENDED
                                                                    JUNE 30,
                                                              --------------------
                                                                1998        1997
                                                              ---------   --------
<S>                                                           <C>         <C>
Net cash (used in) provided by operating activities.........  $ (22,087)  $ 22,976
Cash flows from investing activities:
  Purchases of property and equipment.......................     (3,911)    (7,822)
  Other.....................................................       (620)      (540)
                                                              ---------   --------
          Net cash used in investing activities.............     (4,531)    (8,362)
                                                              ---------   --------
Cash flows from financing activities:
  Sales of stock, including exercise of stock options.......         10        384
  Repayment of debt.........................................    (80,226)   (23,697)
                                                              ---------   --------
          Net cash used in financing activities.............    (80,216)   (23,313)
                                                              ---------   --------
  Net decrease in cash and cash equivalents.................  $(106,834)  $ (8,699)
                                                              =========   ========
</TABLE>
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 
     Depreciation and amortization for the three and six months ended June 30,
1998 and 1997 was as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED    SIX MONTHS ENDED
                                                              JUNE 30,             JUNE 30,
                                                         ------------------    -----------------
                                                          1998       1997       1998      1997
                                                         -------   --------    -------   -------
<S>                                                      <C>       <C>         <C>       <C>
Depreciation...........................................  $2,936    $ 3,075     $ 5,936   $ 6,522
Amortization of goodwill...............................   2,778      3,597       5,543     7,209
Financing costs (included in interest expense).........      40      5,249       4,998    14,588
                                                         ------    -------     -------   -------
          Total........................................  $5,754    $11,921     $16,477   $28,319
                                                         ======    =======     =======   =======
</TABLE>
 
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS:
 
     During the six months ended June 30, 1997, non-cash activity included
cancellation of the Company's Junior Subordinated PIK Notes totaling $120.0
million as a result of the litigation settlement with Caremark. See Note 2.
 
                            See accompanying notes.
 
                                        4
<PAGE>   5
 
                          CORAM HEALTHCARE CORPORATION
 
         NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1998
 
1. BASIS OF PRESENTATION
 
     Business Activity. Coram Healthcare Corporation and its subsidiaries
("Coram" or the "Company") are primarily engaged in providing alternate site
(outside the hospital) infusion therapy and related services throughout the
United States. In addition, the Company provides services through one branch in
the province of Ontario, Canada. Other services offered by the Company include
mail-order pharmacy, pharmacy benefit management, ancillary network management
services and other non-intravenous infusion products and services.
 
     Basis of Presentation. The accompanying unaudited condensed consolidated
financial statements have been prepared by the Company pursuant to the rules and
regulations of the Securities and Exchange Commission. 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 regulations. The unaudited condensed consolidated
financial statements reflect all adjustments and disclosures that are, in the
opinion of management, necessary for a fair presentation. All such adjustments
are of a normal recurring nature. Certain amounts in the 1997 financial
statements have been reclassified to conform to the 1998 presentation.
Management does not believe the effect of such reclassifications are material.
The results of operations for the interim period ended June 30, 1998, are not
necessarily indicative of the results of the full fiscal year. For further
information, refer to the audited consolidated financial statements and notes
thereto included in the Company's Annual Report on Form 10-K, as amended, for
the year ended December 31, 1997.
 
     Provision for Estimated Uncollectible Accounts. Management believes the net
carrying amount of accounts receivable is fairly stated and that the Company has
made adequate provision for uncollectible accounts based on all information
available. However, no assurance can be given as to the level of future
provisions for uncollectible accounts, or how they will compare to the levels
experienced in the past.
 
     Earnings per Share. In 1997, the Financial Accounting Standards Board
issued Statement No. 128, Earnings per Share ("Statement 128"). Statement 128
replaced the calculation of 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 fully
diluted earnings per share under the previous earnings per share methodology.
Earnings per share amounts for all periods have been presented and, where
appropriate, restated to conform to
 
                                        5
<PAGE>   6
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
the Statement 128 requirements. The following table sets forth the computation
of basic and diluted earnings per share for the three and six months ended June
30, 1998 and 1997 (in thousands, except per share data)
 
<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED                SIX MONTHS ENDED
                                            -----------------------------    -----------------------------
                                            JUNE 30, 1998   JUNE 30, 1997    JUNE 30, 1998   JUNE 30, 1997
                                            -------------   -------------    -------------   -------------
<S>                                         <C>             <C>              <C>             <C>
Numerator for basic earnings per share....     $(4,528)       $156,771         $(19,652)       $142,183
                                               =======        ========         ========        ========
Denominator:
  Weighted average shares.................      48,818          44,181           48,651          43,539
Contingently issuable shares..............          --           3,500               --           3,436
                                               -------        --------         --------        --------
  Denominator for basic earnings per
     share................................      48,818          47,681           48,651          46,975
Effect of other dilutive securities:
  Stock options...........................          --              --               --             319
  Warrants................................          --           4,790               --           4,729
                                               -------        --------         --------        --------
  Denominator for diluted earnings per
     share -- adjusted weighted average
     shares and assumed conversion........      48,818          52,471           48,651          52,023
                                               =======        ========         ========        ========
Earnings (loss) per common share..........     $ (0.09)       $   3.29         $  (0.40)       $   3.03
                                               =======        ========         ========        ========
Earnings (loss) per common
  share -- assuming dilution..............     $ (0.09)       $   2.99         $  (0.40)       $   2.73
                                               =======        ========         ========        ========
</TABLE>
 
     In the three months and six months ended June 30, 1998 and 1997, basic
earnings per share data was computed by dividing net income or loss by the
weighted average number of common shares and contingently issuable shares
outstanding during the period. In 1998, diluted earnings per share computations
do not give effect to stock options, warrants to purchase common stock or
convertible securities, as their effect would have been anti-dilutive. In 1997,
diluted earnings per share is adjusted for the dilutive effect of stock options
and warrants to purchase common stock.
 
     Segment Reporting. Effective January 1, 1998, the Company adopted the
Financial Accounting Standards Board's Statement of Financial Accounting
Standards No. 131, Disclosures about Segments of an Enterprise and Related
Information ("Statement 131"). Statement 131 superseded FASB Statement No. 14,
Financial Reporting for Segments of a Business Enterprise. Statement 131
establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements and requires
that those enterprises report selected information about operating segments in
interim financial reports. Statement 131 also establishes standards for related
disclosures about products and services, geographic areas and major customers.
Statement 131 does not require the disclosure of segment information in the
interim statements in the initial year of adoption. However, if applicable,
comparative information for 1998 interim periods shall be reported in financial
statements for interim periods in 1999.
 
2. CAREMARK LITIGATION SETTLEMENT
 
     In June 1997, the Company entered into a $165.0 million litigation
settlement for litigation arising out of the purchase of certain assets of the
home infusion business (the "Caremark Business") of Caremark, Inc., a wholly
owned subsidiary of Caremark International, Inc. ("Caremark") in 1995. Under the
terms of the settlement, the Junior Subordinated PIK Notes totaling
approximately $100.0 million principal and $20.0 million accrued interest
(payable semiannually in PIK Notes of the same type) were cancelled with all
payments thereunder forgiven. Additionally, Caremark agreed to pay $45.0 million
in cash to the Company, which was received September 2, 1997. Of the $45.0
million cash received, $3.6 million was placed in escrow pending
 
                                        6
<PAGE>   7
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
reconciliation of certain lockbox issues, which were settled at a nominal gain
in June 1998. Additionally, as part of the settlement, Caremark assigned and
transferred to Coram all of Caremark's claims and causes of action against
Caremark's auditors, Price Waterhouse LLP, related to the lawsuit. In June 1997,
the Company recorded settlement income of $156.8 million, which represents the
$165.0 million settlement less related costs of $8.2 million.
 
3. SALE OF LITHOTRIPSY BUSINESS
 
     On August 20, 1997, the Company signed an agreement with Integrated Health
Services, Inc. ("IHS") for the sale of the Company's interest in its thirteen
lithotripsy partnerships, the stock of its equipment service company and certain
related assets (the "Lithotripsy Business"). Effective September 30, 1997, the
Company completed the transaction as to all of its Lithotripsy Business other
than its interests in three lithotripsy partnerships. Pursuant to a side
agreement amending the August 20, 1997 purchase agreement, the Company's
interests in the three remaining partnerships were placed in escrow pending the
satisfaction of certain conditions. Following satisfaction of these conditions,
two of the partnerships were conveyed to IHS effective October 3, 1997. Due to
the Company's and IHS's inability to obtain the consent of the other partner to
the transfer of Coram's interest therein, the Company's interest in the
remaining partnership was returned to the Company.
 
     Effective June 1, 1998, the Company signed an agreement with IHS for the
sale of the Company's remaining lithotripsy partnership for an aggregate
purchase price of $1.0 million payable in common stock of IHS. Accordingly, the
Company recorded a gain on the sale of business of $0.7 million in the quarter
ended June 30, 1998.
 
4. TERMINATED MERGER WITH IHS
 
     On October 19, 1996, the Company, IHS and IHS Acquisition XIX, Inc., a
wholly owned subsidiary of IHS ("Merger Sub") entered into a merger agreement
providing for the merger of Merger Sub with and into the Company. If the merger
had been consummated, the Company would have become a wholly-owned subsidiary of
IHS.
 
     On March 30, 1997, Coram, IHS and Merger Sub executed an amendment to the
merger agreement, which was to become effective April 4, 1997. On April 4, 1997,
the Company received from IHS a written notice of termination of the amendment
and the merger agreement. Pursuant to the terms of the merger agreement and as a
result of such termination, IHS paid the Company $21.0 million on May 6, 1997.
Accordingly, in the second quarter of 1997, the Company recorded other income of
$15.2 million, representing the $21.0 million termination fee less legal,
professional and other costs related to the terminated merger of $5.8 million.
 
5. ACQUISITIONS AND RESTRUCTURING
 
     Certain agreements related to previously acquired businesses or interests
therein provide for additional contingent consideration to be paid by the
Company. The amount of additional consideration, if any, is generally based on
the financial performance of the acquired companies. The Company may be required
to pay approximately $2.3 million, subject to increase, based on the Company or
its subsidiaries exceeding certain revenue or income targets and changes in the
market value of the Company's stock. Subject to certain elections by the Company
or the sellers of such acquired entities, a maximum of approximately $1.4
million of these contingent obligations, subject to increase, may be paid in
cash with the remaining to be paid in shares of common stock of the Company. If
these contingent payments are made, they will be recorded as additional goodwill
in the period in which the payment becomes probable.
 
                                        7
<PAGE>   8
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
     Merger and Restructuring. As a result of the formation of Coram in 1994 and
the acquisition of the Caremark Business in 1995, the Company initiated the
Coram Consolidation Plan and the Caremark Business Consolidation Plan. These
plans were initiated in order to reduce operating costs, improve productivity
and gain efficiencies through consolidation of redundant infusion centers and
corporate offices, reduction of personnel, and elimination or discontinuance of
investments in certain joint ventures and other non-infusion facilities.
 
     The Company continually evaluates the accruals and estimated costs to
complete such consolidation plans and may continue to adjust amounts recorded as
contingencies related to lease buyouts, contractual obligations and other
facility reductions. Under the two plans, the Company has made total payments
and asset disposals through June 30, 1998 as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                                                    BALANCE AT
                                            CHARGES THROUGH JUNE 30, 1998         JUNE 30, 1998
                                          ---------------------------------   ----------------------
                                              CASH       NON-CASH             FUTURE CASH     TOTAL
                                          EXPENDITURES   CHARGES     TOTAL    EXPENDITURES   CHARGES
                                          ------------   --------   -------   ------------   -------
<S>                                       <C>            <C>        <C>       <C>            <C>
Coram Consolidation Plan:
  Merger Costs..........................    $27,700      $   600    $28,300      $  200      $28,500
                                            =======      =======    =======      ======      =======
  Personnel Reduction Costs.............    $20,300      $   600    $20,900      $  300      $21,200
  Facility Reduction Costs..............     12,000       21,500     33,500         100       33,600
  Discontinuance Costs..................      1,900       29,400     31,300         400       31,700
                                            -------      -------    -------      ------      -------
          Total Restructuring Costs.....    $34,200      $51,500    $85,700      $  800      $86,500
                                            =======      =======    =======      ======      =======
Caremark Business Consolidation Plan:
  Personnel Reduction Costs.............    $11,300      $    --    $11,300      $   --      $11,300
  Facility Reduction Costs..............      9,050        3,900     12,950       3,750       16,700
                                            -------      -------    -------      ------      -------
          Total Restructuring Costs.....    $20,350      $ 3,900    $24,250      $3,750      $28,000
                                            =======      =======    =======      ======      =======
</TABLE>
 
     The balance in the "Accrued Merger and Restructuring" liability at June 30,
1998 consists of future cash expenditures of $4.8 million reflected in the above
table and $2.9 million of other accruals. The Company currently estimates that
the future cash expenditures related to both the Coram and Caremark Business
Consolidation Plans will be made in the following periods: 25% through June 30,
1999, 5% through June 30, 2000, 15% through June 30, 2001, and 55% through June
30, 2002, and thereafter. The Company believes it has adequate reserves as of
June 30, 1998, to meet future expenditures related to the Coram Consolidation
Plan and the Caremark Business Consolidation Plan. However, there is no
assurance that the reserves will be adequate or that the Company will generate
sufficient working capital to meet future expenditures.
 
                                        8
<PAGE>   9
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
6. LONG-TERM DEBT
 
     Long-term debt is as follows (in thousands):
 
<TABLE>
<CAPTION>
                                                              JUNE 30,   DECEMBER 31,
                                                                1998         1997
                                                              --------   ------------
<S>                                                           <C>        <C>
Former Senior Credit Facility...............................  $     --    $  80,000
Rollover Note, including accrued interest...................        --      219,241
Series A Senior Subordinated Unsecured Notes................   150,000           --
Series B Senior Subordinated Convertible Notes..............    87,922           --
Other obligations, including capital leases, at interest
  rates ranging from 6% to 16%, collateralized by certain
  property and equipment....................................     1,187        1,412
                                                              --------    ---------
                                                               239,109      300,653
Less current scheduled maturities...........................      (598)    (150,225)
                                                              --------    ---------
                                                              $238,511    $ 150,428
                                                              ========    =========
</TABLE>
 
     As of December 31, 1997, the Company's principal credit and debt agreements
consisted of arrangements that were entered into on April 6, 1995 at the time of
the acquisition of the Caremark Business. At December 31, 1997, these agreements
included (i) borrowings under a Credit Agreement with Chase Manhattan Bank
(formerly Chemical Bank) as Agent (the "Former Senior Credit Facility") and (ii)
a subordinated rollover note (the "Rollover Note").
 
     In January 1998, the Company repaid in full all principal, interest and
related fees totaling approximately $80.1 million due under the Former Senior
Credit Facility and terminated such facility. Interest on the Former Senior
Credit Facility was based on margins over certain domestic and foreign indices
and was 8.94% upon repayment. Additionally, in 1995 warrants were issued to the
Company's lenders under the Former Senior Credit Facility valued at
approximately $8.0 million, their value at the date of issuance, and were
accounted for as interest expense through June 1997. Accordingly, the Company
charged approximately $1.7 million to interest expense during the six months
ended June 30, 1997 in relation to these warrants.
 
     Through April 13, 1998, the Rollover Note carried an interest rate that was
based on various indices plus a margin that increased by 0.25% quarterly and was
16.75% upon cancellation effective as of such date. During the three and six
months ended June 30, 1998, an additional $1.4 million and $10.3 million,
respectively, was accrued on the Rollover Note. In addition, as long as the
Rollover Note was outstanding, the holders had the right to receive warrants to
purchase up to 20% of the outstanding shares of the common stock of the Company
(the "Warrants") on a fully diluted basis. The Warrants were accounted for as
interest expense and additional paid-in capital. Accordingly, the Company
recorded interest expense related to the Warrants of $3.2 million in the three
and six months ended June 30, 1998.
 
     On May 6, 1998, the Company entered into a Securities Exchange Agreement
(the "Securities Exchange Agreement") with the holders of its Rollover Note,
Cerberus Partners, L.P., Goldman Sachs Credit Partners L.P. and Foothill Capital
Corporation (collectively the "Holders"). The Securities Exchange Agreement
provides for the cancellation of the Rollover Note (including deferred interest
and fees) and the Warrants in an exchange (the "Exchange"), effective April 13,
1998, for the payment of $4.3 million in cash and the issuance by the Company to
the Holders of (i) $150.0 million in principal amount Series A Senior
Subordinated Unsecured Notes (the "Series A Notes") and (ii) $87.9 million in
original principal amount of 8% Series B Senior Subordinated Convertible Notes
(the "Series B Notes"). In addition, under the Securities Exchange Agreement,
the Holders of the Series A and Series B Notes were given the right to approve
certain new debt and the right to name one director to the Company's Board of
Directors, who was elected to the board in June 1998. The Securities Exchange
Agreement in which the Series A Notes and the Series B Notes
 
                                        9
<PAGE>   10
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
were issued contains certain other customary covenants and events of default. At
June 30, 1998, the Company was in compliance with all of these covenants.
 
     The consummation of the Exchange was contingent upon the satisfaction of
certain conditions prior to closing of the Securities and Exchange Agreement on
June 30, 1998. All conditions were satisfied with the exception of the condition
requiring the Company to execute an agreement for a new senior credit facility.
Accordingly, on June 30, 1998 the Company entered into the First Amendment and
Waiver (the "Amendment") to the Securities Exchange Agreement, and the Exchange
was consummated. The Amendment waived the condition under the Securities
Exchange Agreement requiring the Company to execute an agreement for a new
senior credit facility on or prior to June 30, 1998. In addition, under the
Amendment, the Holders of the Series A and Series B Notes have agreed to extend
the Company up to $60.0 million of senior secured debt (the "New Senior Credit
Facility") subject to the completion of definitive agreements on or prior to
September 30, 1998. Under the proposed New Senior Credit Facility, currently
under negotiation, the Company would pay an upfront fee of 1.0% payable upon
execution, the outstanding indebtedness will bear interest at prime plus 1.5%
and have a final maturity of 2 1/2 years from closing. In addition, under the
proposed New Senior Credit Facility, subject to customary anti-dilution
adjustments, the Company would issue warrants to purchase up to 1.9 million
shares of common stock of the Company that would bear a $0.01 exercise price.
 
     The Series A Notes mature on the later of October 2000 or 90 days after the
maturity date of the New Senior Credit Facility to be obtained by the Company.
The Series A Notes bear interest at the rate of 9.875% (subject to adjustment to
a maximum of 11.125% on September 30, 1998 or March 31, 1999 if certain
performance standards are not achieved) per annum, payable quarterly in arrears
in cash or through the issuance of additional Series A Notes at the election of
the Company. The Holders can require the Company to pay interest in cash if the
Company exceeds a certain interest coverage ratio. During the three months and
six months ended June 30, 1998, interest expense on the Series A Notes was $3.2
million. On July 15, 1998, Series A Notes totaling $3.8 million were issued in
lieu of cash payment of interest due through such date.
 
     The Series B Notes mature April 2008 and bear interest at the rate of 8%
per annum, payable quarterly in arrears in cash or through the issuance of
additional Series B Notes at the election of the Company. During the three
months and six months ended June 30, 1998, interest expense on the Series B
Notes was $1.5 million. Pursuant to a letter agreement dated July 15, 1998
between the Company and the Holders of the Series B Notes, interest due through
July 15, 1998 of $1.8 million was deferred to the earlier of (i) the completion
and funding of the New Senior Credit Facility or (ii) August 15, 1998 and will
accrue interest at a rate of 8% from such date through the date of payment. The
Series B Notes are convertible into shares of the Company's common stock at a
conversion price (the "Conversion Price") initially equal to $3.00 per share,
subject to downward reset to the prevailing market prices (calculated based on
the average of the closing prices for each of the preceding 20 days) on each of
April 13, 1999 and October 13, 1999. The Conversion Price will also be subject
to customary anti-dilution adjustments, including adjustments for sale of common
stock (other than pursuant to existing obligations or employee benefit plans) at
a price below the Conversion Price prevailing at the time of such sale. Cash
will be paid in lieu of fractional shares upon conversion of the Series B Notes.
 
     The Series A and Series B Notes are redeemable, in whole or in part, at the
option of the Holders thereof in connection with any change of control of the
Company (as defined in the Securities Exchange Agreement), if the Company ceases
to hold and control certain interests in its significant subsidiaries, or upon
the acquisition of the Company or certain of its subsidiaries by a third party.
In such instances, the Series A and Series B Notes are redeemable at 103% of the
then outstanding principal amount plus accrued interest. The Series B Notes are
also redeemable at the option of the Holders thereof upon maturity of the Series
A Notes
 
                                       10
<PAGE>   11
                          CORAM HEALTHCARE CORPORATION
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
 
at the outstanding principal amount thereof plus accrued interest. In addition,
the Series A Notes are callable at 103% of the then outstanding principal amount
plus accrued interest at the option of the Company.
 
     In July 1998, the Company issued secured promissory notes (the "Promissory
Notes") in the aggregate principal amount of $6.0 million to the Holders of the
Series A and B Notes. The Promissory Notes will mature August 20, 1998 and bear
interest at a rate of 12% per annum, payable in cash on the maturity date of the
Promissory Notes. The Promissory Notes are collateralized by certain accounts
receivable of the Company and certain of its subsidiaries.
 
7. LITIGATION
 
     The Company is a party to certain litigation that could, if their outcomes
were unfavorable, have a material adverse effect on the Company's financial
position, results of operations or liquidity. The Company intends to vigorously
defend itself in these matters. Nevertheless, due to the uncertainties inherent
in litigation, the ultimate disposition of these matters cannot be presently
determined. For a discussion of certain legal proceedings to which the Company
is a party, see Part I -- Item 3. "Legal Proceedings" contained in the Company's
Annual Report on Form 10-K, as amended, for the year ended December 31, 1997.
 
     The Company is also a party to various other legal actions arising out of
the normal course of its business. Management believes that the ultimate
resolution of such other actions will not have a material adverse effect on the
Company's financial position, results of operations or liquidity of the Company.
Nevertheless, due to the uncertainties inherent in litigation, the ultimate
disposition of these actions cannot presently be determined.
 
8. INCOME TAXES
 
     The effective income tax rates for the three months and six months ended
June 30, 1998 and 1997 differ substantially from the expected combined federal
and state income tax rates calculated using applicable statutory rates as a
result of fully valuing the deferred tax assets.
 
     As of June 30, 1998, deferred tax assets are net of a $118.7 million
valuation allowance. Realization of deferred tax assets is dependent upon the
ability of the Company to generate taxable income in the future. Deferred taxes
relate primarily to temporary differences consisting, in part, of accrued
restructuring costs, the charge for goodwill and other long-lived assets,
allowances for doubtful accounts that are not deductible for income tax purposes
until paid or realized and to net operating loss carry-forwards that are
deductible against future taxable income.
 
                                       11
<PAGE>   12
 
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS
 
     This Quarterly Report on Form 10-Q contains certain forward-looking
statements (as such term is defined in the private Securities Litigation Reform
Act of 1995) and information relating to Coram that are based on the beliefs of
the management of Coram as well as assumptions made by and information currently
available to the management of Coram. When used in this Report, the words
"estimate," "project," "believe," "anticipate," "intend," "expect" and similar
expressions are intended to identify forward-looking statements. Such statements
reflect the current views of Coram with respect to future events and are subject
to risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements. The risk factors set
forth in the Company's Annual Report on Form 10-K, as amended, constitute
important cautionary statements identifying important factors that could cause
actual results to differ from those in such forward-looking statements. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. Coram does not undertake any obligation
to release publicly any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
 
BACKGROUND
 
     Business Strategy. The Company's business strategy is focused on the basic
factors that could lead to profitability: revenue generation programs, cost
reduction, quality improvement and cash collections. The Company continues to
focus on business relationships where it can provide high quality of care and
operate profitably. The Company is continuing to emphasize marketing efforts
aimed at improving its therapy mix and physician relationships and also has
continued the development of its specialty programs such as provider network
development and management for managed care payors, disease-state carve-outs
(i.e., vertical integration along disease-specific categories), transplant
programs, mail order prescription and pharmacy benefit management services and
women's health programs. Cost reduction efforts have focused on reduction of
corporate expenses, assessment of poorly performing branches and a review of
branch efficiencies. Delivery of quality service is being monitored through an
internal task force, more rigorous reporting and independent patient
satisfaction surveys gathered throughout the year. Further, management continues
to concentrate on reimbursement through an emphasis on improving billing and
cash collections and continued assessment of systems support for reimbursement.
While management believes the implementation of its business strategy has
improved operating performance, no assurances can be given as to its ultimate
success.
 
     The settlement of the litigation with Caremark (the "Caremark Litigation"),
completion of the sale of the Company's Lithotripsy Business and the termination
of the Company's proposed merger with IHS, permit management of the Company to
focus on operations and strategic alternatives to enable the Company to realize
its potential in the changing market for alternate site infusion therapy
services.
 
     Five Year Capitated Agreement with Aetna U.S. Healthcare, Inc. In April
1998, the Company entered into a five year capitated agreement with Aetna U.S.
Healthcare, Inc. ("Aetna USHC") for the management and provision of certain home
health services, including home infusion, home nursing, respiratory therapy,
durable medical equipment, hospice care and home nursing support for several of
Aetna USHC's disease management programs. Effective July 1, 1998, the Company
began earning capitated payments on a monthly basis for covered members, assumed
certain financial risk for certain home health services and began providing
certain management services for a network of home health providers through its
Resource Network Division. The Company's network of participating providers
includes certain subsidiaries of the Company and it serves certain persons
enrolled in Aetna USHC's HMO-based plans in the eight state area covered under
the agreement who are presently not committed to other networks. As of July 1,
1998 the number of members covered under the agreement in such plans totaled
approximately 2.2 million lives. The Company expects the operation of this
agreement to have an impact on the Company beginning in the third quarter of
1998. Based on information available, the Company estimates future annual
revenues of approximately $80.0 million. Ultimately, profitability under this
agreement will depend on the level of utilization of services and the cost of
service to the Company. While the Company anticipated profitability under this
agreement based on the information available to it at the time of entering into
this agreement, initial levels of calls for services are higher than
anticipated. No assurance can be given that actual experience will result in the
realization of profitability under this agreement. See also "Liquidity and
Capital Resources."
 
                                       12
<PAGE>   13
 
     Debt Restructuring and Refinancing. At December 31, 1997, the Company had
two principal long-term debt instruments, the Former Senior Credit Facility and
the Rollover Note and related Warrants, the combined outstanding balance of
which was approximately $300.7 million. In January 1998, the Company repaid in
full all amounts due under the Former Senior Credit Facility, and the Former
Senior Credit Facility was terminated. In addition, pursuant to the Securities
Exchange Agreement, effective April 1998, the remainder of the Company's
long-term debt was restructured. As a result, the Company experienced a
reduction in interest expense of approximately $9.0 million and $12.7 million,
respectively, during the three months and six months ended June 30, 1998
compared to 1997.
 
     On May 6, 1998, the Company entered into the Securities Exchange Agreement
with the Holders of the Rollover Note. Under the terms of the Securities
Exchange Agreement, the Rollover Note and the Warrants were cancelled in
exchange for the payment of $4.3 million in cash and the issuance by the Company
to the Holders of (i) $150.0 million in Series A Notes and (ii) $87.9 million in
Series B Notes. The consummation of the Exchange was contingent upon the
satisfaction of certain conditions prior to closing of the Securities and
Exchange Agreement on June 30, 1998. All conditions were satisfied with the
exception of the condition requiring the Company to execute an agreement for a
new senior credit facility. Accordingly, on June 30, 1998 the Exchange was
consummated and the Company entered into the First Amendment and Waiver to the
Securities Exchange Agreement. Based on Rollover Note interest rates ranging
from approximately 16.50% to 17.25%, the Exchange placed the Company in the
position to reduce its annual interest expense related to this debt by
approximately $17.0 million (not including interest on amounts deferred or on
additional Series A and B Notes issued in lieu of cash interest payments).
 
     The Amendment waived the condition under the Securities Exchange Agreement
requiring the Company to execute an agreement for a new senior credit facility
on or prior to June 30, 1998. In addition, under the Amendment, the Holders of
the Series A and Series B Notes have agreed to extend the Company up to $60.0
million of senior secured debt subject to the completion of definitive
agreements on or prior to September 30, 1998. Under the proposed New Senior
Credit Facility, currently under negotiation, the Company would pay an upfront
fee of 1.0% payable upon execution, the outstanding indebtedness will bear
interest at prime plus 1.5% and have a final maturity of 2 1/2 years from
closing. In addition, under the proposed New Senior Credit Facility, subject to
customary anti-dilution adjustments, the Company would issue warrants to
purchase up to 1.9 million shares of common stock of the Company that would bear
a $0.01 exercise price. There can be no assurance that the Company will be able
to secure the New Senior Credit Facility or that it will be able to do so on
commercially acceptable terms. See Note 6 of the Notes to Unaudited Condensed
Consolidated Financial Statements.
 
     In July 1998, the Company issued Promissory Notes in the aggregate
principal amount of $6.0 million to the Holders of the Series A and B Notes. The
Promissory Notes will mature August 20, 1998 and bear interest at a rate of 12%
per annum, payable in cash on the maturity date of the Promissory Notes. In
addition the Promissory Notes are collateralized by certain accounts receivable
of the Company and certain of its subsidiaries.
 
     Strategic Alternatives. Future strategic alternatives currently being
considered by the Company include, among others, the pursuit of opportunities in
its core alternate site infusion therapy business, including consolidation with
or acquisition of other companies in its core business or in businesses
complimentary to the Company's core business. The Company is evaluating
potential acquisitions in markets that permit the Company to grow its local or
regional business either through its core infusion therapy business or through
complementary alternate site services such as mail order pharmacy, pharmacy
benefit management, respiratory therapy and durable medical equipment.
Completion of the debt restructuring, combined with the addition of the New
Senior Credit Facility, will allow the Company to make a series of strategic
acquisitions. The first of these acquisitions was completed effective June 30,
1998 with the acquisition of HealthQuest Infusions, LLC ("HealthQuest") for a
total purchase price of $2.5 million. HealthQuest is a home infusion therapy
company with operations in Idaho, Montana and Wyoming, whose annualized revenues
average approximately $2.0 million. There can be no assurance that any further
acquisitions or other strategic alternatives will be consummated or will be
available to the Company on commercially acceptable terms.
 
                                       13
<PAGE>   14
 
     Factors Affecting Recent Operating Results. The most significant factors
affecting the Company's recent operating performance and financial condition are
as follows:
 
          (i) settlement of the Caremark Litigation for $165.0 million in 1997.
     Through 1995 and 1996, the Company suffered a loss of revenues from
     under-performance of the Caremark Business compared to original
     expectations, a negative impact on revenue referral sources and employee
     morale throughout the Company. In addition, the Company incurred
     substantial indebtedness to acquire the Caremark Business, which it
     expected to service primarily through the operating income and cash flow of
     the Caremark Business. With the settlement of the litigation, the Company
     is now focused on its operations to realize its potential in the changing
     market for alternate site infusion therapy services;
 
          (ii) sale of substantially all of the company's interest in its
     Lithotripsy Business in the third quarter of 1997 with the remaining
     interest sold in the second quarter of 1998, allowing the Company to
     significantly reduce its debt obligations and its contingent liabilities
     associated with the Company's former commitments to its partners in the
     Lithotripsy Business thereby further improving its financial position;
 
          (iii) distractions in its revenue generation programs in the first
     half of 1997 during the pendency of the proposed merger with IHS which was
     terminated April 4, 1997;
 
          (iv) ongoing pricing pressure in the Company's core infusion business
     as a result of a continuing shift in payor mix from private indemnity
     insurance to managed care and governmental payors and intense competition
     among infusion providers;
 
     The following table sets forth the approximate percentages of the Company's
     net revenue attributable to private indemnity insurance and other payors,
     managed care organizations and Medicare and Medicaid programs
     ("governmental payors") for the three months ended June 30, 1998, March 31,
     1998, and June 30, 1997:
 
<TABLE>
<CAPTION>
                                                                 THREE MONTHS ENDED
                                                           -------------------------------
                                                           JUNE 30,   MARCH 31,   JUNE 30,
                                                             1998       1998        1997
                                                           --------   ---------   --------
<S>                                                        <C>        <C>         <C>
Private Indemnity Insurance and Other Payors.............     27%         27%        28%
Managed Care Organizations...............................     47%         47%        44%
Medicare and Medicaid Programs...........................     26%         26%        28%
                                                             ---         ---        ---
          Total..........................................    100%        100%       100%
                                                             ===         ===        ===
</TABLE>
 
          (v) technological advances in the development of new medical
     treatments for complex diseases that reduce the need for certain infusion
     therapy services provided by the Company. For example, oral drugs such as
     protease inhibitors have assisted persons living with HIV and AIDS to
     remain healthier longer. Since the second quarter of 1996, the Company's
     revenue has been negatively impacted by the transition of HIV multiple
     therapy patients from intravenous therapy to oral medications; and
 
          (vi) increased competition from hospitals and physicians who have
     sought to increase the scope of services they offer through their
     facilities and offices, including services similar to those offered by the
     Company, or who have entered into risk bearing relationships with
     third-party payors pursuant to which they have been delegated control over
     the provision of a wide variety of healthcare services, including the
     services offered by the Company.
 
     Management believes that the Company's financial position and its standing
within the home healthcare industry improved in the year ended December 31,
1997, and continued to improve through the six months ended June 30, 1998
primarily through the stabilization of relationships with payors and referral
sources. Additionally, management believes that its focus on its operations and
strategic alternatives will further improve the financial position of the
Company in future periods. However, there can be no assurance that the
improvement will continue or that certain factors noted above would not have an
adverse effect on the financial position, results of operations and liquidity of
the Company.
 
                                       14
<PAGE>   15
 
                             RESULTS OF OPERATIONS
 
CERTAIN QUARTERLY COMPARISONS (UNAUDITED; IN THOUSANDS EXCEPT PER SHARE DATA):
 
<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED,
                                                              --------------------------------
                                                              JUNE 30,   MARCH 31,   JUNE 30,
                                                                1998       1998        1997
                                                              --------   ---------   ---------
<S>                                                           <C>        <C>         <C>
Net revenue.................................................  $117,173   $107,689    $ 120,379
Cost of service.............................................    87,882     80,500       85,304
                                                              --------   --------    ---------
Gross profit................................................    29,291     27,189       35,075
Operating expenses:
  Selling, general and administrative expenses..............    21,625     21,073       22,826
  Provision for estimated uncollectible accounts............     3,577      3,666        4,104
  Amortization of goodwill..................................     2,778      2,765        3,597
  Income from litigation settlement.........................        --         --     (156,792)
                                                              --------   --------    ---------
          Total operating expense...........................    27,980     27,504     (126,265)
                                                              --------   --------    ---------
Operating income (loss).....................................     1,311       (315)     161,340
Other income (expense):
  Interest expense..........................................    (6,083)   (14,175)     (18,230)
  Termination fee...........................................        --         --       15,182
  Other income, net.........................................       946        777        1,057
                                                              --------   --------    ---------
Income (loss) before income taxes and minority interests....    (3,826)   (13,713)     159,349
  Income tax expense........................................       400      1,000          201
  Minority interests in net income of consolidated joint
     ventures...............................................       302        411        2,377
                                                              --------   --------    ---------
Net income (loss)...........................................  $ (4,528)  $(15,124)   $ 156,771
                                                              ========   ========    =========
Earnings (loss) per common share............................  $  (0.09)  $  (0.31)   $    3.29
                                                              ========   ========    =========
Earnings (loss) per common share-- assuming dilution........  $  (0.09)  $  (0.31)   $    2.99
                                                              ========   ========    =========
</TABLE>
 
  THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED MARCH 31,
1998
 
     Net Revenue. Net revenue increased $9.5 million from $107.7 million in the
quarter ended March 31, 1998 compared to $117.2 million in the quarter ended
June 30, 1998. The improvement is due primarily to a favorable shift in
reimbursement resulting from an increase in the provision of certain therapies
as a result of the Company's focus on its revenue generation programs and
quality of service. See "Business Strategy" and "Factors Affecting Recent
Operating Results." In addition the Company's mail order pharmacy, pharmacy
benefit management services and ancillary network management services generated
an increase in net revenue of $3.5 million from $15.0 million in the quarter
ended March 31, 1998 to $18.5 million in the quarter ended June 30, 1998, as a
result of the expansion of services and improved sales efforts.
 
     Gross Profit. Gross profit increased $2.1 million from $27.2 million in the
quarter ended March 31, 1998 to $29.3 million in the quarter ended June 30, 1998
while gross margin remained constant at 25.0% in the quarter ended June 30,
1998. Therefore, the improvement is due primarily to the increase of $9.5
million in net revenue described above.
 
     Operating Income (Loss). The Company recorded operating income of $1.3
million during the three months ended June 30, 1998 compared to an operating
loss of $0.3 million during the three months ended March 31, 1998. The
improvement is due primarily to the increase in net revenue described above.
 
     Interest Expense. Interest expense decreased by $8.1 million or 57.1%, from
$14.2 million in the quarter ended March 31, 1998 to $6.1 million in the quarter
ended June 30, 1998. The decline is due primarily to a decrease in interest
expense of $6.1 million resulting from the completion of the Exchange
contemplated by the Securities Exchange Agreement. Additionally, interest
expense decreased $2.0 million as a result of the payment and termination of the
Former Senior Credit Facility in January 1998. See also "Debt Restructuring and
Refinancing" and Note 6 to the Unaudited Condensed Consolidated Financial
Statements.
 
                                       15
<PAGE>   16
 
     Net Loss. Net loss for the quarter ended June 30, 1998 is $4.5 million
compared to a net loss of $15.1 million for the quarter ended March 31, 1998. As
discussed above, the improvement of $10.6 million can be attributed primarily to
the $2.1 million improvement in gross profit and the $8.1 million decrease in
interest expense.
 
  THREE MONTHS ENDED JUNE 30, 1998 COMPARED WITH THREE MONTHS ENDED JUNE 30,
1997
 
     As previously discussed in "Factors Affecting Recent Operating Results,"
the Company sold substantially all its Lithotripsy Business in 1997, while
retaining its interest in one lithotripsy partnership until it was sold
effective June 1, 1998. During the quarters ended June 30, 1998 and 1997, the
Lithotripsy Business provided the following to the Company's operations (in
millions):
 
<TABLE>
<CAPTION>
                                                          THREE MONTHS
                                                         ENDED JUNE 30,
                                                         --------------
                                                         1998     1997
                                                         -----   ------
<S>                                                      <C>     <C>
Net revenue............................................  $0.2    $12.0
Gross profit...........................................   0.1      7.6
Operating income.......................................   0.1      6.1
</TABLE>
 
     Net Revenue. Net revenue decreased $3.2 million or 2.7%, from $120.4
million in the quarter ended June 30, 1997 to $117.2 million in the quarter
ended June 30, 1998. The decrease can be attributed primarily to the $11.8
million decrease in net revenue provided by the Company's Lithotripsy Business,
offset by a growth of approximately $4.0 million in the Company's mail order
pharmacy and pharmacy benefit management services and an improvement in the home
infusion business of $3.8 million resulting from the Company's focus on its
revenue generation programs and quality of service. See "Factors Affecting
Recent Operating Results."
 
     Gross Profit. Gross profit decreased $5.8 million from $35.1 million or a
gross margin of 29.1% in the quarter ended June 30, 1997 to $29.3 million or a
gross margin of 25.0% in the quarter ended June 30, 1998. The decline in gross
margin resulted primarily from the loss of gross margins provided by the
Lithotripsy Business. The Company's ongoing base business has consistently
maintained its gross margins at approximately 25.0%. See "Factors Affecting
Recent Operating Results."
 
     Selling, General and Administrative Expenses. SG&A decreased $1.2 million
or 5.3%, from $22.8 million in the quarter ended June 30, 1997 to $21.6 million
in the quarter ended June 30, 1998. The improvement is due primarily to a
decrease in collection agency fees reflecting the Company's success in reducing
corporate and field administrative costs. See "Business Strategy".
 
     Income From Litigation Settlement. During the quarter ended June 30, 1997,
the Company recorded income from litigation settlement, net of related costs, of
$156.8 million in connection with the settlement of the Caremark Litigation.
 
     Operating Income. The Company recorded operating income of $1.3 million
during the three months ended June 30, 1998 compared to operating income of
$161.3 million during the three months ended June 30, 1997. The decline in
operating income is due primarily to the non-recurring $156.8 million income
from settlement of the Caremark Litigation recognized in the quarter ended June
30, 1997 and a loss of 4.1% in gross margins provided by the Lithotripsy
Business.
 
     Interest Expense. Interest expense decreased by $12.1 million or 66.6%,
from $18.2 million in the quarter ended June 30, 1997 to $6.1 million in the
quarter ended June 30, 1998. The decline is due primarily to a decrease in
interest expense of $5.2 million resulting from the completion of the Exchange
contemplated by the Securities Exchange Agreement and a decrease of $3.8 million
in interest expense as a result of the payment and termination of the Former
Senior Credit Facility in January 1998. Additionally, interest expense decreased
$2.5 million as a result of the cancellation of the Junior Subordinated
Pay-In-Kind notes in conjunction with the settlement of the Caremark Litigation.
See also "Debt Restructuring and Refinancing" and Notes 2 and 6 to the Unaudited
Condensed Consolidated Financial Statements.
 
                                       16
<PAGE>   17
 
     Termination Fee. During the quarter ended June 30, 1997, the Company
recorded termination fee income, net of related costs, of $15.2 million in
connection with the termination of the proposed merger with IHS.
 
     Minority Interest in Net Income of Consolidated Joint Ventures. Minority
interest expense decreased $2.1 million, from $2.4 million in the three months
ended June 30, 1997 to $0.3 million in the three months ended June 30, 1998. The
decrease is due primarily to the sale of substantially all of the Lithotripsy
Business in September 1997.
 
     Net Income (Loss). During the quarter ended June 30, 1998, the Company
recognized a net loss of $4.5 million compared to a net income of $156.8 million
during the quarter ended June 30, 1997. Excluding the effects of the
non-recurring $156.8 million income from litigation settlement and the $15.2
million termination fee income recognized in the quarter ended June 30, 1997 the
net loss declined by $10.7 million. The reduction in net loss can be attributed
primarily to the decrease in interest expense of $12.1 million and the decrease
in minority interest expense of $2.1 million offset by the $5.8 million decrease
in gross profits.
 
  SIX MONTHS ENDED JUNE 30, 1998 COMPARED WITH SIX MONTHS ENDED JUNE 30, 1997
 
     As previously discussed in "Factors Affecting Recent Operating Results,"
the Company sold substantially all its Lithotripsy Business in 1997, while
retaining its interest in one lithotripsy partnership until it was sold
effective June 1, 1998. During the six months ended June 30, 1998 and 1997, the
Lithotripsy Business provided the following to the Company's operations (in
millions):
 
<TABLE>
<CAPTION>
                                                           SIX MONTHS
                                                         ENDED JUNE 30,
                                                         --------------
                                                         1998     1997
                                                         -----   ------
<S>                                                      <C>     <C>
Net revenue............................................  $0.6    $23.9
Gross profit...........................................   0.3     15.0
Operating income.......................................   0.3     11.5
</TABLE>
 
     Net Revenue. Net revenue decreased $19.4 million or 8.0%, from $244.3
million in the six months ended June 30, 1997 to $224.9 million in the six
months ended June 30, 1998. The decrease can be attributed primarily to the
$23.3 million decrease in net revenue provided by the Company's Lithotripsy
Business and a $3.7 million decrease in its home infusion business, offset by a
growth of approximately $6.5 million in the Company's mail order pharmacy and
pharmacy benefit management services. See "Factors Affecting Recent Operating
Results."
 
     Gross Profit. Gross profit decreased $18.6 million from $75.1 million or a
gross margin of 30.7% in the six months ended June 30, 1997 to $56.5 million or
a gross margin of 25.1% in the six months ended June 30, 1998. The decline in
gross margin resulted primarily from the loss of gross margins provided by the
Lithotripsy Business. The Company's ongoing base business gross margins have
decreased from 27.2% in the six months ended June 30, 1997 to 25.0% in the six
months ended June 30, 1998 due primarily to the shift in payor mix from private
indemnity insurance to managed care organizations. See "Factors Affecting Recent
Operating Results."
 
     Selling, General and Administrative Expenses. SG&A decreased $3.8 million
or 8.1%, from $46.5 million in the six months ended June 30, 1997 to $42.7
million in the six months ended June 30, 1998. The improvement is the result of
the Company's strategy to reduce unnecessary corporate and field administrative
costs evidenced by a decrease in collection agency fees, insurance costs and
other operating expenses. See "Business Strategy."
 
     Provision For Estimated Uncollectible Accounts. Provision for estimated
uncollectible accounts decreased $1.2 million, from $8.4 million or 3.4% of net
revenue in the six months ended June 30, 1997 to $7.2 million or 3.2% of net
revenue in the six months ended June 30, 1998. The decrease is directly
attributed to the Company's concentrated collection efforts over the past year
as evidenced by the decrease in net days sales outstanding ("DSO") from 76 days
as of June 30, 1997 to 73 days as of June 30, 1998. See Note 1 to the
 
                                       17
<PAGE>   18
 
Unaudited Condensed Consolidated Financial Statements -- "Provision for
Estimated Uncollectible Accounts."
 
     Amortization of Goodwill. Amortization of goodwill decreased $1.7 million
or 23.1%, from $7.2 million during the six months ended June 30, 1997 to $5.5
million during the six months ended June 30, 1998. The decrease is due to the
reduction of goodwill associated with the Company's Lithotripsy Business, a
substantial portion of which was sold in September 1997.
 
     Income From Litigation Settlement. During the six months ended June 30,
1997, the Company recorded income from litigation settlement, net of related
costs, of $156.8 million in connection with the settlement of the Caremark
Litigation.
 
     Operating Income. The Company recorded operating income of $1.0 million
during the six months ended June 30, 1998 compared to operating income of $169.8
million during the six months ended June 30, 1997. The decline in operating
income is due primarily to the non-recurring $156.8 million income from the
Caremark litigation settlement recognized in the quarter ended June 30, 1997.
Additionally, gross profit decreased $18.6 million offset by a combined decrease
of $6.6 million in SG&A, provision for uncollectible accounts and amortization
of goodwill.
 
     Interest Expense. Interest expense decreased by $19.5 million or 49.1%,
from $39.7 million in the six months ended June 30, 1997 to $20.2 million in the
six months ended June 30, 1998. The decline is due primarily to a decrease in
interest expense of $3.9 million resulting from the completion of the Exchange
contemplated by the Securities Exchange Agreement and a decrease of $8.8 million
in interest expense as a result of the payment and termination of the Former
Senior Credit Facility in January 1998. Additionally, interest expense decreased
$4.8 million as a result of the cancellation of the Junior Subordinated
Pay-In-Kind notes in conjunction with the settlement of the Caremark Litigation.
See also "Debt Restructuring and Refinancing" and Notes 2 and 6 to the Unaudited
Condensed Consolidated Financial Statements.
 
     Termination Fee. During the six months ended June 30, 1997, the Company
recorded termination fee income, net of related costs, of $15.2 million in
connection with the termination of the proposed merger with IHS.
 
     Income Tax Expense. Income tax expense increased $1.1 million, from $0.3
million in the six months ended June 30, 1997 to $1.4 million in the six months
ended June 30, 1998. The increase in 1998 results from state and local tax
obligations as well as a provision for certain pending examinations. See Note 8
to the Consolidated Financial Statements in the Company's Annual Report on Form
10-K, as amended, for the year ended December 31, 1997.
 
     Minority Interest in Net Income of Consolidated Joint Ventures. Minority
interest expense decreased $3.8 million, from $4.5 million in the six months
ended June 30, 1997 to $0.7 million in six months ended June 30, 1998. The
decrease is due primarily to the sale of substantially all of the Lithotripsy
Business in September 1997.
 
     Net Income (Loss). During the six months ended June 30, 1998, the Company
recognized a net loss of $19.7 million compared to a net income of $142.2
million during the six months ended June 30, 1997. Excluding the effects of the
non-recurring $156.8 million income from litigation settlement and the $15.2
million termination fee income recognized in the six months ended June 30, 1997
the net loss declined by $10.0 million. The reduction in net loss can be
attributed primarily to the decrease in interest expense of $19.5 million and
the decrease in minority interest expense of $3.8 million offset by the $12.0
million decrease (net of non-recurring items) in operating income.
 
LIQUIDITY AND CAPITAL RESOURCES
 
     The Company's cash and cash equivalents decreased $106.8 million from
$109.0 million at December 31, 1997 to $2.2 million at June 30, 1998. The
decrease was primarily due to the repayment of the Former Senior Credit Facility
for $80.0 million and due to cash used in operations of $22.1 million resulting
primarily from the increase in accounts receivable as a result of internal
growth, the increase in inventory to secure supplies of
 
                                       18
<PAGE>   19
 
drugs that may experience short-term shortages and the collateralization of the
first letter of credit for Aetna USHC, described below.
 
     The Company and the Holders reached an agreement in principle on April 13,
1998 on the Rollover Note restructuring and entered into the Securities Exchange
Agreement on May 6, 1998. The Securities Exchange Agreement provides for a
restructuring of the debt represented by the Rollover Note and the related
Warrants pursuant to which the Rollover Note and the Warrants would be cancelled
and exchanged for the Series A Notes and Series B Notes. The consummation of the
Exchange was contingent upon the satisfaction of certain conditions prior to
closing of the Securities and Exchange Agreement on June 30, 1998. All
conditions were satisfied with the exception of the condition requiring the
Company to execute an agreement for a new senior credit facility. Accordingly,
on June 30, 1998 the Exchange was consummated and the Company entered into the
First Amendment and Waiver to the Securities Exchange Agreement. Based on
Rollover Note interest rates ranging from approximately 16.50% to 17.25%, the
Exchange placed the Company in the position to reduce its annual interest
expense related to this debt by approximately $17.0 million (not including
interest on amounts deferred or on additional Series A and B Notes issued in
lieu of cash interest payments).
 
     The Amendment waived the condition under the Securities Exchange Agreement
requiring the Company to execute an agreement for a new senior credit facility
on or prior to June 30, 1998. In addition, under the Amendment the Holders of
the Series A and Series B Notes have agreed to extend the Company up to $60.0
million of senior secured debt subject to the completion of definitive
agreements on or prior to September 30, 1998. Under the proposed New Senior
Credit Facility, currently under negotiation, the Company would pay an upfront
fee of 1.0% payable upon execution, the outstanding indebtedness will bear
interest at prime plus 1.5% and have a final maturity of 2 1/2 years from
closing. In addition under the proposed New Senior Credit Facility, subject to
customary anti-dilution adjustments, the Company would issue warrants to
purchase up to 1.9 million shares of common stock of the Company that would bear
a $0.01 exercise price. There can be no assurance that the Company will be able
to secure the New Senior Credit Facility or that it will be able to do so on
commercially acceptable terms. See Note 6 of the Notes to Unaudited Condensed
Consolidated Financial Statements.
 
     In July 1998, the Company issued Promissory Notes in the aggregate
principal amount of $6.0 million to the Holders of the Series A and B Notes. The
Promissory Notes will mature August 20, 1998, bear interest at a rate of 12% per
annum, payable in cash on the maturity date of the notes and are collateralized
by certain accounts receivable of the Company. The Company intends to repay
amounts due August 20, 1998 on the Promissory Notes through funding received
under the proposed New Senior Credit Facility.
 
     There can be no assurance that the New Senior Credit Facility will be
consummated, or that future cash flow from operations will be sufficient to
cover the Company's current or future debt obligations. The Promissory Notes
mature on August 20, 1998, and the Company does not anticipate having the cash
necessary to pay the amounts due thereunder unless it consummates the New Senior
Credit Facility with the Holders or a substitute credit source. The failure to
pay the Promissory Notes when due would entitle the Holders to declare a default
under the Securities Exchange Agreement and declare the Series A and Series B
Notes immediately due and payable. Similarly, the failure to enter into the New
Senior Credit Facility with the Holders by September 30, 1998, would entitle the
Holders to declare a default under the Series A and Series B Notes and declare
such notes immediately due and payable. In either case, the Company would not
have the ability to pay off such notes. Moreover, the inability to obtain the
New Senior Credit Facility or other equity or debt financing would have a
material adverse impact on the Company's working capital, the scope of strategic
alternatives available to the Company, including its ability to consummate
acquisitions, and, as discussed below, cash available for collateralizing the
letters of credit required to be obtained in connection with the Company's
Agreement with Aetna USHC.
 
     The terms of the Company's agreement with Aetna USHC require the Company to
obtain and maintain a series of letters of credit that increase incrementally to
an aggregate of $14.5 million. The Company obtained the initial $3.0 million
letter of credit by pledging a like amount of cash with the issuing bank. The
Company would anticipate obtaining the subsequent letters of credit required
under the agreement with Aetna USHC through its New Senior Credit Facility. If
no New Senior Credit Facility is obtained, the Company would need to continue
posting cash collateral for its letters of credit. Consequently, the Company's
access to up to
 
                                       19
<PAGE>   20
 
$14.5 million of its cash would be limited, potentially reducing the amount of
cash available for the payment of the Company's debts and liabilities and the
pursuit of the Company's strategic alternatives such as acquisitions. In
addition, no assurance can be made that the Company will have sufficient cash
available to meet the cash requirements provided for in the agreement with Aetna
USHC.
 
FUTURE HEALTH CARE PROPOSALS AND LEGISLATION
 
     In recent years, an increasing number of legislative initiatives have been
introduced or proposed in Congress and in state legislatures that would effect
major changes in the health care system, either nationally or at the state
level. Among the proposals under consideration are various insurance market
reforms, forms of price control, expanded fraud and abuse and antireferral
legislation and further reductions in Medicare and Medicaid reimbursement. Most
recently, on August 5, 1997, President Clinton signed into law the Budget
Reconciliation Act of 1997, which provides for reductions in Medicare and
Medicaid of over $115 billion and $13 billion, respectively, over five years.
The impact of these reductions on the health care industry in general and the
Company specifically cannot be determined at this time. Further, the Company
cannot predict whether any of the above proposals or any other proposals will be
adopted. No assurance can be given that the implementation of the Budget
Reconciliation Act or any other reforms will not have a material adverse effect
on the business of the Company.
 
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
     Not applicable.
 
                                       20
<PAGE>   21
 
                                    PART II
 
                               OTHER INFORMATION
 
ITEM 1. LEGAL PROCEEDINGS
 
     The Company is party to various legal actions arising out of the normal
course of its business. Management believes that the ultimate resolution of such
actions will not have a material adverse effect on the Company's financial
position, results of operations or liquidity of the Company. For a discussion of
certain legal proceedings to which the Company is party, see Part I -- Item 3.
"Legal Proceedings" in the Company's Annual Report on Form 10-K, as amended for
the year ended December 31, 1997.
 
ITEM 2. CHANGE IN SECURITIES
 
     Not applicable.
 
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
 
     Not applicable.
 
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
 
     The Company held its Annual Meeting of Stockholders on June 24, 1998 to
consider and vote upon:
 
          (1) Election of directors to service until the 1998 Annual Meeting of
     Stockholders and until their successors are duly elected and qualified;
 
          (2) Approval for the issuance of Series B Notes, pursuant to the terms
     of the Securities Exchange Agreement dated May 6, 1998 among the Company,
     Cerberus Partners, L.P., Goldman Sachs Credit Partners L.P. and Foothill
     Capital Corporation;
 
          (3) Approval of an amendment to the Company's 1994 Stock Option Plan
     to increase the number of shares of authorized common stock; and
 
          (4) Ratification of the appointment of Ernst and Young LLP as
     independent auditors of the Company for the Company's 1998 fiscal year.
 
     All proposals were approved. The results of the voting are as follows:
 
<TABLE>
<CAPTION>
                                                         TOTAL VOTE FOR   TOTAL VOTE WITHHELD
                                                         EACH DIRECTOR    FROM EACH DIRECTOR
                                                         --------------   -------------------
<S>  <C>                                                 <C>              <C>
(1)  For election as director:
     Donald J. Amaral..................................    40,921,692          1,036,618
     William J. Casey..................................    40,919,363          1,038,947
     Stephen A. Feinberg...............................    40,898,555          1,059,755
     Richard A. Fink...................................    40,908,286          1,050,024
     Stephen G. Pagliuca...............................    40,910,326          1,047,984
     L. Peter Smith....................................    40,927,173          1,031,137
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                   BROKER
                                                 FOR        AGAINST    ABSTAIN    NON-VOTE
                                              ----------   ---------   -------   ----------
<S>  <C>                                      <C>          <C>         <C>       <C>
(2)  Approval of the issuance of Series B
     Notes..................................  20,785,008   1,620,089   280,801   19,272,412
(3)  Approval of the amendment of the
     Company's Stock Option Plan............  33,362,667   8,380,068   215,575           --
(4)  Ratification of the appointment of
     Ernst & Young LLP......................  41,532,000     288,438   137,872           --
</TABLE>
 
ITEM 5. OTHER INFORMATION
 
     Not applicable.
 
                                       21
<PAGE>   22
 
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
 
     (A) Exhibits
 
<TABLE>
<CAPTION>
        EXHIBIT
         NUMBER                                  DESCRIPTION
        -------                                  -----------
<C>                      <S>
         10.01           -- Amendment No. 1 and Waiver to the Securities Exchange
                            Agreement among the Registrant, Cerberus Partners, L.P.,
                            Goldman Sachs Credit Partners L.P., and Foothill Capital
                            Corporation.*
         10.02           -- Promissory Notes and Security Agreement dated July 21,
                            1998 among the Registrant and Foothill Capital
                            Corporation, as collateral agent for Cerberus Partners,
                            L.P., Goldman Sachs Credit Partners L.P. and Foothill
                            Partners III, L.P. and their respective successors and
                            assigns.*
         10.03           -- Request for Deferral of Interest Payment Under the Series
                            B Convertible Subordinated Notes due 2008 and the related
                            Securities Exchange Agreement, dated May 6, 1998, by and
                            between Coram, Inc., Coram Healthcare Corporation,
                            Cerberus Partners, L.P., Goldman Sachs Credit Partners,
                            L.P. and Foothill Capital Corporation, as amended.*
         10.04           -- Amendment No. 1 of Employment Agreement between the
                            Registrant and Donald J. Amaral.*
         27              -- Financial Data Schedule
</TABLE>
 
---------------
 
* Filed herewith.
 
                                       22
<PAGE>   23
 
                                   SIGNATURES
 
     Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
 
                                            CORAM HEALTHCARE CORPORATION
 
                                            By:    /s/ WENDY L. SIMPSON
                                              ----------------------------------
                                                       Wendy L. Simpson
                                              Executive Vice President and Chief
                                                       Financial Officer
 
                                       23
<PAGE>   24



                                  EXHIBIT INDEX


                    EXHIBIT
                    NUMBER                    DESCRIPTION
                    ------                    -----------

                    10.01  --  Amendment No. 1 and Waiver to the Securities
                               Exchange Agreement among the Company, Cerberus
                               Partners,L.P., Goldman Sachs Credit Partners
                               L.P., and Foothill Capital Corporation. Certain
                               attachments and schedules to the Amendment No. 1
                               and Waiver are omitted from this Exhibit. The
                               Registrant agrees to furnish supplementally any
                               omitted exhibit or schedule to the Amendment No.
                               1 and Waiver.*

                    10.02  --  Promissory Notes and Security Agreement dated
                               July 21, 1998 among the Company and Foothill
                               Capital Corporation, as collateral agent for
                               Cerberus Partners, L.P., Goldman Sachs Credit
                               Partners L.P. and Foothill Partners III, L.P. and
                               their respective successors and assigns.*

                    10.03  --  Request for Deferral of Interest Payment Under
                               the Series B Convertible Subordinated Notes due
                               2008 and the related Securities Exchange
                               Agreement, dated May 6, 1998, by and between
                               Coram, Inc., Coram Healthcare Corporation,
                               Cerberus Partners, L.P., Goldman Sachs Credit
                               Partners, L.P. and Foothill Capital Corporation,
                               as amended.*

                    10.04  --  Amendment No. 1 of Employment Agreement between
                               the Registrant and Donald J. Amaral.*

                    27     --  Financial Data Schedule 

                    ----------
                    * Filed herewith.