FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

(Mark One)

[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 1997

                                       OR

[  ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
         SECURITIES EXCHANGE ACT OF 1934

         For the transition period _______________  to __________________

Commission file number     0-20183

                  Medic Computer Systems, Inc.
                  (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                  <C>
             North Carolina                                       56-1306083
(State or other jurisdiction of incorporation        (I.R.S. Employer Identification Number)
or  organization)

</TABLE>

          8601 Six Forks Road, Suite 300, Raleigh, NC 27615
         (Address of principal executive offices, zip code)

         (919) 847-8102
         (Registrant's telephone number, including area code)

                                       N/A
         (Former name, former address and former fiscal year, if changed since
         last report)

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____________

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.


Class                 Number Outstanding                     Date
-----                 ------------------                     ----
Common Stock                 25,723,004                 April 29, 1997
$.01 par value


<PAGE>


                          MEDIC COMPUTER SYSTEMS, INC.


                                INDEX TO FORM 10Q

<TABLE>
<CAPTION>

                                                                                        Pages
<S>               <C>                                                                   <C>
Part I.           FINANCIAL INFORMATION

Item 1.           Consolidated Financial Statements:

                  Balance Sheets as of December 31, 1996 and
                  March 31, 1997 (Unaudited)                                                3

                  Statements of Operations for the three months
                  ended March 31, 1997 and 1996 (Unaudited)                                 4

                  Statements of Cash Flows for the three months
                  ended  March 31, 1997 and 1996 (Unaudited)                                5

                  Notes to Financial Statements                                           6-9


Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                                   10-14



Part II.          OTHER  INFORMATION.

Item 6.           Exhibits and Reports on Form 8-K                                         15


SIGNATURES                                                                                 16


EXHIBIT INDEX                                                                              17

</TABLE>



                                       2



<PAGE>

<TABLE>
<CAPTION>

                                        MEDIC COMPUTER SYSTEMS, INC.
                                         CONSOLIDATED BALANCE SHEETS
                                      (IN THOUSANDS, EXCEPT SHARE DATA)

                                                                                          MARCH 31,        DECEMBER 31,
                                                                                            1997               1996
                                                                                            ----               ----
                                                                                         (UNAUDITED)
<S>                                                                                      <C>                <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                                $35,606            $25,557
  Short-term investments                                                                    26,694             32,852
  Accounts receivable, trade, net                                                           48,381             54,737
  Inventories and maintenance parts                                                         13,593             13,778
  Prepaid expenses                                                                           6,863              4,968
  Other current assets                                                                         911              1,006
  Deferred income tax benefit                                                                2,933              2,886
----------------------------------------------------------------------------------------------------------------------
     TOTAL CURRENT ASSETS                                                                  134,981            135,784

Property and equipment, at cost, net                                                        12,602             10,099
Intangible assets, at cost, net                                                             18,355             18,798
Other assets                                                                                    60                 55
----------------------------------------------------------------------------------------------------------------------
     TOTAL ASSETS                                                                         $165,998           $164,736
----------------------------------------------------------------------------------------------------------------------

LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
  Current portion of long-term note                                                         $1,438             $1,575
  Accounts payable, trade                                                                    6,104             10,013
  Customer deposits and deferred maintenance revenue                                        11,046             11,340
  Income taxes payable                                                                       3,066              1,131
  Accrued expenses:
     Commissions                                                                             1,461              2,213
     Compensation and related items                                                          4,774              4,915
     Other                                                                                   2,294              2,839
----------------------------------------------------------------------------------------------------------------------
     TOTAL CURRENT LIABILITIES                                                              30,183             34,026

Long-term note, less current portion                                                         1,031              1,418
Other long-term liabilities                                                                     73                 82
----------------------------------------------------------------------------------------------------------------------

SHAREHOLDERS' EQUITY:
Common Stock, $.01 par value; 40,000,000 shares authorized; 25,723,004 and
    24,441,470 shares issued and outstanding in 1997 and 1996, respectively
                                                                                               257                244
Additional paid-in capital                                                                  72,221             70,797
Retained earnings                                                                           62,233             58,169
----------------------------------------------------------------------------------------------------------------------
                                                                                           134,711            129,210
----------------------------------------------------------------------------------------------------------------------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                              $165,998           $164,736
----------------------------------------------------------------------------------------------------------------------

</TABLE>

The accompanying Notes are an integral part of the financial statements.


                                       3

<PAGE>


                          MEDIC COMPUTER SYSTEMS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                        (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>

                                                                           -----------------------------------
                                                                                   THREE MONTHS ENDED
                                                                           -----------------------------------
                                                                                   MARCH 31,        MARCH 31, 
                                                                                      1997            1996    
                                                                                      ----            ----    
                                                                                                   (restated) 

<S>                                                                                <C>             <C>
NET REVENUES:
Systems                                                                             $19,565           $21,162
Maintenance, forms and other services                                                27,886            22,212
--------------------------------------------------------------------------------------------------------------
  TOTAL NET REVENUES                                                                 47,451            43,374
--------------------------------------------------------------------------------------------------------------

COST OF REVENUES:
Systems                                                                              13,536            13,001
Maintenance, forms and other services                                                16,952            13,162
--------------------------------------------------------------------------------------------------------------
  TOTAL COST OF REVENUES                                                             30,488            26,163
-------------------------------------------------------------------------------------------------------------
    GROSS MARGIN                                                                     16,963            17,211
--------------------------------------------------------------------------------------------------------------

OPERATING EXPENSES:
Sales and marketing                                                                   4,805             4,124
Research and development                                                              2,942             2,423
General and administrative                                                            3,943             2,281
Amortization of intangible assets                                                       445               445
--------------------------------------------------------------------------------------------------------------
  TOTAL OPERATING EXPENSES                                                           12,135             9,273
--------------------------------------------------------------------------------------------------------------
    INCOME FROM OPERATIONS                                                            4,828             7,938
--------------------------------------------------------------------------------------------------------------

OTHER INCOME:
Interest income                                                                         639               544
--------------------------------------------------------------------------------------------------------------
    INCOME BEFORE INCOME TAXES                                                        5,467             8,482
--------------------------------------------------------------------------------------------------------------
PROVISION FOR INCOME TAXES                                                            2,351             3,091
--------------------------------------------------------------------------------------------------------------
NET INCOME                                                                           $3,116            $5,391
--------------------------------------------------------------------------------------------------------------

PRO FORMA DATA:
 INCOME BEFORE PRO FORMA INCOME TAX PROVISION                                        $3,116            $5,391
 PRO FORMA INCOME TAX EXPENSE FOR THE PERIODS PRIOR TO  MAY 31, 1996                      0               257
--------------------------------------------------------------------------------------------------------------
PRO FORMA NET INCOME                                                                 $3,116            $5,134
--------------------------------------------------------------------------------------------------------------

PRO FORMA EARNINGS PER SHARE:
     Net income per share                                                             $0.12             $0.21
--------------------------------------------------------------------------------------------------------------

Pro forma weighted average common
  shares and equivalents used in
  computing net income per share                                                 25,288,984        24,782,094
--------------------------------------------------------------------------------------------------------------


</TABLE>

The accompanying Notes are an integral part of the financial statements.


                                       4

<PAGE>


<TABLE>
<CAPTION>

                                                MEDIC COMPUTER SYSTEMS, INC.
                                            CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                         (UNAUDITED)
                                                       (IN THOUSANDS)

                                                                           ---------------------------- ----------------------------
                                                                               THREE MONTHS ENDED           THREE MONTHS ENDED
                                                                           ---------------------------- ----------------------------
                                                                                 MARCH 31, 1997               MARCH 31, 1996
                                                                                 --------------               --------------
                                                                                                                (RESTATED)

<S>                                                                              <C>                          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                            $3,116                       $5,391
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED BY OPERATING
    ACTIVITIES:
Depreciation and amortization of property and equipment                                  793                          517
Amortization of intangibles                                                              445                          445
Deferred income taxes                                                                   (47)                          260
Accounts receivable, trade, net                                                        7,901                      (2,220)
Inventories and maintenance parts                                                        250                          402
Prepaid expenses and other current assets                                            (1,310)                      (1,125)
Other assets                                                                             (5)                           87
Accounts payable, trade                                                              (4,154)                      (2,601)
Customer deposits and deferred maintenance revenue                                   (1,210)                        (245)
Income taxes payable                                                                   1,749                        1,466
Accrued expenses                                                                     (2,581)                        (381)
Payments on long-term note                                                             (524)                        (515)
Other long-term liabilities                                                              (9)                         (13)
--------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES                                              4,414                        1,468
--------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments                                                  (7,474)                      (4,412)
Proceeds from the sale of short-term investments                                      13,632                        4,152
Payments for purchases of property and equipment                                     (1,895)                        (714)
Cash acquired, net of payments for acquisitions                                        1,001                         (43)
--------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                                    5,264                      (1,017)
--------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock                                                 117                          199
  Distributions to shareholders                                                            -                        (340)
  Tax benefits from stock options exercised                                              254                          178
--------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                                371                           37
--------------------------------------------------------------------------------------------------------------------------
   Net increase in cash and cash equivalents                                          10,049                          488

CASH AND CASH EQUIVALENTS:
   Beginning of period                                                                25,557                       38,935
--------------------------------------------------------------------------------------------------------------------------
   End of period                                                                     $35,606                      $39,423
--------------------------------------------------------------------------------------------------------------------------
CASH PAID FOR INTEREST AND INCOME TAXES WAS AS FOLLOWS:
   Interest                                                                               $1                           $-
--------------------------------------------------------------------------------------------------------------------------
   Income taxes                                                                         $368                       $1,180
--------------------------------------------------------------------------------------------------------------------------

</TABLE>

The accompanying Notes are an integral part of the financial statements.

                                       5

<PAGE>


                          MEDIC COMPUTER SYSTEMS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The financial statements included herein are unaudited and have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows at March 31, 1997 and for all
periods presented have been made. Certain information and footnote disclosures
normally included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted pursuant
to such rules and regulations, but the Company believes that the disclosures
made are adequate to make the information presented not misleading. For more
complete financial information, these financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Results for interim periods are not necessarily indicative of the results for
any other interim period or for the full fiscal year.

2. BUSINESS COMBINATIONS

On May 31, 1996, the Company acquired all of the outstanding stock of
CompuSystems, Inc. ("CompuSystems"), a privately held company based in Columbia,
South Carolina, through an exchange of stock in a merger transaction valued at
approximately $33,400,000. Medic issued 720,022 shares of its common stock to
the shareholders of CompuSystems in the merger. The transaction was accounted
for as a pooling of interests and, accordingly, the Company's financial
statements for the periods prior to the merger have been restated to include the
results of CompuSystems for all periods presented.

On February 28, 1997, the Company acquired all of the outstanding stock of Home
Care Information Systems, Inc. ("HCIS"), a privately held company located in
Bloomfield, New Jersey, through an exchange of stock in a merger transaction
valued at approximately $18,800,000. The Company issued approximately 522,000
shares of its common stock in the transaction. The acquisition was accounted for
as a pooling of interests, but was not material to the Company's results of
operations and financial position for the periods prior to the acquisition.
Accordingly, the results of operations of HCIS are included from the date of
acquisition.

On February 28, 1997, the Company also acquired all of the outstanding stock of
Computer Business Systems of Virginia, Inc. ("CBSI"), a privately held company
located in Rockville, Maryland, through an exchange of stock in a merger
transaction valued at approximately $26,460,000. The Company issued
approximately 735,000 shares of its common stock in the transaction. The
acquisition was accounted for as a pooling of interests, but was not material to
the Company's results of operations and financial position for the periods prior
to the acquisition. Accordingly, the results of operations of CBSI are included
from the date of acquisition.


                                       6

<PAGE>




3. INVENTORIES AND MAINTENANCE PARTS

Inventories consisted of the following (in thousands):
 
<TABLE>
<CAPTION>

                                                                              March 31,      December 31,
                                                                                1997           1996
                                                                              (unaudited)

<S>                                                                          <C>              <C>
New and used computer hardware and parts                                      $12,478             $12,952
Inventory shipped to customers for which revenue recognition criteria
      has not been met                                                            735                 560
Forms                                                                             380                 266
                                                                               -------            -------   
                                                                              $13,593             $13,778
                                                                               =======            =======

</TABLE>


4. INTANGIBLE ASSETS

Intangible assets consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                        Amortization                            March 31,       December 31,
                                           Method         Estimated Lives         1997              1996
                                           ------         ---------------         ----              ----
                                                                               (unaudited)

<S>                                     <C>               <C>                   <C>             <C>
Excess of purchase price over net
      assets acquired and other
      intangible assets               Straight-line     15 years                $ 25,904          $ 25,904
Noncompetition agreement              Straight-line     5 years                      374               374
                                                                                --------          --------
                                                                                  26,278            26,278
Less accumulated amortization                                                      7,923             7,480
                                                                                --------          --------
                                                                                $ 18,355          $ 18,798
                                                                                ========          ========

</TABLE>


5. INCOME TAXES

The tax provisions for the three-month periods ended March 31, 1997 and 1996
differ from the statutory U.S. federal income tax rate primarily due to state
income taxes and nondeductible amortization of intangibles and acquisition
related costs.

Reconciliation between the "expected" income tax expense rate based on the
statutory U.S. federal income tax rate and the actual effective rate of the
expense is as follows:

<TABLE>
<CAPTION>

                                                                                        Three months ended March 31,
                                                                                        1997                   1996
<S>                                                                                    <C>                    <C>
Statutory U.S. federal rate                                                             35.0%              35.0%
State income taxes, net of  federal income tax benefit
                                                                                         4.8                4.8
Pro forma taxes on CompuSystems, an S-Corporation prior to May 31,
      1996, paid by former shareholders                                                   --               (3.0)
Amortization of intangibles and other permanent differences, including
      acquisition-related expenses                                                       3.2               (0.4)
                                                                                         ---               ----
                                                                                        43.0%              36.4%
                                                                                        ====               ====

</TABLE>

                                       7

<PAGE>


Deferred income taxes result from temporary differences in the recognition of
income and expense items for income tax and financial statement purposes. The
components of the deferred tax asset as of March 31, 1997 were as follows (in
thousands):


                                                                   March 31,
                                                                     1997

Deferred revenue                                                   $ 1,265
Accelerated depreciation                                             (348)
Inventory reserves and/or writedowns                                   390
Inventory spare parts capitalization                                   284
Allowance for bad debts and sales returns and credits                1,198
Accrued bonuses and vacation                                           531
Accrued pension and profit sharing plan                              (473)
Other                                                                   86
                                                                   -------
                                                                   $ 2,933
                                                                   =======


6. REVENUE RECOGNITION

The Company recognizes revenue in accordance with the provisions of AICPA
Statement of Position No. 91-1 "Software Revenue Recognition" (SOP 91-1).
Revenue from systems sales is recognized upon the installation and testing of
the system and completion of the initial customer training for all contracts.
Costs of remaining insignificant Company obligations, if any, are accrued as
cost of revenues at the time of revenue recognition. Revenue from services is
recognized as the services are performed. Revenues related to hardware and
software maintenance contracts are recognized ratably over the terms of the
contracts. Revenues related to forms and other ancillary products are recognized
upon shipment.


                                       8

<PAGE>




7. COMMON STOCK OPTIONS

The Company will adopt Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS No. 128") on December 31, 1997, requiring change in
its method of computing, presenting and disclosing earnings per share
information. Upon adoption, all prior period data presented will be restated to
conform to the provisions of SFAS No. 128.

Had SFAS No. 128 been adopted for the period ended March 31, 1997, basic income
per common share and diluted income per common share would have been presented
as follows (dollars in thousands, except share data):

<TABLE>
<CAPTION>

                                                                                Three Months           Three Months 
                                                                              Ended March 31,        Ended March 31,
                                                                                    1997                   1996  
                                                                                    ----                   ----  

<S>                                                                           <C>                    <C>
Basic income per common share:
     Income available to common stockholders                                     $      3,116           $      5,134
                                                                                        =====                  =====

     Weighted average common shares outstanding                                    24,899,777             24,235,000
                                                                                   ==========             ==========

      Basic income per common share                                              $       0.13           $       0.21
                                                                                         ====                   ====


Diluted income per common share:
     Income available to common stockholders                                     $      3,116           $      5,134
                                                                                        =====                  =====

     Weighted average common shares outstanding                                    24,899,777             24,235,000

     Dilutive effect of stock options                                                 389,207                547,094
                                                                                      -------                -------

     Total shares                                                                  25,288,984             24,782,094
                                                                                   ==========             ==========


      Diluted income per common share                                            $       0.12           $       0.21
                                                                                         ====                   ====


</TABLE>


                                       9

<PAGE>


                                     ITEM 2.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

This Item 2 contains certain forward-looking statements. The actual results of
operations of the Company might differ materially from those projected in the
forward-looking statements. The Company's revenues and results can vary
significantly from quarter to quarter as a result of a number of factors,
including the volume and timing of systems sales and installations and product
deliveries from the Company's vendors. The timing of such revenues from systems
sales is difficult to forecast because the Company's sales cycle can vary
depending upon factors such as the size of the transaction and general economic
conditions. Given that a significant percentage of the Company's expenses are
relatively fixed, a variation in the timing of systems sales can cause
significant variations in operating results from quarter to quarter. The
Company's future operating results may fluctuate as a result of these and/or
other factors, such as customer purchasing patterns and the timing of new
product and service introductions and product upgrade releases. Additional
information regarding factors that could cause actual results to differ
materially from those projected in the forward-looking statements contained
herein is contained in certain of the Company's other SEC filings, copies of
which are available from the Company upon request.



On May 31, 1996, the Company acquired all of the outstanding stock of
CompuSystems, Inc. ("CompuSystems"), a privately held company based in Columbia,
South Carolina, through an exchange of stock in a merger transaction valued at
approximately $33,400,000. Medic issued 720,022 shares of its common stock to
the shareholders of CompuSystems in the merger. The transaction was accounted
for as a pooling of interests and, accordingly, the Company's financial
statements for the periods prior to the merger have been restated to include the
results of CompuSystems for all periods presented.



On February 28, 1997, the Company acquired all of the outstanding stock of Home
Care Information Systems, Inc. ("HCIS"), a privately held company located in
Bloomfield, New Jersey, through an exchange of stock in a merger transaction
valued at approximately $18,800,000. The Company issued approximately 522,000
shares of its common stock in the transaction. The acquisition was accounted for
as a pooling of interests, but was not material to the Company's results of
operations and financial position. Accordingly, the operating results of HCIS
are included in the Company's financial statements from February 28, 1997.



On February 28, 1997, the Company also acquired all of the outstanding stock of
Computer Business Systems of Virginia, Inc. ("CBSI"), a privately held company
located in Rockville, Maryland, through an exchange of stock in a merger
transaction valued at approximately $26,460,000. The Company issued
approximately 735,000 shares of its common stock in the transaction. The
acquisition was accounted for as a pooling of interests, but was not material to
the Company's results of operation and financial position. Accordingly, the
operating results of CBSI are included in the Company's financial statements
from February 28, 1997.



                                       10

<PAGE>




THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED MARCH 31, 1996

TOTAL NET REVENUES

Total net revenues increased by 9.4% from $43,374,000 during the three months
ended March 31, 1996, to $47,451,000 during the three months ended March 31,
1997. Systems sales decreased by 7.5% from $21,162,000 during the three months
ended March 31, 1996, to $19,565,000 for the three months ended March 31, 1997.
Systems sales to new customers decreased by 22.2% from $12,855,000 during the
three months ended March 31, 1996 to $9,998,000 during the three months ended
March 31, 1997, primarily due to lower contract volume in the first quarter and
a longer implementation cycle of the backlog of larger systems. Systems sales to
existing customers for upgrades and add-ons increased 15.2% from $8,307,000 in
1996 to $9,567,000 in 1997.

The systems sales backlog increased by 31.4% from $27,842,000 at March 31, 1996,
to $36,575,000 at March 31, 1997. The backlog reflects an increase in orders
secured during 1996 and three months ended March 31, 1997, compared to the
corresponding period in the prior year.

Net revenues from maintenance, forms and other services increased by 25.5% from
$22,212,000 for the three months ended March 31, 1996, to $27,886,000 for the
three months ended March 31, 1997. This increase was primarily the result of
increases in hardware and software maintenance revenues of $1,750,000, in
FastBillSM revenue of $2,850,000, and in FastClaim(R) revenue of $1,305,000.


COST OF REVENUES

Cost of systems sales increased by 4.1% from $13,001,000 for the three months
ended March 31, 1996, to $13,536,000 for the three months ended March 31, 1997.
Cost of systems sales increased as a percentage of related revenues from 61.4%
for the three months ended March 31, 1996, to 69.2% for the three months ended
March 31, 1997, due primarily to the decrease in higher margin systems sales to
new customers and the increase in lower margin sales to existing customers.

Cost of maintenance, forms and other services revenues increased by 28.8% from
$13,162,000 for the three months ended March 31, 1996, to $16,952,000 for the
three months ended March 31, 1997, due primarily to increased related revenues.
Cost of maintenance, forms and other services revenues increased as a percentage
of related revenues from 59.3% for the three months ended March 31, 1996, to
60.8% for the three months ended March 31, 1997, due primarily to the increase
in FastBill sales as a percentage of maintenance, forms and other services
revenues. FastBill has a relatively lower margin as compared to margins on
maintenance and FastClaim revenues.

The total cost of net revenues increased as a percentage of total net revenues
from 60.3% for the three months ended March 31, 1996, to 64.3% for the three
months ended March 31, 1997, due primarily to the decrease in systems sales to
new customers which have a higher margin than sales to existing customers.

SALES AND MARKETING EXPENSES

Sales and marketing expenses increased by 16.5% from $4,124,000 for the three
months ended March 31, 1996, to $4,805,000 for the three months ended March 31,
1997. Sales and marketing expenses increased as a percentage of net revenues
from 9.5% for the three months ended March 31, 1996, to 10.1% for the three
months ended March 31, 1997, primarily due to the decrease in systems revenues.


                                       11


<PAGE>


GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased by 72.9% from $2,281,000 for the
three months ended March 31, 1996, to $3,943,000 for the three months ended
March 31, 1997, including one-time expenses of $1,079,000 incurred in connection
with the acquisitions of HCIS and CBSI. Excluding the one-time expenses, general
and administrative expenses increased by 25.6%, due primarily to the overall
company growth. General and administrative expenses increased as a percentage of
net revenues from 5.3% for the three months ended March 31, 1996, to 8.3% for
the three months ended March 31, 1997. Excluding the one-time expenses, general
and administrative expenses increased as a percentage of net revenues from 5.3%
for the three months ended March 31, 1996, to 6.0% for the three months ended
March 31, 1997 due to higher fixed costs relative to lower systems revenues.

RESEARCH AND DEVELOPMENT

Research and development costs increased by 21.4% from $2,423,000 for the three
months ended March 31, 1996, to $2,942,000 for the three months ended March 31,
1997, due primarily to the increased investment in developing new clinical 
products and continuing development of the +Medic Vision product. Research and
development expenses increased as a percentage of net revenues from 5.6% for the
three months ended March 31, 1996, to 6.2% for the three months ended March 31,
1997, due primarily to the effect of lower systems revenues. The Company has not
capitalized any research and development costs under Statement of Financial
Accounting Standards No. 86 because the amounts that would be subject to
capitalization have not been material.

AMORTIZATION

Amortization of intangibles remained constant at $445,000 for the three months
ended March 31, 1996 and 1997.

INCOME FROM OPERATIONS

Income from operations decreased by 39.2% from $7,938,000 for the three months
ended March 31, 1996, to $4,828,000 for the three months ended March 31, 1997,
due to the decrease in gross margin of $248,000 and an increase in operating
expenses of $2,862,000, including the one-time expenses of 1,079,000. Excluding
the one-time expenses, income from operations decreased by 25.6%. Income from
operations decreased as a percentage of net revenues from 18.3% for the three
months ended March 31, 1996, to 10.2% for the three months ended March 31, 1997.
Excluding the one-time expenses, income from operations decreased as a
percentage of net revenues from 18.3% for the three months ended March 31, 1996,
to 12.4% for the three months ended March 31, 1997.

OTHER INCOME

Net interest income increased from $544,000 for the three months ended March 31,
1996, to $639,000 for the three months ended March 31, 1997, due primarily to
increased invested cash.

PROVISION FOR INCOME TAXES

The Company's combined actual and pro forma provision for income taxes decreased
by 29.8% from $3,348,000, or 39.5% of pretax income for the three months ended
March 31, 1996, to $2,351,000, or 43.0% of pretax income for the three months
ended March 31, 1997, due primarily to decreased pretax income. The increase in
income taxes as a percentage of pretax income was due primarily to the
non-deductible acquisition related costs as a percentage of pretax income. The
tax provisions differ from the U.S. statutory federal income tax rate due
primarily to state income taxes, nondeductible amortization of intangible
assets, acquisition-related expenses and tax-free interest income. See Note 5 of
Notes to Consolidated Financial Statements.


                                       12

<PAGE>



LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations over the three months ended March 31 1997
primarily through cash on-hand, cash flow from operations and the conversion of
short-term investments. At March 31, 1997, the Company had cash and cash
equivalents equal to $35,606,000 and a working capital position in the amount of
$104,798,000.

The Company currently has a $10,000,000 uncommitted line of credit with Wachovia
Bank of North Carolina, N.A. ("Bank") . At March 31, 1997, there were no
borrowings outstanding under this line.

The Company's balance of cash and cash equivalents increased by 39.3% from
$25,557,000 at December 31, 1996 to $35,606,000 at March 31, 1997, due to cash
flow from operations of $4,414,000, sales of short term investments of
$13,632,000, proceeds from issuance of Common Stock of $117,000, tax benefits
from stock options exercised of $254,000 and net cash acquired of $1,001,000.
Cash was used primarily for purchases of fixed assets in the amount of
$1,895,000 and purchases of short term investments of $7,474,000.

The Company's accounts receivable balance decreased by 11.6% from $54,737,000 at
December 31, 1996, to $48,381,000 at March 31, 1997, due primarily to reduced
sales and increased cash collections. The Company's customer base continues to
expand from predominately small group medical practices to larger, consolidated
physician practices, hospital organizations, affiliated physician networks and
management services organizations. Selected larger customers have been extended
longer payment terms to more closely match the time required by the customers to
integrate the larger practice management systems throughout their organizations
after the installation of the system. The Company has increased the reserve for
doubtful accounts 30.3% from $3,198,000 at December 31, 1996 to $4,167,000 at
March 31, 1997 including reserves in the amount of $478,000 for recent
acquisitions. Days Sales Outstanding remained constant at 93 days from December
31, 1996 to March 31, 1997. The allowance for doubtful accounts is an estimate
and may increase or decrease in the future according to varying conditions in
the general economy or the Company's customer base. Management continues to
invest in systems and personnel to better manage working capital, including
accounts receivable.

Prepaid expenses increased by 38.1% from $4,968,000 at December 31, 1996, to
$6,863,000 at March 31, 1997, due primarily to prepaid insurance for corporate
insurance renewals and payment for supplies and materials associated with
FastBillSM revenues. Property and equipment increased by 24.8% from $10,099,000
at December 31, 1996, to $12,602,000 at March 31, 1997, due primarily to the
purchase of computer equipment for use in various departments and the addition
of real property in the acquisition of CBSI.

Accounts payable decreased by 39.0%, from $10,013,000 at December 31, 1996, to
$6,104,000 at March 31, 1997, due primarily to the timing of payments for
purchases.

Customer deposits and deferred revenue decreased by 2.6% from $11,340,000 at
December 31, 1996, to $11,046,000 at March 31, 1997, due to decreases in
customer deposits of $102,000, deferred maintenance billings of $132,000 and
other deferred revenues of $60,000.


Income taxes payable increased by 171.1% from $1,131,000 at December 31, 1996,
to $3,066,000 at March 31, 1997, due primarily to the timing of estimated
payments.

Accrued commissions decreased by 34.0% from $2,213,000 at December 31, 1996, to
$1,461,000 at March 31, 1997, due primarily to lower systems revenue in the
period and due to commissions paid out at a higher commission rate for 1996
contracts than earned on commissionable sales in 1997.


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<PAGE>

Accrued compensation and related items decreased 2.9% from $4,915,000 at
December 31, 1996, to $4,774,000 at March 31, 1997, due primarily to the payment
of bonuses accrued at December 31, 1996, which was offset by increases in
accrued vacation, accrued salaries, stock plan withholdings and accrued profit
sharing.

The Company's capital expenditures increased from $714,000 during the three
months ended March 31, 1996, to $1,895,000 during the three months ended March
31, 1997 due primarily to the purchase of computer equipment and software to
enhance management information systems and to accommodate the increase in
employees and offices. The Company believes that cash generated from operations,
proceeds from the issuance of common stock, and cash available under the
revolving credit facility will be sufficient to meet its cash and capital
requirements for the immediate foreseeable future.

From time to time, the Company has been contacted by or has made contact with
third parties who represent potential strategic partners or acquisition
candidates that would help facilitate the Company's growth strategy. Depending
upon the cash requirements of a potential transaction, the Company may finance
the transaction through its cash flow from operations or may raise additional
funds by pursuing various financing vehicles such as additional bank financing
or one or more additional public offerings or private placements of the
Company's securities. However, there can be no assurance that any such
transactions will occur, that the funds to finance any such acquisition will be
available on reasonable terms or at all, or that the consummation of such
transactions will not adversely affect the Company's cash balances and capital
requirements.

The Company believes that inflation has not had a significant impact on the
Company's results of operations to date.


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<PAGE>


                           PART II - OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES
                  (a)  None.
                  (b)  None.
                  (c) On February 28, 1997, the Company issued approximately
                      522,000 and 735,000 shares of its Common Stock to the
                      former shareholders of HCIS and CBSI, respectively, in
                      merger transactions exempt from registration under Rule
                      506 or Section 4(2) of the Securities Act of 1933, as
                      amended.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

                  (a)      Exhibits:
                           
                           11.1 Computations of Net Income per share of Common
                                Stock
                           27.1 Financial Data Schedule

                  (b)      Reports on Form 8-K:
                  
                           During the registrant's fiscal quarter ended March
                           31, 1997, registrant was not required to and did not
                           file any reports on Form 8-K.


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<PAGE>


                          MEDIC COMPUTER SYSTEMS, INC.
                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    MEDIC COMPUTER SYSTEMS, INC.


DATED:   May 12, 1997         -----------------------------------------------
                              Luanne L. Roth
                              Vice-President and Chief Financial Officer
                              (Duly Authorized Officer and Principal Financial 
                               and Accounting Officer)



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