<PAGE>   1

                     SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549


                                 FORM 10-Q/A
                               AMENDMENT NO. 1
                      (Amending Part I - Items 1 and 2)


           Quarterly Report Pursuant to Section 13 or 15(d) of the
                       Securities Exchange Act of 1934


                   For the Quarter Ended December 31, 1996



                         Commission File No. 0-26288



                            CONTOUR MEDICAL, INC.
           -----------------------------------------------------
           (Exact Name of Registrant as Specified in its Charter)



            Nevada                                      77-0163521 
-------------------------------           -----------------------------------
(State or Other Jurisdiction of           (IRS Employer Identification Number)
 Incorporation or Organization)



                             3340 Scherer Drive
                        St. Petersburg, Florida 33716
                  ----------------------------------------
                  (Address of Principal Executive Offices)


                               (813) 572-0089
            ----------------------------------------------------
            (Registrant's Telephone Number, Including Area Code)

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 report(s), and (2) has been subject to
such filing requirements for the past 90 days.

                            Yes [ X ]   No [   ]

There were 6,046,793 shares of the Registrant's $.001 par value Common Stock
outstanding as of December 31, 1996.
<PAGE>   2





                            CONTOUR MEDICAL, INC.

                                 FORM 10-Q/A

                                    INDEX


Part I.  Financial Information

<TABLE>
<CAPTION>
Item 1.  Financial Statements                                            Page
<S>                                                                      <C>

         Consolidated Balance Sheets as of December 31, 1996
         and June 30, 1996                                                3-4

         Consolidated Statements of Operations for the Three
         and Six Months Ended December 31, 1996 and 1995                  5-6

         Consolidated Statement of Stockholder's Equity
         for the Six Months Ended December 31, 1996                       7

         Consolidated Statements of Cash Flows for the
         Six Months Ended December 31, 1996 and 1995                      9-10

         Notes to Consolidated Financial Statements                      11-17

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations                             17-18
</TABLE>




                                     -2-
<PAGE>   3

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                         Consolidated Balance Sheet



<TABLE>
<CAPTION>
                                            December 31,     June 30,
                                                1996           1996   
                                            ------------    ----------
                                             (Unaudited)
<S>                                         <C>            <C>
ASSETS

Current:
  Cash                                      $   184,382     $  146,219
  Accounts receivable - trade
    Related parties (Note 4)                  2,095,575      1,918,000
    Other                                     9,975,645      2,527,676
  Inventories (Note 5)                        6,509,354      2,876,792
  Refundable income taxes                            --         21,406
  Prepaid expenses and other                    556,817         51,519
  Due from parent (Note 4)                      974,612        618,897        
                                            -----------     ----------        
      Total Current Assets                   20,296,385      8,160,509
                                            -----------     ----------
Property and Equipment, less
accumulated depreciation (Note 6)             1,915,935      1,223,195
                                            -----------     ----------
Other Assets:

  Goodwill                                    9,459,078      1,286,165
  Deposit on equipment                          577,245        416,184
  Other                                         469,250        172,215 
                                            -----------     ---------- 
      Total Other Assets                     10,505,573      1,874,564  
                                            -----------     ----------  
                                            $32,717,893    $11,258,268
</TABLE>





        See accompanying notes to consolidated financial statements.



                                     -3-
<PAGE>   4

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                         Consolidated Balance Sheet



<TABLE>
<CAPTION>
                                             December 31,     June 30,
                                                1996            1996   
                                            -------------   -----------
<S>                                          <C>           <C> 
                                             (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Notes payable to banks -
   credit lines (Note 7)                     $ 3,815,722   $ 1,391,535
  Accounts payable                             3,228,155     2,036,652
  Accrued expenses                             1,072,049       366,716
  Current maturities of long-term                           
   debt (Note 7)                              10,990,700       433,658
                                             -----------   -----------
      Total Current Liabilities               19,106,626     4,228,561
                                                            
Long-term debt, less current                                
maturities (Note 7)                            1,008,141     1,352,937   
                                             -----------   -----------   
      Total Liabilities                       20,114,767     5,581,498
                                                            
Convertible debentures, 9% interest                         
due monthly through July 1, 2003               5,000,000            --
                                             -----------   -----------
Stockholders' Equity:
  Preferred stock - Series A conver-
   tible, $.001 par value, shares
   authorized 1,265,000; issued
   600,000, outstanding 185,000 and
   600,000 respectively, at aggregate
   liquidation preference                        794,281     2,528,000
  Common stock $.001 par - shares
   authorized 76,000,000; issued
   6,046,793 and 4,802,280 (net of
   $765 discount)                                  5,282         4,449
  Additional paid-in capital                   5,696,369     2,911,696
  Retained earnings                            1,107,194       232,625  
                                             -----------   -----------  
      Total stockholders' equity               7,603,126     5,676,770

                                             $32,717,893   $11,258,268
</TABLE>





        See accompanying notes to consolidated financial statements.



                                     -4-
<PAGE>   5


                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                    Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                   Six Months Ended
                                            December 31,      December 31,
                                                1996             1995    
                                            ------------     ------------
                                            (Unaudited)      (Unaudited)
<S>                                         <C>              <C>

SALES                                       $25,915,316      $4,750,349

COST OF SALES                                18,271,484       3,420,339

GROSS PROFIT                                  7,643,832       1,330,010

OPERATING EXPENSES                            5,894,577         984,944

OTHER INCOME (EXPENSE)                         (304,823)          3,220
                                            -----------      ----------

INCOME BEFORE INCOME TAXES                    1,444,432         348,286

INCOME TAX EXPENSE                              550,000         118,417
                                            -----------      ----------

NET INCOME                                  $   894,432      $  229,869

NET INCOME PER COMMON SHARE                 $       .15      $      .05

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES                                        5,838,369       4,613,841

NET INCOME PER COMMON SHARE AND COMMON
SHARE EQUIVALENTS                           $       .10

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE EQUIVALENTS           8,961,026
</TABLE>





        See accompanying notes to consolidated financial statements.



                                     -5-
<PAGE>   6

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                    Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                 Three Months Ended
                                            December 31,    December 31,
                                               1996             1995   
                                            ----------       ----------
                                            (Unaudited)      (Unaudited)
<S>                                         <C>              <C>

SALES                                       $13,002,786      $ 2,512,220

COST OF SALES                                 9,197,949        1,831,267
                                            -----------      -----------
GROSS PROFIT                                  3,804,837          680,953

OPERATING EXPENSES                            2,957,419          495,343

OTHER INCOME (EXPENSE)                         (100,107)             132   
                                            ------------     -----------   
INCOME BEFORE INCOME TAXES                      747,311          185,742

INCOME TAX EXPENSE                              284,608           63,152
                                            ------------     -----------
NET INCOME                                  $   462,703      $   122,590

NET INCOME PER COMMON SHARE                 $       .08      $       .03

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES                                        5,959,837        4,613,841


NET INCOME PER COMMON SHARE AND COMMON
SHARE EQUIVALENTS                           $       .05

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON SHARE EQUIVALENTS           8,961,026
</TABLE>



        See accompanying notes to consolidated financial statements.



                                     -6-
<PAGE>   7

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

               Consolidated Statement of Stockholders' Equity


<TABLE>
<CAPTION>
                                                           Additional
                                    Common Stock            Paid-in
                                  Shares     Amount         Capital     
                                 ---------   ------        ----------   
<S>                              <C>         <C>           <C>

Balance, June 30, 1996           5,214,223   $4,449        $2,911,696

Exercise of common stock
 warrants                          296,820      297           625,209

Conversions of preferred
 stock                             415,000      415         1,659,564

Conversion dividend                 20,750       21              --

Preferred dividends in
 arrears                                --       --              --

Stock issued for guarantee         100,000      100           499,900

Net income                              --       --              --

Balance, December 31, 1996       6,046,793   $5,282        $5,696,369

</TABLE>



        See accompanying notes to consolidated financial statements.




                                     -7-
<PAGE>   8

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

               Consolidated Statement of Stockholders' Equity




<TABLE>
<CAPTION>
                                    Convertible
                                  Preferred Stock
                                  ---------------          Retained
                                Shares       Amount        Earnings  
                               --------     --------     -----------
<S>                            <C>         <C>           <C>

Balance, June 30, 1996          600,000    $2,528,000      $232,625

Conversions of preferred
stock                          (415,000)   (1,660,000)           --

Payment of Preferred Dividend        --       (88,519)       (5,063)

Preferred dividends in
 arrears                             --        14,800       (14,800)

Net income                           --            --       894,432

Balance, December 31, 1996      185,000     $ 794,281    $1,107,194
</TABLE>


        See accompanying notes to consolidated financial statements.



                                     -8-
<PAGE>   9

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                    Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                  Six Months Ended
                                            December 31,     December 31,
                                               1996             1995   
                                            ----------       ----------
                                            (Unaudited)      (Unaudited)
<S>                                       <C>                <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss)                         $    894,432       $  229,869

Adjustments to reconcile net income
 (loss) to net cash provided (used) by
 operating activities:

   Depreciation & Amortization                 385,807           70,447
   Tax benefit from NOL                             --          118,417

     (Increase) decrease in accounts
       receivable                           (7,625,544)        (422,373) 
     (Increase) decrease in inventories     (3,632,562)        (338,279) 
     (Increase) decrease in other                                        
       current assets and other assets      (8,636,307)         (68,834) 
     Increase (decrease) in accounts                                     
       payable                               1,191,503          188,124  
     Increase (decrease) in accrued                                      
       expenses and other liabilities          705,333           55,996        
                                          ------------        ---------        
       Net cash provided by operating                                    
         activities                        (17,611,770)        (396,502) 
CASH FLOW FROM INVESTING ACTIVITIES:                                     
                                                                         
  Acquisition of equipment                  (1,150,723)        (412,497) 

     (Increase)Decrease in due from           (355,715)         227,388  
        Parent                            ------------       ---------  
                                                                         
      Net cash used by investing                                         
        activities                          (1,506,438)        (185,159) 
</TABLE>



        See accompanying notes to consolidated financial statements.




                                     -9-
<PAGE>   10


                    CONTOUR MEDICAL, INC. AND SUBSIDIARIES

                    Consolidated Statements of Cash Flows



<TABLE>
<CAPTION>
                                                   Six Months Ended
                                             December 31,    December 31,
                                                1996             1995     
                                            ------------     ------------ 
                                            (Unaudited)      (Unaudited)
<S>                                         <C>               <C>

CASH FLOWS FROM FINANCING ACTIVITIES:

Acquisition Notes Issued                    $ 10,850,000      $      --
Convertible Debentures Issued                  5,000,000             --
Net borrowing (payments) on loans              1,786,433        211,619
Proceeds from exercise of options                     --         50,000
Payment of short-swing liability
  by shareholder                                      --         36,513
Exercise of Warrants                             625,506             -- 
                                            ------------      --------- 

Net cash provided by financing
  activities                                  18,261,939        298,150       
                                            ------------      ---------       
NET INCREASE (DECREASE) IN CASH                   38,163        (53,642)

CASH BEGINNING OF PERIOD                         146,219         96,235        
                                            ------------      ---------        

CASH END OF PERIOD                          $    184,382      $  42,593
SUPPLEMENTAL DISCLOSURE OF CASH
FLOW INFORMATION AND NON-CASH
ACTIVITIES:

  Cash paid for interest                    $    362,244      $  66,061

  Cash paid for income tax                  $         --      $     930
</TABLE>




        See accompanying notes to consolidated financial statements.



                                    -10-
<PAGE>   11

                   CONTOUR MEDICAL, INC. AND SUBSIDIARIES

           Notes to Consolidated Financial Statements (Unaudited)


1.   BASIS OF PRESENTATION

         The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information.  Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.  In the opinion of management, all
adjustments, consisting of normal recurring accruals, considered necessary for
a fair presentation have been included.  It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the June 30, 1996 audited financial statements for
Contour Medical, Inc.  The results of operations for the periods ended December
31, 1996 and 1995 are not necessarily indicative of the operating results for
the full year.

         The consolidated financial statements include the accounts of Contour
Medical, Inc. ("CMI") and its wholly-owned subsidiaries, Contour Fabricators,
Inc. ("CFI"), Contour Fabricators of Florida, Inc. ("CFFI") and, since March 1,
1996, AmeriDyne Corporation ("AmeriDyne"), and effective July 1, 1996, Atlantic
Medical Supply Company, Inc. ("Atlantic') collectively referred to as the
Company.  All material intercompany accounts and transactions have been
eliminated.  CMI is a majority-owned subsidiary of Retirement Care Associates,
Inc. ("Parent").

         On March 1, 1996, Contour Medical, Inc. acquired AmeriDyne through a
merger which was accounted for as a purchase.  The Company issued 369,619
shares of its common stock and paid $250,000 to the sole stockholder of
AmeriDyne in connection with this purchase.

         On August 6, 1996, the Company acquired all of the outstanding stock
of Atlantic Medical Supply Company, Inc.  (Atlantic Medical), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  The Company paid $1.4 million in cash and $10.5
million in promissory notes for all of the outstanding stock of Atlantic
Medical.  The promissory notes bear interest at 7% per annum and are due in
full on January 10, 1997.  In the event of a default in the payment of the
promissory notes, they are convertible into shares of common stock of Parent.

         In addition, on August 9, 1996, the Company acquired the remaining
minority interest of Facility Supply, Inc., a majority owned subsidiary of
Atlantic Medical.  The acquisition was made retroactively to July 1, 1996.  The
Company paid $50,000 in cash and $350,000 in promissory notes for the remaining
outstanding stock of Facility Supply, Inc.  The promissory notes bear interest
at 7% per annum and are due in full on January 10, 1997.  In the event of a
default in the payment of the promissory notes, they are convertible into
shares of common stock of Parent.



                                    -11-
<PAGE>   12


2.   CHANGE IN METHOD OF ACCOUNTING FOR TAXES AND INCOME

     Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("FAS 109") which
requires recognition of estimated income taxes payable or refundable on income
tax returns for the current year and for the estimated future tax effect
attributable to temporary differences and carry forwards.  Measurement of
deferred income tax assets being reduced by available tax benefits not expected
to be realized.

3.   CHANGE IN YEAR END

     The Company changed its fiscal year end from December 31 to June 30 during
1995. Atlantic also changed its fiscal year end from December 31 to June 30
during 1996.

4.   RELATED PARTY TRANSACTIONS

      During 1995, the Company began distributing medical supplies to health
care facilities owned, leased or managed by the Parent. Sales to these
facilities approximated $2,948,238 for the six month period ended December 31,
1996, and $1,112,238 for the three month period ended December 31, 1996. Trade
accounts receivable of $2,095,575 and $1,918,000 were outstanding as of
December 31, 1996 and June 30, 1996, respectively, as related to health care
facility sales to the Parent.  Additionally, the Company had an outstanding
loan receivable due from its Parent of approximately $975,000 at December 31,
1996, which is due within 45 days of advance with interest at prime and
$619,000 at June 30, 1996, which is due on demand with no stated interest rate.

5.   INVENTORIES

     Inventories are summarized as follows:

<TABLE>
<CAPTION>
                                       December 31,      June 30,
                                           1996            1996   
                                       -----------      ----------
                                       (Unaudited)      (Unaudited)
      <S>                               <C>             <C>

      Raw Materials                     $  330,823      $  330,699
      Work in process                       62,985          96,647
      Finished goods                     6,115,546       2,449,446  
                                        ----------      ----------  
                                        $6,509,354      $2,876,792
</TABLE>

All inventories are pledged as collateral.

6.   PROPERTY AND EQUIPMENT

     Property and equipment consist of the following:



                                    -12-
<PAGE>   13

<TABLE>
<CAPTION>
                                            December 31,        June 30,
                            Useful Lives        1996              1996   
                            ------------     ----------        ----------
<S>                          <C>             <C>               <C>
Land & Land Improvements             --      $   59,842        $   50,000
Building                     5-45 years         596,247           596,247
Computer Equipment           3-7 years        1,074,945            --
Machinery and equipment      3-7  years       2,349,616         1,798,520
Furniture and fixtures       5-7  years         234,257           146,536
Leasehold improvements       5    years         290,563           251,352
Vehicles                     3-5  years         188,202            72,245
                                             ----------        ----------
                                              4,793,672         2,914,900
Less accumulated depre-
 ciation                                      2,877,737         1,691,705
                                             ----------        ----------
                                             $1,915,935        $1,223,195
</TABLE>
Certain property and equipment are pledged as collateral (see Note 7).

7.   NOTES PAYABLE

     Notes payable at December 31, 1996 and June 30, 1996 consisted of the
following:
<TABLE>
<CAPTION>
                                                December 31,     June 30,
                                                   1996            1996  
                                                -----------     ---------
<S>                                             <C>                <C>
Note payable to sellers of Atlantic Medical
Supply Company, Inc. at 7%, principal and
interest due on January 10,1997, in event
of default convertible into common stock
of Parent                                       $10,500,000             --

Note payable to sellers of Facility
Supply, Inc. at 7%, principal and
interest due on January 10, 1997, in event
of default convertible into common stock
of Parent.                                          350,000             --

Note payable to bank, interest at prime plus
1% (9.25% at June 30, 1996), principal of
$5,000 plus interest due monthly through
June 2000, collateralized by equipment                   --        217,559

Note payable to bank, interest at prime plus
 .75% (9.00% at June 30, 1996) principal of
$7,605 plus interest due monthly through
May 2000, collateralized by equipment and
real property                                       457,251        496,171

Mortgage payable to bank, bearing interest
at 8.58%, principal and interest of $6,793,
due monthly through December 2003,
collateralized by equipment and real property       434,789        456,233
</TABLE>




                                    -13-
<PAGE>   14


<TABLE>
<S>                                               <C>              <C>
Mortgage payable to bank, interest at prime
plus .75% (9.00% at June 30, 1996) principal
of $1,190 plus interest due monthly through
December 2000, collateralized by equipment and
real property                                        57,141         64,284

Borrowings under $7,000,000 line of credit,
interest at 30 day libor plus 200bp (7.44%
at September 30, 1996), payable monthly,
collateralized by accounts receivable and
inventory. Principal due October 31, 1997         3,815,722             --

Borrowings under $100,000 line of credit,
interest at prime plus .75% (9.00%
at June 30, 1996), payable monthly,
collateralized by accounts receivable,
inventory, equipment, and real property                  --         65,000

Note payable to bank, interest at 8.75%
principal and interest at $1,282 due monthly
through April 2001, collateralized by equipment      55,301         60,436

Borrowings under $500,000 line of credit,
interest at prime plus .25% (8.5% at June
30, 1996) payable monthly, collateralized
by accounts receivable, inventory and
equipment, and guarantees by
Parent                                                   --        433,535

Note payable to leasing institution,
interest at 14.6%, monthly installments of
$309 plus sales tax. Matures June 1997,
collateralized by computer equipment                  1,206          2,924

Note payable to equipment company, interest at
11%, monthly installments of $533 including
interest.  Matures December 1997,
collateralized by equipment                           6,027          8,805

Note payable to stockholder, interest at 10%,
principal and interest of $5,693, due monthly
through March 1999                                  137,126        163,646

Note payable to bank, interest at 9%, principal
and interest of $3,600 due monthly through May
1997, collateralized by accounts receivable,
inventory, furniture, fixtures, equipment,
machinery, bank accounts, and guarantees of
Parent                                                   --         38,924
</TABLE>



                                    -14-
<PAGE>   15


<TABLE>
<S>                                             <C>            <C>
Note payable to bank, interest at 9%, principal
and interest of $5,266 due monthly through
October 1997, collateralized by accounts
receivable, inventory, furniture, fixtures,
equipment, machinery, bank accounts, and
guarantees of Parent                                    --     $   212,613

Borrowings under $975,000 line of credit, interest
at prime plus 1.25% (9.5% at June 30, 1996).
Principal is due on demand but no later than May
15, 1997.  Collateralized by accounts receivable,
inventory, furniture, fixtures, equipment,
machinery, bank accounts, and guarantees of
Parent                                                  --         958,000

                                                -----------     ----------
                                                $15,814,563    $ 3,178,130
Less current maturities                          14,806,422      1,825,193
                                                -----------     ----------
                                                $ 1,008,141    $ 1,352,937
</TABLE>


     Certain of the above agreements contain financial and operating covenants,
including requirements that the Company maintain certain net worth levels and
satisfy current and debt-to-net-worth ratios.  The Company was in compliance
with all debt covenants as of December 31, 1996.

The aggregate maturities of long-term debt are as follows as of December 31,
1996:

<TABLE>                                     
         <S>                                          <C>
         1997                                         $ 11,099,183
         1998                                            3,273,405
         1999                                              303,777
         2000                                              491,884
         2001                                               83,674
</TABLE>


SFAS No. 107, "Disclosure About Fair Value of Financial Instruments," requires
that the Company disclose estimated fair values for its financial instruments.
Fair value is defined as the price at which a financial instrument could be
liquidated in an orderly manner over a reasonable time period under present
market conditions.  The rates of the Company's fixed obligations approximate
those rates of the adjustable loans.  Therefore, the fair value of those loans
has been estimated to be approximately equal to their carrying value.

Commitments and Contingencies:

The company is obligated under various noncancelable leases for equipment and
office space.  Future minimum lease commitments under operating leases were as
follows as of December 31, 1996.




                                    -15-
<PAGE>   16



<TABLE>
      <S>                         <C>
      1997                        $389,974
      1998                         412,224
      1999                         385,974
      2000                         307,224
      2001                         305,062
</TABLE>

EMPLOYMENT AGREEMENT - The Company has entered into an employment agreement
with a key executive for a five-year period ending June 1998. The agreement
provides for annual base compensation of $100,000.

LITIGATION - During 1994, the Company was a defendant in an employment injury
lawsuit filed by one of its employees.  The Company settled this dispute for
approximately $30,000.

The Company was a defendant in a lawsuit filed by one of its former employees
for wrongful discharge of employment.  During the year ended December 31, 1993,
the Company settled this dispute for $85,000.

8.       INCOME TAXES:

         Income taxes are provided based on the liability method of accounting
pursuant to Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes."

9.       ACQUISITION:

         Effective March 1, 1996, the Company acquired all of the outstanding
common stock of AmeriDyne Corporation (AmeriDyne) for approximately $2.475
million in cash and stock.  AmeriDyne distributes medical supplies to
hospitals, clinics, physicians, pharmacies, nursing homes and other health care
providers.

         The purchase price exceeded the fair value of the net assets acquired
by approximately $1.3 million.  The acquisition was accounted for as a
purchase.  The resulting goodwill is being amortized on the straight-line basis
over 40 years.

         On August 6, 1996, the Company acquired all of the outstanding stock
of Atlantic Medical Supply Company, Inc.  (Atlantic Medical), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  The Company paid $1.4 million in cash and $10.5
million in promissory notes for all of the outstanding stock of Atlantic
Medical.  The promissory notes bear interest at 7% per annum and are due in
full on January 10, 1997.  In the event of a default in the payment of the
promissory notes, they are convertible into shares of common stock of Parent.

         The following unaudited pro forma consolidated results of operations
presents information as if the acquisitions had occurred at the beginning of
the fiscal year in 1995.  The pro forma information is provided for information
purposes only.  It is based on historical information and does not necessarily
reflect the results that would have occurred nor is it necessarily indicative
of future results of operations of the combined enterprise.





                                    -16-
<PAGE>   17

<TABLE>
<CAPTION>
                                      Unaudited          Unaudited
                                   Six Months Ended      Year Ended
                                  December 31, 1995     June 30, 1996
          <S>                       <C>                  <C>

          Sales                     $23,219,482          $34,333,727
          Net Income                $   645,332          $   585,784*
          Per share                 $      0.14          $      0.10
</TABLE>


* Full year earnings reflect write down of approximately $1.1 million for
events occurring prior to July 1, 1995.

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
          RESULTS OF OPERATIONS.

     The following should be read in conjunction with the attached Financial
Statements and Notes thereto of the Company.

THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED DECEMBER
31, 1995

     As a result of the factors discussed below, for the three months ended
December 31, 1996, the Company had net income of $462,703 compared to $122,590
for the three months ended December 31, 1995.

     Sales increased by $10,490,566 for the three months ended December 31,
1996 as compared to the three months ended December 31, 1995. Approximately
$3,615,356 of the increase resulted from sales by AmeriDyne and approximately
$6,026,045 of the increase resulted from sales by Atlantic.

     Gross profit for the three months ended December 31, 1996, was $3,804,837
or 29.3% of sales, as compared to $680,953 or 27% of sales, for the same period
of the previous year.  The increase in gross profit as a percentage of sales is
primarily the result of higher gross profit margins on business' acquired.

     Operating expenses for the three month period ending December 31, 1996,
were $2,957,419 as compared to $495,343 in 1995.  The operating expenses
increased approximately 600% as the result of the acquisitions, although as a
percent of sales the increase represented only a 3% increase.

SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1995

     As a result of the factors discussed below, for the six months ended
December 31, 1996, the Company had net income of $ 844,432 compared to $229,869
for the six months ended December 31, 1995.

     Sales increased by $21,164,967 for the six months ended December 31, 1996
as compared to the six months ended December 31, 1995. Approximately $6,841,356
of the increase resulted from sales by AmeriDyne and approximately $13,422,045
of the increase resulted from sales by Atlantic.

     Gross profit for the six months ended December 31, 1996, was $7,643,832 or
29.4% of sales, as compared to $1,330,010 or 28% of sales, for the same period
of the previous year.  The increase in gross profit as a percentage of sales is
primarily the result of higher gross profit margins on business' acquired.

     Operating expenses for the six month period ending December 31, 1996, were
$5,894,578 as compared to $984,944 in 1995.  The operating expenses increased
approximately 600% as the result of the acquisitions, although as a percent of
sales the increase represented only a 2% increase.





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<PAGE>   18


LIQUIDITY AND CAPITAL RESOURCES

     At December 31, 1996, the Company had $1,189,758 of working capital as
compared to $3,931,948 on June 30, 1996.

     Operating activities for the six months ended December 31, 1996, utilized
cash of $17,611,770 as compared to operating activities during the six months
ended December 31, 1995, which utilized cash of $ 396,502.  The increased use
of cash was primarily due to increases in inventory, accounts receivable and
other assets due primarily, in the aggregate, to the acquisition of Atlantic.

     The cash flows used by investing activities of $ 1,506,723 during the
six months ended December 31, 1996, were a result of the draw of $355,715 by
the Company's parent and by the use of $1,150,723 for the acquisition and
deposits of additional equipment.

     Cash flow of $18,261,939 was provided from financing activities in 1996,
whereas in 1995 cash flows from financing activities provided cash of $298,150.
During the six months ended December 31, 1996, $5,000,000 was provided from
debenture borrowings, was provided by acquisition notes $10,950,000 and
$625,506 was provided by the exercise of stock warrants.

     The Company currently maintains a total of $7 million revolving line of
credit with its banks for short-term working capital needs.  As of December 31,
1996, $3,815,722 had been borrowed against these lines.

     On August 6, 1996, the Company acquired all of the outstanding stock
of Atlantic Medical Supply Company, Inc.  ("Atlantic"), a distributor of
disposable medical supplies and a provider of third-party billing services to
the nursing home and home health care markets.  The acquisition was made
retroactively to July 1, 1996.  The Company paid $1,400,000 in cash and
promissory notes totaling $10,500,000 for the stock of Atlantic, and
subsequently paid an additional $50,000 in cash and issued a promissory note
for $350,000 to acquire a minority interest in a subsidiary of Atlantic,
Facility Supply, Inc.  The promissory notes bore interest at 7% per annum and
were due in full on January 10, 1997.  In the event of a default in the payment
of the promissory notes, they were convertible into shares of common stock of
the Parent. The cash for this transaction came from a $5 million debenture
placement that was completed on July 12, 1996.

     On January 10, 1997, the Company retired all outstanding notes due the
sellers of Atlantic Medical Supply Company, Inc. and Facility Supply, Inc.,
respectively, in the aggregate principal amount of $10,850,000, along with
accrued interest.  The retirement of these notes was funded by a loan of
$9,750,000 from the Parent, with the balance funded from the Company's existing
line of credit with Barnett Bank.  The loan from the Parent Company was
evidenced by a convertible promissory note bearing interest at 9% per annum and
payable upon demand.  This note was convertible into 1,950,000 shares of the
Company's Common Stock, and on January 10, 1997, the Parent exercised this
conversion right.

     The Company presently does not anticipate any commitments for material
capital expenditures.

SEASONALITY AND INFLATION

     The Company's business is relatively consistent and stable on a monthly
basis, and has not indicated any seasonality over the prior three fiscal
periods.

     In addition, the Company does not believe that inflation has had a
material effect on its results from operations during the past three fiscal
years.  There can be no assurance, however, that the Company's business will
not be affected by inflation in the future.





                                    -18-
<PAGE>   19



                                 SIGNATURES

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

                                     CONTOUR MEDICAL, INC.


Date: July 29, 1997              By: /s/ Donald F. Fox 
                                     -------------------------------------------
                                         Donald F. Fox, President,Treasurer
                                          and Chief Financial Officer





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