|FORM 10-Q


SECURITIES
AND EXCHANGE COMMISSIONWashington,
D.C. 20549


(Mark one)
|---------------------------------------------------------------------------------

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

|For the quarterly
period ended March 31, 2001OR
|-----------------------------------------------

| |  | [_] |  | 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
0-27750


IMPATH INC.(exact name
of registrant as specified in its charter)
|--------------------------------------------------------------------------------------------------------------------------------------------------

|Delaware(State or other jurisdiction ofincorporation or organization) | 8071(Primary Standard IndustrialClassification Code Number) | 13-3459685(I.R.S. EmployerIdentification No.)
|--------------------------------------------------------------------- | ----------------------------------------------------------- | ---------------------------------------------

|521 West 57th StreetNew York, New York 10019(212) 698-0300(Address, including zip code, and telephone
number,including area code, of registrants principal executive offices)


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


Yes _X_          No ___


Indicate
the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|CLASS                   | OUTSTANDING AT MARCH 31, 2001
|----------------------- | -----------------------------
|Common Stock, par value |                              
|$.005 per share         |                              

|Index


IMPATH INC.
and Subsidiaries
|------------------------------------

|           |  | PAGE NUMBER                                               
|---------- |  | ----------------------------------------------------------
|PART I.    |  | Financial Information                                     
|          
|Item 1.    |  | Consolidated Financial Statements (Unaudited):            
|          
|           |  | Consolidated Balance Sheets at March 31, 2001             
|           |  | and December 31, 2000                                     
|          
|           |  | Consolidated Statements of Operations for the Three       
|           |  | Months Ended March 31, 2001 and March 31, 2000            
|          
|           |  | Consolidated Statement of Stockholders Equity for the    
|           |  | Three Months Ended March 31, 2001                         
|          
|           |  | Consolidated Statements of Cash Flows for the Three       
|           |  | Months Ended March 31, 2001 and March 31, 2000            
|          
|           |  | Notes to Consolidated Financial Statements                
|          
|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 6.    |  | Exhibits and Reports on Form 8-K                          
|          
|Signatures |  |                                                           

|Part I.  Financial
Information


Item 1. Consolidated
Financial Statements (Unaudited)



IMPATH INC.
and Subsidiaries



Consolidated Balance
Sheets(unaudited)
|----------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                             | March 31,2001 | December 31,2000
|------------------------------------------------------------ | ------------- | ----------------
|ASSETS                                                       |               |                 
|                                                            
|Current assets:                                              |              
|Cash and cash equivalents                                    |               | $     8,639,035 
|Marketable securities, at market value                       |               | 15,472,125      
|Accounts receivable, net of allowance for doubtful accounts  |               | 57,972,238      
|Prepaid expenses                                             |               | 955,368         
|Deferred tax assets                                          |               | 4,267,831       
|Other current assets                                         |               | 9,970,701       
|                                                            
|Total current assets                                         |               | 97,277,298      
|Fixed assets, less accumulated depreciation and amortization |               | 68,197,776      
|Deposits and other assets                                    |               | 522,801         
|Intangible assets, net of accumulated amortization           |               | 39,517,472      
|                                                            
|Total assets                                                 |               | $ 205,515,347   
|                                                            
|LIABILITIES AND STOCKHOLDERS EQUITY                         |              
|                                                            
|Current liabilities:                                         |              
|Current portion of capital lease obligations                 |               | $   11,301,883  
|Current portion of notes payable                             |               | 283,259         
|Short term  borrowings                                       |               | 3,000,000       
|Accounts payable                                             |               | 4,881,452       
|Deferred revenue                                             |               | 2,253,180       
|Income taxes payable                                         |               | 5,682,077       
|Accrued expenses & other current liabilities                 |               | 3,919,948       
|                                                            
|Total current liabilities                                    |               | 31,321,799      
|                                                            
|Capital lease obligations, net of current portion            |               | 27,238,161      
|Deferred tax liabilities                                     |               | 2,803,271       
|Stockholders equity:                                        |              
|Common stock                                                 |               | 90,858          
|Common stock to be issued                                    |               | 50,000          
|Additional paid-in capital                                   |               | 134,810,235     
|Retained earnings                                            |               | 37,267,351      
|Accumulated other comprehensive (loss)                       |               | (130,542        
|                                                            
|                                                             |               | 172,087,902     
|Less:                                                        |              
|Cost of 2,209,476 and 2,209,476 shares of common stock       |              
|held in treasury in 2001 and 2000, respectively              |               | (26,750,281     
|Deferred compensation                                        |               | (1,185,505      
|                                                            
|Total stockholders equity                                   |               | 144,152,116     
|                                                            
|Total liabilities and stockholders equity                   |               | $ 205,515,347   
|                                                            

|See accompanying notes to
consolidated financial statements.
|------------------------------------------------------------

|IMPATH
INC. and Subsidiaries



Consolidated Statements
of Operations(Unaudited)
|--------------------------------------------------------------------------------

|                                                      | Three Months Ended March 31,
|----------------------------------------------------- | ----------------------------
|
|Revenues:                                             |                             
|Net Physicians Services                               |                             
|IMPATH Predictive Oncology                            |                             
|Information Services                                  |                             
|                                                     
|                                                      |                             
|                                                     
|Operating expenses:                                   |                             
|Salaries and related costs                            |                             
|Selling, general and administrative                   |                             
|Depreciation and amortization                         |                             
|                                                     
|Total operating expenses                              |                             
|                                                     
|Income from operations                                |                             
|Interest income                                       |                             
|Interest expense                                      |                             
|                                                     
|Other Income (expense), net                           |                             
|Income before income tax expense                      |                             
|Income tax expense                                    |                             
|                                                     
|Net income                                            |                             
|                                                     
|Earnings per share:                                   |                             
|Basic:                                                |                             
|Net income per common share                           |                             
|                                                     
|Weighted average common shares outstanding            |                             
|                                                     
|Diluted:                                              |                             
|Net income per common share-assuming                  |                             
|dilution                                              |                             
|                                                     
|Weighted average common and common                    |                             
|equivalent shares outstanding-assuming       dilution |                             
|                                                     

|See accompanying notes to
consolidated financial statements.
|------------------------------------------------------------

|IMPATH INC. and Subsidiaries
Consolidated Statement of Stockholders EquityThree Months Ended March 31, 2001
(Unaudited)
|------------------------------------------------------------------------------------------------------------------------

|                                   | Common Stock | CommonStock to | AdditionalPaid-inCapital | Retained | Accumulated OtherComprehensive | Treasury   | Deferred |             
|---------------------------------- | ------------ | -------------- | ------------------------ | -------- | ------------------------------ | ---------- | -------- | ------------
|
|Balance at     December 31, 2000   |              | 18,000,899     |                          | $90,005  |                                | $ 595,000  |          | $133,633,347
|Common shares issued               |             
|upon exercise of     stock options |              | 130,600        |                          | 653      |                                |            |          | 632,088     
|Issuance of common shares          |              | 40,000         |                          | 200      |                                | (545,000   | )        | 544,800     
|Change in deferred                 |             
|compensation                       |              |                |                          |          |                                |            |          |             
|Comprehensive income:              |             
|Change in unrealized net           |             
|depreciation of securities         |              |                |                          |          |                                |            |          |             
|Net income for the period          |             
|ended March 31, 2001               |              |                |                          |          |                                |            |          |             
|                                  
|Total comprehensive     income     |              |                |                          |          |                                |            |          |             
|                                  
|Balance at March 31, 2001          |              | 18,171,499     |                          | $90,858  |                                | $   50,000 |          | $134,810,235
|                                  

|See accompanying notes to
consolidated financial statements
|-----------------------------------------------------------

|IMPATH INC. and
Subsidiaries



Consolidated Statements
of Cash Flows(Unaudited)
|--------------------------------------------------------------------------------

|                                                              | Three Months Ended March 31,
|------------------------------------------------------------- | ----------------------------
|
|Cash flows from operating activities:                         |                             
|Net income                                                    |                             
|Adjustments to reconcile net income to net cash provided by   |                             
|(used in) operating activities:                               |                             
|Depreciation and amortization                                 |                             
|Provision for uncollectible accounts receivable               |                             
|Non-cash compensation                                         |                             
|Changes in assets and liabilities:                            |                             
|(Increase) in accounts receivable                             |                             
|(Increase) in prepaid expenses and current assets             |                             
|(Increase) in deposits and other assets                       |                             
|Increase (decrease) in accounts payable and accrued expenses  |                             
|Increase in income taxes payable                              |                             
|Increase in deferred revenues                                 |                             
|                                                             
|Total adjustments                                             |                             
|                                                             
|Net cash provided by (used in) operating activities           |                             
|                                                             
|Cash flows from investing activities:                         |                             
|Purchases of marketable securities                            |                             
|Sales/maturities of marketable securities                     |                             
|Purchase of intangible assets                                 |                             
|Capital expenditures                                          |                             
|                                                             
|Net cash (used in) provided by investing activities           |                             
|                                                             
|Cash flows from financing activities:                         |                             
|Issuance of common stock from exercise of shares and warrants |                             
|Repurchase of common stock                                    |                             
|Payments of capital lease obligations                         |                             
|Proceeds from capital leases                                  |                             
|Proceeds from bank loans                                      |                             
|Payments of notes payable                                     |                             
|                                                             
|Net cash (used in) provided by financing activities           |                             
|                                                             
|Net (decrease) in cash and cash equivalents                   |                             
|Cash and cash equivalents at beginning of period              |                             
|                                                             
|Cash and cash equivalents at end of period                    |                             
|                                                             

|See accompanying notes to consolidated
financial statements.
|------------------------------------------------------------

|IMPATH INC.



Notes to Consolidated
Financial Statements(unaudited)


General:


The accompanying unaudited
consolidated financial statements have been prepared by management in accordance
with the rules and regulations of the United States Securities and Exchange
Commission.


In the opinion of IMPATH
Inc. (the Company or IMPATH), the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments necessary for the fair presentation of the
financial information for all periods presented. Results for the interim periods
are not necessarily indicative of the results for an entire year and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto contained in the Companys
Annual Report on Form 10-K for the year ended December 31, 2000.


Net Income Per Share:


Net income per share, basic
is based on the weighted average number of shares of common stock outstanding
and includes shares to be issued from the date the commitment to issue was
consummated. Diluted earnings per share is based on the weighted average number
of shares of common stock, shares to be issued and common equivalent shares
outstanding. Common equivalent shares from stock options and warrants are
included in the computation assuming the related options and warrants had been
exercised to the extent their effect is dilutive.


Comprehensive
Net Income:


Comprehensive net income is
equal to the net income reported adjusted for the unrealized net depreciation of
marketable securities, net of related deferred taxes. Comprehensive net income
for the three months ended March 31, 2001 and 2000 was $4,054,953 and
$2,835,411, respectively.


Investments:


In accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, the
Companys investments (consisting primarily of government and corporate
fixed income securities) were classified as available for sale. As a result, the
unrealized depreciation is recorded as a separate component of
stockholders equity, net of related deferred taxes. At March 31, 2001,
approximately $5,118,374 of securities with original maturities of three months
or less were included as cash equivalents. The remaining securities included in
the investment portfolio with original maturities that exceed three months are
included in current assets.


Accounts
Receivable, Net of Allowance for Doubtful Accounts:


In accordance with
Generally Accepted Accounting Principles (GAAP) and consistent with
healthcare industry practices, IMPATH presents its accounts receivable at net
realizable value. Net accounts receivable balances are comprised of the
following as of March 31, 2001 and December 31, 2000:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | March 31, 2001 | December 31, 2000
|------------------------------- | -------------- | -----------------
|Gross accounts receivable       |                | $ 110,991,249    
|Allowance for doubtful accounts |                | (15,929,235      
|Contractual allowance reserve   |                | (37,089,776      
|                               
|                                |                | $   57,972,238   
|                               

|
|

|Segment
information:


In June 1997, the FASB issued SFAS
No. 131, Disclosures About Segments of An Enterprise and Related Information.SFAS
No. 131 established standards for reporting information about operating segments in
annual financial statements and in interim financial reports issued to stockholders.


(a)  Segment Information


The Company operates in
three reportable business segments: (1) Physician Services, (2) IMPATH
Predictive Oncology (IPO) and (3) Information Services.
Physician Services derives revenue from performing specialized cancer analyses.
IPO provides contract laboratory services and cancer database and
pharmacoeconomic information to pharmaceutical companies. Information Services
derives revenues by licensing its tumor registry software to community hospitals
and state agencies. The Company measures the performance of its operating
segments through Operating Income as defined on the accompanying
consolidated statements of operations.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|($ in Thousands)        | TotalIMPATH Inc. | PhysicianServices | IMPATHPredictive Oncology | InformationServices
|----------------------- | ---------------- | ----------------- | -------------------------- | -------------------
|2001                    |                  |                   |                            |                    
|Revenue                 |                  | 42,136            |                            | 38,004             
|Operating Income (loss) |                  | 7,410             |                            | 7,798              
|Depreciation and        |                 
|Amortization            |                  | 3,420             |                            | 2,889              
|                       

|Intangible
Asset:


The Company has designed
and is developing Genebank as a large
repository of tissues, clinical data, treatment history and outcomes analyses
from cancer patients to facilitate genomic (gene-based) and proteomic
(protein-based) discovery initiatives. The Company anticipates that the Genebank infrastructure
will make it possible to collect tumor specimens and outcomes data on 40,000 to
50,000 patients over the next several years. Genebank has been
classified as an intangible asset and has capitalized costs of $1.4 million as of March 31, 2001. Genebank is being amortized
using the straight line method over its estimated useful life of seven years.


Recently
Issued Accounting Standards:


In June 1998, SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities was issued
and, as amended, is effective for all fiscal years beginning after June 15,
2000. SFAS No. 133 standardizes the accounting for derivative instruments
including certain derivative instruments embedded in other contracts and
requires derivatives to be recognized as assets and liabilities and be recorded
at fair value. The Company is currently not party to any derivative instruments.
Any future transactions involving derivative instruments will be evaluated based
on SFAS No. 133.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Commitments
and Contingencies:


As a provider of
healthcare-related services, the Company is subject to extensive and frequently
changing federal, state and local laws governing licensure, reimbursement,
financial relationships, referrals, conduct of operations and other aspects of
the Companys business. In recent years, the federal government has
expanded its investigative and enforcement activities relating to the billing of
government programs, such as Medicare and Medicaid, by laboratories and other
healthcare providers. In January 2000, the Company was notified that the U.S.
Attorneys Office for the Southern District of New York was investigating
certain of the Companys billing practices. The Company continues to
believe that its billing practices are in compliance with applicable laws and is
cooperating in the investigation.


In addition, from time to time, the
Company is involved in various other legal actions in the normal course of business, some
of which seek monetary damages. While the Company cannot predict with absolute certainty
the outcome of any of the proceedings in which it is involved, the Company believes any
ultimate liability associated with these contingencies would not have a material adverse
effect on the Companys consolidated financial position or results of operations.
(See Managements Discussion and Analysis of Financial Condition
and Results of Operations  Forward Looking Statements).


Stock Split:


On July 24, 2000, the
Companys Board of Directors declared a two-for-one common stock split
effected in the form of a 100% common stock dividend, which was distributed on
August 28, 2000 to each shareholder of record at the close of business on August
16, 2000. Accordingly, all share and per share information in the accompanying
consolidated statement of operations contained in this quarterly report have
been retroactively adjusted to reflect the stock split.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 2.
MANAGEMENTS DISCUSSION AND ANALYSISOF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS


Special Note Regarding
Forward Looking Statements


This
Quarterly Report on Form 10-Q may contain statements that the Company believes are, or
may be considered to be, forward-looking statements within the meaning of various
provisions of the Securities Act of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements generally can be identified by use of statements that include
phrases such as the Company believes, expects, anticipates, intends, plans,
foresees or other similar words or phrases. Similarly, statements that describe the
Companys projected growth and goals and its plans for expansion also are forward-looking
statements. All of these forward-looking statements are subject to certain risks and
uncertainties, many of which are outside of managements control, and which could cause
the Companys actual results to differ materially from those contemplated by the relevant
forward-looking statement. Some of the most significant factors that could cause the
actual results to differ materially from the forward-looking statement, alone or in
combination, would be the failure to continue to successfully integrate the businesses
acquired by the Company, unanticipated disagreements with the Companys joint venture or
other partners, unanticipated changes in the healthcare industry (as a result of cost
containment measures, changes in governmental regulation, including reimbursement
programs and patient confidentiality issues, or other factors), an inability to procure
consented, well-characterized tissue specimens, the adverse effect of any legal
proceedings involving the Company, an unanticipated failure in the commercialization of
the Companys biopharmaceutical products, or an unanticipated loss of business. Readers
are urged to consider these factors carefully in evaluating the forward-looking
statements. The forward-looking statements included in this Quarterly Report on Form 10-Q
are made only as of the date of this Quarterly Report and the Company undertakes no
obligation to publicly update these forward-looking statements to reflect subsequent
events or circumstances.



Three Months Ended
March 31, 2001Compared
with Three Months Ended March 31, 2000


The Companys total revenues
for the three months ended March 31, 2001 and 2000 were $42.1 million and $30.6 million,
respectively, representing an increase of $11.5 million, or 37.6%, in 2001. This growth
was primarily attributable to a 10.7% increase in case volume, resulting from increased
sales and marketing activities, as well as a 25.5% increase in revenue realization per
case due to continuing product mix changes toward lymphoma/leukemia cases, which entail
more analyses, as well as an increase in the number of technologies applied in analyzing
lymphoma/leukemia and breast cancer cases. In addition, IMPATH Predictive Oncology (IPO)
revenues increased 57.9% to $3.0 million this quarter up from $1.9 million in the year
ago quarter as a result of the successful integration of the IPO division and
increases in the numbers of projects with biopharmaceutical and genomics companies.


Salaries
and related costs for the three months ended March 31, 2001 and 2000 were $15.0
million and $12.1 million, respectively, representing an increase of $2.9
million, or 24.0%, in 2001. This increase was the result of increased personnel
due to rapid case volume growth and the shift to more complex cases, and labor
costs associated with the IPO divisions expansion. Salaries and related
costs, as a percentage of total revenues, decreased to 35.6% in 2001 from 39.5%
in 2000. This decrease was facilitated by the Companys successful
expansion strategy resulting in streamlining of operational and administrative
duties combined with a higher revenue realization per case.


Selling,
general and administrative expenses for the three months ended March 31, 2001
and 2000 were $16.4 million and $11.3 million, respectively, representing an
increase of $5.1 million, or 45.1%, in 2001. The largest component of this
increase was $2.7 million of incremental bad debt expense associated with higher
revenues as well as the inherent risk of potential billing and collection delays
incurred in connection with the Companys billing system optimization
efforts. The Company also incurred an additional $1.9 million in incremental
laboratory supplies, courier costs, and temporary services due to rapid case
volume growth and an additional $400,000 in association with the building of the
infrastructure to support increasing demand for its IPO division. Selling,
general and administrative expenses, as a percentage of revenues, increased to
39.0 % in 2001 from 36.9% in 2000, primarily due to the increase in bad debt
expenses.


Depreciation
and amortization expense for the three months ended March 31, 2001 and 2000 was
$3.4 million and $2.4 million, respectively, representing an increase of $1.0
million, or 41.7%, in 2001. This increase was primarily due to $416,000 in
depreciation expense associated with the Companys clinical and billing
systems, and an additional $510,000 in depreciation expense for furniture, office
equipment and leasehold improvements in connection with the expansion of our
East and West Coast facilities. As a percentage of total revenues, depreciation
and amortization expense increased to 8.1% in 2001 from 7.8% in 2000.


Income
from operations for the three months ended March 31, 2001 and 2000 was $7.4
million and $4.8 million, respectively, representing an increase of $2.6
million, or 54.2%, in 2001. The 2001 figure reflects an increase in operating
margins associated with the Companys core physician services business. As
a percentage of total revenues, income from operations increased to 17.6% in
2001 from 15.7% in 2000, primarily due to the increase in revenue realization
per case in combination with the Companys streamlining efforts referred to
above.


Other
income (expense), net for the three months ended March 31, 2001 and 2000 was
$(336,000) and $93,000, respectively, representing a decrease of $429,000 in
2001. The decrease was primarily due to increased interest expense associated
with additional capital lease obligations, in conjunction with a reduction in
the amount of interest bearing securities on hand.


The
tax provision for the three months ended March 31, 2001 of approximately $3.0
million reflects federal, state and local income tax expense. The effective tax
rate for 2001 and 2000 remained consistent at 43.0%.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net
income for the three months ended March 31, 2001 and 2000 was $4.0 million and
$2.8 million, respectively, representing an increase of $1.2 million, or 42.9%,
in 2001. As a percentage of total revenues, net income increased to 9.5% in 2001
from 9.2% in 2000.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Liquidity and
Capital Resources


Since
inception, the Company has raised approximately $103.9 million of capital through the
public offerings of its common stock and $6.6 million from private placements of
preferred stock, all of which was converted into common stock at the closing of the
Companys initial public offering in February 1996. The Companys working
capital and capital expenditure needs have increased and are expected to continue to
increase as the Company expands its existing facilities and pursues its growth
strategy.


The
Companys cash and cash equivalent balances at March 31, 2001 and December 31, 2000
were $8.6 million and $13.5 million, respectively, representing a decrease of $4.9
million in 2001. The Company also had approximately $15.5 million in marketable
securities at March 31, 2001, representing a $2.5 million decrease from the $18.0 million
at December 31, 2000. The net decrease in cash and cash equivalents and marketable
securities in the first quarter was primarily due to $6.3 million in capital expenditures
and capital lease payments, $2.3 million in payments of acquisition related notes and a
$1.4 million investment in GeneBank intangible assets. The decrease was offset by cash
provided by operations of $1.9 million, for the three months ended March 31, 2001. This
was driven by earnings before interest, taxes, depreciation, and amortization (EBITDA)
of approximately $10.8 million, partially offset by increases in accounts receivable, net
of allowance for bad debt of $7.2 million. The increase in net accounts receivable was
due primarily to rapid sales growth. The continuing product mix shift towards
lymphoma/leukemia cases, which carry a higher revenue realization per case, also
contributed to the increase.


During
2001, the Company incurred approximately $3.0 million in capital expenditures
associated with the expansion of its laboratory and office facilities. The
Company received $600,000 from the issuance of common stock upon the exercise of
Company stock options and warrants.


The
Company has a line of credit for an aggregate principal amount of $15.0 million
with Fleet Bank. Borrowing under the line bears interest at LIBOR plus 2.0%. As
of March 31, 2001, the Company had $3.0 million outstanding under this line. The
Company has lines of credit for financing equipment, leasehold improvements and
computer hardware and software. In July 1999, the Company established a $6.0
million credit line with Newcourt Financial (currently CIT Group)
with lease terms that are based on 48 monthly payments at a rate equal to .35%
above yield on four-year treasury notes. As of March 31, 2001, the Company had
fully drawn against this line. In September 1999, the Company established a $6.0
million credit line with Fleet Bank with lease terms based on 48 monthly
payments at a rate equal to .20% above the yield on four-year treasury notes. As
of March 31, 2001, approximately $1.0 million was drawn against this line. In
December 1999, the Company established a $6.2 million credit line with First
American Bankcorp, Inc. with lease terms of 48 months and a rate equal to the
yield on four-year treasury notes. The line of credit was subsequently increased
to $21.2 million in March 2001, under the same lease terms. As of March 31,
2001, approximately $16.0 million was drawn against this line. In April 2000,
the Company established an $875,000 credit line with Dynamics Commercial Funding
Corp. with lease terms of 36 months and a rate equal to the yield on three-year
treasury notes. As of March 31, 2001, the Company had fully drawn against this
line. In June 2000, the Company established an additional $4.0 million credit
line with Dynamics Commercial Funding Corp. with lease terms of 48 months and a
rate equal to the yield on four-year treasury notes. As of March 31, 2001, the
Company had fully drawn against this line. In November 2000, the Company
established an additional $2.0 million credit line with Dynamics Commercial
Funding Corp. with lease terms of 48 months and a rate equal to the yield on
four-year treasury notes. As of March 31, 2001, approximately $1.4 million was
drawn against this line. In April 2000, the Company established a $3.0 million
credit line with First Sierra Financial, Inc. (currently Popular
Bank) with lease terms of 48 months and a rate equal to the yield on
four-year treasury notes. As of March 31, 2001, the Company had fully drawn
against this line. In September 2000, the Company established an additional $6.0
million credit line with First Sierra Financial, Inc (currently Popular
Bank) with the lease terms of 48 months and a rate equal to the yield on
four-year treasury notes. As of March 31, 2001, approximately $3.4 million was
drawn against this line. In July 2000, the Company established a $5.0 million
credit line with Advanced Capital Resources Corp. with lease terms of 48 months
and a rate equal to the yield on four-year treasury notes. As of March 31, 2001,
approximately $2.4 was drawn against this line. In November 2000, the Company
established a $3.0 million credit line with Trimarc Financial Corp. with lease
terms of 48 months and a rate equal to the yield on four-year treasury notes. As
of March 31, 2001, the Company had fully drawn against this line. In January
2001, the Company established a $2 million credit line with IFC Credit Corp.
with lease terms of 48 months and a rate equal to the yield on four-year
treasury notes. As of March 31, 2001, approximately $525,000 was drawn against
this line.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The Companys growth
strategy is anticipated to be financed through its current cash resources and
existing third-party credit facilities. The Company believes the combination of
these sources will be sufficient to fund its operations and satisfy the
Companys cash requirements for the next 12 months and the foreseeable
future. There may be circumstances, however, that would accelerate the
Companys use of cash resources. If this occurs, the Company may, from time
to time, incur additional indebtedness or issue, in public or private
transactions, equity or debt securities. However, there can be no assurance that
suitable debt or equity financing will be available to the Company. See Forward-Looking Statements.


Impact of
Inflation and Changing Prices


The impact of inflation and
changing prices on the Company has been primarily limited to salary, laboratory
and operating supplies and rent increases and has not been material to date to
the Companys operations. In the future, the Companys revenue
realization per case may not be sufficient to cover the cost of inflation,
although the Company is responding to these concerns by attempting to increase
the volume and adjust the product mix of its business.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|ITEM 3.  QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The following discussion
about our exposure to market risk of financial instruments contains
forward-looking statements. Actual results may differ materially from those
described. (See Managements Discussion and Analysis of Financial Condition
and Results of Operations  Forward Looking Statements).


The Companys holdings
of financial instruments are comprised of U.S. corporate debt, U.S. government
debt and commercial paper. All such instruments are classified as securities
available for sale. The Company does not invest in portfolio equity securities
or commodities or use financial derivatives for trading purposes. The
Companys debt security portfolio represents funds held temporarily pending
use in our business and operations. The Company manages these funds accordingly.
The Company seeks reasonable assurance of the safety of principal and market
liquidity by investing in investment grade fixed income securities while at the same time
seeking to achieve a favorable rate of return. The Companys market risk
exposure consists principally of exposure to changes in interest rates. The
Companys holdings are also exposed to the risks of changes in the credit
quality of issuers. The Company typically invests in the shorter-end of the
maturity spectrum, and at March 31, 2001, more than 70% of the Companys
holdings were in instruments maturing in two years or less and more than 43% of
such holdings matured in one year or less.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II. Other Information



ITEM 6.  Exhibits and Reports
on Form 8-K
|-----------------------------------------------------------------------

|(a) |  | Exhibits:
|--- |  | ---------

| | The
exhibits required to be filed as part of this Quarterly Report on Form 10-Q are listed in
the attached Index to Exhibits.
| | -----------------------------------------------------------------------------------------------------------------------------

|(b) |  | Reports
on Form 8-K:
|--- |  | --------------------

| | There were
no reports on Form 8-K filed during the quarter ended March 31, 2001.
| | --------------------------------------------------------------------------------

|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.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Dated: May 15, 2001 |  | IMPATH INC.

(Registrant)
|------------------- |  | ---------------------------------------

|Dated: May 15, 2001 |  | By: / s / ANU D. SAAD
Anu D. Saad, Ph.D.Chief Executive Officer
|------------------- |  | -----------------------------------------------------------------------------

|Dated: May 15, 2001 |  | / s / DAVID J. CAMMARATA
David J. CammarataChief Financial Officer andPrincipal Accounting Officer
|------------------- |  | ----------------------------------------------------------------------------------------------------------------

|(INDEX TO EXHIBITS)
|-------------------

|ExhibitNumber | Description | Page                                                                                
|------------- | ----------- | ------------------------------------------------------------------------------------
|10.22         |             | Letter Agreement dated January 9, 2001 between Richard C. Rosenzweig and IMPATH Inc.
|             
|10.23         |             | Letter Agreement dated October 1, 1999 between James B. Douglass and IMPATH Inc.