<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

[X]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934
      FOR THE QUARTERLY PERIOD ENDED MARCH 29, 2002

[ ]   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 0-19952

                        --------------------------------

                                 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)

                             10900 RED CIRCLE DRIVE
                           MINNETONKA, MINNESOTA 55343
                    (Address of principal executive offices)
                                   (Zip Code)

        Registrant's telephone number, including area code (952) 979-3600


      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.

Common Stock, $.01 par value - 12,336,319 shares outstanding as of April 30,
2002



<PAGE>




                                      INDEX

                         CHRONIMED INC. AND SUBSIDIARIES



PART I.   FINANCIAL INFORMATION


Item 1.  Financial Statements

                  Consolidated Balance Sheets - March 29, 2002 (Unaudited) and
                  June 29, 2001

                  Consolidated Statements of Income (Unaudited) - Three months
                  ended March 29, 2002 and March 30, 2001; Nine months ended
                  March 29, 2002 and March 30, 2001

                  Consolidated Statements of Cash Flows (Unaudited) - Nine
                  months ended March 29, 2002 and March 30, 2001

                  Notes to Consolidated Financial Statements (Unaudited) - March
                  29, 2002


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


Item 3.  Quantitative and Qualitative Disclosures About Market Risk


PART II.  OTHER INFORMATION

Items 1, 2, 3, 4 and 5 required under Part II have been omitted since all items
are not applicable or the answers are negative.



Item 6.   Exhibits and Reports on Form 8-K

         a.)      Exhibits

                  10.1 Amended and Restated Credit Agreement dated as of January
                       17, 2002

         b.)      Reports on Form 8-K


SIGNATURES



                                       1
<PAGE>


ITEM 1.  FINANCIAL STATEMENTS

                                 CHRONIMED INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

<TABLE>
<CAPTION>
                                                                            MARCH 29,
                                                                               2002                JUNE 29,
                                                                           (UNAUDITED)               2001
                                                                     --------------------     --------------------
<S>                                                                          <C>                        <C>
ASSETS
Current assets
  Cash and cash equivalents                                                         $565                      $--
  Accounts receivable (net of allowances of $12,446 and $9,664                    47,900                   40,322
   at March 29, 2002, and  June 29, 2001, respectively)
  Income taxes receivable                                                          7,168                    6,370
  Inventory                                                                        9,837                    8,833
  Other current assets                                                               833                    1,030
  Deferred taxes                                                                   2,859                    3,918
                                                                     --------------------     --------------------
    Total current assets                                                          69,162                   60,473
                                                                     --------------------     --------------------
Property and equipment
  Property and equipment                                                          17,987                   16,942
  Allowance for depreciation                                                     (11,771)                  (9,915)
                                                                     --------------------     --------------------
    Net property and equipment                                                     6,216                    7,027

Goodwill, net                                                                     30,233                   30,233
Deferred taxes                                                                     1,030                    1,030
Other assets, net                                                                    200                      230
                                                                     --------------------     --------------------
  Total assets                                                                  $106,841                  $98,993
                                                                     ====================     ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
  Accounts payable                                                               $15,215                  $15,524
  Accrued expenses                                                                 4,268                    3,867
  Short-term debt                                                                 10,567                    4,100
                                                                     --------------------     --------------------
    Total current liabilities                                                     30,050                   23,491

Shareholders' equity
  Preferred Stock                                                                     --                       --
  Common Stock, issued and outstanding shares -
      12,336 and 12,315 respectively                                                 123                      123
  Additional paid-in capital                                                      55,052                   54,961
  Retained earnings                                                               21,616                   20,418
                                                                     --------------------     --------------------
    Total shareholders' equity                                                    76,791                   75,502
                                                                     --------------------     --------------------
Total liabilities and shareholders' equity                                      $106,841                  $98,993
                                                                     ====================     ====================

</TABLE>

See notes to consolidated financial statements




                                       2
<PAGE>



                                 CHRONIMED INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                    (in thousands, except per share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                   QUARTER ENDED          NINE MONTHS ENDED
                                                               ----------------------   ----------------------
                                                                MARCH 29,   MARCH 30,     MARCH 29,  MARCH 30,
                                                                  2002        2001          2002       2001
                                                               ----------   ---------    ----------  ---------

REVENUE
<S>                                                           <C>        <C>          <C>        <C>
  Mail Order                                                     $44,887    $39,422      $130,778   $113,891
  Retail                                                          57,473     38,569       165,564     96,038
                                                               ---------   --------     ---------  ---------
    Total Revenue                                                102,360     77,991       296,342    209,929
         Yr to Yr Growth                                            31.2%      37.8%         41.2%      27.9%
COSTS AND EXPENSES
  Cost of revenue                                                 90,335     68,863       260,731    184,304
                                                               ---------   --------     ---------  ---------
    Gross profit                                                  12,025      9,128        35,611     25,625
          % of Revenue                                              11.7%      11.7%         12.0%      12.2%

  Selling and marketing                                              841        700         2,553      2,472
  General and administrative                                       8,759      7,818        28,765     22,118
  Bad debt expense                                                 1,001      1,314         2,445      3,416
                                                               ---------   --------     ---------  ---------
    Total operating expenses                                      10,601      9,832        33,763     28,006
          % of Revenue                                              10.4%      12.6%         11.4%      13.3%

INCOME (LOSS) FROM OPERATIONS                                      1,424       (704)        1,848     (2,381)
          % of Revenue                                              1.4%       -0.9%          0.6%      -1.1%

  Interest income                                                    161        289           390        472
  Interest (expense)                                                (182)       (11)         (401)       (91)
  Other (loss) income                                                 --       (250)          109       (238)
                                                               ---------   --------     ---------  ---------

INCOME (LOSS) BEFORE INCOME TAXES                                  1,403       (676)        1,946     (2,238)
  Income tax (expense) benefit                                      (537)       265          (749)       810

INCOME (LOSS) FROM CONTINUING OPERATIONS                             866       (411)        1,197     (1,428)
          % of Revenue                                               0.8%      -0.5%          0.4%      -0.7%

DISCONTINUED OPERATIONS
(Loss) Income from Discontinued Operations, net of tax                --       (83)            --      1,462
Gain on Sale of Discontinued Operations, net of tax                   --    13,776             --     13,776
                                                               ---------   --------     ---------  ---------

NET INCOME                                                          $866    $13,282        $1,197    $13,810
                                                               =========   ========     =========  =========
          % of Revenue                                               0.8%      17.0%          0.4%       6.6%


BASIC AND DILUTED EARNINGS (LOSS) PER SHARE
  Income (Loss) from Continuing Operations                         $0.07    $ (0.03)        $0.10    $ (0.12)
  Income from Discontinued Operations                                 --       1.12            --       1.25
                                                               ---------   --------     ---------  ---------
  Net Income per share                                             $0.07      $1.09         $0.10      $1.13
                                                               =========   ========     =========  =========

BASIC WEIGHTED AVERAGE SHARES OUTSTANDING                         12,317     12,222        12,316     12,174
DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING                       12,394     12,222        12,331     12,174

</TABLE>


See notes to consolidated financial statements




                                       3
<PAGE>



                                 CHRONIMED INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)



<TABLE>
<CAPTION>
                                                                                   NINE MONTHS ENDED
                                                                     -----------------------------------------------
                                                                             MARCH 29,              MARCH 30,
                                                                               2002                    2001
                                                                     ----------------------  -----------------------
<S>                                                                  <C>                       <C>
OPERATING ACTIVITIES
  Net income                                                                         $1,197                  $13,810
  Less income from discontinued operations                                                -                   15,238
                                                                     ----------------------  -----------------------
    Income (loss) from continuing operations                                          1,197                   (1,428)

  Adjustments to reconcile income from continuing operations to net cash used in
    (provided by) operating activities:
      Depreciation and amortization                                                   2,224                    3,113
      Deferred income taxes                                                           1,059                      781
      Gain on sale of business                                                            -                      (22)
      Loss on sale of available-for-sale securities                                       -                      260
      Changes in operating assets and liabilities:
        Accounts receivable                                                          (7,578)                  (3,075)
        Income taxes                                                                   (798)                   5,116
        Inventory                                                                    (1,004)                      63
        Accounts payable                                                               (309)                   2,846
        Accrued expenses                                                                401                      730
        Other assets                                                                    227                     (521)
                                                                     ----------------------  -----------------------
      Net cash (used in) provided by operating activities                            (4,581)                   7,863

INVESTING ACTIVITIES
  Acquisitions                                                                            -                  (17,194)
  Proceeds from sale of Home Service Medical Business                                     -                    2,734
  Purchases of property and equipment                                                (1,413)                  (2,431)
  Sale of available-for-sale securities                                                   -                    4,413
                                                                     ----------------------  -----------------------
      Net cash (used in) investing activities                                        (1,413)                 (12,478)

FINANCING ACTIVITIES
  Net proceeds from issuance of Common Stock                                             92                      913
  Net proceeds from (repayments of) borrowings                                        6,467                   (2,500)
                                                                     ----------------------  -----------------------
      Net cash provided by (used in) financing activities                             6,559                   (1,587)

CASH PROVIDED BY DISCONTINUED OPERATIONS                                                  -                   15,864

Increase in cash and cash equivalents                                                   565                    9,662
Cash and cash equivalents at beginning of period                                          -                        -
                                                                     ----------------------  -----------------------
Cash and cash equivalents at end of period                                             $565                   $9,662
                                                                     ======================  =======================


</TABLE>

See notes to consolidated financial statements



                                       4
<PAGE>


                                 CHRONIMED INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION

         The accompanying unaudited condensed consolidated 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 quarter ended March
29, 2002, are not necessarily indicative of the results that may be expected for
the year ending June 28, 2002.

         The balance sheet at June 29, 2001, 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.

         We use 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.

2.       CRITICAL ACCOUNTING ESTIMATES

         See the "Critical Accounting Estimates" in the "Management's Discussion
and Analysis of Financial Condition and Results of Operations" of this Form
10-Q.

3.       INVENTORIES

         Inventories consist primarily of purchased pharmaceuticals held for
resale and are carried at the lower of cost or market determined under the
average cost method.

4.       PER SHARE DATA

         Earnings per share are calculated in accordance with SFAS No. 128,
"Earnings Per Share." Potential common shares are included in the diluted net
income (loss) calculation when dilutive. Potential common shares consisting of
common stock issuable upon exercise of outstanding common stock options are
computed using the treasury stock method. Our net income (loss) per basic and
diluted share calculations are based on the weighted common shares outstanding.
The following table sets forth the computation of basic and diluted net income
per share.



                                       5
<PAGE>


$s and Shares in Thousands

<TABLE>
<CAPTION>
                                                              QUARTER ENDED                   NINE MONTHS ENDED
                                                        -------------------------         ------------------------
                                                         MARCH 29,      MARCH 30,           MARCH 29,    MARCH 30,
                                                           2002           2001               2002          2001
                                                        ----------    -----------         -----------  -----------
<S>                                                    <C>           <C>                <C>           <C>
Numerator for basic and diluted net
     income per share - net income (loss)
          Continuing operations                              $866          $(411)             $1,197      $(1,428)
          Discontinued operations                               -         13,693                   -       15,238
                                                        ----------    -----------         -----------  -----------
          Net Income                                         $866        $13,282              $1,197      $13,810
                                                        ==========    ===========         ===========  ===========
Denominator for basic net income
     per share - weighted-average shares                   12,317         12,222              12,316       12,174
Effect of dilutive securities:
     Employee stock options                                    77              -                  15            -
                                                        ----------    -----------         -----------  -----------
Denominator for diluted net income
     per share - weighted-average shares
     and assumed conversions                               12,394         12,222              12,331       12,174
                                                        ==========    ===========         ===========  ===========
Basic and Diluted net income (loss) per share:
        Continuing operations                               $0.07         $(0.03)              $0.10       $(0.12)
        Discontinued operations                                 -           1.12                   -         1.25
                                                        ----------    -----------         -----------  -----------
        Basic net income (loss) per share                   $0.07          $1.09               $0.10        $1.13
                                                        ==========    ===========         ===========  ===========
</TABLE>


         Options to purchase 1,142,870 and 1,219,520 shares of common stock at
various prices were outstanding during the third quarter ended March 29, 2002,
and fiscal 2002 year-to-date, respectively and were excluded from the above
computation of diluted net income per share. Options to purchase 220,130 and
1,138,780 shares of common stock at various prices were outstanding as of the
third quarter ended March 30, 2001, and fiscal 2001 year-to-date, respectively,
and were excluded from the above computation of diluted net loss per share. The
exercise prices of these options were greater than the average market price of
the common shares and, therefore, the effect would be antidilutive.


5.       BUSINESS SEGMENT INFORMATION

         We have two reportable segments. The Mail Order segment includes the
results of our biotech injectables and organ transplant business lines. Also
included in the Mail Order segment's results for the nine months ended March 30,
2001, are the results of our Home Service Medical subsidiary, which we sold to
Express-Med Inc. on September 1, 2000. The Retail segment consists of our
StatScript Pharmacy, which serves primarily HIV/AIDS patients and post-organ
transplant recipients. For the nine months ended March 30, 2001, the Retail
segment also included our Clinical Partners' strategic services line. The
Clinical Partners business ceased operations in the second quarter fiscal 2001.
The table below presents information by reportable segment.



                                       6
<PAGE>



(in thousands)

<TABLE>
<CAPTION>
                                                       MAIL ORDER         RETAIL            TOTAL
                                                       ----------        --------          --------
<S>                                                   <C>               <C>              <C>
For the Quarter Ended March 29, 2002
      Revenues                                           $44,887          $57,473          $102,360
      Income from Operations                                 409            1,015             1,424
For the Quarter Ended March 30, 2001
      Revenues                                           $39,422          $38,569           $77,991
      Income (Loss) from Operations                          246             (950)             (704)

For the Nine Months Ended March 29, 2002
      Revenues                                          $130,778         $165,564          $296,342
      Income from Operations                               1,730            2,348             4,078
For the Nine Months Ended March 30, 2001
      Revenues                                          $113,891          $96,038          $209,929
      Income (Loss) from Operations                          814           (3,195)           (2,381)

</TABLE>

         The difference between segment totals and our consolidated totals
consist of administrative costs associated with the transition of our StatScript
Overland Park, Kansas office to corporate headquarters (see Note 12), costs
associated with our financial restatement (see Notes 9 and 12), and store
closing costs (see Note 12), all of which are not allocated to the segments. The
total of these StatScript Retail related charges was $2.2 million for the nine
months ended March 29, 2002. The following table is a reconciliation of
reportable segment income to our consolidated totals.

(in thousands)

<TABLE>
<CAPTION>
                                                     THIRD QUARTER ENDED                          NINE MONTHS ENDED
                                                -------------------------------              ----------------------------
                                                MARCH 29,             MARCH 30,              MARCH 29,          MARCH 30,
                                                 2002                   2001                   2002               2001
                                                ---------             ---------              ---------         ----------

<S>                                              <C>                  <C>                    <C>               <C>
Income (Loss) from Operations:
Total for reportable segments                      $1,424                $(704)                $4,078             $(2,381)
Unallocated amounts:
 - Corporate G&A                                        -                    -                 (2,230)                  -
 - Interest income                                    161                  289                    390                 472
 - Interest (expense)                                (182)                 (11)                  (401)                (91)
 - Other income (expense)                               -                 (250)                   109                (238)
                                                 --------             --------               --------           ---------
Income (loss) before income taxes                  $1,403                $(676)                $1,946             $(2,238)
                                                 ========             ========               ========           =========

</TABLE>




                                       7
<PAGE>




The following table presents assets by reportable segment:
(in thousands)

<TABLE>
<CAPTION>
                                       MAIL ORDER         RETAIL            CORPORATE        TOTAL
                                       ----------         ------            ---------        -----
<S>                                   <C>               <C>              <C>              <C>
As of March 29, 2002
      Segment Assets                     $31,567          $62,774           $12,500         $106,841

As of  June 29, 2001
      Segment Assets                     $31,210          $55,612           $12,171          $98,993

</TABLE>

6.       DISCONTINUED OPERATIONS - SALE OF MEDGENESIS

         We sold our diagnostics products subsidiary, MEDgenesis Inc., to
Medisys PLC on January 5, 2001. We have classified MEDgenesis as "discontinued
operations" for financial reporting purposes. As a result, all financial results
concerning MEDgenesis Inc. for the quarter and nine months ended March 30, 2001,
have been classified as discontinued operations.

         The discontinued operations represented by MEDgenesis and the gain on
the sale contributed net income after tax of $13.7 million or $1.12 per share in
the third quarter of fiscal 2001 and $15.2 million or $1.25 per share for the
nine months ended March 30, 2001.

7.       SALE OF HOME SERVICE MEDICAL BUSINESS

         We sold our Home Service Medical ("HSM") business on September 1, 2000,
to Express-Med, Inc. of New Albany, Ohio for $6.5 million. We received $2.7
million in cash ($3.0 million at close less a $0.3 million working capital
adjustment paid to the buyer on December 1, 2000) and a $3.8 million
subordinated note maturing in 42 months and bearing an annual interest rate of
11%.

                  We deferred the $3.8 million gain on the sale of HSM in
accordance with the SEC Staff Accounting Bulletin No. 81, "Gain Recognition on
the Sale of a Business or Operating Assets to a Highly Leveraged Entity." Given
that there is no guarantee that Express-Med will be able to repay the note and
the long-term nature of the note, the gain will be deferred until principal
payments under the promissory note are received or are deemed to be fully
collectable. Based on the terms of the HSM Asset Purchase Agreement,
Express-Med, Inc. will pay quarterly installments of accrued interest and
periodic installments of principal. Quarterly interest payments began March 1,
2001, and the periodic installments of principal will begin September 6, 2002.
Principal payments will consist of $1.0 million due on September 6, 2002, $1.0
million due on September 2, 2003, and $1.8 million due on March 1, 2004. The
remaining outstanding balance of principal and interest becomes due on March 1,
2004. Express-Med is current on its quarterly interest payments. We believe that
Express-Med, Inc. will be able to continue funding the interest payments and
therefore we will accrue the interest receivable monthly as earned.



                                       8
<PAGE>

         We recorded the $3.8 million deferred gain on the balance sheet as an
offset to notes receivable, netting to zero and therefore is not reflected on
the face of the balance sheet.

8.       SIGNIFICANT CONCENTRATIONS

         A major payor with whom we have a contract represented 26% of the
Company's revenue in the third quarter of fiscal 2002 and 27% for the nine
months ended March 29, 2002. This compares to 34% in the third quarter of fiscal
2001 and 36% for the nine months ended March 30, 2001.

         We use a national distributor who supplies pharmaceuticals for both the
Retail and the Mail Order segments. This distributor supplied 89% of our
inventory purchases in the third quarter of fiscal 2002 and 90% for the nine
months ended March 29, 2002. This compares to 91% of our inventory purchases in
the third quarter of fiscal 2001 and 79% for the nine months ended March 30,
2001. In the event that we are unable to purchase pharmaceuticals through this
distributor, we would be able to purchase the same inventory through other
pharmaceutical distributors.

9.       FINANCIAL RESTATEMENT

         Our financial statements for the quarter ended March 30, 2001, are
those as restated on the Form 10-Q/A filed with the Securities and Exchange
Commission on October 12, 2001. We refer the reader to that document and our
Form 10-K for the fiscal year ended June 29, 2001, also filed on October 12,
2001, for further information.

10.      COMPREHENSIVE INCOME

         Comprehensive income was $12.0 million for the fiscal 2001 third
quarter and $12.1 million for the nine months ended March 30, 2001. Other
comprehensive income consisted of unrealized loss on available-for-sale
securities in the amount of $1.3 million for the fiscal 2001 third quarter and
$1.7 million for the nine months ended March 30, 2001. There was no other
comprehensive income for the third quarter and nine months ended March 29, 2002.


11.      GOODWILL

         On June 30, 2001, we adopted Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). This
statement requires that goodwill and intangible assets with indefinite lives no
longer be amortized, but instead be tested for impairment at least annually. We
currently have unamortized goodwill in the amount of $30.2 million. The
unamortized goodwill is primarily from the acquisition of StatScript pharmacy,
several subsequent acquisitions of pharmacy stores, and the acquisition of a
transplant pharmacy. During the first fiscal quarter ended September 28, 2001,
we completed our transitional testing for impairment of goodwill and determined
that no impairment exists.

         As required by SFAS 142, the results for the first three quarters of
fiscal 2001 have not been restated. A reconciliation of net income after tax, as
if SFAS 142 had been adopted, is presented below for the third quarter and nine
months ended March 30, 2001 (in thousands except per share data):



                                       9
<PAGE>


<TABLE>
<CAPTION>
                                                           QUARTER ENDED        NINE MONTHS ENDED
                                                             MARCH 30,              MARCH 30,
                                                               2001                   2001
                                                           -------------        -----------------
<S>                                                        <C>                  <C>
Reported net (loss) from continuing operations                   $  (411)                $(1,428)
Goodwill amortization                                                213                     554
                                                           -------------        ----------------
Adjusted net (loss) from continuing operations                   $  (198)                  $(874)
                                                           =============        ================
Reported basic and diluted (loss) per share                      $ (0.03)                $ (0.12)
Goodwill amortization                                               0.02                    0.05
                                                           -------------        ----------------
Adjusted basic and diluted (loss) per share                      $ (0.01)                $ (0.07)
                                                           =============        ================

</TABLE>


12.      TRANSITION, FINANCIAL RESTATEMENT AND STORE CLOSING COSTS

         On August 14, 2001, we announced that we intended to consolidate the
support functions of our StatScript Pharmacy division, then in Overland Park,
Kansas, into our headquarters located in Minnetonka, Minnesota. The transfer of
these functions was completed as of November 1, 2001. We incurred approximately
$993,000 of expense related to this consolidation in fiscal 2002 year-to-date.

         We incurred approximately $880,000 fiscal 2002 year-to-date of
auditing, consulting, and other expenses related to the restatement of our
fiscal 2001 and 2000 financial statements. The restated financial statements
were completed and filed on October 12, 2001. See Note 9 for further details
regarding the restatement.

         We also incurred $357,000 fiscal 2002 year-to-date for costs related to
the closing of five of our retail stores in the second quarter.

         The total of these Retail StatScript related charges was $2.2 million
for the nine months ended March 29, 2002. These costs have been classified as
general and administrative expenses in the Chronimed Consolidated Statements of
Income. The transition of StatScript support functions from Kansas to corporate
headquarters, the restatement effort, and the store closings were substantially
completed in the second fiscal quarter ended December 28, 2001.

13.      LOSS CONTINGENCY

         The Company holds a promissory note, secured by a residential real
estate mortgage, given by a former officer and director of the Company. The note
in the amount of $549,900 was payable in full on December 31, 2001. Payment was
not made and the note is in default. The Company has undertaken steps to enforce
its rights under the note and mortgage and considers the debt to be collectible.



                                       10
<PAGE>

14.      SUBSEQUENT EVENTS

         On April 30, 2002, the Company announced its intent to close nine
smaller, unprofitable retail stores in fiscal 2002 fourth quarter. This decision
was based upon the current financial performance of these stores and long-term
growth opportunities within each of the respective geographical markets.
Management believes it is a necessary action to improve profitability and to
focus resources on its highest potential markets. The Company anticipates that
it will recognize a special charge of approximately $1.0 million in its fiscal
2002 fourth quarter for the costs directly related to the store closings.




                                       11
<PAGE>


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

OVERVIEW
         Chronimed Inc. is a disease-focused company excelling in specialty
pharmacy distribution for people with chronic health conditions. The specialty
pharmacy industry was developed to serve patients with highly specialized
pharmaceutical needs and to help employers and third-party payors manage and
control patient care costs more effectively. Chronimed distributes
pharmaceuticals and provides specialized patient management services nationwide
for people with conditions such as post-organ transplants, HIV/AIDS, and
diseases treated with biotech injectable medications. We work directly with
patients, physicians, nursing services, and other healthcare providers, and with
insurance companies, health maintenance organizations, preferred provider
organizations, government agencies, and other third-party payors to improve
clinical and financial outcomes for patients with long-term, complex and
expensive pharmaceutical needs.

         We distribute pharmaceuticals and related educational materials via
mail service and through our nationwide StatScript retail pharmacy chain.
Accordingly, we operate in two business segments, Mail Order and Retail.

         Our specialty medications, ranging from $3,000 to $150,000 per patient
per year, often need refrigerated packaging, may require overnight delivery, and
are usually part of a complex regimen. These are all reasons these types of
medications are not routinely stocked in standard retail pharmacies. Our unique
distribution and management techniques, as well as coordination with healthcare
partners, improve the quality of care for people afflicted by very expensive
diseases and contain costs within a complex healthcare reimbursement system. We
also work with our healthcare partners to develop patient and therapy management
guidelines through ongoing monitoring and evaluation of patient outcomes.

Our services are most effective for patients who:

o        have illnesses that generally occur in less than one percent of the
         nation's population;

o        require treatment by healthcare specialists;

o        require high-cost, complex medications that are not always available
         through traditional retail pharmacies, the majority of which must be
         taken for the rest of the patient's life; and

o        require a significant amount of self-management and ongoing education
         (where patient compliance is critical for improving clinical and
         financial outcomes).



                                       12
<PAGE>



Our key relationships are with:

o        Patients: For the patient, we provide a confidential, convenient,
         competitively priced source of prescription drugs, counseling, and a
         variety of educational materials to help the patient achieve maximum
         control over his or her condition. Educating patients, improving
         patient compliance, and increasing provider support and intervention
         favorably affect clinical outcomes and decrease the long-term costs of
         care. Our patient-specific, value-added services include counseling by
         highly trained registered pharmacists and internally certified patient
         specialists, confidentiality, the provision of educational materials,
         compliance monitoring, insurance billing, refill reminders, 24-hour
         pharmacist availability, automated reorder capabilities, and timely
         shipments to patients' homes, workplaces, physicians' offices, and
         treatment facilities.

o        Healthcare Providers: Our expertise makes us a valuable partner for
         healthcare providers working with patients experiencing chronic health
         conditions. We have developed relationships with several treatment
         centers, foundations, and medical associations that specialize in the
         treatment or support of patients with chronic conditions. Through these
         relationships, we are able to introduce our services to a large number
         of individuals with chronic conditions and the healthcare specialists
         treating them.

o        Pharmaceutical Developers and Manufacturers: Our delivery system is
         well suited for developers and manufacturers of pharmaceutical products
         who are targeting small or hard-to-identify patient populations. We
         have established relationships with developers and manufacturers of
         prescription drugs needed to manage various chronic conditions and
         provide these companies with assistance in rapid product introduction,
         a cost-effective means for distributing products to specific patient
         populations, and a method for monitoring product use.

o        Payors: Managed care plays a significant role in the provision of
         healthcare in the United States, and the majority of our patient
         referrals come from contracted third-party payors and the government.
         We believe these payors benefit from our services because our
         experience in managing specific patient groups allows us to improve
         patient care while minimizing overall expenditures.

         We work directly with all of these constituents in a concerted effort
to improve clinical and financial outcomes while enhancing the quality of life
for the chronically ill, all in a manner consistent with our obligations to
patient confidentiality.



                                       13
<PAGE>



RESTATEMENT

         We have filed restated financial statements for the fiscal year ended
June 30, 2000, and for the first three quarters of the fiscal year ended June
29, 2001. The restatements reflect a reduction in revenues, an increase in bad
debt expense, and an increase in allowance for doubtful accounts. The
restatements were limited to our Retail segment. Refer to Note 2 to the
Consolidated Financial Statements included in our Form 10-K for the fiscal year
ended June 29, 2001, filed October 12, 2001.


DISCONTINUED OPERATIONS

         On October 10, 2000, we announced that we were engaged in negotiations
to sell our diagnostic products business, MEDgenesis Inc. On December 1, 2000,
we entered into an Asset Purchase Agreement with Medisys PLC of Woodbridge,
Suffolk, England and on January 5, 2001, we completed the sale of MEDgenesis to
Medisys. We have classified MEDgenesis as "discontinued operations" for
financial reporting purposes. As a result, all financial results concerning
MEDgenesis have been classified as discontinued operations.

CRITICAL ACCOUNTING ESTIMATES

         The preparation of our financial statements in conformity with
accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the amounts
reported in our financial statements and accompanying notes. Actual results
could differ materially from those estimates. The items in our financial
statements requiring significant estimates and judgments are as follows:

Allowance for Payor Discounts

         We bill what is called a usual and customary price to our customers who
do not have a contracted billing rate. In many cases, these customers actually
pay a price that is less than the full usual and customary price, yet is still
acceptable to Chronimed. In these cases, at the time of sale, we must estimate
the amount of expected payor discount. We determine this allowance for payor
discount based on an analysis of historical payment experience for both the
Retail and Mail Order businesses. Payor discount allowances are recorded as
offsets to revenue in Chronimed's Consolidated Statements of Income. The
assumptions and estimates used to determine the allowance are subject to
constant revision, and actual results including net revenue and net income could
differ materially from those estimated. The primary factors that could impact
these assumptions include a significant reduction in reimbursement from
healthcare payors and the efficiency and effectiveness of Chronimed's billing,
collections, and cash posting functions.



                                       14
<PAGE>



Allowance for Doubtful Accounts

         We determine an allowance for doubtful accounts based upon an analysis
of the collectibility of specific accounts, historical experience, and the aging
of the accounts receivable. Bad debt expense is recorded as an operating expense
in Chronimed's Consolidated Statements of Income. The assumptions and estimates
used to determine the allowance are subject to constant revision, and actual
collection results could differ materially from those estimated and therefore
materially impact bad debt expense and net income. The primary factors that
impact these assumptions include the efficiency and effectiveness of Chronimed's
billing, collections, and cash posting functions and the financial condition of
payors and patients.

Goodwill and Intangible Impairment

         In assessing the recoverability of the Company's goodwill and other
intangibles, we must make assumptions regarding estimated future cashflows and
other factors to determine the fair value of the respective assets. If these
estimates or their related assumptions change in the future, we may be required
to record impairment charges for these assets not previously recorded. On June
30, 2001, the Company adopted Statement of Financial Accounting Standard No. 142
"Goodwill and Other Intangible Assets," and will be required to analyze its
goodwill for impairment issues on an annual basis coinciding with its fiscal
June 28 year-end.



                                       15
<PAGE>


REVENUE


(in thousands)

<TABLE>
<CAPTION>

                                                                  QUARTER ENDED
                                     ----------------------------------------------------------------------------
                                     MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                       2002                   2001              (DECREASE)               CHANGE
                                     ---------             ----------           ---------              ----------
<S>                                  <C>                    <C>                  <C>                    <C>
Mail-Order - On-going                  $44,887                $39,422              $5,465                   +14%
Mail-Order - Disposed
  (HSM)                                      -                      -                   -                      -
                                     ---------             ----------           ---------              ----------
  Total Mail Order                      44,887                 39,422               5,465                   +14%
Retail                                  57,473                 38,569              18,904                   +49%
                                     ---------             ----------           ---------              ----------
Total Company                         $102,360                $77,991             $24,369                   +31%
                                     ---------             ----------           ---------              ----------

</TABLE>

<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED
                                     ----------------------------------------------------------------------------
                                     MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                       2002                   2001              (DECREASE)               CHANGE
                                     ---------             ----------           ---------              ----------
<S>                                 <C>                    <C>                  <C>                     <C>
Mail-Order - On-going                 $130,778               $111,661             $19,117                   +17%
Mail-Order - Disposed
  (HSM)                                      -                  2,230              (2,230)                 -100%
                                     ---------             ----------           ---------              ----------
  Total Mail Order                     130,778                113,891              16,887                   +15%

Retail                                 165,564                 96,038              69,526                   +72%
                                     ---------             ----------           ---------              ----------
Total Company                         $296,342               $209,929             $86,413                   +41%
                                     =========             ==========           =========              ==========

</TABLE>

         Fiscal 2002 third quarter revenue of $102.4 million represents an
increase of $24.4 million or 31% compared to third quarter fiscal 2001 revenue
of $78.0 million. The specialty pharmacy acquisitions we made in the second half
of fiscal 2001, including the four APP stores, Oaks Pharmacy in Los Angeles and
Sangstat's mail service transplant pharmacy, contributed nearly half of the 31%
increase. Our base business contributed slightly more than half of the increase.
For the nine months ended March 29, 2002, and March 30, 2001, total revenue
increased 41% from $209.9 million to $296.3 million.

         Mail Order segment revenue in the third quarter of fiscal 2002 grew
$5.5 million or 14% over last year's third quarter, from $39.4 million to $44.9
million. Year-to-date Mail Order revenue increased $16.9 million or 15% from
$113.9 million to $130.8 million for the nine months ended March 30, 2001, and
March 29, 2002, respectively. Year-to-date fiscal 2001 revenue included $2.2
million of revenue from our Home Service Medical ("HSM") subsidiary that was
sold in September of 2000. Excluding the fiscal 2001 HSM revenue, Mail Order
revenue grew $19.1 million or 17% from $111.7 million to $130.8 million for the
nine months ended March 30, 2001, and March 29, 2002, respectively. The increase
in Mail Order revenue is due primarily to increased biotech injectable business,
aided by the April 2001 acquisition of a mail order transplant pharmacy.



                                       16
<PAGE>

         The Retail segment grew $18.9 million, or 49%, in the third quarter of
fiscal 2002 compared to last year's third quarter. Year-to-date revenue grew
$69.5 million or 72% from $96.0 million to $165.6 million for the nine months
ended March 30, 2001, and March 29, 2002, respectively. This growth was due
primarily to store acquisitions in fiscal 2001 (American Prescription Providers,
Inc. in February 2001 and Oaks Pharmacy in April 2001) in addition to 23%
same-store growth in pharmacies open for more than one year. The closure of five
Retail stores in the second quarter of fiscal 2002 had a slight negative impact
on fiscal 2002 third quarter and fiscal 2002 year-to-date revenue.

GROSS PROFIT

         Total gross profit dollars increased $2.9 million, or 32% to $12.0
million, in the third quarter of fiscal 2002 compared to last year's third
quarter of $9.1 million. Year-to-date gross profit dollars increased $10.0
million or 39%, from $25.6 million last year to $35.6 million this year. The
increase was primarily the result of 31% revenue growth.

         Third quarter gross profit percentage was consistent with the prior
year quarter at 11.7%. This reflects stabilization in the markets we serve and
is also tied to our improved purchasing programs. Year-to-date gross profit
percentage decreased from 12.2% to 12.0% for the nine months ended March 30,
2001, and March 29, 2002, respectively. The gross margin percentage decline was
due primarily to reduced reimbursement rates in our Retail segment.

SELLING AND MARKETING EXPENSES

(in thousands)


<TABLE>
<CAPTION>

                                                                     QUARTER ENDED
                                        ----------------------------------------------------------------------------
                                        MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                          2002                   2001              (DECREASE)               CHANGE
                                        ---------             ----------           ---------              ----------
<S>                                     <C>                    <C>                  <C>                    <C>
On-going business                            $841                  $700                 $141                   +20%
Disposed (HSM) business                         -                     -                    -                      -
                                        ---------             ----------           ---------              ----------
Total Company                                $841                  $700                 $141                   +20%
                                        ---------             ----------           ---------              ----------

</TABLE>

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                        ----------------------------------------------------------------------------
                                        MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                          2002                   2001              (DECREASE)               CHANGE
                                        ---------             ----------           ---------              ----------
<S>                                     <C>                   <C>                  <C>                     <C>
On-going business                          $2,553                $2,048                 $505                   +25%
Disposed (HSM) business                         -                   424                 (424)                 -100%
                                        ---------             ----------           ---------              ----------
Total Company                              $2,553                $2,472                  $81                    +3%
                                        =========             ==========           =========              ==========

</TABLE>

         Total selling and marketing expenses increased $0.1 million, or 20%, in
the fiscal 2002 third quarter compared to the prior year third quarter.
Year-to-date selling and marketing expenses increased $0.1 million, or 3%,
compared to last year's first nine months due to increased headcount and
promotional spending focused on the post-organ transplant and HIV markets.
Exclusive of the HSM business, selling and marketing expenses increased by $0.5
million, or 25%, during this same period. As a percentage of revenue, on-going
selling and marketing expenses decreased from 0.9% in the third quarter of
fiscal 2001 to 0.8% in the third quarter of fiscal 2002. Year-to-date sales and



                                       17
<PAGE>

marketing expenses as a percent of revenue declined from 1.2% to 0.9% for the
nine months ended March 30, 2001, and March 29, 2002, respectively. Exclusive of
the HSM business, selling and marketing expenses decreased as a percent of
revenue from 1.0% to 0.9% during the same period. The decrease is due to the
consolidation of our selling and marketing efforts into one organization serving
both the Mail Order and Retail segments beginning in the fourth quarter of
fiscal 2001. We believe this integrated approach increases the effectiveness of
our selling and marketing efforts.

GENERAL AND ADMINISTRATIVE EXPENSES

(in thousands)


<TABLE>
<CAPTION>

                                                                     QUARTER ENDED
                                        ----------------------------------------------------------------------------
                                        MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                          2002                   2001              (DECREASE)               CHANGE
                                        ---------             ----------           ---------              ----------
<S>                                     <C>                    <C>                  <C>                       <C>
On-going business                          $8,759                $7,818                 $941                   +12%
Disposed (HSM) business                         -                     -                    -                      -
Transition, restatement,
   and store closing costs                      -                     -                    -                      -
                                        ---------             ----------           ---------              ----------
Total Company                              $8,759                $7,818                 $941                   +12%
                                        ---------             ----------           ---------              ----------

</TABLE>

<TABLE>
<CAPTION>
                                                                      NINE MONTHS ENDED
                                        ----------------------------------------------------------------------------
                                        MARCH 29,             MARCH 30,             INCREASE              PERCENTAGE
                                          2002                   2001              (DECREASE)               CHANGE
                                        ---------             ----------           ---------              ----------
<S>                                    <C>                    <C>                  <C>                        <C>
On-going business                         $26,535               $21,887               $4,648                   +21%
Disposed (HSM) business                                             231                 (231)                 -100%
Transition, restatement,
  and store closing costs                   2,230                     -                2,230                     nm
                                        ---------             ----------           ---------              ----------
Total Company                             $28,765               $22,118               $6,647                   +30%
                                        =========             ==========           =========              ==========

</TABLE>

         Total Company general and administrative ("G&A") expenses increased $
0.9 million, or 12%, in the third quarter of fiscal 2002 compared to the same
period last year. Year-to-date expenses increased $6.6 million, or 30% from
$22.1 million to $28.8 million for the nine months ended March 30, 2001, and
March 29, 2002, respectively. Costs associated with the transition of our
Overland Park, Kansas office functions, financial restatement, and store
closings accounted for $2.2 million of the increase (see Notes 9 and 12 to the
Consolidated Financial Statements included in this Form 10-Q for further
information regarding these costs). Exclusive of the transition, restatement and
store closing costs in the first two quarters of fiscal 2002, and the fiscal
2001 activity of our disposed HSM business, year-to-date G&A expenses increased
$4.6 million or 21% compared to the same period last year. The increase is
attributable to increased direct costs from customer service, billing and
fulfillment associated with the revenue growth in our existing business, store
acquisitions and openings completed in fiscal 2001, and increased audit fees. As
a percentage of revenue, G&A costs decreased from 10.0% in last year's third
quarter to 8.6% in this year's third quarter. Year-to-date G&A expenses
decreased as a percentage of revenue from 10.5% to 9.7% for the nine months
ended March 30, 2001, and March 29, 2002, respectively. Exclusive of the above
mentioned costs, G&A expenses decreased as a percentage of revenue from 10.4% to
9.0% for fiscal 2002 year-to-date



                                       18
<PAGE>

compared to the same period last year. This decrease represents the Company's
continued emphasis on leveraging its existing operating infrastructure over a
growing revenue base.

BAD DEBT EXPENSE

         Total Company third quarter bad debt expense decreased $0.3 million, or
24%, from $1.3 million last year to $1.0 million this year. Year-to-date, bad
debt expense decreased $1.0 million, or 28%, from $3.4 million to $2.4 million
for the nine months ended March 30, 2001, and March 29, 2002, respectively. As a
percentage of revenue, third quarter bad debt expense decreased from 1.7% last
year to 1.0% this year. Year-to-date, as a percentage of revenue, bad debt
expense decreased from 1.6% to 0.8% for the nine months ended March 30, 2001,
and March 29, 2002, respectively. The high rate of bad debt expense in the
previous year periods was due primarily to the Company's write-off of
receivables in its StatScript Retail segment, which was part of the Company's
financial restatement as described elsewhere in this document and in the
Company's Form 10-K for the fiscal year ended June 29, 2001. We expect bad debt
expense to be approximately 1% of revenue for the total 2002 fiscal year. The
assumptions and estimates used to determine bad debt expense and the allowance
for doubtful accounts are subject to constant revision, and actual collection
results could differ materially from those estimated and therefore materially
impact bad debt expense and net income. Also, a change in the financial position
of or willingness to pay by any one large payor could materially affect the
Company's bad debt expense and net income.

INTEREST INCOME AND EXPENSE

         Third quarter interest income decreased from $0.3 million in fiscal
2001 to $0.2 million in fiscal 2002. Year-to-date, interest income decreased
from $0.5 million to $0.4 million for the nine months ended March 30, 2001, and
March 29, 2002, respectively. The higher interest income in fiscal 2001 third
quarter is due to the interest earned on the cash proceeds from the sale of the
Company's MEDgenesis subsidiary in January 2001. A portion of the cash proceeds
had been utilized by the end of third quarter fiscal 2001 to fund the
acquisition of four American Prescription Providers pharmacies and to fund
continuing operations. Third quarter interest expense increased from $11,000
last year to $0.2 million this year due to the cash proceeds available from the
sale of the Company's subsidiary to fund continuing operations in third quarter
fiscal 2001. Year-to-date, interest expense increased from $0.1 million to $0.4
million for the nine months ended March 30, 2001, and March 29, 2002,
respectively, for the same reason noted above.

INCOME TAXES

         Our income tax rate was approximately 38% in the third quarter and for
the nine months ended March 29, 2002. Our income tax rate was approximately 37%
for fiscal 2001.

LIQUIDITY AND CAPITAL RESOURCES

         As of March 29, 2002, we had $39.1 million of working capital, compared
to $37.0 million as of June 29, 2001. During the nine months ended March 29,
2002, we utilized $4.6 million of cash in operating activities. The average
days-sales-outstanding (DSO) of the Company's accounts receivable was 45 days at
June 29, 2001, and 44 days at March 29, 2002. We are beginning to see the
benefits of our centralized collections and cash posting in Minneapolis as part
of closing the StatScript Overland Park, Kansas headquarters in the second



                                       19
<PAGE>

quarter of fiscal year 2002. We expect to further improve the overall efficiency
and effectiveness of these functions as we move forward. The average days
inventory on-hand was 10 days both at June 29, 2001, and at March 29, 2002.

         We had no long-term debt as of March 29, 2002. Shareholders' equity as
of March 29, 2002, increased from $75.5 million at fiscal 2001 year-end to $76.8
million. Net tangible assets, an indicator of borrowing capacity, increased from
$45.3 million at June 29, 2001, to $46.6 million at March 29, 2002.

         We had a discretionary line of credit totaling $15 million, secured by
receivables and inventory, and bearing interest at Prime Rate plus 0.25%, that
was amended to extend through January, 2002. We also paid a commitment fee of
0.5% on the unused portion of the line of credit. On January 17, 2002, the
Company signed a one-year credit agreement for $30 million, secured by
receivables and inventory, and bearing interest at Prime Rate. Fees associated
with the one-year credit agreement totaled $0.1 million.

         We had $10.6 million of short-term borrowings outstanding under our
line of credit at March 29, 2002, compared to $4.1 million at June 29, 2001. The
increase in short-term borrowing is due primarily to revenue growth and the
related working capital requirements. In April, 2002, we received $6.2 million
in federal income tax refunds for tax years 2000 and 2001. We believe that the
line of credit and cash provided by operating activities should allow us to meet
foreseeable cash requirements and provide the flexibility to fund future working
capital growth. We are not currently planning any major capital projects beyond
our normal requirements of $2 to $3 million per year.


GOVERNMENT REGULATION

         Our 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. Because sanctions
may be imposed for violations of these laws, compliance is a significant
operational requirement for us. Management believes we are in substantial
compliance with all existing statutes and regulations materially affecting the
conduct of our business.

SEASONALITY

         Historically, we have had significantly higher revenues in our second
fiscal quarter (ending December) than in our first fiscal quarter. We believe
the seasonality of our revenues and earnings is a consequence of the
acceleration of purchases of prescription drugs by individuals with
non-contracted indemnity insurance prior to the beginning of a new calendar year
(when payors generally impose new deductible calculations) and sales of a
seasonal drug whose usage is concentrated in the fall and winter months.



                                       20
<PAGE>


FORWARD-LOOKING STATEMENTS

         Information contained in this "Management's Discussion and Analysis of
Financial Condition and Results of Operations", other than historical or current
facts, should be considered forward looking statements as defined in the Private
Securities Litigation Reform Act of 1995. These statements reflect management's
current views of future events and financial performance that involve a number
of risks and uncertainties. These factors include, but are not limited to, the
following: our ability to maintain satisfactory ongoing arrangements with
product manufacturers and wholesalers; pressure from payors to reduce the amount
we charge for pharmaceutical products; compliance with various federal, state,
and local laws and regulations; political, economic and regulatory changes
affecting the health care industry and prescription drug providers; the ability
of management and accounting controls to assure accurate and timely information,
including the accrual estimation of bad debt expense and payor discounts;
management's assumptions in valuing the Company's goodwill; developments in
medical research affecting the treatment or cure of conditions for which we
distribute medications; computer system, software or hardware failures or
malfunctions; the ability to successfully integrate acquired businesses;
heightened competition; the costs and impact of any adverse rulings in legal or
administrative proceedings; the ability to obtain competitive financing to fund
operations and growth; continuing qualification to be listed on a national stock
exchange; and loss or retirement of key executives or changes in ownership. We
urge you to read the cautionary statement filed as Exhibit 99 to our Form 10-K
filed on October 12, 2001. This cautionary statement discusses specific factors
which could affect the Company's operations and forward-looking statements
contained in this Form 10-Q.


ITEM 3.         QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         As of March 29, 2002 and June 29, 2001, our only exposure to market
risk was our short-term debt under our line of credit agreement. As the interest
rate on this debt is subject to change based on changes in the prime rate, we
believe that any market risk is negligible.



                                       21
<PAGE>


PART II.   OTHER INFORMATION


Items 1, 2, 3, 4 and 5 required under Part II have been omitted since they are
not applicable or the answers are negative.



Item 6.  Exhibits and Reports on Form 8-K

         a.)  Exhibits

                  10.1 Amended and Restated Credit Agreement dated as of January
                       17, 2002


         b.)  Reports on Form 8-K

                  None.






                                       22
<PAGE>







                                   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)

May 10, 2002                       By    /s/ Henry F. Blissenbach
------------                             -------------------------
    Date                                 Henry F. Blissenbach
                                         Chief Executive Officer and
                                         Chairman of the Board of Directors


May 10, 2002                             /s/ Gregory H. Keane
------------                             --------------------
    Date                                 Gregory H. Keane
                                         Vice President, Chief Financial Officer