|FORM 10-Q


SECURITIES
AND
EXCHANGE COMMISSIONWashington,
D.C. 20549


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

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

|For the quarterly
period ended June 30, 2000






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                        
|(State or other jurisdiction of |  | (Primary Standard Industrial
|incorporation or organization)  |  | Classification Code Number) 

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


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


Yes [X] No [_]


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

|CLASS                   | OUTSTANDING AT JUNE 30, 2000
|----------------------- | ----------------------------
|Common Stock, par value |                             
|$.005 per share         |                             

---

|Index



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

|        |  | PAGE NUMBER          
|------- |  | ---------------------
|PART I. |  | Financial Information

|Item 1. |  | Consolidated Financial Statements (Unaudited): |  |  | 
|------- |  | ---------------------------------------------- |  |  | 

| |  | Consolidated Balance Sheets at June 30, 2000 and December 31, 1999 |  | 3 | 
| |  | ------------------------------------------------------------------ |  | - | 

| |  |  |  |  | 
| |  |  |  |  | 

| |  |                                                                                                        
| |  | -------------------------------------------------------------------------------------------------------
| |  | Consolidated Statements of Operations for the Three and SixMonths Ended June 30, 2000 and June 30, 1999

| |  |  |  |  | 
| |  |  |  |  | 

| |  | Consolidated Statement of Stockholders Equity for theSix Months Ended June 30, 2000 |  | 5 | 
| |  | ------------------------------------------------------------------------------------ |  | - | 

| |  |  |  |  | 
| |  |  |  |  | 

| |  | Consolidated Statements of Cash Flows for the SixMonths Ended June 30, 2000 and June 30, 1999 |  | 6 | 
| |  | --------------------------------------------------------------------------------------------- |  | - | 

| |  | Notes to Consolidated Financial Statements |  | 7-8 | 
| |  | ------------------------------------------ |  | --- | 

|Item 2. |  | Managements Discussion and Analysisof Financial Condition and Results of Operations |  | 9-14 | 
|------- |  | ------------------------------------------------------------------------------------ |  | ---- | 

|Item 3. |  | Quantitative and Qualitative Disclosures about Market Risk |  | 15 | 
|------- |  | ---------------------------------------------------------- |  | -- | 

|Signatures |  |  |  | 16 | 
|---------- |  |  |  | -- | 

|PART II. |  | OTHER INFORMATION |  |  | 
|-------- |  | ----------------- |  |  | 

|Item 6. |  | Exhibits and Reports on Form 8-K |  | 17-19 | 
|------- |  | -------------------------------- |  | ----- | 

---

|Item 1.   Consolidated
Financial Statements (Unaudited)



IMPATH INC.
and Subsidiaries



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

|                                                             | June 30,2000 | December 31,1999
|------------------------------------------------------------ | ------------ | ----------------
|
|Current assets:                                              |              |                 
|Cash and cash equivalents                                    |              | $     8,330,955 
|Marketable securities, at market value                       |              | 18,208,049      
|Accounts receivable, net of allowance for doubtful accounts  |              | 44,254,140      
|Prepaid expenses                                             |              | 1,335,723       
|Deferred tax assets                                          |              | 1,784,074       
|Other current assets                                         |              | 7,700,587       
|                                                            
|Total current assets                                         |              | 81,613,528      
|                                                            
|Fixed assets, less accumulated depreciation and amortization |              | 44,742,454      
|Deposits and other assets                                    |              | 611,686         
|Investment in preferred stock                                |              | 5,000,000       
|Intangible assets, net of accumulated amortization           |              | 37,751,548      
|                                                            
|Total assets                                                 |              | $169,719,216    
|                                                            
|                                                             |              |                 
|LIABILITIES AND STOCKHOLDERS EQUITY                         |             
|                                                             |              |                 
|Current liabilities:                                         |             
|Current portion of capital lease obligations                 |              | $     7,624,580 
|Current portion of notes payable                             |              | 863,126         
|Short term  borrowings                                       |              | 3,000,000       
|Accounts payable                                             |              | 3,634,335       
|Deferred revenue                                             |              | 1,878,603       
|Income taxes payable                                         |              | 3,707,845       
|Accrued expenses & other current liabilities                 |              | 2,903,649       
|                                                            
|Total current liabilities                                    |              | 23,612,138      
|                                                            
|Capital lease obligations, net of current portion            |              | 17,896,192      
|Notes payable, net of current portion                        |              | 800,000         
|Deferred tax liabilities                                     |              | 2,666,649       
|Stockholders equity:                                        |             
|Common stock                                                 |              | 44,234          
|Common stock to be issued                                    |              | 645,000         
|Additional paid-in capital                                   |              | 125,529,749     
|Retained earnings                                            |              | 26,219,613      
|Accumulated other comprehensive (loss)                       |              | (630,125        
|                                                            
|                                                             |              | 151,808,471     
|                                                            
|Less:                                                        |             
|Cost of 1,104,738 and 955,738 shares of common stock         |             
|held in treasury in 2000 and 1999, respectively              |              | (26,750,281     
|Deferred compensation                                        |              | (313,953        
|                                                            
|Total stockholders equity                                   |              | 124,744,237     
|                                                            
|Total liabilities and stockholders equity                   |              | $169,719,216    
|                                                            

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

---

|IMPATH
INC. and Subsidiaries



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

|                                                     | Three Months Ended June 30 | Six Months EndedJune 30
|---------------------------------------------------- | -------------------------- | -----------------------
|
|Revenues:                                            |                            |                        
|Net diagnostic and prognostic services               |                            | $ 30,309,319           
|Biopharmaceutical/Genomics services                  |                            | 2,047,004              
|Tumor registry services                              |                            | 1,007,695              
|                                                    
|                                                     |                            | 33,364,018             
|                                                    
|Operating expenses:                                  |                           
|Salaries and related costs                           |                            | 12,834,812             
|Selling, general and administrative                  |                            | 12,374,299             
|Depreciation and amortization                        |                            | 2,549,108              
|                                                    
|Total operating expenses                             |                            | 27,758,219             
|                                                    
|Income from operations                               |                            | 5,605,799              
|Interest income                                      |                            | 480,215                
|Interest expense                                     |                            | (702,454               
|                                                    
|Other Income, Net                                    |                            | (222,239               
|                                                    
|Income before income tax expense                     |                            | 5,383,560              
|Income tax expense                                   |                            | (2,314,931             
|                                                    
|Net income                                           |                            | $   3,068,629          
|                                                    
|Earnings per share:                                  |                           
|Basic:                                               |                           
|Net income per common share                          |                            | $            0.40      
|                                                    
|                                                     |                            | 7,733,000              
|                                                    
|Weighted average common shares outstanding           |                           
|Diluted:                                             |                           
|Net income per common share-assuming dilution        |                            | $            0.38      
|                                                    
|Weighted average common and common equivalent shares |                           
|outstanding-assuming dilution                        |                            | 8,104,000              
|                                                    

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

---

|IMPATH INC. and
SubsidiariesConsolidated Statement of Stockholders EquitySix Months Ended June 30, 2000
(Unaudited)
|--------------------------------------------------------------------------------------------------------------------

|                                                                     | Common Stock | CommonStock to | AdditionalPaid-inCapital | Retained | Accumulated Other Comprehensive | Treasury   | Deferred |             
|-------------------------------------------------------------------- | ------------ | -------------- | ------------------------ | -------- | ------------------------------- | ---------- | -------- | ------------
|
|Balance at December 31,1999                                          |              | 8,695,181      |                          | $43,475  |                                 | $1,735,000 |          | $122,553,938
|                                                                     |              |                |                          |          |                                 |            |          |             
|Common shares issued upon exercise of stock    options               |              | 111,801        |                          | 559      |                                 |            |          | 1,686,077   
|Compensation associated with issuance of    options to non-employees |              |                |                          |          |                                 |            |          | 199,934     
|Issuance of common shares                                            |              | 40,000         |                          | 200      |                                 | (1,090,000 | )        | 1,089,800   
|                                                                     |              |                |                          |          |                                 |            |          |             
|Repurchase of common shares                                          |              |                |                          |          |                                 |            |          |             
|                                                                     |              |                |                          |          |                                 |            |          |             
|Amortization of deferred compensation                                |              |                |                          |          |                                 |            |          |             
|Comprehensive income:                                                |              |                |                          |          |                                 |            |          |             
|Change in unrealized net depreciation of    securities               |              |                |                          |          |                                 |            |          |             
|Net income for the period ended June 30, 2000                        |              |                |                          |          |                                 |            |          |             
|                                                                    
|Total comprehensive income                                           |              |                |                          |          |                                 |            |          |             
|                                                                    
|Balance at June 30, 2000                                             |              | 8,846,982      |                          | $44,234  |                                 | $645,000   |          | $125,529,749
|                                                                    

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

---

|IMPATH
INC. and Subsidiaries



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

|                                                              | Six Months Ended June 30, |              
|------------------------------------------------------------- | ------------------------- | -------------
|
|Cash flows from operating activities:                         |                           |              
|Net income                                                    |                           | $   5,889,461
|Adjustments to reconcile net income to                        |                          
|net cash provided by (used in)                                |                          
|operating activities:                                         |                          
|Depreciation and amortization                                 |                           | 4,924,186    
|Provision for uncollectible accounts receivable               |                           | 8,684,792    
|Non-cash compensation                                         |                           | 178,963      
|Changes in assets and liabilities:                            |                          
|(Increase) in accounts receivable                             |                           | (17,423,903  
|(Increase) in prepaid expenses and current assets             |                           | (3,649,494   
|(Increase) in deposits and other assets                       |                           | (273,313     
|(Increase) decrease in accounts payable and accrued expenses  |                           | 62,508       
|Increase in income taxes payable                              |                           | 2,272,898    
|(Decrease) increase in deferred revenues                      |                           | (109,543     
|                                                             
|Total adjustments                                             |                           | (5,332,906   
|                                                             
|Net cash provided by (used in) operating activities           |                           | 556,555      
|                                                             
|Cash flows from investing activities:                         |                          
|Purchases of marketable securities                            |                           | (1,656,697   
|Sales/maturities of marketable securities                     |                           | 7,239,574    
|Acquisitions of businesses, net of cash acquired              |                           | (316,375     
|Capital expenditures                                          |                           | (2,552,826   
|                                                             
|Net cash provided by (used in) investing activities           |                           | 2,713,676    
|                                                             
|Cash flows from financing activities:                         |                          
|Issuance of common stock from exercise of shares and warrants |                           | 1,686,636    
|Repurchase of common stock                                    |                           | (3,399,814   
|Payments of capital lease obligations                         |                           | (2,999,787   
|Proceeds from capital leases                                  |                           | 1,653,234    
|Proceeds (repayment) of bank loans                            |                           | 3,000,000    
|Payments of notes payable                                     |                           | (201,461     
|                                                             
|Net cash used in financing activities                         |                           | (261,192     
|                                                             
|Net increase (decrease) in cash and cash equivalents          |                           | 3,009,039    
|Cash and cash equivalents at beginning of period              |                           | 5,321,916    
|                                                             
|Cash and cash equivalents at end of period                    |                           | $   8,330,955
|                                                             

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

---

|IMPATH INC.



Notes to Consolidated
Financial Statements(unaudited)



General:


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


In the opinion of IMPATH
Inc. (the Company or IMPATH), the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments necessary for the fair presentation of the
financial information for all periods presented. Results for the interim periods
are not necessarily indicative of the results for an entire year and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto contained in the Companys
Annual Report on Form 10-K for the year ended December 31, 1999.


Net Income Per Share:


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



Comprehensive
Net Income:


Comprehensive net income is
equal to the net income reported adjusted for the unrealized net depreciation of
marketable securities, net of related deferred taxes. Comprehensive net income
for the three months ended June 30, 2000 and 1999 was $3,128,954 and $1,889,997
respectively. Comprehensive net income for the six months ended June 30, 2000
and 1999 was $5,964,365 and $3,616,072 respectively.


Investment:


In accordance with
Statement of Financial Accounting Standards (SFAS) No. 115, the
Companys investments (consisting primarily of government and corporate
fixed income securities) were classified as available for sale. As a result, the
unrealized depreciation is recorded as a separate component of
stockholders equity, net of related deferred taxes. At June 30, 2000,
approximately $4,927,475 of securities with original maturities of three months
or less were included as cash equivalents. The remaining securities included in
the investment portfolio with original maturities that exceed three months are
included in current assets.



Accounts
Receivable, Net of Allowance for Doubtful Accounts:


In accordance with
Generally Accepted Accounting Principles (GAAP) and consistent with
healthcare industry practices, IMPATH presents its accounts receivable at net
realizable value. Net accounts receivable balances are comprised of the
following as of June 30, 2000 and December 31, 1999:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | June 30, 2000 | December 31, 1999
|------------------------------- | ------------- | -----------------
|Gross accounts receivable       |               | $ 81,893,917     
|Allowance for doubtful accounts |               | (10,110,232      
|Contractual allowance reserve   |               | (27,529,545      
|                               
|                                |               | $ 44,254,140     
|                               

---

|Recent
Acquisitions


On June 1, 2000 the Company
purchased certain assets of M.I.T Consultant, Inc. (MIT), a privately held
histology business based in Los Angeles, CA for $132,750. The terms provided for
an initial payment of $66,375 and $66,375 payable in two equal semi-annual
installments beginning November 2000, $16,600 of which is contingent upon the
achievement of previously established revenue targets, with interest accruing at
6% per annum.


On June 16, 2000 the
Company purchased certain assets of InterScience Diagnostic Laboratories, Inc.
(IDL), a privately held cytogenetics company based in Brooklyn, New York for
$250,000. This transaction will allow IMPATH to expand its cytogenetics business.
Additionally, IDL will further enhance the Companys ability to provide
unique cancer information to physicians for evaluating and treating cancer
patients.



Commitments
and Contingencies:


The Company is involved in
various legal actions in the normal course of business, some of which seek
monetary damages. 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.


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



Subsequent Events:


On July 24, 2000, the Companys
Board of Directors declared a two-for-one common stock split, to be paid on August 28, 2000
effected in the form of a 100% common stock dividend. The stock dividend will entitle each
shareholder of record at the close of business on August 16, 2000 to one additional share
of IMPATH Inc. common stock held on that date. Per share information in this quarterly
report has not been restated to reflect this stock split.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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


Three Months
Ended June 30, 2000Compared with Three Months Ended June 30, 1999



The Companys total
revenues for the three months ended June 30, 2000 and 1999 were $33.4 million
and $20.8 million, respectively, representing an increase of $12.6 million, or
60.6%, in 2000. This growth was primarily attributable to a 20.0% increase in
case volume resulting from increased sales and marketing activities, as well as
a 29.2% increase in revenue realization per case due to continuing product mix
changes toward lymphoma/leukemia cases, which entail more analyses. In addition,
biopharmaceutical/genomic revenues increased 582% over prior year billings as a
result of the successful integration of recently acquired BioClinical Partners
Inc.(BCP) and increases in the numbers of projects with genomic
companies.


Salaries and related costs
for the three months ended June 30, 2000 and 1999 were $12.8 million and $7.8
million, respectively, representing an increase of $5.0 million, or 64.1%, in
2000. This increase was the result of increased personnel due to rapid
case volume growth, labor costs associated with the
Companys recent acquisitions and staff augmentation required to facilitate billing and collection efforts. As a result, salaries and related costs as a
percentage of total revenues  increased to 38.3% in
2000 from 37.5% in 1999.


Selling, general and
administrative expenses for the three months ended June 30, 2000 and 1999 were
$12.4 million and $8.1 million, respectively, representing an increase of $4.3
million, or 53.1%, in 2000. The largest component of this increase was $2.3
million of increased bad debt expense associated with higher revenues.
Additionally, operating expenses increased by $1.1 million in connection with
Company acquisitions. The Company also incurred an additional $803,000 in
incremental laboratory supplies, courier costs and travel expenses due to
rapid case volume growth and increased sales and marketing activities. As a result of the higher
revenue realization per case, selling, general and administrative expenses as a percentage of net revenues
decreased to 37.1% in 2000 from 38.9% in 1999.


Depreciation and
amortization expense for the three months ended June 30, 2000 and 1999 was $2.5
million and $1.6 million, respectively, representing an increase of $0.9
million, or 56.3%, in 2000. This increase was partially due to $346,000 in
depreciation expense associated with the on-going development of the
Companys clinical and billing systems, an additional $260,000 in
depreciation expense incurred in connection with facilities expansion and
$200,000 in amortization of intangible assets associated with recent
acquisitions. As a percentage of total revenues, depreciation and amortization
decreased to 7.5% in 2000 from 7.7% in 1999.


Income from operations for
the three months ended June 30, 2000 and 1999 was $5.6 million and $3.3 million,
respectively, representing an increase of $2.3 million, or 69.7%, in 2000. The
2000 figure reflects operating margin expansion in its core physician services
business, as well as rapid revenue growth with biopharmaceutical/genomic
services, partially mitigated by the increased salaries and related costs
referred to above. As a percentage of total revenues, income from operations
increased to 16.8% in 2000 from 15.9% in 1999.


Other income (expense), net
for the three months ended June 30, 2000 and 1999, was approximately $(222,000)
and $549,000, respectively, representing a decrease of $771,000 in 2000. The
decrease was primarily due to sales of interest bearing securities, the proceeds
of which were used to finance the Companys treasury stock buyback program,
as well as increased interest expense associated with additional capital lease
obligations and acquisition-related debt.


The
tax provision for the three months ended June 30, 2000 of $2.3 million reflects federal,
state and local income tax expense. The Company has estimated its annual effective tax
rate for 2000 to be approximately 43% compared to 40% in 1999. The 43% tax rate reflects
an increase in the Companys state and local tax provision due to
reduction in tax-exempt interest income, as well as increased taxable income.
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Net income for the three
months ended June 30, 2000 and 1999 was $3.1 million and $2.3 million,
respectively, representing an increase of $0.8 million, or 34.8%, in 2000. As a
percentage of total revenues, net income decreased to 9.3% in 2000 from 11.1% in
1999. This decrease was primarily due to lower interest income, increased interest expense associated with capital lease obligations, as well as a
higher tax rate.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Six Months
Ended June 30, 2000Compared
with Six Months Ended June 30, 1999




The Companys total
revenues for the first six months of June 30, 2000 and 1999 were $63.9 million
and $37.8 million, respectively, representing an increase of $26.1 million, or
69.0%, in 2000. This growth was primarily attributable to an 18.2% increase in
case volume resulting from increased sales and marketing activities, as well as
a 38.7% increase in revenue realization per case due to continuing product mix
changes toward lymphoma/leukemia cases, which entail more analyses. In addition,
biopharmaceutical/genomic revenues increased 623% over prior year billings as a
result of the successful integration of recently acquired BioClinical Partners
Inc.(BCP) and increases in the numbers of projects with genomic
companies.


Salaries and related costs
for the first six months of June 30, 2000 and 1999 were $24.9 million and $14.6
million, respectively, representing an increase of $10.3 million, or 70.5%, in
2000. This increase was the result of increased personnel due to rapid
case volume growth, labor costs associated with the
Companys recent acquisitions and staff augmentation required to facilitate billing and collection efforts. As a result, salaries and related costs, as a
percentage of total revenues, increased to 39.0% in 2000 from 38.6% in 1999.


Selling, general and
administrative expenses for the first six months of June 30, 2000 and 1999 were
$23.6 million and $14.5 million, respectively, representing an increase of $9.1
million, or 62.8%, in 2000. The largest component of this increase was $4.6
million of increased bad debt expense associated with higher revenues.
Additionally, operating expenses increased by $2.5 million in connection with
recent acquisitions. The Company also incurred an additional $1.85 million in
incremental laboratory supplies, courier costs and travel expenses due to
rapid case volume growth and sales and marketing activities. As a
percentage of total revenues, selling, general and administrative expenses
decreased to 36.9 % in 2000 from 38.4% in 1999 due to the implementation of
certain operating efficiencies combined with a higher revenue realization per
case.


Depreciation and
amortization expense for the first six months of June 30, 2000 and 1999 was $4.9
million and $3.0 million, respectively, representing an increase of $1.9 million
or 63.3%, in 2000. This increase was primarily due to $789,000 in depreciation
expense associated with the on-going development of the Companys clinical
and billing systems, an additional $512,000 in depreciation related to
facilities expansion and $410,000 in amortization of intangible assets
associated with recent acquisitions. As a percentage of total revenues,
depreciation and amortization expense decreased to 7.7% in 2000 from 7.9% in
1999.


Income from operations for
the first six months of June 30, 2000 and 1999 was $10.4 million and $5.8
million, respectively, representing an increase of $4.6 million, or 79.3%, in
2000. The 2000 figure reflects an increase in operating margins associated with the Companys
core physician services business, as well as rapid revenue growth with
biopharmaceutical/genomic services, partially mitigated by the increased
salaries and related costs referred to above. As a percentage of total revenues,
income from operations increased to 16.3% in 2000 from 15.3% in 1999.


Other income (expense), net
for the first six months of June 30, 2000 and 1999 was $(129,000) and $1.1
million, respectively, representing a decrease of $1.2 million in 2000. The
decrease was the result of increased interest expense due to additional capital
lease obligations and acquisition-related debt, as well as reduced interest
income due to the sale of interest bearing securities, the proceeds of which
were used to finance the Companys stock buyback program and the 1999
acquisitions of BCP and Pacific Coast Reference Laboratories, Inc.
(PCRL).
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|The tax provision for the
first six months of June 30, 2000 of approximately $4.4 million reflects
federal, state and local income tax expense. The Company has estimated its
annual effective tax rate for 2000 to be approximately 43%, as compared to 40%
in 1999. The 43% effective tax rate resulted from an increase in the Companys state and
local tax provision due to lower tax-exempt interest income,
as well as increased taxable income.


Net income for the first
six months of June 30, 2000 and 1999 was $5.9 million and $4.1 million,
respectively, representing an increase of $1.8 million, or 43.9%, in 2000. As a
percentage of total revenues, net income decreased to 9.2% in 2000 from 10.8% in
1999. This decrease was due to lower interest income, increased interest expense associated with capital lease obligations as well as a higher tax rate.
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

---

|Liquidity and Capital
Resources


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


The Companys cash and
cash equivalent balances at June 30, 2000 and December 31, 1999 were $8.3
million and $5.3 million, respectively, representing an increase of $3.0 million
in 2000. The Company also had approximately $18.2 million in marketable
securities at June 30, 2000, representing a $5.5 million decrease from the $23.7
million at December 31, 1999. The net decrease in cash and cash equivalents and
marketable securities was primarily due to the repurchase of 149,000 shares of
common stock for approximately $3.4 million associated with the Companys treasury stock buyback
program.


For the six months ended
June 30, 2000, net cash provided by operating activities was approximately
$557,000. This was driven by earnings before interest, taxes, depreciation, and
amortization (EBITDA) of approximately $15.3 million, partially
offset by increases in accounts receivable, net of allowance for bad debt of
$8.7 million. The increase in net accounts receivable was due primarily to rapid sales growth, as well as the claims filing delays associated
with the Companys new billing system implemented in 1999. The continuing product mix shift
towards lymphoma/leukemia cases, which carry a higher revenue realization per
case, also contributed to the increase. In addition, due to rapid case
volume growth, supplies inventory increased approximately $2.2 million. This increase was
offset by an increase in income taxes payable of $2.3 million.


The Company incurred
approximately $2.6 million in capital expenditures associated with the expansion
of its laboratory and office facilities. The Company also received $3.0 million
from short term line of credit bank borrowings and approximately $1.7 million
 through the issuance of common stock upon
the exercise of Company stock options and warrants.


The Company has a line of
credit for an aggregate principal amount of $15.0 million with Fleet Bank.
Borrowing under the line bears interest at LIBOR plus 2.0%. As of June 30, 2000,
the Company had $3.0 million outstanding under this line. The Company has lines
of credit for financing equipment, leasehold improvements and computer hardware
and software. In July 1999, the Company established a $6.0 million credit line
with Newcourt Financial (currently CIT Group) with lease terms that
are based on 48 monthly payments at a rate equal to .35% above the yield on
four-year treasury notes. As of June 30, 2000, the Company had fully drawn
against the 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,
2000, approximately $1 million was drawn against the 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 $15.0 million
in March 2000, under the same lease terms. As of June 30, 2000, approximately
$11.9 million was drawn against this line. In April 2000, the Company
established an $875,000 credit line with Dynamics Commercial Funding Corp. with
lease terms of 36 months and a rate equal to the yield on three-year treasury
notes. As of June 30, 2000, the Company had fully drawn against the 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, 2000, approximately
$716,000 was drawn against this line.


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

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|Impact of
Inflation and Changing Prices


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

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|ITEM 3. QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT MARKET RISK


The following discussion
about our exposure to market risk of financial instruments contains
forward-looking statements. Actual results may differ materially from those
described.


The Companys holdings
of financial instruments are comprised of U.S. corporate debt, U.S. government
debt and commercial paper. All such instruments are classified as securities
available for sale. The Company does not invest in portfolio equity securities
or commodities or use financial derivatives for trading purposes. The
Companys debt security portfolio represents funds held temporarily pending
use in our business and operations. The Company manages these funds accordingly.
The Company seeks reasonable assurance of the safety of principal and market
liquidity by investing in grade fixed income securities while at the same time
seeking to achieve a favorable rate of return. The Companys market risk
exposure consists principally of exposure to changes in interest rates. The
Companys holdings are also exposed to the risks of changes in the credit
quality of issuers. The Company typically invests in the shorter-end of the
maturity spectrum, and at June 30, 2000, more than 58% of the Companys
holdings were in instruments maturing in two years or less and more than 51% of
such holdings matured in one year or less.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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|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, 2000 |  | IMPATH INC. 
|                         |  | (Registrant)

|                         |  |                      
|------------------------ |  | ---------------------
|Dated:   August 14, 2000 |  | By  / s / ANU D. SAAD
|                         |  | Anu D. Saad, Ph.D.   
|                         |  | President and Chief  
|                         |  | Executive Officer    

|                         |  |                                                                                                    
|------------------------ |  | ---------------------------------------------------------------------------------------------------
|Dated:   August 14, 2000 |  | By  / s / DAVID J. CAMMARATA                                                                       
|                         |  | David J. CammarataExecutive Vice President,Chief Financial Officer,and Principal Accounting Officer

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|INDEX TO
EXHIBITS
|-----------------

|ExhibitNumber | Description | PageNumber             
|------------- | ----------- | -----------------------
|27            |             | Financial Data Schedule