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, 1997

                                       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 AUGUST 7, 1997
Common stock, par value $.01 per share                   1,787,598 Shares

                                       1

<PAGE>


                        ACCUHEALTH, INC. AND SUBSIDIARIES

                                      INDEX


PART I.   FINANCIAL INFORMATION

                                                                        PAGE NO.
                                                                        --------

Item 1.      Condensed Consolidated Financial Statements.

             Condensed Consolidated Balance Sheets at
             June 30, 1997 and March 31, 1997 ..........................     3

             Condensed Consolidated Statements of Operations
             for the three months ended June 30, 1997 and 1996 .........     4

             Condensed Consolidated Statements of Cash Flows
             for the three months ended June 30, 1997 and 1996 .........     5

             Notes to Condensed Consolidated Financial
             Statements ................................................  6-10

Item 2.      Management's Discussion and Analysis of
             Financial Condition and Results of Operations ............. 11-12

Item 3.      Quantitative and Qualitative Disclosures About Market Risk.
             Not Applicable.............................................    12

PART II.     OTHER INFORMATION .........................................    13


SIGNATURES .............................................................    14



                                       2

<PAGE>
                        ACCUHEALTH, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

ASSETS:                                                                    JUNE 30,1997       MARCH 31, 1997
      -                                                                    ------------       --------------
<S>                                                                          <C>                  <C>       
Current Assets:
   Cash                                                                      $   33,638           $   31,548
   Accounts receivable, net                                                   5,421,535            5,279,369
   Inventories                                                                  630,937              665,335
   Prepaid expenses and other current assets                                    114,167              191,323
                                                                             ----------           ----------
      Total Current Assets                                                    6,200,277            6,167,575

Revenue producing equipment, net                                                490,764              485,305
Fixed assets, net                                                             1,639,903            1,659,056
Other assets                                                                    189,705              188,229
                                                                             ----------           ----------

     Total Assets                                                            $8,520,649           $8,500,165
                                                                             ==========           ==========

LIABILITIES AND STOCKHOLDER'S  EQUITY:

Current Liabilities:
   Notes payable - revolving credit facility                                 $2,436,817           $2,782,677
   Notes payable - term loan                                                    500,000                   --
   Notes payable - other                                                        185,596              224,869
   Accounts payable                                                           2,003,507            1,801,120
   Accrued expenses and other current liabilities                             1,253,516            1,128,828
   Current portion of capital lease - Facility                                  357,500               53,625
   Current portion of other capital lease obligations                           107,792              113,124
                                                                             ----------           ----------
   Total Current Liabilities                                                  6,844,728            6,104,243

Notes payable - term loan                                                            --              500,000
Notes payable - other                                                           121,454              101,031
Capital lease - Facility, less current portion                                       --              303,875
Other capital lease obligations, less current portion                            96,927               69,637
                                                                            -----------           ----------
    Total Liabilities                                                         7,063,109            7,078,786
                                                                            -----------          -----------

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 1,787,598 and 1,787,598 shares, respectively                  17,876               17,876
  Additional paid-in capital                                                  6,168,364            6,168,364
  Deficit                                                                    (4,117,880)          (4,154,041)
                                                                             ----------           ----------
                                                                              2,081,860            2,045,699
  Less treasury stock (308,004 shares) at cost                                  624,320              624,320
                                                                             ----------          -----------
Total Stockholders' Equity                                                    1,457,540            1,421,379
                                                                             ----------          -----------

Total Liabilities and Stockholders' Equity                                   $8,520,649           $8,500,165
                                                                             ==========           ==========

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

                                       3

<PAGE>

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



                                                     THREE MONTHS ENDED JUNE 30,
                                                     ---------------------------

                                                           1997         1996
                                                           ----         ----

Net sales                                               $4,284,502    $3,927,372

Cost of goods sold                                       2,487,324     2,216,484
                                                        ----------    ----------

Gross profit                                             1,797,178     1,710,888

Selling, general and administrative expenses             1,586,486    1,545,,400

Operating income                                           210,692       165,488

Interest expense                                           134,031       128,395
                                                        ----------    ----------

Net income                                              $   76,661    $   37,093
                                                        ==========    ==========





Net income per common share applicable to common
      shareholders
         Primary                                        $      .02    $      .--
                                                        ----------    ----------
         Fully diluted                                  $      .02    $      .--
                                                        ----------    ----------


Weighted number of common shares and equivalents
     outstanding
         Primary                                         1,533,317     1,338,356
                                                        ----------    ----------
         Fully diluted                                   1,822,593     1,338,356
                                                        ----------    ----------

                                       4

<PAGE>


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


<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED
                                                                        JUNE 30
                                                                  -------------------
                                                                    1997        1996
                                                                    ----        ----
OPERATING ACTIVITIES

<S>                                                           <C>            <C>      
Net income                                                    $    36,161    $  37,093
Adjustments to reconcile net income to net cash provided by
operating activities:
    Amortization of financing costs                                 2,778       16,448
    Depreciation and amortization                                 101,620      104,614

CHANGES IN OPERATING ASSETS AND LIABILITIES
    Accounts receivable                                          (142,166)     174,585
    Inventories                                                    34,398       (4,322)
    Prepaid expenses and other assets                              77,156       (2,987)
    Other assets                                                   (4,254)      (8,770)
    Accounts payable                                              202,387           63
    Accrued expenses and other current liabilities                124,688      (28,597)
                                                              -----------    ---------
    Cash provided by operating activities                         432,768      188,127
                                                              -----------    ---------

INVESTING ACTIVITIES
Purchase of fixed assets                                          (87,926)      (2,877)
                                                              -----------    ---------
Cash (used in) provided by investing activities                   (87,926)      (2,877)
                                                              -----------    ---------

FINANCING ACTIVITIES
    Proceeds from note payable - revolving credit facility      3,915,540      (25,907)
    Proceeds from notes payable - other                            50,169      (69,006)
    Increase in capital lease obligations                          73,135           --
    Payments on note payable - revolving credit facility       (4,261,400)          --
    Payments on notes payable - other                             (69,019)          --
    Principal payments on capital lease - Facility                     --      (17,875)
    Payments on other capital lease obligations                   (51,177)    (116,059)
                                                              -----------    ---------
    Cash used in financing activities                            (342,752)    (177,033)
                                                              -----------    ---------

    Net increase (decrease) in cash                                 2,090        8,217
    Cash at beginning of period                                    31,548        2,694
                                                              -----------    ---------
    Cash at end of period                                     $    33,638    $  10,911
                                                              ===========    =========

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
    Interest paid                                             $   128,000    $ 115,000
                                                              ===========    =========

NONCASH INVESTING AND FINANCING ACTIVITIES
    Additions to capital leases                               $    73,135    $  10,820
                                                              ===========    =========
</TABLE>

            See notes to condensed consolidated financial statements.

                                       5
<PAGE>


                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 1997

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 three-month  period ended June 30, 1997 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-K for the fiscal
year ended March 31, 1997 filed with the Securities and Exchange Commission. The
balance  sheet at March 31, 1997 has been  derived  from the  audited  financial
statements at that date.

ACCOUNTS RECEIVABLE

Accounts  receivable  are  principally  due from third party  payors,  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 quarters  ended June 30, 1997 and 1996,  primary income (loss) per share
has been calculated by dividing the net income (loss) applicable to common stock
by the weighted average of common stock and common stock equivalents outstanding
during the period. Dividends attributable to the redeemable preferred stock were
$40,500 and $39,366,  respectively, for the three months ended June 30, 1997 and
1996. Net income (loss)  applicable to common  stockholders for the three months
ended June 30, 1997 and 1996, respectively were $36,161 and $(2,273). On a fully
diluted basis, both net income (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  period  ended  June 30,  1997 the  effect of  converting  the
convertible   preferred  stock  was   anti-dilutive  and  not  included  in  the
calculation.  For the three  months  ended June 30,  1996,  both  conversion  of
preferred  stock  and  incremental  option  shares  were  anti-dilutive  and not
included in the calculation.

                                       6
<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 1997

In February  1997 the  Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"), which is required to be adopted beginning with the quarter ended December
31,  1997.  At that time,  the  Company  will be  required  to change the method
currently  used to compute  earnings per share and to restate all prior periods.
Under the new  requirements  for  calculating  primary  earnings per share,  the
dilutive effect of stock options and warrants will be excluded. The Company does
not  anticipate  the  adoption of SFAS 128 to have a  significant  impact on the
calculation of primary and fully diluted earnings per share.

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 17% and 11% of the
Company's  net  sales  for the  three  months  ended  June 30,  1997  and  1996,
respectively.  At June 30, 1997, this customer represented  approximately 14% of
the Company's gross receivables.

NOTE 2 - NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS

NOTES PAYABLE - OTHER

The Company's notes payable outstanding are as follows:

(A)      The Company  converted a portion of its  accounts  payable  into a note
         payable  to a  trade  creditor  in  the  principal  amount  aggregating
         $46,949.  This note is payable in monthly installments of approximately
         $4,200 beginning  October 11, 1996 which includes interest at 10.9% per
         annum. The outstanding principal balance at June 30, 1997 was $20,336.

(B)      The Company  converted several of its capital leases into notes payable
         to a trade creditor in principal amounts  aggregating  $276,830.  These
         notes are payable in monthly  installments  ranging from  approximately
         $2,000 to $8,000 with  interest  rates  ranging from 10% to 14.5%.  The
         outstanding balance at June 30, 1997 was $237,875.

(C)      In February 1997, the Company reached a settlement with the City of New
         York relating to an audit of General  Corporation  and Commercial  Rent
         taxes  for the  years  1990  through  1992.  In  accordance  with  this
         settlement  agreement,  the outstanding  principal  balance at June 30,
         1997 of $69,175 is payable  in  monthly  installments  of $1,976  which
         includes  interest at 10% per annum. A final balloon payment of $18,146
         is due on March 1, 2000.

                                       7
<PAGE>

                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 1997

NOTES PAYABLE - REVOLVING CREDIT FACILITY AND TERM LOAN

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 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.

Effective  February  1, 1996,  the Company  and  Rosenthal  amended the Loan and
Security  Agreement  (the  "Amendment").  The  Amendment  extended the Agreement
through  April 28,  1997 and  allowed  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%.  Effective  February 1, 1997,
the Company and Rosenthal  amended the Loan and Security  Agreement  ("Amendment
No. 2") to extend the  Agreement  through  April 1, 1998 and reduce the interest
rate to prime (8 1/2% at March 31, 1997) plus 2 7/8%.  In addition,  the Company
granted  Rosenthal  warrants  to  purchase an  additional  30,000  shares of the
Company's  common stock  Commencing  April 28, 1996, the Company was required to
pay a facility fee of $35,000 per annum,  which Amendment No. 2 has increased to
$40,000 per annum.

Amendment  No. 2 also  provided a $500,000 term loan to the Company due on April
1, 1998 with interest payable monthly at a rate of prime plus 5%.

The revolving  credit  facility and term loan bear  interest at variable  market
rates and as such the carrying value approximates their fair value.

CAPITAL LEASE OBLIGATIONS

The Company  leases its  principal  offices and  warehouse  facility and certain
equipment,  furniture and fixtures,  rental equipment and leasehold improvements
under capital lease agreements which extend through April 2000.

CAPITAL LEASE - FACILITY

The Company  occupies a pharmacy  warehouse and office facility (the "Facility")
which 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,  USA (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 

                                       8
<PAGE>
                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 1997

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, 1998. Since the Company has not requested nor received from Fleet a waiver of
non-compliance  with such  covenants  occurring  after April 1, 1998, the entire
balance outstanding has been classified as current on the accompanying condensed
consolidated balance sheet at June 30, 1997.

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 June 30,
1997) 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

In June 1995,  a former  employee  commenced  an action  against the Company and
certain of its former and current  officers,  directors  and  shareholders.  The
action alleges that the Company breached plaintiff's  employment  agreement.  On
June 18, 1996 the Court granted  defendants' motion  effectively  dismissing the
Complaint  as to the  Company's  current  and  former  officers,  directors  and
shareholders and leaving  plaintiff's claim for breach of contract and violation
of New York's Labor Law solely  against the Company.  The Company has now served
an Answer and a Document Request. The plaintiff has not proceeded with discovery
and the case is currently  dormant.  The Company  intends to deny the  principal
allegations in the Complaint and to defend this action vigorously.

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

Management  believes that the above matters will be settled without any material
adverse  financial  impact  to the  Company's  financial  position,  results  of
operations or cash flows.

                                       9
<PAGE>
                        ACCUHEALTH, INC. AND SUBSIDIARIES
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)
                                  JUNE 30, 1997

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  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, 1997  dividend  will be paid out in 45,556 shares of common stock on
July 25, 1997. Accrued and unpaid dividends are included in accrued expenses and
other current liabilities at June 30, 1997.

NOTE 5.  PROHEALTHCARE INFUSION SERVICES INC. ACQUISITION

Effective July 1, 1997 all of the conditions and requirements of the acquisition
had been satisfied. As a result,  Accuhealth,  Inc. completed the acquisition of
ProHealthCare  Infusion  Services,  Inc. This represents the consummation of the
transaction that was conditionally agreed to and announced in March 1997.

                                       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
---------------------

Net  sales  increased  approximately  $357,000  or 9% from the  comparable  1996
quarter to $4.284 million for the three months ended June 30, 1997. The increase
was the result of an  increase of  approximately  $362,000  and  $210,000 in the
Company's  institutional  pharmacy and oral medication  businesses,  offset by a
decrease in the Company's infusion services revenues of approximately $209,000 .

Gross profit for the three months ended June 30, 1997 and 1996 was approximately
$1.80 and $1.71 million, respectively, representing approximately 42% and 44% of
net  sales  for the  three  months  ended  June 30,  1997  and  June  30,  1996,
respectively.

Selling,  general and administrative expenses ("SG &A") were approximately $1.58
and $1.55  million or  approximately  37.3% and 39.3% of net sales for the three
months ended June 30, 1997 and 1996, respectively.  The increase was principally
attributable to payroll and related expenses.

FINANCIAL CONDITION
-------------------

The  Company's  cash  provided by operating  activities  during the three months
ended June 30, 1997 was $432,768. As of June 30, 1997, the Company had a working
capital  deficiency  of $644,451  as  compared to working  capital of $63,332 at
March 31, 1997. 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 June 30, 1997.  The  Company's
working capital  deficiency at June 30, 1997 would be approximately  $345,000 if
the capital lease were not  classified  as a current  liability on the June 1997
balance sheet. 

Management has formulated certain planned actions to improve its working capital
position and generate  sufficient  cash to meet its  operating  needs.  The plan
includes, among other matters, obtaining additional financing.

                                       11
<PAGE>

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
-----------------------------------------------

The Private  Securities  Litigation  Reform Act of 1995 provides a "safe harbor"
for forward looking  statements.  Certain information in Items 1 and 2 of Part I
of this Form 10-Q  include  information  that is  forward  looking,  such as the
Company's  plans to obtain  additional  financing.  The  matters  referred to in
forward  looking  statements  could be affected  by the risks and  uncertainties
involved in the Company's business.  These risks and uncertainties  include, but
are not limited to, the effect of economic and market conditions,  the impact of
the cost containment  efforts of third-party payors and the Company's ability to
obtain and  maintain  required  licenses.  Subsequent  written and oral  forward
looking  statements  attributable to the Company or persons acting on its behalf
are expressly  qualified in their entirety by the  cautionary  statements in the
paragraph and elsewhere in this Form 10-Q.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

                                       12
<PAGE>

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings
                  None

Item 2.  Changes in Securities
                  None

Item 3.  Default Upon Senior Securities
                  None

Item 4.  Submission of Matters to a Vote of Security Holders
                  None

Item 5.  Other Information
                  None

Item 6.  Exhibits and Reports on Form 8-K
                  (a) Exhibits
                      None
                  (b) Report on Form 8-K
                      The Company's  current  report on Form 8-K, date of report
                      July 2, 1997 and filed on July 16, 1997, reporting on Item
                      1 Note 5 to condensed consolidated financial statements.

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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: August 13, 1997             By: /s/ GLENN C. DAVIS
                                      -----------------
                                          Glenn C. Davis, as
                                          President and Chief Executive Officer

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