##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended June 30, 2001

or

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

For the transition period from ___________ to ___________

Commission file number 0-28328

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

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|Delaware                                 |  | 75-2117882                       
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|(State of incorporation)                 |  | (IRS Employer Identification No.)
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|840 Research Parkway, Oklahoma City, OK  |  | 73104                            
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|(Address of principal executive offices) |  | (zip code)                       

(405) 290-4000
(Registrants telephone number, including area code)

Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant:   (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days.

Yes X        No

The number of shares of issuers Common Stock, $.01 par value, outstanding on
August 6, 2001 was 9,982,980 shares.





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TABLE OF CONTENTS



|                                                  |                                                                                               |                                                                |  |  |  |  |  | 
|------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION                   
|                                                  | Item 1. Financial Statements                                                                 
|                                                  |                                                                                               | CONSOLIDATED BALANCE SHEETS                                   
|                                                  |                                                                                               | CONSOLIDATED STATEMENTS OF OPERATIONS                         
|                                                  |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS                         
|                                                  |                                                                                               | NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
|                                                  | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                                  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|PART II  OTHER INFORMATION                      
|                                                  | Item 1. Legal Proceedings                                                                    
|                                                  | Item 2. Changes in Securities and Use of Proceeds                                            
|                                                  | Item 3. Defaults Upon Senior Securities                                                      
|                                                  | Item 4. Submission of Matters to a Vote of Security Holders                                  
|                                                  | Item 5. Other Information                                                                    
|                                                  |                                                                                               | Cautionary Statements                                         
|                                                  | Item 6. Exhibits and Reports on Form 8-K.                                                    
|SIGNATURES                                       
|INDEX TO EXHIBITS                                
|EX-10.1 Amendment No. 5 to Lease Agreement       
|EX-10.2 Dianon Merger Agreement                  
|EX-10.3 Change in Control Agreement              
|EX-10.5 Amended 1997 Employee Stock Purchase Plan
|EX-10.6 1997 Non-Employee Director Stock Option  
|EX-10.8 Amendment to 1997 Employee Stock Purchase



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##### Table of Contents



UROCOR, INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2001

INDEX

|                                                                                             |                                                                                                 |  |       |     | 
|-------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------- |  | ----- | --- | 
|                                                                                             |                                                                                                 |  | Page  |    
|                                                                                             | PART I  FINANCIAL INFORMATION                                                                 
|                                                                                            
|                                                                                            
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|                                                                                            
|Item 1. Financial Statements (Unaudited)                                                    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                             | Consolidated Balance Sheets as of June 30, 2001 and
December 31, 2000                           |  |       | 3   | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                             | Consolidated Statements of Operations for the three and six
months ended June 30, 2001 and 2000 |  |       | 4   | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                             | Consolidated Statements of Cash Flows for the six months ended
June 30, 2001 and 2000           |  |       | 5   | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                             | Notes to Unaudited Interim Consolidated Financial Statements - June 30, 2001                    |  |       | 6-8 | 
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 2.Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                                                                 |  | 9-13  |    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 3. Quantitative and Qualitative Disclosures About Market Risk                           |                                                                                                 |  | 13    |    
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|                                                                                            
|                                                                                             | PART II  OTHER INFORMATION                                                                    
|                                                                                            
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|                                                                                            
|Item 1. Legal Proceedings                                                                    |                                                                                                 |  | 14    |    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 2. Changes in Securities and Use of Proceeds                                            |                                                                                                 |  | 14    |    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 3. Defaults Upon Senior Securities                                                      |                                                                                                 |  | 14    |    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 4. Submission of Matters to a Vote of Security Holders                                  |                                                                                                 |  | 14    |    
|                                                                                            
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|                                                                                            
|                                                                                            
|Item 5. Other Information                                                                    |                                                                                                 |  | 15-22 |    
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|                                                                                            
|                                                                                            
|                                                                                             | Cautionary Statements                                                                          
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Item 6. Exhibits and Reports on Form 8-K                                                     |                                                                                                 |  | 22    |    
|                                                                                            
|                                                                                            
|                                                                                            
|                                                                                            
|Signatures                                                                                   |                                                                                                 |  | 23    |    

2



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##### Table of Contents












PART I  FINANCIAL INFORMATION

Item 1. Financial Statements

|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |             |            | 
|-------------------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | - | ----------- | ---------- | ---------- | ------------ | ----------- | ---------- | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   | June 30,    |            |            | December 31, |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   | 2001        |            |            | 2000         |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   | (Unaudited) |           
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | ASSETS                                    
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|CURRENT ASSETS:                                                                                         
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Cash and cash equivalents                                                                                                                                                                         |                                            | $ | 9,198,435   |            |            | $            | 11,006,568  |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Short-term marketable investments                                                                                                                                                                 |                                            |   | 3,573,014   |            |            |              | 488,587     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Accounts receivable, net of allowance for doubtful accounts of $5,215,582 at
June 30, 2001 and $4,130,275 at December 31, 2000                                                                    |                                            |   | 13,494,280  |            |            |              | 12,476,454  |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Prepaid expenses                                                                                                                                                                                  |                                            |   | 621,983     |            |            |              | 565,167     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Laboratory supplies, at average cost                                                                                                                                                              |                                            |   | 490,161     |            |            |              | 473,205     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Inventory                                                                                                                                                                                         |                                            |   | 247,716     |            |            |              | 309,308     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Deferred tax asset, net                                                                                                                                                                           |                                            |   | 1,026,108   |            |            |              | 2,286,619   |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Other current assets                                                                                                                                                                              |                                            |   | 428,349     |            |            |              | 760,726     |           
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total current assets                       |   |             | 29,080,046 |            |              |             | 28,366,634 | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|LONG-TERM MARKETABLE INVESTMENTS                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | 511,713                                    |   |             |            | 996,261    |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|PROPERTY AND EQUIPMENT, net                                                                              |                                                                                                                                                                                   |                                                                                                                                                                                                   | 9,595,965                                  |   |             |            | 10,037,696 |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|NON-CURRENT DEFERRED TAX ASSET, net                                                                      |                                                                                                                                                                                   |                                                                                                                                                                                                   | 2,616,149                                  |   |             |            | 4,371,456  |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|GOODWILL, net of accumulated amortization of $254,381 at June 30, 2001 and
$155,224 at December 31, 2000 |                                                                                                                                                                                   |                                                                                                                                                                                                   | 3,754,940                                  |   |             |            | 3,859,336  |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|INTANGIBLE AND OTHER ASSETS, net                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | 2,012,967                                  |   |             |            | 3,697,979  |             
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total assets                               |   | $           | 47,571,780 |            |              | $           | 51,329,362 | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | LIABILITIES AND STOCKHOLDERS EQUITY      
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|CURRENT LIABILITIES:                                                                                    
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Accounts payable                                                                                                                                                                                  |                                            | $ | 2,364,820   |            |            | $            | 3,257,018   |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Accrued compensation                                                                                                                                                                              |                                            |   | 2,196,409   |            |            |              | 856,648     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Current installments of obligations under capital leases                                                                                                                                          |                                            |   | 352,373     |            |            |              | 249,679     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Accrued special charges                                                                                                                                                                           |                                            |   |            |            |            |              | 9,892,432   |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Other accrued liabilities                                                                                                                                                                         |                                            |   | 942,884     |            |            |              | 728,516     |           
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total current liabilities                  |   |             | 5,856,486  |            |              |             | 14,984,293 | 
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|DEFERRED COMPENSATION                                                                                    |                                                                                                                                                                                   |                                                                                                                                                                                                   | 594,393                                    |   |             |            | 469,855    |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|OBLIGATIONS UNDER CAPITAL LEASES, net of current installments                                            |                                                                                                                                                                                   |                                                                                                                                                                                                   | 531,753                                    |   |             |            | 594,280    |             
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|LONG-TERM DEBT                                                                                           |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                           |   |             |            | 175,000    |             
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total liabilities                          |   |             | 6,982,632  |            |              |             | 16,223,428 | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|STOCKHOLDERS EQUITY:                                                                                   
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         | Preferred stock, $.01 par value, authorized 6,000,000 shares at
June 30, 2001 and at December 31, 2000; no shares issued and
outstanding at June 30, 2001 or at December 31, 2000 |                                                                                                                                                                                                   |                                            |  |             |            |            |             |            
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Common stock, $.01 par value, authorized 20,000,000 shares at June 30, 2001 and
at December 31, 2000; 11,145,751 shares issued at June 30, 2001 and 11,030,131 shares issued at December 31, 2000 |                                            |   | 111,458     |            |            |              | 110,301     |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Additional paid-in capital                                                                                                                                                                        |                                            |   | 60,185,946  |            |            |              | 59,536,736  |           
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Common stock held in treasury at cost, 1,172,060 shares at June 30, 2001 and
1,194,604 at December 31, 2000                                                                                       |                                            |   | (5,301,837  | )          |            |              | (5,397,308  | )         
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                        
|                                                                                                         |                                                                                                                                                                                   | Accumulated deficit                                                                                                                                                                               |                                            |   | (14,406,419 | )          |            |              | (19,143,795 | )         
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total stockholders equity                 |   |             | 40,589,148 |            |              |             | 35,105,934 | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   | Total liabilities and stockholders equity |   | $           | 47,571,780 |            |              | $           | 51,329,362 | 
|                                                                                                         |                                                                                                                                                                                   |                                                                                                                                                                                                   |                                            |   |             |            |            |              |            

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

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##### Table of Contents






UROCOR, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |            |           |            |            | 
|-------------------------- | ------------------------------------------------------------------------------------ | -------------------------------------------- | ------------------------ | ---------- | ------------------ | ---------- | ---------- | ---------------- | --------- | ---------- | ---------- | ---------- | ---------- | ---------- | ---------- | --------- | ---------- | ---------- | 
|                           |                                                                                      |                                              |                          |            | Three Months Ended |            |            | Six Months Ended |          
|                           |                                                                                      |                                              |                          |            | June 30,           |            |            | June 30,         |          
|                           |                                                                                      |                                              |                          |            | 2001               |            |            | 2000             |           |            | 2001       |            |            | 2000       |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|REVENUE                    |                                                                                      | $                                            | 15,857,756               |            |                    | $          | 12,320,146 |                  |           | $          | 31,328,177 |            |            | $          | 24,360,703 |          
|                          
|                          
|                          
|                          
|OPERATING EXPENSES:       
|                          
|                          
|                          
|                          
|                           |                                                                                      | Direct cost of services and products         |                          |            | 5,638,557          |            |            |                  | 4,655,424 |            |            |            | 10,866,918 |            |            |           | 9,031,747  |           
|                          
|                          
|                          
|                          
|                           |                                                                                      | Selling, general and administrative expenses |                          |            | 8,017,233          |            |            |                  | 6,673,435 |            |            |            | 16,102,116 |            |            |           | 13,429,687 |           
|                          
|                          
|                          
|                          
|                           |                                                                                      | Research and development                     |                          |            | 309,115            |            |            |                  | 388,092   |            |            |            | 636,458    |            |            |           | 786,807    |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|                           |                                                                                      |                                              | Total operating expenses |            |                    | 13,964,905 |            |                  |           | 11,716,951 |            |            |            | 27,605,492 |            |           |            | 23,248,241 | 
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|OPERATING INCOME           |                                                                                      |                                              | 1,892,851                |            |                    |            | 603,195    |                  |           |            | 3,722,685  |            |            |            | 1,112,462  |          
|                          
|                          
|                          
|                          
|OTHER INCOME (EXPENSE):   
|                          
|                          
|                          
|                          
|                           |                                                                                      | Gain on termination of therapeutic agreement |                          |            |                   |            |            |                  |          |            |            |            | 4,597,010  |            |            |           |           |           
|                          
|                          
|                          
|                          
|                           |                                                                                      | Interest, net                                |                          |            | 27,965             |            |            |                  | 164,742   |            |            |            | 249,471    |            |            |           | 336,271    |           
|                          
|                          
|                          
|                          
|                           |                                                                                      | Other                                        |                          |            | (786,867           | )          |            |                  | (4,459    | )          |            |            | (815,972   | )          |            |           | (28,642    | )         
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|                           |                                                                                      |                                              | Total other income, net  |            |                    | (758,902   | )          |                  |           | 160,283    |            |            |            | 4,030,509  |            |           |            | 307,629    | 
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|Income before income taxes |                                                                                      |                                              | 1,133,949                |            |                    |            | 763,478    |                  |           |            | 7,753,194  |            |            |            | 1,420,091  |          
|                          
|                          
|                          
|                          
|Income tax provision       |                                                                                      |                                              | 440,932                  |            |                    |            | 305,875    |                  |           |            | 3,015,818  |            |            |            | 555,395    |          
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|NET INCOME                 |                                                                                      | $                                            | 693,017                  |            |                    | $          | 457,603    |                  |           | $          | 4,737,376  |            |            | $          | 864,696    |          
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|NET INCOME PER SHARE:     
|                          
|                          
|                          
|                          
|Basic:                    
|                          
|                          
|                          
|                          
|                           | Net Income Per Common Share                                                          |                                              | $                        | .07        |                    |            | $          | .05              |           |            | $          | .48        |            |            | $          | .09       |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|                           | Weighted Average Common and Common
Equivalent Shares Outstanding                     |                                              |                          | 9,897,001  |                    |            |            | 9,768,329        |           |            |            | 9,877,585  |            |            |            | 9,568,243 |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|Diluted:                  
|                          
|                          
|                          
|                          
|                           | Net Income Per Common Share  Assuming
Dilution                                      |                                              | $                        | .06        |                    |            | $          | .05              |           |            | $          | .44        |            |            | $          | .09       |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           
|                           | Weighted Average Common and Common
Equivalent Shares Outstanding  Assuming
Dilution |                                              |                          | 10,830,185 |                    |            |            | 9,962,083        |           |            |            | 10,707,977 |            |            |            | 9,805,686 |           
|                           |                                                                                      |                                              |                          |            |                    |            |            |                  |           |            |            |            |            |            |           

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

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##### Table of Contents






UROCOR, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |           |            |  
|--------------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------------------------------------------- | -------------------------------------------------------------- | --------------------------------------------------- | ---------- | ---------------- | ---------- | ------- | ---------- | --------- | ---------- | -
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            | Six Months Ended |           
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            | June 30,         |           
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            | 2001             |            |         | 2000       |          
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|CASH FLOWS FROM OPERATING ACTIVITIES:                                
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Net income                                                                        |                                                    | $                                                              | 4,737,376                                           |            |                  | $          | 864,696 |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Adjustments to reconcile net income to net cash provided by
operating activities:
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Depreciation and amortization                      |                                                                |                                                     | 1,388,589  |                  |            |         | 1,438,955  |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Deferred income tax provision                      |                                                                |                                                     | 3,015,818  |                  |            |         | 555,395    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Deferred compensation expense                      |                                                                |                                                     | 124,538    |                  |            |         | 156,583    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Stock option compensation expense                  |                                                                |                                                     |           |                  |            |         | 4,126      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Loss on disposition of equipment                   |                                                                |                                                     | 85,353     |                  |            |         | 3,857      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Loss on asset write downs                          |                                                                |                                                     | 49,998     |                  |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Gain on termination of therapeutic agreement       |                                                                |                                                     | (4,597,010 | )                |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Equity in net income of subsidiary                 |                                                                |                                                     | (9,889     | )                |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      | Changes in assets and liabilities:
 (Increase) decrease in accounts receivable    |                                                    |                                                                | (1,017,826                                          | )          |                  |            | 921,145 |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | (Increase) decrease in prepaid expense             |                                                                |                                                     | (56,816    | )                |            |         | 69,024     |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | (Increase) decrease in laboratory supplies         |                                                                |                                                     | (16,956    | )                |            |         | 40,327     |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | (Increase) decrease in inventory                   |                                                                |                                                     | 61,592     |                  |            |         | (296,970   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | (Increase) decrease in other current assets        |                                                                |                                                     | 332,377    |                  |            |         | (83,141    | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | (Decrease) in accounts payable                     |                                                                |                                                     | (892,198   | )                |            |         | (622,431   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Increase in accrued compensation                   |                                                                |                                                     | 1,339,761  |                  |            |         | 5,622      |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Increase in accrued liabilities                    |                                                                |                                                     | 214,368    |                  |            |         | 158,329    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Decrease in accrued special charges                |                                                                |                                                     | (9,892,432 | )                |            |         |           |          
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|                                                                      |                                                                                   |                                                    |                                                                | Net cash (used in) provided by operating activities |            |                  | (5,133,357 | )       |            |           | 3,215,517  |  
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|CASH FLOWS FROM INVESTING ACTIVITIES:                                
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Purchases of short-term marketable investments     |                                                                |                                                     | (3,084,427 | )                |            |         | (241,109   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Maturities of long-term marketable investments     |                                                                |                                                     | 484,548    |                  |            |         | 2,687,292  |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Cash acquired in acquisition of subsidiary         |                                                                |                                                     |           |                  |            |         | (30,543    | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Cash paid for acquisition of subsidiary            |                                                                |                                                     |           |                  |            |         | (650,000   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Capital expenditures                               |                                                                |                                                     | (900,127   | )                |            |         | (1,683,823 | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Milestone payments for therapeutic product         |                                                                |                                                     |           |                  |            |         | (750,000   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Proceeds from termination of therapeutic agreement |                                                                |                                                     | 7,000,000  |                  |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Intangibles and other assets                       |                                                                |                                                     | (785,775   | )                |            |         | (866,643   | )        
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|                                                                      |                                                                                   |                                                    |                                                                | Net cash provided by (used in) investing activities |            |                  | 2,714,219  |         |            |           | (1,534,826 | )
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|CASH FLOWS FROM FINANCING ACTIVITIES:                                
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Proceeds from employee stock purchase plan         |                                                                |                                                     | 58,034     |                  |            |         | 55,687     |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Repurchases of Common Stock                        |                                                                |                                                     |           |                  |            |         | (311,996   | )        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Proceeds from exercise of stock options            |                                                                |                                                     | 687,804    |                  |            |         | 274,839    |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Proceeds from exercise of warrants                 |                                                                |                                                     |           |                  |            |         | 27,000     |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Payment of long term debt                          |                                                                |                                                     | (175,000   | )                |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Proceeds from fixed asset sale/leaseback           |                                                                |                                                     | 236,253    |                  |            |         |           |          
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   | Principal payments under capital lease obligations |                                                                |                                                     | (196,086   | )                |            |         | (8,454     | )        
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|                                                                      |                                                                                   |                                                    |                                                                | Net cash provided by financing activities           |            |                  | 611,005    |         |            |           | 37,076     |  
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|Net increase in cash and cash equivalents                             |                                                                                   |                                                    | (1,808,133                                                     | )                                                   |            |                  | 1,717,767  |        
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|CASH AND CASH EQUIVALENTS, beginning of year                          |                                                                                   |                                                    | 11,006,568                                                     |                                                     |            |                  | 5,259,218  |        
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|CASH AND CASH EQUIVALENTS, end of period                              |                                                                                   | $                                                  | 9,198,435                                                      |                                                     |            | $                | 6,976,985  |        
|                                                                      |                                                                                   |                                                    |                                                                |                                                     |            |                  |            |         |            |          
|SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                    
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   |                                                    | Cash paid for interest                                         |                                                     | $          | 193,267          |            |         | $          |          |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES:
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   |                                                    | Obligations under therapeutic product distribution agreement   |                                                     | $          |                 |            |         | $          | 1,000,000 |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   |                                                    | Current liabilities assumed in acquisition of subsidiary       |                                                     | $          |                 |            |         | $          | 265,740   |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   |                                                    | Long-term liabilities assumed in acquisition of subsidiary     |                                                     | $          |                 |            |         | $          | 175,000   |           
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|                                                                      |                                                                                   |                                                    | Issuance of 477,700 common shares in acquisition of subsidiary |                                                     | $          |                 |            |         | $          | 1,910,800 |           

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

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##### Table of Contents






UROCOR, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 2001

NOTE 1  BASIS OF PRESENTATION:

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring items) considered necessary for a
fair presentation have been included. These interim financial statements
should be read in conjunction with the financial statements and notes included
in the Companys Annual Report on Form 10-K for the year ended December 31,
2000 filed with the Securities and Exchange Commission on April 2, 2001.

The consolidated financial statements include the accounts of all
majority-owned subsidiaries. All significant intercompany transactions have
been eliminated. Operating results for the six-month period ended June 30,
2001 are not necessarily indicative of the results that may be expected for the
full year ending December 31, 2001.

NOTE 2  INVESTMENTS:

Pursuant to the Companys investment policy, idle and excess funds are
invested in high grade, fixed income securities generally for no more than two
years. These securities are considered available-for-sale as of June 30, 2001
and December 31, 2000. The Company considers any net unrealized gain or loss
on these investments to be temporary, and reflects such gains or losses as a
component of stockholders equity. As of June 30, 2001 and December 31, 2000,
there was not a material net unrealized gain or loss on these investments.

NOTE 3  COMMITMENTS AND CONTINGENCIES:

Effective June 29, 2001, the Company received final judicial and
governmental approvals of a settlement agreement with the United States
Department of Justice (DOJ) previously announced on February 16, 2001,
concerning matters covered by the DOJs investigation into actions of UroCor
during 1992 through 1998 in connection with billing claims submitted by UroCor
to Medicare and other federal and state insurance programs for its diagnostics
testing services. Under the final settlement agreement, UroCor refunded the
various programs a total of $9.0 million that was accrued at December 31, 2000. The settlement covers UroCor
liabilities to the federal government and the state insurance programs with
respect to matters under investigation through December 31, 2000. Under the
terms of the settlement, there was no admission by UroCor of any wrongdoing in
connection with matters covered by the investigation. UroCor also has agreed
to operate under a corporate integrity agreement for a period of up to five
years. Among other things, the corporate integrity agreement requires UroCor
to cooperate with the United States Attorneys Office for the Western District
of Oklahoma in connection with a criminal investigation of others related to the DOJ
investigation. UroCor has incurred and expects to continue to incur expenses
relating to the DOJ investigation, including without limitation, the
administration of the DOJ settlement (including compliance with the corporate
integrity agreement), and may incur additional expenses in connection with any
related governmental investigations or proceedings (including the criminal
investigation) and any potential indemnification of legal and other fees and
costs for current and past directors, officers and employees of UroCor. UroCor
currently estimates that it could incur up to $6 million in potential
indemnification expenses.

6



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##### Table of Contents



NOTE 4  STOCK REPURCHASE PROGRAM:

On April 20, 1999, the Companys Board of Directors authorized the
repurchase by the Company of up to $10 million of UroCor common stock.
Management expects that the repurchase program will be conducted from time to
time on the open market or in privately negotiated transactions, depending upon
market conditions, securities regulations and other factors. As of June 30,
2001, the Company had repurchased approximately $7.6 million (or approximately
1.7 million shares) of common stock, reissued 477,700 treasury shares for the
acquisition of Mills Biopharmaceuticals, Inc. and reissued 22,544 shares
pursuant to the terms of the employee stock purchase plan. There were no stock
repurchases during the six months ended June 30, 2001.

NOTE 5  SEGMENT REPORTING:

Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures
about Segments of an Enterprise and Related Information, requires selected
information about reportable segments in interim financial reports that is
consistent with that made available to management to assess financial
performance. The Company operates in two reportable segments1) diagnostic
services and 2) therapeutic products. The diagnostic services segment provides
testing services to urologists for diagnosing, selecting appropriate therapies
and managing patients with urologic diseases. The therapeutic products segment
currently offers ProstaSeed® for early stage prostate cancer and
offered PACIS BCG® for bladder cancer until February 2001, when an
agreement was reached with the manufacturer of PACIS BCG to terminate the
related distribution agreement, resulting in a gain of approximately $4.6
million. The Companys management evaluates performance based on several
factors. However, the primary measurement focus is Gross Profit (revenue
less direct costs) and Operating Income, excluding special charges and any
other unusual items. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies contained in
the Companys Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2000. Corporate expenses include
overhead expenses not allocated to specific business segments, including
administrative expenses and information services expenses. The expenses that
are allocated to business segments after the gross profit calculation to result
in the operating income figures include sales and marketing expenses, certain
administrative expenses directly attributable to the segments and bad debt
expense. Asset information by segment is not reported, because the Company does
not yet produce such information internally. The following table presents
information about the Companys segments for the three months ended June 30,
2001 and 2000:

|                            |  |                     |            |                      |  |       |            |   |  |   |            | 
|--------------------------- |  | ------------------- | ---------- | -------------------- |  | ----- | ---------- | - |  | - | ---------- | 
|                            |  | Diagnostic Services |            | Therapeutic Products |  | Total
|                            |  |                     |            |                      |  |      
|Three months ended June 30:
|                           
|                           
|                           
|                           
|2001:                      
|                           
|                           
|                           
|                           
|Revenue                     |  | $                   | 15,245,027 |                      |  | $     | 612,729    |   |  | $ | 15,857,756 | 
|                           
|                           
|                           
|                           
|Gross Profit                |  | $                   | 10,375,135 |                      |  | $     | (155,936   | ) |  | $ | 10,219,199 | 
|                           
|                           
|                           
|                           
|Operating Income (Loss)     |  | $                   | 5,234,357  |                      |  | $     | (615,356   | ) |  | $ | 4,619,001  | 
|                           
|                           
|                           
|                           
|2000:                      
|                           
|                           
|                           
|                           
|Revenue                     |  | $                   | 12,040,407 |                      |  | $     | 279,739    |   |  | $ | 12,320,146 | 
|                           
|                           
|                           
|                           
|Gross Profit                |  | $                   | 7,812,194  |                      |  | $     | (147,472   | ) |  | $ | 7,664,722  | 
|                           
|                           
|                           
|                           
|Operating Income (Loss)     |  | $                   | 3,707,035  |                      |  | $     | (915,407   | ) |  | $ | 2,791,628  | 
|                           
|                           
|                           
|                           
|Six months ended June 30:  
|                           
|                           
|                           
|                           
|2001:                      
|                           
|                           
|                           
|                           
|Revenue                     |  | $                   | 30,155,922 |                      |  | $     | 1,172,255  |   |  | $ | 31,328,177 | 
|                           
|                           
|                           
|                           
|Gross Profit                |  | $                   | 20,779,326 |                      |  | $     | (318,067   | ) |  | $ | 20,461,259 | 
|                           
|                           
|                           
|                           
|Operating Income (Loss)     |  | $                   | 10,510,292 |                      |  | $     | (1,357,882 | ) |  | $ | 9,152,410  | 
|                           
|                           
|                           
|                           
|2000:                      
|                           
|                           
|                           
|                           
|Revenue                     |  | $                   | 24,025,727 |                      |  | $     | 334,976    |   |  | $ | 24,360,703 | 
|                           
|                           
|                           
|                           
|Gross Profit                |  | $                   | 15,460,213 |                      |  | $     | (131,257   | ) |  | $ | 15,328,956 | 
|                           
|                           
|                           
|                           
|Operating Income (Loss)     |  | $                   | 6,957,109  |                      |  | $     | (1,530,553 | ) |  | $ | 5,426,556  | 

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Reconciliation of operating income above to corresponding totals in the
accompanying financial statements:

|                              |  |                    |           |  |                  |   |           |      |  |   |           |  |  |   |           | 
|----------------------------- |  | ------------------ | --------- |  | ---------------- | - | --------- | ---- |  | - | --------- |  |  | - | --------- | 
|                              |  | Three Months Ended |           |  | Six Months Ended |  
|                              |  | June 30,           |           |  | June, 30         |  
|                              |  | 2001               |           |  | 2000             |   |           | 2001 |  |   | 2000      | 
|                              |  |                    |           |  |                  |   |           |      |  |   |           | 
|Total for reportable segments |  | $                  | 4,619,001 |  |                  | $ | 2,791,628 |      |  | $ | 9,152,410 |  |  | $ | 5,426,556 | 
|                             
|                             
|                             
|                             
|Less: Corporate expenses      |  |                    | 2,726,150 |  |                  |   | 2,188,433 |      |  |   | 5,429,725 |  |  |   | 4,314,094 | 
|                              |  |                    |           |  |                  |   |           |      |  |   |           | 
|Operating income              |  | $                  | 1,892,851 |  |                  | $ | 603,195   |      |  | $ | 3,722,685 |  |  | $ | 1,112,462 | 
|                              |  |                    |           |  |                  |   |           |      |  |   |           | 

NOTE 6  BASIC EARNINGS PER SHARE AND DILUTED EARNINGS PER SHARE:

Basic earnings per share of common stock has been computed on the basis of
the weighted average number of shares outstanding during each period. The
diluted net income per share of common stock includes the dilutive effect of
the outstanding stock options and warrants.

The following table summarizes the calculation of basic earnings per share
(EPS) and the diluted EPS components:

|                                                       |  | Three months ended June 30, 2001 |         |  | Three months ended June 30, 2000 | 
|------------------------------------------------------ |  | -------------------------------- | ------- |  | -------------------------------- | 
|                                                       |  |                                  |         |  |                                  | 
|                                                       |  | Income                           |         |  | Shares                           | 
|                                                       |  | (Numerator)                      |         |  | (Denominator)                    | 
|                                                       |  |                                  |         |  |                                  | 
|Net income/shares                                      |  | $                                | 693,017 |  |                                  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Basic EPS                                              |  |                                  |         |  |                                  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Effect of Dilutive Securities
(stock options/warrants) |  |                                  |         |  |                                  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Adjusted net income/shares                             |  | $                                | 693,017 |  |                                  | 
|                                                      
|                                                      
|                                                      
|                                                      
|Diluted EPS                                            |  |                                  |         |  |                                  | 

|                                                       |  | Six months ended June 30, 2001 |           |  | Six months ended June 30, 2000 | 
|------------------------------------------------------ |  | ------------------------------ | --------- |  | ------------------------------ | 
|                                                       |  |                                |           |  |                                | 
|                                                       |  | Income                         |           |  | Shares                         | 
|                                                       |  | (Numerator)                    |           |  | (Denominator)                  | 
|                                                       |  |                                |           |  |                                | 
|Net income/shares                                      |  | $                              | 4,737,376 |  |                                | 
|                                                      
|                                                      
|                                                      
|                                                      
|Basic EPS                                              |  |                                |           |  |                                | 
|                                                      
|                                                      
|                                                      
|                                                      
|Effect
of Dilutive Securities
(stock options/warrants) |  |                                |           |  |                                | 
|                                                      
|                                                      
|                                                      
|                                                      
|Adjusted net income/shares                             |  | $                              | 4,737,376 |  |                                | 
|                                                      
|                                                      
|                                                      
|                                                      
|Diluted EPS                                            |  |                                |           |  |                                | 

NOTE 7  RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

In July 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets."
SFAS 142 addresses financial accounting and reporting for intangible assets and goodwill.  The
statement requires that goodwill and intangible assets having indefinite useful lives not be amortized,
rather tested at least annually for impairment.  Intangible assets that have finite useful lives will continue
to be amortized over their useful lives.  As required by SFAS 142,
UroCor will adopt this new accounting standard January 1, 2002.
The Company is currently analyzing the provisions of SFAS 142 and have not yet determined the impact on our financial statements.

NOTE 8  PROPOSED ACQUISITION OF UROCOR BY
DIANON SYSTEMS, INC.:

On June 28,
2001, DIANON Systems, Inc. and UroCor announced that the companies
had signed a definitive merger agreement for the acquisition of
UroCor by DIANON. Pursuant to the terms of the merger agreement, at
the closing of the transaction, each stockholder of UroCor would
receive 0.4064 shares of common stock of DIANON for each share of UroCor
common stock, subject to adjustment as described in the merger
agreement. The consummation of the merger is subject to customary
conditions, including approval of the stockholders of both companies
and necessary regulatory approvals and is expected to close in the
fourth quarter of 2001.

8



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##### Table of Contents






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

The following discussion of financial condition and results of operations
of UroCor, Inc. (UroCor or the Company) should be read in conjunction with
the Consolidated Financial Statements and Notes thereto included elsewhere in
this Quarterly Report on Form 10-Q. Special Note: Certain statements set
forth below constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. See Special Note Regarding
Forward-Looking Statements and Cautionary Statements included elsewhere in
this Report.

Overview

UroCor markets a comprehensive range of integrated products and services
directly to urologists and managed care organizations to assist in detecting,
diagnosing, treating and managing prostate cancer, bladder cancer, kidney
stones and other complex urologic disorders. The Companys primary focus is
helping urologists improve patient care and outcomes while reducing the total
cost of managing these diseases.

During the six months ended June 30, 2001, the Company derived
approximately 96% of its revenue from diagnostic products and services that
UroCor Labs provides to the urology market to assist in the
diagnosis, prognosis and management of prostate cancer, bladder cancer and
kidney stones disease. The Company recognizes revenue when products are sold
or services are rendered. The Company typically bills various third-party
payors for its products and services, such as private insurance, managed care
plans and governmental programs (e.g., Medicare), as well as individual
patients and physicians. During the six months ended June 30, 2001,
approximately 44%, 43%, 9% and 4% of the Companys diagnostic revenue was
attributable to Medicare, private insurance and managed care, individual
patients, and physicians and hospitals, respectively.

During the six months ended June 30, 2001, the Company derived
approximately 4% of its revenue from the sales of its therapeutic product,
ProstaSeed. ProstaSeed is a UroCor-branded line of radiation implants (also
referred to as seeds) used in brachytherapy for early stage prostate cancer
that received regulatory approval for marketing in January 2000.

On June 28,
2001, DIANON Systems, Inc. and UroCor announced that the companies
had signed a definitive merger agreement for the acquisition of
UroCor by DIANON. Pursuant to the terms of the merger agreement, at
the closing of the transaction, each stockholder of UroCor would
receive 0.4064 shares of common stock of DIANON for each share of
UroCor common stock, subject to adjustment as described in the merger
agreement. The consummation of the merger is subject to customary
conditions, including approval of the stockholders of both companies
and necessary regulatory approvals and is expected to close in the
fourth quarter of 2001.

Results of Operations

Revenue.Revenue for the three months ended June 30, 2001 increased 28.7%
to approximately $15.9 million compared to $12.3 million for the three months
ended June 30, 2000, and increased from approximately $24.4 million for the
first six months of 2000 to approximately $31.3 million for the first six
months of 2001.

Diagnostic
services revenue increased 26.6% for the three-month period ending
June 30, 2001 and
25.5% for the six-month period ending
June 30, 2001 resulting primarily from the Companys price
increase effective August 14, 2000 and an overall positive reimbursement change
from Medicare effective January 1, 2001. The Companys price increase and the
overall increase in Medicare reimbursement resulted in an increase of
approximately $2.0 million in revenue for the three months ended June 30, 2001
compared to the same period in 2000 and $3.8 million for the six months ended
June 30, 2001 compared to the 2000 period. Case volume for the three months
ended June 30, 2001 increased 6.2% compared to the three months ended June 30,
2000, while case volume for the six months ended June 30, 2001 decreased 1.9%
compared to the 2000 period. The decline in diagnostic volumes for the
six-month period was primarily the result of the revision of pricing on
contractual programs during the first quarter of 2000 that resulted in the loss
of some clients and decreased product usage from other clients. The Companys
client base for the second quarter of 2001 was approximately 2,540 urologists
of which approximately 46% used two or more products compared to approximately
2,475 urologists and approximately 46% using more than one product for the
second quarter of 2000.

9



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Therapeutic products revenue increased from approximately $280,000 during
the three months ended June 30, 2000 to approximately $613,000 during the three
months ended June 30, 2001 and increased from approximately $335,000 for the
six months ended June 30, 2000 to approximately $1.2 million for same period in
2001. The Companys marketing of ProstaSeed accounted for substantially all of
the therapeutic products revenue in both periods. Increases in therapeutic
products revenue in subsequent periods is contingent upon success in increasing
the sales of ProstaSeed and the success in the acquisition of rights for, and
the obtaining of appropriate United States Food and Drug Administration (the
FDA) or other regulatory approvals for, any other therapeutic products that
could be marketed by the Company.

Direct Cost of Services and Products.As a percentage of revenue, direct
expenses decreased to 35.6% for the three months ended June 30, 2001 from 37.8%
for the three months ended June 30, 2000 and decreased to 34.7% for the six
months ended June 30, 2000 from 37.1 % for the six months ended June 30, 2001.
In the aggregate, direct cost of services and products increased 21.1%, from
approximately $4.7 million for the three months ended June 30, 2000 to
approximately $5.6 million for the three months ended June 30, 2001 and
decreased 20.3% from approximately $9.0 million for the six months ended June
30, 2000 to approximately $10.9 million for the six months ended June 30, 2001.

Direct costs for diagnostic services, as a percentage of revenue,
decreased to 31.9% for the three months ended June 30, 2001 from 35.1% for the
three months ended June 30, 2000 and decreased to 31.1% for the six months
ended June 30, 2001 from 35.7% for the six months ended June 30, 2000. The
Companys price increases discussed above in Revenue contributed to these
decreased percentages, along with shifts in volume mix towards the Companys
higher margin tests. In the aggregate, direct costs for diagnostic services
increased 15.2%, from approximately $4.2 million for the three months ended
June 30, 2000 to approximately $4.9 million for the three months ended June 30,
2001 and increased 9.5% from approximately $8.6 million for the six months
ended June 30, 2000 to approximately $9.4 million for the six months ended June
30, 2001. These increases were primarily related to personnel costs for
initial data-entry and specimen processing.

Direct costs for therapeutic products for the three and six months ended
June 30, 2001 and 2000 were principally comprised of the manufacturing and
overhead costs related to ProstaSeed. Before the Company acquired the
manufacturer of ProstaSeed in April 2000, direct costs were for acquisition of
the product. These direct costs exceeded revenue by 25.4% for the three-month
period ended June 30, 2001 and 52.7% for the three-month period ended June 30,
2000 and 27.1% for the six months ended June 30, 2001 and 39.2% for the six
months ended June 30, 2000. In aggregate, the direct costs for therapeutic
products increased to approximately $769,000 for the three-month period ended
June 30, 2001 from approximately $427,000 for the three-month period ended June
30, 2000 and to approximately $1.5 million for the six months ended June 30,
2001 from approximately $466,000 for the six months ended June 30, 2000.
Attainment of positive gross profit margins for the Companys ongoing
ProstaSeed marketing efforts is contingent upon increasing sales volumes, which
is dependent on the efforts and results of the Companys product distributors.

Selling, General and Administrative Expenses.As a percentage of revenue,
selling, general and administrative expenses decreased to 50.6% for the three
months ended June 30, 2001 from 54.2% for the three months ended June 30, 2000
and to 51.4% for the six months ended June 30, 2001 from 55.1% for the six
months ended June 30, 2000. In the aggregate, selling, general and
administrative expenses increased 20.1%, from approximately $6.7 million in the
three months ended June 30, 2000 to approximately $8.0 million in the three
months ended June 30, 2001 and increased 19.9% from approximately $13.4 million
for the six months ended June 30, 2000 to $16.1 million for the six months
ended June 30, 2001. The increase in selling, general and administrative
expenses for the three-month period was due principally to increased sales and
administrative personnel costs of approximately $808,000, an increase in the
provision for doubtful accounts of approximately $300,000, increased
professional service costs of approximately $276,000 and increased facilities
and equipment rent of approximately $109,000, offset by a decrease in
therapeutic advertising and promotions of approximately $120,000. The increase
in selling, general and administrative expenses for the six-month period was
due principally to increased sales and administrative personnel costs of
approximately $1.6 million, an increase in the provision for doubtful accounts
of approximately $798,000, increased professional service costs of
approximately $294,000, increased facilities and equipment rent of
approximately $208,000 and increased conventions and meetings costs of
approximately $161,000, offset by a decrease in therapeutic advertising and
promotions of approximately $238,000.
10Table of ContentsResearch and Development Expenses.As a percentage of revenue, research
and development expenses decreased to 1.9% for the three months ended June 30,
2001 from 3.1% for the three months ended June 30, 2000 and to 2.0% for the six
months ended June 30, 2001 from 3.2% for the six months ended June 30, 2000. In
the aggregate, research and development costs decreased 20.4%, from
approximately $388,000 in the three months ended June 30, 2000 to approximately
$309,000 in the three months ended June 30, 2001 and decreased 19.1% from
approximately $787,000 for the six months ended June 30, 2000 to approximately
$636,000 in the six months ended June 30, 2001. The decrease in expenses was
due primarily to the Companys focus on strategic projects that it has
determined have the highest commercial potential, which has resulted in overall
lower base research and development program costs.Other Income (Expense).Other income, net of interest expense decreased
from income of approximately $160,000 in the three months ended June 30, 2000
to expense of approximately $759,000 in the three months ended June 30, 2001,
primarily due to approximately $694,000 of costs related to the proposed merger
of the Company with DIANON Systems, Inc. and increased from approximately
$308,000 for the six months ended June 30, 2000 to approximately $4.0 million
in the six months ended June 30, 2001. This increase was due principally to
the realized gain of approximately $4.6 million attributable to the termination
in February 2001 of the Companys distribution agreement with the manufacturer
of PACIS BCG, a therapeutic product previously distributed by the Company.Income Taxes.Income tax expense recorded in the three months ended June
30, 2001 was approximately $441,000 resulting in an effective 38.9% federal and
state income tax rate. Income tax expense recorded in the three months ended
June 30, 2000 was approximately $306,000 based upon an effective 40.1% federal
and state income tax rate. For the six months ended June 30, 2001, income tax
expense was approximately $3.0 million at an effective tax rate of 38.9%,
while income tax expense of approximately $555,000 was recorded for the six
months ended June 30, 2000 based upon a 39.1% effective tax rate.Liquidity and Capital ResourcesAs of June 30, 2001, cash, cash equivalents and marketable investments
totaled approximately $13.3 million, and the Companys working capital was
approximately $23.2 million. As of June 30, 2001, the components of cash, cash
equivalents and marketable investments were approximately $9.2 million of cash
and cash equivalents, and short-term and long-term marketable investments of
approximately $3.6 million and $512,000, respectively, consisting principally
of high-grade fixed income securities with maturities of less than one year.Accounts receivable, net of allowance for doubtful accounts, totaled
approximately $13.5 million at June 30, 2001, an increase of approximately $1.0
million from December 31, 2000, or 8.2%, principally attributable to increased
revenue.At June 30, 2001 and December 31, 2000, the Companys average number of
days sales in net diagnostics receivables was approximately 78 and 77,
respectively.Virtually all of the Companys diagnostic services are rendered on a
fee-for-service basis. Accordingly, the Company assumes the financial risk
related to collection, including potential inability to collect accounts, long
collection cycles for accounts receivable, difficulties in gathering complete
and accurate billing information and delays attendant to reimbursement by
third-party payors, such as governmental programs such as Medicare, private
insurance plans and managed care organizations.The Company monitors the collection quality of its accounts receivable
through analytical review of aging categories by payor group and collections
performance. While the Company maintains what it believes to be an adequate
allowance for doubtful accounts, there can be no assurance that the Companys
ongoing assessment of accounts receivable will not result in the need for
additional provision for doubtful accounts. Such additional provision could
have an adverse effect on the Companys financial position and results of
operations.
11Table of ContentsOperating activities used net cash of approximately $5.1 million for the
six months ended June 30, 2001 compared to net cash provided of approximately
$3.2 million for the six months ended June 30, 2000. For the six months ended
June 30, 2001, the net cash used by operating activities was primarily the
result of net income of approximately $4.7 million, depreciation and
amortization of approximately $1.4 million, deferred income tax provision of
approximately $3.0 million, and increase in accrued compensation of
approximately $1.3 million, more than offset by the gain on termination of
therapeutic agreement of approximately $4.6 million, an increase in accounts
receivable of approximately $1.0 million, a decrease in accounts payable of
approximately $892,000 and a decrease in accrued liabilities of approximately
$9.7 million.Net cash provided by investing activities was approximately $2.7 million
for the six months ended June 30, 2001 and consisted primarily of the proceeds
of approximately $7.0 million from the termination of the PACIS BCG
distribution agreement offset by capital expenditure purchases of approximately
$900,000, net purchases of marketable securities of $2.6 million and an
increase in other assets of approximately $786,000.Net cash provided by financing activities was approximately $611,000 for
the six months ended June 30, 2001, consisting primarily of approximately
$688,000 from the exercise of stock options by employees, $58,000 from
issuances of stock pursuant to the Companys employee stock purchase plan and
$236,000 of additional proceeds for financing of fixed assets, offset by
payment of debt of $175,000 and capital lease principal payments of
approximately $196,000.The Companys capital expenditures of approximately $900,000 for the six
months ended June 30, 2001, were primarily for leasehold improvements,
furniture and fixtures, and computer equipment and software. Of the total
amount, approximately $353,000 related to internal software development costs
related primarily to installation and customization of third-party software.
While future capital expenditures will depend upon a number of factors, the
Company expects such expenditures to be comparable to recent levels as the
Company continues to expand to deliver therapeutics and information services
and to enhance current diagnostic services and operational capabilities. The
Company intends to finance the majority of these capital expenditures with
existing cash and investment balances and possibly debt.Effective June 29, 2001, the Company received final judicial and
governmental approvals of a settlement agreement with the United States
Department of Justice (DOJ) previously announced on February 16, 2001,
concerning matters covered by the DOJs investigation into actions of UroCor
during 1992 through 1998 in connection with billing claims submitted by UroCor
to Medicare and other federal and state insurance programs for its diagnostics
testing services. Under the final settlement agreement, UroCor refunded the
various programs a total of $9.0 million and agreed to operate under a
corporate integrity agreement for a period of up to five years. Among other
things, the corporate integrity agreement requires UroCor to cooperate with the
United States Attorneys Office for the Western District of Oklahoma in
connection with a criminal investigation of others related to the DOJ investigation.
UroCor has incurred and expects to continue to incur expenses relating to the
DOJ investigation, including without limitation, the administration of the DOJ
settlement (including compliance with the corporate integrity agreement), and
may incur additional expenses in connection with any related governmental
investigations or proceedings (including the criminal investigation) and any
potential indemnification of legal and other fees and costs for current and
past directors, officers and employees of UroCor. UroCor currently estimates
that it could incur up to $6 million in potential indemnification expenses.In March 2001, the Company entered into a collaborative agreement with a
manufacturer of therapeutic products giving UroCor the exclusive rights to
distribute one of the manufacturers products in the United States. Under the
terms of the agreement, UroCor paid $750,000 during the first quarter of 2001
and will pay up to an additional $2.3 million in milestone payments in
subsequent years during the development and potential product launch of the
product. As milestones are achieved, the Company intends to make the
additional payments from existing cash and investment balances or debt.The Company intends to pursue the acquisition, licensing or co-promotion
of new therapeutic products and to acquire diagnostic products or possibly
existing business. As such opportunities are identified, the Company intends
to make any related acquisition payments from existing cash and investment
balances or new debt.12Table of ContentsIn April 1999, the Companys Board of Directors authorized the repurchase
of up to $10 million of the Companys common stock. As of June 30, 2001, the
Company had repurchased approximately $7.6 million (or approximately 1.7
million shares) of its common stock, reissued 477,700 treasury shares for the
acquisition of Mills Biopharmaceuticals, Inc. and reissued 22,544 shares
pursuant to the terms of the employee stock purchase plan.The Company believes that its existing capital resources will be
sufficient to provide the funds necessary to maintain its present level of
operations and implement its currently planned growth strategy. There may be
circumstances or new business opportunities, however, that would require
additional resources. In such event, the Company may be required to seek
additional financing, and there is no assurance that the Company would be able
to obtain such financing on a timely basis or on acceptable terms.
Item 3. Quantitative and Qualitative Disclosures About Market RiskPursuant to the Companys investment policy, idle and excess funds are
invested in high grade, fixed income securities generally for no more than two
years and are classified as Available-for-Sale. Marketable securities at June
30, 2001 consisted primarily of debt securities with maturities as long as one
year. The Company considers any net unrealized gain or loss on these
investments to be temporary, and reflects such gains or losses as a component
of stockholders equity. As of June 30, 2001 and December 31, 2000, there were
no material net unrealized gains or losses on these investments.13Table of Contents




PART II  OTHER INFORMATIONItem 1. Legal ProceedingsNone
Item 2. Changes in Securities and Use of ProceedsNone
Item 3. Defaults Upon Senior SecuritiesNone
Item 4. Submission of Matters to a Vote of Security HoldersOn June 21, 2001 and July 11, 2001, at the recovening of the Companys annual meeting of stockholders:A) The stockholders elected the individuals listed below to serve as Class
III directors until the 2004 annual meeting. Set forth below is the
tabulation of votes cast:

|                |  |                  |           |  |                 |  |           |                  |  |  |   | 
|--------------- |  | ---------------- | --------- |  | --------------- |  | --------- | ---------------- |  |  | - | 
|Name            |  | Shares Voted For |           |  | Shares Withheld |  |           | Broker Non-Votes | 
|                |  |                  |           |  |                 |  |           |                  | 
|Aaron Beam, Jr. |  |                  | 7,342,940 |  |                 |  | 1,721,150 |                  |  |  | 0 | 
|               
|               
|               
|               
|Thomas C. Ramey |  |                  | 7,629,560 |  |                 |  | 1,434,530 |                  |  |  | 0 | 



| |                                                                                                                                                                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The members of the Company's Board of
Directors whose terms did not expire in 2001 include Herbert J. Conrad,
Michael W. George, Michael E. Herbert, Michael R. Miller and
Louis M. Sherwood, M.D.                                                                                                                           
| |                                                                                                                                                                                                                                                                                                                              
| | B) The stockholders did not approve the proposed amendment to the
UroCor, Inc Second Amended and Restated 1992 Stock Option Plan, as amended
to increase the number of shares for which options may be granted under
such Plan form 2,700,000 to 3,100,000. The tabulation of votes with
respect to this item was as follows:

|                 |  |                      |           |  |                  |  |        |                  |  |  |   | 
|---------------- |  | -------------------- | --------- |  | ---------------- |  | ------ | ---------------- |  |  | - | 
|Shares Voted For |  | Shares Voted Against |           |  | Shares Abstained |  |        | Broker Non-Votes | 
|                 |  |                      |           |  |                  |  |        |                  | 
|3,428,603        |  |                      | 3,891,912 |  |                  |  | 33,001 |                  |  |  | 0 | 



| |                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | C) The stockholders approved an amendment to the UroCor, Inc. 1997
Non-Employee Director Stock Option Plan, as amended, to increase the
number of shares for which options may be granted under such Plan for
200,000 to 300,000. The tabulation of the votes with respect to this item
was as follows:

|                 |  |                      |           |  |                  |  |        |                  |  |  |   | 
|---------------- |  | -------------------- | --------- |  | ---------------- |  | ------ | ---------------- |  |  | - | 
|Shares Voted For |  | Shares Voted Against |           |  | Shares Abstained |  |        | Broker Non-Votes | 
|                 |  |                      |           |  |                  |  |        |                  | 
|5,007,135        |  |                      | 2,319,880 |  |                  |  | 26,501 |                  |  |  | 0 | 



| | 
| | 

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Item 5. Other Information

Special Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q includes forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical facts included in this Report,
including without limitation, statements regarding the Companys financial
position, business strategy, products, products under development, markets,
budgets and plans and objectives of management for future operations, are
forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Important factors that could cause actual results to differ materially from the
Companys expectations are disclosed in statements set forth under Cautionary
Statements and elsewhere in this Report, including, without limitation, in
conjunction with the forward-looking statements included in this Report. All
subsequent written and oral forward-looking statements attributable to the
Company, or persons on its behalf, are expressly qualified in their entirety by
the Cautionary Statements and such other statements.




Cautionary Statements

Risks Associated with Management of Growth.Over the last several years,
the Company has experienced substantial growth and expanded its operational
capabilities. The Company also intends to develop further and expand its
therapeutic products business and to offer additional information services
products. This growth and expansion has placed, and will continue to place, a
significant strain on the Companys management, production, technical,
financial and other resources. To date, the Company primarily has experience
in managing a diagnostics service business. There can be no assurance that the
Company will be able to manage successfully the operation and expansion of its
therapeutics or information services businesses.

Potential Fluctuations in Operating Results.The Companys quarterly and
annual operating results are affected by a wide variety of factors, many of
which are outside the Companys control, which have in the past and could in
the future materially and adversely affect revenue, operating expenses and
income. These factors include seasonality, the quantities and timing of
specimens received, competitive pricing pressures, reimbursement changes,
availability and cost of diagnostic supplies, availability and cost of logistic
and delivery services, changes in the mix of products sold, timing and costs of
new product and technology introductions by the Company or its competitors,
retention and expansion of the sales force and timing of payments from Medicare
and other third-party payors. The Company relies principally upon Federal
Express, UPS and Airborne Express for inbound and outbound shipping of
specimens and kits for its diagnostics operations; any disruption in the
availability of such logistics and delivery services could have a material
adverse effect on the Companys operating results. The need for continued
investment in research and development and expansion of its product lines could
limit the Companys ability to reduce expenses quickly. As a result of these
factors, the Companys operating results may continue to fluctuate in the
future.

Uncertainties Related to Government Regulation and Enforcement.As a
provider of health care related services, the Company is subject to extensive
and frequently changing federal, state and local laws and regulations governing
licensure, billing, financial relationships, referrals, conduct of operations,
purchase of existing businesses, cost-containment, direct employment of
licensed professionals by business corporations and other aspects of the
Companys business relationships. The various types of regulatory activity
affect the Companys business by controlling its growth, restricting licensure
of the business entity or by controlling the reimbursement for services
provided. The Company cannot predict the timing or impact of any changes in
such laws and regulations or their interpretations by regulatory bodies, and no
assurance can be given that any such changes will not have a material adverse
effect on the Companys financial condition and results of operations.

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Existing federal laws governing federal health care programs, including
Medicare, as well as some state laws, regulate certain aspects of the
relationship between health care providers, including the Company, and their
referral sources, including physicians, hospitals and other facilities. The
Medicare and Medicaid Anti-Fraud and Abuse Amendments to the federal Social
Security Act (the Federal Anti-Kickback Law") generally
prohibits providers and others from soliciting, offering, receiving or paying,
directly or indirectly, any remuneration in return for either making a referral
for a service or item or purchasing, ordering or leasing a service or
item. The federal physician self-referral and payment prohibitions
(commonly referred to as the "Stark law") prohibits physicians, subject to certain exceptions, from making such referrals
to certain entities in which they (or their immediate family members)
have an ownership or investment interest or with which
they have a compensation arrangement. Violation of these prohibitions is
punishable by disallowance of submitted claims, civil monetary penalties and
criminal penalties and/or exclusion from Medicare and other federally funded
programs. The federal government has expanded its investigative and
enforcement activities in these areas. The federal government also has become
more aggressive recently in examining billing by laboratories and other health
care providers, and in seeking repayments and even penalties based on how the
services were billed (e.g. the billing codes used), regardless of whether
carriers had furnished clear guidance on this subject.

Effective June 29, 2001, the Company received final judicial and
governmental approvals of a settlement agreement with the United States
Department of Justice (DOJ) previously announced on February 16, 2001,
concerning matters covered by the DOJs investigation into actions of UroCor
during 1992 through 1998 in connection with billing claims submitted by UroCor
to Medicare and other federal and state insurance programs for its diagnostics
testing services. Under the final settlement agreement, UroCor refunded the
various programs a total of $9.0 million and agreed to operate under a
corporate integrity agreement for a period of up to five years. Among other
things, the corporate integrity agreement requires UroCor to cooperate with the
United States Attorneys Office for the Western District of Oklahoma in
connection with a criminal investigation of others related to the DOJ investigation.
UroCor has incurred and expects to continue to incur expenses relating to the
DOJ investigation, including without limitation, the administration of the DOJ
settlement (including compliance with the corporate integrity agreement), and
may incur additional expenses in connection with any related governmental
investigations or proceedings (including the criminal investigation) and any
potential indemnification of legal and other fees and costs for current and
past directors, officers and employees of UroCor. UroCor currently estimates
that it could incur up to $6 million in potential indemnification expenses.

The Companys diagnostic laboratory operations currently are required to
be certified or licensed under the federal Clinical Laboratory Improvements Act
of 1976, as amended (CLIA), the Medicare and Medicaid programs and various
state and local laws. In some instances, the Company is also subject to
licensing or regulation under federal and state laws relating to the handling
and disposal of medical specimens, infectious and hazardous waste and
radioactive materials, as well as to the safety and health of laboratory
employees. Although the Company seeks to structure its practices to comply with
such laws and regulations, no assurances can be given regarding compliance in
any particular factual situation. The possible sanctions for failure to comply
with these licensing provisions or regulations may include denial of the right
to conduct business, significant fines and criminal penalties. Any exclusion
or suspension from participation in the Medicare program or certain state
programs, any loss of licensure or accreditation or any inability to obtain any
required license or permit, whether arising from any action by the United
States Department of Health and Human Services (the DHHS) or any state or any
other regulatory authority, would have a material adverse effect on the
Companys business. Any significant civil monetary or criminal penalty
resulting from such proceedings could have a material adverse effect on the
Companys financial condition and results of operations.

Additionally, with the acquisition in April 2000 of Mills
Biopharmaceuticals, Inc. (Mills), the manufacturer of its ProstaSeed product,
the Company became subject to regulation by the United States Environmental
Protection Agency, the Nuclear Regulatory Commission (the NRC) and other
federal, state and municipal regulatory agencies for the hazardous waste
generated through the Mills Biopharmaceuticals manufacturing facility. Such
waste is segregated and disposed of through hazardous waste transporters.
Although the Company believes that it is currently in compliance in all
material respects with applicable environmental regulations, failure to comply
fully with any such regulations could result in the imposition of penalties,
fines or sanctions that could have a material adverse effect on the Companys
financial condition and results of operations. In addition, the Company is
subject to regulation by the Board of Pharmacy in each state where the
ProstaSeed product is sold.

While the Company currently knows of no plans that the FDA has to require
FDA approval of assays developed by clinical laboratories for in-house use, the FDA has
in the past considered drafting guidelines for such regulation. If in the
future the FDA were to issue guidelines for the clinical laboratory market
sector, such guidelines might require the Company to meet certain FDA medical
device approval requirements for the Companys in-house assays. Such
regulations, if enacted in a way that affects the Company, would increase the
cost of development and approval of new products, slow their introduction to
the market and could have a material adverse effect on the Companys financial
condition and results of operations. Additionally, FDA regulations require
that in some circumstances involving in-house assays, laboratories are required
to indicate that the assay has not been cleared by the FDA. There can be no
assurance that such disclosure will not have an adverse impact on reimbursement
of the Companys diagnostic laboratory tests.

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The FDA currently regulates a number of the products that the Company
purchases from third parties for use in its diagnostic services. The
manufacturers of such products are responsible for compliance with FDA
regulations relating to such products. There can be no assurance, however,
that action by the manufacturers or by the FDA would not impair the Companys
ability to obtain and offer certain services. The unavailability of certain
services and materials used in the Companys diagnostics business would have a
material adverse effect on the Companys financial condition and results of
operations.

The FDA currently regulates products that the Company licenses or
otherwise acquires from third parties for distribution or marketing by the
Company. The manufacturers of such products are responsible for compliance
with the approval and marketing regulations of the FDA. The ability of third
parties to address their FDA regulatory issues is outside the Companys
control. Failure of such third parties to address their FDA regulatory matters
adequately could have a material adverse effect on the Companys financial
condition and results of operations.

The FDA currently also regulates the sale, manufacturing, labeling and
record-keeping of the therapeutic products that the Company currently
manufactures and markets and that it may market in the future. Failure to
comply with applicable requirements could have a material adverse effect on the
Company. In addition, most users of the Companys ProstaSeed product are
required to possess licenses issued by the state in which they reside or by the
NRC. The Company has received 510(k) marketing clearance from the FDA and NRC
approval for the ProstaSeed product. Future discovery of previously unknown
problems may result in restrictions on a products marketing, or withdrawal of
the product from the market. The commercial distribution in the United States
of any new products developed by the Company will be dependent upon obtaining
the prior approval or clearance of the FDA and/or other regulatory agencies,
which can take many years and entail significant costs.

Congress made sweeping changes to various health care fraud provisions in
the Health Insurance Portability and Accountability Act of 1996 (HIPAA).
HIPAA called upon the Secretary of the DHHS to establish a program aimed at controlling fraud and abuse. HIPAA
also expended the criminal laws and sanctions to strengthen the enforcement
capabilities of the federal government in attempting to prevent health care
fraud and abuse. HIPAA has increased the risk of fraud investigations. HIPAA
also created a federal crime of health care fraud that applies to anyone who
knowingly and willfully executes, or attempts to execute, a scheme or artifice
to defraud any health care benefit program affecting commerce, including any
public or private plan or contract, under which any medical benefit, item or
service is provided to any individual.

Uncertainties Related to Third-Party Reimbursement.The Company typically
bills governmental programs such as Medicare and other third-party payors such
as private insurance and managed care plans for its products and services.
Such third-party payors are increasingly negotiating prices with the goal of
lowering reimbursement rates, which may result in lower profit margins for the
Company. Reimbursement rates have been established for most but not all of the
services performed by the Company. The Company cannot collect from Medicare or
other third-party payors for services that those payors have not approved for
reimbursement. The Company routinely bills for direct reimbursement for both
medical services and products. As is common with all suppliers of medical
services and devices, there is a certain amount of variability with respect to
reimbursement among third party payor sources. There can be no assurance that
any new products the Company currently has under development will be accepted
for reimbursement by Medicare or other third party payors. Such uncertainty
makes the amount and timing of such products reimbursement difficult to
predict, which potentially subjects the Company to reimbursement risks with
respect to accounts receivable. Furthermore, Medicare and other third party
payors have, on occasion, ceased reimbursement when certain tests are ordered
for patients with certain diagnoses while maintaining reimbursement when those
tests are ordered for other diagnoses deemed appropriate by the carrier. This
practice has recently become more prevalent with respect to Medicare. Medicare
may retroactively audit and review its payments to the Company and may
determine that certain payments for services must be returned.

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##### Table of Contents



Medicare reimbursement amounts for brachytherapy products, such as
ProstaSeed, are currently significantly less than for an alternative treatment,
a radical prostatectomy. Although brachytherapy requires less physician time
than a radical prostatectomy, lesser reimbursement amounts, combined with
physician familiarity with a radical prostatectomy, may provide disincentives
for urologists to perform brachytherapy. Current or future limitations on
reimbursement by Medicare or Medicaid or other third party payors for prostate
cancer treatment could materially adversely affect the market for the
ProstaSeed product and there can be no assurance that such reimbursement will
continue at rates that enable the Company to maintain prices at levels
sufficient to realize an appropriate profit. The occurrence of any such factors
could have a material adverse effect on the results of operations and financial
condition of the Company.

Potential Health Care Reform.From time to time, the public and federal
government focus significant attention on reforming the health care system in
the United States. In 1997, Congress enacted the Balanced Budget Act of 1997
(BBA) that effected numerous changes to the Medicare and Medicaid programs
that could affect health care providers, including clinical laboratories. The
1997 act also revised the resource-based relative value scale system that could
affect health care providers that offer physician pathology services. These
1997 changes and any future changes in Medicare and other third-party payor
reimbursement which may result from health care reform or deficit reduction
legislation will likely continue the downward pressure on prices. A number of
other legislative proposals have been introduced in Congress and state
legislatures in recent years that would effect major reforms of the health care
system and otherwise reduce health care spending. In addition, the Health Care
Financing Administration (HCFA) has made a number of proposals regarding the
payment and coverage of clinical laboratory services including the development
of national coverage policies. Because of the uncertainties surrounding the
nature, timing and extent of any such reimbursement changes, audits and reform
initiatives, the Company is unable to predict the effects of any such matters
on the Company.

Dependence on Certain Product Lines.A significant portion of the
Companys revenue has been, and is expected to continue to be, dependent upon
the Companys prostate tissue analysis and bladder cellular analysis product
lines. Any negative event related to these product lines, such as increased
competition, pricing pressures, reimbursement changes and clinical or
technological obsolescence, would have a material and adverse effect on the
Companys financial condition and results of operations.

No Assurance of Access to and Delivery of New Diagnostic Technology. The
markets for the Companys diagnostic products and services are characterized by
rapidly changing technology, frequent new product introductions and enhancement
and, therefore, rapid product obsolescence. There can be no assurance the
Company will be able to identify new products, trends or opportunities, develop
and bring to market new products, respond effectively to new technological
changes or product announcements by others, develop or obtain access to
advanced materials and technologies or receive commercial acceptance for its
products.

Uncertainties Related to the Regulatory Review of Therapeutic Products.
The Company has a collaboration agreement with Bioniche Life Sciences, Inc.
(Bioniche) for a therapeutic product for use in treating interstitial
cystitis, a painful condition of the bladder. Pursuant to the agreement,
Bioniche is responsible for obtaining approvals from the FDA for marketing the
therapeutic product in the United States. The Company can give no assurance
that approval will be obtained.

No Assurance of Successful Marketing Arrangements for Therapeutic
Products.The Company conducts marketing activities for therapeutic products.
The Company currently has acquired distribution rights for one therapeutic
product. The Company has entered into marketing and distribution agreements
with other product distributors for sales of the Companys ProstaSeed product.
These agreements can be terminated by either party. While the Company has
previous experience marketing four other therapeutic products, there can be no
assurance that the Companys future efforts will be successful or that the
other product distributors efforts will be successful. UroCors future
therapeutics marketing efforts are dependent, in part, upon acquiring,
licensing and co-promoting additional pharmaceuticals or devices from others.
Other companies, including those with substantially greater resources, are
competing with UroCor for the rights to such products. There can be no
assurance that UroCor will be able to acquire, license or co-promote additional
pharmaceuticals or devices on acceptable terms, if at all. The failure to
acquire, license, co-promote or market commercially successful pharmaceuticals
or devices could have a material adverse effect on the Companys financial
condition and results of
18Table of Contentsoperations. There can be no assurance that, once it has obtained rights to a
pharmaceutical product or device and committed to payment terms, UroCor will be
able to generate sales sufficient to create a profit or otherwise avoid a loss
on such product. Additionally, the Company has not previously marketed to the
radiation oncology and medical oncology markets that are being pursued for
sales of the Companys ProstaSeed product, and there can be no assurance that
the Company will be successful in these marketing and sales efforts.In addition, the Company is and will be dependent on third-party
manufacturers to produce the products that are the subject of the Companys
marketing and distribution agreements. If such manufacturers are unable to
produce the products, produce adequate quantities or produce them in a manner
that is compliant with all regulatory requirements, the Companys marketing and
distribution agreements are subject to termination and potential liabilities
that could have a material and adverse effect on the Companys financial
condition and results of operations. In addition, in the case of the Companys
ProstaSeed product, the Company has been manufacturing this therapeutic product
for only approximately 12 months and there can be no assurance that the Company
will be able to produce quantities effectively or in a manner compliant with
all regulatory requirements.Potential Therapeutics Product Liability or Recall.UroCor intends to
increase its marketing of therapeutic products; if the Company is successful in
these efforts, it will face increasing exposure to product liability claims in
the event that the use of any of its therapeutic products is alleged to have
resulted in adverse effects. Such risks will exist even with respect to those
products that receive regulatory approval for commercial sale. While UroCor
has taken, and intends to continue to take, what it believes are appropriate
precautions, there can be no assurance that it will avoid significant product
liability exposure or product recalls. There can be no assurance that a
product liability claim or recall would not have a material adverse effect on
the Companys financial condition and results of operations.Uncertainties Regarding Insurance Coverage.   Although the Company
currently maintains medical malpractice and general liability insurance, there
can be no assurance that the insurance coverage will provide sufficient funds
to satisfy any judgments which could be entered against the Company in the
future or that liability insurance in such amounts will be available or
affordable in the future. In addition, there can be no assurance that all of
the activities encompassed within the Companys business are covered under the
Companys insurance policies. The lack of such coverage could have a material
adverse effect on the Companys financial condition and results of operations.The commercial sale of therapeutic products by the Company exposes it to
potential product liability risks that are inherent in the marketing of such
products for human use. These claims might be made directly by consumers.
Although the Company currently maintains product liability insurance, there can
be no assurance that the Company will be able to obtain or maintain such
insurance on acceptable terms or that such insurance will provide adequate
coverage against potential liabilities. A product liability claim could have a
material adverse effect on the Companys financial condition and results of
operations.Moreover, although the Company maintains personal property and business
interruption insurance and has taken what it believes to be adequate
safeguards, the loss of the Companys specimen repository could have a material
adverse effect on the continued development of its database in a manner that
would not be compensated fully by insurance and could have a material adverse
effect on the Companys financial condition and results of operations..Uncertainties Related to Accounts Receivable.Virtually all of the
Companys diagnostic services are rendered on a fee-for-service basis.
Accordingly, the Company assumes the financial risk related to collection,
including potential inability to collect accounts, long collection cycles for
accounts receivable, difficulties in gathering complete and accurate billing
information and delays attendant to reimbursement by third-party payors, such
as governmental programs, private insurance plans and managed care
organizations. At times, the Companys accounts receivable have increased at a
rate greater than revenue growth and, therefore, have affected the Companys
cash flow from operations. In addition, in 1998, the Company determined that
it had not sent invoices timely to certain patients, primarily managed care
patients, for certain co-pays, deductibles and other amounts relating
principally to services rendered in 1998. In December 1998, the Company
commenced collection efforts for certain of these amounts. As a result of
delay in sending such invoices, the Company had difficulty in its related
collection efforts. During the second quarter of 1999, the Company
discontinued certain managed
19Table of Contentscare and payor related marketing programs and identified significantly aged
segments of its accounts receivable for which the likelihood of collectibility
was doubtful and recorded an additional provision. The Company has previously
taken steps to implement systems and processing changes intended to improve
billing procedures and related collections results and, in response to the
unsent invoices, it has undertaken additional initiatives to further improve
claims efficiencies and collections results, in addition to assessing the
ultimate collectibility of outstanding balances. While the Companys
management believes it has made progress by reorganizing and streamlining its
accounts receivable and billing functions, and the Company maintains what it
believes to be an adequate allowance for doubtful accounts, there can be no
assurance that the Companys ongoing assessment of accounts receivable will not
result in the need for additional provision for doubtful accounts. Such
additional provision could have a material adverse affect on the Companys
results of operations.Risks Associated with Investments in Management Information Systems.The
Company has been and expects to continue investing in the development of
information-based capabilities and services which it plans to introduce or use
in the future related to the clinical management of urologists patients. The
Company has developed and introduced, on a limited basis, disease outcomes
reporting capabilities in two disease states. Further development and delivery
of these new services may require substantial additional investment and
represents an expansion of the type of services the Company presently provides
to urologists. There can be no assurance that any future revenues directly or
indirectly from these services will be sufficient to cover or otherwise justify
the costs of development and introduction.Risks Associated with Confidentiality of Health Information.The
confidentiality of patient medical records is subject to considerable
regulation by the state and federal governments. Most state and federal laws
and regulations govern both the disclosure and the use of confidential patient
medical record information. Legislation and regulations governing the
dissemination and use of medical record information are being proposed
continually at both the state and federal levels. Virtually all states have
enacted laws governing the confidentiality of health information. At the
federal level, the Secretary of the DHHS has published two final regulations in
the area of health information that could have significant effects on the
operations of health care providers, including the Company. The first
regulation, published in August 2000, governs electronic transactions and
health information, and adopts standards for eight types of transactions and
their code sets, including health care payment and remittance advice. The
second regulation, published in December 2000, establishes the first federal
privacy regulation regarding the use and disclosure of personal health
information, and will apply to most health care providers, health insurers and
health care clearinghouses. This regulation restricts the manner in which
covered health care entities may use and disclose health information, and
allows patients greater access to their medical records. If the Company is
found to have violated any law or regulation with regard to the privacy,
security, confidentiality, dissemination or use of a patients health
information, it could be liable for damages or civil or criminal penalties. In
February 2001, DHHS announced that due to an administrative oversight, the
effective date of the final privacy regulations was delayed until April 14,
2001. This means that covered entities generally will have until April 14,
2003 to come into compliance with the requirements of the new regulations. The
Company believes that it complies in all material respects with all applicable
state and federal laws and regulations governing the confidentiality,
dissemination and use of medical record information. There can be no
assurance, however, that differing interpretations of existing laws and
regulations or the adoption of new laws and regulations would not have a
material adverse effect on the ability of the Company to obtain or use patient
information. In addition, complying with the two new regulations published by
the DHHS in the area of health information may require significant effort and
expense that also could have a material adverse effect on the Companys
financial condition and results of operations. Moreover, the American Medical
Association (the AMA) has issued a statement to the effect that a physician
who does not obtain a patients consent to the disclosure of the patients
medical record information violates the AMAs ethical standards. While the
AMAs statements are not law, they may influence the willingness of physicians to
obtain patient consents or to disclose patient medical information to the
Company and thus could have a material adverse effect on the Companys ability
to obtain or use patient information. Existing laws and regulations or new
laws and regulations that may be adopted in the future regarding
confidentiality of patient health information also could have a material
adverse effect on the Companys plans to develop and market its urology disease
information databases.20Table of ContentsUncertainties Related to Managed Care.Managed care organizations are
gaining increasing control over access to health care and payment for an
increasing number of patients with urologic diseases. There can be no
assurance that the Company will be able to maintain its existing contracts with
managed care organizations or that it will be able to obtain additional
contracts with such organizations in the future which could preclude the
Company from serving large groups of patients in certain markets. The Company
has experienced increasing pricing pressure from managed care organizations,
and such pressure is expected to continue. There can be no assurance that such
pricing pressure and any contract restrictions will not have a material adverse
effect on the Companys financial condition and results of operations. In
addition, the Company is focused on the field of urology, and managed care
providers tend to contract exclusively with companies that serve a wider
breadth of the healthcare market. There can be no assurance that the Company
will be able to overcome this managed care trend. If the Company is unable to
become an approved participating provider under certain managed care programs
that cover a number of patients of any particular physician, that physician, to
simplify purchasing and billing, may elect to use a competitor of UroCor that
is approved by such managed care organizations for all of the physicians
needs, regardless of whether other patients are covered by Medicare or other
third party payors. The loss of business from key urologists and their
patients could have a material adverse affect on the Companys financial
condition and results of operations.Uncertainties Related to Patents and Proprietary Rights.While UroCors
success does not depend on its ability to obtain patents, there can be no
assurance that it can operate without infringing upon the proprietary rights of
others. UroCor has licenses or license rights to certain United States patent
and patent applications. On UroCors own patent applications, there can be no
assurance that patents, United States or foreign, will be obtained, or that, if
issued or licensed, they will be enforceable or will provide substantial
protection from competition or be of commercial benefit, or that UroCor will
possess the financial resources necessary to enforce or defend any of its
patent rights. Federal court decisions establishing legal standards for
determining the validity and scope of patents in the field are in transition.
There can be no assurance that the historical legal standards surrounding
questions of validity and scope will continue to be applied or that current
defenses as to issued patents in the field will offer protection in the future.
UroCor must also avoid infringing patents issued to competitors and must
maintain technology licenses upon which certain of its current products are, or
any future products under development might be, based. Litigation, which could
result in substantial cost to the Company, may be necessary to enforce its
patent and license rights or to determine the scope and validity of proprietary
rights of third parties. If any of UroCors products are found to infringe upon
patents or other rights owned by third parties, it could be required to obtain
a license to continue to utilize or market such products. There can be no
assurance that licenses to such patent rights would be made available to the
Company on commercially reasonable terms, it at all. If UroCor does not obtain
such licenses, it could encounter delays in marketing affected products or be
precluded from marketing them at all.Competitive Pressures.The industry in which the Companys diagnostics
business operates is characterized by intense competition with many different
types of competitors including specialty laboratories, diagnostic kit and
instrumentation manufacturers, local, regional and national pathology services,
hospital laboratories and general reference clinical laboratories. Many of the
Companys competitors are significantly larger and have significantly greater
financial, technical and administrative resources than the Company; many also
have long established relationships with the Companys current and prospective
customers and with managed care organizations. There can be no assurance that
the Company will be able to compete successfully with such entities in the
marketing of products and services and in the acquisition of new technologies.Many companies, including large pharmaceutical firms with financial and
marketing resources and development capabilities substantially greater than
those of UroCor, are engaged in developing, marketing and selling therapeutic
products that compete with the drugs and devices offered or planned to be
offered by the Company. The selling prices of such products frequently decline
as competition increases. Further, other products now in use or under
development by others may be more effective than UroCors current or future
products. The industry is characterized by rapid technological change, and new
or presently competing products may prevent the Companys products from gaining
sufficient market share to attain profitability. As a result of increasing
competition in marketing to urologists, the Companys ability to attract and
retain sales representatives and management may also affect its ability to
compete in the marketing of both diagnostic services and therapeutics. There
can be no assurance that the Company will be able to compete successfully in
marketing therapeutic products.
21Table of ContentsSources and Availability of Raw Materials.   The Company is dependent upon
a limited number of outside unaffiliated suppliers for its radioisotopes. To
date, the Company has been able to obtain the required radioisotopes for its
products. The Company believes that it will be able to continue to obtain
required radioisotopes from these or other sources, although there can be no
assurance thereof. The delay or unavailability of radioisotopes could have a
material adverse effect on the Companys production and sales levels and
consequently upon its financial condition and results of operations.Access to Capital.Historically, the Companys growth has required, and
any future growth will require, significant amounts of working capital.
Although the Company believes that existing capital resources will be adequate
to fund its current level of operations and implement its currently planned
growth strategy, there may be circumstances or new business opportunities that
would require the Company to seek additional resources. There is no assurance
that the Company would be able to obtain such financing on acceptable terms.Possible Volatility of Stock Price of Common Stock.There has been a
history of significant volatility in the market prices for shares of companies
engaged in the health care and biotechnology fields, and the market price of
the shares of the Companys common stock may be highly volatile. Factors such
as fluctuations in the Companys quarterly revenues and operating results,
announcements of technological innovations or new analytical services by the
Company and its competitors and changes in third-party reimbursement and
governmental regulation may have a significant effect on the market price of
the common stock.
Item 6. Exhibits and Reports on Form 8-K.(a)
        
        Exhibits:Exhibits designated by the symbol * are filed
with this Quarterly Report on Form 10-Q. All exhibits not so
designated are incorporated by reference to a prior filing as
indicated.10.1*
        
        Amendment No. 5 dated January 2, 2001, amending the Lease
Agreement between Presbyterian Health Foundation, as Landlord and
UroCor, Inc., as Tenant dated April 15, 1994.10.2*
        
        Agreement and Plan of Merger dated as of June 28, 2001
among DIANON Systems, Inc., UroCor Acquisition Corp, and UroCor, Inc.10.3*
        
        Form of Change in Control Agreement dated June 18, 2001 and Amendment
thereto dated June 28, 2001 between
UroCor, Inc. and each of the individuals named and with the terms listed on
Schedule 10.1 thereto.10.4
        
        Rights Agreement dated as of August 17, 1998, between the Company and American
Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the
Commission on August 21, 1998).10.5*
        
        First Amendment to Rights Agreement dated June 28, 2001.10.6*
        
        The UroCor, Inc. 1997 Non-Employee Director Stock Option Plan, as amended.10.7
        
        The UroCor, Inc. 1997 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form S-8
(Reg. No. 333-58017), filed with the Commission on June 29, 1998).10.8*
        
        Amendment to the UroCor, Inc.
1997 Employee Stock Purchase Plan dated June 27,
2001.(b)
        
        Reports on Form 8-KA Form 8-K was filed on June 28, 2001, in connection with the proposed
acquisition of the Company by DIANON Systems, Inc.22Table of Contents
SIGNATURESPursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                |  |                                                                                                                
|--------------- |  | ---------------------------------------------------------------------------------------------------------------
|                |  | UROCOR, INC.                                                                                                   
|               
|                |  | By:  /s/ Michael W. George
Michael W. GeorgePresident and Chief Executive Officer                              
|               
|August 13, 2001
|               
|                |  | By:  /s/ Bruce C. Hayden
Bruce C. HaydenSenior Vice-President, Chief
Financial Officer, Treasurer and Secretary
|               
|August 13, 2001

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INDEX TO EXHIBITS

|        |  |                                                                                                                                                                                                                                                                        
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|EXHIBIT |  |                                                                                                                                                                                                                                                                        
|NUMBER  |  | DESCRIPTION                                                                                                                                                                                                                                                            
|        |  |                                                                                                                                                                                                                                                                        
|10.1*   |  | Amendment No. 5 dated January 2, 2001, amending the Lease
Agreement between Presbyterian Health Foundation, as Landlord and
UroCor, Inc., as Tenant dated April 15, 1994.                                                                                              
|       
|       
|       
|       
|10.2*   |  | Agreement and Plan of Merger dated as of June 28, 2001
among DIANON Systems, Inc., UroCor Acquisition Corp, and UroCor, Inc.                                                                                                                                           
|       
|       
|       
|       
|10.3*   |  | Form of Change in Control Agreement dated June 18, 2001 and Amendment
thereto dated June 28, 2001 between
UroCor, Inc. and each of the individuals named and with the terms listed on
Schedule 10.1 thereto.                                                           
|       
|       
|       
|       
|10.4    |  | Rights Agreement dated as of August 17, 1998, between the Company and American
Stock Transfer & Trust Company, as Rights Agent (incorporated by reference to
Exhibit 4.1 to the Registrant's Current Report on Form 8-K, filed with the
Commission on August 21, 1998).
|       
|       
|       
|       
|10.5*   |  | First Amendment to Rights Agreement dated June 28, 2001.                                                                                                                                                                                                               
|10.6*   |  | The UroCor, Inc. 1997 Non-Employee Director Stock Option Plan, as amended.                                                                                                                                                                                             
|10.7    |  | The UroCor, Inc. 1997 Employee Stock Purchase Plan (incorporated by reference to
Exhibit 4.4 to the Registrant's Registration Statement on Form S-8
(Reg. No. 333-58017), filed with the Commission on June 29, 1998).                                                 
|10.8*   |  | Amendment to the UroCor, Inc.
1997 Employee Stock Purchase Plan dated June 27,
2001.                                                                                                                                                                                   



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| |  | Exhibits designated by the symbol * are filed with this Quarterly Report
on Form 10-Q. All exhibits not so designated are incorporated by
reference to a prior filing as indicated.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------