UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


               Quarterly Report Under Section 13 or 15(d) of the
                        Securities Exchange Act of 1934

For the period ended        September 27, 1996
                      -----------------------------

Commission File Number          0-19952

                                 CHRONIMED Inc.
             (Exact name of registrant as specified in its charter)

          Minnesota                                             41-1515691
(State or other jurisdiction of                              (I.R.S. Employer
 incorporation or organization)                           Identification Number)

                              13911 Ridgedale Drive
                              Minnetonka, MN 55305
                    (Address of principal executive offices)
                                   (Zip code)

Registrant's telephone number, including area code   (612) 541-0239



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, 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.


       Common Stock, $.01 par value - 12,546,166 shares outstanding as of
                                October 24, 1996
--------------------------------------------------------------------------------


                                      INDEX

                         CHRONIMED INC. AND SUBSIDIARIES




PART I.   FINANCIAL INFORMATION


Item 1.           Financial Statements (Unaudited)

                  Consolidated Balance Sheets - September 27, 1996 and June 28,
                  1996

                  Consolidated Statements of Income - Three months ended
                  September 27, 1996 and September 29, 1995

                  Consolidated Statements of Cash Flows - Three months ended
                  September 27, 1996 and September 29, 1995

                  Notes to Consolidated Financial Statements - September 27,
                  1996


Item 2.           Management's Discussion and Analysis of Financial Condition 
                  and Results of Operations



PART II.  OTHER INFORMATION

                  Items 1 through 5 have been omitted since all items are not
applicable or answers negative.


Item 6.           Exhibits

                  10.27    Chronimed 1997 Stock Option Plan
                  11.1     Computation of Earnings Per Share



SIGNATURES





Part I.  Financial Information
Item I.  Financial Statements


<TABLE>
<CAPTION>
                                 CHRONIMED INC.
                           CONSOLIDATED BALANCE SHEETS
                                     ($000s)
                                                                             SEPT. 27,   JUNE 28,
                                                                               1996        1996
                                                                             --------    --------
ASSETS                                                                      (UNAUDITED)  (NOTE A)
  Current assets:
<S>                                                                          <C>         <C>     
    Cash and cash equivalents ............................................   $  3,890    $ 11,434
    Available-for-sale securities ........................................      7,219      12,803
    Accounts receivable (net of allowance
     of $990,000 and $860,000 at September 27, 1996
     and June 28, 1996, respectively) ....................................     21,705      19,843
    Income taxes receivable ..............................................         45          49
    Inventory ............................................................     13,626       5,476
    Other current assets .................................................        644         559
    Deferred taxes .......................................................        493         493
                                                                             --------    --------
        Total current assets .............................................     47,622      50,657

  Note receivable ........................................................      1,384       1,375
  Available-for-sale securities ..........................................      9,005       9,069

  Property and equipment:
    Property and equipment ...............................................      9,528       8,542
    Allowance for depreciation ...........................................     (3,732)     (3,097)
                                                                             --------    --------
                                                                                5,796       5,445

Intangible assets, net ...................................................     10,315       1,362
                                                                             --------    --------
Total assets .............................................................   $ 74,122    $ 67,908
                                                                             ========    ========

LIABILITIES AND SHAREHOLDERS' EQUITY
  Current liabilities:
    Accounts payable and accrued expenses ................................     16,246    $  9,992
    Short-term debt ......................................................        350         404
                                                                             --------    --------
            Total current liabilities ....................................     16,596    $ 10,396

  Long-term debt .........................................................       --           350

  Shareholders' equity:
    Preferred Stock, $.01 par value;
      5,000,000 shares authorized; none
      outstanding ........................................................       --          --
    Common Stock, $.01 par value --
      authorized 20,000,000 shares;  issued and
      outstanding September 27, 1996 -- 12,431,443 shares;
      June 28,1996 -- 12,454,560 shares ..................................        125         125
    Additional paid-in capital ...........................................     48,719      49,569
    Retained earnings ....................................................      8,723       7,475
                                                                             --------    --------
                                                                               57,567      57,169

    Unrealized (loss) on available-for-sale securities ...................        (41)         (7)
                                                                             --------    --------
       Total shareholders' equity ........................................     57,526      57,162
                                                                             --------    --------

 Total liabilities and shareholders'
    equity ...............................................................   $ 74,122    $ 67,908
                                                                             ========    ========
</TABLE>



                                 CHRONIMED INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                     ($000s)
                                   (UNAUDITED)



                                                      THREE MONTHS ENDED
                                               SEPTEMBER 27,       SEPTEMBER 29,
                                                   1996               1995
                                                 --------           --------
Revenues
   Managed Care .......................          $  4,933           $  2,692
   Proprietary ........................             9,210              5,401
   Patient Choice/Professional Referral            14,363             10,433
                                                 --------           --------

          TOTAL REVENUES ..............            28,506             18,526

Cost of Sales .........................            20,757             13,578
                                                 --------           --------

          GROSS PROFIT ................             7,749              4,948

Operating Expenses
   Selling and Marketing ..............             1,616              1,467
   General and Administrative .........             4,238              2,679
   Research and Development ...........               207                 95
                                                 --------           --------

          TOTAL OPERATING EXPENSES ....             6,061              4,241

Operating Income ......................             1,688                707
Interest Income .......................               267                309
Provision for Income Taxes ............              (708)              (291)
                                                 --------           --------

NET INCOME ............................          $  1,247           $    725
                                                 ========           ========

  Income per share ....................          $    .09           $    .06

Weighted average number
  of shares outstanding (000s) ........            13,212             12,916



<TABLE>
<CAPTION>
                                 CHRONIMED INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     ($000s)
                                   (UNAUDITED)


                                                                                          THREE MONTHS ENDED
                                                                                    SEPTEMBER 27,     SEPTEMBER 29,
                                                                                        1996               1995
                                                                                      --------           --------
<S>                                                                                   <C>                <C>     
Operating Activities:
    Net income .............................................................          $  1,247           $    725
    Adjustments to reconcile net income to net
       cash provided by (used in) operating activities:
           Depreciation and amortization ...................................               929                365
           Changes in operating assets and liabilities:
              Accounts and notes receivable ................................            (1,868)            (2,041)
              Inventory ....................................................            (8,150)            (2,516)
              Other assets .................................................               (95)               (36)
              Accounts payable and accruals ................................             6,254             (4,099)
                                                                                      --------           --------

           NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES .............            (1,683)               596

Investing Activities:
    Repurchase of common stock .............................................            (1,577)              --
    Acquisitions, net of cash purchased ....................................            (9,234)               (84)
    Purchases of property and equipment ....................................              (985)              (548)
    Purchase of available-for-sale securities ..............................            (2,006)            (2,580)
    Sale and maturities of available-for-sale securities ...................             7,619              3,051
                                                                                      --------           --------

           NET CASH (USED IN) INVESTING ACTIVITIES .........................            (6,183)              (161)

Financing Activities:
    Net proceeds from sale of Common Stock .................................               322                257

           NET CASH PROVIDED BY
              FINANCING ACTIVITIES .........................................               322                257
                                                                                      --------           --------

Increase (decrease) in cash and cash equivalents ...........................            (7,544)               692

Cash and cash equivalents at beginning of period ...........................            11,434              2,203
                                                                                      --------           --------

           CASH AND CASH EQUIVALENTS AT END OF PERIOD ......................          $  3,890           $  2,895
                                                                                      ========           ========

</TABLE>


                                 CHRONIMED INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE A--BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three month period ended September 27, 1996
are not necessarily indicative of the results that may be expected for the year
ending June 27, 1997. For further information, refer to the financial statements
and footnotes thereto for the year ended June 28, 1996.

The balance sheet at June 28, 1996, has been derived from the audited financial
statements at that date, but does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.

The Company uses a four-week, four-week, five-week (4-4-5) quarterly accounting
cycle with the fiscal year ending on the Friday closest to June 30 and the
fiscal quarters ending on the Friday closest to the last day of the respective
month.


NOTE B--INVENTORIES

Inventories consist primarily of goods held for resale and are valued at the
lower of cost or market under the average cost method.


NOTE C--INVESTMENTS

The Company's investment policy is to invest idle and excess funds in high
grade, fixed income securities generally for no more than two years. These
securities are classified as Available-for-Sale as of September 27, 1996 and
June 28, 1996. The Company considers the net unrealized loss on these
investments of $41,000 and $7,000 at those respective dates to be temporary, and
as such has recorded it through shareholders' equity.


NOTE D--ACQUISITION

Effective July 1, 1996, the Company acquired the assets of StatScript Management
Services, Inc. and its associated specialty pharmacies (StatScript). The
all-cash purchase price was $10,250,000, plus a contingent payment of up to
$2,250,000. StatScript provides pharmacy services to patients with HIV and AIDS.


Part I.   Financial Information
Item 2.   Management's Discussion


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         Chronimed Inc. ("Chronimed" or the "Company") develops, markets and
distributes prescription drugs, medical products and educational materials by
mail and retail pharmacy to specific populations of patients with chronic
conditions. By focusing on specific chronic conditions, the Company believes it
is able to provide valuable services to: the patients affected by chronic
conditions; the insurance companies, health maintenance organizations, preferred
provider organizations, government agencies and other third-party payors
("Payors") that pay a large portion of the related health care costs; the
developers and manufacturers that produce the prescription drugs and other
products needed to manage chronic conditions; and the institutions, foundations
and health care providers working with these patients. The patient populations
for which the Company believes its services are most effective include patients
who:

         *        Require a costly regimen of maintenance prescription drugs or
                  other medical products over the course of their lives;

         *        Are treated by health care specialists; and

         *        Require a significant amount of self-management and on-going
                  education.

The Company is currently serving four such populations in the main: patients
with diabetes, patients who have had an organ transplant, patients with
HIV/AIDS, and patients who self- administer injectable medications. Starting
July 1996, Chronimed has increased its efforts in addressing the needs of
HIV/AIDS patients through the Company's acquisition of StatScript Management
Services, Inc., and its nine specialty HIV/AIDS pharmacies. The Company is
investigating programs for a variety of other chronic conditions.

         Chronimed provides patients with a convenient, competitively-priced
source of prescription drugs, medical and clinical nutrition products and a
variety of educational materials designed to help patients achieve maximum
control over their chronic conditions. Often, the greater the effort a patient
makes to stabilize or control his or her chronic condition, the lower the
incidence of complications and the better the patient's quality of life.

         Historically, the Company has obtained patients primarily through
referrals from health care providers and direct patient contacts. As employers
have attempted to control their escalating health care costs, Payors have
increasingly adopted various specialized managed care techniques in order to
limit the costs of health care. The specialty managed care industry has
developed principally in response to the demand from employers and Payors for
more effective control of cost increases in certain sectors, such as patients
with chronic conditions. In 1994, an estimated 63% of employees in the United
States who were covered by a healthcare plan were enrolled in a managed care
program, up from 53% in 1993. Chronimed seeks to adapt managed care techniques
or to develop new techniques to manage the particular delivery systems, cost
structures, and utilization characteristics of patients with chronic conditions.
As a result of the increasing role of managed care, coupled with the Company's
experience in managing specific patient groups, patient referrals are
increasingly coming from the Company's Payor programs.

         The Company has developed relationships with certain treatment centers,
foundations and associations which specialize in the treatment or support of
patients with chronic conditions. These relationships provide the Company with
access to a large number of individuals with chronic conditions and to the
health care providers treating these conditions.

         Chronimed believes that its system is well-suited for developers and
manufacturers of pharmaceutical and medical products designed for small or
hard-to-identify patient populations. Chronimed provides these companies with
assistance in the design and rapid introduction of their products, a cost
effective means for distributing these products to specific patient populations,
and a method for monitoring the use of these products as well as outcomes.

         Chronimed has increased its emphasis on the development and licensing
of proprietary products suitable for distribution through its system. Through
its agreement with Orphan Medical, Inc., the Company has the right to sell a
number of proprietary drugs. Additionally, Chronimed has exchanged rights to
sell other Orphan Medical drugs for future royalties, some of which are expected
to be received in fiscal 1997. Pursuant to exclusive distribution agreements,
the Company currently markets diabetes-related products, including the Supreme
blood glucose monitor and reagent strip, generic reagent strips, infusion sets
and a lancing device.

REVENUES

         The Company's revenues are derived from three principal sources: (1)
customers who are part of a managed care network ("Managed Care"); (2) revenues
generated primarily from sales of proprietary products ("Proprietary Products");
and (3) referrals from healthcare providers or patients who choose to purchase
from the Company ("Patient Choice"), which now includes the new StatScript
Pharmacy business acquired in July, 1996.

         Total revenues increased 54%, from $18,526,000 to $28,506,000, for the
three months ended September 29, 1995, and September 27, 1996, respectively.
Price increases have not been a significant reason for these revenue increases.

         Revenue from Managed Care contracts grew 83%, from $2,692,000 to
$4,933,000 for the three months ended September 29, 1995, and September 27,
1996, respectively. Strong growth in managed care sales for distribution of self
injectable medications accounted for this increase. Revenue from Proprietary
Products grew 71%, from $5,401,000 to $9,210,000 due to strong sales growth in
both the Quick Check and Supreme reagent strips. Patient Choice revenue
increased 38%, from $10,433,000 to $14,363,000, due primarily to the addition of
our new StatScript Pharmacy business in July, 1996, which closed the quarter
with $4,232,000 in revenue. Specialty Pharmacy, the largest business unit in
Patient Choice, closed the quarter down 7% in revenue due mainly to the decision
by the Company to suspend serving patients insured by low margin payors.

         Overall revenue growth for Chronimed is expected to remain strong
through the remainder of fiscal 1997. The Company predicates its high growth
managed care revenue projections on a business model which relates the number of
converted patients for the Company's self injectables program to the number of
members of health insurance plans under agreements with the Company. Because the
Company has had limited time with the programs to develop statistically sound
patient conversion rates, its projections may be subject to inaccuracy. As to
proprietary products' projections, sales and production rates of reagent strips,
if continued, coupled with new and updated products to be offered this fiscal
year, should provide for high growth rates through fiscal 1997 compared to
fiscal 1996. The Company believes its production rates are sustainable but may
be subject to unforeseen shortfalls.

COST OF SALES AND GROSS PROFIT

         The increase in cost of sales in the first quarter of fiscal 1997
compared to the first quarter of fiscal 1996 reflects the Company's 54% revenue
growth. The gross margin percentage improved from 26.7% to 27.2% for the three
months ended September 29, 1995 and September 27, 1996, respectively. This
improvement is due primarily to profitable growth in the reagent strip business,
increased margins in the Managed Care self-injectables program, and the addition
of StatScript Pharmacy at better-than-average margins.

         The average order size for all businesses increased from $374 to $475
for the three months ended September 29, 1995 and September 27, 1996,
respectively. The increase in order size has generally resulted in higher gross
margin dollars per order. These increases were due to continued growth in
higher-priced prescription drugs and volume sales through distributors of
medical products.


SELLING AND MARKETING EXPENSES

         Selling and marketing expenses increased 10% over the prior year's
first quarter, primarily as a result of increased spending in preparation for
product releases, additional sales personnel, and increased promotional
activities. As a percent of revenues, selling and marketing expenses decreased
from 7.9% to 5.7% in the three months ended September 29, 1995 and September 27,
1996, respectively.


GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative (G&A) expenses increased 58% over the prior
year's first quarter. As a percent of revenues, these expenses increased from
14.5% to 14.9%. The Company's G&A expenses include customer service and
fulfillment, and thus vary with order activity. These increases reflect
additional people and systems to build an appropriate infrastructure for
continued revenue growth. These increases also reflect goodwill amortization
associated with the StatScript acquisition as well as StatScript's normal
general and administrative expenses. For the full 1997 fiscal year, the Company
expects G&A expenses to be approximately 13% of revenue.


OPERATING INCOME

         Operating income increased from $707,000 to $1,688,000 for the three
months ended September 29, 1995 and September 27, 1996, respectively. This
increase reflects 54% revenue growth, improved margins, and controlled selling,
general and administrative expenses.


INTEREST INCOME

         Interest income decreased primarily as a result of the decrease in
total investment balances. Net interest income after a provision for taxes
accounted for approximately 40% and 20% of net income for the three months ended
September 29, 1995 and September 27, 1996, respectively.


INCOME TAXES

         The Company's income tax rate was approximately 28.7% and 36.2% in the
three months ended September 29, 1995 and September 27, 1996, respectively.
These rates differ from the statutory rate due to favorable tax treatment on
municipal bond interest income. The rate increase in the comparable quarters is
due to a lower percentage of income from interest in the fiscal 1997 period.


LIQUIDITY AND CAPITAL RESOURCES

         As of September 27, 1996, the Company had working capital of
$31,026,000, with no long-term debt, and $57.5 million of shareholders' equity.

         The Company believes that its current working capital, together with
existing sources of liquidity and cash generated by operations, will satisfy its
working capital requirements through at least fiscal 1997.

         The Company's accounts receivable are generally with Payors for which
the collection periods vary depending on the practices of the individual Payor.
Because of the complexities involved in the reimbursement process, typically as
much as one third of the Company's receivables are outstanding for more than 90
days on an ongoing basis. The average collection period for the Company's
accounts receivable increased up until the beginning of fiscal 1995 as the
Company became more involved in the reimbursement process through its specialty
pharmacy programs for patients with chronic conditions, including organ
transplant and HIV/AIDS. Additionally, the Company has obtained an increasing
number of patients with benefits from Medicaid and special state programs which
tend to pay claims more slowly. The advent of electronic billing is a recent
positive trend that has begun to shorten cash collection periods and improve
cash flow. Nonetheless, the Company expects working capital requirements to
increase as revenues increase.

         The days sales outstanding (DSO) of the Company's accounts receivable
improved to 64 at September 27, 1996, compared to 76 at September 29, 1995. The
decrease reflects improved collection efforts and the mix of business. Growth in
revenue from Payors which are billed electronically and increased sales to large
institutions have both contributed to the decrease in DSO as these groups pay
claims in a more timely manner.

         The reserve for bad debts increased from $860,000 to $990,000 from June
28, 1996, to September 27, 1996, supporting the Company's significant revenue
growth, favorably offset by the improving quality of receivables.

         Inventory increased $8.2 million from June 1996 to September 1996 due
to large buys to secure favorable pricing and to general business growth.

         Effective July 1, 1996, the Company acquired the assets of StatScript
Management Services, Inc. and its associated specialty pharmacies (StatScript).
The all-cash purchase price was $10,250,000, plus a contingent payment of up to
$2,250,000. StatScript provides pharmacy services to patients with HIV and AIDS.

         On September 6, 1996, the Company approved a stock repurchase plan of
up to 1 million shares at times and prices to be determined by management.
Through September 27, 1996, the Company has repurchased 113,000 shares at a cost
of $1,575,000 with plans to acquire more shares in fiscal 1997.

         The Company has no material commitments for capital expenditures for
fiscal 1997. The Company's capital plan for fiscal 1997 is $2.7 million.

         The Company has a discretionary line of credit of $2,500,000. There was
no balance outstanding under the line of credit at September 27, 1996.

         The Company has a $1.4 million note receivable from Health Craft
International, Inc. (HCI) at September 27, 1996. The note bears interest at a
rate of 8%, payable monthly. Proceeds from the note are being used to fund
development of a new product for diabetes patients. Principal payments on the
note have been restructured to commence in January, 1997, and are payable in
sixty equal monthly installments. The Company has the option of converting this
note into a controlling equity interest in HCI. Alternatively, the Company has
the option to acquire the assets of HCI by forgiving the note, paying a one-time
fee, and agreeing to a revenue-based royalty schedule subject to a maximum
dollar limit. As is always the case with product design and development efforts,
there is a risk that the project will not be completed successfully. If the
underlying HCI project is unsuccessful, the Company's note receivable may become
uncollectible.


HEALTH REFORM/GOVERNMENT REGULATION

         Political, economic and regulatory influences are subjecting the health
care industry in the United States to fundamental change. A variety of new
approaches has been proposed, including mandated basic health care benefits,
controls on health care spending through limitations on the growth of private
health insurance premiums and Medicare and Medicaid spending, and the creation
of large purchasing groups and other fundamental changes to the health care
delivery system. In addition, some of the states in which the Company operates
have adopted or are considering various health care reform proposals. The
Company anticipates that both the public and private sectors will continue to
review and assess alternative health care delivery systems and payment methods
and that debate of these issues will likely continue in the future. Because of
uncertainty regarding the ultimate features of reform initiatives and their
enactment and implementation, the Company cannot predict which, if any, of such
reform proposals will be adopted, when they may be adopted, or what impact they
may have on the Company.

         The Company's business is subject to substantial governmental
regulation, including laws governing the dispensing of prescription drugs and
laws prohibiting the payment of remuneration for patient referrals. Management
believes that the Company is in substantial compliance with all existing
statutes and regulations materially affecting the conduct of its business.


SEASONALITY

         The Company has experienced a significant seasonal pattern in its
operating results. Historically, the Company has had higher revenues in its
second fiscal quarter than in its third fiscal quarter. The Company believes the
seasonality of its revenues and earnings results from the acceleration of
purchases of prescription drugs and medical products by individuals prior to the
beginning of a new calendar year (which is generally when Payors impose new
deductible calculations). As sales through Patient Choice become a less
significant part of the Company's total revenues, the Company believes its
operating results will become somewhat less seasonal.


OUTLOOK

         Information contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations", other than historical
information, should be considered forward looking and reflects management's
current views of future events and financial performance that involve a number
of risks and uncertainties. The factors that could cause actual results to
differ include, but are not limited to, the following: competition and pricing
pressures; difficulties or delays in the development and marketing of the
Company's products; difficulties in realizing the expected revenues and profits
from the StatScript acquisition; termination of key payor contracts; termination
of key supplier contracts; changes in or unknown violations of various federal,
state, and local regulations governing the business; and management of growth.
Please see Exhibit 99 filed with the Company's Form 10-K on September 12, 1996,
for additional circumstances that could cause actual results to differ from
forecasts.


                                     PART II


Items 1 through 5 required under Part II have been omitted since they are not
applicable or the answers negative.



Item 6 -       Exhibits and Reports on Form 8-K

               (a)   Exhibits

                     10.27   Chronimed 1997 Stock Option Plan
                     11.1    Computation of Earnings Per Share

               (b)   Reports on Form 8-K

                     The Company filed a report on Form 8-K dated July 10, 1996
                     and an amended report on Form 8-K/A dated September 13,
                     1996, both related to the acquisition of StatScript
                     Pharmacy.


                                   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.





                                    CHRONIMED INC.
                                    (REGISTRANT)



   November 1, 1996                 /s/  Maurice R. Taylor, II
              Date                       Maurice R. Taylor, II
                                         Chairman of the Board, President, and
                                              Chief Executive Officer



    November 1, 1996                /s/ Norman A. Cocke
              Date                      Norman A. Cocke
                                        Senior Vice President, Chief Financial 
                                              Officer and Secretary