|FORM 10-Q


SECURITIES
AND
EXCHANGE COMMISSION Washington,
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 September 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
0-27750IMPATH 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 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 SEPTEMBER 30, 2000 | 
|--------------------------------------- |  | --------------------------------- | 
|Common Stock, par value$ .005 per share |  | 15,670,248                        | 

|Index


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

|                                                                                               | PAGE NUMBER
|---------------------------------------------------------------------------------------------- | -----------
|PART I. Financial Information                                                                  |            
|                                                                                               |            
|Item 1.   Consolidated Financial Statements (Unaudited):                                      
|                                                                                              
|                                                                                               |            
|                                                                                               |            
|                                                                                              
|                                                                                               |            
|                                                                                               |            
|                                                                                              
|                                                                                               |            
|                                                                                               |            
|                                                                                              
|                                                                                               |            
|                                                                                               |            
|                                                                                              
|                                                                                               |            
|                                                                                              
|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)
|-------------------------------------------------------------------------------------------------------------------------------

|                                                             | September 30,2000 | December 31,1999
|------------------------------------------------------------ | ----------------- | ----------------
|ASSETS                                                       |                   |                 
|Current assets:                                              |                  
|Cash and cash equivalents                                    |                   | $8,064,460      
|Marketable securities, at market value                       |                   | 18,073,618      
|Accounts receivable, net of allowance for doubtful accounts  |                   | 46,587,331      
|Prepaid expenses                                             |                   | 1,327,011       
|Deferred tax assets                                          |                   | 1,784,074       
|Other current assets                                         |                   | 8,259,089       
|                                                            
|Total current assets                                         |                   | 84,095,583      
|                                                            
|Fixed assets, less accumulated depreciation and amortization |                   | 50,712,768      
|Deposits and other assets                                    |                   | 664,301         
|Investment in preferred stock                                |                   | 5,000,000       
|Intangible assets, net of accumulated amortization           |                   | 38,021,989      
|                                                            
|Total assets                                                 |                   | $178,494,641    
|                                                            
|                                                            
|LIABILITIES AND STOCKHOLDERS EQUITY                         |                  
|                                                            
|Current liabilities:                                         |                  
|Current portion of capital lease obligations                 |                   | $8,817,599      
|Current portion of notes payable                             |                   | 1,196,698       
|Short term borrowings                                        |                   | 3,000,000       
|Accounts payable                                             |                   | 3,836,238       
|Deferred revenue                                             |                   | 1,969,668       
|Income taxes payable                                         |                   | 5,063,704       
|Accrued expenses & other current liabilities                 |                   | 2,776,202       
|                                                            
|Total current liabilities                                    |                   | 26,660,109      
|                                                            
|Capital lease obligations, net of current portion            |                   | 19,575,991      
|Notes payable, net of current portion                        |                   | 100,000         
|Deferred tax liabilities                                     |                   | 2,666,649       
|                                                            
|Stockholders equity:                                        |                  
|Common stock                                                 |                   | 89,398          
|Common stock to be issued                                    |                   | 645,000         
|Additional paid-in capital                                   |                   | 128,111,120     
|Retained earnings                                            |                   | 29,480,769      
|Accumulated other comprehensive (loss)                       |                   | (427,193        
|                                                            
|                                                             |                   | 157,899,094     
|                                                            
|Less:                                                        |                  
|Cost of 2,209,476 and 1,911,476 shares of common stock       |                  
|held in treasury in 2000 and 1999, respectively              |                   | (26,750,281     
|Deferred compensation                                        |                   | (1,656,921      
|                                                            
|Total stockholders equity                                   |                   | 129,491,892     
|                                                            
|Total liabilities and stockholders equity                   |                   | $178,494,641    
|                                                            

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

|IMPATH INC. and
Subsidiaries


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

|                                              | Three Months Ended | Nine Months Ended
|--------------------------------------------- | ------------------ | -----------------
|
|
|Revenues:                                     |                    |                  
|Net Physician services                        |                    | $ 31,596,249     
|Biopharmaceutical/Genomics services           |                    | 2,692,470        
|Information services                          |                    | 1,116,797        
|                                             
|                                              |                    | 35,405,516       
|                                             
|Operating expenses:                           |                   
|Salaries and related costs                    |                    | 13,131,619       
|Selling, general and administrative           |                    | 13,461,933       
|Depreciation and amortization                 |                    | 2,731,880        
|                                             
|Total operating expenses                      |                    | 29,325,432       
|                                             
|Income from operations                        |                    | 6,080,084        
|Interest income                               |                    | 473,823          
|Interest expense                              |                    | (754,301         
|                                             
|Other Income, Net                             |                    | (280,478         
|                                             
|Income before income tax expense              |                    | 5,799,606        
|Income tax expense                            |                    | (2,493,831       
|                                             
|Net income                                    |                    | $   3,305,775    
|                                             
|Earnings per share:                           |                   
|Basic:                                        |                   
|Net income per common share                   |                    | $0.21            
|                                             
|Weighted average common shares outstanding    |                    | 15,607,000       
|                                             
|Diluted:                                      |                   
|Net income per common share-assuming dilution |                    | $0.20            
|                                             
|Weighted average common and common equivalent |                   
|shares outstanding-assuming dilution          |                    | 16,499,000       
|                                             

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

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

|                                                                 | Common Stock | CommonStock to | AdditionalPaid-inCapital | Retained | Accumulated OtherComprehensive | 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                                        |              | 410,874        |                          | 2,055    |                                |            |          | 2,605,397   
|Compensation associated withissuance of options to non-employees |              |                |                          |          |                                |            |          | 1,861,985   
|Issuance of common shares                                        |              | 80,000         |                          | 400      |                                | (1,090,000 | )        | 1,089,800   
|Repurchase of common shares                                      |              |                |                          |          |                                |            |          |             
|Amortization of deferred                                         |             
|Compensation                                                     |              |                |                          |          |                                |            |          |             
|                                                                
|100% Stock Dividend                                              |              | 8,693,669      |                          | 43,468   |                                |            |          |             
|Comprehensive income:                                            |             
|Change in unrealized net                                         |             
|depreciation of securities                                       |              |                |                          |          |                                |            |          |             
|Net income for the period                                        |             
|Ended September 30, 2000                                         |              |                |                          |          |                                |            |          |             
|                                                                
|Total comprehensive income                                       |              |                |                          |          |                                |            |          |             
|                                                                
|Balance at September 30, 2000                                    |              | 17,879,724     |                          | $89,398  |                                | $645,000   |          | $128,111,120
|                                                                

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

|IMPATH INC. and
Subsidiaries


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

|                                                                      | Nine Months Ended September 30,
|--------------------------------------------------------------------- | -------------------------------
|
|Cash flows from operating activities:                                 |                                
|Net income                                                            |                                
|Adjustments to reconcile net income to net cash provided by (used in) |                                
|operating activities:                                                 |                                
|Depreciation and amortization                                         |                                
|Provision for uncollectible accounts receivable                       |                                
|Non-cash compensation                                                 |                                
|Changes in assets and liabilities:                                    |                                
|(Increase) in accounts receivable                                     |                                
|(Increase) in prepaid expenses and current assets                     |                                
|(Increase) in deposits and other assets                               |                                
|Increase in accounts payable and accrued expenses                     |                                
|Increase in income taxes payable                                      |                                
|(Decrease) increase in deferred revenues                              |                                
|                                                                     
|Total adjustments                                                     |                                
|                                                                     
|Net cash provided by (used in) operating activities                   |                                
|                                                                     
|Cash flows from investing activities:                                 |                                
|Purchases of marketable securities                                    |                                
|Sales/maturities of marketable securities                             |                                
|Acquisitions of businesses, net of cash acquired                      |                                
|Investment in preferred stock                                         |                                
|Capital expenditures                                                  |                                
|                                                                     
|Net cash provided by (used in) investing activities                   |                                
|                                                                     
|Cash flows from financing activities:                                 |                                
|Issuance of common stock from exercise of shares and warrants         |                                
|Repurchase of common stock                                            |                                
|Payments of capital lease obligations                                 |                                
|Proceeds from capital leases                                          |                                
|Proceeds (repayment) of bank loans                                    |                                
|Payments of notes payable                                             |                                
|                                                                     
|Net cash used in financing activities                                 |                                
|                                                                     
|Net increase (decrease) in cash and cash equivalents                  |                                
|Cash and cash equivalents at beginning of period                      |                                
|                                                                     
|Cash and cash equivalents at end of period                            |                                
|                                                                     

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

|IMPATH INC.


Notes to Consolidated
Financial Statements(unaudited)



General:


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


In the opinion of IMPATH
Inc. (the Company or IMPATH), the accompanying unaudited
consolidated financial statements contain all adjustments, consisting only of
normal recurring adjustments necessary for the fair presentation of the
financial information for all periods presented. Results for the interim periods
are not necessarily indicative of the results for an entire year and do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto contained in the Companys
Annual Report on Form 10-K for the year ended December 31, 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 September 30, 2000 and 1999 was $3,508,707 and
$2,328,508 respectively. Comprehensive net income for the nine months ended
September 30, 2000 and 1999 was $9,473,072 and $5,944,580 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 September 30, 2000,
approximately $4,857,686 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 September 30, 2000 and December 31, 1999:
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                | September 30, 2000 | December 31, 1999
|------------------------------- | ------------------ | -----------------
|Gross accounts receivable       |                    | $ 88,397,632     
|Allowance for doubtful accounts |                    | (12,132,209      
|Contractual allowance reserve   |                    | (29,678,092      
|                               
|                                |                    | $ 46,587,331     
|                               

|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.


Stock Split:


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

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


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


The Companys total
revenues for the three months ended September 30, 2000 and 1999 were $35.4
million and $21.5 million, respectively, representing an increase of $13.9
million, or 64.7%, in 2000. This growth was primarily attributable to a 23.5%
increase in case volume resulting from increased sales and marketing activities,
as well as a 33.9% 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 97.3% 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 September 30, 2000 and 1999 were $13.1 million and
$8.0 million, respectively, representing an increase of $5.1 million, or 63.8%,
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 of a higher revenue realization per case,
salaries and related costs as a percentage of total revenues decreased to 37.0%
2000 from 37.2% in 1999.


Selling, general and
administrative expenses for the three months ended September 30, 2000 and 1999
were $13.5 million and $8.0 million, respectively, representing an increase of
$5.5 million, or 68.8%, in 2000. The largest component of this increase was $3.4
million of increased bad debt expense associated with higher revenues.
Additionally, costs of $520,000 were incurred in association with the building
of the infrastructure to support the demand for our biopharmaceutical/genomics
services and operating expenses increased by $1.2 million in connection with
Company acquisitions. The Company also incurred an additional $402,000 in
incremental rental, repairs and equipment service costs due to increasing case
volume growth and facilities expansion. As a result of the aforementioned,
selling, general and administrative expenses as a percentage of net revenues
increased to 38.1% in 2000 from 37.2% in 1999.


Depreciation and
amortization expense for the three months ended September 30, 2000 and 1999 was
$2.7 million and $1.9 million, respectively, representing an increase of $0.8
million, or 42.1%, in 2000. This increase was partially due to $380,000 in
depreciation expense associated with the on-going development of the
Companys clinical and billing systems, an additional $221,000 in
depreciation expense incurred in connection with the expansion of our facilities
and $173,000 in amortization of intangible assets related to recent
acquisitions. As a percentage of total revenues, depreciation and amortization
decreased to 7.6% in 2000 from 8.8% in 1999.


Income from operations for
the three months ended September 30, 2000 and 1999 was $6.1 million and $3.7
million, respectively, representing an increase of $2.4 million, or 64.9%, in
2000. The 2000 figure reflects operating margin expansion in its core physician
services business, partially mitigated by increased expenses associated with
building the infrastructure to support the demand for our
biopharmaceutical/genomics services. As a percentage of total revenues, income
from operations remained consistent at 17.2% in 2000 and 1999.


Other income (expense), net
for the three months ended September 30, 2000 and 1999, was approximately
$(280,000) and $354,000, respectively, representing a decrease of $634,000 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 and recent acquisitions, as well as increased interest expense
associated with additional capital lease obligations and acquisition-related
debt.


The tax provision for the three
months ended September 30, 2000 of $2.5 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 a reduction in tax-exempt interest
income, as well as increased taxable income.
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Net income for the three
months ended September 30, 2000 and 1999 was $3.3 million and $2.4 million,
respectively, representing an increase of $0.9 million, or 37.5%, in 2000. As a
percentage of total revenues, net income decreased to 9.3% in 2000 from 11.2% 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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Nine Months
Ended September 30, 2000Compared with Nine Months Ended September 30, 1999


The Companys total
revenues for the first nine months of September 30, 2000 and 1999 were $99.3
million and $59.4 million, respectively, representing an increase of $39.9
million, or 67.2%, in 2000. This growth was primarily attributable to an 18.9%
increase in case volume resulting from increased sales and marketing activities,
as well as a 37.9% 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 249% over prior year
billings as a result of the successful integration of recently acquired BCP and
increases in the numbers of projects with genomic companies.


Salaries and related costs
for the first nine months of September 30, 2000 and 1999 were $38.1 million and
$22.6 million, respectively, representing an increase of $15.5 million, or
68.6%, 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 38.4% in 2000 from 38.0% in 1999.


Selling, general and
administrative expenses for the first nine months of September 30, 2000 and 1999
were $37.1 million and $22.5 million, respectively, representing an increase of
$14.6 million, or 64.9%, in 2000. The largest component of this increase was
$8.0 million of increased bad debt expense associated with higher revenues.
Additionally, costs of $1.3M were incurred in association with the building of
the infrastructure to support the demand for our biopharmaceutical/genomics
services and operating expenses increased by $2.0 million in connection with
recent acquisitions. The Company also incurred an additional $1.8 million in
rental, repairs and equipment service costs as well as $1.4 million in
incremental laboratory supplies, courier costs and travel expenses due to rapid
case volume growth, facilities expansion and sales and marketing activities. As
a percentage of total revenues, selling, general and administrative expenses
decreased to 37.4 % in 2000 from 37.9% in 1999, primarily due to a higher
revenue realization per case.


Depreciation and
amortization expense for the first nine months of September 30, 2000 and 1999
was $7.7 million and $4.8 million, respectively, representing an increase of
$2.9 million, or 60.4%, in 2000. This increase was primarily due to $1.2 million
in depreciation expense associated with the on-going development of the
Companys clinical and billing systems, an additional $820,000 in
depreciation in connection with the expansion of our facilities and $582,000 in
amortization of intangible assets associated with recent acquisitions. As a
percentage of total revenues, depreciation and amortization expense decreased to
7.8% in 2000 from 8.1% in 1999.


Income from operations for
the first nine months of September 30, 2000 and 1999 was $16.5 million and $9.5
million, respectively, representing an increase of $7 million, or 73.7%, in
2000. The 2000 figure reflects an increase in operating margins associated with
the Companys core physician services business, partially mitigated by
increased expenses associated with building the infrastructure to support the
demand for our biopharmaceutical/genomics services. As a percentage of total
revenues, income from operations increased to 16.6% in 2000 from 16.0% in 1999.


Other income (expense), net
for the first nine months of September 30, 2000 and 1999 was $(410,000) and $1.4
million, respectively, representing a decrease of $1.8 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 recent
acquisitions.
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|The tax provision for the
first nine months of September 30, 2000 of approximately $6.9 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
nine months of September 30, 2000 and 1999 was $9.2 million and $6.5 million,
respectively, representing an increase of $2.7 million, or 41.5%, in 2000. As a
percentage of total revenues, net income decreased to 9.3% in 2000 from 10.9% 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 September 30, 2000 and December 31, 1999 were $8.1
million and $5.3 million, respectively, representing an increase of $2.8 million
in 2000. The Company also had approximately $18.1 million in marketable
securities at September 30, 2000, representing a $5.6 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
298,000 shares of common stock (split adjusted) for approximately $3.4 million
associated with the Companys treasury stock buyback program.


For the nine months ended
September 30, 2000, net cash provided by operating activities was approximately
$5.5M. This was driven by earnings before interest, taxes, depreciation, and
amortization (EBITDA) of approximately $24.2 million, partially
offset by increases in accounts receivable, net of allowance for bad debt of
$11.1 million. The increase in net accounts receivable was due primarily to
rapid sales growth. The continuing product mix shift towards lymphoma/leukemia
cases, which carry a higher revenue realization per case, also contributed to
the increase. In addition, due to rapid case volume growth, supplies inventory
and other current assets increased approximately $4.2 million. This increase was
offset by an increase in income taxes payable of $3.6 million.


The Company incurred
approximately $5.4 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 $2.6 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 September 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 yield
on four-year treasury notes. As of September 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 September 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 term. As of September 30,
2000, approximately $11.9 million was drawn against this line. In April 2000,
the Company established a $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 September 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 September 30,
2000, approximately $2.7 million was drawn against this line. In April 2000, the
Company established a $3.0 million credit line with First Sierra Financial, Inc.
with lease terms of 48 months and a rate equal to the yield on four-year
treasury notes. As of September 30, 2000, the Company had fully drawn against
the line. In September 2000, the Company established an additional $6.0 million
credit line with First Sierra Financial, Inc. with the lease terms of 48 months
and a rate equal to the yield on four-year treasury notes. As of September 30,
2000, the Company has not drawn down against this credit 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.
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Impact of
Inflation and Changing Prices


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

|ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


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


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 September 30, 2000, approximately 58% of the
Companys holdings were in instruments maturing in two years or less and
more than 57% of such holdings matured in one year or less.
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|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: November 7, 2000 | IMPATH INC.(Registrant)                                                                                                      
|----------------------- | -----------------------------------------------------------------------------------------------------------------------------
|Dated: November 7, 2000 | By /s/ ANU D. SAADAnu D. Saad, Ph.D.
President and ChiefExecutive Officer                                                    
|Dated: November 7, 2000 | By /s/ DAVID J. CAMMARATADavid J. Cammarata
Executive Vice President,Chief Financial Officer,and Principal Accounting Officer

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

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