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

                             FORM 10-K

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

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

For the fiscal year ended                   Commission File No.
   December 31, 1997                              0-15443

                      THERAGENICS CORPORATION
  (Exact name of registrant as specified in its charter)

        Delaware                          58-1528626
(State of incorporation)     (I.R.S. Employer Identification Number)

      5325 Oakbrook Parkway
       Norcross, Georgia                              30093
(Address of principal executive offices)            (Zip Code)

Registrant's telephone number, including area code:(770) 381-8338

    Securities registered pursuant to Section 12(b) of the Act:
Title of each class     Name of each exchange on which registerer
        None                               None

    Securities registered pursuant to Section 12(g) of the Act:
                        Title of Class
     Common  Stock,  par value  $.01 per  share,  together  with the  associated
             Common Stock Purchase Rights

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

  Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
form 10-K.

  As of March 16, 1998 the  aggregate  market  value of the common  stock of the
registrant held by non-affiliates of the registrant,  as determined by reference
to the closing  price of the Common  Stock as  reported  on the Nasdaq  National
Market system, was $1,003,681,314.

  As of March 16,  1998 the  number of shares of common  stock,  $.01 par value,
outstanding was 14,546,106.

  Documents incorporated by reference: Proxy Statement for the registrant's 1998
Annual  Meeting of  Stockholders,  to be filed with the  Securities and Exchange
Commission not later than 120 days after December 31, 1997, is  incorporated  by
reference in Part III herein.


<PAGE>


Part I

Item 1.  BUSINESS

General

    Theragenics Corporation  ("Theragenics" or the "Company") is a leader in the
production  and sales of  implantable  radiation  devices  ("seeds") used in the
treatment of prostate  cancer.  The Company produces and sells  TheraSeed(R);  a
FDA-licensed device based on Pd-103, a radioactive isotope.  Management believes
the Company is currently the only company commercially  producing Pd-103 for use
in medical  devices.  In the  treatment of prostate  cancer,  TheraSeeds(R)  are
implanted  ("seeding")  into the  prostate  in a  one-time,  minimally  invasive
procedure.  The radiation emitted by the seeds is contained within the immediate
prostate area, killing the tumor while sparing surrounding organs.  TheraSeed(R)
has been shown in independent  clinical  studies to offer success rates that are
comparable  to  or  better  than  other  conventional  therapies,   while  being
associated with a reduced incidence of side effects.  In addition,  TheraSeed(R)
offers significant quality of life and cost advantages. Since 1987, TheraSeed(R)
has been used by physicians in over 400 centers across the United States.  Sales
of  TheraSeed(R)  increased  58% in 1996  and 99% in 1997 due to  increased  and
reliable production from the Company's cyclotron-based manufacturing process and
higher demand for  TheraSeed(R) as a result of increased  marketing  efforts and
the release of favorable  clinical  data.  TheraSeed(R)  has also been used on a
limited basis to treat cancers of the pancreas,  lung,  head, neck, oral cavity,
brain and eye.

  On May 30, 1997, the Company entered into a sales and marketing agreement with
Indigo  Medical,  Inc., a subsidiary of Johnson & Johnson,  granting  Indigo the
exclusive  worldwide right to market and sell  TheraSeed(R) for the treatment of
prostate cancer.  Management  believes the alliance with Indigo will provide for
sales growth and international expansion while allowing the Company to focus its
resources on maintaining its leadership in the production of Pd-103 for prostate
cancer treatment and other potential  applications.  By leveraging the extensive
worldwide marketing  capability of Indigo and Johnson & Johnson, the Company has
eliminated  the need to  develop  an  extensive,  vertically  integrated  sales,
marketing,  education  and  training  network for the sale of  TheraSeed(R)  for
prostate cancer treatment.

<PAGE>

    Theragenics  received  FDA  clearance  to  market  TheraSeed(R)  in 1986 and
commenced  product  sales in 1987.  The  Company  has been  profitable  in every
quarter  since  1991.  In  1992,  management  increased  its  control  over  the
manufacture of TheraSeed(R) while maintaining quality and regulatory  compliance
by integrating into the Company the production of Pd-103.

Industry Overview

Prostate Cancer

    Excluding  skin cancer,  prostate  cancer is the most common form of cancer,
and the second leading cause of cancer  deaths,  in men. Based on industry data,
the Company estimates that in 1995 the cost of treating prostate cancer exceeded
$3.0  billion  in the  United  States.  In 1998,  the  American  Cancer  Society
estimates  there will be 184,500 new cases of prostate  cancer and an  estimated
39,200  deaths  associated  with the disease.  Between  1989 and 1992,  prostate
cancer  incidence rates increased  dramatically,  probably due to the increasing
use of prostate-specific  antigen (PSA) blood test screenings. In 1993 and 1994,
prostate  cancer  incidence  rates  declined as the  initial  impact of improved
diagnosis  caught up with  already  existing but  undiagnosed  cases of prostate
cancer.  Overall from 1973 to 1994, incidence rates for white men increased from
63 to 135 per 100,000 and  incidence  rates for  African-American  men increased
from 106 to 234 per 100,000.

  Prostate  cancer  incidence  and  mortality  increase  with  age;  77%  of men
diagnosed  with prostate  cancer each year are over 65 years old.  While rare in
young men, incidence rates accelerate with age. Illustratively,  incidence rates
are 1 in 100,000  for men under 40, 82 in  100,000  for men ages  50-54,  518 in
100,000 for men ages 60-64,  and 1,326 in 100,000 for men ages 70-74.  Estimates
by the United States  Bureau of Census  indicate the number of men most prone to
prostate cancer,  those 40 to 80 years old, will grow to 55 million by 2006 from
45 million in 1996. The Company estimates that in 1997, its U.S. market share in
the treatment of early stage localized prostate cancer was approximately 5%.

    The prostate is a walnut-sized  gland surrounding the male urethra,  located
below the bladder and adjacent to the rectum.  The two most  prevalent  prostate
diseases are benign prostatic  hyperplasia ("BPH") and prostate cancer. BPH is a
non-cancerous enlargement of the innermost part of the prostate. Prostate cancer
is a malignant  tumor that begins most often in the  periphery of the gland and,
like other forms of cancer, may spread beyond the prostate to other parts of the
<PAGE>


body. If left  untreated,  prostate  cancer can metastasize to the lung or bone,
resulting  in death.  The  following  table  summarizes  the  various  stages of
prostate cancer.

Classification                 Stage of Progression
--------------                  --------------------
A                              Clinically unsuspected
B                              Tumor  confined to the prostate gland (localized)
C                              Tumor  outside  prostate capsule 
D                              Metastasized  into pelvic  lymph nodes 
D2                             Metastasized  into distant lymph nodes,
                               organs, soft tissues or bone

Source:  American Urological Association Today

    Approximately  58% of new  prostate  cancer  diagnoses  are defined as being
localized.  Prostate cancer is typically  curable when detected  early,  but the
lack of early-stage  symptoms makes  diagnosis  difficult.  Until 1988, the best
method of routine examination had been the digital rectal exam, an uncomfortable
subjective  determination.  In  1988,  a  diagnostic  test  was  developed  that
determines the amount of prostate specific antigen ("PSA") present in the blood.
PSA is found in a protein  secreted by the prostate,  and elevated levels of PSA
are associated with either prostatitis (a noncancerous  inflammatory  condition)
or a  proliferation  of cancer cells in the  prostate.  As stated  earlier,  the
number of new prostate cancers diagnosed  increased  significantly  from 1989 to
1993 as a result of physicians' use of the PSA test. Industry studies have shown
that the PSA test can detect  prostate cancer as many as five years earlier than
the digital rectal exam.  The PSA test is currently part of the routine  medical
check-up for prostate assessment.  Transrectal ultrasound tests and biopsies are
typically  performed  on  patients  with  elevated  PSA  readings to confirm the
existence of cancer.

Treatment Options

    In  addition  to  seeding,  prostate  cancer  can be  treated  with  radical
prostatectomy ("RP"), external beam radiation therapy ("EBRT"), hormone therapy,
chemotherapy  and watchful  waiting.  Some of these therapies may be combined in
special cases to address a specific  cancer stage or patient need.  For example,
TheraSeed(R)  has been  used in  combination  with  EBRT to treat  some  locally
advanced cases of prostate cancer. The treatments that have been most successful
are  those  that  remove  or kill all of the  cancerous  tissue  while  avoiding
excessive damage to the surrounding healthy tissue. When the cancerous tissue is
not completely  eliminated,  the cancer  typically  returns to the primary site,
often with  metastases  to other areas.  The following is a summary of treatment
options for prostate cancer other than seeding.

 Radical  Prostatectomy is a major surgical procedure that involves the complete
removal of the prostate  gland.  This  procedure has been used for over 30 years
and  is  considered  to be  the  standard  medical  treatment  for  early-stage,
localized tumors. RP typically requires a three to seven day hospital stay and a
lengthy  recovery  period  (generally  four to six weeks).  Side effects include
impotence  and  incontinence.  The cost of RP ranges from $20,000 to $30,000 per
procedure, excluding treatment for side effects and postoperative complications.
Approximately 120,000 men underwent RP in 1995.

    External Beam Radiation  Therapy  involves  directing a beam of radiation at
the prostate gland to destroy  tumorous  tissue and has been a common  technique
for  treating  many kinds of cancer  since the 1950s.  EBRT has  typically  been
reserved for  early-stage  prostate  cancer in locally  advanced cases where the
patient is an  inappropriate  surgical risk. The therapy consists of a series of
daily treatments usually lasting from six to eight weeks.  Rectal  complications
resulting  from  damage to the rectal wall  caused by the  radiation  beam as it
travels to the prostate are the most common side effects. Principal side effects
also include incontinence and impotence,  but these side effects generally occur
with less frequency than they do following RP. EBRT is estimated to cost between
$12,000 to $15,000 per patient. Approximately 35,000 men underwent EBRT in 1995.

    Ancillary   Therapies,   primarily   consisting   of  hormone   therapy  and
chemotherapy,  are used to slow the growth of cancer and reduce tumor size,  but
are  generally not intended to be curative.  Ancillary  therapies are often used
during advanced stages of the disease to extend life and relieve symptoms.  Side
effects of hormonal  drug  therapy  include  increased  development  of breasts,
impotence  and  decreased  libido.  In addition,  many  hormone  pharmaceuticals
artificially lower PSA levels in patients,  which can interfere with staging the
disease and  monitoring  its  progress.  Side  effects of  chemotherapy  include
nausea, hair loss and fatigue.  Drug therapy and chemotherapy require long-term,
repeated administration of medication on an outpatient basis.

    Watchful Waiting is recommended by some physicians in certain  circumstances
based on the severity and growth rate of the disease,  as well as on the age and
life  expectancy of the patient.  The aim of watchful  waiting is to monitor the
patient,  treat some of the attendant  symptoms and  determine  when more active
intervention is required.  Watchful  waiting has gained  popularity  among those

<PAGE>

patients  refusing  treatment  due  to  side  effects  associated  with  radical
prostatectomy.  Watchful  waiting  requires  periodic  physician  visits and PSA
monitoring.

    In  addition  to the  treatment  options  described  above,  other  forms of
treatment  as well as  prevention  are being  developed  and tested in  clinical
settings.

The Theragenics Solution

    Theragenics  produces  TheraSeed(R),  an FDA-cleared  device  currently used
principally  in  seeding  for  the  treatment  of  prostate   cancer.   In  this
application,  TheraSeeds(R)  are implanted  throughout  the prostate  gland in a
minimally invasive surgical technique under ultrasound  guidance.  The radiation
emitted by the seeds is contained  within the immediate  prostate area,  killing
the tumor while  sparing  surrounding  organs.  The seeds,  whose  capsules  are
biocompatible,  are not removed after  delivering  their  radiation  dose to the
prostate.  TheraSeed(R)  is  best  suited  for  solid  localized  tumors  and is
typically classified as a treatment for early-stage disease.

    Management believes  TheraSeed(R) offers significant  advantages over RP and
EBRT.  Recent  multi-year  clinical studies indicate that seeding offers success
rates that are  comparable  to or better  than those of RP or EBRT plus  reduced
complication  rates.  In  addition,  the  TheraSeed(R)  treatment  is a one-time
outpatient  procedure  with a  typical  two to three  day  recovery  period.  By
comparison,  RP is an inpatient  procedure  typically  accompanied by a three to
seven  day  hospital  stay  and a four to six  week  recovery  period,  and EBRT
involves  six to eight  weeks  of daily  radiation  treatments.  Treatment  with
TheraSeed(R)  generally  costs  $10,000  to  $15,000  per  procedure,  which  is
substantially lower than the cost of RP and comparable to the cost of EBRT.

    TheraSeed(R) is a radioactive "seed"  approximately 4.5 millimeters long and
0.8 millimeters wide, or roughly the size of a grain of rice. Each seed consists
of a biocompatible  titanium outer capsule containing the radioactive  substance
Pd-103.  The  half-life  of Pd-103,  or the time  required to reduce the emitted
radiation  to  one-half  of  its  initial  level,  is  17  days.  The  half-life
characteristics result in the loss of almost all radioactivity in less than four
months.

Treatment Protocol

  Prostate  cancer  patients  electing  seed therapy first undergo a transrectal
ultrasound  test or CT scan,  which  generates  a  two-dimensional  image of the

<PAGE>

prostate.  With  the  assistance  of a  computer  program,  a three  dimensional
treatment plan is designed that calculates the number and placement of the seeds
required for the best possible distribution of radiation to the prostate.

  Once the implant  model has been  constructed,  the procedure is scheduled and
the seeds are ordered.  The number of seeds implanted normally ranges from 40 to
100,  with the  number  of seeds  varying  with  the size of the  prostate.  The
procedure is usually performed under local anesthesia in an outpatient  setting.
An ultrasound  probe is first positioned in the rectum to guide needle placement
and seed  location.  Correct needle  placement is facilitated by a template,  or
grid,  that covers the perineum (the area between the scrotum and rectum through
which the needles are  inserted).  This  template is attached to the  ultrasound
probe.  Implant  needles  loaded  with  seeds are  assigned  to the  appropriate
template holes as indicated in the treatment plan. Each needle is guided through
the template and then through the perineum to its predetermined  position within
the prostate under direct ultrasound  visualization.  The seeds are implanted as
the needle is withdrawn  from the prostate.  When all seeds have been  inserted,
the ultrasound image is again reviewed to verify seed placement.

  An experienced  practitioner typically performs the procedure in approximately
60 to 90 minutes,  with the patient often  returning home at day's end.  Seeding
has been used as a treatment  for prostate  cancer  since the early 1980s,  when
seeds containing the radioactive isotope Iodine-125  ("I-125") were implanted in
prostate tumors under open surgery.  However,  this technique fell into disfavor
because the seeds were often  haphazardly  arranged  resulting in radiation  not
reaching all of the targeted cancerous prostate. Compounding this was that often
an  unintended  radiation  dose was  delivered to healthy  surrounding  tissues,
particularly the urethra and rectum. Clinical results indicate that the computer
modeling,  advanced  imaging  and other  techniques  used in seeding  today have
significantly ameliorated these drawbacks.

Clinical Results

  Strong Efficacy  Results.  Clinical data indicates that seeding offers success
rates that are  comparable  to or better  than  those of RP or EBRT.  In a study
published in Urology Times in September  1994, Drs. John Blasko and Haakon Ragde
of the Northwest Tumor Institute in Seattle,  Washington,  in a study of 298 men
with early-stage  prostate cancer,  found an actuarial local control rate of 96%
after treatment with either PD-103 or I-125 seed implantation. A study published
in 1995 by Drs.  Blasko and Ragde found 100% of the 111  patients  treated  with
TheraSeed(R)  for  localized  early-stage  prostate  cancer  showed no localized
prostate  cancer after  treatment  follow-up  ranging from 12-73 months,  with a
median follow-up of 32 months. The actuarial  disease-free rate at 54 months was
89%.  Updating their previous study on patients treated with Pd-103 or I-125 for
a paper  published  for the Seminars in Surgical Oncology  1997,  Drs.  Blasko,
                            ----------------------------- 
Ragde,  Grimm,  et al.  found a  seven-year  actuarial  local  (confined  to the
prostate) and distal  (outside the prostate)  disease-free  rate of 97% and 95%,
respectively for 320 patients treated for localized early-stage prostate cancer.
They  also  presented   therein  an  eight-year   actuarial   local  and  distal
disease-free  rate of 91%  and  83%,  respectively  for 231  patients  who  were
considered to represent  higher risks of locally  advanced  prostate  cancer and
were treated with a  combination  of Pd-103 or I-125 seeding and a modified dose
of EBRT. A study by Dr. Michael Dattoli of University Community Hospital, Tampa,
Florida and Dr. Kent  Wallner of Memorial  Sloan-Kettering  Cancer  Center,  New
York, New York,  published in the International  Journal of Radiation  Oncology,
Biology  and  Physics in July 1996 found a  three-year  actuarial  freedom  from
biochemical  failure  (based  on PSA  scores)  of 79%  among  73  patients  with
clinically  localized,  high risk prostate  cancer who were treated with EBRT in
combination  with  Pd-103.  This  compares  favorably  to results  reported  for
patients treated with conventional dose EBRT alone. These locally advanced cases
are significant because typical RP protocols would not classify them as suitable
for surgical treatment.

    Reduced Incidence of Side Effects.  Because  TheraSeed(R)  delivers a highly
concentrated  and confined dose of radiation  directly to the prostate,  healthy
surrounding  tissues and organs are spared excessive  radiation  exposure.  This
results in  significantly  fewer and less severe side effects and  complications
than are incurred with other conventional  therapies.  RP generally results in a
50-90% impotence rate and a 2-65%  incontinence rate, and EBRT generally results
in  impotence  and  incontinence  rates of 40-60% and 10-25%,  respectively.  In
contrast, according to the 1995 study by the Northwest Tumor Institute described
above,  it was reported that 85% of seed therapy  patients under 70 years of age
who were potent before the procedure remained so. In addition,  patients who had
not  had a  previous  transurethral  prostate  resection  ("TURP")  suffered  no
incontinence.  Patients having a previous TURP have  compromised  urinary tracts
and can experience higher rates of incontinence.  Patients receiving seeding can
expect  some  urinary  urgency  post-implantation  as the  Pd-103  delivers  its
radiation dose.


    Lower Treatment Cost. The total cost of seeding is approximately  $10,000 to
$15,000 per  procedure.  This is  approximately  one-half  the cost of RP, which
ranges  from  $20,000 to  $30,000,  excluding  treatment  for side  effects  and
post-operative  complications.  Seeding cost is  comparable to the cost of EBRT,
which  ranges  from  $12,000  to  $15,000  for a  six-to-eight  week  course  of
treatment.



<PAGE>



      The following  table  compares the methods of treatment  discussed  above
     with a minimum of five-year outcomes data:
<TABLE>
<CAPTION>

    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
                                                                         External Beam
                                           Radical Prostatectomy         Radiation Therapy              Seeding
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
                                                                         Outpatient procedure           One-time outpatient
                                           Inpatient procedure with      with daily treatments for      procedure lasting
                                           3-7 day hospital stay         6-8 weeks                      60-90 minutes
    <S>                                    <C>                           <C>                            <C>

    Nature of Treatment
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Targeted Cancer Stage                  A and B                       A, B and C                     A and B
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Five Year Success   Rate(a)            78-83%                        50%                            80-100%
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Recovery Period                        Generally 4-6 weeks           None after 6-8 weeks           2-3 days
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Impotence Rate(b)                      50-90%                        40-60%                         5-15%
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Incontinence Rate(b)                   2-65%                         10-25%                         0-2%
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
    Cost Per Procedure                     $20,000-$30,000               $12,000-$15,000                $10,000-$15,000
    -------------------------------------- ----------------------------- ------------------------------ ----------------------------
</TABLE>


<PAGE>



(a) Calculated as the percent of patients  disease-free  after five years. Rates
may be actuarially computed.  (b) The percent of patients with normal continence
and potency prior to treatment not remaining continent or
        potent following the procedure. Excludes patients with previous TURPs.

    Management  believes  TheraSeed(R)  represents  the best  available  form of
seeding. Another radioactive isotope, Iodine-125 ("I-125"), is also commercially
available  as a  permanent  implant.  TheraSeed(R)  is  the  first  commercially
available  alternative isotope to I-125 since I-125's introduction in the 1970s.
Management believes I-125 and Pd-103 are used with relatively equal frequency in
substantially all prostate cancer seeding procedures. Another technique known as
"temporary  seeding," which involves the temporary placement of an Iridium-based
source  in or near a  tumor,  is  used  in a very  small  percentage  of  cases.
Management  believes Pd-103 has the following  advantages over I-125: (i) Pd-103
delivers three times the initial dose rate of I-125,  which can yield advantages
in treating  aggressive  cancers,  (ii) Pd-103 has  approximately  one-third the
half-life of I-125,  which shortens  radiation induced side effects and exposure
to medical personnel in treatment  follow-up;  and (iii) unlike I-125, Pd-103 is
nontoxic and non-volatile as it decays.  Management is not aware of any clinical
studies directly comparing the efficacy of Pd-103 versus I-125.

Strategy

  In  an  effort  to  enhance  market  penetration  and  maintain  technological
leadership,  the Company has signed a sales and marketing  agreement with Indigo
Medical,  Inc.,  a Johnson  & Johnson  Company.  Management  believes  that this
agreement  will allow  Theragenics  and Indigo to take the seeding  treatment of
prostate  cancer to levels of  penetration  previously  unseen by leveraging the
consumer  marketing,  health care  organization  network,  training capacity and
international capabilities of Johnson & Johnson.

Production

    The production of TheraSeed(R) is dependent upon the availability of Pd-103,
as well as  Rhodium-103  ("Rh-103"),  titanium,  graphite  and  lead.  With  the
exception of Pd-103,  all of these raw materials are relatively  inexpensive and
readily available from third party suppliers.

    Pd-103 is a radioactive  isotope that can be produced by neutron bombardment
of  Pd-102  in a  nuclear  reactor,  or by  proton  bombardment  of  Rh-103 in a
cyclotron.  Following the production of Pd-103 from Rh-103 in the cyclotron, the
Pd-103 is harvested from the cyclotron and moved through a number of proprietary
production processes until it reaches its final seed form.

    To increase its control over timely, consistent and continuing availability,
quality and cost of Pd-103, the Company turned away from neutron  bombardment of
Pd-102 and to the proton  bombardment  method of producing Pd-103. To accomplish
this alternative  method of production,  the Company  contracted in 1992 for the
purchase of a cyclotron for in-house  production of Pd-103.  After the cyclotron
was  delivered  and  reliable  production  of Pd-103  was  proven,  the  Company
discontinued its reliance on outside vendors for irradiation services.

    The Company has four cyclotrons in production and is currently  installing a
fifth,  which is scheduled to become  operational  during the second  quarter of
1998. The Company has ordered nine additional cyclotrons,  three to be installed
in fiscal 1998, and six in fiscal 1999.  The Company's  cyclotrons are designed,
built,  installed and tested by a company  specializing  in the  construction of
such equipment. A number of proprietary design modifications are incorporated in
the cyclotrons.  These  modifications are subject to confidentiality  agreements
with the cyclotron manufacturer and the Company's own personnel.

    Due to the highly  sophisticated and technical nature of the equipment,  the
Company has in the past encountered delays and difficulties in the construction,
installation  and testing of its cyclotrons.  Management  cannot be certain that
such problems will not occur in connection with the  construction,  installation
and testing of the cyclotrons to be installed in 1998 and 1999.

    Cyclotron  operations  constitute  only one  component  of the  TheraSeed(R)
manufacturing  process.   Because  the  production  of  TheraSeed(R)  is  highly
sensitive and labor intensive,  management is focusing significant attention and
effort on  automating  and  otherwise  improving  all  aspects of the  Company's
manufacturing  process.  Although the  automation  process is difficult and time
consuming,  and has been subject to significant  delays,  management believes it
can improve  efficiency,  further  reduce  radiation  exposure to personnel  and
provide additional production capacity for TheraSeed(R).

  During  1997,  the Company  received  certification  that its quality  control
system  meets  all  the  requirements  of  the  International  Organization  for
Standards' ISO 9001/EN46001  Quality System  Standard.  The Company is currently
working toward obtaining a CE mark. Receipt of a CE mark is a necessary step for
any future launch of Theraseed(R) in the European Community.

Marketing

    Strategic Alliance.  In 1997, the Company entered into a sales and marketing
agreement with Indigo Medical, Inc., a subsidiary of Johnson & Johnson, granting
to Indigo the exclusive  worldwide right to market and sell Theraseed(R) for the
treatment  of  prostate  cancer.  Indigo  has  assumed  responsibility  for  the
education and training of urologists,  radiation oncologists and other personnel
involved in the use of TheraSeed(R) for the treatment of prostate cancer.

  Management believes the alliance with Indigo will provide for sales growth and
international  expansion  while  allowing the Company to focus its  resources on
maintaining  its  leadership  in the  production  of Pd-103 for prostate  cancer
treatment  and  other  potential  applications.   By  leveraging  the  extensive
worldwide  marketing  capability  of Indigo and  Johnson & Johnson,  the Company
eliminates  the need to  develop  an  extensive,  vertically  integrated  sales,
marketing and education and training  network for the marketing of  Theraseed(R)
for prostate cancer.

  Based on the current  high level of demand in the prostate  cancer  market and
production  capacity,  management  does not  anticipate  having  the  ability to
generate significant sales in other cancer areas in the coming year.

TheraSphere(R)

    Theragenics has also  participated in the development of  TheraSphere(R),  a
microscopic radioactive glass sphere designed for the treatment of liver cancer.
The Company holds a worldwide  exclusive license from the University of Missouri
for the use of the technology  required to produce  TheraSphere(R).  The Company
has granted to Nordion  International,  Inc.  ("Nordion") an exclusive worldwide
sublicense  to  manufacture,   distribute  and  sell   TheraSphere(R)   for  any
application.  TheraSphere(R)  has been approved for distribution in Canada,  but
has not been approved by the FDA for  distribution  in the United States.  Under
the  terms of the  sublicense,  Nordion  has  agreed  to  obtain  the  necessary
regulatory approvals for distribution of TheraSphere(R) in the United States and
other  countries.   The  commercial   development  and  regulatory  approval  of
TheraSphere(R) is still in its early stages,  and management does not anticipate
significant revenues from TheraSphere(R) within the foreseeable future.

    A  TheraSphere(R)   treatment  dose  contains   approximately  five  million
yttrium-90  glass  spheres  that are each  approximately  half the diameter of a
human hair.  The  radiation  dose is delivered to the tumor by  introducing  the
TheraSphere(R) by catheter into the hepatic artery, which carries arterial blood
to the liver.  Because of greater blood flow to tumors compared to healthy liver
tissue, the microspheres  concentrate in the capillaries  feeding the tumor. The
concentration  of microspheres  in healthy tissue is much lower.  Because of the
ability  to place the  radiation  source in such close  proximity  to the tumor,
TheraSphere(R)  can  deliver a  radiation  dose to the tumor cells five times as
strong as that which can be delivered via external beam radiation.

Patents and Licenses; Trade Secrets

    The Company  holds  United  States  patents  directed to Pd-103 based on its
production  using both  cyclotrons  and nuclear  reactors.  The Company also has
corresponding patents in Canada, South Africa, Japan and the 10 countries of the
European  patent  convention,  and a PCT patent  application  on file for Japan,
Australia,  New Zealand, Canada, and Europe (representing 16 European countries)
as well as a direct  filing in Mexico.  The Company may file  additional  patent
applications from time to time and considers the ownership of patents important,
but not  necessarily  essential,  to its  operations.  The  Company  also uses a
strategy of  confidentiality  agreements  and trade secret  treatment to provide
primary  protection  to a number  of  proprietary  design  modifications  in the
cyclotrons, as well as various production processes.

    The Company also holds a worldwide  exclusive license from the University of
Missouri  for the  use of  technology  required  for  producing  TheraSphere(R).
Theragenics holds the rights to all improvements  developed by the University of
Missouri  on this  technology.  The  Company,  in  turn,  sublicenses  exclusive
worldwide rights to this technology and all improvements to Nordion. Pursuant to
its license agreement with the University of Missouri,  the Company is obligated
to pay the  University  the greater of a fixed annual  amount or a percentage of
the gross sales amount derived from the sale of TheraSphere(R).

    Theragenics holds patents for technology  concerning methods for delivery of
TheraSphere(R)  in  several  countries,  including  the United  States,  Canada,
Australia,  Argentina,  South Africa and the 10 countries of the European patent
convention,  and has patent  applications on file in other countries,  including
Japan. The Company exclusively licenses this technology to Nordion for worldwide
use.

    The Company  relies to a significant  degree on trade  secrets,  proprietary
know-how and technological  advances that are either not patentable or which the
Company chooses not to patent.  In particular,  the Company has designed certain
modifications to its cyclotrons as well as various production  processes that it
deems to be proprietary.  The Company seeks to protect non-patented  proprietary
information,  in part, by confidentiality  agreements with suppliers,  employees
and consultants.

Competition

  The Company competes in a market  characterized  by technological  innovation,
extensive research efforts and significant competition. In general, TheraSeed(R)
competes with conventional  methods of treating  localized cancer such as RP and
EBRT. RP currently  represents the standard  medical  treatment for early-stage,
localized  prostate cancer. RP has a long history of favorable  clinical results
and physicians have developed a high degree of familiarity and comfort with this
procedure.  EBRT is also a  well-established  method of treatment  and is widely
accepted  for  patients  who do not  represent  a good  surgical  risk or  whose
prostate  cancer has advanced  beyond the stage for which surgical  treatment is
indicated.  RP and EBRT are therefore well  entrenched in the medical  community
and in the  universities and schools  providing  medical  education.  Management
believes  that if  general  conversion  from  these  established  procedures  to
TheraSeed(R)  treatment  does  occur,  such  conversion  will be the result of a
combination of equivalent or better efficacy,  reduced incidence of side effects
and  complications,  lower cost,  other  quality of life issues and  pressure by
health care providers and patients.

    In addition,  I-125 is  commercially  available  as a permanent  implant and
competes with TheraSeed(R).  Management  believes I-125 and Pd-103 are used with
relatively equal frequency in prostate cancer seeding  procedures.  I-125's dose
rate is approximately  one-third that of Pd-103,  however,  and its half-life is
three times longer.  Management  believes Pd-103 enjoys a competitive  advantage
over I-125  based on:  (i) a higher  dose rate,  which can yield  advantages  in
treating aggressive cancers, (ii) a shorter half-life,  which shortens radiation
induced side effects and exposure to medical  personnel in treatment  follow-up;
and (iii) Pd-103 is nontoxic and non-volatile as it decays.  Management is aware
of no other similar radioactive products competing directly with TheraSeed(R). A
number of small  companies  have  announced  their  intentions  to produce I-125
and/or Pd-103 seeds for the treatment of prostate  cancer.  One such company,  a
small  start-up,  consisting  of  certain  former  Theragenics'  employees,  has
indicated  that they will have one  cyclotron  installed by the third quarter of
1998 for the purpose of producing  Pd-103 for medical  devices.  Theragenics has
initiated legal action against the company for infringement of trade secrets and
the legal action is ongoing. To the best of Management's knowledge,  Theragenics
is still the only company in the world currently producing  quantities of Pd-103
for medical devices on a commercial basis.

    Many companies,  both public and private, are researching new and innovative
methods  of  preventing  and  treating  cancer.  In  addition,  many  companies,
including  many large,  well-known  pharmaceutical,  medical device and chemical
companies,  are  engaged in  radiological  pharmaceutical  and device  research.
Significant developments by any of these companies could lessen or eliminate the
demand for the Company's products.



<PAGE>



Government Regulation

    The Company's  present and intended  future  activities in the  development,
manufacture  and sale of cancer  therapy  products are subject to various  laws,
regulations,  regulatory approvals and guidelines. Within the United States, the
Company's  therapeutic  radiological  devices must comply with the U.S.  Federal
Food, Drug and Cosmetic Act, which is enforced by the FDA.

    The Company is also required to adhere to  applicable  FDA  regulations  for
Good Manufacturing  Practices,  including extensive record keeping and reporting
and periodic inspections of manufacturing facilities.

    The Company  obtained FDA 510(k)  clearance  in 1986 to market  TheraSeed(R)
for, in general, the treatment of localized solid tumors. A new 510(k) clearance
is  required  for any  modifications  in the device or its  labeling  that could
significantly affect the safety or effectiveness of the original product.

    The Company's handling of radioactive  materials is governed by the State of
Georgia in agreement with the NRC. The users of  TheraSeed(R)  are also required
to possess  licenses issued either by the states in which they reside or the NRC
(depending  upon which state is involved and the production  process used).  The
Company's  expansion plans require the Company to secure additional  permits and
licenses from a number of environmental,  health and safety regulatory agencies.
The Company  believes,  but cannot  assure,  that it will be able to acquire the
permits and licenses  necessary for its planned  expansion of its  manufacturing
capacity in accordance  with the  Company's  timetable  for its  expansion.  The
Company to date has not experienced delays in licensing any of its facilities or
cyclotrons.

    The Company is required under its radioactive  materials license to maintain
radiation  control and radiation  safety  personnel,  procedures,  equipment and
processes, and to monitor its facilities and its employees and contractors.  The
Company  is also  required  to  provide  financial  assurance  that  end-of-life
radiological  decommissioning  of its cyclotrons and other  radioactive areas of
its property that contain radioactive materials will be adequately funded by the
Company.  The  Company's  decommissioning   obligations  will  increase  as  its
production capacity is expanded.

    The Company disposes of low level radioactive  waste to licensed  commercial
radioactive  waste  treatment or disposal  facilities for  incineration  or land
disposal.  Management  believes the Company is in compliance  with all state and
federal  regulations.  The  Company  provides  training  and  monitoring  of its
personnel to facilitate the proper handling of all materials.

Employees

    As of December 31, 1997, the Company had 111 full-time employees  (including
full-time temporary employees and executive  personnel).  Of this total, 84 were
engaged in development and production of the Company's  products.  The remainder
were  engaged in  marketing  and general  corporate  activities.  The  Company's
employees are not  represented by a union or a collective  bargaining  unit, and
management considers employee relations to be good.

Item 2.  Properties

    The  Company  owns a 15,245  square-foot,  single-story  building in Buford,
Georgia,  leases  a  10,752  square-foot,  single-story  building  in  Norcross,
Georgia,  and leases a 2,692 square-foot suite of offices in a four-story office
building in Norcross, Georgia. The larger Norcross facility houses the Company's
assembly, shipping, and administrative operations, the smaller Norcross facility
provides  executive  office space and the Buford  facility  houses the Company's
cyclotrons  and its raw material  processing  operations.  In 1996,  the Company
purchased 30 acres of land adjacent to its Buford facility.  Management is using
this land for  long-term  expansion of the  Company's  production  facilities as
manufacturing   expands  to  meet  increasing  sales  demand.   Currently  under
construction  on  this  land  is  a  single  story  manufacturing   facility  of
approximately  80,000 square feet.  Eventually all functions currently housed in
the leased  Norcross  facilities  will be relocated to this new site adjacent to
its current Buford facility.

Item 3.  Legal Proceedings

    There  are  currently  no  material  legal  proceedings  pending  or, to the
knowledge of management, threatened against the Company.

Item 4.  Submission of Matters to a Vote of Security Holders

  The Company did not submit any matter to a vote of its security holders during
the fourth quarter of calendar 1997.








PART II

Item 5.         Market for Registrant's Common Equity and Related
                Stockholder Matters

  The Company's Common Stock is traded on the Nasdaq National Market ("Nasdaq").
The trading symbol for the Company's  Common Stock on Nasdaq is "THRX." The high
and low prices as reported  on Nasdaq for the  Company's  Common  Stock for each
quarterly period in 1996 and 1997 are as follows:

                                                          High       Low
                                                          ----       ---
1996
First Quarter............................................$12.25     $7.00
Second Quarter............................................18.63      8.63
Third Quarter.............................................19.25     11.75
Fourth Quarter............................................25.63     16.00

1997
First Quarter.............................................27.50     15.75
Second Quarter............................................25.38     15.05
Third Quarter.............................................50.00     22.25
Fourth Quarter............................................54.00.    33.00

  As of March 16, 1998, the closing price of the Company's  Common Stock was $69
per share. Also, as of that date, there were approximately 706 holders of record
of the Company's Common Stock. The number of record holders does not reflect the
number of beneficial  owners of the  Company's  Common Stock for whom shares are
held by depositary trust companies, brokerage firms and others.

  On February 14, 1997, the Company's  Board of Directors  adopted a Stockholder
Rights Plan (the "Rights Plan"). The Rights Plan contains  provisions to protect
the Company's  stockholders in the event of an unsolicited  offer to acquire the
Company,  including  offers  that do not treat  all  stockholders  equally,  the
acquisition in the open market of shares  constituting  control without offering
fair value to all stockholders and other coercive, unfair or inadequate takeover
bids and  practices  that could  impair the ability of the Board of Directors to
represent  stockholders' interests fully. Pursuant to the Rights Plan, the Board
of  Directors  declared  and paid a  dividend  of one  share  purchase  right (a
"Right")  for each  outstanding  share of  Common  Stock  held of  record  as of
February 28, 1997.  The Rights,  which will expire in February  2007,  initially
will be represented by, and traded  together with, the Common Stock.  The Rights
are not  currently  exercisable  and do not become  exercisable  unless  certain
events occur,  including the  acquisition  of, or commencement of a tender offer
for, 15% or more of the  outstanding  Common Stock.  Each Right  represents  the
right to purchase from the Company one share of Common Stock at a purchase price
of $120.00, subject to adjustment. In the event certain triggering events occur,
including the  acquisition of 20% or more of the  outstanding  Common Stock each
Right that is not held by the 20% or more stockholder will entitle its holder to
purchase  additional  shares of Common  Stock having a market value of twice the
purchase price. As a result, the Rights Plan could add substantially to the cost
of acquiring the Company,  and  consequently  could delay or prevent a change in
control of the Company. These effects could adversely affect the market price of
the Common Stock. Prior to the time the Rights become exercisable,  the Board of
Directors  may redeem the rights at a  redemption  price of $.01 per Right.  The
description and terms of the Rights are set forth in a Rights Agreement dated as
of February 17, 1997 by and between the Company and SunTrust Bank,  Atlanta,  as
Rights Agent.

Dividend Policy

  The Company has never declared or paid a cash dividend on its Common Stock. It
is the  present  policy of the Board of  Directors  to retain  all  earnings  to
support  operations  and  to  finance  expansion.  Consequently,  the  Board  of
Directors does not  anticipate  declaring or paying cash dividends on the Common
Stock in the foreseeable future. The Company's current credit facility restricts
the Company's  ability to pay  dividends if such dividend  payment would cause a
default under any of the credit facility's financial covenants. Decisions on the
payment and amount of future  dividends  on the Common  Stock will depend on the
Company's results of operations,  capital  requirements and financial  condition
and other relevant factors as determined by the Board of Directors.

Stock Split

  On March 16,  1998,  the  Company  announced a  two-for-one  stock split to be
effected  in the form of a 100%  stock  dividend  payable  on April 15,  1998 to
shareholders of record at the close of business on March 31, 1998.

Item 6.  Selected Financial Data

  The selected  financial  data set forth below as of December 31, 1996 and 1997
and for each of the years in the three-year  period ended December 31, 1997 have
been derived from the  financial  statements of the Company  included  elsewhere
herein,  which have been audited by Grant  Thornton LLP,  independent  certified
public  accountants.  The selected  financial data as of December 31, 1993, 1994
and 1995 and for each of the years in the  two-year  period  ended  December 31,
1994 have been derived from the financial statements of the Company,  which have
been audited by Grant  Thornton LLP but are not  included  herein.  The selected
financial data set forth below should be read in conjunction  with the financial
statements of the Company and related notes thereto and "Management's Discussion
and  Analysis  of  Financial  Condition  and  Results  of  Operations"  included
elsewhere herein.


<PAGE>




                                                        Year Ended December 31,
<TABLE>
<CAPTION>
                                                                 

                                                                    1993           1994         1995          1996          1997
                                                                    ----           ----         ----          ----          ----

                                                                    (Dollars and shares in thousands, except per share data)
<S>                                                                 <C>           <C>         <C>           <C>           <C>

Statement of Earnings Data:
Product sales.....................................................  $4,091        $4,723      $7,782        $12,257       $12,170
Product sales - affiliate                                               --            --          --             --        12,287
Licensing fees....................................................      --            --          85            100           100
                                                                    ------         -----     ------         -------       -------
                                                                     4,091         4,723       7,867         12,357        24,557
Cost of product sales.............................................   1,678         1,791       2,645          3,736         6,141
Selling, general and administrative...............................   1,607         1,844       2,396          3,198         4,819
Research and development..........................................      36            15          18              7            55
                                                                    ------         -----      ------        -------        ------
                                                                     3,321         3,650       5,059          6,941        11,015
Other income (expense)............................................     (86)          110          64             36         1,306
                                                                    -------       ------      ------        -------        ------
Net earnings before income taxes, extraordinary credit
and cumulative effect of change in accounting
principle.........................................................
                                                                       684         1,183       2,872          5,452        14,848
Income tax expense................................................     254           453       1,100          2,067         5,350
                                                                    ------        ------      ------         ------       -------
Net earnings before extraordinary credit and change in accounting
method............................................................
                                                                       430           730       1,772          3,385         9,498
Extraordinary credit..............................................      --            --          --             --            --
Change in accounting method.......................................   2,860            --          --             --            --
                                                                    ------        ------      ------         ------       -------
Net earnings......................................................  $3,290        $  730      $1,772         $3,385        $9,498
                                                                    ======        ======      ======         ======        ======
Earnings per common share-basic
  Income before accounting change.................................  $ 0.04        $ 0.07      $ 0.16         $ 0.29        $ 0.69
    Cumulative effect of a change in
    accounting principle..........................................  $ 0.26            --          --             --            --
    Net Income....................................................  $ 0.30        $ 0.07      $ 0.16         $ 0.29        $ 0.69
Weighted average shares-basic.....................................  10,800        10,935      11,103         11,625        13,763

  Earnings per common share-assuming
    dilution
    Income before accounting change...............................  $ 0.04        $ 0.06      $ 0.15         $ 0.28        $ 0.66
    Cumulative effect of a change in
    accounting principle..........................................  $ 0.24            --          --             --            --
    Net Income....................................................  $ 0.28        $ 0.06      $ 0.15         $ 0.28        $ 0.66
Weighted average shares-diluted...................................  11,705        11,588      11,848         12,291        14,309



                                                                                                           December 31,
                                                                    1993           1994         1995          1996         1997
                                                                    ----           ----         ----          ----         ----
                                                                                                 (In thousands)
Balance Sheet Data:
Cash and short-term investments..................................  $3,083         $2,317       $3,266        $2,986      $30,162
Property, plant and equipment, net...............................   5,647          8,458       10,073        17,586       28,986
Total assets.....................................................  12,619         14,169       16,878        23,689       71,140
Long-term debt, including current installments...................
                                                                    1,330          1,989        1,519         3,458           --
Shareholders' equity.............................................  11,034         11,810       14,769        19,385       67,033

</TABLE>


<PAGE>



Item 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

    Theragenics  was founded in 1981 and is engaged in the  manufacture and sale
of  TheraSeed(R),  a  rice-sized  device  used for the  treatment  of  localized
prostate  cancer in a  one-time,  minimally  invasive  procedure.  In 1986,  the
Company received FDA clearance for its principal product,  TheraSeed(R), for use
in any solid localized tumor. Sales increased 58% in 1996 and 99% in 1997 due to
increased and reliable  production  from the Company's  cyclotrons and increased
demand  for  TheraSeed(R)  as a result  of  growing  market  acceptance  of this
treatment alternative for prostate cancer.

    Production of Pd-103, the radioisotope  supplying the therapeutic  radiation
of TheraSeed(R),  has always been a controlling  factor in the Company's efforts
to generate  sales.  To  increase  its  control  over the timely and  consistent
availability,  quality and cost of Pd-103,  the Company  converted  from reactor
produced Pd-103 to an alternative  means of producing  Pd-103 using a cyclotron.
In 1992,  the Company  contracted  for the purchase of a cyclotron  for in-house
production of Pd-103.  After the cyclotron was delivered and reliable production
of Pd-103 was  demonstrated,  the Company  discontinued  its reliance on outside
vendors for irradiation services.

  In view of the scale of the investment  necessary to add cyclotrons,  the time
and effort required to develop the production process, and the Company's limited
access to debt and equity  capital,  the Company  undertook a slow and  measured
roll-out  of its  TheraSeed(R)  product.  Management  focused  primarily  on the
careful  development  of  relationships  with  the  physician  community  and on
ensuring that the Company's  production  capabilities  could meet demand for its
product.  The Company added additional  cyclotrons in 1995, 1996, and 1997 for a
total of four  cyclotrons.  Four  additional  cyclotrons are scheduled to become
operational  in 1998 and six in  1999.  Because  a  cyclotron  does  not  become
available for production until approximately 18 months after it is ordered,  the
accuracy of the Company's  long-term plans can significantly  affect its results
of operations.  The delivery of cyclotrons  prior to a commensurate  increase in
demand could adversely impact margins, while inadequate cyclotron capacity could
limit the Company's ability to meet demand and achieve maximum sales growth.

    The Company is well underway on a $28 million capital expansion project that
includes the purchase of four  additional  cyclotrons and the  construction of a
new production facility. Although no assurances can be given, management expects
that one new  cyclotron  will  become  operational  in April,  1998,  or shortly
thereafter  and the next three becoming  operational  at three month  intervals.
Contracts  were signed for six  additional  cyclotrons  to be delivered in 1999.
Again,  while  no  assurances  can  be  given,  Management  expects  one  to  be
operational at the end of the first quarter 1999, three additional by the end of
third  quarter 1999,  and two more by the end of the fourth  quarter of 1999, or
shortly  thereafter.  Each of these cyclotrons,  including the facility to house
each, are estimated to cost less than $5,000,000.

    On May 30,1997,  the Company  entered into a sales and  marketing  agreement
with Indigo  Medical,  Inc.,  a  subsidiary  of Johnson & Johnson,  granting the
exclusive  worldwide right to market and sell  Theraseed(R) for the treatment of
prostate  cancer.  Under  the  terms  of  the  agreements,  Indigo  has  assumed
responsibility   for  the  education  and  training  of  urologists,   radiation
oncologists and other  personnel  involved in the use of TheraSeed(R) as well as
all  other  sales  and  marketing  activities.   The  Company  continues  to  be
responsible for all manufacturing and distribution for TheraSeed(R).


Results of Operations

 Year Ended December 31, 1997 Compared to Year Ended
December 31, 1996

    Product  sales were $24.6 million in 1997 compared to $12.4 million in 1996,
an increase of $12.2  million,  or 98.4%.  Market  acceptance  of the  Company's
TheraSeed(R)  treatment  alternative  for  prostate  cancer  grew  during  1997.
Concurrently,  the  Company was able to reliably  increase  production  from its
cyclotron-based  manufacturing  and thereby take advantage of increased  demand.
Sales also reflect that the Company had four cyclotrons available during much of
1997 to meet sales demand as compared to only two cyclotrons throughout 1996.

    Licensing  fees  represent  royalty  payments  with respect to the Company's
licensed TheraSphere(R) technology. Management does not expect licensing fees to
become  material in the  foreseeable  future.  See Note F of Notes to  Financial
Statements.

    Cost of product  sales was $6.1 million in 1997  compared to $3.7 million in
1996, an increase of $2.4 million,  or 64.9%. This increase was due primarily to
incremental  staffing and  cyclotron  related  costs.  Staffing  increases  were
necessary to respond to and anticipate sales growth.  Cyclotron  operating costs
and  depreciation  increased  as all four of the  Company's  cyclotrons  were in
service by February,  1997. As cyclotrons come on-line,  margins decline because
each machine  represents  excess  capacity for a period while  carrying its full
component of fixed costs,  including  depreciation.  As a percentage  of product
sales, cost of product sales decreased from 30.5% in 1996 to 25.0% in 1997. This
decrease resulted from economies of scale.

    Selling,  general  and  administrative  expense  was  $4.8  million  in 1997
compared to $3.2 million in 1996, an increase of $1.6 million, or 50.6%. Primary
contributors to this increase were legal and professional  fees and compensation
and related  expense.  Legal and  professional  expense  fees  increased  as the
Company  completed  the  Theragenics/Indigo  Sales and  Marketing  Agreement and
initiated  legal action  against a small  company  founded by former  employees.
Compensation and related expenses rose as the number of employees  increased and
salaries were increased  reflecting the larger scope of the Company's operations
and the need to attract and retain qualified  employees.  There were also higher
expenditures in a number of areas representing  support for higher sales levels.
Despite  these  increases,  selling,  general  and  administrative  expense as a
percentage  of net sales  decreased  from  26.1% in 1996 to 19.7% in 1997 due to
economies of scale.

  During  the  periods  presented,  the  Company  had no ongoing  pure  research
function.  As in the past,  much of the  development  component  of research and
development of product and processes is incorporated in the  manufacturing  area
and  therefore is included in the cost of goods sold  category.  Management  may
choose to develop a more  traditional  research and  development  program if and
when appropriate opportunities are identified and resources are in place.

    Other income (expense) during the periods presented  consist  principally of
interest income, interest expense and the write-off of unamortized loan costs as
a result of loan refinancing.  Interest income jumped  dramatically,  reflecting
interest on funds received as a result of the secondary stock offering completed
in April,  1997.  Since these funds will  largely be used to fund the  Company's
expansion program in 1998 and 1999, management expects other income to return to
levels consistent with historical amounts.

    The Company's  effective income tax rate was  approximately  38% in 1996 and
approximately 36% in 1997.


Liquidity and Capital Resources

    During 1995,  1996 and 1997,  the Company's  principal cash needs related to
capital   spending   to  increase   manufacturing   capacity.   To   manufacture
TheraSeed(R),  the Company purchases,  installs and operates  cyclotrons,  which
involves  significant  capital  investment.  The Company has funded its capacity
expansions in 1995 and 1996,  principally  from cash flows from  operations  and
bank  borrowings,  and in 1997 from cash flows from  operations and the proceeds
from the secondary offering of common stock completed in April, 1997.

    The Company had cash and short-term investments of $30.2 million at December
31, 1997,  compared to $3.0 million at December  31, 1996.  Working  capital was
$39.0  million at December 31, 1997,  This  compares to $1.3 million at year end
1996, which included $3.5 million  representing the current portion of long-term
obligations.

    Cash  provided by operating  activities  was, $5.7 million and $14.2 million
during 1996 and 1997, respectively. These amounts primarily represent net income
supplemented  in 1997 by an increase  in income tax  payable and trade  accounts
payable,  and in all years by the tax  sheltering  effects of  depreciation  and
deferred  tax  expense.  Offsetting  these  items  were  increases  in  accounts
receivable.

    Cash used in investing activities was $8.6 million and $21.2 million in 1996
and 1997, respectively, consisting in each of these years primarily of purchases
of property and equipment.  Spending in 1996  represents the  continuation  of a
project to add  cyclotrons  three and four to the  facility,  the purchase of 30
acres of land for the  Company's  expansion  project and spending on an assembly
automation  project.  Spending in 1997  primarily  represents the beginning of a
project  to add four  cyclotrons  and a new  manufacturing  facility  having  an
estimated  total cost of  approximately  $28  million.  As of December 31, 1997,
approximately $11 million had been spent on this expansion project and less than
$2  million  on other  capital  projects.  Theragenics  invested  in  marketable
securities  and held $8.4  million of those  securities  at December 31, 1997 as
disclosed in Note B-3 in the Notes to Financial Statements attached hereto.

    On January 23, 1998, the Company entered into six  agreements,  each for the
purchase of one additional cyclotron. Each cyclotron,  including the facility to
house  it,  is  expected  to cost less than $5  million.  The  Company  has made
payments to date on these six cyclotrons totaling  approximately $5.5 million as
of March 16, 1998.

  Cash provided (used) by financing  activities was $(21,000),  $2.6 million and
$34.2 million in 1995,  1996 and 1997,  respectively.  Cash flows from financing
activities  relates  principally  to bank  borrowings  and  repayments  thereof,
proceeds from the exercise of stock options and warrants,  and in 1997, proceeds
from the secondary  placement of common  stock,  and common stock sold to Indigo
Medical as part of a sales and marketing agreement.

  Management  intends to  continue  its  efforts  toward  increasing  its Pd-103
production  capacity.  As such,  over the next two  fiscal  years,  the  Company
intends to construct facilities,  purchase cyclotrons, purchase other production
equipment, invest in research and development, invest in automation, and provide
for working capital and general corporate needs.

  Management  believes that current cash balances,  cash from future  operations
and its credit  facility,  will be  sufficient  to meet its working  capital and
capital  expenditure  requirements for at least the next 12 months. In the event
additional  financing  becomes  necessary,  management may choose to raise those
funds through other methods of financing as appropriate.

  YEAR 2000 ISSUE:  Some computer systems used today were designed and developed
using two digits,  rather than four,  to specify  the year.  Consequently,  such
systems may recognize a date of "00" as the year 1900 instead of year 2000. This
may cause many  computer  systems to fail or create  inaccurate  results  unless
corrective measures are taken. We are currently  implementing,  or we have plans
to implement,  upgrades to computer  systems to properly  recognize  dates after
December 31, 1999. The financial  impact  associated with upgrades to systems to
address  the year 2000 issue is not  expected  to have a material  effect on the
Company's financial position or results of operations in any given year.

  This document contains certain  forward-looking  statements within the meaning
of the  private  securities  litigation  reform act of 1995  including,  without
limitation,  statements regarding possible benefits associated with the alliance
with Indigo Medical Inc., future costs of sales, S, G & A expenses, research and
development,  costs and timetable for capacity  expansion and the sufficiency of
the Company's  liquidity and capital  resources.  From time to time, the Company
may make other  forward-looking  statements  relating to such matters as well as
anticipated   financial   performance,    business   prospects,    technological
developments,  research and development  activities and similar  matters.  These
forward-looking statements are subject to certain risks, uncertainties and other
factors  which  could  cause  actual  results  to differ  materially  from those
anticipated,   including  risks   associated  with  the  management  of  growth,
government regulation of the therapeutic radiological, pharmaceutical and device
business, dependence on health care professionals, competition from conventional
and newly developed methods of treating  localized  cancer,  and dependence on a
third party cyclotron manufacturer.



<PAGE>


Quarterly Results

  The following table sets forth certain  consolidated  statements of operations
data for each of the Company's last eight  quarters.  This  unaudited  quarterly
information  has  been  prepared  on  the  same  basis  as  the  annual  audited
information  presented  elsewhere  in this Form 10K,  reflects  all  adjustments
(consisting  only of normal,  recurring  adjustments)  necessary in management's
opinion for a fair  presentation  of the information for the periods covered and
should be read in conjunction  with the financial  statements and notes thereto.
The operating results for any quarter are not necessarily  indicative of results
for any future period. Quarterly data presented may not reconcile to totals or 
full year results due to rounding.




<TABLE>

<CAPTION>
                                 1996                                               1997
                                 ----                                               ----
                                First        Second       Third     Fourth          First       Second       Third      Fourth
                                 Qtr          Qtr          Qtr       Qtr             Qtr          Qtr         Qtr        Qtr
                                 ---          ---          ---       ---             ---          ---         ---        ---
                              (Dollars and shares in thousands, except per share data)
<S>                            <C>         <C>         <C>       <C>                 <C>          <C>        <C>        <C>

Total revenues                 $2,798      $2,727      $3,144    $3,688              $4,107       $6,172     $7,018    $7,260
                                ------      ------      ------    ------              ------      ------     ------    ------
Cost of product sales
                                  753         888         958      1,137               1,145       1,559      1,580     1,856
Selling,
general and                       693         771         722      1,012               1,185       1,391      1,180     1,063
administrative
Research and Development
                                    1           1           1          4                   4          30         11        10
Other income
(expense)                          27          26          17        (34)                 16         328        499       462
                               ------       -----      ------      ------              -----      ------      -----    ------
Net earnings before income      1,378       1,093       1,480      1,501               1,789       3,520      4,746     4,793
taxes

Income tax
expense                           524         415         562        566                 680       1,338      1,803     1,529

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

Net earnings                   $  854      $  678      $  918     $  935              $1,109      $2,182     $2,943    $3,264
                               ======      ======      ======      ======             ======      ======     ======    ======
Earnings per common
share:
  Basic                         $0.07       $0.06       $0.08      $0.08               $0.09       $0.15      $0.20     $0.22
  Diluted                       $0.07       $0.06       $0.08      $0.08               $0.09       $0.15      $0.20     $0.22
Weighted average shares
outstanding
  Basic:                       11,505      11,588      11,658     11,748              11,836      14,229     14,449    14,537
  Diluted                      12,290      12,204      12,298     12,372              12,381      14,730     15,030    15,094

</TABLE>


<PAGE>



Inflation

    Management does not believe that the relatively moderate levels of inflation
which  have been  experienced  in the United  States in recent  years have had a
significant effect on the Company's net sales or profitability.

Item 8.  Financial Statements and Supplementary Data

           See Index to Financial Statements (Page 34) and following pages.

Item 9.  Changes in and Disagreements on Accounting and  Financial Disclosure

           Not Applicable


PART III

Item 10. Directors and Officers of Registrant*

Item 11. Executive Compensation*

Item 12. Security Ownership of Certain Beneficial Owners and Management*

Item 13. Certain Relationships and Related Transactions*
------------------------------
   *Theinformation  called for by Items 10,  11, 12 and 13 is omitted  from this
       Report and is incorporated by reference to the definitive Proxy Statement
       to be filed by the  Company  not later than 120 days after  December  31,
       1997, the close of its fiscal year.

PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

     a) The following documents are filed as part of this Report.

          1. Financial Statements
             See index to financial statements on page 34

          2. Financial Schedules
             See the index to financial schedules on page 34



          3. Exhibits

              3.1  -    Certificate of Incorporation (1)
              3.2  -    Certificate of Amendment to Certificate
                        of Incorporation (1)
              3.3  -    Certificate of Amendment to Certificate
                        of Incorporation (1)
              3.4  -    By-Laws (1)
              4.1       - See Exhibits 3.1 - 3.4 for provisions in the Company's
                        Certificate of  Incorporation  and By-Laws  defining the
                        rights of holders of the Company's Common Stock.
              4.2  -    Form of Warrant issued to the
                        Representatives of the Underwriters of the
                        Company's Public Offering (1)
              4.3  -    Warrant Agreements dated May 1, 1989 between the
                        Company and James Devas (4)
              4.4  -    Warrant Agreement dated May 8, 1993 between
                        the Company and James Devas (9)
             10.1  -    License Agreement with University of
                        Missouri, as amended (1)
             10.2  -    Agreement with Atomic Energy of Canada, Ltd. (1)
             10.3  -    Reassignment and Release Agreement among the Company,
                        John L. Russell, Jr., and Georgia Tech Research
                        Institute (1)
             10.4  -    1986 Incentive and Non-Incentive Stock
                        Option Plan (1)
             10.5       - Letter of  Agreement  between the Company and Yale-New
                        Haven Hospital (2)
             10.6  -    Lease between the Company and T. Rowe Price
                        Realty Income Fund II dated July 14, 1988 (2)
             10.7  -    Form of Purchase Agreement between the
                        Company and ten institutional investors (3)
             10.8  -    Form of Custody Agreement between the
                        Company and IBJ Schroder Bank & Trust
                        Company (3)
             10.9  -    1990 Incentive and Non-Incentive Stock
                        Option Plan (5)*
             10.10 -    Employment Agreement of Bruce W. Smith (5)*
             10.11 -    Purchase Agreement between Theragenics
                        Corporation and Production Equipment
                        Manufacturer (6)
             10.12 -    Term Loan and Security Agreement between
                        Theragenics Corporation and Heller
                        Financial, Inc. (7)
             10.13 -    Purchase Agreement between Theragenics
                        Corporation and Production Equipment
                        Manufacturer (8)
             10.14 -    Amendment to Purchase Agreement between
                        Theragenics Corporation and Production
                        Equipment Manufacturer (9)
             10.15 -    Employment Agreement of John V. Herndon
                        dated August 1, 1993 (9)*
             10.16 -    Employment Agreement of M. Christine Jacobs* (14)
             10.17 -    Lease between the Company and T. Rowe Price
                        Realty Income Fund II dated January 1, 1994
                        (9)
             10.18 -    Agreement with Nordion International Inc.
                        (11)
             10.19 -    Purchase Agreements between Theragenics
                        Corporation and Production Equipment
                        Manufacturer (12)
             10.20(a)   Purchase  Agreement  dated  December  27,  1996  between
                        Theragenics Corporation and Ion Beam Applications s.a.
                        (15)
             10.20(b)   Purchase Agreement dated December 27, 1996
                        between Theragenics Corporation and Ion Beam
                        Applications s.a. (15)
             10.20(c)   Purchase  Agreement  dated  December  27,  1996  between
                        Theragenics Corporation and Ion Beam Applications s.a.
                        (15)
             10.20(d)   Purchase  Agreement  dated  December  27,  1996  between
                        Theragenics Corporation and Ion Beam Applications s.a.
                        (15)
             10.21 -    Second Amended and Restated Loan and Security Agreement
                        by and between Theragenics Corporation and NationsBank,
                        N.A. (South), Dated as of December 9,
                        1996 (15)
             10.22 -    First modification of Second Amended and Restated Loan
                        and Security Agreement between  Theragenics  Corporation
                        and NationsBank, N.A., Dated September 30, 1997.
             10.23 -    Second  Modification  of Second  Amended and  Restated
                        Loan  and   security   Agreement   between   Theragenics
                        Corporation and  NationsBank,  N.A., Dated November 26,
                        1997.
             10.24 -    Rights Agreement dated as of February 17, 1997 between
                        the Company and SunTrust Bank, Atlanta (16)
             10.25 -    Theragenics  Corporation 1995 Stock Option Plan (17)* 
             10.26 -    1997 Stock  Incentive  Plan  (18)*  
             10.27 -    Marketing  and Sales Agreement by and between the
                        Company and Indigo Medical, Inc. dated May 30, 1997 (19)
             24.1  -    Consent of Independent Public Accountants
                        for Incorporation by Reference of Audit
                        Report into Registration Statements
             27.1  -    Financial Data Schedule for the years ended December 31,
                        1997 and 1996 (for SEC use only)
             27.2  -    Financial Data Schedule for the interim periods in the 
                        year ended December 31, 1997
             27.3  -    Financial Data Schedule for the interim periods in the
                        year ended December 31, 1996

*    Management contract or compensatory plan or arrangement identified
     pursuant to Item 14(a)(3) of Form 10-K

(1)  Incorporated  by  reference  to  the  exhibits  filed  with  the  Company's
     registration  statement on Form S-1, File No. 33-7097,  and  post-effective
     amendments thereto.
(2)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1988.
(3)  Incorporated  by  reference  to the exhibits to the report on Form 10-Q for
     the period ended June 30, 1989.
(4)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1989.
(5)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1990.
(6)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1991.
(7)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1992.
(8)  Incorporated  by  reference  to the exhibits to the report on Form 10-Q for
     the period ended June 30, 1993.
(9)  Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1993.
(10) Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1994.
(11) Incorporated  by  reference to the exhibits to the report on Form 8-K dated
     March 23, 1995.
(12) Incorporated  by  reference to the exhibits to the report on Form 8-K dated
     June 29, 1995.
(13) Incorporated  by  reference  to the exhibits to the report on Form 10-K for
     the period ended December 31, 1995.
(14) Incorporated by reference to the exhibits to the report on Form 10-K for 
     the period ended December 31, 1996.
(15) Incorporated  by  reference to the exhibits to the report on Form 8-K dated
     January 13, 1997.
(16) Incorporated  by reference to the  exhibits to the  Company's  registration
     statement on Form 8-1 filed February 27, 1997.
(17) Incorporated by reference to the exhibits to the Common Stock  Registration
     Statement on for S-8, file #333- 15313.
(18) Incorporated  by reference to appendix B to the Company's  proxy  statement
     for its 1997 Annual Meeting of Stockholders filed on schedule 14A.
(19) Incorporated by reference to the exhibits to the report on Form 10Q for the
     period ended September 30, 1997.



(b) Reports on Form 8-K

       No reports on Form 8-K were filed by the Company  during the last quarter
       of the most recent fiscal year.



<PAGE>


                                  SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) 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.
                                  THERAGENICS CORPORATION
                                       (Registrant)

                                  By:/s/ M. Christine Jacobs
                                     M. Christine Jacobs
                                     Chief Executive Officer
Dated: March 27, 1998
       Norcross, Georgia

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.

Name                      Title                           Date

/s/ M. Christine Jacobs   Chief Executive Officer        3/27/98
M. Christine Jacobs       (Principal Executive Officer);
                          Director

/s/ Bruce W. Smith        Chief Financial Officer,       3/27/98
Bruce W. Smith            Treasurer (Principal
                          Financial Officer) and
                          Secretary

/s/ Charles Klimkowski    Director, Chairman             3/27/98
Charles Klimkowski


/s/ John V. Herndon       Director                       3/27/98
John V. Herndon


/s/ Orwin L. Carter       Director                       3/27/98
Orwin L. Carter


/s/ Peter A.A. Saunders   Director                       3/27/98
Peter A.A. Saunders


/s/ Otis W. Brawley       Director                       3/27/98
Otis W. Brawley

THERAGENICS CORPORATION

TABLE OF CONTENTS


                                                           Page

    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ................35
    (For the periods ended December 31, 1995, 1996 and 1997)

    FINANCIAL STATEMENTS

    Balance Sheets - December 31, 1996 and 1997 .............36

    Statements of Earnings for the Three Years Ended
    December 31, 1997 .......................................37

    Statement of Shareholders' Equity for
    the Three Years Ended December 31, 1997 .................38

    Statements of Cash Flows for the Three Years Ended
    December 31, 1997 .......................................40

    NOTES TO FINANCIAL STATEMENTS ...........................42






















<PAGE>



REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Theragenics Corporation

         We have  audited  the  balance  sheets of  Theragenics  Corporation  (a
Delaware  corporation)  as of  December  31,  1996  and  1997,  and the  related
statements  of earnings,  shareholders'  equity,  and cash flows for each of the
three years in the period ended December 31, 1997.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally  accepted auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe our audits provide a reasonable basis for our opinion.

         In our opinion,  the  financial  statements  referred to above  present
fairly,  in  all  material  respects,  the  financial  position  of  Theragenics
Corporation  as of December 31, 1996 and 1997, and the results of its operations
and its cash flows for each of the three years in the period ended  December 31,
1997, in conformity with generally accepted accounting principles.




Atlanta, Georgia
January 15, 1998








<PAGE>




                                              THERAGENICS CORPORATION
                                                  BALANCE SHEETS
 

                                                 December 31,
<TABLE>

<CAPTION>                                                                                      

                                                                                        1996                      1997

                                                                                ---------------------     ----------------------
<S>                                                                              <C>                      <C>

 ASSETS
    CURRENT ASSETS
       Cash and short-term investments                                                $  2,986,123                30,161,614      
       Marketable securities                                                                    --                 8,391,807
       Trade accounts receivable, less
       allowance of $0 in 1996 and $65,446 in 1997                                       2,258,936                 2,925,390
       Inventories                                                                         229,298                   433,873
       Prepaid expenses and other current assets                                           133,625                   160,620
                                                                                 --------------------       -------------------
          Total current assets                                                           5,607,982                42,073,304
     PROPERTY, PLANT AND EQUIPMENT - AT COST
       Building and improvements                                                         3,333,728                 3,333,728
       Leasehold improvements                                                              138,978                   138,978
       Machinery and equipment                                                          11,522,064                14,698,623
       Office furniture and equipment                                                       65,057                    66,464
                                                                                  --------------------     --------------------
                                                                                        15,059,827                18,237,793
       Less accumulated depreciation                                                    (3,237,684)               (4,695,669)
                                                                                  -------------------      --------------------
                                                                                        11,822,143                13,542,124
       Land                                                                                525,372                   525,754
       Construction in progress                                                          5,238,056                14,917,788
                                                                                  -------------------      --------------------
                                                                                        17,585,571                28,985,666
     OTHER ASSETS
       Deferred income tax asset                                                           360,000                        --
       Patent costs                                                                         80,685                    71,836
       Other                                                                                55,183                     9,503
                                                                                                           
                                                                                  -------------------      --------------------
                                                                                           495,868                    81,339
                                                                                  -------------------      --------------------
                                                                                  
   Total Assets                                                                         23,689,421         $      71,140,309      
                                                                                  ===================      ====================
   LIABILITIES AND SHAREHOLDERS' EQUITY
    CURRENT LIABILITIES
   Current portion of long-term debt                                                     3,458,436                    --
      Trade accounts payable                                                               330,375                 1,435,154
      Accrued salaries, wages and payroll taxes                                            459,421                   689,610
      Income taxes payable                                                                   --                      845,364
      Other current liabilities                                                             56,677                   137,097
                                                                                  -------------------     ---------------------
         Total current liabilities                                                       4,304,909                 3,107,225
    DEFERRED INCOME TAXES                                                                       --                 1,000,000
    COMMITMENTS AND CONTINGENCIES                                                               --                        --
    SHAREHOLDERS' EQUITY
     Common stock authorized 50,000,000 shares of $.01 par
     value;            issued and outstanding, 11,814,278 in 1996 and
    14,537,841 in 1997                                                                     118,143                   145,378
   Additional paid-in capital                                                           17,616,560                55,740,366
   Retained earnings                                                                     1,649,809                11,147,340
                                                                                  -------------------     ---------------------
                                                                                  -------------------     ---------------------
                                                                                        19,384,512                67,033,084
                                                                                  -------------------     ---------------------
                                                                                  ===================     =====================
    Total Liabilities and Shareholders' Equity                                    $     23,689,421        $       71,140,309

                                                                                  ===================     =====================
</TABLE>

The accompanying notes are an integral part of these statements.
<PAGE>



                                              THERAGENICS CORPORATION

                                              STATEMENTS OF EARNINGS
                                              Year ended December 31,
<TABLE>
<CAPTION>

                                                               1995                   1996                   1997
                                                      --------------------  ----------------------  ---------------------
<S>                                                   <C>                   <C>                     <C>

REVENUE
  Product sales                                       $         7,781,962   $          12,257,165   $         12,169,724
  Product sales - affiliate                                            --                      --             12,287,650
     Licensing fees                                                85,431                 100,000                100,000
                                                      --------------------  ----------------------  ---------------------
                                                      --------------------  ----------------------  ---------------------
                                                                7,867,393              12,357,165             24,557,374
                                                      --------------------  ----------------------  ---------------------

COSTS AND EXPENSES
  Cost of product sales                                         2,645,730               3,735,669              6,141,330
   Selling, general
        and                                                     2,395,846               3,198,663              4,818,650
        administrative
  Research and development                                         17,954                   6,952                 55,390
                                                      --------------------  ----------------------  ---------------------
                                                      --------------------  ----------------------  ---------------------
                                                                5,059,530               6,941,284             11,015,370
                                                      --------------------  ----------------------  ---------------------
OTHER INCOME (EXPENSE)
  Interest income                                                143,424                  126,953              1,361,890
  Interest expense                                               (51,967)                (84,517)               (21,095)
  Other                                                          (26,995)                 (6,311)               (35,268)
                                                      ---------------------   ---------------------   --------------------
                                                      --------------------  ----------------------  ---------------------
                                                                   64,462                  36,125             1,305,527
                                                      --------------------  ----------------------  ---------------------

Net earnings before income  taxes                               2,872,325               5,452,006             14,847,531

Income tax expense                                              1,100,000               2,067,500              5,350,000
                                                      --------------------  ----------------------  ---------------------

               Net earnings                                   $ 1,772,325             $ 3,384,506            $ 9,497,531
                                                      ====================  ======================  =====================

Net earnings per common share
  Basic                                                        $       .16   $                 .29           $       .69
                                                      ====================  ======================  =====================

  Diluted                                                       $      .15            $       .28            $       .66
                                                      ====================  ======================  =====================


</TABLE>






<PAGE>


                            Theragenics Corporation

                     STATEMENTS OF SHAREHOLDERS' EQUITY

                    For the three years ended December 31, 1997


<TABLE>
<CAPTION>

                                                                                                 Retained
                                                          Common stock        Additional         earnings
                                                    Number of     Par value       paid-in       (accumulated
                                                     shares         $.01          capital         deficit)           Total
<S>                                             <C>            <C>           <C>              <C>              <C>

Balance, December 31, 1994                         10,961,887  $   109,618   $   15,207,453   $  (3,507,022)    $ 11,810,049

Exercise of stock options, net of 17,102
  common shares redeemed                              432,898        4,330          469,717               -          474,047

Income tax benefit from stock options exercised             -            -          713,000               -          713,000

Net earnings for the year                                   -            -                -       1,772,325        1,772,325
                                                -------------    ----------  --------------  --------------    -------------
Balance, December 31, 1995                         11,394,785       113,948      16,390,170      (1,734,697)      14,769,421

Exercise of stock options, net of 11,723
   common shares redeemed                             379,493         3,795         398,163               -          401,958

Exercise of warrants                                   40,000           400         299,600               -          300,000

Income tax benefit from stock options exercised             -             -         528,627               -          528,627

Net earnings for the year                                   -             -               -       3,384,506        3,384,506
                                                 ------------    ----------  --------------  --------------    -------------
Balance, December 31, 1996                         11,814,278       118,143      17,616,560       1,649,809       19,384,512
</TABLE>
<PAGE>




                                    Theragenics Corporation

                              STATEMENTS OF SHAREHOLDERS' EQUITY - CONTINUED

                               For the three years ended December 31, 1996


<TABLE>
<CAPTION>
                                                                                                  Retained
                                                          Common stock          Additional        earnings
                                                    Number of      Par value     paid-in        (accumulated
                                                    shares          $.01         capital          deficit)         Total
                                                    ------------------------   -----------    -------------    ------------

<S>                                               <C>            <C>         <C>             <C>               <C>

Issuance of common stock in secondary public
  offering, net of offering costs of $2,482,701    2,300,000        23,000    31,994,299                -       32,017,299

Issuance of common stock to Johnson & Johnson
  Development Corporation                            254,453         2,544     4,997,456                -        5,000,000

Exercise of stock options, net of 1,000 common
  shares redeemed                                    149,110         1,491       492,615                -          494,106

Exercise of warrants                                  20,000           200       149,800                -          150,000

Income tax benefit from stock options exercised            -             -       489,636                -          489,636

Net earnings for the year                                  -             -             -        9,497,531        9,497,531
                                                  ----------     ---------    ----------       ----------       ----------

Balance, December 31, 1997                        14,537,841     $ 145,378   $55,740,366     $ 11,147,340      $67,033,084
                                                  ==========     =========    ==========      ===========       ==========

</TABLE>


The accompanying notes are an integral part of these statements.



<PAGE>



                             Theragenics Corporation

                           STATEMENTS OF CASH FLOWS

                             Year ended December 31,


<TABLE>
<CAPTION>

                                                                      1995              1996                1997
                                                              --------------      -------------       -------------
<S>                                                              <C>                <C>                 <C>

Cash flows from operating activities:
   Net earnings                                                  $ 1,772,325        $ 3,384,506         $ 9,497,531
   Adjustments to reconcile net earnings to net
     cash provided by operating activities:
       Deferred income taxes                                       1,082,000          1,972,000           1,850,000
       Depreciation and amortization                                 828,072          1,114,919           1,466,834
       Provision for doubtful accounts receivable                          -                  -              65,446
       Loss on disposal of property and equipment                      1,677                  -                   -
       Change in assets and liabilities:
         Accounts receivable                                        (603,221)          (923,291)           (731,900)
         Inventories                                                  25,206            (62,343)           (204,575)
         Prepaid expenses and other current assets                    24,280            (66,104)            (26,995)
         Other assets                                                      -                  -              45,680
         Trade accounts payable                                      121,982            (17,816)          1,104,779
         Accrued salaries, wages and payroll taxes                   115,006            234,283             230,189
         Other current liabilities                                   (17,214)            47,369              80,056
         Income taxes payable                                              -                  -             845,364
                                                                   ---------        -----------         -----------

             Net cash provided by operating activities             3,350,113          5,683,523          14,222,409
                                                                   ---------        -----------         -----------

Cash flows from investing activities:
   Purchase and construction of property and equipment            (2,426,961)        (8,555,876)        (12,858,080)
   Purchase of marketable securities                                       -                  -          (8,391,807)
   Maturities of marketable securities                                50,000                  -                   -
   Patent costs                                                       (3,632)                 -                   -
                                                                   ---------        -----------         -----------

              Net cash used by investing activities               (2,380,593)        (8,555,876)        (21,249,887)
                                                                   ---------        -----------         -----------

</TABLE>












<PAGE>




                                  Theragenics Corporation

                           STATEMENTS OF CASH FLOWS - CONTINUED

                                 Year ended December 31,

<TABLE>
<CAPTION>


                                                                1995                 1996                 1997
                                                          --------------     ----------------       ---------------
<S>                                                      <C>                 <C>                    <C>

Cash flows from financing activities:
   Proceeds from long-term debt                                       -             2,450,225                   -
   Repayment of long-term debt                                 (469,622)             (511,286)         (3,458,436)
   Proceeds from issuance of common stock, net                        -                     -          37,017,299
   Proceeds from exercise of stock options and
     warrants                                                   474,047               701,958             644,106
   Debt issue costs                                             (25,070)              (48,759)                  -
                                                          --------------     ----------------       ---------------

         Net cash (used) provided by
           financing activities                                 (20,645)            2,592,138          34,202,969
                                                          --------------     ----------------       ---------------

Net increase (decrease) in cash and
   short-term investments                                       948,875              (280,215)         27,175,491

Cash and short-term investments
   at beginning of year                                       2,317,463             3,266,338           2,986,123
                                                          --------------     ----------------       ---------------

Cash and short-term investments
   at end of year                                        $    3,266,338        $    2,986,123       $  30,161,614
                                                          ==============     ================       ===============
</TABLE>

             Supplemental Schedule of Non Cash Financing Activities

   During 1995,  1996 and 1997, the Company  realized an income tax benefit from
   the exercise and early  disposition of certain stock options of approximately
   $713,000, $529,000 and $490,000, respectively.
<TABLE>
<CAPTION>

Supplementary Cash Flow Disclosure
<S>                                                          <C>      <C>        <C>               <C>   


   Interest paid, net of amounts capitalized                  $       54,000     $       82,000    $         29,000

   Income taxes paid                                          $       15,000     $       99,000    $      2,655,000


</TABLE>


The accompanying notes are an integral part of these statements.

<PAGE>


                             Theragenics Corporation

                          NOTES TO FINANCIAL STATEMENTS

                           December 31, 1996 and 1997



NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

   Theragenics  Corporation  (the  "Company")  was organized in November 1981 to
   develop,  manufacture,  and market  radiological  pharmaceuticals and devices
   used in the  treatment  of  cancer.  The  Company  manufactures  and  markets
   primarily one product, TheraSeed(R), which is used primarily in the treatment
   of prostate  cancer.  Use of the  Company's  product is regulated by the U.S.
   Food and Drug  Administration  (FDA).  Under a marketing and sales  agreement
   executed with Indigo  Medical,  Inc.  (Indigo) in May 1997,  (see Note F) all
   TheraSeed(R)  products used in the  treatment of prostate  cancer are sold to
   Indigo.  The  TheraSeed(R)  product is utilized by hospitals,  physicians and
   other health service providers in the United States. The Company therefore is
   directly  affected  by  changes  in  technology,  as it may  apply to  cancer
   treatment,  and by FDA  regulations  and the well  being of the  health  care
   industry.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant  accounting  policies  consistently  applied in the
preparation of the accompanying financial statements follows:

   1.Use of Estimates

   In preparing  financial  statements in  conformity  with  generally  accepted
   accounting  principles  ("GAAP"),  management  is  required  to make  certain
   estimates  and  assumptions  that affect the  reported  amounts of assets and
   liabilities  and the disclosure of contingent  assets and  liabilities at the
   date of the  financial  statements  and  revenues  and  expenses  during  the
   reporting period. Actual results could differ from those estimates.

   2.Cash and Short-Term Investments

   For purposes of reporting cash flows, cash and short-term investments include
   cash on hand,  cash in banks and variable rate demand notes with original
   maturities of less than 90 days.

   3.Marketable Securities

   Marketable  securities  are classified as available for sale and are reported
   at fair value. Fair value is based upon quoted market prices. At December 31,
   1997,  marketable  securities  consisted of municipal and hospital  authority
   obligations.  Marketable  securities of $6,891,807 mature within one year and
   marketable  securities  of  $1,500,000  mature  in  2004  with  a put  option
   exercisable  in 1998.  At December  31,  1997,  the fair value of  marketable
   securities approximated amortized cost. No marketable securities were held at
   December 31, 1996.

<PAGE>


                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1996 and 1997


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

   4.Inventories

   Inventories  are  stated at the lower of cost or market.  Cost is  determined
   using the specific  identification  method which  approximates  the first-in,
   first-out (FIFO) method. Inventories consist primarily of work in process.

   5.Property, Equipment, Depreciation and Amortization

   Property and  equipment  are recorded at  historical  cost.  Depreciation  is
   provided for in amounts  sufficient to relate the cost of depreciable  assets
   to operations over their estimated  services lives on a straight-line  basis.
   Depreciation  and  amortization  expense  related to property  and  equipment
   charged to operations was approximately  $810,000,  $1,044,000 and $1,458,000
   for  1995,  1996 and  1997,  respectively.  Estimated  services  lives are as
   follows:

                  Building and improvements               30 years
                  Machinery, leasehold improvements,
                    furniture and equipment             5-10 years

   A significant portion of the Company's depreciable assets are utilized in the
   production   of  its   product.   Management   periodically   evaluates   the
   realizability  of its  depreciable  assets in light of its  current  industry
   environment.  Management  believes that no impairment of  depreciable  assets
   exists at December  31,  1997.  It is possible,  however,  that  management's
   estimates  concerning the realizability of the Company's  depreciable  assets
   could  change  in the  near  term due to  changes  in the  technological  and
   regulatory environment.

   The primary machinery and equipment  utilized in the Company's  manufacturing
   process  has been  acquired  from one  vendor.  Currently,  the  Company  has
   contracts for additional manufacturing equipment with this vendor. Management
   believes that the vendor has the ability to continue to deliver the equipment
   in accordance with the terms of the contracts. Any inability of the vendor to
   meet its  obligations  for  delivery of the  equipment  could have an adverse
   affect on the Company's ability to increase its production capacity.

   6.Patent Costs

   The Company  capitalizes the costs of patent  applications  for its products.
   Amortization is computed on a straight line basis over the estimated economic
   lives of the patents,  commencing at the date of grant of the related patent.
   Patent costs are net of  accumulated  amortization  of $47,295 and $56,144 at
   December  31,  1996 and 1997,  respectively.  Amortization  related to patent
   costs charged to operations was approximately $8,000,  $10,000 and $9,000 for
   1995, 1996 and 1997, respectively.
<PAGE>

                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1996 and 1997


NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

   7.Income Taxes

   The Company  accounts for income taxes using the asset and liability  method.
   Under this method, deferred tax assets and liabilities are recognized for the
   future tax  consequences  attributable  to differences  between the financial
   statement  carrying  amounts of  existing  assets and  liabilities  and their
   respective tax bases.  Deferred tax assets and liabilities are measured using
   enacted  tax rates  applied to taxable  income.  The effect on  deferred  tax
   assets and  liabilities  of a change in tax rates is  recognized in income in
   the period  that  includes  the  enactment  date.  A valuation  allowance  is
   provided  for  deferred  tax assets  when it is more likely than not that the
   asset will not be realized.

   8.Research and Development Costs

   The costs of research and development  and consumable  supplies and materials
   to be  used  for the  development  of the  Company's  intended  products  are
   expensed when incurred.

   9.Advertising

   The Company expenses the cost of advertising as incurred. Advertising expense
   for the  years  ended  December  31,  1995,  1996 and 1997 was  approximately
   $139,000, $229,000 and $230,000, respectively.

   10. Earnings Per Share

   The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS
   128),  Earnings Per Share, in the fourth quarter of 1997.  Basic net earnings
   per common share is based upon the weighted  average  number of common shares
   outstanding during the period. Diluted net earnings per common share is based
   upon the weighted  average number of common shares  outstanding plus dilutive
   potential common shares,  including options and warrants  outstanding  during
   the  period.  All  comparative  earnings  per share  data for  prior  periods
   presented has been restated.

   11. Stock Based Compensation

   The Company's  stock option plans are accounted for under the intrinsic value
   method in which  compensation  expense is recognized for the amount,  if any,
   that the fair value of the underlying common stock exceeds the exercise price
   at the date of grant.

<PAGE>




                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                            December 31, 1996 and 1997




NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

   12. Fair Value of Financial Instruments

   The  Company's   financial   instruments   include  cash,  cash  equivalents,
   marketable securities and long-term debt. The carrying value of cash and cash
   equivalents  approximates  fair value due to the  relatively  short period to
   maturity  of  the  instruments.   Marketable  securities  are  classified  as
   available for sale and are reported at fair value.  The carrying value of the
   Company's long-term obligations  approximates fair value based upon borrowing
   rates  currently  available  to the Company for  borrowings  with  comparable
   maturities.

   13. Hedging Activities

   The Company enters into foreign exchange forward contracts to hedge the price
   risks associated with equipment purchase  commitments  denominated in foreign
   currencies. The forward contracts typically mature concurrently with payments
   required under the equipment  purchase  contracts.  The Company does not hold
   foreign exchange forward contracts for trading or speculative purposes. Gains
   and  losses  are  deferred  and  accounted  for as  part  of  the  underlying
   transactions.  At December 31, 1997,  foreign exchange forward contracts were
   not significant.


NOTE C - CONSTRUCTION IN PROGRESS

Construction in progress consists primarily of payments made for construction of
manufacturing equipment and facilities expansion.  Total cost of this project is
expected to be  approximately  $54,000,000  and is expected to be  completed  in
various stages through 1999.  Total  outstanding  commitments of this project at
December 31, 1997 are approximately  $40,000,000.  Construction of equipment and
facilities totaling  approximately  $4,900,000 and $3,000,000 were completed and
placed in service during 1996 and 1997, respectively.





<PAGE>



                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                            December 31, 1996 and 1997

<TABLE>
<CAPTION>

NOTE D - INCOME TAXES

   The provision for income taxes is summarized as follows:

                                    1995               1996            1997
                               --------------     -------------    ------------
<S>                            <C>                <C>              <C>

       Current tax expense     $      18,000      $     95,500     $  3,500,000
       Deferred tax expense        1,082,000         1,972,000        1,850,000
                               --------------     -------------    ------------

                               $   1,100,000      $  2,067,500     $  5,350,000
                               ==============     =============    ============
</TABLE>

 The Company's  temporary  differences  result in a deferred income tax asset at
 December  31, 1996 and a deferred  income tax  liability  at December 31, 1997,
 summarized as follows:
<TABLE>
<CAPTION>

                                                            December 31,
                                              ----------------------------------
                                                  1996                 1997
                                              ------------          ------------
<S>                                           <C>                  <C>

      Deferred tax assets:
       Net operating loss carryforwards       $   870,000          $          -
       Tax credit carryforwards                   174,000                     -
       Nondeductible accruals and allowances       50,000                60,000
       Other                                       14,000                     -
                                              ------------          ------------
         Gross deferred tax asset               1,108,000                60,000

       Deferred tax liabilities:
         Depreciation                             748,000            (1,060,000)
                                              -----------           ------------

         Net deferred tax asset (liability)   $   360,000          $ (1,000,000)
                                              ===========           ============
</TABLE>

   The  provision  for  income  taxes  differs  from the  amount of  income  tax
determined by applying the applicable federal rates due to the following:
<TABLE>
<CAPTION>

                                             Year ending December 31,
                                             ------------------------
                                        1995          1996           1997
                                      --------    -----------      ---------
<S>                                <C>            <C>            <C>

Tax at applicable federal rates    $   977,000    $ 1,854,000    $ 5,097,000
State tax, net                         115,000        208,000        254,000
Tax exempt interest                          -            -          (40,000)
         Other                           8,000          5,500         39,000
                                     ---------    -----------      ---------

                                   $ 1,100,000    $ 2,067,500    $ 5,350,000
                                     =========    ===========      =========
</TABLE>
<PAGE>


                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1996 and 1997




NOTE E - NOTES PAYABLE
   The Company  has  entered  into an amended  and  restated  loan and  security
   agreement ("the loan agreement") with a bank. The loan agreement provides for
   a revolving  credit  facility of up to  $15,000,000.  Interest on outstanding
   borrowings is payable monthly at the prime rate or at a LIBOR based rate.

   The LIBOR  based  rate  ranges  from LIBOR plus 1.5% to LIBOR plus 2%, and is
   determined by the Company's debt service  coverage  ratio,  as defined in the
   loan agreement.  At December 31, 1996,  $3,458,436 was outstanding  under the
   revolving  credit  facility  with an  effective  interest  rate of 8.25%.  No
   amounts were outstanding under the revolving credit agreement at December 31,
   1997.

   Outstanding  borrowings  under  the  loan  agreement  are  collateralized  by
   substantially all of the Company's  assets.  Provisions of the loan agreement
   limit the  incurrence  of  additional  debt and  require the  maintenance  of
   certain  minimum  financial  ratios,  among other things.  As of December 31,
   1997,  the  Company  was in  compliance  with  the  provisions  of  the  loan
   agreement.


NOTE F - COMMITMENTS AND CONTINGENCIES

   Marketing and Sales Agreement

   In May 1997,  the Company  executed an agreement  with Indigo  Medical,  Inc.
   (Indigo), a subsidiary of Johnson & Johnson Development  Corporation (Johnson
   & Johnson),  granting Indigo the exclusive worldwide right to market and sell
   TheraSeed(R) for the treatment of prostate cancer for a period of seven years
   with a provision for successive three year renewals.  In accordance with this
   agreement,  all  TheraSeed(R)  products  used for the  treatment  of prostate
   cancer are sold to Indigo.  Concurrently with the execution of the agreement,
   Johnson & Johnson purchased 254,453 shares of the Company's common stock.

   Licensing Agreement

   The Company  holds a  worldwide  exclusive  license  from the  University  of
   Missouri for the use of technology,  patented by the University,  used in the
   Company's  "Therasphere"  product.  The licensing  agreement provides for the
   payment  of  royalties  based on the level of sales and on lump sum  payments
   received pursuant to a licensing agreement with Nordion International, Inc.
   (see below).

<PAGE>


                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                           December 31, 1996 and 1997


NOTE F - COMMITMENTS AND CONTINGENCIES - Continued

   Licensing Agreement - Continued

   The  Company  has  granted  certain  of its  geographical  rights  under  the
   licensing agreement with the University of Missouri to Nordion International,
   Inc.,  a Canadian  company  which is a  producer,  marketer  and  supplier of
   radioisotope products and related equipment. Under the Nordion agreement, the
   Company  will  receive  a  licensing  fee for each  geographic  area in which
   Nordian  receives new drug  approval.  The Company will also be entitled to a
   percentage  of future  revenues  earned by  Nordion  as  royalties  under the
   agreement.  Royalties  from this agreement for each of the three years in the
   period ended December 31, 1997 were not significant.

   In 1995, 1996 and 1997, the Company received approximately $85,000,  $100,000
   and $100,000, respectively, from Nordion for the right to use certain patents
   and to manufacture,  distribute,  and sell "Therasphere" for all applications
   worldwide.

   Letter of Credit

   The Company has a letter of credit  outstanding  for  approximately  $315,000
relating to regulatory requirements.

   Lease Commitment

   The Company  leases space and office  equipment  under  noncancelable  leases
   which expire at various dates through April 2000.  Approximate  minimum lease
   payments  under the leases are as follows:  1998,  $162,000;  1999,  $25,000;
   2000, $1,200.

   Rent expense was  approximately  $61,500,  $76,000 and $179,000 for the years
ended December 31, 1995, 1996 and 1997, respectively.



<PAGE>



                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1996 and 1997


NOTE G - STOCK OPTIONS AND WARRANTS

   Stock Options

   The  Company's  board of directors has approved four stock option plans which
   in aggregate cover up to 2,700,000  shares of common stock. The plans provide
   for the  expiration  of options ten years from the date of grant and requires
   the  exercise  price of the  options  granted to be at least equal to 100% of
   market value on the date granted.  Stock option  transaction  for each of the
   three years in the period ended December 31, 1997 are summarized below:
<TABLE>
<CAPTION>

                                                   1995                     1996                  1997
                                         ---------------------   ---------------------    -------------------
                                                      Weighted               Weighted                Weighted
                                                       Average                Average                 Average
                                                      Exercise               Exercise                Exercise
                                          Shares       Price       Shares      Price        Shares     Price
                                         ---------    ------    --------     -------    ---------     ------
       <S>                               <C>          <C>       <C>          <C>         <C>          <C>

       Outstanding, beginning of year    1,226,716     $2.09     997,716     $  3.11      826,500     $ 7.22
       Granted                             221,000      5.38     220,000       15.92      269,000      35.80
       Exercised                          (450,000)     1.29    (391,216)       2.21     (150,110)      3.59
       Forfeited                                 -         -           -           -      (52,000)      5.38
                                         ---------    ------    --------     -------     ---------     -----

       Outstanding, end of year            997,716     $3.11     826,500     $  7.22      893,390     $16.54
                                         =========    ======    ========     =======     =========     =====
</TABLE>

The following table summarizes information about stock options outstanding at
December 31, 1997:
<TABLE>
<CAPTION>

                                          Options Outstanding                         Options Exercisable
                               --------------------------------------------      ------------------------------
                                                   Weighted
                                                   Average         Weighted                            Weighted
              Range of            Number           Remaining      Average            Number           Average
              Excise           Outstanding at    Contractual      Exercise       Exercisable at        Exercise
             Price            December 31, 1997  Life (Years)      Price         December 31, 1997      Price
              -----------        -----------------  ------------  ------------      -----------------     --------
          <S>                         <C>           <C>             <C>             <C>                  <C>

             $1.00-3.50               138,175         3.0           $ 2.03            138,175            $ 2.03
             $5.38-6.38               278,215         7.6             5.59            113,881              5.78
          $15.25-16.88                208,000         9.0            15.94             64,000             15.86
                $23.50                 24,000         9.5            23.50                  -                 -
                $37.00                245,000        10.0            37.00                  -                 -
                                      -------       -----            -----          -----------          ------

                                      893,390         7.9           $16.54            316,056            $ 6.18
                                      =======       =====            =====          ===========          ======
</TABLE>

<PAGE>

                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                            December 31, 1996 and 1997


NOTE G - STOCK OPTIONS AND WARRANTS - Continued

   The Company  follows the  practice of  recording  amounts  received  upon the
   exercise of certain options by crediting common stock and additional  paid-in
   capital. No charges are reflected in the statements of operations as a result
   of the grant or  exercise  of  options.  The  Company  realizes an income tax
   benefit from the exercise or early disposition of certain stock options. This
   benefit  results in a reduction  to income  taxes  payable and an increase in
   additional paid-in capital.

   The Company  uses the  intrinsic  value  method in  accounting  for its stock
   option  plans.  In  applying  this  method,  no  compensation  cost  has been
   recognized.  Had compensation  cost for the Company's stock option plans been
   determined  based on the fair value at the grant dates for awards under those
   plans,  the Company's net earnings and earnings per share would have resulted
   in the pro forma amounts indicated below:

<TABLE>

<CAPTION>

                                                           1995                1996               1997
                                                       -----------          -----------       -----------
     <S>                                               <C>                  <C>               <C>
     Net earnings                As reported           $ 1,772,325          $ 3,384,506       $ 9,497,531
                                 Pro forma               1,750,736            3,015,123         8,628,538

     Basic net earnings per
       common share              As reported           $       .16          $       .29       $       .69
                                 Pro forma                     .16                  .26       $       .63

     Diluted net earnings per
       common share              As reported           $       .15          $       .28       $       .66
                                 Pro forma                     .15                  .24       $       .61
</TABLE>

   For purposes of the pro forma  amounts  above,  the fair value of each option
   grant  was   estimated   on  the  date  of  grant  using  the   Black-Scholes
   options-pricing  model with the following  weighted-average  assumptions used
   for grants in 1995, 1996 and 1997, respectively;  expected volatility of 70%,
   70% and 68%, risk-free interest rates of 5.86%, 6.33% and 5.87%; and expected
   lives of 5.5 years, 7 years and 3.7 years.

   Warrants

   40,000 warrants were exercised during 1996 and 20,000 warrants were exercised
   during 1997,  resulting in proceeds to the Company of $300,000 and  $150,000,
   respectively.  At December 31, 1997, there are outstanding  warrants covering
   40,000 shares of common  stock.  The warrants are  exercisable  at a price of
   $7.50 per share and expire in May 1999.


<PAGE>


                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                          December 31, 1996 and 1997


NOTE H - EARNINGS PER SHARE

   Earnings per common share was computed as follows:


                                                   Year ended December 31, 1997
                                                   ----------------------------
<TABLE>
<CAPTION>
                                                            
                                                               Earnings           Shares            Per share
                                                              (Numerator)        (Denominator)        Amount
                                                             ------------       --------------       -----------
     <S>                                                    <C>                 <C>                 <C>
     Net earnings                                           $   9,497,531
                                                             ============

       Basic net earnings per common share

       Earnings available to common shareholders            $   9,497,531           13,762,844      $        .69
                                                                                                     ===========

     Effect of dilutive securities

       Options and warrants                                                            545,876

       Diluted net earnings per common share                $   9,497,531           14,308,720      $        .66

                                                             ============       ==============       ===========

</TABLE>

<TABLE>

<CAPTION>


                                                                          Year ended December 31, 1997
                                                                         ------------------------------
                                                               Earnings           Shares            Per share
                                                              (Numerator)        (Denominator)        Amount
                                                            --------------      --------------       -----------
     <S>                                                    <C>                 <C>                <C>
     Net earnings                                           $   3,384,506
                                                             ============

       Basic net earnings per common share

       Earnings available to common shareholders            $   3,384,506       11,624,778         $    .29
                                                                                                      =====

     Effect of dilutive securities
       Options and warrants                                                        666,462

       Diluted net earnings per common share                $   3,384,506       12,291,240         $   .28
                                                             ============       ==========            =====


</TABLE>
<PAGE>




                             Theragenics Corporation

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED

                             December 31, 1996 and 1997

<TABLE>
<CAPTION>

NOTE H - EARNINGS PER SHARE - Continued


                                                                          Year ended December 31, 1995
                                                               Earnings           Shares         Per share
                                                              (Numerator)      (Denominator)      Amount
 <S>                                                        <C>                 <C>              <C>

 Net earnings                                               $   1,772,325
                                                             ============

       Basic net earnings per common share

       Earnings available to common shareholders            $   1,772,325        11,102,869      $    .16
                                                                                                  =======

     Effect of dilutive securities

       Options and warrants                                                         745,181

       Diluted net earnings per common share                $   1,772,325        11,848,050      $    .15
                                                             ============       ===========       =======
</TABLE>


NOTE I - MAJOR CUSTOMERS

   In 1997,  sales to Indigo  Medical,  Inc.  (Indigo)  represented 50% of total
   sales.  Additionally,  approximately  86% of  accounts  receivable  were from
   Indigo at December 31, 1997.  Indigo is a subsidiary of a stockholder  of the
   Company.

   During 1995 and 1996,  there were no customers which  individually  comprised
ten percent or more of sales.


NOTE J - EMPLOYEE BENEFIT PLAN

   The  Company  sponsors  a  defined  contribution  401(k)  Plan  covering  all
   employees  with at least six months of service  and at least 21 years of age.
   The Plan  permits  participants  to  defer a  portion  of their  compensation
   through payroll deductions. The Company may, at its discretion, contribute to
   the  Plan  on  behalf  of  participating  employees.   Company  discretionary
   contributions were approximately $40,000,  $14,000 and $35,000 for 1995, 1996
   and 1997, respectively.





<PAGE>


Page 53

                                  Theragenics Corporation

                             NOTES TO FINANCIAL STATEMENTS - CONTINUED

                                  December 31, 1996 and 1997
<TABLE>
<CAPTION>

NOTE K - QUARTERLY FINANCIAL DATA (UNAUDITED)

The following summarizes certain quarterly results of operations (in thousands, except per share amounts):
                                                                      Quarters ended
                                                  March 31       June 30      September 30    December 31
                                                  --------       -------      ------------    -----------
   <S>                                          <C>               <C>          <C>               <C>
   Year ended December 31, 1997:
   Net revenue                                  $    4,107        $6,172       $    7,018        $ 7,260
   Gross profit                                      2,962         4,613            5,437          5,404
   Net earnings                                      1,109         2,182            2,943          3,264
   Basic net earnings per common share          $      .09        $  .15       $      .20        $   .22
   Diluted net earnings per
     common share                               $     .09         $  .15       $      .20        $   .22

   Year ended December 31, 1996:
   Net revenue                                  $    2,798        $2,727       $    3,144        $ 3,688
   Gross profit                                      2,045         1,840            2,186          2,550
   Net earnings                                        854           678              918            935
   Basic net earnings per common share          $     .07         $  .06       $      .08        $   .08
   Diluted net earnings per
     common share                               $     .07         $  .06       $      .08        $   .08

</TABLE>

NOTE L - NEW ACCOUNTING PRONOUNCEMENTS

   The  Financial  Accounting  Standards  Board (FASB) has issued the  following
   Statements of Financial Accounting Standards (SFAS):

   SFAS 130, Reporting Comprehensive Income, which is effective for fiscal years
   beginning  after  December 15, 1997.  SFAS 130 requires  companies to include
   details  about  comprehensive  income that arise  during a reporting  period.
   Comprehensive income includes revenue, expenses, gains and losses that bypass
   the income  statement  and are reported  directly in a separate  component of
   equity.

   SFAS 131, Disclosure about Segments of An Enterprise and Related Information,
   which is effective for fiscal years  beginning  after December 15, 1997. SFAS
   131 requires  companies  to report  information  about an entity's  different
   types of business activities and the different economic environments in which
   it operates, referred to as operating segments.

   Management  does not expect the  adoption  of these new  standards  to have a
   material  impact  on  the  Company's   results  of  operations  or  financial
   condition.


<PAGE>


THERAGENICS CORPORATION

INDEX TO EXHIBITS


 Page No.

10.23 -  First modification of Second Amended and                   55
         Restated Loan and Security  Agreement between
         Theragenics Corporation and NationsBank,
         N.A., Dated September 30, 1997.

10.24 -  Second Modification of Second Amended and                  58
         Restated Loan and security  Agreement between
         Theragenics  Corporation and NationsBank,
         N.A., Dated November 26, 1997.

24.1     Consent of Independent Public Accountants                  68
         for Incorporation by Reference of Audit
         Statement into Registration Statement





<PAGE>


            FIRST MODIFICATION OF SECOND AMENDED AND RESTATED LOAN 
                        AND SECURITY AGREEMENT

         THIS MODIFICATION is made as of this 30th day of September, 1997, by
and between THERAGENICS CORPORATION,  a Delaware corporation  ("Borrower"), and
NATIONSBANK, N.A. ("Lender").

                              R E C I T A L S
                              ---------------

         WHEREAS, Lender and Borrower are parties to that certain Second Amended
and  Restated  Loan  Agreement,   dated  as  of  December  9,  1996  (the  "Loan
Agreement"),  pursuant to which Lender has agreed to make one or more loans from
time to time to the  Borrower  in  accordance  with  the  terms  and  conditions
thereof; and

         WHEREAS,  Lender and  Borrower  desire to modify the Loan  Agreement in
certain respects in accordance with the terms and conditions set forth herein.

         NOW,  THEREFORE,  in consideration  of the premises,  the covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  adequacy of which are hereby  acknowledged,  Borrower and Lender do
hereby  agree that all  capitalized  terms used herein  shall have the  meanings
ascribed  thereto in the Loan  Agreement as amended  hereby (except as otherwise
expressly defined or limited herein) and do hereby further agree as follows:

1.  Amendment of Loan  Agreement.  Subject to the  fulfillment of the conditions
precedent to the effectiveness of this  Modification  which are set forth below,
Section 1.1 of the Loan  Agreement is hereby  amended by deleting the definition
of the term "Revolving  Credit Facility  Expiration Date" in its entirety and by
substituting  in lieu  thereof  the  following  new  definition  of  such  term:
"Revolving Credit Facility Expiration Date - December 31, 1997."

1. No Other  Amendments.  Except  for the  amendment  expressly  set  forth  and
referred to in Section 1 above, the Loan Agreement shall remain unchanged and in
full force and  effect and is hereby in all  respects  ratified  and  confirmed.
Nothing in this Modification is intended, or shall be construed, to constitute a
novation or an accord and  satisfaction  of any of the Obligations or to modify,
affect or impair the perfection or continuity of Lender's security interests in,
security titles to or other Liens on any Collateral for the Obligations.

1.  Representations  and  Warranties.  To  induce  Lender  to  enter  into  this
Modification, the Borrower does hereby warrant, represent and covenant to Lender
that each  representation  or  warranty  of the  Borrower  set forth in the Loan
Agreement is hereby restated and reaffirmed as true and correct on and as of the
date hereof as if such  representation  or  warranty  were made on and as of the
date  hereof  (except to the extent  that any such  representation  or  warranty
expressly  relates to a prior specific date or period),  and no Default or Event
of  Default  has  occurred  and is  continuing  as of this  date  under the Loan
Agreement  as amended by this  Modification;  and (b) the Borrower has the power
and is duly authorized to enter into, deliver and perform this Modification, and
this  Modification  is the legal,  valid and binding  obligation of the Borrower
enforceable against the Borrower in accordance with its terms.

1. Reference to and Effect on the Credit  Documents.  Upon the  effectiveness of
this  Modification,  on and after the date  hereof,  each  reference in the Loan
Agreement  to "this  Agreement,"  "hereunder,"  "hereof" or words of like import
referring to the Loan Agreement,  and each reference in the other Loan Documents
to "the  Loan  Agreement,"  "thereunder,"  "thereof"  or  words  of like  import
referring  to the Loan  Agreement,  shall  mean and be a  reference  to the Loan
Agreement as amended hereby.

1. Reimbursement of Costs and Expenses.  The Borrower hereby agrees to reimburse
Lender on demand for all costs (including  reasonable  attorneys' fees) incurred
by Lender in negotiating,  documenting and consummating this  Modification,  the
other documents referred to herein, and the transactions contemplated hereby and
thereby.

1. Conditions Precedent to Effectiveness of this Modification. The effectiveness
of this  Modification and the amendment  provided in Section 1 above are subject
to the truth and accuracy in all material  respects of the  representations  and
warranties of the Borrower contained in Section 3 above and the Lender's receipt
of one or more duly executed counterparts of this Modification.

1.  Counterparts.  This  Modification may be executed in multiple  counterparts,
each of which  shall be deemed to be an  original  and all of which  when  taken
together shall constitute one and the same instrument.

1.  Governing  Law.  This  Modification  shall be governed by, and  construed in
accordance  with,  the  internal  laws of the  State of  Georgia  applicable  to
contracts made and performed in such state.






                 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]



<PAGE>


         IN WITNESS WHEREOF, the parties hereto have caused this Modification to
be duly executed and delivered as of the day and year specified at the beginning
hereof.


                                BORROWER:

                                THERAGENICS CORPORATION


                                By:
                                  Name:    /s/ Bruce W. Smith
                                           -------------------
                                           Bruce W. Smith
                                  Title:   Secretary, Treasurer &
                                           Chief Financial Officer


                                LENDER:

                                NATIONSBANK, N.A.

                                By:
                                   Name:   /s/ Michael S. Paulson
                                           ----------------------
                                           Michael S. Paulson
                                   Title:  Vice President



<PAGE>


                    SECOND MODIFICATION OF SECOND AMENDED AND
                      RESTATED LOAN AND SECURITY AGREEMENT


         THIS MODIFICATION is made as of this 26th day of November, 1997, by and
between THERAGENICS CORPORATION, a Delaware corporation ("Borrower"), and
                                                                --------
NATIONSBANK, N.A. ("Lender").
                    ------

                              R E C I T A L S
                              ---------------

         WHEREAS, Lender and Borrower are parties to that certain Second Amended
and  Restated  Loan and  Security  Agreement,  dated as of December 9, 1996,  as
amended by that certain First  Modification  of Second Amended and Restated Loan
and Security  Agreement,  dated as of September 30, 1997 (the "Loan Agreement"),
pursuant to which  Lender has agreed to make one or more loans from time to time
to the Borrower in accordance with the terms and conditions thereof; and

         WHEREAS,  Lender and  Borrower  desire to modify the Loan  Agreement in
certain respects in accordance with the terms and conditions set forth herein.

         NOW,  THEREFORE,  in consideration  of the premises,  the covenants and
agreements  contained  herein,  and other good and valuable  consideration,  the
receipt and  adequacy of which are hereby  acknowledged,  Borrower and Lender do
hereby  agree that all  capitalized  terms used herein  shall have the  meanings
ascribed  thereto in the Loan  Agreement as amended  hereby (except as otherwise
expressly defined or limited herein) and do hereby further agree as follows:



<PAGE>



1.              Amendments of Loan Agreement.  Subject to the fulfillment of the
                ----------------------------
conditions  precedent to the  effectiveness of this  Modification  which are set
forth below, the Loan Agreement shall be amended as follows:

(a) Section  1.1 of the Loan  Agreement  is hereby  amended by adding to Section
1.1, the following new definitions:

                Additional  Facility - the uncommitted credit facility described
             in Section 2.5 hereof.

                  Additional  Facility  Advances  -  advances,  if any,  made by
             Lender under the Additional Facility.

                  Annual  Maintenance  Capital  Expenditures  - for any calendar
             year,  the  number of  Cyclotrons  of  Borrower  in  service  as of
             December 31 of the previous year, multiplied by $40,000.

                  Applicable  Interest  Rate Margin - the  interest  rate margin
             determined pursuant to Section 2.4(D) hereof.

                  Current  Assets - as of any date,  the  amount of the  current
             assets of a Person shown on a balance  sheet of such Person at such
             date in accordance with GAAP.

                  Current  Liabilities  - as of  any  date,  the  amount  of the
             current  liabilities  of a Person shown on a balance  sheet of such
             Person at such date in accordance with GAAP.

                  Current  Ratio - the  ratio of  Borrower's  Current  Assets to
             Borrower's Current Liabilities.

                  Indebtedness for Money  Borrowed/EBITDA Ratio - as of the last
             day of any fiscal quarter of Borrower, (a) Borrower's  Indebtedness
             for Money Borrowed on such day divided by (b) Borrower's EBITDA for
             Borrower's most recently completed four (4) quarters.

                  Quarterly Maintenance Capital Expenditures - for each calendar
             quarter  during  a  year  for  which  Annual  Maintenance   Capital
             Expenditures has been calculated,  such Annual Maintenance  Capital
             Expenditures divided by four (4).


(a) Section 1.1 of the Loan Agreement is hereby further amended by deleting from
Section  1.1,  the terms  "Debt  Service  Coverage  Ratio,"  "Interest  Period,"
"Loans,"  "Maturity  Date,"  "Revolving  Credit Facility  Expiration  Date," and
"Revolving Credit Maximum Availability," and
by substituting in lieu thereof,
the following new definitions of such terms:

                  Debt  Service  Coverage  Ratio - for  the  four  (4)  calendar
         quarters ending on the applicable  calculation  date, (a)(i) Borrower's
         EBITDA for such period, minus (ii) taxes paid during such period, minus
         (iii) any dividends or other  distributions to shareholders made during
         such  period,  minus  (iv)  the sum of  Quarterly  Maintenance  Capital
         Expenditures  for each quarter ending during such period divided by (b)
         total  principal and interest paid on  Indebtedness  for Money Borrowed
         during such period.

                  Interest Period - (a) in the case of the  determination of any
         Adjusted  LIBOR, a one, two,  three,  four, five or six month period as
         selected by Borrower,  but (b) in the event any  Interest  Period would
         end on a day which is not a Business Day, such Interest Period shall be
         deemed to end on the  immediately  succeeding  Business Day unless such
         extension  would cause such Interest Period to end on the next calendar
         month in which case such Interest  Period shall be deemed to end on the
         immediately  preceding  Business  Day,  (c) any  Interest  Period which
         begins on a day for which there is no numerically  corresponding day in
         the calendar  month in which such Interest  Period ends shall expire on
         the immediately  preceding  Business Day, and (d) Borrower shall not be
         entitled  to select  any  Interest  Period  which  extends  beyond  the
         Revolving Credit Facility Expiration Date.

                  Loans - all loans and advances made by Lender pursuant to this
         Agreement, including, without limitation, the Revolving Credit Loans.

                  Maturity Date - The Revolving Credit Facility Expiration Date,
         or such  earlier date as the  Obligations  shall become due (whether by
         acceleration or otherwise).

                  Revolving Credit Facility Expiration Date - November 26, 2000.

                  Revolving  Credit Maximum  Availability - $15,000,000 (as such
amount may be adjusted from time to time pursuant to this Agreement).

(a) Section 1.1 of the Loan Agreement is hereby further amended by deleting from
Section 1.1, the terms, "Term-Out Requirements," "Treasury Rate," and "Treasury
Rate Advance."

(a) The Loan Agreement is hereby further  amended by deleting  Section 2.1(B) in
its entirety and by  substituting  in lieu  thereof,  the  following new Section
2.1(B),  the  effect of which is to delete  provisions  relating  to a  term-out
option:

                  (B) On the Revolving  Credit  Facility  Expiration  Date,  the
         entire unpaid  balance of the  Revolving  Credit Loans shall be due and
         payable.  For a period of thirty (30) days prior to  November  26,1998,
         Borrower may request a twelve-month  extension of the Revolving  Credit
         Facility  Expiration  Date,  which  extension may be approved or not by
         Lender in its sole and absolute discretion.

(a) The Loan Agreement is hereby further  amended by deleting  Section 2.2(A) in
its entirety and by  substituting  in lieu  thereof,  the  following new Section
2.2(A), the effect of which is to delete reference to Treasury Rate Advances:

                  (A) A request  for a Revolving  Credit Loan shall be made,  or
         shall be deemed to be made, in the following manner: (i) Borrower shall
         give Lender written notice (or telephonic notice promptly  confirmed in
         writing) substantially in the form of Exhibit C attached hereto, signed
         by an  authorized  officer of  Borrower,  provided  that in the case of
         Prime Rate  Advances,  such  notice  shall be given to Lender not later
         than 10:00 a.m. (Atlanta, Georgia time) on the Business Day of the date
         of a proposed  Prime Rate  Advance  and in the case of LIBOR  Advances,
         such  notice  shall be given to Lender at least two (2)  Business  Days
         prior to the date of a proposed  LIBOR  Advance,  and further  provided
         that any notice given to Lender  under this  Section  shall be given to
         Lender prior to 10:00 a.m.  (Atlanta,  Georgia  time) in order for such
         Business  Day to count  towards  the minimum  number of  Business  Days
         required; (ii) the becoming due of any other Obligation,  to the extent
         not paid by Borrower,  on the due date thereof,  after giving effect to
         any applicable grace periods,  shall be deemed, at Lender's discretion,
         irrevocably to be a request for a Revolving Credit Loan on the due date
         in the amount then so due and (iii) pursuant to the terms of Borrower's
         autoborrow account or similar account with Lender.

(a) The Loan Agreement is hereby further amended by deleting Sections 2.4(B) and
2.4(C) in their entireties,  and by substituting in lieu thereof,  the following
new Sections 2.4(B) and 2.4(C),  the effect of which is to revise the applicable
margin for  Advances on an Adjusted  LIBOR basis and to delete  reference to the
term-out option:

                  (B)  Interest  Rate.  The  unpaid  principal  balance  of  the
         Revolving Credit Loans shall bear interest at a rate per annum equal to
         the Prime Rate;  provided,  however,  that  Borrower  may, by a written
         notice  (or  by  telephonic  notice  promptly   confirmed  in  writing)
         delivered to Lender not later than 10:00 am (Atlanta,  Georgia time) on
         the second  Business Day prior to any  Interest  Period  designated  by
         Borrower  in such  notice,  direct that  interest  accrue on the unpaid
         principal balance of the Revolving Credit Loans (or any portion thereof
         which is in an amount of not less than $250,000 or any greater integral
         multiple  thereof)  outstanding  from time to time during such Interest
         Period at a rate per annum equal to the sum of the  Adjusted  LIBOR for
         such Interest Period plus the Applicable Interest Rate Margin in effect
         from time to time and as more fully set forth in Section  2.4(D) below;
         and  provided,  further,  that (i) upon the  occurrence  and during the
         continuation  of any  Event of  Default,  Lender  may,  upon  notice to
         Borrower,  suspend Borrower's right to use the aforesaid Adjusted LIBOR
         option,  and (ii)  Borrower  may not have more  than four (4)  Adjusted
         LIBOR-based  interest rates in effect  hereunder at any one time.  Each
         such  designation  by Borrower of an  interest  rate for the  Revolving
         Credit  Loans based on the  Adjusted  LIBOR and of an  Interest  Period
         applicable  thereto  shall be  irrevocable  and shall  remain in effect
         throughout  such Interest  Period.  Upon  determining any interest rate
         based  on the  Adjusted  LIBOR  for an  Interest  Period  requested  by
         Borrower,  Lender shall notify the Borrower by telephone  (which may be
         confirmed  in  writing  by  Lender)  of such  determination,  and  such
         determination  shall,  in the  absence  of  manifest  error,  be final,
         conclusive and binding for all purposes.

                  (C)      Reserved.

(a) The Loan Agreement is hereby further  amended by deleting  Section 2.4(D) in
its entirety and by  substituting  in lieu  thereof,  the  following new Section
2.4(D), the effect of which is to delete reference to Treasury Rate Advances and
to replace the pricing grid in its entirety:

                  (D) Applicable  Interest Rate Margin. The Applicable  Interest
         Rate  Margin  for LIBOR  Advances  shall be the  interest  rate  margin
         determined  by Lender  based  upon  Borrower's  Indebtedness  for Money
         Borrowed/EBITDA  Ratio for the four (4)  quarter  period  ending on the
         last  day of  the  most  recent  fiscal  quarter  for  which  financial
         statements  have been  provided to Lender,  effective  as of the second
         Business  Day after the  financial  statements  referred to in Sections
         7.1(I)(i) and 7.1(I)(ii) hereof, and an accompanying certificate of the
         chief  financial  officer of Borrower in the form of Exhibit B attached
         hereto, are delivered by Borrower to Lender for the fiscal quarter most
         recently ended, expressed as a per annum rate of interest as follows:

          ------------------------------------------- =========================
          If  Borrower's   Indebtedness   for  Money  Then,  the  Applicable 
          Borrowed/EBITDA Ratio is:                   Interest Rate Margin shall
                                                      be:
          ------------------------------------------- =========================
          Less than 1.0 to 1.0                        1.500%
          =========================================== =========================
          Greater  than or  equal  to 1.0 to 1.0 but  1.625%
          Less than 1.5 to 1.0
          =========================================== =========================
          Greater  than or  equal  to 1.5 to 1.0 but  1.750%
          Less than 2.0 to 1.0
          =========================================== =========================
          Greater  than or  equal  to 2.0 to 1.0 but  1.875%
          Less than 2.5 to 1.0
          =========================================== =========================
          Greater than or equal to 2.5 to 1.0         2.000%
          =========================================== =========================

         In the event  that  Borrower  fails to  timely  provide  the  financial
         statements  and  certificate  referred to above in accordance  with the
         terms  of  Sections   7.1(I)(i)  and  7.1(I)(ii)  hereof,  and  without
         prejudice  to  any  additional  rights  under  Section  9.3  hereof  or
         otherwise,  no downward  adjustment  of the  Applicable  Interest  Rate
         Margin in effect for the preceding quarter shall occur until the actual
         delivery of such financial statements and certificate.

(a) The Loan Agreement is hereby further amended by deleting  Section 2.4(E) and
by substituting in lieu thereof, the following new Section 2.4(E), the effect of
which is to delete reference to Treasury Rate Advances and to Section 2.4(C):

                  (E) Conversions and Continuations.

                           (i) Borrower may on any Business Day,  subject to the
         giving of a proper  Notice of  Conversion/Continuation  as  hereinafter
         described,  elect (A) to continue all or any part of a LIBOR Advance by
         selecting a new Interest Period  therefor,  to commence on the last day
         of the immediately  preceding  Interest  Period,  or (B) subject to the
         availability  of interest  rates as  provided  in  Sections  2.4(B) and
         2.4(D) hereof,  to convert all or any part of a Loan of one type into a
         Loan of another  type;  provided,  however,  that  Lender  shall not be
         obligated  to  convert  any  outstanding  Loan  into  or  continue  any
         outstanding  Loan as a LIBOR  Advance  when  any  Default  or  Event of
         Default has  occurred  and is  continuing.  Any  conversion  of a LIBOR
         Advance into a Prime Rate Advance  shall be made on the last day of the
         Interest Period for such LIBOR Advance.
                           (ii) Whenever Borrower desires to convert or continue
         Loans under  Section  2.4(E)(i),  Borrower  shall give  Lender  written
         notice  (or   telephonic   notice   promptly   confirmed   in  writing)
         substantially in the form of Exhibit D, signed by an authorized officer
         of Borrower, on the requested conversion date by 10:00 a.m. in the case
         of a conversion  into a Prime Rate Advance,  and by 10:00 a.m. at least
         two (2) Business Days before the requested  conversion or  continuation
         date  in the  case of a  conversion  into  or  continuation  of a LIBOR
         Advance.   Each  such  Notice  of   Conversion/Continuation   shall  be
         irrevocable  and shall  specify the aggregate  principal  amount of the
         Loans to be  converted or  continued,  the date of such  conversion  or
         continuation  (which shall be a Business Day) and whether the Loans are
         being  converted  into or continued as a LIBOR Advance (and, if so, the
         duration of the Interest  Period to be  applicable  thereto) or a Prime
         Rate Advance.  If upon the expiration of any Interest Period in respect
         of any LIBOR Advance,  Borrower shall have failed to deliver the Notice
         of Conversion/Continuation, Borrower shall be deemed to have elected to
         convert such LIBOR Advance to a Prime Rate Advance.

(a)               Section 2.4(H) of the Loan Agreement is hereby amended by 
deleting the reference to Treasury Rate Advances in the first sentence thereof.

(a)               The Loan Agreement is hereby further amended by adding the 
following new Section 2.5 immediately following the existing Section 2.4:

                  Additional Facility.
                  --------------------

                  (A) Subject to the terms and conditions of this Agreement, the
         Borrower  may request on or prior to November 1, 2000,  the  Additional
         Facility on any Business Day; provided,  however, that the Borrower may
         not request the Additional  Facility or an Additional  Facility Advance
         after the  occurrence  or during the  existence of an Event of Default.
         The aggregate  amount of the  Additional  Facility and the  outstanding
         Additional  Facility Advances  thereunder shall not exceed $25,000,000.
         The maturity date for the  Additional  Facility  Advances  shall be not
         later than November 1, 2000. The Lender is not committed to provide the
         Additional  Facility or to make any Additional  Facility Advances,  and
         the  decision  of the Lender to provide the  Additional  Facility or to
         make  Additional  Facility  Advances  to the  Borrower  shall be at the
         Lender's  sole  and  absolute  discretion,  and  shall  be  subject  to
         customary  due  diligence,  appropriate  internal  credit  approval and
         formal documentation.

             (B)  In  connection   with  any  request  for  the  Additional
         Facility,  the  Borrower  shall (i)  deliver  to the Lender a notice of
         Additional  Facility  and such  other loan  documents  as Lender may be
         reasonably  request to further  document and  evidence  the  Additional
         Facility;  and (ii)  provide  revised  projections  to the Lender which
         shall be in form and substance  reasonably  satisfactory  to the Lender
         and shall  demonstrate  the  Borrower's  ability  to timely  repay such
         Additional Facility and any Additional Facility Advances thereunder and
         to comply with the covenants  contained in this Agreement or such other
         covenants  as shall be  reasonably  established  by Lender  based  upon
         Borrower's then-current credit situation.

        (k) The Loan Agreement is hereby further amended by deleting  Section 
    4.2(B) and by substituting in lieu thereof, the following new Section 
    4.2(B), the effect of which is to amend provisions relating to payment of 
    the unused commitment fee:

            (B)  Borrower shall pay to Lender an unused commitment fee on the
         aggregate  unused amount of the Revolving  Credit Maximum  Availability
         (which will  accrue from the date  hereof) at a rate of .35% per annum;
         provided, however, that such unused commitment fee shall not be due for
         any month during which the average used amount of the Revolving  Credit
         Maximum Availability for such month is greater than thirty-five percent
         (35%)  of  the  Revolving  Credit  Maximum  Availability.  Such  unused
         commitment fee shall be computed on the basis of a hypothetical year of
         360  days for the  actual  number  of days  elapsed,  shall be  payable
         monthly  in  arrears  on the  last  day of each  month,  commencing  on
         December 31, 1997 and on the Revolving Credit Facility Expiration Date,
         shall be fully earned when due, and shall be non-refundable  when paid.
         For purposes  hereof,  the  aggregate  stated amount for all Letters of
         Credit then  outstanding  shall be deemed a use of the Revolving Credit
         Maximum Availability.

         (l) The Loan Agreement is hereby further  amended by deleting Sections
   7.2(K), 7.2(L), 7.2(M), 7.2(N), 7.2(O) and 7.2(P) in their entireties and by
substituting in lieu thereof the following new Sections 7.2(K),  7.2(L),  7.(M),
7.2(N),  7.2(O) and  7.2(P),  the  effect of which is to (i) amend the  negative
covenants entitled  "Limitation on Indebtedness,"  "Minimum Tangible Net Worth,"
                     ---------------------------   -----------------------------
"Debt Service Coverage Ratio," and Funded Debt Ratio," (ii) delete the negative
 ---------------------------       -----------------
covenants  entitled  "Leverage  Ratio,"  "Capital  Expenditures"  and "Cyclotron
                      ---------------     ---------------------
Purchases,"  and (iii)  renumber the  negative  covenants  entitled  "Dividends,
                                                                      ----------
Distributions, Etc." and "Negative Negative Pledge":
-------------------       ------------------------
             (K)  Limitation  on  Indebtedness.  Create,  incur,  assume or
                  ----------------------------
         suffer to exist any Indebtedness, except: (i) Indebtedness evidenced by
         or arising under this Agreement,  the Letter of Credit Agreement or any
         of the other Loan Documents;  (ii) unsecured current liabilities (other
         than  those for Money  Borrowed)  incurred  in the  ordinary  course of
         business for current purposes,  including,  without  limitation,  trade
         payables incurred in the ordinary course of business, and which are not
         represented by a promissory note or other evidence of indebtedness  and
         are not more  than  thirty  (30)  days  past  due;  (iii)  Indebtedness
         described on Schedule 7.2(K) hereto,  (iv) Purchase Money  Indebtedness
         not  otherwise  inconsistent  with  the  terms of this  Agreement,  (v)
         renewals or  extensions of any of the  Indebtedness  described in items
         (i) through  (iv) above (but so long as any  indebtedness  described in
         items  (ii),  (iii)  or (iv)  above  is not  increased  after  the date
         hereof),  and  (vi)  additional  unsecured   Indebtedness  (other  than
         Indebtedness  permitted  under any of clauses (i) through (v) above) of
         up to $250,000 in the aggregate at any time outstanding.

              (L) Minimum Tangible Net Worth.  Borrower's Tangible Net Worth
                  --------------------------
         shall  not be less  than  $58,000,000.00  on  December  31,  1997,  and
         Borrower shall maintain a Tangible Net Worth as of the last day of each
         fiscal quarter of Borrower ending after December 31, 1997, which is not
         less  than  the sum of the  minimum  Tangible  Net  Worth  of  Borrower
         required  hereunder for the last day of the fiscal quarter  immediately
         preceding the fiscal quarter ending on the applicable  calculation date
         plus  seventy-five  (75%) of Borrower's  Net Income after taxes for the
         quarter  ending on the applicable  calculation  date (rounded up to the
         nearest $100,000, but such sum shall not be reduced if Borrower suffers
         a net loss in any fiscal quarter).

              (M) Current  Ratio.  Borrower's  Current  Ratio shall not be less
                  --------------
         than 1.5 to 1.0 as of the end of any fiscal  quarter or fiscal year 
         ending on
                            
         or after December 31, 1997.

                  (N) Debt Service  Coverage Ratio. As of December 31, 1997, and
                      ----------------------------
         as of the  end of  each  fiscal  quarter  thereafter,  Borrower's  Debt
         Service Coverage Ratio shall not be less than 1.5 to 1.0.

                  (O)  Indebtedness  for  Money  Borrowed/EBITDA  Ratio.  As  of
                       ------------------------------------------------
         December 31, 1997, and as of the end of each fiscal quarter thereafter,
         Borrower   shall  not   permit   Borrower's   Indebtedness   for  Money
         Borrowed/EBITDA Ratio to exceed 3.0 to 1.0.

                  (P) Negative, Negative Pledge. Borrower shall not, directly or
                      -------------------------
         indirectly, enter into any agreement (other than the Loan Documents and
         documents  relating to Permitted  Liens) with any Person that prohibits
         or  restricts  or limits the  ability  of  Borrower  to create,  incur,
         pledge, or suffer to exist any Lien upon any assets of Borrower.

                  (Q) Dividends,  Distributions, Etc. Borrower shall not declare
                      -------------------------------
         or pay any dividend on its capital  stock (other than stock  dividends)
         or make any payment to purchase,  redeem,  retire or acquire any of its
         capital  stock or any option,  warrant or other  right to acquire  such
         capital stock if such  declaration  or payment would cause a Default or
         Event of Default under any of the financial covenants set forth in this
         Section 7.2.

(m) Section  10.4(B) of the Loan  Agreement  is hereby  amended by deleting  the
reference to "Treasury  Rate Advance" from the third  sentence  thereof,  and by
substituting in lieu thereof, a reference to "Prime Rate Advance."

(n) The Loan  Agreement  is hereby  further  amended by  deleting  the  existing
Exhibit B and Exhibit D entitled "Chief  Financial  Officer's  Certificate"  and
---------     ---------
"Form of Notice of Conversion/Continuation,"  respectively, in their entireties,
and by  substituting  in lieu  thereof,  the  Exhibit B and  Exhibit D  attached
                                              ---------      ---------
hereto.

1. No Other  Amendments.  Except  for the  amendments  expressly  set  forth and
   --------------------
referred to in Section 1 above, the Loan Agreement shall remain unchanged and in
full force and  effect and is hereby in all  respects  ratified  and  confirmed.
Nothing in this Modification is intended, or shall be construed, to constitute a
novation or an accord and  satisfaction  of any of the Obligations or to modify,
affect or impair the perfection or continuity of Lender's security interests in,
security titles to or other Liens on any Collateral for the Obligations.

1.  Representations  and  Warranties.  To  induce  Lender  to  enter  into  this
    --------------------------------
Modification, the Borrower does hereby warrant, represent and covenant to Lender
that (a) each  representation  or warranty of the Borrower set forth in the Loan
Agreement is hereby restated and reaffirmed as true and correct on and as of the
date hereof as if such  representation  or  warranty  were made on and as of the
date  hereof  (except to the extent  that any such  representation  or  warranty
expressly  relates to a prior specific date or period),  and no Default or Event
of  Default  has  occurred  and is  continuing  as of this  date  under the Loan
Agreement  as amended by this  Modification;  and (b) the Borrower has the power
and is duly authorized to enter into, deliver and perform this Modification, and
this  Modification  is the legal,  valid and binding  obligation of the Borrower
enforceable against the Borrower in accordance with its terms.

1. Reference to and Effect on the Credit  Documents.  Upon the  effectiveness of
   ------------------------------------------------
this  Modification,  on and after the date  hereof,  each  reference in the Loan
Agreement  to "this  Agreement,"  "hereunder,"  "hereof" or words of like import
referring to the Loan Agreement,  and each reference in the other Loan Documents
to "the  Loan  Agreement,"  "thereunder,"  "thereof"  or  words  of like  import
referring  to the Loan  Agreement,  shall  mean and be a  reference  to the Loan
Agreement as amended hereby.

1. Reimbursement of Costs and Expenses.  The Borrower hereby agrees to reimburse
   -----------------------------------
Lender on demand for all costs (including  reasonable  attorneys' fees) incurred
by Lender in negotiating,  documenting and consummating this  Modification,  the
other documents referred to herein, and the transactions contemplated hereby and
thereby.

1. Conditions Precedent to Effectiveness of this Modification. The effectiveness
   ----------------------------------------------------------
of this Modification and the amendments  provided in Section 1 above are subject
to (i) the truth and  accuracy in all material  respects of the  representations
and  warranties  of the  Borrower  contained  in  Section 3 above,  and (ii) the
Lender's receipt of one or more duly executed counterparts of this Modification,
a duly executed  replacement note in an original principal amount of $15,000,000
and  copies  of  Borrower's  board  of  directors   resolutions  approving  this
Modification and the new promissory note,  certified by the Borrower's corporate
secretary.

1.  Counterparts.  This  Modification may be executed in multiple  counterparts,
    ------------
each of which  shall be deemed to be an  original  and all of which  when  taken
together shall constitute one and the same instrument.

1.  Governing  Law.  This  Modification  shall be governed by, and  construed in
    --------------
accordance  with,  the  internal  laws of the  State of  Georgia  applicable  to
contracts made and performed in such state.




<PAGE>


         IN WITNESS  WHEREOF,  the parties  hereto have caused this  
Modification  to be duly executed and delivered as of the day and year 
specified at the beginning hereof.



                                            BORROWER:

                                            THERAGENICS CORPORATION


                                            By:        /s/ Bruce W. Smith
                                               Name:   Bruce W. Smith   
                                               Title:  Secretary, Treasurer &
                                                       Chief Financial Officer
         
                                                        

                                             LENDER:

                                             NATIONSBANK, N.A.

                                             By:       /s/ Michael S. Paulson   
                                               Name:   Michael S. Paulson
                                               Title:  Vice President

<PAGE>


               CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS



Board of Directors
Theragenics Corporation


We hereby consent to the  incorporation by reference of our report dated January
15,  1998,  appearing  in your  Annual  Report on Form  10-K for the year  ended
December 31, 1997,  in the Company's  Registration  Statements on Form S-8, file
numbers 333-15313, 333-40737, and 333-40653.




Atlanta, Georgia
March 30, 1998