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 September 30, 1996

                                       OR

     |_|      TRANSITIONAL REPORT PURSUANT TO SECTION 13 0R 15 (d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

              For the transition period from _________ to __________

                         Commission file number 0-17292


                                ACCUHEALTH, INC.
             (Exact name of registrant as specified in its charter)

           New York                                    13-3176233
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)


         1575 Bronx River Avenue
             Bronx, New York                                             10460
(Address of principal executive offices)                              (Zip Code)

       Registrant's telephone number, including area code: (718) 518-9511


     Indicate  by check mark (X) whether  the  registrant  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 |_|


     APPLICABLE  ONLY TO  CORPORATE  ISSUERS:  Indicate  the  number  of  shares
outstanding  of each of the issuer's  classes of common stock,  as of the latest
practicable date.


               Class                            Outstanding at November 11, 1996
Common stock, par value $.01 per share                  1,375,085 Shares


<PAGE>



                        ACCUHEALTH, INC. AND SUBSIDIARIES

                                      INDEX


PART I.   FINANCIAL INFORMATION

                                                                        Page No.
                                                                        --------

Item 1.   Condensed Consolidated Financial Statements

          Condensed Consolidated Balance Sheets as of
          September 30, 1996 and March 31, 1996                              3

          Condensed Consolidated Statements of Operations
          for the three and six months ended September 30, 1996 and 1995     4

          Condensed Consolidated Statements of Cash Flows
          for the six months ended September 30, 1996 and 1995               5

          Notes to Condensed Consolidated Financial
          Statements                                                         6

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

SIGNATURES                                                                   14







                                        2

<PAGE>



                        ACCUHEALTH, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
ASSETS:                                                       September 30, 1996   March 31, 1996
                                                              ------------------   --------------
<S>                                                                  <C>            <C>        
Current Assets:
   Cash                                                              $     6,381    $     2,694
   Accounts receivable, net                                            5,000,959      4,459,693
   Inventories                                                           663,382        621,838
   Prepaid expenses and other current assets                             104,608        103,114
                                                                     -----------    -----------
      Total Current Assets                                             5,775,330      5,187,339

Revenue producing equipment, net                                         603,603        670,352
Fixed assets, net                                                      1,704,744      1,758,646
Other assets                                                              28,956         34,620
                                                                     -----------    -----------

     Total Assets                                                    $ 8,112,633    $ 7,650,957
                                                                     ===========    ===========

LIABILITIES AND STOCKHOLDERS'  EQUITY:

Current Liabilities:
   Notes payable - revolving credit facility                         $ 2,746,888    $ 2,413,392
   Notes payable - trade                                                 103,813        294,598
   Accounts payable                                                    2,105,595      1,512,836
   Accrued expenses and other current liabilities                      1,124,798      1,021,422
   Reserve for contingencies                                                --          200,000
   Capital lease facility                                                357,500         71,500
   Current portion of other capital lease obligations                    232,541        354,209
                                                                     -----------    -----------
      Total Current Liabilities                                        6,671,135      5,867,957

Capital lease - facility, less current portion                              --          375,375
Other capital lease obligations, less current portion                     87,316        112,977
                                                                     -----------    -----------

    Total Liabilities                                                  6,758,451      6,356,309
                                                                     -----------    -----------


Stockholders' Equity:
  Preferred stock, $.01 par value; authorized 3,650,000
    shares; no shares issued and outstanding                                --             --
  6% Redeemable cumulative convertible preferred stock
    $.01 par value; $2,713,500 liquidation preference, authorized,
    issued and outstanding 1,350,000 shares                               13,500         13,500
  Common stock, $.01 par value; authorized 15,000,000
    shares; issued 1,683,089 and 1,630,233 shares, respectively           16,831         16,302
  Additional paid-in capital                                           6,087,232      6,007,938
  Deficit                                                             (4,139,061)    (4,118,772)
                                                                     -----------    -----------
                                                                       1,978,502      1,918,968
  Less treasury stock (308,004 shares) at cost                           624,320        624,320
                                                                     -----------    -----------
Total Stockholders' Equity                                             1,354,182      1,294,648
                                                                     -----------    -----------

Total Liabilities and Stockholders' Equity                           $ 8,112,633    $ 7,650,957
                                                                     ===========    ===========
</TABLE>

                  See notes to condensed consolidated financial statements.



                                        3

<PAGE>


                        ACCUHEALTH, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                          Three Months Ended            Six Months Ended
                                            September 30,                 September 30,
                                      -------------------------    -------------------------
                                          1996          1995           1996         1995
                                          ----          ----           ----         ----

<S>                                   <C>           <C>            <C>           <C>        
Net Sales                             $ 4,155,736   $ 3,871,305    $ 8,083,108   $ 7,677,798
Cost of goods sold                      2,490,757     2,114,078      4,707,241     4,250,479
                                      -----------   -----------    -----------   -----------
Gross profit                            1,664,979     1,757,227      3,375,867     3,427,319
Selling, general and administrative
   expenses                             1,519,855     2,050,406      3,065,255     3,827,763
                                      -----------   -----------    -----------   -----------
Operating (loss) income                   145,124      (293,179)       310,612      (400,444)
Interest expense                          122,640       173,652        251,035       296,329
                                      -----------   -----------    -----------   -----------

Net income (loss)                     $    22,484   $  (466,831)   $    59,577   $  (696,773)
                                      ===========   ===========    ===========   ===========



Net primary and fully diluted loss
  per share:
     Primary                          $      (.01)  $      (.41)   $     (.01)   $      (.66)
     Fully diluted                    $      (.01)  $      (.41)   $     (.01)   $      (.66)
                                     ============   ===========    ===========   ===========

Weighted number of common shares
   and equivalents outstanding
     Primary                            1,375,085     1,242,549      1,356,521     1,242,274
                                     ------------   -----------    -----------   -----------
     Fully diluted                      1,375,085     1,242,549      1,356,521     1,242,274
                                     ------------   -----------    -----------   -----------
</TABLE>




            See notes to condensed consolidated financial statements.


                                        4

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                        Six Months Ended
                                                                          September 30,
                                                                        -----------------
                                                                        1996         1995
                                                                        ----         ----
<S>                                                                  <C>          <C>       
Operating activities

Net income (loss)                                                    $  59,577    $(696,773)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
     Amortization of financing costs                                    16,448       69,642
     Depreciation and amortization                                     204,489      199,136
     Write off of Revenue Producing Equipment                           29,606         --
Changes in operating assets and liabilities:
     Accounts receivable                                              (541,266)    (689,734)
     Inventories                                                       (41,544)    (152,115)
     Prepaid expenses and other assets                                  (1,494)      26,718
     Other assets                                                      (15,540)     (19,876)
     Accounts payable                                                  592,759      811,861
     Reserve for contingencies                                        (200,000)        --
     Accrued expenses and other current liabilities                     23,510      131,021
                                                                     ---------    ---------
     Cash provided by (used in) operating activities                   126,545     (320,120)
                                                                     ---------    ---------

Investing activities
     Notes receivable                                                     --         32,800
     Purchase of revenue producing equipment                              --           --
     Purchase of fixed assets                                          (10,636)     (26,883)
                                                                     ---------    ---------
     Cash used in investing activities                                 (10,636)       5,917
                                                                     ---------    ---------

Financing activities
     Proceeds from note payable - revolving credit facility            333,496      679,677
     Principal payments on note payable -Towerview                    (190,785)    (147,406)
     Principal payments on capital lease - facility                    (89,375)     (35,750)
     Payments on other capital lease obligations                      (165,558)     (93,522)
     Due to prior officers                                                --       (152,301)
                                                                     ---------    ---------
     Cash  (used in) provided by financing activities                 (112,222)     250,698
                                                                     ---------    ---------

     Net increase (decrease) in cash                                     3,687      (63,505)
     Cash at beginning of period                                         2,694      147,307
                                                                     ---------    ---------
     Cash at end of period                                           $   6,381    $  83,802
                                                                     =========    =========

Supplemental disclosure of cash flow information:
     Interest paid                                                   $ 235,671    $ 227,331
                                                                     =========    =========

Noncash investing and financing activities:
     Additions to capital leases                                     $  18,229    $  52,758
                                                                     =========    =========
</TABLE>

                 See notes to consolidated financial statements.


                                        5

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                               September 30, 1996



Note 1 - Basis of Presentation

The  condensed   consolidated  financial  statements  include  the  accounts  of
Accuhealth,  Inc.  and its  subsidiaries,  all of which  are  wholly-owned  (the
"Company").   Significant  intercompany  accounts  and  transactions  have  been
eliminated in consolidation.

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information  and principally  with the  instructions to Form 10-Q and
Article 10 of  Regulation  S-X. In the opinion of  management,  all  adjustments
(consisting  of  normal  recurring  accruals)  considered  necessary  for a fair
presentation of the periods reported have been included.  Operating  results for
the  six-month  period ended  September  30, 1996 may not be  indicative  of the
results for the full fiscal year.

These financial  statements  should be read in conjunction with the consolidated
financial  statements  and notes  thereto  included  in the Form  10-KSB for the
fiscal  year  ended  March 31,  1996  filed  with the  Securities  and  Exchange
Commission.

The balance sheet at March 31, 1996 has been derived from the audited  financial
statements at that date.

Management has formulated certain planned actions to mitigate the effects of the
Company's  working capital  deficiency and generate  sufficient cash to meet its
operating  needs through at least  September 30, 1997. The plan includes,  among
other  matters,  increasing the borrowing  capacity  under the revolving  credit
facility,  obtaining more favorable  terms and financing from vendors,  reducing
corporate  expenses  and  increasing  services  to managed  care  providers.  No
assurances  can be made that  management  will be  successful  in achieving  its
plans. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

Accounts Receivable

Accounts  receivable  are  principally  due from third party  payers,  primarily
governmental  agencies  (Medicare and Medicaid),  managed care organizations and
private insurance companies.

Inventories

Inventories  consist  of  over-the-counter  and  prescription  drugs,   infusion
products  and  supplies,  and home health care  equipment  and  supplies and are
priced at the lower of cost or market  using the  first-in,  first-out  ("FIFO")
method.

Earnings Per Share

For the three months and six months ended  September 30, 1996 and 1995,  primary
loss per share has been calculated by dividing the net loss applicable to common
stock by the  weighted  average  of common  stock and common  stock  equivalents
outstanding during the period. Net loss applicable to

                                        6

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                               September 30, 1996



common stock is derived by reducing net income  (loss) by  redeemable  preferred
stock  dividends and  accretion.  Dividends and  accretion  attributable  to the
redeemable preferred stock were $40,500 and $39,750, respectively, for the three
months ended September 30, 1996 and 1995 and $79,866 and $123,102, respectively,
for the six months ended  September  30, 1996 and 1995.  Net loss  applicable to
common  stockholders  for the three  months ended  September  30, 1996 and 1995,
respectively, were ($18,016) and ($506,581) and ($20,289) and ($819,875) for the
six months ended September 30, 1996 and 1995,  respectively.  On a fully diluted
basis, both the net loss and shares outstanding,  if applicable, are adjusted to
assume the conversion of convertible  preferred stock from the date of issue and
for the incremental  option shares for fully diluted  purposes (See Note 4). For
the periods ended  September 30, 1996 and 1995,  their effect was  anti-dilutive
and therefore not included in the calculation.

Income Taxes

The Company files consolidated Federal, combined New York State and combined New
York City income tax returns.  The  Company's  method of  accounting  for income
taxes is the liability method required by FASB Statement No. 109 "Accounting for
Income Taxes."

Major Customer

The  Company's  revenues  from  one  customer  accounted  for 24% and 10% of the
Company's  net sales for the three  months  ended  September  30, 1996 and 1995,
respectively,  and 25% and 11% for the six months ended  September  30, 1996 and
1995,   respectively.   At  September  30,  1996,   this  customer   represented
approximately 17% of the Company's gross receivables.

Note 2 - Notes Payable and Capital Lease Obligations

Notes payable - trade

The  Company's  trade  notes  outstanding  which  arose in  connection  with the
purchase of pharmaceutical inventories are as follows:

(A)  In December  1995,  the Company issued an unsecured note payable to a trade
     creditor in the principal  amount of $348,616.  The outstanding  balance at
     September  30,  1996  was  $64,342.  The  note is  payable  in ten  monthly
     installments of $36,808, which includes interest at 12% per annum.

(B)  During the three  months  ended June 30,  1996,  the  Company  converted  a
     portion of its accounts  payable into a note payable to a trade creditor in
     the  principal  amount  aggregating  $46,949.  The  outstanding  balance at
     September   30,  1996  was  $39,471.   This  note  is  payable  in  monthly
     installments  of  approximately  $4,200  beginning  August  24,  1996 which
     includes  interest at 10.9% per annum.  At September 30, 1996,  the Company
     has classified the principal balance as a current note payable-trade.


                                        7

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                               September 30, 1996

Notes payable - revolving credit facility

In April 1994,  the Company  entered  into a Loan and  Security  Agreement  (the
"Agreement") with Rosenthal and Rosenthal ("Rosenthal") to borrow, under certain
conditions  and terms,  up to $2,500,000 at an interest rate of prime (8-1/4% at
June 30, 1996) plus 4-7/8%. Borrowings under the Agreement are collateralized by
certain  assets of the Company,  including  accounts  receivables,  inventories,
equipment  and  fixtures.  The Company's  ability to use this  revolving  credit
facility is dependent upon the level of its eligible receivables,  as defined in
the Agreement.  In addition,  the Company granted Rosenthal warrants to purchase
70,000 shares of the Company's common stock at $2.00 per share.

Effective  February  1, 1996,  the Company  and  Rosenthal  amended the Loan and
Security  Agreement  (the  "Amendment").  The  Amendment  extends the  Agreement
through  April  28,  1997 and  allows  the  Company  to  borrow,  under  certain
conditions and terms up to $3,500,000 (based on eligible accounts receivable, as
defined) at an interest rate of prime plus 3-7/8%. The revolving credit facility
can be  terminated  by  Rosenthal  absent  a  default,  at  any  time  upon  one
hundred-twenty  days notice. The Company granted Rosenthal an extension of their
current  warrants to purchase  70,000 shares of the Company's  common stock,  at
$2.00 per share until  October  31,  1997.  In  addition,  the  Company  granted
Rosenthal  warrants to purchase an  additional  30,000 shares of common stock at
$2.50 per share  expiring on April 28,  1998.  Commencing  April 28,  1996,  the
Company is required to pay a facility fee of $35,000 per annum.

The revolving  credit  facility bears  interest at variable  market rates and as
such the carrying value approximates its fair value.

Capital lease facility

The Company leases its principal office and warehouse  facility (the "Facility")
and certain  equipment,  furniture and fixtures,  rental equipment and leasehold
improvements under capital lease agreements which extend through April 1999.

The Facility was obtained  under a ten-year lease (the "Lease  Agreement")  with
the New York City Industrial  Development  Agency (the "Agency") as lessor.  The
Agency issued to National  Westminster  Bank,  U.S.A.  (now "Fleet")  $1,072,500
principal amount of its Industrial  Development  Bonds (the "Bonds") pursuant to
an Indenture of Mortgage and  Agreement  dated April 1, 1989 (the  "Indenture"),
which  created a lien on the  Facility.  The Company also paid $227,500 in order
for the Agency to purchase  the  warehouse.  This  amount and other  acquisition
costs are capitalized as land and building under capital lease.

At the end of the term of the lease,  the Company may  purchase the Facility for
one dollar so long as all terms and  conditions  of the lease have been met. The
Lease Agreement and Guaranty  Agreement require the Company and its subsidiaries
to comply with certain covenants,  including but not limited to, maximum debt to
worth ratio,  maximum  allowable  losses and debt service  coverage  ratio.  The
Company's  non-compliance  with such covenants was waived by Fleet through April
1, 1997 with a

                                        8

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                               September 30, 1996

principal  payment of $71,500 in July, 1996. Since the Company has not requested
nor received from Fleet a waiver of non-compliance with such covenants occurring
after April 1, 1997,  the entire  balance  outstanding  has been  classified  as
current on the accompanying  condensed  consolidated  balance sheet at September
30, 1996.

In  lieu  of  rent,  the  Company  pays  principal  on the  Bonds  in  quarterly
installments of $17,875, plus interest at the rate of prime (8 1/4% at September
30,  1996)  plus 1%.  On April  28,  1994,  in  conjunction  with the  Rosenthal
financing, the Company made an additional principal payment of $143,000. A final
balloon payment of $232,375 plus interest  thereon is due on April 1, 1999. Each
of  the  Company's  wholly-owned   subsidiaries  has  guaranteed  the  Company's
obligations  under the lease.  The Lease  Agreement and Guaranty  Agreement also
restrict the payment of cash  dividends  in any one year to an aggregate  amount
not to exceed 25% of the  Company's  net income  for the  immediately  preceding
year.

Other capital leases

The Company  leases durable  medical  equipment  under capital lease  agreements
which extend through March 31, 2000.

Note 3 - Contingencies

The City of New York  conducted  an audit  relating to General  Corporation  and
Commercial  Rent taxes for the years 1990 through 1992.  The Company has settled
with the City of New York  during the  quarter for  approximately  $100,000  and
reclassed the liability to accrued  expenses and other current  liabilities from
the reserve for  contingencies.  As of September  30,  1996,  as a result of the
settlement  with the City of New York, the remaining  balance of the reserve for
contingencies   has  been  reclassed  to  accrued  expenses  and  other  current
liabilities.

An agency of New York State is  conducting  a review of  Medicaid  reimbursement
with respect to two  categories of products for the years 1990 through 1993. The
Company has not been advised as to whether any claim will be made.

In June 1995, a former employee commenced an action against the Company alleging
that the Company breached plaintiff's employment agreement.  The Company intends
to deny the  principal  allegations  in the  Complaint and to defend this action
vigorously. Management and counsel are still assessing the legal implications at
this time but currently  management  believes that this action will not have any
material adverse financial impact on the Company. The minimum probable liability
as  estimated  by  management  of  approximately  $15,000 is included in accrued
expenses and other current liabilities at September 30, 1996.

Management  believes that the above matters will be settled without any material
adverse financial impact to the Company.

                                        9

<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                               September 30, 1996

Note 4 - 6% Redeemable Cumulative Convertible Preferred Stock

On December 14, 1994 and January 30,  1995,  the Company  completed  the sale at
$2.00 per share of 1,325,000  shares of redeemable  convertible  preferred stock
("Preferred Stock") with a 6% per annum cumulative dividend.  During the quarter
ended December 31, 1995,  the Company sold at $2.50 per share 25,000  additional
shares of Preferred Stock to certain officers and directors of the Company.  The
Preferred Stock is convertible at any time at the option of the holder,  subject
to antidilution adjustments,  into 1,350,000 shares of common stock. The Company
has reserved  1,350,000 shares of common stock for such conversion.  At any time
on or after  December  31,  1995,  subject  to certain  conditions,  such as the
registration  of the  underlying  common stock under the Securities Act of 1933,
compliance  with the terms of the Preferred  Stock and any other  agreement with
the holders of the  Preferred  Stock and the payment of all  dividends  that are
accrued and unpaid on the Preferred Stock as of the Redemption Date, the Company
may redeem all or any portion of the Preferred Stock then outstanding.  For each
share that is called for redemption,  the Company shall pay $3.00 per share from
December  31,  1995  through  December  31, 1997 and $4.00 per share on or after
January 1, 1998.  The  holders of the  Preferred  Stock are  entitled  to voting
rights  equivalent to that of the common stock. The Preferred Stock is senior to
the common stock in the event of a liquidation of the Company.  The  liquidation
preference is $2.00 per share plus accrued and unpaid dividends.

The Preferred  Stock was subject to mandatory  redemption  requirements of up to
$4.00 per share plus  accrued  dividends.  As of June 16,  1995,  the holders of
Preferred  Stock agreed to modify  their  stockholder  agreements  to negate the
mandatory  redemption  requirements.  This modification  eliminates the need for
recognition  of accretion  effective June 16, 1995, and results in the Preferred
Stock being classified as equity rather than debt.

The  Company  is  obligated  to pay  annual  dividends  of $.12 per share on its
1,350,000  outstanding  shares of Preferred Stock.  Such dividends accrue daily,
are payable each June 1 and December 1 and, at the election of the Company,  may
be paid in shares of Common  Stock valued in  accordance  with the terms of such
stock.  Dividends on the Company's Preferred Stock are payable in preference and
priority to any payment of any dividends on the common stock.

The June 1, 1996  Dividend was paid out in 54,793 shares of common stock on July
7, 1996. Accrued and unpaid dividends from June 2, 1996 to September 30, 1996 of
$54,000 are  included  in accrued  expenses  and other  current  liabilities  at
September 30, 1996.


                                       10

<PAGE>

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

This Management's Discussion and Analysis should be read in conjunction with the
condensed  consolidated  financial  statements  of the Company and related notes
included elsewhere in this Form 10-Q.

Results of Operations

Three Months Ended September 30, 1996 and 1995

Net  sales  increased  approximately  $285,000  or 7% from the  comparable  1995
quarter to $4.2  million for the three  months ended  September  30,  1996.  The
increase  was the result of  increases of  approximately  $506,000,  $43,000 and
$12,000  in the  Company's  institutional  pharmacy  business,  durable  medical
equipment and oral  medication  revenues,  respectively,  offset,  in part, by a
decrease in the Company's infusion services revenues of approximately $276,000.

Gross  profit  for the  three  months  ended  September  30,  1996  and 1995 was
approximately $1.66 and $1.76 million, respectively,  representing approximately
40% of net sales for the three months ended June 30, 1996 as compared to 45% for
the comparable prior year.  Gross profit decreased  primarily due to an increase
in lower margin institutional pharmacy and infusion services business.

Selling,  general and administrative expenses ("SG &A") were approximately $1.52
and $2.05  million or  approximately  37.9% and 49.9% of net sales for the three
months  ended  September  30,  1996 and 1995,  respectively.  The  decrease  was
principally  the  result of  reductions  of  approximately  $173,000,  $110,000,
$109,000 and $25,000 for professional  fees,  marketing costs,  certain clinical
and administrative salaries and insurance, respectively.

Six Months Ended September 30, 1996 and 1995

Net sales for the six months ended  September 30, 1996  increased  approximately
$405,000 or 5% from the comparable 1995 period to $8.1 million. The increase was
the  result  of  an  increase  of  approximately  $1,112,000  in  the  Company's
institutional  pharmacy business  partially offset by decreases in the Company's
infusion  services  revenues,  oral  medication  and durable  medical  equipment
revenues, respectively, of approximately $588,000, $98,000 and $21,000.

Gross  profit  for  the six  months  ended  September  30,  1996  and  1995  was
approximately $3.38 and $3.43 million, respectively,  representing approximately
42% of net sales for the six months ended  September 30, 1996 as compared to 45%
for the six months ended  September 30, 1995.  The decrease was primarily due to
an increase in lower margin institutional pharmacy business.

Selling,  general and administrative expenses ("SG &A") were approximately $3.07
and  $3.83  million  or  approximately  37.9% and 49.9% of net sales for the six
months  ended  September  30,  1996 and 1995,  respectively.  The  decrease  was
principally  the  result of  reductions  of  approximately  $172,000,  $163,000,
$121,000 and $61,000 for professional  fees, certain clinical and administrative
salaries, marketing costs and insurance, respectively.

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<PAGE>

Financial Condition

The Company's cash provided by operating  activities during the six months ended
September  30, 1996 was $126,545.  As of September  30, 1996,  the Company had a
working  capital  deficiency  of  $895,805  as compared to $680,618 at March 31,
1996. As described in Note 2 of the  financial  statements,  the entire  capital
lease  obligation for the Company's  capital lease facility of $357,500 has been
classified as a current  liability at September 30, 1996. The Company's  working
capital  deficiency at September 30, 1996 would be $574,055 if the capital lease
were not classified as a current  liability on the September 1996 balance sheet.
The Company is current in the payment of principal  and interest with respect to
such capital lease.

Management  has  formulated  certain  planned  actions to  mitigate  the working
capital  deficiency  and generate  sufficient  cash to meet its operating  needs
through at least  September 30, 1997. The plans include  seeking an acquisition,
increasing the borrowing  capacity under the Company's existing revolving credit
facility and  continuing to obtain  better terms and financing  from vendors and
reducing corporate  expenses.  No assurances can be made that management will be
successful in achieving its plans, however.

On April 28,  1994,  the  Company  obtained a $2.5  million  maximum  commitment
working  capital  facility from Rosenthal and Rosenthal  ("Rosenthal")  and used
funds borrowed under that facility to reduce its indebtedness to Fleet under the
capital lease-facility and to trade and other creditors. Interest on the greater
of $1,250,000 or the outstanding balance is payable monthly at the rate of 47/8%
over the prime  rate.  Effective  February  1, 1996,  the  Company  agreed to an
amendment  of the Loan and  Security  Agreement,  which  allows  the  Company to
borrow,  under certain conditions and terms up to $3,500,000 at an interest rate
of prime plus 37/8%. See, "Note 2 - Notes payable revolving credit facility."

During the quarter ended  September 30, 1996,  the Company has made a settlement
of  approximately  $100,000  with the  City of New York as a result  of an audit
relating to General  Corporation  and  Commercial  Rent taxes for the years 1990
through 1992. Payment terms have not been yet been agreed upon.

Accounts  receivable  is  principally  due from third  party  payers,  primarily
governmental agencies (Medicare and Medicaid) and private insurance companies.

Disclosure Regarding Forward-Looking Statements

This document contains certain forward-looking statements,  containing the words
"believes,"  "anticipates,"  "expects," and words of similar import,  based upon
current  expectations  that involve a number of known and unknown business risks
and  uncertainties.  The factors that could cause  results to differ  materially
include the following: national and regional economic conditions, changes in the
reimbursement  practices of third party  payers,  changes in laws  affecting the
availability  of health  care  services  for the needy that  reduce the  funding
available  for such  services,  risks  related to the expansion of the Company's
business,  whether  through  acquisitions  or  internal  growth,  losses  of key
executives or other employees,  and other risks and  uncertainties  described in
the Company's Annual Report on form 10-KSB filed with the SEC for the year ended
March 31, 1996.

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<PAGE>

                                   SIGNATURES


     In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.

                                        ACCUHEALTH, INC.


Date: November 14, 1996                 By: /s/Glenn C. Davis
                                           ------------------------------------
                                           Glenn C. Davis, as
                                           President and Chief Executive Officer


Date: November 14, 1996                 By: /s/Gary S. LaPorta
                                           ------------------------------------
                                           Gary S. LaPorta, as
                                           Treasurer, Chief Financial Officer
                                           and Chief Accounting Officer


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