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       December  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 - 11,817,838 shares outstanding as of
January 30, 1997




                                      INDEX
                         CHRONIMED INC. AND SUBSIDIARIES


PART I.   FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

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

              Consolidated Statements of Income - Three months ended 
              December 27, 1996 and December 29, 1995; Six months ended
              December 27, 1996 and December 29, 1995

              Consolidated Statements of Cash Flows - Six months ended
              December 27, 1996 and December 29, 1995

              Notes to Consolidated Financial Statements - December 27, 1996


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



PART II.  OTHER INFORMATION

              Items  1, 3 and 5 have been omitted since all items are not
              applicable or answers are negative.

Item 2.       Changes in Securities

Item 4.       Submission of Matters to a Vote of Security Holders

Item 6.       Exhibits and Reports on Form 8-K

               3         Amendments to Chronimed By Laws as of December 18, 1996

              10.15      Line of Credit Agreement between Chronimed Inc. and
                         First Bank, NA

              11.1       Computation of Earnings Per Share

              27         Financial Data Schedule


SIGNATURES




Part I. Financial Information
Item 1. Financial Statements

<TABLE>
<CAPTION>

CHRONIMED INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
                                                             Dec 27, 1996   June 28, 1996
                                                             ------------   ------------
ASSETS                                                       (Unaudited)      (Note A)
<S>                                                           <C>           <C>     
Current assets:
  Cash and cash equivalents                                    $    563      $ 11,434
  Available-for-sale securities                                   1,418        12,803
  Accounts receivable, net                                       22,442        19,843
  Income taxes receivable                                            42            49
  Inventory                                                      16,117         5,476
  Other current assets                                              823           559
  Deferred taxes                                                    493           493
                                                               --------      --------
    Total current assets                                         41,898        50,657

Note receivable                                                   1,391         1,375
Available-for-sale securities                                     4,892         9,069

Property and equipment:
  Property and equipment                                         10,678         8,542
  Allowance for depreciation                                     (4,281)       (3,097)
                                                               --------      --------
                                                                  6,397         5,445

Intangible assets, net                                           10,036         1,362
                                                               --------      --------
  Total assets                                                 $ 64,614      $ 67,908
                                                               ========      ========

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses                        $ 15,942      $  9,992
  Short-term debt                                                   350           404
                                                               --------      --------
    Total current liabilities                                    16,292        10,396

Long-term debt                                                     --             350

Shareholders' equity:
  Preferred stock, $.01 par value--
  authorized 5,000,000 shares; none outstanding                    --
  Common stock, $.01 par value--
  authorized 20,000,000 shares; issued and
  outstanding December 27, 1996--11,802,826;
  June 28, 1996--12,454,560                                         118           125
  Additional paid-in capital                                     37,690        49,569
  Retained earnings                                              10,491         7,475
                                                               --------      --------
                                                                 48,299        57,169
  Unrealized gain (loss) on available-for-sale securities            23            (7)
                                                               --------      --------
     Total shareholders' equity                                  48,322        57,162

Total liabilities and shareholders' equity                     $ 64,614      $ 67,908
                                                               ========      ========
</TABLE>



<TABLE>
<CAPTION>

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


                                    Three months ended            Six months ended
                               Dec 27, 1996   Dec 29, 1995   Dec 27, 1996   Dec 29, 1995
                               ------------   ------------   ------------   ------------
<S>                             <C>            <C>            <C>            <C>     
REVENUES
  Managed Care                   $  5,558       $  3,090       $ 10,490       $  5,782
  Proprietary                       9,267          8,980         18,477         14,381
  Patient Choice                   16,507         12,739         30,871         23,172
                                 --------       --------       --------       --------
    Total Revenue                  31,332         24,809         59,838         43,335
             YR TO YR GROWTH         26.3%                         38.1%

COSTS AND EXPENSES
  Cost of sales                    22,634         17,658         43,401         31,236
    Gross profit                    8,698          7,151         16,437         12,099
              % OF REVENUE           27.8%          28.8%          27.5%          27.9%
  Selling and marketing             1,883          1,749          3,447          3,217
  General and administrative        4,087          3,008          8,361          5,686
  Research and development             78             97            285            192
                                 --------       --------       --------       --------
    Total operating expenses        6,048          4,854         12,093          9,095
              % OF REVENUE           19.3%          19.6%          20.2%          21.0%

INCOME FROM OPERATIONS              2,650          2,297          4,344          3,004
              % OF REVENUE            8.5%           9.3%           7.3%           6.9%
  Interest income                     191            232            458            540

INCOME BEFORE INCOME TAXES          2,841          2,529          4,802          3,544
  Provision for income taxes       (1,078)          (907)        (1,786)        (1,198)

NET INCOME                       $  1,763       $  1,622       $  3,016       $  2,346
              % OF REVENUE            5.6%           6.5%           5.0%           5.4%

NET INCOME PER SHARE             $   0.14       $   0.12       $   0.23       $   0.18

AVERAGE SHARES OUTSTANDING         12,695         13,078         12,887         12,991

</TABLE>



<TABLE>
<CAPTION>

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

                                                                 Six Months Ended
                                                            Dec 27, 1996   Dec 29, 1995
                                                            ------------   ------------
<S>                                                          <C>           <C>     
OPERATING ACTIVITIES:
  Net income                                                  $  3,016      $  2,346
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities:
      Depreciation and amortization                              1,771           818
      Changes in operating assets and liabilities:
        Accounts and notes receivable                           (2,609)       (5,802)
        Inventory                                              (10,641)       (1,126)
        Other assets                                              (290)          105
        Accounts payable and accruals                            5,950         3,082
                                                              --------      --------

      Net cash (used in) operating activities                   (2,803)         (577)

INVESTING ACTIVITIES:
  Repurchase of common stock                                   (13,254)           --
                                                                            
  Acquisitions, net of cash purchased                           (9,234)          (84)
  Purchases of property and equipment                           (2,136)       (1,263)
  Purchase of available-for-sale securities                     (2,006)       (2,580)
  Sales and maturities of available-for-sale securities         17,598         7,054
                                                              --------      --------

      Net cash provided by (used in) investing activities       (9,032)        3,127

FINANCING ACTIVITIES:
  Net proceeds from sale of common stock                           964           974

      Net cash provided by financing activities                    964           974

Increase (decrease) in cash and cash equivalents               (10,871)        3,524

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

Cash and cash equivalents at end of period                    $    563      $  5,727
                                                              ========      ========
</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 six month period ended December 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 December 27, 1996 and June
28, 1996. The Company considers the net unrealized gain/(loss) on these
investments of $23,000 and $(7,000) at those respective dates to be temporary,
and as such has recorded it through shareholders' equity.




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 includes the StatScript Pharmacy
business acquired in July, 1996.

         Total revenues increased 26%, from $24,809,000 to $31,332,000, for the
three months ended December 29, 1995, and December 27, 1996, respectively; and
38%, from $43,335,000 to $59,838,000 for the six months ended December 29, 1995
and December 27, 1996, respectively. Price increases have generally not been a
significant reason for these revenue increases.

         Revenue from Managed Care contracts grew 80%, from $3,090,000 to
$5,558,000 for the three months ended December 29, 1995, and December 27, 1996,
respectively; and 81%, from $5,782,000 to $10,490,000 for the six months ended
December 29, 1995 and December 27, 1996, respectively. Strong growth in managed
care sales of self injectable medications accounted for this increase. Revenue
from Proprietary Products grew 3% for the quarter, from $8,980,000 to $9,267,000
due to increases in Supreme strip sales and Publishing sales, partially offset
by a decline in Quick Check strip sales caused by both an extremely strong year
ago quarter performance and lower second quarter Quick Check strip sales due to
a production hold. For the respective six month periods, revenue from
Proprietary Products grew 28%, from $14,381,000 to $18,477,000, on the strength
of Supreme strip sales and related medical product sales. Patient Choice revenue
increased 30% for the quarter, from $12,739,000 to $16,507,000, due to the
addition of the StatScript Pharmacy business in July, 1996, which closed the
quarter with $4,506,000 in revenue. Specialty Pharmacy, the largest business
unit in Patient Choice, closed the quarter down 10% in revenue compared to the
year ago quarter due mainly to the decision by the Company to suspend serving
patients insured by the lowest margin payors. For the respective six month
periods, revenue from Patient Choice grew 33%, from $23,172,000 to $30,871,000,
due to $8,739,000 in StatScript growth offset by a planned decline in Specialty
Pharmacy revenue.

         The shortfall in Quick Check sales noted above was due to a voluntary
shipment hold by our reagent strip supplier starting late November pending final
and conclusive results of a Food and Drug Administration (FDA) standards test on
the product. Revenues for the second quarter were negatively impacted by about
$1 million due to this hold. Chronimed's strip supplier and independent experts
in the field of diabetes have disputed the FDA's preliminary test findings. The
Company's supplier has been working very closely with the FDA on this matter,
and as a result, Chronimed remains cautiously optimistic about resuming
shipments soon. In the event, however, that satisfactory resolution of this
matter does not occur in the Third Fiscal Quarter ending March 28, 1997, revenue
could be adversely impacted by up to $4 million and earnings per share by up to
$0.06 in the Third Fiscal Quarter. It is also possible that adverse impact could
extend into the Fourth Fiscal Quarter if the issue continues unresolved.

         Revenue growth for Chronimed is expected to continue through the
remainder of fiscal 1997, particularly due to growth in the self-injectables
program and StatScript Pharmacy. 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 continued growth through fiscal 1997 compared to fiscal
1996. However, as discussed above, the Quick Check shipment hold must be
resolved soon in order for Proprietary Products revenue to continue strong
through year-end. The Company believes its Supreme reagent strip production
rates are sustainable but may be subject to unforeseen shortfalls.

GROSS PROFIT

          The gross profit percentage declined from 28.8% to 27.8% for the three
months ended December 29, 1995 and December 27, 1996, respectively. This decline
is due primarily to the increase in lower-margin Managed Care revenue and
decrease in Specialty Pharmacy gross profits, partially offset by
better-than-average gross profit percentages in our growing StatScript business.
For the respective six month periods, the gross profit percentage declined
slightly from 27.9% to 27.5% due primarily to the increase in lower-margin
Managed Care revenue.

         The average order size for all businesses increased from $434 to $485
for the three months ended December 29, 1995 and December 27, 1996,
respectively; and from $406 to $480 for the respective six month periods. The
increase in order size has generally resulted in higher gross margin dollars per
order. These increases are 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 8% over the prior year's
second quarter, primarily as a result of increased spending in the
self-injectables program and in the StatScript Pharmacy business. As a percent
of revenues, selling and marketing expenses decreased from 7.0% to 6.0% in the
three months ended December 29, 1995 and December 27, 1996, respectively. For
the respective six month periods, selling and marketing expenses increased 7%
for the same reasons noted above. As a percent of revenue, selling and marketing
expenses decreased from 7.4% to 5.8% in the six months ended December 29, 1995
and December 27, 1996, respectively.

GENERAL AND ADMINISTRATIVE EXPENSES

         General and administrative (G&A) expenses increased 36% over the prior
year's second quarter. As a percent of revenues, these expenses increased from
12.1% to 13.0%. For the respective six month periods, G&A expenses increased
47%, with expenses increasing from 13.1% of revenue to 14.0% of revenue. 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.

INCOME FROM OPERATIONS

         Income from operations increased from $2,297,000 to $2,650,000 for the
three months ended December 29, 1995 and December 27, 1996, respectively. As a
percent of revenue, operating income decreased from 9.3% to 8.5% primarily as a
result of decreased gross profit percentage caused by factors noted earlier. For
the respective six month period, operating income increased from $3,004,000 to
$4,344,000, up from 6.9% of revenue to 7.3% of revenue due primarily to reduced
sales and marketing expenses as a percent of revenue.

INTEREST INCOME

         Interest income for both the quarter and six month period decreased as
a result of the decrease in total investment balances.

INCOME TAXES

         The Company's income tax rate was approximately 35.9% and 37.9% in the
three months ended December 29, 1995 and December 27, 1996, respectively; and
33.8% and 37.2% in the respective six month periods. These rates differ from the
statutory rate due to favorable tax treatment on municipal bond interest income.
The rate increase in the comparable periods is due to a lower percentage of
income from interest in fiscal 1997 and to lesser relative amounts of investment
securities being tax exempt.

LIQUIDITY AND CAPITAL RESOURCES

         As of December 27, 1996, the Company had working capital of
$25,606,000, with no long-term debt, and $48,322,000 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 66 at December 27, 1996, compared to 71 at December 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 $890,000 from June
28, 1996, to December 27, 1996, supporting the Company's revenue growth,
favorably offset by the improving quality of receivables.

         Inventory increased $10.6 million from June 1996 to December 1996 due
to two large forward purchase agreements to secure favorable pricing, to the
acquisition of StatScript inventory, and to general business growth. The Company
believes there is not significant risk of inventory write-offs and that the
current inventory reserve is adequate.

          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 December 27, 1996, the Company has repurchased 903,500 shares at a cost
of $13.3 million.

         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 recently increased its committed line of credit from $2.5
million to $15 million in an agreement executed on December 31, 1996. There was
no balance outstanding under the earlier line of credit on December 27, 1996.

         The Company has a $1.4 million note receivable from Health Craft
International, Inc. (HCI) at December 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 March, 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; timing of decisions by the
FDA relative to Chronimed's regulated products; 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, 3 and 5 required under Part II have been omitted since they are not
applicable or the answers negative.

Item 2-  Changes in Securities

         The Company filed a report on Form 8-K dated December 18, 1996 related
         to the adoption of a shareholder rights plan.

Item 4-  Annual Meeting of Shareholders, held on November 13, 1996.

         At the meeting, the director nominees described in the Company's Proxy
         Statement were elected as follows:

                                                                   WITHHOLD
                                                    FOR            AUTHORITY
                                                    ---            ---------
         Maurice R. Taylor, II                   11,486,393         72,917
         Henry F. Blissenbach, Pharm.D.          11,487,096         72,214
         John Howell Bullion                     11,485,198         74,112
         Donnell D. Etzwiler, M.D.               11,488,418         70,892
         Charles V. Owens, Jr.                   11,486,075         73,235
         Lawrence C. Weaver, Ph.D.               11,482,238         77,072

         In addition, the Company's 1997 Employee Stock Purchase Plan and the
         appointment of Ernst and Young were approved by shareholders as
         follows:

<TABLE>

                                                                                             BROKER
                                                   FOR         AGAINST       ABSTAIN        NON-VOTE
                                                   ---         -------       -------        --------

<C>                                             <C>           <C>             <C>           <C>      
1997 Stock Option Plan                          4,409,620     2,098,644       102,769       4,948,277

Appointment of Ernst and Young LLP
  as independent auditors for 1997
  fiscal year.                                 11,493,229        46,522        19,559              -0-

</TABLE>

Item 6-   Exhibits and Reports on Form 8-K

         (a)  Exhibits

               3         Amendments to Chronimed By Laws as of December 18, 1996

              10.15      Line of Credit Agreement between Chronimed Inc. and
                         First Bank, NA

              11.1       Computation of Earnings Per Share

              27         Financial Data Schedule

         (b)  Reports on Form 8-K

The Company filed a report on Form 8-K dated December 18, 1996 related to the
adoption of a shareholder rights plan.



                                   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)



   February 4, 1997                          /s/  Maurice R. Taylor, II
---------------------                   -------------------------------------
              Date                              Maurice R. Taylor, II
                                        Chairman of the Board, President, and
                                               Chief Executive Officer



    February 4, 1997                          /s/ Norman A. Cocke
---------------------                   -------------------------------------
              Date                               Norman A. Cocke
                                  Senior Vice President, Chief Financial Officer
                                                  and Secretary