<PAGE>
                          UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                                
                            FORM 10-Q


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1998

                               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:  0-28212

               SUNQUEST INFORMATION SYSTEMS, INC.
     (Exact name of registrant as specified in its charter)
                                
PENNSYLVANIA                                 86-0378223
(State or Other Jurisdiction of              (I.R.S. Employer
Incorporation or Organization)               Identification Number)

                  4801 East Broadway Boulevard
                      Tucson, Arizona 85711
       (Address of principal executive office) (Zip Code)
                                
                         (520) 570-2000
      (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.  [ X ] Yes   [   ]  No


On August 12, 1998, there were 15,384,467 shares of Common Stock
outstanding.

<PAGE>
               Sunquest Information Systems, Inc.
                            Form 10-Q
          For the Quarterly Period Ended June 30, 1998
                                
                        Table of Contents


                                                             Page
                                                             ----
Part I.   Financial Information                                 
                                                                
  Item 1. Financial Statements                                  
                                                                
          (a.) Condensed consolidated balance sheets as        3
          of June 30, 1998 (unaudited) and December 31,
          1997
                                                                
          (b.) Unaudited condensed consolidated                4
          statements of income and comprehensive income
          for each of the three and six month periods
          ended June 30, 1998 and June 30, 1997
                                                                
          (c.) Unaudited condensed consolidated                5
          statements of cash flows for each of the six
          month periods ended June 30, 1998 and June 30,
          1997
                                                                
          (d.) Notes to unaudited condensed consolidated       6
          financial statements
                                                                
  Item 2. Management's Discussion and Analysis of              8
          Financial Condition and Results of Operations
                                                                
  Item 3. Quantitative and Qualitative Disclosures About      14
          Market Risk
                                                                
Part II.  Other Information                                     
                                                                
  Item 1. Legal Proceedings                                   15
                                                                
  Item 2. Changes in Securities and Use of Proceeds           15
                                                                
  Item 3. Defaults Upon Senior Securities                     15
                                                                
  Item 4. Submission of Matters to a Vote of Security         15
          Holders
                                                                
  Item 5. Other Information                                   16
                                                                
  Item 6. Exhibits and Reports on Form 8-K                    16
                                                                
          (a.)  Exhibits                                      16
                                                                
          (b.)  Reports on Form 8-K                           16
                                                                
Signatures                                                    17

                                   2
<PAGE>

Part I.  Financial Information

Item 1.  Financial Statements

               Sunquest Information Systems, Inc.
              Condensed Consolidated Balance Sheets
                         (In thousands)
<TABLE>
<CAPTION>
                                              June 30,    December 31,
                                                1998         1997
                                             ----------   ------------
       <S>                                   <C>            <C>
                                             (unaudited)
       ASSETS                                                   
                                                               
       Cash and cash equivalents                 $2,617     $23,692
       Short-term investments                    26,683           -
       Trade receivables, net                    33,977      36,547
       Other current assets                       2,396       2,166
       Deferred tax asset                         1,895       1,898
                                                -------     -------
         Total current assets                    67,568      64,303
                                                               
       Property and equipment, net               10,973      11,513
       Capital leases from related party, net     3,700       4,096
       Software development costs, net           11,686      12,252
       Deferred tax asset                           199         346
       Other assets, net                          1,541       1,663
                                                -------     -------
         Total assets                           $95,667     $94,173
                                                =======     =======                
       LIABILITIES AND SHAREHOLDERS' EQUITY
                                                               
       Accounts payable                          $3,430      $3,401
       Accrued compensation and related taxes     4,611       4,523
       Accrued expenses                           6,224       4,957
       Obligations under capital leases,                        
         primarily from related party               872         800
       Deferred revenue                          10,866      11,519
       Deferred income taxes                         13          13
       Other liabilities                          1,000       1,000
                                                -------     -------
         Total current liabilities               27,016      26,213
                                                               
       Obligations under capital leases,                        
         primarily from related party             4,625       5,080
       Deferred income taxes                      1,167       1,167
       Transition costs                             236         891
       Other liabilities                              -       1,000
                                                               
       Shareholders' equity                                     
         Common stock                            50,545      50,474
         Retained earnings                       12,120       9,403
         Accumulated other comprehensive loss       (42)        (55)
                                                -------     -------
           Total shareholders' equity            62,623      59,822
                                                -------     -------
           Total liabilities and             
             shareholders' equity               $95,667     $94,173
                                                =======     =======
</TABLE>

See accompanying notes.

                                   3
<PAGE>

               Sunquest Information Systems, Inc.
  Condensed Consolidated Statements of Income and Comprehensive Income
            (In thousands, except per share amounts)
                           (Unaudited)

<TABLE>
<CAPTION>
                                 
                                Three Months Ended     Six Months Ended
                                     June 30,              June 30,
                                ------------------    ------------------  
                                  1998      1997        1998     1997
                                --------  --------    --------  --------       
<S>                              <C>       <C>        <C>       <C>
Revenues:                                                              
  System sales                   $12,967   $14,435    $28,673   $27,253
  Support and service             14,730    13,545     27,638    25,334
                                 -------   -------    -------   -------
Total revenues                    27,697    27,980     56,311    52,587
                                 -------   -------    -------   -------
Operating expenses:                                                    
  Cost of system sales             5,863     7,762     13,755    14,155
  Client services                  7,863     7,303     15,726    13,422
  Research and development         3,600     2,556      7,483     5,866
  Sales and marketing              4,184     3,687      7,981     6,866
  General and administrative       3,782     3,058      7,283     6,472
  Gain on sale of assets            (404)        -       (404)        -
                                 -------   -------    -------   -------
Total operating expenses          24,888    24,366     51,824    46,781
                                 -------   -------    -------   -------        
Operating income                   2,809     3,614      4,487     5,806
Other income (expense):                                                
  Interest income                    344       274        619       659
  Interest expense                  (274)     (501)      (570)     (625)
  Other                              213       201        163        35
                                 -------   -------    -------   -------
Income before income taxes         3,092     3,588      4,699     5,875
Income tax provision               1,302     1,468      1,982     2,452
                                 -------   -------    -------   -------
Net income                        $1,790    $2,120     $2,717    $3,423
                                                                       
Other comprehensive (loss)                                             
  income, net of tax:
  Foreign currency translation      
    adjustment                       (25)      (23)        13      (115)
                                 -------   -------    -------   -------
Comprehensive income              $1,765    $2,097     $2,730    $3,308
                                 =======   =======    =======   =======
                                                                       
Net income per share:                                                  
  Basic and diluted                 $.12      $.14       $.18      $.22
                                 =======   =======    =======   =======
                                                                       
Weighted-average shares                                                
  outstanding:
  Basic                           15,381    15,365     15,378    15,364
                                 =======   =======    =======   =======
  Diluted                         15,393    15,432     15,394    15,397
                                 =======   =======    =======   =======

</TABLE>

See accompanying notes.

                                    4

<PAGE>

               Sunquest Information Systems, Inc.
         Condensed Consolidated Statements of Cash Flows
                         (In thousands)
                           (Unaudited)
<TABLE>
<CAPTION>
                                                         Six Months Ended
                                                             June 30,
                                                        ------------------
                                                          1998      1997
                                                        --------  --------
     <S>                                                  <C>       <C>
     Cash flows from operating activities:                   
       Net income                                         $2,717    $3,423
       Adjustments to reconcile net income                   
         to net cash provided by operating                      
         activities:
         Depreciation and amortization                     4,034     3,848
         Bad debt expense                                    149       488
         Deferred revenue                                   (640)   (2,202)
         Deferred income taxes                               150     1,197
         Gain on sale of assets                             (404)        -
                                                             
       Changes in operating assets and liabilities:
         Receivables                                       2,364   (11,996)
         Inventory                                           213     1,352
         Prepaid expenses and other                         (475)     (311)
         Other assets                                        (42)      975
         Accounts payable                                     29     1,380
         Accrued compensation and related taxes               88      (612)
         Other accrued expenses                            1,830       (56)
                                                         -------   -------
           Net cash provided by (used in)              
             operating activities                         10,013    (2,514)
                                                         -------   -------
     Cash flows from investing activities:                   
       Purchase of property and equipment                 (1,381)   (3,510)
       Costs related to acquisitions                      (1,170)   (1,522)
       Capitalized software development costs             (2,685)   (2,995)
       Purchase of investments                           (53,977)        -
       Proceeds from sale or maturity of investments      27,294         -
       Proceeds from sale of assets                        1,130         -
                                                         -------   -------
           Net cash used in investing activities         (30,789)   (8,027)
                                                         -------   -------
     Cash flows from financing activities:                   
       Principal payments on debt                              -      (289)
       Principal payments on capitalized                     
         leases, primarily from related party               (383)     (324)
       S Corporation distribution                              -    (3,601)
       Net proceeds from employee stock           
         purchase plan                                        71        92
                                                         -------   -------
           Net cash used in financing activities            (312)   (4,122)
                                                         -------   -------
     Foreign currency translation adjustment                  13      (115)
                                                         -------   -------
           Net decrease in cash and cash equivalents     (21,075)  (14,778)
     Cash and cash equivalents at beginning of period     23,692    31,911
                                                         -------   -------
     Cash and cash equivalents at end of period           $2,617   $17,133
                                                         =======   =======
</TABLE>

See accompanying notes.

                                   5

<PAGE>

Notes to Unaudited Condensed Consolidated Financial Statements


Note 1 - Interim Statement Presentation

The unaudited condensed consolidated financial statements of
Sunquest Information Systems, Inc. (the "Company") have been
prepared by the Company pursuant to the rules and regulations of
the Securities and Exchange Commission (the "Commission") and in
accordance with generally accepted accounting principles for the
preparation of interim financial statements.  Accordingly,
certain information and footnote disclosures normally included in
annual financial statements have been omitted or condensed.
These unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the notes thereto incorporated by reference into
the Company's 1997 Annual Report on Form 10-K filed with the
Commission.  The 1997 balance sheet amounts were derived from
audited statements.

In the opinion of management, all necessary adjustments,
consisting of normal and recurring adjustments, have been made to
provide a fair presentation to the unaudited financial
information.  The operating results for the three and six month
periods ended June 30, 1998 are not necessarily indicative of the
results that may be expected for any other interim period or for
the full year ending December 31, 1998.

Certain prior year amounts have been reclassified to conform to
the current year presentation.


Note 2 - Employee Stock Purchase Plan

In the three months ended June 30, 1998, the Company issued 3,984
shares of its Common Stock for approximately $31,000 pursuant to
the Employee Stock Purchase Plan.  In the six months ended June
30, 1998, the Company has issued a total of 8,505 shares of its
Common Stock for approximately $71,000 pursuant to the Employee
Stock Purchase Plan.


Note 3 - Net Income Per Share

The Company adopted the provisions of Statement of Financial
Accounting Standards No. 128,  "Earnings Per Share" ("SFAS No.
128") effective December 31, 1997.  Under the new provisions for
calculating earnings per share, the dilutive effect of stock
options has been excluded in the determination of "basic"
earnings per share and only included in "diluted" earnings per
share.

                              6

<PAGE>

In accordance with the disclosure requirements of SFAS No. 128, a
reconciliation of the numerator and denominator of basic and
diluted net income per share follows.

<TABLE>
<CAPTION>
                                     Three Months Ended             Six Months Ended
                                          June 30,                      June 30,
                                 --------------------------    --------------------------
                                     1998          1997            1998          1997
                                 ------------  ------------    ------------  ------------
<S>                                <C>           <C>             <C>           <C>   
Numerator for basic and                                           
 diluted net income per share:                                                  
 Net income                        $1,790,000    $2,120,000      $2,717,000    $3,423,000
                                   ==========    ==========      ==========    ==========          
                                                                     
Denominator:                                                         
 Denominator for basic                                           
  net income per share --
  weighted-average shares          15,380,526    15,365,492      15,378,282    15,364,063
 Effect of diluted securities:
  Stock options                        12,621        66,196          15,438        33,346
                                   ----------    ----------      ----------    ----------
 Denominator for diluted net
  income per share -- adjusted                                           
  weighted-average shares          15,393,147    15,431,688      15,393,720    15,397,409
                                   ==========    ==========      ==========    ==========
                                                                     
Basic net income per share               $.12          $.14            $.18          $.22
                                   ==========    ==========      ==========    ==========
Diluted net income per share             $.12          $.14            $.18          $.22
                                   ==========    ==========      ==========    ==========

</TABLE>

Note 4 - Investments

The Company accounts for its investments in Tax Exempt Municipals
and Short-Term Demand Notes based on Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," ("SFAS No. 115").  SFAS No. 115
provides the accounting and reporting requirements for
investments in securities that have readily determinable fair
values and for all investments in debt securities.  At June 30,
1998, all of the Company's investments in debt securities have
been classified as available-for-sale securities.  Available-for-
sale securities are carried at fair value with net unrealized
gains and losses on such securities, net of tax, reported as a
component of shareholders' equity.  At June 30, 1998, the
amortized cost of the Company's investment in debt securities
approximated the fair value and as such, there was no adjustment
to shareholders' equity.

                                   7

<PAGE>

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


     Sunquest Information Systems, Inc. designs, develops,
markets, installs and supports health care information systems
for large and mid-sized hospitals, clinics and other facilities,
including integrated delivery networks.  Revenues are derived
from the licensing of software, the provision of value-added
services and the sale of related hardware.

     During the quarter ended June 30, 1998, the Company sold the
assets comprising its Managed Care Manager Payor ("MCM") software
product line to Monument Systems, Inc. ("Monument")  for
approximately $1.1 million.  Monument assumed the existing
contracts and future support of customer installations.  The pre-
tax gain resulting from the sale, after associated write-offs,
was approximately $404,000.  The after-tax gain was approximately
$238,000, or $.02, basic and diluted net income per share.  The
sale of the MCM product line is consistent with the Company's
strategy and focus on its clinical suite of products.

Year 2000 Compliance
--------------------

     The year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year.  Any of the Company's software programs, whether
sold as products of the Company or used internally, may recognize
a date using "00" as the year 1900 rather than the year 2000.
This could result in a system failure or miscalculations causing
disruptions of operations, including, among other things, a
temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

     Based on a current assessment, the Company believes that
virtually all of the current releases of its products are year
2000 compliant, and with respect to those that are not, the
Company anticipates releasing year 2000 compliant versions by the
first quarter of 1999.  The Company believes that the costs
incurred to make these products year 2000 compliant will be
immaterial.  The Company plans to have all clients converted to
year 2000 compliant versions of its products by October 1999.
Pursuant to contract terms, clients are obligated to cooperate
with the Company in the installation of system enhancements,
including the current year 2000 compliant versions.

     In addition, the Company has determined that only a small
portion of software programs developed by other vendors and
utilized internally will require upgrades to new versions to
properly utilize dates beyond December 31, 1999.  After reviewing
the plans of these vendors, the Company believes that the
upgrades to such software programs will be completed by the end
of the second quarter of 1999.  The cost of year 2000 compliant
software related to systems developed by other vendors and used
internally is included in maintenance agreements.  The Company
believes that consulting costs incurred in accomplishing the
installation of year 2000 compliant software will be immaterial.


                              8

<PAGE>

     The results of operations for the three and six months ended
June 30, 1998 are not necessarily indicative of the results that
may be expected for any other interim period or for the full year
ending December 31, 1998.


Results of Operations
---------------------

Comparison of Three Months Ended June 30, 1998 and June 30, 1997

     Revenues.  The Company's total revenues were $27.7 million
for the three months ended June 30, 1998 compared to $28.0
million for the three months ended June 30, 1997, a decrease of
$283,000, or 1.0%.  Revenues from system sales were $13.0 million
for the three months ended June 30, 1998 compared to $14.4
million for the three months ended June 30, 1997, a decrease of
$1.5 million, or 10.2%.  This decrease was primarily attributable
to decreases in hardware shipments to new customers.  Revenues
from support and service were $14.7 million for the three months
ended June 30, 1998 compared to $13.5 million for the three
months ended June 30, 1997, an increase of $1.2 million, or 8.7%.
This increase was primarily attributable to the Company's
increased installed customer base.

     At June 30, 1998, the Company had a total contract backlog
of $109.5 million, which consisted of $51.2 million of system
sales and $58.3 million of support and service.  The Company's
total contract backlog at March 31, 1998, was $96.7 million,
which consisted of $43.2 million of system sales and $53.5
million of support and service.  At June 30, 1997, total contract
backlog was $85.2 million, which consisted of $37.3 million of
system sales and $47.9 million of support and service.

     Cost of System Sales.  Cost of system sales was $5.9 million
for the three months ended June 30, 1998 compared to $7.8 million
for the three months ended June 30, 1997, a decrease of $1.9
million, or 24.5%.  As a percentage of total revenues, cost of
system sales was 21.1% in 1998 compared to 27.8% in 1997.  The
dollar decrease was primarily attributable to decreases in
hardware and operating system deliveries.  Amortization of
previously capitalized software development costs was $814,000
for the three months ended June 30, 1998 compared to $932,000 for
the three months ended June 30, 1997, a decrease of $118,000, or
12.7%.  The decrease in amortization was primarily attributable
to the reduction in carrying value of IntelliCare software in the
third and fourth quarters of 1997.  During the fourth quarter of
1997, the Company discontinued the sale of its IntelliCare suite
of products as an enterprise-wide computerized patient record
solution and the related development of a nurse clinical
documentation system.

     Client Services.  Client services expenses were $7.9 million
for the three months ended June 30, 1998 compared to $7.3 million
for the three months ended June 30, 1997, an increase   of
$560,000, or 7.7%.  As a percentage of total revenues, client
services expenses were 28.4% in 1998 compared to 26.1% in 1997.
The dollar increase was primarily attributable to additional
staff dedicated to the support and installation of the Company's
systems and additional staff dedicated to providing consulting
services to customers.

                             9

<PAGE>


     Research and Development.  Research and development expenses
were $3.6 million for the three months ended June 30, 1998
compared to $2.6 million for the three months ended June 30,
1997, an increase of $1.0 million, or 40.8%.  As a percentage of
total revenues, research and development expenses were 13.0% in
1998 compared to 9.1% in 1997.  The dollar increase in research
and development expenses was primarily attributable to increased
staff dedicated to the development, enhancement and documentation
of the Company's pharmacy, reference laboratory and Clinical
Event Manager systems partially offset by decreased expenses and
capitalization related to the IntelliCare suite of products.  The
Company capitalized $946,000 of its software development costs
for the three months ended June 30, 1998 compared to $1.3 million
for the three months ended June 30, 1997, a decrease of 362,000,
or 27.7%.  The dollar decrease in capitalized software
development was primarily attributable to timing differences at
Antrim Corporation ("Antrim") and the discontinuation of IntelliCare
partially offset by increased capitalization for the pharmacy and
laboratory products.

     Sales and Marketing.  Sales and marketing expenses were $4.2
million for the three months ended June 30, 1998 compared to $3.7
million for the three months ended June 30, 1997, an increase of
$497,000, or 13.5%.  As a percentage of total revenues, sales and
marketing expenses were 15.1% in 1998 compared to 13.2% in 1997.
The dollar increase was primarily attributable to increased sales
efforts for new products and the European market.

     General and Administrative.  General and administrative
expenses were $3.8 million in the three months ended June 30,
1998 compared to $3.1 million in the three months ended June 30,
1997, an increase of $724,000, or 23.7%.  As a percentage of
total revenues, general and administrative expenses were 13.7% in
1998 compared to 10.9% in 1997.  The dollar increase was
primarily attributable to increased depreciation expense
resulting from additions of property and equipment, increased
variable compensation, increased contributions to the Company's
Profit Sharing Plan and the addition of Sunquest Pharmacy
Information Systems, Inc. ("Sunquest Pharmacy").

     Transition Costs.  For the three months ended June 30, 1998,
the Company paid previously accrued transition costs established
at the time of the acquisition of Antrim of $546,000 as compared
to $564,000 paid during the corresponding period in 1997.  These
costs were primarily associated with replacing certain Antrim
software products with Sunquest products and employee related
costs.  In addition, during the three months ended June 30, 1998,
the Company paid transition costs related to the purchase of the
PreciseCare Medication Management System ("PreciseCare") of
$11,000.


Comparison of Six Months Ended June 30, 1998 and June 30, 1997

     Revenues.  The Company's total revenues were $56.3 million
for the six months ended June 30, 1998 compared to $52.6 million
for the six months ended June 30, 1997, an increase of $3.7
million, or 7.1%.  Revenues from system sales were $28.7 million
for the six months ended June 30, 1998 compared to $27.3 million
for the six months ended June 30, 1997, an increase of $1.4
million, or 5.2%.  This increase was primarily attributable to
increases in installations of

                              10

<PAGE>

software to existing customers partially offset by decreases in
installations of hardware.  Revenues from support and service were
$27.6 million for the six months ended June 30, 1998 compared to
$25.3 million for the six months ended June 30, 1997, an increase
of $2.3 million, or 9.1%.  This increase was primarily attributable
to the Company's increased installed customer base.

     Cost of System Sales.  Cost of system sales was $13.8
million for the six months ended June 30, 1998 compared to $14.2
million for the six months ended June 30, 1997, a decrease of
$400,000, or 2.8%.  As a percentage of total revenues, cost of
system sales was 24.4% in 1998 compared to 26.9% in 1997.  The
dollar decrease was primarily attributable to decreases in
hardware and operating system deliveries.  Amortization of
previously capitalized software development costs was $1.6
million for the six months ended June 30, 1998 compared to $1.8
million for the six months ended June 30, 1997, a decrease of
$166,000, or 9.2%.  The decrease in amortization was primarily
attributable to the reduction in carrying value of IntelliCare
software in the third and fourth quarters of 1997.

     Client Services.  Client services expenses were $15.7
million for the six months ended June 30, 1998 compared to $13.4
million for the six months ended June 30, 1997, an increase of
$2.3 million, or 17.2%.  As a percentage of total revenues,
client services expenses were 27.9% in 1998 compared to 25.5% in
1997.  The dollar increase was primarily attributable to
additional staff dedicated to the support and installation of the
Company's systems, additional staff and consultants dedicated to
providing consulting services to customers and the addition of
Sunquest Pharmacy.

     Research and Development.  Research and development expenses
were $7.5 million for the six months ended June 30, 1998 compared
to $5.9 million for the six months ended June 30, 1997, an
increase of $1.6 million, or 27.6%.  As a percentage of total
revenues, research and development expenses were 13.3% in 1998
compared to 11.2% in 1997.  The dollar increase in research and
development expenses was primarily attributable to increased
staff dedicated to the development, enhancement and documentation
of the Company's reference laboratory systems partially offset by
decreased expenses related to the IntelliCare suite of products.
The Company capitalized $1.7 million of its software development
costs for the six months ended June 30, 1998 compared to $2.0
million for the six months ended June 30, 1997, a decrease of
$310,000, or 15.5%.  The dollar decrease in capitalized software
development was primarily attributable to discontinuation of
development related to IntelliCare and the MCM software product
line partially offset by increased capitalization related to the
pharmacy product.

     Sales and Marketing.  Sales and marketing expenses were $8.0
million for the six months ended June 30, 1998 compared to $6.9
million for the six months ended June 30, 1997, an increase of
$1.1 million, or 16.2%.  As a percentage of total revenues, sales
and  marketing expenses were 14.2% in 1998 compared to 13.1% in
1997. The dollar increase was primarily attributable to increased
sales efforts for new products and the European market and
increased commissions resulting from a 27.0% growth in sales
bookings in 1998.

     General and Administrative.  General and administrative
expenses were $7.3 million in the six months ended June 30, 1998
compared to $6.5 million in the six months ended June 30, 1997,

                              11

<PAGE>

an increase of $811,000, or 12.5%.  As a percentage of total
revenues, general and administrative expenses were 12.9% in 1998
compared to 12.3% in 1997.  The dollar increase was primarily
attributable to increased depreciation expense resulting from
additions of property and equipment, increased variable
compensation and the addition of Sunquest Pharmacy.

     Transition Costs.  For the six months ended June 30, 1998,
the Company paid previously accrued transition costs established
at the time of the acquisition of Antrim of $1.0 million as
compared to $1.0 million paid during the corresponding period in
1997.  These costs were primarily associated with replacing
certain Antrim software products with Sunquest products and
employee related costs.  In addition, during the six months ended
June 30, 1998, the Company paid transition costs related to the
purchase of PreciseCare of $128,000.  These costs were primarily
associated with employee costs and professional services related
to the purchase.


Liquidity and Capital Resources
-------------------------------

     At June 30, 1998, the Company had cash, cash equivalents and
short-term investments of $29.3 million which consisted of cash
of $2.6 million and short-term investments of $26.7 million.
This compares to cash and cash equivalents of $23.7 million at
December 31, 1997 and $17.1 million at June 30, 1997, increases
of $5.6 million and $12.2 million, respectively.  Cash provided
by operating activities was $10.0 million for the six months
ended June 30, 1998 compared to cash used in operating activities
of $2.5 million for the six months ended June 30, 1997.

     As of June 30, 1998, the Company had net trade receivables
of $34.0 million which consisted of $20.6 million in net billed
trade receivables and $13.4 million in unbilled trade
receivables.  At December 31, 1997, the Company had net trade
receivables of $36.5 million which consisted of $27.9 million in
net billed trade receivables and $8.6 million in unbilled trade
receivables.  Net trade receivables have decreased by $2.6
million since December 31, 1997, with $7.4 million related to
collections on the billed portion partially offset by an increase
of $4.8 million in the unbilled portion.  The unbilled
receivables represent revenue that has been recognized in
accordance with the percentage-of-completion accounting method,
but which has not yet been billed to customers under contractual
milestone billings.  The Company believes that this increase in
unbilled receivables is primarily a result of the timing of
system sales and installations in the year.  The Company
maintains an allowance for doubtful accounts that it believes is
adequate to cover potential credit losses.  The average
collection period, a rolling twelve-month average, on net billed
trade receivables was 88 days at June 30, 1998 compared to 92
days at March 31, 1998 and  91 days at December 31, 1997.  Days
sales outstanding ("DSO") was 110 at June 30, 1998 compared to
107 at March 31, 1998 and 129 at December 31, 1997.

     Cash used in investing activities was $30.8 million for the
six months ended June 30, 1998.  Purchases of investments totaled
$54.0 million.  Proceeds from the maturity or sale of investments
totaled $27.3 million.  Capitalized software development costs
totaled $2.7 million.  Of this amount, $1.0 million was related
to the second payment under the Value Added Reseller ("VAR")
agreement with Dynamic Healthcare Technologies, Inc. ("Dynamic")
for the license of a software program known as CoPath
Client/Server.  Purchases of property and equipment totaled $1.4

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<PAGE>

million and consisted primarily of purchases of computers,
computer-related equipment, computer software and leasehold
improvements.  Costs related to acquisitions totaled $1.2
million.  Of this amount, approximately $1.0 million was related
to the payment of previously accrued transition costs established
at the time of the acquisition of Antrim and was primarily
associated with replacing certain Antrim software products with
Sunquest products and employee related costs.  In addition, the
Company also paid transition costs related to the purchase of the
PreciseCare software of approximately $128,000.  These costs were
primarily associated with employee costs and professional
services related to the purchase.  The proceeds from the sale of
assets consisted of $1.1 million from the sale of the MCM
software product line to Monument.

     Cash used in financing activities was $312,000 for the six
months ended June 30, 1998.  Of this amount, $383,000 was used
for principal payments on capital leases.  This amount was
partially offset by the issuance of 8,505 shares of the Company's
Common Stock for approximately $71,000 under the Employee Stock
Purchase Plan.

     At June 30, 1998, working capital was $40.6 million compared
to $38.1 million at December 31, 1997.

     The Company has a revolving line of credit with a bank
allowing the Company to borrow up to $10.0 million.  Any
borrowings under the line of credit will bear interest at the
bank reference rate unless the Company elects a fixed rate or
certain variable rates contemplated by the agreement.  All
outstanding principal and interest under the line of credit is
due April 30, 1999 except for any amounts outstanding under stand-
by letters of credit which have a maximum maturity of 365 days.
Borrowings under the line of credit are secured by all of the
Company's assets.  There were no stand-by letters of credit or
borrowings outstanding as of June 30, 1998.

     Other than the final payment of $1.0 million due in February
of 1999 related to the VAR agreement with Dynamic, the Company
has no significant commitments for capital expenditures at this
time.  However, the Company continues to be actively involved in
identifying and evaluating potential acquisitions which may
result in the future expenditure of funds.

     Management believes that existing cash, cash equivalents,
short-term investments, cash available under its revolving line
of credit and funds generated from operations will be sufficient
to meet operating requirements for at least the next twelve
months.

     To date, inflation has not had a material impact on the
Company's revenues or income, and the Company does not expect
inflation to have a material impact in the foreseeable future.


New Accounting Standards
------------------------

     As of January 1, 1998, the Company adopted Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive
Income" ("SFAS No. 130"), which requires businesses to disclose
comprehensive income and its components in general purpose financial


                             13

<PAGE>


statements with reclassification of prior period financial statements.
The adoption of SFAS No. 130 had no significant impact on the Company's
financial statements.

     As of January 1, 1998, the Company adopted Statement of
Position ("SOP") 97-2, "Software Revenue Recognition," which
revised certain aspects of SOP 91-1.  The adoption of SOP 97-2
did not affect the Company's revenue recognition policies with
respect to software license fees which are recognized as part of
the Company's overall software contracts and are determined based
upon actual hours incurred related to total estimated
installation hours.

     In March 1998, the American Institute of Certified Public
Accountants issued SOP 98-1, "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use."  SOP
98-1 requires companies to capitalize qualifying computer
software costs incurred during the application development stage.
SOP 98-1 is effective for fiscal years beginning after December
15, 1998 and permits early adoption.  The Company adopted SOP 98-
1 in the first quarter of 1998.  The adoption had no impact on
net income as the Company's policy was materially consistent with
the requirements of SOP 98-1.

     In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 131,
"Disclosures about Segments of an Enterprise and Related
Information" ("SFAS No. 131"), which redefines how operating
segments are determined and requires disclosure of certain
financial and descriptive information about a company's operating
segments.  SFAS No. 131 is effective for fiscal years beginning
after December 15, 1997.  The Company is currently evaluating the
effects, if any, the adoption of this pronouncement will have on
the disclosure of its historical data at year end.


Forward-Looking Statements
--------------------------

     This report, and other reports and communications to
shareholders, contains forward-looking statements, including
statements which contain words such as "will," "expects,"
"believes," "plans," "anticipates" and words of similar impact.
Certain risk factors, including but not limited to dependence on
laboratory information system products, competition in the
marketplace, purchase and installation decisions of customers,
pricing decisions of competitors and development risks and
uncertainties could cause actual results to differ materially
from such forward-looking statements.  These and other risks are
detailed in the Company's 1997 Annual Report on Form 10-K filed
with Securities and Exchange Commission.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

     Not applicable.

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<PAGE>

Part II.  Other Information

Item 1.   Legal Proceedings

          On July 30, 1998, the Company instituted a legal action
          in the United States District Court for the Western
          District of Pennsylvania against Dean Witter Reynolds,
          Inc. and The Compucare Company for material
          misrepresentations and omissions in connection with the
          Company's purchase of all of the outstanding capital
          stock of Antrim Corporation from the Compucare Company
          on November 26, 1996.  The Complaint seeks remedies
          available to the Company including damages and/or
          rescission of the acquisition.

          The Company is or may be subject to legal proceedings
          and claims covering a wide range of matters that arise
          in the ordinary course of business.  Management is of
          the opinion that the potential liability with respect
          to these legal proceedings and claims will not
          materially affect the Company's financial position or
          results of operations.


Item 2.   Changes in Securities and Use of Proceeds
          None.


Item 3.   Defaults Upon Senior Securities
          None.


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

          (a.) The Company held its Annual Meeting of
               Shareholders on April 30, 1998.  Of the 15,375,962
               shares of Common Stock entitled to vote, 13,285,771
               shares were represented in person or by proxy at the
               meeting.

          (b.) Not applicable, pursuant to Instruction 3 to Item
               4 of this Form 10-Q.
            
          (c.) A description of the matters voted upon at the
               meeting along with an indication of the results of
               the votes on such matters are set forth below:

                              15

<PAGE>
          
               1. Directors who were elected at the Annual
                  Meeting of Shareholders to serve for a term of one
                  year and until their respective successors are
                  elected and qualified:

                                          For         Withheld
                                      ----------      --------
               Sidney A. Goldblatt    13,258,998       26,773
               Nina M. Dmetruk        13,261,175       24,596
               Richard W. Barker      13,259,198       26,573
               Larry R. Ferguson      13,261,649       24,122
               Curtis S. Goldblatt    13,261,076       24,695
               Peter P. Gombrich      13,259,649       26,122
               Stanley J. Lehman      13,260,383       25,388
             
               2. The ratification of the selection of Ernst &
                  Young LLP to audit the books and accounts of the
                  Company for the year ending December 31, 1998.
                  There were 13,260,329 votes in favor, 18,453 votes
                  against and 6,989 shares abstaining. Accordingly,
                  the selection of Ernst & Young LLP was ratified.
               
               3. The approval of the Company's Stock Incentive
                  Plan of 1996, as amended, including a 1,300,000
                  share increase.  There were 10,968,563 votes in
                  favor, 438,801 votes against, 12,046 shares
                  abstaining and 1,866,361 broker non-vote.
                  Accordingly, the Stock Incentive Plan of 1996, as
                  amended, was approved.


Item 5.   Other Information
          None.


Item 6.   Exhibits and Reports on Form 8-K

          (a.)  Exhibits

                27.1 - Financial Data Schedule, filed herewith.

          (b.)  Reports on Form 8-K

                No reports on Form 8-K were filed by the Company
                during the quarter ended June 30, 1998.

                              16

<PAGE>

                           SIGNATURES

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


                             SUNQUEST INFORMATION SYSTEMS, INC.
                                       (Registrant)



Date: August 14, 1998       By: /s/ Nina M. Dmetruk
                                __________________________________________
                                Nina M. Dmetruk
                                Executive Vice President and Chief Financial
                                Officer
                                (Principal Financial and Accounting Officer)


                              17