|FORM 10-QSECURITIES 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 June 30, 2002


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
0-27750


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

|Delaware                                                                  | 8071                                                                | 13-3459685                                     
|------------------------------------------------------------------------- | ------------------------------------------------------------------- | -----------------------------------------------
|(State
      or other jurisdiction ofincorporation
      or organization) | (Primary
      Standard IndustrialClassification
      Code Number) | (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 or15(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 JUNE 30, 2002
|-------------------------------------------- | ----------------------------------
|                                             |                                   
|Common
      Stock, par value$.005 per share | 16,329,478                        

|
|

|Index


IMPATH Inc. and
Subsidiaries
|------------------------------------

|                                                                                                                               | Page
      Number
|------------------------------------------------------------------------------------------------------------------------------ | -----------------
|                                                                                                                               |                  
|                                                                                                                               |                  
|PART
      I. Financial Information                                                                                            |                  
|                                                                                                                               |                  
|Item
      1. Consolidated Financial Statements (Unaudited):                                                                   |                  
|                                                                                                                               |                  
|Consolidated
      Balance Sheets at June 30, 2002
                   and
      December 31, 2001                              | 3                
|                                                                                                                               |                  
|Consolidated
      Statements of Operations for the Three and Six
                   Months
      Ended June 30, 2002 and 2001 | 4                
|                                                                                                                               |                  
|Consolidated
      Statement of Stockholders Equity for the
                   Six
      Months Ended June 30, 2002           | 5                
|                                                                                                                               |                  
|Consolidated
      Statements of Cash Flows for the Six
                   Months
      Ended June 30, 2002 and 2001           | 6                
|                                                                                                                               |                  
|Notes
      to Consolidated Financial Statements                                                                               | 7                
|                                                                                                                               |                  
|Item
      2. Managements Discussion and Analysis
                   of
      Financial Condition and Results of Operations   | 12               
|                                                                                                                               |                  
|Item
      3. Quantitative and Qualitative Disclosures about Market Risk                                                       | 18               
|                                                                                                                               |                  
|PART
      II. Other Information                                                                                               |                  
|                                                                                                                               |                  
|Item
      6. Exhibits and Reports on Form 8-K                                                                                 | 19               
|                                                                                                                               |                  
|Signatures and Certification                                                                                                   | 20               

|2
|-

|Part I.
Financial Information


Item 1.
Consolidated Financial Statements (Unaudited)


IMPATH Inc.
and Subsidiaries


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

|                                                                                                                   | June
      30,
      2002 |             | December
      31,
      2001 |  
|------------------------------------------------------------------------------------------------------------------ | ------------------------- | ----------- | ----------------------------- | -
|ASSETS                                                                                                             |                           |             |                               |  
|Current
      assets:                                                                                              |                           |             |                               |  
|Cash
      and cash equivalents                                                                                    | $                         | 8,285,364   |                               | $
|Marketable
      securities, at market value                                                                       |                           | 10,832,066  |                               |  
|Accounts
      receivable, net of allowance for doubtful accounts                                                  |                           | 71,942,919  |                               |  
|Prepaid
      expenses                                                                                             |                           | 1,621,801   |                               |  
|Deferred
      tax assets                                                                                          |                           | 5,227,139   |                               |  
|Other
      current assets                                                                                         |                           | 18,621,796  |                               |  
|                                                                                                                   |                           |             |                               |  
|Total
      current assets                                                                                         |                           | 116,531,085 |                               |  
|                                                                                                                   |                           |             |                               |  
|Fixed
      assets, less accumulated depreciation and amortization                                                 |                           | 85,682,275  |                               |  
|                                                                                                                   |                           |             |                               |  
|Deposits
      and other non-current assets                                                                        |                           | 610,485     |                               |  
|Intangible
      assets, net of accumulated amortization                                                           |                           | 33,816,122  |                               |  
|Goodwill                                                                                                           |                           | 48,678,698  |                               |  
|                                                                                                                   |                           |             |                               |  
|Total
      Assets                                                                                                 | $                         | 285,318,665 |                               | $
|                                                                                                                   |                           |             |                               |  
|                                                                                                                   |                           |             |                               |  
|LIABILITIES
      AND STOCKHOLDERS EQUITY                                                                         |                           |             |                               |  
|                                                                                                                   |                           |             |                               |  
|Current
      liabilities:
          Current portion of capital lease obligations                                  | $                         | 15,018,013  |                               | $
|Current
      portion of note payable                                                                              |                           | 5,113,455   |                               |  
|Accounts
      payable                                                                                             |                           | 5,219,001   |                               |  
|Deferred
      revenue                                                                                             |                           | 4,080,960   |                               |  
|Income
      taxes payable                                                                                         |                           | 6,546,628   |                               |  
|Accrued
      expenses & other current liabilities                                                                 |                           | 5,880,251   |                               |  
|                                                                                                                   |                           |             |                               |  
|Total
      current liabilities                                                                                    |                           | 41,858,308  |                               |  
|                                                                                                                   |                           |             |                               |  
|Capital
      lease obligations, net of current portion                                                            |                           | 21,956,258  |                               |  
|Long
      term note payable, net of current portion                                                               |                           | 50,150,000  |                               |  
|Deferred
      tax liabilities                                                                                     |                           | 7,844,249   |                               |  
|                                                                                                                   |                           |             |                               |  
|Stockholders
      equity:                                                                                        |                           |             |                               |  
|Common
      stock                                                                                                 |                           | 92,845      |                               |  
|Additional
      paid-in capital                                                                                   |                           | 140,446,971 |                               |  
|Retained
      earnings                                                                                            |                           | 50,624,595  |                               |  
|Accumulated
      other comprehensive (loss)                                                                       |                           | (147,061    | )                             |  
|                                                                                                                   |                           |             |                               |  
|                                                                                                                   |                           | 191,017,350 |                               |  
|                                                                                                                   |                           |             |                               |  
|Less:                                                                                                              |                           |             |                               |  
|Cost
      of 2,239,476 and 2,209,476 shares of common stock
              held in treasury in 2002
      and 2001 |                           | (27,402,470 | )                             |  
|Deferred
      compensation                                                                                        |                           | (105,030    | )                             |  
|                                                                                                                   |                           |             |                               |  
|Total
      stockholders equity                                                                                   |                           | 163,509,850 |                               |  
|                                                                                                                   |                           |             |                               |  
|Total
      liabilities and stockholders equity                                                                   | $                         | 285,318,665 |                               | $
|                                                                                                                   |                           |             |                               |  

|See accompanying notes to
unaudited consolidated financial statements.


3
|--------------------------------------------------------------------------

|IMPATH Inc. and
Subsidiaries


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

|                                                                                                                         | Three
      Months Ended
      June 30 |            | Six
      Months Ended
      June 30 |  
|------------------------------------------------------------------------------------------------------------------------ | -------------------------------------- | ---------- | ------------------------------------ | -
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         | 2002                                   |            | 2001                                 |  
|                                                                                                                         |                                        |            |                                      |  
|Revenues:                                                                                                                |                                        |            |                                      |  
|Net
      Physicians Services                                                                                            | $                                      | 47,080,458 |                                      | $
|IMPATH
      Predictive Oncology                                                                                         |                                        | 5,625,691  |                                      |  
|Information
      Services                                                                                               |                                        | 3,907,070  |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        | 56,613,219 |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Cost
      of services                                                                                                   |                                        | 16,544,000 |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Gross
      Profit                                                                                                       |                                        | 40,069,219 |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Operating
      expenses:                                                                                                |                                        |            |                                      |  
|Selling,
      general and administrative                                                                                |                                        | 25,344,115 |                                      |  
|Depreciation
      and amortization                                                                                      |                                        | 5,198,001  |                                      |  
|Acquired
      in process research & development                                                                         |                                        |           |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Total
      operating expenses                                                                                           |                                        | 30,542,116 |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Income
      from operations                                                                                             |                                        | 9,527,103  |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Other
      Income                                                                                                       |                                        | 176,783    |                                      |  
|Other
      Expense                                                                                                      |                                        | (1,020,762 | )                                    |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Other
      expense, net                                                                                                 |                                        | (843,979   | )                                    |  
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Income
      before income tax expense                                                                                   |                                        | 8,683,124  |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Income
      tax expense                                                                                                 |                                        | (3,733,740 | )                                    |  
|                                                                                                                         |                                        |            |                                      |  
|Net
      income                                                                                                         | $                                      | 4,949,384  |                                      | $
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Earnings
      per share:                                                                                                |                                        |            |                                      |  
|Basic:                                                                                                                   |                                        |            |                                      |  
|Net
      income per common share                                                                                        | $                                      | 0.30       |                                      | $
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Weighted
      average common shares outstanding                                                                         |                                        | 16,278,000 |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Diluted:                                                                                                                 |                                        |            |                                      |  
|Net
      income per common share, assuming      dilution                                                                | $                                      | 0.30       |                                      | $
|                                                                                                                         |                                        |            |                                      |  
|                                                                                                                         |                                        |            |                                      |  
|Weighted
        average common and common
               equivalent shares outstanding,
        assuming       dilution |                                        | 16,750,000 |                                      |  
|                                                                                                                         |                                        |            |                                      |  

|See accompanying notes to
unaudited consolidated financial statements.


4
|--------------------------------------------------------------------------

|IMPATH Inc. and
SubsidiariesConsolidated Statement of Stockholders EquitySix Months Ended June 30,
2002(Unaudited)
|-------------------------------------------------------------------------------------------------------------------

|                                                                                          | Common
      Stock |  | Additional
      Paid-in 
      Capital |        | Retained
      Earnings |   | Accumulated
      Other
      Comprehensive 
      (Loss) |  | Treasury
      Stock |            | Deferred 
      Compensation |           | Total |             
|----------------------------------------------------------------------------------------- | ------------------ |  | --------------------------------------- | ------ | ----------------------- | - | --------------------------------------------------------- |  | -------------------- | ---------- | ---------------------------- | --------- | ----- | ------------
|                                                                                         
|Shares                                                                                    |                    |  | Amount                                 
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Balance
      at December
           31, 2001                                             | 18,406,579         |  | $                                       | 92,033 |                         | $ | 138,259,994                                               |  | $                    | 44,226,341 |                              | ($10,776  | )     | ($26,750,281
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Common
      share
           issued upon
           exercise of stock
           options | 162,375            |  |                                         | 812    |                         |   | 2,186,977                                                 |  |                      |            |                              |           |       |             
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Repurchase
      of
           common shares                                              |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       | (652,189    
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Change
      in deferred
          compensation                                           |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Comprehensive
           income:                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Change
      in unrealized
           net depreciation of
           securities           |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              | (136,285  | )     |             
|Net income for the
             periodEnded
             June 30, 2002                    |                    |  |                                         |        |                         |   |                                                           |  |                      | 6,398,254  |                              |           |       |             
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Total
      comprehensive
            income                                              |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|                                                                                          |                    |  |                                         |        |                         |   |                                                           |  |                      |            |                              |           |       |             
|Balance
      at June 30,
           2002                                                 | 18,568,954         |  | $                                       | 92,845 |                         | $ | 140,446,971                                               |  | $                    | 50,624,595 |                              | ($147,061 | )     | ($27,402,470

|See accompanying notes to unaudited
consolidated financial statements


5
|-------------------------------------------------------------------------

|IMPATH Inc.
and Subsidiaries


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

|                                                                        | Six
      Months Ended June 30, |            
|----------------------------------------------------------------------- | ------------------------------- | -----------
|                                                                        |                                 |            
|                                                                        | 2002                            |            
|                                                                        |                                 |            
|                                                                        |                                 |            
|Cash
      flows from operating activities:                             |                                 |            
|Net
      income                                                        | $                               | 6,398,254  
|Adjustments
      to reconcile net income to net cash provided by       |                                 |            
|operating
      activities:                                             |                                 |            
|Acquired
      in process research & development                        |                                 | 900,000    
|Depreciation
      and amortization                                     |                                 | 13,122,982 
|Provision
      for uncollectible accounts receivable                   |                                 | 21,032,477 
|Non-cash
      deferred compensation                                    |                                 | 43,481     
|Changes
      in assets and liabilities (net of effect from acquisition |                                 |            
|of
      business):                                                     |                                 |            
|(Increase)
      in accounts receivable                                 |                                 | (28,430,767
|(Increase)
      in prepaid expenses and current assets                 |                                 | (3,945,785 
|Decrease/(increase)
      in deposits and other assets                  |                                 | 123,774    
|Increase
      in accounts payable and accrued expenses                 |                                 | 118,909    
|Increase
      in income taxes payable                                  |                                 | 420,000    
|(Decrease)/increase
      in deferred revenues                          |                                 | (1,380,532 
|                                                                        |                                 |            
|Total
      adjustments                                                 |                                 | 2,004,539  
|                                                                        |                                 |            
|Net cash
      provided by operating activities                         |                                 | 8,402,793  
|                                                                        |                                 |            
|Cash
      flows from investing activities:                             |                                 |            
|Purchases
      of marketable securities                                |                                 | (6,594,995 
|Sales/maturities
      of marketable securities                         |                                 | 12,135,907 
|Acquisition
      of business, net of cash acquired                     |                                 | (28,623,718
|Purchase
      of intangible assets                                     |                                 | (6,009,186 
|Capital
      expenditures                                              |                                 | (4,169,497 
|                                                                        |                                 |            
|                                                                        |                                 |            
|Net cash
      (used in) investing activities                           |                                 | (33,261,489
|                                                                        |                                 |            
|Cash
      flows from financing activities:                             |                                 |            
|Issuance
      of common stock from exercise of options and warrants    |                                 | 2,187,789  
|Repurchase
      of common stock                                        |                                 | (652,189   
|Payments
      of capital lease obligations                             |                                 | (7,622,323 
|Proceeds
      from bank loans                                          |                                 | 33,600,000 
|Payments
      of notes payable                                         |                                 | (223,845   
|                                                                        |                                 |            
|Net cash
      provided by/(used in) financing activities               |                                 | 27,289,432 
|                                                                        |                                 |            
|Net increase/(decrease)
      in cash and cash equivalents              |                                 | 2,430,736  
|Cash
      and cash equivalents at beginning of period                  |                                 | 5,854,628  
|                                                                        |                                 |            
|Cash
      and cash equivalents at end of period                        | $                               | 8,285,364  
|                                                                        |                                 |            

|See accompanying notes to
unaudited consolidated financial statements.


6
|--------------------------------------------------------------------------

|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), 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 accounting principles generally
accepted in the United States of America for complete annual 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, 2001.


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 exercisable 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 June 30, 2002 and 2001 was $4,989,031 and $4,023,344,
respectively. Comprehensive net income for the six months ended June 30, 2002
and 2001 was $6,261,969 and $8,078,297, 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 gain or loss is recorded as a separate component of
stockholders equity, net of related deferred taxes. At June 30, 2002,
approximately $1,167,893 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 marketable securities.


Accounts
Receivable, Net of Allowance for Doubtful Accounts


In accordance with
accounting principles generally accepted in the United States of America
(GAAP) and consistent with healthcare industry practices, the
Company presents its accounts receivable at net realizable value. Net accounts
receivable balances are comprised of the following as of June 30, 2002 and
December 31, 2001:
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                      | June
      30, 2002 |             | December
      31, 2001 |  
|------------------------------------- | ------------------- | ----------- | ----------------------- | -
|                                      |                     |             |                         |  
|                                      |                     |             |                         |  
|Gross
      accounts receivable       | $                   | 149,717,506 |                         | $
|Allowance
      for doubtful accounts |                     | (20,939,832 | )                       |  
|Contractual
      allowance reserve   |                     | (56,834,755 | )                       |  
|                                      |                     |             |                         |  
|                                      | $                   | 71,942,919  |                         | $
|                                      |                     |             |                         |  

|7
|-

|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 (i) contract laboratory services, (ii) cancer database and
pharmacoeconomic information and (iii) clinical trial support services to
genomics, biotechnology and pharmaceutical companies. Information Services
derives revenues by licensing its tumor registry software to community hospitals
and state agencies. Beginning with the acquisition of Tamtron Corporation
(Tamtron) in January 2002, Information Services also provides pathology
information management software, which is licensed to hospitals and academic
medical centers around the country. The Company measures the performance of its
operating segments through Income (loss) from operations as defined
on the accompanying consolidated statements of operations.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Six Months Ended
      ($ in Thousands) | Total 
      IMPATH Inc. |         | Physician
      Services |   | IMPATH
      
      Predictive Oncology |  | Information
      Services |       
|--------------------------------------- | ------------------------ | ------- | ------------------------ | - | --------------------------------------- |  | -------------------------- | ------
|                                       
|2002                                    |                          |         |                          |   |                                         |  |                            |       
|Revenue,
      net                      | $                        | 109,194 |                          | $ | 91,416                                  |  | $                          | 11,596
|Income
      (loss) from operations     | $                        | 12,758  |                          | $ | 14,011                                  |  | $                          | 2,411 
|Depreciation
      and                  |                          |         |                          |   |                                         |  |                            |       
|Amortization                            | $                        | 13,123  |                          | $ | 10,689                                  |  | $                          | 1,741 
|                                       
|2001                                    |                          |         |                          |   |                                         |  |                            |       
|Revenue,
      net                      | $                        | 89,210  |                          | $ | 80,425                                  |  | $                          | 6,490 
|Income
      (loss) from operations     | $                        | 15,386  |                          | $ | 16,105                                  |  | $                          | 206   
|Depreciation
      and                  |                          |         |                          |   |                                         |  |                            |       
|Amortization                            | $                        | 7,244   |                          | $ | 6,046                                   |  | $                          | 632   
|                                       

|Intangible Asset


Payments to acquire tissue and tumor
samples for use in GeneBank has been classified as an intangible asset with total
purchases of $6,009,186 for the six months ended June 30, 2002. GeneBank payments are
being amortized using the straight-line method over its estimated useful life of seven
years.


Recently Issued
Accounting Standards


In July 2001, the FASB issued SFAS
No. 141, Business Combinations (SFAS 141"), which requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting, and SFAS No. 142, Goodwill and Other Intangible Assets (SFAS 142"), which
broadens the criteria for recording intangible assets separate from goodwill. SFAS 142
requires the use of a nonamortization approach to account for purchased goodwill and
certain intangibles. Under the nonamortization approach, goodwill and intangibles with
indefinite lives will not be amortized into results of operations, but instead will be
reviewed for impairment at least annually and an impairment charge will be recorded in
the periods in which the recorded carrying value of goodwill and certain intangibles is
more than its estimated fair value. Goodwill acquired in a business combination for which
the acquisition date is after June 30, 2001 will not be amortized. The Company has
adopted the provisions of SFAS 142, related to goodwill acquired prior to June 30, 2001
and intangible assets, on January 1, 2002. The Company has reclassified to goodwill
approximately $100,000 which was previously assigned to the workforce. The Company had
approximately $25,454,000 of unamortized goodwill as of January 1, 2002 which was subject
to the transition provisions of SFAS 142. The Company completed its transitional goodwill
impairment assessment in the second quarter of fiscal year 2002. The assessment indicated
that there was no goodwill impairment. The Company will perform its annual impairment
test in the fourth quarter of each fiscal year, upon completion and approval of the
Companys financial operating plan.


8
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The Companys pro forma basic
and diluted earnings per share for the six months ended June 30, 2001 as if the Company
adopted Statement 142 at the beginning of fiscal 2001 would have been $0.28 and $0.27 per
share respectively versus $0.27 and $0.26 per share respectively as reported,
had amortization expense of $342,000, net of tax, not been reported during the six month
period. The aggregate acquired intangible asset amortization for the three and six month
periods ended June 30, 2002 was approximately $650,000 and $700,000, respectively. The
estimated acquired intangible asset amortization expense for the fiscal years ended
December 31, 2002 through 2005 is approximately $2.7 million per year. Goodwill by segment
for the period ended December 31, 2001 for Physician Services, IPO and Information
Services was approximately $4.2 million, $10.8 million and $10.5 million, respectively.
Goodwill by segment for the period ended June 30, 2002 for Physician Services, IPO and
Information Services was approximately $1 million, $13.6 million and $34.0 million,
respectively.


The following disclosure presents
certain information on the Companys acquired intangible assets as of June 30, 2002, and
December 31, 2001. All intangible assets are amortized over their estimated useful lives,
as indicated below, with no residual values.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Acquired
      Intangible Assets
      (In $ Thousands) |  | Weighted-
      
      Average 
      Amortization
      Period |  | Gross 
      Carrying
      Amount |  | Accumulated
      
      Amortization |   | Net Balance
|------------------------------------------------------- |  | --------------------------------------------------------------- |  | ---------------------------------- |  | ------------------------------------- | - | -----------
|                                                       
|                                                        |  |                                                                 |  |                                    |  |                                       |   |            
|At June
      30, 2002                                  |  |                                                                 |  |                                    |  |                                       |   |            
|Amortized
      acquired intangible assets:             |  |                                                                 |  |                                    |  |                                       |   |            
|Technology                                              |  | 5 years                                                         |  | 4,600                              |  | (425                                  | ) | 4,175      
|Customer
      Lists                                    |  | 15 years                                                        |  | 24,839                             |  | (5,427                                | ) | 19,412     
|                                                        |  |                                                                 |  |                                   
|                                                        |  |                                                                 |  | 29,439                             |  | (5,852                                | ) | 23,587     
|                                                        |  |                                                                 |  |                                   
|                                                        |  |                                                                 |  |                                    |  |                                       |   |            
|At December
      31, 2001                              |  |                                                                 |  |                                    |  |                                       |   |            
|Amortized
      acquired intangible assets:             |  |                                                                 |  |                                    |  |                                       |   |            
|Customer
      Lists                                    |  | 15 years                                                        |  | 17,749                             |  | (4,372                                | ) | 13,377     
|                                                        |  |                                                                 |  |                                   
|                                                        |  |                                                                 |  | 17,749                             |  | (4,372                                | ) | 13,377     
|                                                        |  |                                                                 |  |                                   

|In April 2002, the FASB
issued SFAS No. 145, Rescission of FASB No. 4, 44 and 64, Amendment of
FASB Statement No. 13, and Technical Corrections (SFAS 145). SFAS 145
updates, clarifies and simplifies existing accounting pronouncements. SFAS 145
rescinds Statement No.4, which required all gains and losses from extinguishment
of debt to be aggregated and, if material, classified as an extraordinary item,
net of related income tax effect. As a result, the criteria in APB No. 30 will
now be used to classify those gains and losses because Statement No. 4 has been
rescinded. Statement No. 44 was issued to establish accounting requirements for
the effects of transition to provisions of the Motor Carrier Act of 1980.
Because the transition has been completed, Statement No. 44 is no longer
necessary. SFAS 145 amends Statement No. 13 to require that certain lease
modifications that have economic effects similar to sale-leaseback transactions
be accounted for in the same manner as sale-leaseback transactions. This
amendment is consistent with FASBs goal of requiring similar accounting
treatment for transactions that have similar economic effects. SFAS 145 also
makes technical corrections to existing pronouncements. While those corrections
are not substantive in nature, in some instances, they may change accounting
practice. We are required to adopt SFAS 145, effective for fiscal 2003. We do
not expect the adoption of SFAS 145 to have a material impact on our
consolidated financial statements.


9
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Recent
Acquisition


On January 18, 2002, the
Company completed its acquisition of Tamtron for $25,930,241 million in cash,
plus debt repayment of $651,492, as well as acquisition expenses of $2,622,326,
for a total purchase price of $29,204,059. Tamtron is a San Jose, California,
based company whose flagship PowerPath software is designed
specifically to assist companies who provide surgical pathology, cytology and
autopsy services (e.g. anatomic pathology) in streamlining operations and
supporting multi-site or multi-entity healthcare networks. The source of funds
for the acquisition was a combination of the Companys available cash, as
well as advances totaling $25 million under its amended credit facility. In
connection with the Tamtron acquisition, on January 18, 2002, the Company
amended its original credit facility and converted its $25 million 364-day
facility to a $28 million term loan. The term loan is to be repaid over a
five-year period, with interest only payable for the first twelve months.
Thereafter, the loan is payable in seventeen payments of principal plus
interest, with principal payments of $4.9 million due in 2003, 2004, 2005 and
2006 and a final principal payment of $8.4 million due in 2007. Both the
revolving credit line and the term loan currently bear interest at LIBOR plus 1.25%, which
amounted to 3.5% at June 30, 2002.


The acquisition has been
accounted for under the purchase method, in accordance with SFAS 141, pursuant
to which the purchase price is allocated to the underlying assets and
liabilities based on their estimated fair values. The resulting goodwill from
this transaction of $23.5 million will not be amortized, and intangibles of
$11.0 million will be amortized over periods ranging from five to fifteen years.
The following table reflects the allocation of the purchase price.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Cash                                                            | $ | 580,341    |  
| | --------------------------------------------------------------- | - | ---------- | -
| | Prepaid
      expenses and other current assets                 |   | 151,406    |  
| | Accounts
      receivables, net of allowance                    |   | 907,284    |  
| | Property
      and equipment, net of accumulated depreciation   |   | 555,244    |  
| | Intangible
      assets  customer lists and acquired software  |   | 11,000,000 |  
| | Goodwill                                                        |   | 23,546,178 |  
| | Acquired
      in process research & development                |   | 900,000    |  
| | Current
      and other liabilities, including deferred revenue |   | (4,036,394 | )
| | Deferred
      tax, liability                                   |   | (4,400,000 | )
| |                                                                 |   |           
| |                                                                 | $ | 29,204,059 |  
| |                                                                 |   |           

|Tamtron has annualized
revenue of approximately $10 million, which is generated primarily through
software sales and maintenance contracts. Tamtrons current customer base
includes more than 350 sites, including hospitals and academic medical centers
around the country, which process over 5 million cases per year.


Pro forma historical
results (unaudited) for the six months ended June 30, 2001, adjusted, as if
Tamtron had been acquired on January 1, 2001, approximate $91.2 million in
revenue, $8.5 million in net income, and $0.51 in diluted earnings per share.
The pro forma results are not necessarily indicative of what actually would have
occurred if the acquisition had been completed as of January 1, 2001, nor are
they necessarily indicative of future results.


Software
Development Cost


Once technological feasibility has been established, the Company capitalizes software development costs
incurred related to software developed for resale until the product is released for
commercial use. Similarly, costs incurred to develop upgrades are capitalized
until the upgrades are commercially released. Before technological feasibility
has been established, the Company expenses all costs incurred for the product.


10
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Commitments
and Contingencies


From time to time, the
Company is involved in various 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.


Certain executive officers of the
Company have entered into agreements which provide severance of up to one years
salary in the event of termination without cause. On August 7, 2002, certain executive
officers of the Company entered into agreements which provide for certain payment to the
executive, including three years of salary and bonus upon the consummation of a change
of control. Please see exhibits 10.31 and 10.32


Discontinuance of
Biologic & Immunologic Science Laboratories, Inc.


During the course of the
Companys strategic review for the quarter ended March 31, 2002, it was
determined that the Company would no longer offer certain products based on
technology which was purchased from Biologic & Immunologic Science
Laboratories, Inc. (BIS), an acquisition that was completed in July
1998. As a result, the Company recorded a goodwill write-down of $3,200,000,
which eliminated all remaining goodwill from the BIS acquisition. The goodwill
impairment was necessitated by the Companys decision to completely
discontinue the BIS product offering. Additionally, the Company recorded a
one-time charge of $1,900,000 to account for severance and related costs, as
well as an increase in allowances for bad-debt expenses related to those
accounts the Company will no longer be servicing.


11
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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


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 the 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 partners,
unanticipated changes in the healthcare industry (as a result of cost
containment measures, changes in governmental regulations, 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. In addition, the September 11, 2001 terrorist
attacks, and change in international political conditions as a result of these
events, may continue to effect the United States and the global economy and
increase other risks. 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 June 30, 2002Compared with Three Months Ended June 30, 2001


The Companys total
net revenues for the three months ended June 30, 2002 and 2001 were $56.6
million and $47.1 million, respectively, representing an increase of $9.5
million, or 20%, in 2002. This growth was primarily attributable to a 12%
increase in case volume on a per day basis, resulting from increased sales and
marketing activities, as well as a growth in lymphoma and leukemia cases, which
increased 20% on a per day basis over the year ago quarter. IPO revenues
increased 62% to $5.6 million this quarter as compared to the year ago quarter,
primarily driven by increases in the number of projects with biopharmaceutical
companies as well as revenue generated by the IMPATH Clinical Trials
Network (ICTN).


Cost of services, which
primarily includes payroll, laboratory supplies, logistics and outside services,
for the three months ended June 30, 2002 and 2001 were $16.5 million and $16.1
million, respectively, representing an increase of $400,000, or 2.5% in 2002.
This increase was necessitated by case volume growth and the continuing product
shift to more complex cases, as well as costs associated with the operations of
Tamtron. Cost of services as a percentage of total revenues decreased to 29.2%
in 2002 from 34.1% in 2001 due to increased sales at IPO which had lower associated
cost of services as a percentage of revenue.


Gross profit for the three
months ended June 30, 2002 and 2001 was $40.1 million and $31.0 million,
respectively, representing an increase of $9.1 million, or 29.3%, in 2002. Gross
profit margins increased to 70.8% in 2002, up from 65.9% in 2001.


Selling, general and
administrative expenses for the three months ended June 30, 2002 and 2001 were
$25.3 million and $19.2 million, respectively, representing an increase of $6.1
million, or 31.7%, in 2002. The increase is primarily due to an additional $2.2
million in bad-debt expense associated with higher revenues. The Company also
incurred additional charges related to incremental laboratory supplies and
courier services due to case volume growth, as well as costs associated with the
administration of ICTN. Selling, general and administrative expenses, as a
percentage of revenues, increased to 44.7% in 2002 from 40.8% in 2001.


12
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Depreciation and
amortization expense for the three months ended June 30, 2002 and 2001 was $5.2
million and $3.8 million, respectively, representing an increase of $1.4
million, or 37%, in 2002. This increase was primarily driven by depreciation
expense for new office and laboratory furniture and equipment, as well as
leasehold improvements incurred in connection with the expansion the
Companys New York and Los Angeles facilities. The Company also incurred
depreciation expense for enhancements made to the Companys clinical and
billing systems, as well as expenses related to the amortization of GeneBank.
Amortization of goodwill was ceased as a result of the January 1, 2002 adoption
of SFAS 142. As a percentage of total revenues, depreciation and amortization
expense increased to 9.2% in 2002 from 8.1% in 2001.


Income from operations for
the three months ended June 30, 2002 and 2001 was $9.5 million and $8.0 million,
respectively, representing an increase of $1.5 million, or 19%, in 2002. As a
percentage of total revenues, income from operations decreased to 16.8% in 2002,
from 17.0% in 2001.


Other expense, net for the
three months ended June 30, 2002 and 2001 was $844,000 and $422,000,
respectively, representing an increase of $422,000 in 2002. The increase was
primarily due to increased interest expense associated with capital lease
obligations and long-term borrowings, as well as a reduction in the amount of
interest bearing securities on hand.


The tax provision for the
three months ended June 30, 2002 of approximately $3.7 million reflects federal,
state and local income tax expense. The effective tax rate for each of 2002 and
2001 was 43.0%.


Net income for the three
months ended June 30, 2002 and 2001 was $5.0 million and $4.3 million,
respectively, representing an increase of $0.7 million, or 16%, in 2002. Net
income as a percentage of revenues for 2002 and 2001 remained consistent at 9%.


Six Months
Ended June 30, 2002Compared with Six Months Ended June 30, 2001


The Companys total
net revenues for the six months ended June 30, 2002 and 2001 were $109.2 million
and $89.2 million, respectively, representing an increase of $20.0 million, or
22.4%, in 2002. This growth was primarily attributable to a 12% increase in case
volume on a per day basis, resulting from increased sales and marketing
activities, as well as the growth in lymphoma and leukemia cases, which
increased 22% over the year ago period. IPO revenues increased 78%, to $11.6
million, for the six months as compared to the year ago period primarily due to
the increase in the number of projects with biopharmaceutical companies as well
as revenue generated by ICTN.


Cost of services, which
primarily includes payroll, laboratory supplies, logistics and outside services,
for the six months ended June 30, 2002 and 2001 were $33.0 million and $30.3
million, respectively, representing an increase of $2.7 million, or 9%, in 2002.
This increase was necessitated by case volume growth, a continuing product shift
to more complex cases, as well as the costs associated with the operations of
Tamtron. In addition, the Company reported a one-time charge in the first
quarter of $1.0 million relating to certain severance payments in conjunction
with the decision to no longer offer certain non-core products based on
technology purchased from BIS. Cost of services as a percentage of total
revenues decreased to 30.2% in 2002, from 34.0% in 2001 due to increased sales
at IPO which had lower associated cost of services as a percentage of revenue.


Gross profit for the six
months ended June 30, 2002 and 2001 was $76.2 million and $58.9 million,
respectively, representing an increase of $17.3 million, or 29.4%, in 2002.
Gross profit margins increased to 69.8% in 2002, up from 66.0% in 2001.


Selling, general and
administrative expenses for the six months ended June 30, 2002 and 2001 were
$49.4 million and $36.3 million, respectively, representing an increase of $13.1
million, or 36.0%, in 2002. The increase is primarily due to an additional $5.3
million in bad-debt expense associated with higher revenues. In addition, the
Company incurred a one-time charge of $900,000 in the first quarter, as a result
of increased in bad-debt allowances related to BIS. The Company also
incurred expenses related to incremental laboratory supplies and courier
services due to case volume growth, as well as costs associated with the
administration of ICTN. Selling, general and administrative expenses, as a
percentage of revenues, increased to 45.2% in 2002, from 40.7% in 2001,
primarily due to the increase in bad-debt expenses and the one-time charge.


13
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Depreciation and
amortization expense for the six months ended June 30, 2002 and 2001 was $13.1
million and $7.2 million, respectively, representing an increase of $5.9
million, or 82%, in 2002. This increase was primarily due to a one-time charge
of $3.2 million in amortization expense for the write-down of BIS goodwill as
well as depreciation expense for new furniture and laboratory equipment, as well as
leasehold improvements incurred in connection with the expansion the
Companys New York and Los Angeles facilities. The Company also incurred
depreciation expense for enhancements made to the Companys clinical and
billing systems, as well as expenses related to the amortization of GeneBank.
Amortization of goodwill was ceased as a result of the Companys January 1, 2002 adoption
of SFAS 142. As a percentage of total revenues, depreciation and amortization
expense increased to 12.0% in 2002, from 8.1% in 2001.


Income from operations for
the six months ended June 30, 2002 and 2001 was $12.8 million and $15.4 million,
respectively, representing a decrease of $2.6 million, or 16.9%, in 2002. The
decrease was due to one-time charges totaling $6.0 million, which consists of
$5.1 million relating to the decision to no longer offer certain non-core
products based on technology purchased from BIS, as well as $900,000 in
connection with the Companys acquisition of Tamtron for Acquired in
Process Research and Development pursuant to FASB requirements. Income
from operations decreased to 11.7% in 2002 from 17.3% in 2001, as a percentage
of total revenues, as a result of the aforementioned charges.


Other expense, net for the
six months ended June 30, 2002 and 2001 was $1.5 million and $758,000,
respectively, representing an increase of $775,000 in 2002. The increase was
primarily due to increased interest expense associated with capital lease
obligations and long-term borrowings, as well as a reduction in the amount of
interest bearing securities on hand.


The tax provision for the
six months ended June 30, 2002 of approximately $4.8 million reflects federal,
state and local income tax expense. The effective tax rate for 2002 and 2001
remained consistent at 43.0%.


Net income for the six
months ended June 30, 2002 and 2001 was $6.4 million and $8.3 million,
respectively, representing a decrease of $1.9 million, or 23%, in 2002. Due to
the non-recurring charges, net income as a percentage of revenues decreased to
5.9% in 2002 from 9.3% in 2001.


14
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Liquidity and
Capital Resources


Since its inception, the
Company has raised approximately $103.9 million of capital through public
offerings of its common stock, and $6.6 million of capital from private
placements of its preferred stock. All of the Companys preferred stock 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
Companyexpands its existing facilities and pursues its growth strategy.


The Companys cash and
cash equivalent balances at June 30, 2002 and December 31, 2001 were $8.3
million and $5.9 million, respectively, representing an increase of $2.4 million
in 2002. The Company also had approximately $10.8 million in marketable
securities at June 30, 2002, representing a $5.7 million decrease from the $16.5
million at December 31, 2001. The net decrease in cash and cash equivalents and
marketable securities for the six-month period was primarily due to $33.6
million in loan proceeds, offset by $28.6 million for the acquisition of
Tamtron, $11.8 million in lease payments and $6.0 million for the acquisition of
GeneBank samples. The Company generated approximately $8.4 million in operating
cash flow in the six-month period.


In June 2001, the Company
entered into a $50 million Senior Secured Credit Facility consisting of a
five-year commitment for a $25 million revolving credit line and a $25 million
364-day facility intended for acquisitions. The credit facility syndicated by
Fleet National Bank, which also acts as Agent for the lenders, replaced the
Companys previous $15 million unsecured line of credit that expired on
June 28, 2001. In connection with the Tamtron acquisition, on January 18, 2002,
the Company amended its original credit facility and converted its $25 million
364-day facility to a $28 million term loan. The term loan is to be repaid over
a five-year period, with interest only payable for the first twelve months.
Thereafter, the loan is payable in seventeen payments of principal plus
interest, with principal payment of $4.9 million due in 2003, 2004, 2005 and
2006 and a final principal payments of $8.4 million due in 2007. Both the
revolving credit line and the term loan currently bears interest at LIBOR plus 1.25%, which
was approximately 3.5% at June 30, 2002. As of June 30, 2002, the Company had $24.6
million outstanding under the revolving credit line and $28 million drawn down
from the term loan. The $24.6 million under the revolving credit line is due in
full in five years. In connection with the amended facility, the Company also
amended certain debt covenants contained in the original facility. The Company
was in compliance with these covenants as of June 30, 2002. The covenants are
principally related to current ratios, stockholders equity and debt to EBITDA
ratios.


On May 7, 2002, the Company
announced its intentions to resume its repurchase of shares of the
Companys common stock. The share repurchase program was approved by the
Companys board of directors in January of 2000 and authorized the
repurchase of up to $15,000,000 of common stock of the Company from time to time
in open market or private transactions, depending on market conditions, share
price and other considerations. In May 2002, the Company repurchased 30,000
shares for approximately $650,000. Approximately $13 million remains available
for repurchase under the program. Any additional purchases will be funded from
available cash and working capital.



15
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Year
      ending December 31,                                                   | Operating
      leases |  | Capital
      leases |  
| | -------------------------------------------------------------------------------- | ---------------------- |  | -------------------- | -
| |                                                                                  |                        |  |                      |  
| | 2002                                                                             | $  2,664,785           |  | $   8,036,498        |  
| | 2003                                                                             | 4,231,525              |  | 16,477,773           |  
| | 2004                                                                             | 3,730,919              |  | 11,417,372           |  
| | 2005                                                                             | 3,465,307              |  | 3,601,527            |  
| | 2006                                                                             | 3,314,179              |  | 315,162              |  
| | Thereafter                                                                       | 11,266,993             |  |                     |  
| |                                                                                  |                        |  |                      |  
| |                                                                                  | $28,673,708            |  | $ 39,848,332         |  
| |                                                                                  |                        |  |                      |  
| | Amount
      representing interest
           (rates range from 4.45% to 11.47%) |                        |  | (2,874,061           | )
| |                                                                                  |                        |  |                      |  

|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 June 30, 2002, 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 June 30, 2002 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 June 30, 2002, approximately $20.8
million was drawn against this line. In November 2001, the Company established
an additional $10 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. As of June 30, 2002 the Company had not 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 June 30, 2002, 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 June
30, 2002, the Company had fully drawn against this line. In November 2000, the
Company established an additional $2.9 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 June 30, 2002, approximately $2.6
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 Leasing, USA) with lease terms of 48 months and a rate equal
to the yield on four-year treasury notes. As of June 30, 2002, 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 Leasing, USA) with the lease terms of 48 months and a rate
equal to the yield on four-year treasury notes. As of June 30, 2002, the Company
had fully drawn against this line. In November 2001, the Company established an
additional $2 million credit line with Popular Leasing, USA with lease terms of
48 months and a rate equal to .35% above yield on four-year treasury notes. As
of June 30, 2002 the Company had fully drawn against the line. In July 2000, the
Company established a $7.15 million credit line with Advanced Capital Resources
Corp. (currently Applied Financial, Inc.) with lease terms of 48
months and a rate equal to the yield on four-year treasury notes. As of June 30,
2002, approximately $6.6 million 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 June 30, 2002, the Company had fully drawn against this
line. In April 2001, the Company established an additional $1.1 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 June 30, 2002 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 June 30, 2002,
approximately $525,000 was drawn against this line. In January 2002, the Company
established a $2 million credit line with Key Equipment Finance with lease term
of 48 months and a rate equal to the yield on four-year treasury notes. As of
June 30, 2002, approximately $229,000 was drawn against this line. In May 2002,
the Company established a $950,000 credit line with Celtic Leasing Corp. with
lease terms of 48 months and a rate equal to the yield on four-year treasury
notes. As of June 30, 2002, approximately $182,000 was drawn against this line.


16
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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, specifically, acquisitions of businesses
or technologies that could require additional liquidity needs. 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.


CRITICAL
ACCOUNTING POLICIES


The Companys critical accounting
policies are as follows:
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  |  | revenue
recognition;
| | - |  | --------------------

| |  |  | estimating
valuation allowances and accrued liabilities, specifically contractual and bad debt
allowances for doubtful accounts;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------

| |  |  | accounting
for income taxes; and
| | - |  | --------------------------------

|Revenue
recognition.The Company generally recognizes revenue for services
rendered upon completion of the testing process. Revenue is reported at the
estimated net realizable amounts from patients, third-party and government
payors, and others for services rendered, including estimated retroactive
adjustments under reimbursement agreements with certain payors. Retroactive
adjustments are accrued on an estimated basis in the period the related services
are rendered and adjusted in future periods as final settlements are determined.


Revenue
from IPO is recognized within the guidance contained in the provisions of SEC
Staff Accounting Bulletin No. 101, Revenue Recognition in Financial
Statements. Revenues are recognized upon completion of analysis in
accordance with the terms of the contract. In cases where the contract calls for
the biological specimen to be shipped, revenue is recognized upon shipment of
the biological material to the customer.


Revenue
from the Information Services division is deferred and recognized on a
straight-line basis over the term of the agreement. All license agreements have
support and maintenance obligations by the Company.


Contractual
allowances and allowance for doubtful accounts. The preparation
of financial statements requires the Companys management to make estimates and
assumptions that affect the reported amount of assets and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period.
Specifically, the Companys management must make estimates of contractual allowances and
potential future uncollectible accounts receivable. Significant management
judgments and estimates must be made and used in connection with establishing
the allowances in any accounting period. Material differences may result in the
amount and timing of the Companys revenue and expenses for any period if management made
different judgments or utilized different estimates. Management specifically
analyzes accounts receivable and analyzes historical bad debts, customer
concentrations, customer credit-worthiness, current economic trends and changes
in our customer payment terms when evaluating the adequacy of the allowance for
doubtful accounts.


17
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Accounting for income
taxes. As part of the process of preparing the Companys consolidated
financial statements the Company is required to estimate its income taxes in each of the
jurisdictions in which it operates. This process involves estimating the Companys
actual current tax exposure together with assessing temporary differences
resulting from differing treatment of items, such as deferred revenue, for tax
and accounting purposes. These differences result in deferred tax assets and
liabilities, which are included within the Companys consolidated balance sheet. The Company must
then assess the likelihood that its deferred tax assets will be recovered from
future taxable income and to the extent the Company believes that recovery is not likely,
it must establish a valuation allowance. To the extent the Company establishes a valuation
allowance or increase this allowance in a period, the Company must include an expense
within the tax provision in the statement of operations.


Significant
management judgment is required in determining the Companys provision for income taxes,
its deferred tax assets and liabilities and any valuation allowance recorded
against the Companys net deferred tax assets. In the event that actual results differ
from these estimates or the Company adjusts these estimates in future periods, the Company may need
to establish an additional valuation allowance which could materially impact the Companys
financial position and results of operations.


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 to date has not been material 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 believes that continued growth in its businesses and advancements in science and technology (and the resulting impact on the
Company's product mix and sales and marketing efforts) will reduce the potential impact of inflation or changing prices.


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, see Forward Looking Statements. Actual
results may differ materially from those described.


The Companys holdings
of financial instruments are comprised primarily 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 its business and operations. The Company manages these funds accordingly.
The Company seeks reasonable assuredness of the safety of principal and market
liquidity by investing in rated 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 invest in the shorter-end of the
maturity spectrum, and at June 30, 2002, approximately 60% of its holdings were
in instruments maturing in two years or less and more than 83% of such holdings
maturing in one year or less.


18
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|PART II. Other
Information


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

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

| |  | 4.1 |  | Restated
Certificate of Incorporation
| |  | --- |  | -------------------------------------

| |  | 10.31 |  | Change-of-Control
Agreement, dated August 7, 2002, by the Registrant and Anu D. Saad
| |  | ----- |  | ------------------------------------------------------------------------------------

| |  | 10.32 |  | Change-of-Control
Agreement, dated August 7, 2002, by the Registrant and Richard P. Adelson
| |  | ----- |  | -------------------------------------------------------------------------------------------

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

| | A
current report on Form 8-K dated January 18, 2002 was filed on February 4, 2002 by the
registrant, in connection with the completed acquisition of Tamtron Corporation dated
January 18, 2002.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | A
current report on Form 8-K dated July 19, 2002 was filed on July 23, 2002 by the
registrant, in connection with the adoption of the Stockholder Rights Plan.
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------

|19
|--

|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: August 14,
      2002 | IMPATH INC.                                                  
| | ---------------------------- | -------------------------------------------------------------
| |                              |                                                              
| |                              | (Registrant)                                                 
| |                              |                                                              
| | Dated: August 14,
      2002 | By /s/ ANU D. SAAD                                           
| |                              |                                                              
| |                              | Anu D. Saad, Ph.D.
      Chairman and Chief Executive Officer

|20
|--

|CERTIFICATION


Pursuant to the
Sarbanes-Oxley Act of 2002, the undersigned officers of the registrant each certify,
to the best of their knowledge, that (i) this periodic report fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934
and (ii) that the information contained in this periodic report fairly presents, in
all material respects, the financial condition and results of operations of the
registrant.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Dated:
      August 14, 2002 | By /s/
      Anu D. Saad                                           
| |  | ---------------------------- | -------------------------------------------------------------------
| |  |                              |                                                                    
| |  |                              | Anu D.
      Saad, Ph.D.
      Chairman and Chief Executive Officer
| |  |                              |                                                                    
| |  | Dated:
      August 14, 2002 | By /s/
      Peter Torres                                          
| |  |                              |                                                                    
| |  |                              | Peter
      Torres
      Principal Financial Officer               

|21
|--