<PAGE>

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

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                 FORM 10-Q/A-1

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

                  For the quarterly period ended June 30, 2000

                                       OR

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

                        Commission file number 000-26537

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

                Delaware                               36-3444974
    (State or other jurisdiction of                 (I.R.S. Employer
     incorporation or organization)              Identification Number)

                              2401 Commerce Drive
                          Libertyville, Illinois 60048
                    (Address of principal executive offices)

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

                                 (847) 680-3515
              (Registrant's telephone number, including area code)

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

   Indicate by check ( X ) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes  X   No

   As of July 31, 2000, there were 28,034,729 shares of the Registrant's $0.01
par value common stock outstanding.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

                                ALLSCRIPTS, INC.

                                 FORM 10-Q/A-1

                                     INDEX

<TABLE>
<CAPTION>
                                                                            Page
                                                                            ----
<S>                                                                         <C>
Note Regarding Amended 10-Q................................................   1

PART I. FINANCIAL INFORMATION
  Item 1. Financial Statements.............................................   2

    Condensed Consolidated Balance Sheets At December 31, 1999 and June 30,
     2000..................................................................   2

    Condensed Consolidated Statements of Operations For the three and six
     months ended June 30, 1999 and 2000...................................   3

    Condensed Consolidated Statements of Cash Flows For the six months
     ended June 30, 1999 and 2000..........................................   4

    Notes to Condensed Consolidated Financial Statements...................   5

  Item 2. Management's Discussion and Analysis of Financial Condition and
   Results of Operations...................................................   9

PART II. OTHER INFORMATION

  Item 6. Exhibits and Reports on Form 8-K.................................  14

  SIGNATURES...............................................................  15
</TABLE>
<PAGE>


                       NOTE REGARDING AMENDED 10-Q

   We are making this filing to revise our financial statements as noted
below. During the quarter ended June 30, 2000, we recognized $500,000 in
revenue for services provided to IMS Health Incorporated based upon the
delivery of data services to IMS. Subsequently, we determined that revenue
recognition was not appropriate due to certain ambiguities with respect to the
understanding between the parties and the related documentation. Accordingly,
previously reported revenues for the second quarter of 2000 have been revised
from $12,616,000 to $12,116,000, and previously reported revenues for the
first six months of 2000 have been revised from $22,263,000 to $21,763,000.
The revisions increased our net loss for the second quarter from $24,331,000
to $24,831,000 and net loss for the first six months of 2000 from $26,374,000
to $26,874,000.
<PAGE>

                          PART I FINANCIAL INFORMATION

Item 1. Financial Statements.

                       ALLSCRIPTS, INC. AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS

                      (In thousands, except share amounts)

<TABLE>
<CAPTION>
                                                       December 31,  June 30,
                                                           1999        2000
                                                       ------------ -----------
                                                                    (Unaudited)
<S>                                                    <C>          <C>
ASSETS
Current assets:
  Cash and cash equivalents...........................   $ 40,561    $ 83,243
  Marketable securities...............................     15,049      30,917
  Accounts receivable, net of allowances of $3,743 in
   1999 and $3,735 in 2000............................      5,126       9,233
  Interest receivable.................................        340       1,136
  Inventories.........................................      3,585       4,335
  Prepaid expenses and other current assets...........        786       1,787
                                                         --------    --------
    Total current assets..............................     65,447     130,651
Long-term marketable securities.......................        --       25,133
Fixed assets, net.....................................      4,940       8,898
Intangible assets, net................................      3,575     167,913
Other assets..........................................         52       1,047
                                                         --------    --------
    Total assets......................................   $ 74,014    $333,642
                                                         ========    ========
LIABILITIES
Current liabilities:
  Accounts payable....................................   $  4,352    $  6,005
  Accrued expenses....................................      1,664       4,941
  Deferred revenue....................................        575       1,887
                                                         --------    --------
    Total current liabilities.........................      6,591      12,833
Long-term debt........................................         59         --
                                                         --------    --------
    Total liabilities.................................      6,650      12,833
                                                         --------    --------
STOCKHOLDERS' EQUITY
Preferred shares:
  Undesignated, $0.01 par value, 1,000,000 shares
   authorized, no shares issued and outstanding at
   December 31, 1999 and June 30, 2000................        --          --
Common shares:
  $0.01 par value, 75,000,000 shares authorized,
   24,221,537 shares issued, 24,187,072 shares
   outstanding at December 31, 1999; 150,000,000
   shares authorized, 27,931,081 shares issued,
   27,896,616 shares outstanding at June 30, 2000.....        242         280
  1,439,691 shares to be issued pursuant to business
   combinations.......................................        --           14
Unearned compensation.................................     (1,632)     (1,350)
Additional paid-in capital............................    130,830     410,815
Treasury stock at cost; 34,465 common shares at
 December 31, 1999 and June 30, 2000..................        (68)        (68)
Accumulated deficit...................................    (62,008)    (88,882)
                                                         --------    --------
    Total stockholders' equity........................     67,364     320,809
                                                         --------    --------
    Total liabilities and stockholders' equity........   $ 74,014    $333,642
                                                         ========    ========
</TABLE>

  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       2
<PAGE>

                                ALLSCRIPTS, INC.

                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                           Three Months     Six Months Ended
                                          Ended June 30,        June 30,
                                         -----------------  ------------------
                                          1999      2000      1999      2000
                                         -------  --------  --------  --------
                                           (Unaudited)         (Unaudited)
<S>                                      <C>      <C>       <C>       <C>
Revenue................................  $ 6,392  $ 12,116  $ 12,420  $ 21,763
Cost of revenue........................    5,143     9,492     9,708    17,089
                                         -------  --------  --------  --------
    Gross profit.......................    1,249     2,624     2,712     4,674
Selling, general and administrative
 expenses..............................    4,554    10,748     8,104    19,693
Amortization of intangibles............      175     5,443       268     6,017
Write-off of acquired in-process
 research and development..............      --     13,729       --     13,729
                                         -------  --------  --------  --------
    Loss from operations...............   (3,480)  (27,296)   (5,660)  (34,765)
Interest income (expense), net.........      (91)    2,272      (200)    3,455
                                         -------  --------  --------  --------
Loss from continuing operations........   (3,571)  (25,024)   (5,860)  (31,310)
Income from discontinued operations....      --        --         26        83
Gain from sale of discontinued
 operations............................      --        193     3,547     4,353
                                         -------  --------  --------  --------
Net loss...............................   (3,571)  (24,831)   (2,287)  (26,874)
Accretion of mandatory redemption value
 of preferred shares and accrued
 dividends on preferred shares.........     (699)      --     (1,398)      --
                                         -------  --------  --------  --------
    Net loss attributable to common
     stockholders......................  $(4,270) $(24,831) $ (3,685) $(26,874)
                                         =======  ========  ========  ========
Per share data-basic and diluted:
  Continuing operations (including
   accretion and accrued dividends on
   preferred shares)...................  $ (0.48) $  (0.90) $  (0.84) $  (1.19)
  Discontinued operations..............      --       0.01      0.41      0.17
                                         -------  --------  --------  --------
    Net loss attributable to common
     stockholders......................  $ (0.48) $  (0.89) $  (0.43) $  (1.02)
                                         =======  ========  ========  ========
Weighted average shares of common stock
 outstanding used in computing per
 share data-basic and diluted..........    8,859    27,931     8,667    26,432
                                         =======  ========  ========  ========
</TABLE>


  The accompanying notes are an integral part of these condensed consolidated
                             financial statements.

                                       3
<PAGE>

                       ALLSCRIPTS, INC. AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                                June 30,
                                                           -------------------
                                                             1999      2000
                                                           --------  ---------
                                                              (Unaudited)
<S>                                                        <C>       <C>
Cash flows from operating activities:
  Net loss                                                 $ (2,287) $ (26,874)
  Adjustments to reconcile net loss to net cash used in
   operating activities:
    Depreciation and amortization.........................      747      7,210
    Gain on sale of discontinued operations...............   (3,547)    (4,353)
    Write-off of acquired in-process research and
     development..........................................      --      13,729
    Non-cash compensation expense-employees...............      271        282
    Non-cash expense-non-employees........................      --         742
    Changes in operating assets and liabilities:..........
      Decrease (increase) in accounts receivable, net.....    6,034     (2,994)
      Increase in interest receivable.....................      --        (796)
      Increase in inventories.............................     (692)      (570)
      Increase in prepaid expenses and other assets.......     (249)      (935)
      (Decrease) increase in accounts payable.............   (2,402)     1,203
      (Decrease) increase in accrued and other current
       liabilities........................................     (483)     2,369
                                                           --------  ---------
        Net cash used in operating activities.............   (2,608)   (10,987)
                                                           --------  ---------
Cash flows from investing activities:
  Capital expenditures....................................     (694)    (4,238)
  Purchases of marketable securities......................      --     (53,699)
  Proceeds from sale of marketable securities.............      --      12,924
  Proceeds from sale of discontinued operations...........    7,473      4,353
  Cash used for acquisitions, net of acquired cash........       49    (12,674)
  Purchase of investment..................................      --      (1,000)
                                                           --------  ---------
        Net cash provided by (used in) investing
         activities.......................................    6,828    (54,334)
                                                           --------  ---------
Cash flows from financing activities:
  Proceeds from exercise of common stock options..........      109        570
  Proceeds from public offering...........................      --      99,743
  Cash received from sale of common stock.................      --      10,000
  Borrowings under line of credit.........................    1,400        --
  Payments under line of credit...........................   (1,500)    (2,251)
  Payments on long-term debt..............................      --         (59)
                                                           --------  ---------
        Net cash provided by financing activities.........        9    108,003
                                                           --------  ---------
Net increase in cash and cash equivalents.................    4,229     42,682
Cash and cash equivalents, beginning of period............      718     40,561
                                                           --------  ---------
Cash and cash equivalents, end of period.................. $  4,947  $  83,243
                                                           ========  =========
</TABLE>

   The accompanying notes are an integral part of these condensed consolidated
financial statements.


                                       4
<PAGE>

                       ALLSCRIPTS, INC. AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

   The quarterly financial information presented herein should be read in
conjunction with Allscripts' audited financial statements and the accompanying
notes included in our Annual Report on Form 10-K. The unaudited interim
condensed financial statements have been prepared on a basis consistent with
those financial statements and reflect all adjustments (all of which are of a
normal recurring nature, except those related to discontinued operations and
business combinations) that are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods. The consolidated
financial statements include the accounts of Allscripts, Inc. and its wholly
owned subsidiaries (collectively referred to as "Allscripts"). All significant
intercompany accounts and transactions have been eliminated in consolidation.
The results for the interim periods are not necessarily indicative of the
results to be expected for the year.

2. Revisions to Previously Issued Financial Statements

   During the quarter ended June 30, 2000, Allscripts recognized $500,000 in
revenue for services provided to IMS Health Incorporated based upon the
delivery of data services to IMS. Subsequently, Allscripts determined that
revenue recognition was not appropriate due to certain ambiguities with
respect to the understanding between the parties and the related
documentation. Accordingly, previously reported revenues for the second
quarter of 2000 have been revised from $12,616,000 to $12,116,000, and
previously reported revenues for the first six months of 2000 have been
revised from $22,263,000 to $21,763,000. The revisions increased Allscripts'
net loss for the second quarter from $24,331,000 to $24,831,000 and net loss
for the first six months of 2000 from $26,374,000 to $26,874,000.

3. Recently Issued Accounting Standards

   In December 1999, the U.S. Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" ("SAB 101"), which provides the SEC's views in applying generally
accepted principles to selected revenue recognition issues. Adoption of SAB
101 is required in the fourth quarter of fiscal year 2000. Allscripts does not
expect SAB 101 to have a material impact on Allscripts' consolidated results
of operations or financial position.

4. Sale of Common Stock

   On March 10, 2000, Allscripts completed a public offering of 1,452,000
shares of its common stock, at an offering price of $73 per share. The public
offering resulted in gross proceeds of $105,996,000, $5,561,000 of which was
applied to the underwriting discount and approximately $692,000 of which was
applied to related offering expenses. The remaining net proceeds of
approximately $99,743,000 were invested in interest-bearing, investment-grade
securities.

   During February 2000, Allscripts sold IMS Health Incorporated 214,794
shares of Allscripts common stock for a purchase price of $10,000,000.

5. Business Combinations

   On May 9, 2000, Allscripts acquired MasterChart, Inc., a software developer
providing dictation, integration and patient record technology. In exchange
for all of the outstanding common shares of MasterChart, Allscripts issued
1,617,873 shares of its common stock with a value of approximately
$127,400,000 and paid cash of approximately $5,000,000. The business
combination was accounted for using the purchase method of accounting and
MasterChart's results of operations have been included in the consolidated
financial statements subsequent to the date of acquisition. Approximately
$5,000,000 of the purchase price was allocated to the value of acquired in-
process research and development that had no alternative future use and was
charged against

                                       5
<PAGE>

operations during the three months ended June 30, 2000. In addition,
approximately $4,600,000 of the purchase price was allocated to acquired
software and is being amortized on a straight-line basis over the software's
estimated useful life. Tradenames and goodwill, totaling approximately
$125,000,000, are being amortized on a straight-line basis over five years.
Goodwill represents the excess of the purchase price over the fair market
value of the net assets acquired.

   On May 17, 2000, Allscripts acquired Medifor, Inc., a provider of Internet
delivered patient education. In exchange for all of the outstanding common and
preferred A and B shares of Medifor, Allscripts issued 935,858 shares of its
common stock with a fair value of approximately $34,400,000. In addition,
Allscripts issued 142,786 common stock options in replacement of Medifor
common stock options with a fair value of approximately $4,200,000. The fair
value of the replacement common stock options was estimated using the Black-
Scholes model. The business combination was accounted for using the purchase
method of accounting and Medifor's results of operations have been included in
the consolidated financial statements subsequent to the date of acquisition.
Approximately $8,700,000 of the purchase price was allocated to the value of
acquired in process research and development that had no alternative future
use and charged against operations during the three months ended June 30,
2000. Tradenames and goodwill, totaling $30,300,000, are being amortized on a
straight-line basis over five years. Goodwill represents the excess of the
purchase price over the fair value of the net assets acquired.

   Pursuant to the terms of the purchase agreements, certain shares of
Allscripts' common stock were not delivered at the acquisition dates. It is
anticipated that all undelivered shares will be delivered by December 31,
2000.

   The following unaudited pro forma consolidated statements of operations for
the six months ended June 30, 1999 and 2000 assume the MasterChart and Medifor
acquisitions had occurred on January 1 of each year after giving effect to
purchase accounting adjustments. These pro forma financial statements have
been prepared for comparative purposes only and do not purport to be
indicative of what Allscripts' operating results would have been had the
acquisitions actually taken place at the beginning of each of the periods
presented, nor are they necessarily indicative of future consolidated
operating results. The pro forma information below excludes the impact of non-
recurring charges related to an immediate expensing of acquired in-process
research and development, as well as the impact of charges from stock-based
compensation recognized by MasterChart in connection with the acquisition. The
pro forma weighted average shares include 1,617,873 shares issued as
consideration for the MasterChart acquisition and 935,858 shares issued as
consideration for the Medifor acquisition as if they had been issued as of
January 1 of each period presented.

<TABLE>
<CAPTION>
                                                            Six Months Ended
                                                                June 30,
                                                            ------------------
                                                              1999      2000
                                                            --------  --------
                                                               (Unaudited)
                                                             (In thousands,
                                                            except per share
                                                                amounts)
      <S>                                                   <C>       <C>
      Revenue.............................................. $ 13,920  $ 23,483
      Loss from continuing operations (including accretion
       and accrued dividends on preferred shares).......... $(25,763) $(45,114)
      Net loss attributable to common stockholders......... $(22,190) $(40,678)
      Per share data--basic and diluted:
        Loss from continuing operations (including
         accretion and accrued dividends on preferred
         shares)........................................... $  (2.30) $  (1.60)
        Net loss attributable to common stockholders....... $  (1.98) $  (1.44)
      Weighted average shares of common stock outstanding
       used in computing basic and diluted loss per share..   11,221    28,283
</TABLE>

                                       6
<PAGE>

6. Net Income (Loss) Per Share

   Allscripts accounts for net income (loss) per share in accordance with SFAS
No. 128, "Earnings per Share." SFAS No. 128 requires the presentation of
"basic" earnings per share and "diluted" earnings per share. Basic earnings
per share is computed by dividing the net income (loss) attributable to common
stockholders by the weighted average shares of outstanding common stock
(including shares to be issued pursuant to business combinations). For
purposes of calculating diluted earnings per share, the denominator includes
both the weighted average shares of common stock outstanding (including shares
to be issued pursuant to business combinations) and dilutive potential common
stock.

   In accordance with SFAS No. 128, basic and diluted net loss per share has
been computed using the weighted average number of shares of common stock
outstanding during the period. Allscripts has excluded the impact of all
outstanding warrants and options to purchase shares of common stock, all
outstanding convertible preferred shares on an if converted basis and
contingent share payment obligations from the calculation of diluted loss per
share because all such securities are antidilutive for all periods presented.
Antidilutive potential common stock excluded from the diluted earnings per
share computation were 10,245,131 and 2,417,646 shares at June 30, 1999 and
2000, respectively.

7. Cash, Cash Equivalents and Marketable Securities

   Cash and cash equivalent balances consist of cash and highly liquid
corporate debt securities with maturities at the time of purchase of less than
90 days. Marketable securities include corporate debt instruments with
maturities of greater than 90 days at the time of purchase.

   Current marketable securities include those with maturities of less than
one year at the balance sheet date. Long term marketable securities have
maturities of greater than one year at the balance sheet date.

8. Contingencies

   The pharmaceutical repackaging industry is subject to stringent federal and
state regulations. Allscripts' repackaging operations are regulated by the
Food and Drug Administration as if Allscripts were a manufacturer. Allscripts
is also subject to regulation by the Drug Enforcement Agency in connection
with the packaging and distribution of controlled substances.

   Allscripts is a defendant in numerous multi-defendant lawsuits involving
the manufacture and sale of dexfenfluramine, fenfluramine and phentermine. The
plaintiffs in these cases claim injury as a result of ingesting a combination
of these weight-loss drugs. These suits have been filed in various
jurisdictions throughout the United States, and in each of these suits,
Allscripts is one of many defendants, including manufacturers and other
distributors of these drugs. Allscripts does not believe it has any
significant liability incident to the distribution or repackaging of these
drugs, and it has tendered defense of these lawsuits to its insurance carrier
for handling. The lawsuits are in various stages of litigation, and it is too
early to determine what, if any, liability Allscripts will have with respect
to the claims made in these lawsuits. If Allscripts' insurance coverage in the
amount of $16,000,000 per occurrence and $17,000,000 per year in the aggregate
is inadequate to satisfy any resulting liability, Allscripts will have to
defend these lawsuits and be responsible for the damages, if any, that
Allscripts suffers as a result of these lawsuits. Allscripts does not believe
that the outcome of these lawsuits will have a material adverse effect on its
financial condition, results of operations or cash flows.

9. Discontinued Operations

   In March 1999, Allscripts sold substantially all of the assets, excluding
cash and accounts receivable, of its pharmacy benefit management business. The
operating results of the pharmacy benefit management business have been
segregated from continuing operations and reported as a separate line item on
the Condensed Consolidated Statements of Operations under the caption "Income
from discontinued operations."

                                       7
<PAGE>

   Operating results from discontinued operations were as follows:

<TABLE>
<CAPTION>
                                                                   Six Months
                                                                      Ended
                                                                    June 30,
                                                                  -------------
                                                                   1999   2000
                                                                  ------- -----
                                                                       (In
                                                                   thousands)
                                                                   (Unaudited)
      <S>                                                         <C>     <C>
      Revenue.................................................... $14,292 $ --
      Cost of revenue............................................  13,378   --
                                                                  ------- -----
        Gross profit.............................................     914   --
      Selling, general and administrative expenses...............     762   (83)
      Amortization of intangibles................................     126   --
                                                                  ------- -----
      Operating income...........................................      26    83
                                                                  ------- -----
      Income from discontinued operations........................ $    26 $  83
                                                                  ======= =====
</TABLE>

   Included in revenue for the first six months of 1999 is $375,000 from
Anthem, Inc., a related party.

   For the six months ended June 30, 1999 and 2000, Allscripts recognized a
gain on the sale of this business of $3,547,000 and $4,353,000, respectively,
which has been reported as a separate line item on the Condensed Consolidated
Statements of Operations under the caption "Gain on sale of discontinued
operations." The gain in 2000 represents final payment of contingent
consideration related to the sale based upon certain pre-defined metrics which
were achieved in 2000. The contingent consideration was received by Allscripts
in May of 2000.

10. Subsequent Event

   On July 13, 2000, Allscripts entered into a definitive agreement to acquire
ChannelHealth Inc., a majority owned subsidiary of IDX Systems Corporation and
a provider of Internet and point-of-care clinical applications. In
consideration of the acquisition, Allscripts will issue approximately
8,600,000 shares of common stock. This acquisition will be accounted for as a
purchase. Consummation of the acquisition is subject to regulatory approval
and the approval of Allscripts' stockholders.

                                       8
<PAGE>

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

 Overview

   We provide physicians with Internet and client/server medication management
solutions designed to improve the quality and cost effectiveness of
pharmaceutical healthcare. We currently derive our revenue from the sale of
prepackaged medications, software licenses, computer hardware and related
services.

   Our shift in focus to physicians who require technology-based services to
operate successfully in a managed care environment and away from physicians
with a high percentage of fee-for-service patients is reflected in the
composition of our revenue, as depicted in the following table:

<TABLE>
<CAPTION>
                                                   Quarter Ended
                               -----------------------------------------------------
                                              1999                       2000
                               ----------------------------------- -----------------
                                                             Dec.             June
                               March 31, June 30, Sept. 30,  31,   March 31,   30,
                               --------- -------- --------- ------ --------- -------
                                                    (Unaudited)
                                                  (In thousands)
      <S>                      <C>       <C>      <C>       <C>    <C>       <C>
      Traditional revenue.....  $5,235    $4,537   $4,035   $4,085  $4,443   $ 4,993
      E-commerce revenue......     793     1,855    2,940    4,106   5,204     7,123
                                ------    ------   ------   ------  ------   -------
          Total revenue.......  $6,028    $6,392   $6,975   $8,191  $9,647   $12,116
                                ======    ======   ======   ======  ======   =======
</TABLE>

   Traditional revenue includes all non-e-commerce revenue and is derived from
the sale, through non-Internet channels, of prescription medications and other
medical products to physicians who do not use our software. We expect
traditional revenue to represent a decreasing percentage of total revenue in
the future. E-commerce revenue is derived primarily from the sale of
prescription medications over the Internet to physicians who use our software
or who order products from us primarily over the Internet. E-commerce revenue
also includes technology related revenue for software subscriptions, computer
hardware sales and leases, transaction fees, e-detailing and related services.
For the three months ended June 30, 2000, sales of prepackaged medications
represented 63.3% of e-commerce revenue. For the three months ended June 30,
2000, 22.9% of e-commerce revenue represented medication sales over the
Internet without the use of TouchScript ordering. While we expect a portion of
future e-commerce revenue to continue to represent a shifting of traditional
revenue, we anticipate that most of the future growth in e-commerce revenue
will be generated by physician practice groups that are not currently our
customers. Factors that we expect will attract future customers include an
interest in physician dispensing, a desire to minimize financial risk imposed
by managed care payers with respect to medications that they prescribe and
concern about the potential liability associated with medication errors.

   We believe that managed care prescription programs will continue to cover
an increasing percentage of patients in the foreseeable future. This trend
will have the effect of reducing the dispensing opportunities of our
traditional dispensing customers because of their inability to submit claims
electronically for reimbursement by managed care payers. This reduction in
dispensing opportunities will reduce the revenue that we have historically
recognized from these customers. Additionally, managed care programs impose
reduced reimbursement rates for the medications dispensed to their plan
participants, thus providing us with a dollar margin per prescription
dispensed that is lower than we have historically experienced. Because
TouchScript enables physicians to submit claims electronically for
reimbursement by managed care payers, a large portion of the medications
dispensed by our TouchScript customers is dispensed to managed care patients.
Accordingly, we expect that the fastest growing portion of our business will
provide margins with respect to the sale of prepackaged medications that are
lower than we have historically experienced. In addition, we expect that
seasonal variances in demand for our products and services will continue.
Historically, all other factors aside, our sales of prepackaged medications
have been highest in the fall and winter months.

   To maintain our position in a rapidly changing and increasingly competitive
marketplace, we expect to continue to increase the number of our sales, sales
support, product development and customer service personnel significantly,
and, accordingly, we expect our operating expenses to continue to increase at
an accelerated pace. In addition, we expect to amortize unearned compensation
expense of approximately $1,350,000 through December 31, 2003.

                                       9
<PAGE>

   In addition to medication management, we believe that there are other
aspects of the physician's daily work flow that can be effectively addressed
through technology-focused solutions. We have enhanced, and we intend to
continue to enhance, our current offerings by integrating new products and
services that address these needs. In furtherance of this strategy, in May
2000 we acquired MasterChart, Inc., a software developer providing dictation,
integration and patient record technology, and Medifor, Inc., a provider of
Internet-delivered patient education. See Note 5 of Notes to Condensed
Consolidated Financial Statements. In connection with these acquisitions, we
recorded goodwill and other intangible assets of approximately $159,900,000,
$4,600,000 of which will be amortized to expense over two years, and the
balance of which will be amortized to expense over five years. In addition, on
July 13, 2000, we entered into a definitive agreement to acquire
ChannelHealth, Inc. in exchange for approximately 8,600,000 shares of our
common stock. See Note 10 of Notes to Condensed Consolidated Financial
Statements. In connection with the ChannelHealth acquisition, which is
expected to close in the fourth quarter of 2000, we expect to record goodwill
and other intangible assets equal to a substantial portion of the purchase
price. These intangible assets will be amortized to expense over their
estimated economic life. We anticipate that there will be additional cash
required to fund the operations of ChannelHealth.

 Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999

   Total revenue for the three months ended June 30, 2000 increased by 89.5%
or $5,724,000 from $6,392,000 in 1999 to $12,116,000 in 2000. E-commerce
revenue increased by 284.0% or $5,268,000 from $1,855,000 in the second
quarter of 1999 to $7,123,000 in the second quarter of 2000. Traditional
revenue for the three months ended June 30, 2000 increased by 10.1% or
$456,000 from $4,537,000 in 1999 to $4,993,000 in 2000.

   The increase in e-commerce revenue reflects increased installations and
utilization of TouchScript, a conversion of traditional revenue as a result of
traditional customers ordering products over the Internet, an increase in the
dispensing percentage of brand drugs, which have a higher average selling
price than their generic counterparts, revenue generated from the MasterChart
and Medifor acquisitions, which closed in May, 2000, revenue generated from
our e-detailing product. The increase in traditional revenue reflects an
increase in new customers obtained through internal business generation and
acquisition, general price inflation of brand medications, an increase in the
dispensing percentage of brand drugs, which have a considerably higher average
selling price than their generic counterparts, and traditional revenue
generated by MedSmart, which was acquired in May 1999.

   Cost of revenue for the three months ended June 30, 2000 increased by 84.6%
or $4,349,000 from $5,143,000 in 1999 to $9,492,000 in 2000 due to increased
revenue, a greater percentage of revenue coming from higher cost brand
medications, increased operating costs at sites where we manage the dispensary
on behalf of the physician and increased depreciation expense due to increased
volume of TouchScript system installations. For the three months ended June
30, 2000, cost of revenue as a percentage of total revenue decreased to 78.3%
from 80.5% in the prior year period principally due to higher relative margin
contributions from software licensing fees, our e-detailing product and our
Medifor and Masterchart acquisitions. This percentage decrease was partially
offset by a greater percentage of revenue coming from lower margin brand
medications, increased operating costs at sites where we manage the dispensary
on behalf of the physician and increased depreciation expense.

   Selling, general and administrative expenses for the three months ended
June 30, 2000 increased by 136.0% or $6,194,000 from $4,554,000 in 1999 to
$10,748,000 in 2000 due primarily to additional spending for sales support
personnel and related expenses needed to sell, implement and support
TouchScript installations, other corporate expenses, general and
administrative expenses related to MedSmart, MasterChart and Medifor
operations that were acquired during May 1999 and May 2000, and additional
spending for TouchScript and Internet product development personnel and
related support expenses. As a result, selling, general and administrative
expenses as a percentage of total revenue increased to 88.7% for the three
months ended June 30, 2000 from 71.2% of total revenue in the prior year
period.

   Amortization of intangibles for the three months ended June 30, 2000
increased by 3,010.3% or $5,268,000 from $175,000 in 1999 to $5,443,000 in
2000. The increase in amortization relates primarily to the amortization

                                      10
<PAGE>

of goodwill and other intangibles recorded in the MasterChart and Medifor
acquisitions, which were completed in May 2000, as well as the amortization of
goodwill and other intangibles recorded in the MedSmart acquisition, which was
completed in May 1999, and the Shopping@Home acquisition, which was completed
in June 1999. For the three months ended June 30, 2000, we recorded an expense
for the immediate write-off of acquired in-process research and development
related to the Medifor and MasterChart acquisitions in the amount of
$13,729,000.

   Net interest income for the three months ended June 30, 2000 was $2,272,000
as compared to net interest expense of $91,000 for the prior year period. The
change relates to interest earned on the investment of net proceeds from our
initial public offering in July 1999 and our public offering in March 2000, as
well as the repayment of borrowings under our revolving credit facility with
our commercial bank in July 1999.

   We have recorded no provision or benefit for income taxes during the three
months ended June 30, 2000 because we currently anticipate that the annual
effective income tax rate will be minimal or zero, and we have fully reserved
all of our deferred tax assets.

   The operating results of our pharmacy benefit management business, which we
sold in March 1999, have been segregated from continuing operations and
reported as a separate line item on the Condensed Consolidated Statements of
Operations under the caption "Income from discontinued operations."
Additionally, the gain we recognized from the sale of this business has been
reported as a separate line item under the caption "Gain from sale of
discontinued operations." The gain recorded during the first six months of
2000 represents final payment of contingent consideration related to the sale
based upon certain pre-defined metrics, which were achieved in 2000.
Allscripts received the contingent consideration in May 2000.

 Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999

   Total revenue for the six months ended June 30, 2000 increased by 75.2% or
$9,343,000 from $12,420,000 in 1999 to $21,763,000 in 2000. E-commerce revenue
increased by 365.5% or $9,679,000 from $2,648,000 for the six months ended
June 30, 1999 to $12,327,000 for the same period of 2000. Traditional revenue
for the six months ended June 30, 2000 decreased by 3.4% or $336,000 from
$9,772,000 in 1999 to $9,436,000 in 2000.

   The increase in e-commerce revenue reflects increased installations and
utilization of TouchScript, a conversion of traditional revenue as a result of
traditional customers ordering products over the Internet, an increase in the
dispensing percentage of brand drugs, which have a higher average selling
price than their generic counterparts, revenue generated from our e-detailing
product and revenue generated by our Medifor and Masterchart acquisitions. The
decrease in traditional revenue reflects a conversion of traditional revenue
to e-commerce, as outlined above, offset partially by general price inflation
of brand medications, an increase in the dispensing percentage of brand drugs,
which have a considerably higher average selling price than their generic
counterparts, increased sales of pre-packaged medications to new customers and
traditional revenue generated by MedSmart, which was acquired in May 1999.

   Cost of revenue for the six months ended June 30, 2000 increased by 76.0%
or $7,381,000 from $9,708,000 in 1999 to $17,089,000 in 2000 due to increased
revenue, a greater percentage of revenue coming from higher cost brand
medications, increased operating costs at sites where we manage the dispensary
on behalf of the physician and increased depreciation expense due to increased
volume of technology sites, increased costs of technical support. For the six
months ended June 30, 2000, cost of revenue as a percentage of total revenue
increased from 78.2% in the prior year period to 78.5% principally due to a
greater percentage of revenue coming from lower margin brand medications,
increased operating costs at sites where we manage the dispensary on behalf of
the physician, increased depreciation expense and increased costs of technical
support. This percentage increase was partially offset by higher relative
margin contributions from software license fees, our e-detailing product and
from our Medifor and Masterchart acquisitions.

   Selling, general and administrative expenses for the six months ended June
30, 2000 increased by 143.0% or $11,589,000 from $8,104,000 in 1999 to
$19,693,000 in 2000 due primarily to additional spending for sales support
personnel and related expenses needed to sell, implement and support
TouchScript installations, expenses

                                      11
<PAGE>

related to MedSmart, MasterChart and Medifor operations that were acquired
during May 1999 and May 2000, other corporate expenses, additional spending
for product development personnel and related support expenses and a non-cash
charge related to stock options issued to non-employees. As a result, selling,
general and administrative expenses as a percentage of total revenue increased
to 90.5% for the six months ended June 30, 2000 from 65.2% of total revenue in
the prior year period.

   Amortization of intangibles for the six months ended June 30, 2000
increased by 2,145.1% or $5,749,000 from $268,000 in 1999 to $6,017,000 in
2000. The increase in amortization relates to the amortization of goodwill and
other intangibles recorded in the MasterChart and Medifor acquisitions, which
were completed in May 2000, as well as the amortization of goodwill and other
intangibles recorded in the MedSmart acquisition, which was completed in May
1999, and the Shopping@Home acquisition, which was completed in June 1999. For
the six months ended June 30, 2000, we recorded an expense for the immediate
write-off of acquired in-process research and development related to the
Medifor and MasterChart acquisitions in the amount of $13,729,000.

   Net interest income for the six months ended June 30, 2000 was $3,455,000
as compared to net interest expense of $200,000 for the prior year period. The
change relates to interest earned on the investment of net proceeds from our
initial public offering in July 1999 and our public offering in March 2000, as
well as the repayment of borrowings under our revolving credit facility with
our commercial bank in July 1999.

   We have recorded no provision or benefit for income taxes during the six
months ended June 30, 2000 because we currently anticipate that the annual
effective income tax rate will be minimal or zero, and we have fully reserved
all of our deferred tax assets.

   The operating results of our pharmacy benefit management business, which we
sold in March 1999, have been segregated from continuing operations and
reported as a separate line item on the Condensed Consolidated Statements of
Operations under the caption "Income from discontinued operations."
Additionally, the gain we recognized from the sale of this business has been
reported as a separate line item under the caption "Gain from sale of
discontinued operations." The gain for the six months ended June 30, 2000
represents final payment of contingent consideration related to the sale based
upon certain pre-defined metrics, which were achieved in March 2000.
Allscripts received the contingent consideration in May 2000.

 Liquidity and Capital Resources

   At June 30, 2000, our principal sources of liquidity consisted of
$83,243,000 of cash and cash equivalents and $56,050,000 of marketable
securities.

   Net cash used in operating activities increased by $8,379,000 to
$10,987,000 for the six months ended June 30, 2000, compared to $2,608,000 for
the six months ended June 30, 1999, primarily due to an increase in operating
losses. Depreciation and amortization increased by $6,463,000 to $7,210,000
for the six months ended June 30, 2000 compared to $747,000 for the six months
ended June 30, 1999 due primarily to amortization expenses related to recent
acquisitions. Accounts receivable, net of allowances, increased $2,994,000 in
the six months ended June 30, 2000 versus a decrease of $6,034,000 in the same
period last year, primarily due to increased sales volume in 2000 and the sale
of the pharmacy benefit management business in March 1999. Interest receivable
increased $796,000 in the six months ended June 30, 2000 from zero in the same
period last year due to interest receivable on cash equivalents and marketable
securities. Accounts payable increased $1,203,000 in the six months ended June
30, 2000 versus a decrease of $2,402,000 in the same period last year,
primarily due to the sale of the pharmacy benefit management business in March
1999. Allscripts also incurred non-cash charges of $742,000 and $13,729,000 in
the first and second quarter of 2000, respectively. The first quarter charge
relates to warrants issued to non-employees and the second quarter charge
relates to the write-off of in-process research and development costs.

   Net cash used in investing activities increased to $54,334,000 in the six
months ended June 30, 2000 from net cash generated from investing activities
of $6,828,000 in the first six months of 1999, primarily as a result of

                                      12
<PAGE>

the net purchases of marketable securities of $40,775,000 in the first six
months of 2000. In addition, net cash used for acquisitions increased to
$12,674,000 in the first six months of 2000 from zero in the prior year
period. Capital expenditures were $4,238,000 for the six months ended June 30,
2000 compared to $694,000 for the same period in 1999. The increased level of
expenditures in 2000 relates to facility expansion and improvements,
TouchScript computer systems and increases in capital outlays to accommodate
new employees. Currently, we have no material commitments for capital
expenditures, although we anticipate ongoing capital expenditures in the
ordinary course of business.

   Net cash provided by financing activities increased to $108,003,000 for the
six months ended June 30, 2000 compared to $9,000 for the six months ended
June 30, 1999, primarily due to the receipt of net proceeds of $99,743,000
from the public offering of our common stock and $10,000,000 related to a
private placement of common stock. Both occurred in March 2000.

   On March 10, 2000, Allscripts completed a public offering of 1,452,000
shares of its common stock, at an initial public offering price of $73 per
share. The public offering resulted in gross proceeds of $105,996,000,
$5,561,000 of which was applied to the underwriting discount and approximately
$692,000 of which was applied to related offering expenses. The remaining net
proceeds of approximately $99,743,000 were invested in interest-bearing,
investment-grade securities.

   We believe that our existing cash, cash equivalents and marketable
securities will be sufficient to meet the anticipated cash needs of our
current business for the next twelve months. However, any projections of
future cash needs and cash flows are subject to substantial uncertainty. We
will, from time to time, consider the acquisition of, or investment in,
complementary businesses, products, services and technologies, which might
impact our liquidity requirements or cause us to issue additional equity or
debt securities. There can be no assurance that financing will be available in
the amounts or on terms acceptable to us, if at all.

 Recently Issued Accounting Pronouncements

   In December 1999, the U.S. Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), which provides the SEC's views in applying generally accepted
principles to selected revenue recognition issues. Adoption of SAB 101 is
required in the fourth quarter of fiscal year 2000. We do not expect SAB 101
to have a material impact on our consolidated results of operations or
financial position.

 Safe Harbor For Forward-Looking Statements

   This report and statements we or our representatives make contain forward-
looking statements that involve risks and uncertainties. We develop forward-
looking statements by combining currently available information with our
beliefs and assumptions. These statements often contain words like believe,
expect, anticipate, intend, contemplate, seek, plan, estimate or similar
expressions. Forward-looking statements do not guarantee future performance.
Recognize these statements for what they are and do not rely upon them as
facts.

   Forward-looking statements involve risks, uncertainties and assumptions,
including, but not limited to, those discussed in this report. We make these
statements under the protection afforded them by Section 21E of the Securities
Exchange Act of 1934. Because we cannot predict all of the risks and
uncertainties that may affect us, or control the ones we do predict, our
actual results may be materially different from the results we express in our
forward-looking statements.

   For a more complete discussion of the risks, uncertainties and assumptions
that may affect us, see our Annual Report on Form 10-K for the fiscal year
ended December 31, 1999.

                                      13
<PAGE>

                          PART II. OTHER INFORMATION

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

   (a) Exhibits--See Index to Exhibits.

   (b) Reports on Form 8-K.

     A report on Form 8-K dated May 24, 2000 was filed by Allscripts in
  connection with the announcement of the merger with MasterChart, Inc.

     A report on Form 8-K dated May 31, 2000 was filed by Allscripts in
  connection with the announcement of the merger with Medifor, Inc.

     A report on Form 8-K/A dated July 24, 2000 (which amends the report on
  Form 8-K dated May 24, 2000) was filed by Allscripts to provide pro forma
  financial information in connection with the merger with MasterChart, Inc.

     A report on Form 8-K/A dated July 25, 2000 (which amends the report on
  Form 8-K/A dated July 24, 2000) was filed by Allscripts to amend certain
  pro forma financial information in connection with the merger with
  MasterChart, Inc.

     A report on Form 8-K/A dated July 25, 2000 (which amends the report on
  Form 8-K dated May 31, 2000) was filed by Allscripts to provide pro forma
  financial information in connection with the merger with Medifor, Inc.

                                      14
<PAGE>

                                   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.

                                          Allscripts, Inc.
                                           (Registrant)

                                                  /s/ David B. Mullen
                                          By: _________________________________
                                                      David B. Mullen
                                               President and Chief Financial
                                                          Officer
                                               (Duly Authorized Officer and
                                               Principal Financial Officer)

Date: October 26, 2000

                                       15
<PAGE>

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
  Exhibit  Description
  -------  -----------

 <C>       <S>                                                              <C>
  2.1*     Agreement and Plan of Merger, dated as of March 13, 2000,
           among the Registrant, MC Acquisition Corp., MasterChart, Inc.
           and certain shareholders of MasterChart, Inc., together with a
           list of exhibits and schedules thereto. Such exhibits and
           schedules are not filed, but the Registrant undertakes to
           furnish a copy of any such exhibit or schedule to the
           Securities and Exchange Commission upon request.
  2.2*     Amendment No. 1 to Agreement and Plan of Merger, dated as of
           May 9, 2000, by and among the Registrant, MC Acquisition
           Corp., MasterChart, Inc. and certain shareholders of
           MasterChart, Inc.
  2.3**    Agreement and Plan of Merger, dated as of April 12, 2000,
           among the Registrant, WebDoc Acquisition Corp., Medifor, Inc.
           and certain shareholders of Medifor, Inc., together with a
           list of exhibits and schedules thereto. Such exhibits and
           schedules are not filed, but the Registrant undertakes to
           furnish a copy of any such exhibit or schedule to the
           Securities and Exchange Commission upon request.
  3.1***   Amended and Restated Certificate of Incorporation, as amended
           May 18, 2000.
 10.1***   Amended and Restated 1993 Stock Incentive Plan, as amended May
           10, 2000.
 10.2*     Registration Rights Agreement dated as of May 9, 2000 by and
           among the Registrant and certain shareholders of MasterChart,
           Inc.
 10.3**    Registration Rights Agreement dated as of May 17, 2000 by and
           among the Registrant and certain shareholders of Medifor, Inc.
 10.4***   Employment Agreement dated as of April 5, 2000 by and between
           the Registrant and Lee A. Shapiro.
 10.5      Strategic Alliance Agreement dated February 16, 2000 by and
           between the Registrant and IMS Health Incorporated.
 27.1      Financial Data Schedule.
</TABLE>
--------
   * Incorporated herein by reference from the Registrant's Current Report on
     Form 8-K dated May 24, 2000.
  ** Incorporated hereby by reference from the Registrant's Current Report on
     Form 8-K dated May 31, 2000.

 *** Filed on August 14, 2000 as part of this Quarterly Report on Form 10-Q.

                                       16