UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 30, 2007

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

For the transition period from ______________to ______________

Commission file number 0-12927

	NATIONAL HOME HEALTH CARE CORP.
	(Exact name of Registrant as Specified in Its Charter)
Delaware		22-2981141
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)
	700 White Plains Road, Scarsdale, New York 10583
	(Address of Principal Executive Offices with Zip Code)
	Registrant's Telephone Number Including Area Code: 914-722-9000

	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 No

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Large Accelerated Filer Accelerated Filer Non-Accelerated Filer

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares of common stock outstanding as of June 14, 2007 was 5,662,531.

NATIONAL HOME HEALTH CARE CORP.
Form 10-Q
For the Quarter Ended October 31, 2006
Table of Contents

PART I.	FINANCIAL INFORMATION	Page
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of April 30, 2007 and July 31, 2006 (unaudited)	3-4
	Condensed Consolidated Statements of Operations for the three months and nine months ended April 30, 2007 and April 30, 2006 (unaudited)	5
	Condensed Consolidated Statements of Cash Flows for the nine months ended April 30, 2007 and April 30, 2006 (unaudited)	6
	Notes to Condensed Consolidated Financial Statements	7-11
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	12-17
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	17
Item 4.	Controls and Procedures	17
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	18
Item 6.	Exhibits	19
SIGNATURES		20
EXHIBIT INDEX		21

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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	April 30, 2007		July 31, 2006
ASSETS
Current:
Cash and cash equivalents	$	20,422,000	$	19,301,000
Accounts receivable-less allowance for possible
losses of $1,915,000 and $1,419,000		20,368,000		18,837,000
Prepaid expenses and other		1,132,000		934,000
Deferred income taxes		249,000		317,000


Total current assets		42,171,000		39,389,000


Furniture, equipment and leasehold improvements, net		1,934,000		1,865,000
Goodwill		14,463,000		14,463,000
Other intangible assets, net		740,000		980,000
Deposits and other assets		593,000		522,000


TOTAL	$	59,901,000	$	57,219,000

(continued)

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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

	April 30, 2007			July 31, 2006
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable and accrued expenses	$	5,245,000		$	3,354,000
Deferred revenue		365,000			255,000
Dividend payable		425,000			425,000
Income taxes payable		427,000			6,000
Estimated third-party payor settlement		--			316,000


Total current liabilities		6,462,000			4,356,000


Stockholders' equity:
Common stock, $.001 par value; authorized
20,000,000 shares, issued 7,125,544 shares		7,000			7,000
Additional paid-in capital		26,532,000			26,532,000
Retained earnings		30,748,000			30,172,000

		57,287,000			56,711,000

Less: treasury stock (1,462,953 shares) at cost		(3,848,000	)		(3,848,000	)


Total stockholders' equity		53,439,000			52,863,000


TOTAL	$	59,901,000		$	57,219,000

See accompanying notes to consolidated financial statements.

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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

	For the three months ended April 30,					For the nine months ended April 30,
		2007			2006		2007		2006


Net patient revenue	$	27,938,000		$	25,032,000	$	81,641,000	$	77,023,000


Operating expenses:

Cost of revenue		18,625,000			16,906,000		54,304,000		51,193,000
General and administrative		8,168,000			6,807,000		22,315,000		20,908,000
Amortization of intangibles		80,000			98,000		240,000		307,000
Allowance for possible losses		324,000			132,000		966,000		410,000


Total operating expenses		27,197,000			23,943,000		77,825,000		72,818,000


Income from operations		741,000			1,089,000		3,816,000		4,205,000

Other income:

Interest		216,000			128,000		661,000		345,000


Income before income taxes		957,000			1,217,000		4,477,000		4,550,000

Provision for income taxes		1,201,000			495,000		2,626,000		1,795,000

Net (loss) income	$	(244,000	)	$	722,000	$	1,851,000	$	2,755,000


Net (loss) income per common share:

Basic	$	(0.04	)	$	0.13	$	0.33	$	0.49

Diluted	$	(0.04	)	$	0.13	$	0.32	$	0.48


Weighted average shares outstanding:

Basic		5,662,531			5,662,531		5,662,531		5,663,185


Diluted		5,745,797			5,741,722		5,743,131		5,742,485


Dividends declared per share	$	0.075		$	0.075	$	0.225	$	0.225

See accompanying notes to consolidated financial statements.

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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the nine months ended April 30,
	2007			2006
Cash flows from operating activities:
Net income	$	1,851,000		$	2,755,000
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization		681,000			712,000
Provision for doubtful accounts, net of writeoffs		496,000			374,000
Deferred income taxes		68,000			410,000
Changes in assets and liabilities:
Accounts receivable		(2,027,000	)		(126,000	)
Prepaid expenses and other		(269,000	)		(262,000	)
Accounts payable and accrued expenses		1,891,000			(292,000	)
Estimated third-party payor settlements		(316,000	)		(3,000	)
Deferred revenue		110,000			(144,000	)
Income taxes payable		421,000			(254,000	)

Net cash provided by operating activities		2,906,000			3,170,000


Cash flows from investing activities:
Purchase of property, plant and equipment		(510,000	)		(367,000	)
Proceeds from sale of investments		--			19,000

Net cash used in investing activities		(510,000	)		(348,000	)


Cash flows from financing activities:
Payment of dividends		(1,275,000	)		(1,275,000	)
Purchase of treasury shares		--			(15,000	)

Net cash used in financing activities		(1,275,000	)		(1,290,000	)


Net increase in cash and cash equivalents		1,121,000			1,532,000


Cash and cash equivalents-beginning of period		19,301,000			16,184,000


Cash and cash equivalents-end of period	$	20,422,000		$	17,716,000


Supplemental disclosures of cash flow information:
Cash paid during the period for:
Taxes	$	2,135,000		$	1,277,000
Interest	$	--		$	10,000
Dividends declared and not paid	$	425,000		$	425,000

See accompanying notes to consolidated financial statements.

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NATIONAL HOME HEALTH CARE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and Article 10 of regulation S-X. 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. Operating results for the three and nine month periods ended April 30, 2007 are not necessarily indicative of the results that may be expected for the year ending July 31, 2007. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended July 31, 2006.

NOTE 2 — RECLASSIFICATIONS

Certain reclassifications have been made in prior periods’ financial statements to conform to classifications used in the current period.

NOTE 3 — NET INCOME PER SHARE DATA

A reconciliation of shares used in calculating basic and diluted net income per share is as follows:

	For the three months ended April 30,
	2007		2006
	Shares		Shares

Basic EPS:		5,662,531		5,662,531
Effect of dilutive securities		83,266		79,191

Diluted EPS:		5,745,797		5,741,722

	For the nine months ended April 30,
	2007		2006
	Shares		Shares

Basic EPS:		5,662,531		5,663,185
Effect of dilutive securities		80,600		79,300

Diluted EPS:		5,743,131		5,742,485

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NOTE 4 – STOCK-BASED COMPENSATION

In December of 2004, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 123 (revised) , “Share-Based Payment.” SFAS No. 123R provides investors and other users of financial statements with more complete and neutral financial information by requiring that the compensation cost relating to share-based payment transactions be recognized in financial statements. The Company adopted SFAS No. 123R in the first quarter of fiscal 2006. This standard requires that the Company measure the cost of employee services received in exchange for any award of equity instruments based on the grant date fair value of the award. That cost will be recognized over the period in which the employee is required to provide the services – the requisite service period (usually the vesting period) – in exchange for the award. The grant date fair value for options and similar instruments will be estimated using option pricing models. Under SFAS 123R, the Company is required to select a valuation technique or option pricing model that meets the criteria as stated in the standard, which includes a binomial model and the Black-Scholes model. At the present time, the Company is continuing to use the Black-Scholes model. The adoption of SFAS 123R, applying the “modified prospective method,” as elected by the Company, requires the Company to value stock options prior to its adoption of SFAS 123R under the fair value method and expense these amounts over the remaining vesting period of the stock options. SFAS 123R requires that the Company estimate forfeitures for stock options and reduce compensation expense accordingly. The adoption of SFAS No. 123R did not have any impact on the Company’s overall results of operations or financial position as of April 30, 2007. Prior to the adoption of SFAS No. 123R, the Company accounted for stock-based compensation using the intrinsic value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations in accounting for its stock option plan by recording as compensation expense the excess of the fair market value of the underlying common stock over the exercise price per share as of the date of grant. Because the exercise price of the Company’s employee stock options equaled the market price of the underlying stock on the date of grant, no compensation expense was recognized.

NOTE 5 – AGREEMENT AND PLAN OF MERGER

On May 9, 2007, the Company, AG Home Health Acquisition Corp., a Delaware corporation (the “Acquisition Corp”), and AG Home Health LLC, a Delaware limited liability company (the “Parent”) entered into an Amended and Restated Agreement and Plan of Merger, dated May 9, 2007 (the “Merger Agreement”). On June 4, 2007, the Company, the Acquisition Corp and the Parent entered into Amendment No. 1, dated June 4, 2007, to the Merger Agreement (the Merger Agreement, as so amended, the “Amended Merger Agreement”). Pursuant to the Amended Merger Agreement and subject to the conditions set forth therein, the Acquisition Corp will merge with and into the Company, with the Company continuing as the surviving corporation under the laws of the State of Delaware. The Parent is an affiliate of Angelo, Gordon & Co.

At the effective time and as a result of the merger, each share of the Company’s common stock, par value $.001 per share (each a “Common Share”) issued and outstanding immediately prior to the effective time will be cancelled, extinguished and converted into the right to receive $12.75 per share, payable in cash (the “Merger Consideration”). Pursuant to a separate agreement among the Company, the Acquisition Corp, the Parent and Mr. Frederick H. Fialkow, Mr. Fialkow will contribute a portion of his Common Shares to the Company in exchange for an 8% subordinated note in a principal amount equal to the amount of cash he would otherwise have received for such Common Shares.

At the effective time of the merger, all options issued under the Company’s Stock Option Plans shall be converted into the right to receive a cash payment equal to the product of (i) the total number of Common Shares otherwise issuable upon exercise of such option and (ii) the amount, if any, by which the

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Merger Consideration per Common Share exceeds the applicable exercise price per Common Share of such option.

Consummation of the transactions contemplated by the Amended Merger Agreement is conditioned upon, among other things, (1) approval of the Amended Merger Agreement by the stockholders of the Company, (2) other regulatory approvals, including healthcare regulatory approvals, (3) the absence of a material adverse change in the Company, (4) holders of fewer than 15% of the common shares seeking appraisal of the fair value of their shares, (5) the absence of a court order enjoining the merger and (6) the amendment of the lease for the Company’s Queens, New York facility. The landlord to this lease is 175-20 Hillside Avenue Associates, which is a company that is controlled by Frederick H. Fialkow, the Chairman of the Company’s Board of Directors and the holder of approximately 36% of the Company’s outstanding common stock. The amendment of this lease will, among other things, extend the term of the lease for an additional 5 years (with two additional five year renewal options) and during such five year period, the yearly rent will be subject to a 3% increase per year. Subject to the satisfaction of the conditions to closing, it is anticipated that the merger will be consummated no later than September 10, 2007.

The Amended Merger Agreement contains customary representations and warranties by the Company, the Acquisition Corp and the Parent. The Amended Merger Agreement also contains customary covenants and agreements, including with respect to the operation of the business of the Company and its subsidiaries between signing and closing, restrictions on solicitation of proposals with respect to alternative transactions, governmental filings and approvals, public disclosures and similar matters. Nothing in the Amended Merger Agreement, however, prevents the Company from furnishing information to, or engaging in discussions or negotiations with, any person that offers the Company a Superior Proposal (as defined by the Amended Merger Agreement), or from accepting a Superior Proposal, which in either such case the board of directors of the Company, upon the recommendation of the special committee of the board of directors, determines in good faith (after consultation with independent legal counsel) that such action is necessary for the board to comply with its fiduciary duties to the Company’s shareholders. If the Company accepts a Superior Proposal, however, it must pay the Parent and Acquisition Corp a break-up fee of $2,300,000 plus the lesser of (i) the aggregate amount of Parent’s and Acquisition Corp’s Expenses (as defined in the Amended Merger Agreement) or (ii) $1,500,000.

Two stockholders of the Company, holding approximately 7.7% of the Company’s Common Shares, have exercised their appraisal rights. One additional stockholder of the Company, holding approximately 8.5% of the Company’s Common Shares, has indicated that it is his current intention to exercise his appraisal rights.

A lawsuit has been commenced against the Company and its directors. Plaintiff moved for a preliminary injunction, which was denied by the Court. The Amended Merger Agreement includes a provision whereby the Parent consents to an additional payment of $0.10 per share in cash to all Company shareholders other than the executive officers and directors of the Company and members of their families as settlement of such action, subject to certain conditions. See Note 6.

The Amended Merger Agreement may be terminated by any of the parties if there is any law that prohibits the consummation of the merger; if a governmental order is issued that prohibits the consummation of the merger or the payment of the Merger Consideration; if the Company’s shareholders do not approve the Amended Merger Agreement; or if the merger is not consummated before September 10, 2007. The Parent or Acquisition Corp may terminate the Amended Merger Agreement if, among other things, any of its closing conditions are incapable of being satisfied; if the Company materially breaches any of its representations, warranties or agreements in the Amended Merger Agreement; or if the

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Company’s board or its special committee withdraws or adversely modifies its favorable recommendation of the Amended Merger Agreement, or fails to recommend against any Acquisition Proposal (as defined in the Amended Merger Agreement). The Company may terminate the Amended Merger Agreement if, among other things, any of its closing conditions are incapable of being satisfied; if the Parent or Acquisition Corp materially breaches any of its representations, warranties or agreements in the Amended Merger Agreement; or if the Company complies with its covenants in the Amended Merger Agreement and an Acquisition Proposal constitutes a Superior Proposal.

A special meeting of the shareholders of the Company to a vote on the Amended Merger Agreement is scheduled to be held on June 15, 2007.

NOTE 6 – LITIGATION

On February 28, 2006, Lerai Jones, individually and on behalf of all other persons similarly situated, filed a lawsuit against the Company for alleged unpaid overtime wages pursuant to the New York Labor Law. Plaintiff seeks to certify a class of regular full-time hourly employees working within the State of New York. The legal issues in this case are closely intertwined and connected to the legal issues currently being litigated in the matter of Coke v. Long Island Care at Home, 376 F.3d 118 (2d Cir. 2004), which involves the exemption for home health care aides under the Fair Labor Standards Act. On August 31, 2006, upon a remand from the United States Supreme Court, the United States District Court for the Second Circuit affirmed the decision of the United States District Court for the Southern District of New York ruling that the exemption did not apply to home health aides employed by third parties. This decision, however, has been stayed pending an appeal to the United States Supreme Court, which has granted certiorari, and the defendant in the Coke decision is currently in the process of appealing this decision to the United States Supreme Court. Thus, because of this pending appeal of the Coke decision, Jones and the Company have agreed to enter into a stipulation extending the defendant’s time to answer the complaint or agreeing to have plaintiff stipulate to a discontinuance of this matter within thirty (30) days after a ruling in the Coke decision by the United States Supreme Court. On June 11, 2007, the United States Supreme Court unanimously overturned the decision of the United States Court of Appeals for the Second Circuit and upheld the exemption from overtime wages for home health aides.

On October 3, 2006, the Company’s New York subsidiary received an Information Subpoena with Restraining Notice by certified mail in connection with a Judgment obtained by Ida Faulkner against the New York subsidiary in the amount of $2,149,180 entered on default on January 4, 2005 in the Supreme Court of New York, Bronx County. The Company had no prior knowledge of Ms. Faulkner’s action, nor of the entry of the default. Upon a review of the Court’s file, the Company has ascertained that the action was commenced on or about August 21, 2003 and service of the Summons and Verified Complaint was made at an incorrect address. All subsequent notices were sent to this incorrect address and were not received by the Company. The Verified Complaint asserted causes of action for negligence and breach of contract and alleged that Ms. Faulkner suffered unspecified personal injuries. On October 6, 2006, the Company moved by Order to Show Cause to vacate the default based upon its lack of notice of the Summons and Verified Complaint. By Stipulation dated January 29, 2007, the default was vacated and the action was restored to the court’s active calendar. On February 8, 2007 the Company served an Answer asserting numerous defenses to the Verified Complaint. The parties are currently engaged in discovery. The Company believes that the claims are without merit and are fully covered by insurance.

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of approximately $573,000 against all of the defendants. MRI has answered the complaint, denied all of the allegations contained therein and is vigorously defending the claims. The Company cannot predict the ultimate resolution of this matter or the total amount of legal fees or other expenses to be incurred in connection with this matter.

On January 19, 2007, Helaba Invest Kapitalanlagegesellschaft mbH filed a verified class action complaint in the Delaware Court of Chancery (the “Class Action Complaint”). The suit purportedly was filed on behalf of the “public shareholders of the Company”. The Class Action Complaint names as defendants the Company and the individual members of its board of directors. In the Class Action Complaint, the plaintiff challenges the Merger Agreement and seeks a declaration that the defendants, and each of them, have committed or participated in a breach of their fiduciary duties of loyalty, good faith and care to the Company’s minority, public stockholders by approving the merger, and causing the Company to enter into the Merger Agreement. The plaintiff in the Class Action Complaint seeks preliminary and permanent injunctive relief preventing the consummation of the transaction, or in the alternative, if the transaction is consummated, rescission of the transaction. In the Class Action Complaint, the plaintiff alleged, among other things, that the initial Merger Consideration of $11.35-$11.50 per Common Share was inadequate; that the break up fee in the Merger Agreement is excessive and discourages other potentially superior offers for the Company; that two of the directors, the largest individual stockholders of the Company, have executed voting agreements requiring them to vote in favor of the transaction; and that certain terms of the transaction provide financial benefits to management and inside directors that create conflicts of interest. The defendants filed answers on or about February 13, 2007, denying the material allegations of the Class Action Complaint. Discovery has commenced. Plaintiff moved for a preliminary injunction which was denied by the Court. The Amended Merger Agreement includes a provision whereby the Parent consents to an additional payment of $0.10 per share in cash to all Company shareholders other than the executive officers and directors of the Company and members of their families as settlement of such action, conditioned upon Parent’s approval of the form of Stipulation of Settlement to be signed in connection therewith, in which the Company will reserve its rights to object to any fee application made by plaintiff’s counsel, and conditioned upon additional discovery by plaintiff. If a Stipulation of Settlement is signed, the Court will hold a hearing to consider whether to certify the class and approve the settlement. It is anticipated that it will take approximately 90 days for the appropriate notification procedures to occur. The Company and its directors believe the suit is without merit and, if not settled, intend to vigorously defend it.

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

General

The following discussion and analysis provides information which the Company’s management believes is relevant to an assessment and understanding of the Company’s results of operations and financial condition. This discussion and analysis should be read in conjunction with the attached unaudited consolidated financial statements and notes thereto, and with the Company’s audited financial statements and notes thereto for the fiscal year ended July 31, 2006 included with the Company’s annual report on Form 10-K with respect to such fiscal year.

Certain matters set forth in this report are forward-looking statements that are dependent on certain risks and uncertainties, including but not limited to risks and uncertainties relating to whether the Company can identify, consummate and integrate on favorable terms acquisitions or market penetrations, market acceptance, pricing and demand for the Company’s services, changing regulatory environment, changing economic conditions, whether the Company can attract and retain qualified personnel, the ability to manage the Company’s growth, and other risks detailed in the Company’s other filings with the Securities and Exchange Commission.

The Company is subject to external factors that could significantly impact its business, including potential reductions in reimbursement rates by Medicare, Medicaid and other third party payors for the Company’s services, retroactive adjustments due to prior year audits, reviews and investigations, government fraud and abuse initiatives and other such factors that are beyond the control of the Company. These factors could cause future results to differ materially from historical results.

New England Home Care, Inc. (“New England”), as a participant in the State of Connecticut Department of Social Services Medicaid program, is subject to survey and audits of operational, clinical and financial records with respect to proper applications of general regulations governing operations and billing of claims. These audits can result in retroactive adjustments for payments received from this program. In October 2006, New England received the final results of an audit for the period covering April 1, 2003 through March 31, 2005 which resulted in a liability of $151,000. There can be no assurance that federal, state or local governments will not change existing standards or impose additional standards. There can be no assurance that future Medicaid audits will not have a material adverse impact on the Company.

The Balanced Budget Act (the “Act”) was signed into law in August 1997. The Act made significant changes in the reimbursement system for Medicare home health care services. The primary change that affects the Company is the restructuring of the reimbursement system related to Medicare certified home health care agencies. Prior to the Act, Medicare reimbursed providers on a reasonable cost basis subject to program-imposed cost per visit limitations.

Under the Act, changes in Medicare home care reimbursement were scheduled in two phases. A temporary or interim payment system (“IPS”) took effect for cost reports beginning on or after October 1, 1997. Under IPS, home health care providers were reimbursed the lowest of (i) their actual costs, (ii) cost limits based on 105% of median costs of freestanding home health agencies, or (iii) an agency-specific per patient cost limit, based on 1994 costs adjusted for inflation. Under IPS, most Medicare providers were actually reimbursed under an agency-specific per patient cost limit. Effective October 1, 2000, under the prospective payment system, Medicare reimburses providers a predetermined base payment. The payment is adjusted for the health condition and care needs of the beneficiary and is also adjusted for

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geographic differences in wages across the country. Medicare provides home health agencies with payments for 60-day “episodes of care”.

In two of the last three fiscal years, less than five percent of the Company’s net patient revenue was derived directly from Medicare, and accordingly the change to the prospective payment system has not, to date, had a material adverse effect on the Company. However, there can be no assurance that the Medicare prospective payment system will not adversely impact the Company’s reimbursement rates in the future or otherwise have a material adverse effect on the Company. The Company’s operations in New York are dependent upon referrals, primarily from Medicare certified home health care agencies, whose reimbursement has been adversely affected by the prospective payment system. Under the prospective payment system, there can be no assurance that the Company’s future referrals will not result in reduced reimbursement rates or reduced volume of business.

The Company derives a substantial amount of revenue from state sponsored Medicaid programs. Approximately 47%, 46% and 43% of net patient revenue for the fiscal years ended July 31, 2006, 2005 and 2004, respectively, were derived from state law under federal guidelines. States differ as to reimbursement policies and rates. The Company is a licensed Medicaid provider in Connecticut, Massachusetts, New Jersey and in Nassau and Westchester Counties, New York.

From March 1, 2004 through August 23, 2005, the Division of Health Systems Regulation for the Connecticut Department of Public Health (the “DPH”) conducted various licensing and certification inspections of New England, the Company’s Medicare certified and licensed home health care subsidiary in Connecticut. In December 2005, New England and DPH entered into a Consent Order for the purpose of resolving DPH’s findings at the conclusion of those inspections. The Consent Order provides for the adoption of certain policies and procedures pursuant to a Plan of Correction approved by DPH. The terms of the Consent Order will generally remain in effect until the fall of 2007.

In December 6, 2004, New York State adopted legislation to increase the State minimum wage from $5.15 per hour to $7.15 over a two-year period. The law increased the minimum wage to $6.00 per hour starting January 1, 2005. The minimum wage was raised to $6.75 on January 1, 2006 and was raised again on January 1, 2007 to $7.15 per hour. This minimum wage legislation has impacted the Company’s New York operations on two fronts. Firstly, the Company has been paying higher base wages and secondly, overtime in New York is computed at 1.5 times the state minimum wage, thus increasing overtime costs to the Company.

On May 13, 2005, Accredited Health Services, Inc., (“Accredited”), the Company’s New Jersey wholly-owned subsidiary, received a copy of a Petition for Certification of Representative, pursuant to the provisions of the National Labor Relations Act. On March 21, 2006 the home health aides of Accredited, in a mail ballot election, rejected union representation by SEIU 1199 New Jersey.

On July 1, 2005, the State of New Jersey Medicaid Program introduced a revised Personal Care Assistant (“PCA”) Beneficiary Tool (the “Tool”). The Tool is used to determine the weekly hours a PCA Beneficiary receives. A a result of the implementation of the Tool, Accredited has experienced a reduction in the total hours per week that each PCA Beneficiary receives. For the fiscal year ended July 31, 2006, the State of New Jersey Medicaid Program accounted for approximately 82% of Accredited’s revenue.

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Results of Operations and Effects of Inflation

Three Months Ended April 30, 2007 Compared to Three Months Ended April 30, 2006.

Net Patient Revenue. For the three months ended April 30, 2007, net patient revenue increased $2,906,000, or 11.6%, to $27,938,000 from $25,032,000 for the three months ended April 30, 2006. This increase was attributable to (i) an increase of $1,201,000 resulting from the expansion of operations in Massachusetts, (ii) an increase of $914,000 resulting from additional Medicare and Medicaid revenue in Connecticut (iii) an increase of $744,000 resulting from additional hours being subcontracted in New York and (iv) an increase of $47,000 in New Jersey.

Gross Profit. Gross profit margin increased to 33.3% for the three months ended April 30, 2007 from 32.4% for the three months ended April 30, 2006. This increase is attributable to better nurse productivity and increases in certain reimbursement rates, offset by increases in direct payments to caregivers.

General and Administrative. General and administrative expenses increased $1,361,000, or 20.0%, to $8,168,000 for the three months ended April 30, 2007 from $6,807,000 for the three months ended April 30, 2006. This increase is primarily attributable to (i) increased home office costs, primarily consisiting of professional fees incurred with respect to the Merger Agreement in the amount of $1,499,000 and (ii) an increase of $200,000 in general and administrative costs in Massachussets as a result of the expansion of operations there. This increase was offset by reduced occupancy and administrative personnel costs in New Jersey, New York and Connecticut in the amount of $338,000, as the Company reduced costs to compensate for the effects of the Tool and the elimination of the non-recurring legal, consulting and administrative costs related to the above mentioned inspections in Connecticut incurred in the prior three month period. As a percentage of net patient revenue, general and administrative expenses increased to 29.2% for the three months ended April 30, 2007 from 27.2% for the three months ended April 30, 2006.

Amortization. Amortization of intangibles decreased $18,000, or 18.4%, to $80,000 for the three months ended April 30, 2007 from $98,000 for the three months ended April 30, 2006. This decrease is attributable to previous acquisitions that have now been fully amortized.

Allowance for Possible Losses. The Company recorded an allowance for possible losses of $324,000 for the three months ended April 30, 2007 as compared to $132,000 for the three months ended April 30, 2006. This increase is attributable to the Company increasing reserves for possible losses from certain payor sources.

Income from Operations. As a result of the foregoing, income from operations decreased $348,000, or 32.0%, to $741,000 for the three months ended April 30, 2007 from $1,089,000 for the three months ended April 30, 2006.

Interest Income. Interest income increased $88,000, or 68.8%, to $216,000 for the three months ended April 30, 2007 from $128,000 for the three months ended April 30, 2006. This increase is attributable to the higher cash balances of the Company and increased interest rates.

Income Taxes. The Company’s effective tax rate increased to 125.5% for the three months ended April 30, 2007 from 40.6% for the three months ended April 30, 2006. This increase is primarily attributable to the fact that none of the professional fees related to the Merger Agreement are deductible for income tax purposes (See Note 5).

Net (Loss) Income. Net income decreased $966,000, or 133.8%, to a loss of ($244,000), or ($.04) per diluted share, in the three months ended April 30, 2007 from $722,000, or $.13 per diluted share, in the three months ended April 30, 2006.

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Nine Months Ended April 30, 2007 Compared to Nine Months April 30, 2006.

Net Patient Revenue. For the nine months ended April 30, 2007, net patient revenue increased $4,618,000, or 6.0%, to $81,641,000 from $77,023,000 for the nine months ended April 30, 2006. This increase was attributable to an increase of $5,019,000 resulting from the expansion of operations in Massachusetts and additional hours being subcontracted in New York. The increase in net patient revenue was partially offset by (i) a decrease in Connecticut of $73,000 and (ii) a decrease of $328,000 in New Jersey as a result of the implementation of the Tool.

Gross Profit. Gross profit margin remained at 33.5% for both the nine months ended April 30, 2007 and the nine months ended April 30, 2006. This was attributable to the Company offsetting increased wages to caregivers with increases in certain reimbursement rates.

General and Administrative. General and administrative expenses increased $1,407,000 or 6.7%, to $22,315,000 for the nine months ended April 30, 2007 from $20,908,000 for the nine months ended April 30, 2006. This increase is attributable to (i) increased home office costs, primarily consisting of professional fees incurred with respect to the Merger Agreement in the amount of $2,448,000 and (ii) an increase of $572,000 in general and administrative costs in Massachusetts and New York as a result of the expansion of business and increased hours. This increase was offset by $1,613,000 as a result of reduced occupancy and administrative personnel costs in New Jersey and Connecticut, as the Company reduced costs to compensate for the effects of the Tool and the elimination of the non-recurring legal, consulting and administrative costs related to the above mentioned inspections in Connecticut incurred in the prior nine month period. As a percentage of net patient revenue, general and administrative expenses increased to 27.3% for the nine months ended April 30, 2007 from 27.1% for the nine months ended April 30, 2006.

Amortization. Amortization of intangibles decreased $67,000, or 21.8% to $240,000 for the nine months ended April 30, 2007 from $307,000 for the nine months ended April 30, 2006. This decrease is attributable to previous acquisitions that have now been fully amortized.

Allowance for Possible Losses. Allowance for possible lossses increased $556,000, or 135.69%, to $966,000 for the nine months ended April 30, 2007, as compared to $410,000 for the nine months ended April 30, 2006. This increase is primarily attributable to the Company recording additional allowances as a result of certain accounts receivable balances increasing and a Medicare certified agency in New York filing for Chapter 11 bankruptcy protection in November 2006.

Income from Operations. As a result of the foregoing, income from operations decreased $389,000, or 9.3%, to $3,816,000 for the nine months ended April 30, 2007 from $4,205,000 for the nine months ended April 30, 2006.

Interest Income. Interest income increased $316,000, or 91.6%, to $661,000 for the nine months ended April 30, 2007 from $345,000 for the nine months ended April 30, 2006. This increase is attributable to the higher cash balances of the Company and increased interest rates.

Income Taxes. The Company’s effective tax rate increased to 58.7% for the nine months ended April 30, 2007 from 39.5% for the nine months ended April 30, 2006. This increase is primarily attributable to the fact that none of the professional fees related to the Merger Agreement are deductible for income tax purposes (See Note 5).

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Net Income. Net income decreased $904,000, or 32.8%, to $1,851,000, or $.32 per diluted share, in the nine months ended April 30, 2007 from $2,755,000, or $.48 per diluted share, in the nine months ended April 30, 2006.

The rate of inflation had no material effect on operations for the nine months ended April 30, 2007.

Financial Condition and Capital Resources

Current assets increased to $42,171,000 and current liabilities increased to $6,462,000 at April 30, 2007. This resulted in an increase in working capital of $676,000 from $35,033,000 at July 31, 2006 to $35,709,000 at April 30, 2007. Cash and cash equivalents increased $1,121,000 to $20,422,000 at April 30, 2007 from $19,301,000 at July 31, 2006. The increase in cash and cash equivalents was primarily attributable to the cash generated by operating activities, offset by the payments of cash dividends.

The Company provided net cash from operating activities of $2,906,000 for the nine months ended April 30, 2007 as compared to net cash provided by operating activities of $3,170,000 for the nine months ended April 30, 2006. The decrease in net cash provided by operating activities of $264,000 is attributable to a decrease in operating cash flow of $1,155,000 and an increase in operating assets of $1,908,000, offset by an increase in operating liabilities of $2,799,000 over the comparable period for the nine months ended April 30, 2006.

The net cash used in investing activities for the nine months ended April 30, 2007 consisted of the purchase of equipment. The net cash used in investing activities for the nine months ended April 30, 2006 consisted of the purchase of equipment, offset by the proceeds from the sale of investments.

The net cash used in financing activities for the nine months ended April 30, 2007 consisted of the payments of cash dividends. The net cash used in financing activities for the nine months ended April 30, 2006 consisted of the payment of cash dividends and the purchase of treasury shares.

The nature of the Company’s business requires weekly payments to health care personnel at the time services are rendered. The Company typically receives payment for these services in 90 to 150 days with respect to contracted and insurance business and 8 to 45 days with respect to certain governmental payors, such as Medicare and Medicaid programs. Accounts receivable turnover was 72 days at both April 30, 2007 and April 30, 2006.

The Company extended its $7,500,000 revolving credit facility ( the “credit facility”) with Bank of America on April 17, 2007. The credit facility provides for the Company’s subsidiaries to borrow up to $7,500,000 at the bank’s prime rate or LIBOR plus 1.5%. The credit facility expires on April 2, 2008 and requires the Company to meet certain financial covenants and ratios. At April 30, 2007, there was no outstanding balance under the credit facility. Borrowings are secured by a pledge of all assets of the Company and its subsidiaries and guaranteed by the Company.

The Company intends to incur capital expenditures of approximately $600,000 (of which approximately $500,000 has been expended through the nine months ended April 30, 2007) during the fiscal year ending July 31, 2007 in connection with the implementation of new computer hardware, telephone equipment and networking equipment. These expenditures are designed to, among other things, update certain data input capability regarding services rendered at certain locations. The Company believes that the software will provide efficiencies in data organization, retrieval and analysis, both for continuing operations and in connection with certain audits. The Company intends to fund these expenditures, acquisitions and cash dividends declared by the Board of Directors and otherwise meet its

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short term and long term liquidity needs from its current cash balances, cash flow from operations and its credit facility.

Contractual Obligations

The Company rents various office facilities through 2012 under terms of several lease agreements that include escalation clauses. At April 30, 2007, minimum rental commitments under noncancellable operating leases were as follows:

Operating Leases

Less than 1 year	$1,084,000
1-3 years	837,000
3-5 years	110,000

	$2,031,000

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

None

Item 4. Controls and Procedures.

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that the Company is required to file under the Securities Exchange Act of 1934 (the “Exchange Act Reports”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. The Company’s management necessarily has applied its judgment in assessing the costs and benefits of such controls and procedures, which, by their nature, can provide only reasonable assurance regarding management’s control objectives. Management believes that there are reasonable assurances that the Company’s controls and procedures will achieve management’s control objectives.

Prior to the filing date of this report, the Company carried out an evaluation, under the supervision and with the participation of its management, including the President and Chief Executive Officer and the Vice President of Finance and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s disclosure controls and procedures pursuant to Exchange Act Rule 13a-15 as of April 30, 2007. Based upon that evaluation, the President and Chief Executive Officer and the Vice President of Finance and Chief Financial Officer concluded that the Company’s disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (and its consolidated subsidiaries) required to be included in its Exchange Act Reports.

Changes in Internal Controls Over Financial Reporting

The evaluation referred to above did not identify any changes in the Company’s internal controls over financial reporting that occurred during the quarter ended April 30, 2007 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II OTHER INFORMATION

Item 1. Legal Proceedings.

On November 17, 2006, Americare at Home, Inc. brought an action against Medical Resources, Inc. (“MRI”), a subsidiary of the Company, and certain others, in the Superior Court of the Commonwealth of Massachusetts. The plaintiff alleges that there was an existing contract between it and defendant Psychiatric Home Care, Inc. (“PHC”) and that MRI entered into a contract with PHC tortiously interfering with such contract and interfering with an advantageous relationship. Plaintiff seeks damages of approximately $573,000 against all of the defendants. MRI has answered the complaint, denied all of the allegations contained therein and is vigorously defending the claims. The Company cannot predict the ultimate resolution of this matter or the total amount of legal fees or other expenses to be incurred in connection with this matter.

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Complaint, the plaintiff challenges the Merger Agreement and seeks a declaration that the defendants, and each of them, have committed or participated in a breach of their fiduciary duties of loyalty, good faith and care to the Company’s minority, public stockholders by approving the merger, and causing the Company to enter into the Merger Agreement. The plaintiff in the Class Action Complaint seeks preliminary and permanent injunctive relief preventing the consummation of the transaction, or in the alternative, if the transaction is consummated, rescission of the transaction. In the Class Action Complaint, the plaintiff alleged, among other things, that the initial Merger Consideration of $11.35-$11.50 per Common Share was inadequate; that the break up fee in the Merger Agreement is excessive and discourages other potentially superior offers for the Company; that two of the directors, the largest individual stockholders of the Company, have executed voting agreements requiring them to vote in favor of the transaction; and that certain terms of the transaction provide financial benefits to management and inside directors that create conflicts of interest. The defendants filed answers on or about February 13, 2007, denying the material allegations of the Class Action Complaint. Discovery has commenced. Plaintiff moved for a preliminary injunction which was denied by the Court. The Amended Merger Agreement includes a provision whereby the Parent consents to an additional payment of $0.10 per share in cash to all Company shareholders other than the executive officers and directors of the Company and members of their families as settlement of such action, conditioned upon Parent’s approval of the form of Stipulation of Settlement to be signed in connection therewith, in which the Company will reserve its rights to object to any fee application made by plaintiff’s counsel, and conditioned upon additional discovery by plaintiff. If a Stipulation of Settlement is signed, the Court will hold a hearing to consider whether to certify the class and approve the settlement. It is anticipated that it will take approximately 90 days for the appropriate notification procedures to occur. The Company and its directors believe the suit is without merit and, if not settled, intend to vigorously defend it.

Item 6. Exhibits.

The following exhibits are filed herewith:

Exhibit Number	Description
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32.1	Section 1350 Certification of Principal Executive Officer.
32.2	Section 1350 Certification of Principal Financial Officer.

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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.

NATIONAL HOME HEALTH CARE CORP.

Date: June 14, 2007

/s/ Robert P. Heller
Robert P. Heller
Vice President of Finance (principal financial officer and
principal accounting officer)

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EXHIBIT INDEX


Exhibit
Number	Description

31.1*	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.

31.2*	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.

32.1*	Section 1350 Certification of Principal Executive Officer.

32.2*	Section 1350 Certification of Principal Financial Officer.

_________________

* Filed herewith

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APPLICABLE ONLY TO CORPORATE ISSUERS:

NATIONAL HOME HEALTH CARE CORP. Form 10-Q For the Quarter Ended October 31, 2006 Table of Contents

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

General

Results of Operations and Effects of Inflation

Three Months Ended April 30, 2007 Compared to Three Months Ended April 30, 2006.

Nine Months Ended April 30, 2007 Compared to Nine Months April 30, 2006.

Financial Condition and Capital Resources

Contractual Obligations

Item 3. Quantitative and Qualitative Disclosure About Market Risk.

Item 4. Controls and Procedures.

Changes in Internal Controls Over Financial Reporting

PART II OTHER INFORMATION

Item 1. Legal Proceedings.

Item 6. Exhibits.

NATIONAL HOME HEALTH CARE CORP.
Form 10-Q
For the Quarter Ended October 31, 2006
Table of Contents

NATIONAL HOME HEALTH CARE CORP 10-Q