FOR IMMEDIATE RELEASE

CONTACT:  Stacie Byars, Investor Relations, NeoPath, Inc.
          www.neopath.com, (425) 556-3050

                              
       NEOPATH REPORTS FOURTH QUARTER 1998 RESULTS AND
                CLOSES FINANCING TRANSACTION
                              
REDMOND,  WASHINGTON,  February 10, 1999  --  NeoPath,  Inc.
(NASDAQ:  NPTH)  today reported financial  results  for  the
fourth  quarter  and  year  ended  December  31,  1998;   in
addition,  the Company reported the completion  of  a  $14.5
million    private   equity   transaction   among    current
shareholders.

NeoPath's  fourth quarter revenues totaled $2.3 million,  65
percent   of   which   resulted  from  AutoPap   fee-per-use
contracts.   Fee-per-use revenues in the fourth  quarter  of
1998  increased  more than 50 percent from  the  immediately
preceding quarter and from the prior year's fourth  quarter.
The  remaining  quarterly revenues were primarily  from  the
sale  of  two AutoPap Primary Screening Systems to  domestic
customers  under  previously  offered  sales  terms.   Total
revenues in the quarter decreased from the fourth quarter of
1997   as  a  result  of  fewer  units  placed  under  sales
contracts.    The  increase  in  fee-per-use   revenues   is
consistent  with NeoPath's strategic focus to place  AutoPap
Systems primarily under multi-year fee-per-use contracts.

"The  fourth quarter of 1998 represents the first  reporting
period  following the announcement of our national agreement
with  SmithKline  Beecham Clinical Laboratories,"  said  Dr.
Alan  C.  Nelson, President and Chief Executive  Officer  of
NeoPath.  "We are pleased to report that as of December  31,
1998   we  have  delivered  more  than  70  AutoPap  Primary
Screening Systems to SmithKline Beecham.  More than half  of
these  were new systems delivered during the fourth  quarter
of  1998  which,  combined with the  upgrade  of  previously
placed  AutoPap  QC  Systems and  more  favorable  per-slide
pricing to NeoPath, generated a significant increase in  our
core  AutoPap  fee-per-use revenues  as  compared  to  prior
periods."

NeoPath  reported  revenues of $12.1 million  for  the  year
ended  December  31, 1998, which is 12 percent  higher  than
revenues  of  $10.8  million  reported  in  1997.    It   is
noteworthy  that  1998  revenues were  primarily  from  U.S.
customers,  whereas half of 1997 revenues were from  foreign
customers.    The  Company  continues  to  actively   pursue
increased U.S. market share and expects that future revenues
will   be   primarily  from  domestic  fee-per-use   product
placements,   except  for  potential  AutoPap  sales   under
NeoPath's  national pricing agreement with Kaiser Permanente
and international AutoPap sales.

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NeoPath's gross margin was 51 percent in the fourth  quarter
of  1998,  compared to a gross margin of 38 percent  in  the
third   quarter  of  1998.   The  gross  margin   percentage
increased in the fourth quarter due to improved average per-
slide  pricing on fee-per-use contracts as well as increased
average slides processed per System as customers adopted the
AutoPap Primary Screening System.  Primary screening systems
are  expected  to  process a greater number  of  slides,  on
average,  than  the  prior  installed  base  of  AutoPap  QC
Systems.

Total expenses in the fourth quarter included a $3.1 million
non-cash  write-off  of  intangible assets  related  to  the
Pathfinder  System product line.  Pathfinder  product  sales
amounted  to only 3 percent of total revenues in 1998,  with
no  overall  contribution to profit.  The  Company  followed
required  accounting  practices and  wrote  off  the  entire
remaining balance of Pathfinder intangible assets.  This one-
time  expense  represented $0.21 of the total net  loss  per
share in 1998.

Total ongoing operating expenses in the fourth quarter  were
$6.2  million, which represents a decrease of $700,000  from
the  fourth  quarter  of 1997.  Operating  expenses  in  the
fourth  quarter were $1 million lower than the third quarter
of  1998  and  $2 million lower than the second  quarter  of
1998,  reflecting the Company's continuing  efforts  in  the
second  half  of  1998 to reduce costs and  carefully  focus
corporate  spending.  Recurring operating expenses  for  the
twelve  months  ended December 31, 1998 decreased  from  the
prior  year  by  $2.8 million to a total of  $29.2  million.
The  decrease  from  the prior year  was  due  primarily  to
completion  of NeoPath's primary screening clinical  studies
during  1997  as  well  as an overall reduction  in  expense
levels during the second half of 1998.

Excluding the write-off of intangible assets, NeoPath's  net
loss per share for the fourth quarter of 1998 was $0.34  per
share  compared  to a net loss of $0.33  per  share  in  the
fourth  quarter of 1997.  NeoPath's 1998 net loss per share,
excluding the write-off, was $1.60, compared to a  net  loss
per share of $1.66 in 1997.

At December 31, 1998, NeoPath reported total cash and short-
term  investments of $9.0 million.  The Company's  operating
cash  usage approximated $10 million in the second  half  of
1998,  of  which more than 50 percent was used  for  AutoPap
System production.

Financing Transaction

The  Company closed a $14.5 million private equity financing
on  February  9,  1999, which consisted of  a  sale  of  2.9
million shares of NeoPath common stock to a small number  of
current  NeoPath shareholders.  NeoPath will register  these
newly issued shares on Form S-3.

"Closing   this   limited  equity  offering   with   current
shareholders  is  the  first step in our  overall  financial
strategy and reflects the confidence of some of our  largest
shareholders,"  said  Dr.  Nelson.   "This  equity  infusion
provides immediate cash to fund operating needs and directly
supports  our  continuing  efforts  to  finalize  additional
financing  in a separate debt facility.  We plan  to  use  a
debt  facility  primarily to support  AutoPap  manufacturing
costs  for  our  growing placements of fee-per-use  systems.
This asset-based debt facility

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will  use the strength of our national usage-based agreement
with  SmithKline Beecham to secure sufficient  financing  to
sustain  an aggressive fee-per-use product strategy  in  the
United States."

NeoPath, Inc., headquartered in Redmond, Washington develops
proprietary  visual intelligence technology  that  automates
the  interpretation of complex medical images to improve the
accuracy  of  medical  testing.  Approved  by  the  FDA  for
primary  diagnostic Pap smear screening, the AutoPap  System
consists of high-speed video microscopes, specialized visual
intelligence software, and ultra-fast morphology computers.

Forward-looking  statements in this press release  are  made
pursuant  to  the  safe  harbor provisions  of  the  Private
Securities  Litigation Reform Act of 1995.   These  forward-
looking   statements  are  subject  to  various  risks   and
uncertainties  that  could cause actual  results  to  differ
materially  from  historical results or  those  anticipated.
These factors include, without limitation, acceptance of the
Company's products, marketing and sales programs in domestic
and  international markets; receipt of purchase orders under
long-term   national  customer  agreements;  the   Company's
limited  marketing,  sales,  customer  service  and  support
capabilities;  dependence on timely and adequate  levels  of
reimbursement  from  third-party  payers;  the   status   of
competing  products;  product and  manufacturing  regulatory
approvals; the availability of adequate financial  resources
under  acceptable  terms; and other risks and  uncertainties
detailed  in  the Company's filings with the Securities  and
Exchange Commission.

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