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                                  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 JUNE 30, 2001 OR

        [_]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
                OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE
                TRANSITION PERIOD FROM__________TO_____________

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

                         Commission File Number 0-26816

                             IDX SYSTEMS CORPORATION
             (Exact name of registrant as specified in its charter)

            Vermont                                    03-0222230
(State or other jurisdiction of                     (I.R.S. Employer
 incorporation or organization)                    Identification No.)

                               1400 Shelburne Road
                           South Burlington, VT 05403
                    (Address of principal executive offices)

        Registrant's telephone number, including area code: (802-862-1022)

         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
                                     ----

         The number of shares outstanding of the registrant's common stock as of
July 31, 2001 was 28,673,916.


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<PAGE>



                             IDX SYSTEMS CORPORATION
                                    FORM 10-Q
                       For the Period Ended June 30, 2001


                                TABLE OF CONTENTS


                                                                           Page
PART I.  FINANCIAL INFORMATION                                             ----

Item 1.  Interim Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets ............................3
         Condensed Consolidated Statements of Operations ..................4
         Condensed Consolidated Statements of Cash Flows ..................5
         Notes to Condensed Consolidated Financial Statements .............6
         Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations   ............................10
         Item 3.  Quantitative and Qualitative Disclosures About
         Market Risk ......................................................23

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings .......................................24
         Item 2.  Changes In Securities ...................................25
         Item 3.  Defaults Upon Senior Securities .........................25
         Item 4.  Submission of Matters to a Vote of Security Holders .....25
         Item 5.  Other Information .......................................26
         Item 6.  Exhibits And Reports On Form 8-K ........................26

SIGNATURES ................................................................27


                                  Page 2 of 28

<PAGE>



PART I.   FINANCIAL INFORMATION

Item 1.   Interim Financial Statements

                             IDX SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                             June 30,           December 31,
                                               2001                 2000
                                        -----------------     ----------------
                                           (unaudited)            (audited)
<S>                                        <C>                  <C>
ASSETS
Cash and marketable securities             $ 52,246             $ 70,683
Accounts receivable, net                    104,757              110,360
Refundable income taxes                       6,822               13,699
Prepaid and other current assets              7,076                6,927
Deferred tax asset                           12,234                9,021
                                        -----------------     ----------------
TOTAL CURRENT ASSETS                        183,135              210,690

Property and equipment, net                  81,704               71,590
Other assets                                  9,316                7,483
Investment in unconsolidated affiliate        6,073                    -
Deferred tax asset                            4,828                7,728
                                        -----------------    -----------------
TOTAL ASSETS                              $ 285,056            $ 297,491
                                        =================    =================

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
  and other liabilities                     $48,585              $56,646
Deferred tax liability                        2,441                    -
Deferred revenue                             19,599               19,913
Line of credit                               12,000                    -
                                        -----------------     ----------------
TOTAL CURRENT LIABILITIES                    82,625               76,559


Redeemable convertible preferred
  stock of subsidiary                             -               33,140
Minority interest                                 -                8,682
Stockholders' equity                        202,431              179,110
                                        -----------------     ----------------
TOTAL LIABILITIES AND STOCKHOLDERS'
  EQUITY                                  $ 285,056            $ 297,491
                                        =================     ================

</TABLE>



          See Notes to the Condensed Consolidated Financial Statements.

                                  Page 3 of 28



<PAGE>


Part I. Financial Information

Item 1.  Interim Financial Statements

                             IDX SYSTEMS CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
<TABLE>
<CAPTION>

                                Three Months Ended        Six Months Ended
                                    June 30,                   June 30,
                               2001           2000        2001          2000
                             ---------------------------------------------------
<S>                          <C>            <C>         <C>           <C>
REVENUES
  Systems sales              $ 33,666       $ 21,090    $ 59,828      $ 42,740
  Maintenance and service
    fees                       67,727         58,506     133,374       113,578
                             ---------------------------------------------------

TOTAL REVENUES                101,393         79,596     193,202       156,318

OPERATING EXPENSES

  Cost of sales                65,092         60,660     128,440       115,820
  Selling, general and
    administrative             23,920         21,442      42,871        39,787
  Research and development     11,350         13,154      21,851        25,340
  Loss on impairment of
    goodwill                        -              -           -         5,810
  Restructuring charge              -         21,029           -        21,029
                             ---------------------------------------------------
TOTAL OPERATING EXPENSES      100,362        116,285     193,162       207,786
                             ---------------------------------------------------
OPERATING INCOME (LOSS)         1,031        (36,689)         40       (51,468)

OTHER INCOME

  Other income, net               625          1,007       1,309         2,130
  Gain on sale of investment
    in subsidiary                   -              -      35,546             -
  Realized gain on investment       -              -       5,849             -
                             ---------------------------------------------------
TOTAL OTHER INCOME                625          1,007      42,704         2,130
                             ---------------------------------------------------
Income (loss) before taxes
  and equity in loss of         1,656        (35,682)     42,744       (49,338)
  unconsolidated affiliate

Equity in loss of
  unconsolidated affiliate     (5,451)             -     (11,502)            -
Income tax benefit (provision)  1,518         13,659     (13,759)       16,816
                             ---------------------------------------------------

NET INCOME (LOSS)            $ (2,277)      $(22,023)   $ 17,483      $(32,522)
                             =========      =========   ========      =========

Basic earnings (loss) per
  share                      $  (0.08)      $  (0.79)   $   0.61      $  (1.16)
                             =========      =========   ========      =========

Basic weighted average
  shares outstanding           28,476         28,029      28,455        27,993
                             =========      =========   =========     =========

Diluted earnings (loss)
  per share                  $  (0.08)      $  (0.79)   $   0.61      $ (1.16)
                             =========      =========   ========      ========

Diluted weighted average
  shares outstanding           28,476         28,029      28,786       27,993
                             =========      =========   =========     ========
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements.

                                  Page 4 of 28

<PAGE>

PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements

                              IDX SYSTEMS CORPORATION
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                  (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                        Six Months Ended
                                                            June 30,
                                                    2001               2000
                                                  ---------          ---------
<S>                                               <C>                <C>

OPERATING ACTIVITIES

Net income (loss)                                 $ 17,483           $(32,522)
Adjustments to reconcile net income (loss)
  to net cash used in operating activities:
    Depreciation                                     7,488              7,366
    Amortization                                       856                274
    Deferred taxes                                   2,128               (133)
    Increase in allowance for doubtful accounts        921                705
    Minority interest                                  297                490
    Gain on investment                              (5,849)                 -
    Write-off of goodwill                                -              5,810
    Equity in loss of unconsolidated affiliate      11,502                  -
    Gain on sale of subsidiary common stock        (35,546)                 -
    Loss on disposition of assets                      404                  -
    Restructuring charge                                 -             21,029
    Changes in operating assets and liabilities,
      net of business acquisitions:
        Accounts receivable                          3,653             14,228
        Prepaid expenses and other assets           (3,468)            (1,663)
        Accounts payable and accrued expenses      (10,799)            (3,758)
        Federal and state income taxes payable       6,877            (17,097)
        Deferred revenue                              (286)             2,104
                                                  ------------------------------
          Net cash used in operating activities     (4,339)            (3,167)

INVESTING ACTIVITIES
Purchase of property and equipment, net            (26,205)           (15,015)
Proceeds from sale of property and equipment           264                  -
Purchase of securities available-for-sale          (65,270)            (8,795)
Sale of securities available-for-sale               96,787              9,336
Proceeds from sale of investment                    11,282                  -
Business acquisitions                               (2,080)                 -
Other assets                                          (245)            (1,019)
                                                  ------------       -----------
          Net cash provided by (used in)
            investing activities                    14,533            (15,493)


FINANCING ACTIVITIES
Proceeds from sale of common stock                   2,753              3,786
Proceeds from debt issuance                         12,000                  -
Contributions to affiliates, net                      (469)              (700)
Proceeds from sale of redeemable convertible
  preferred stock of subsidiary                          -             33,140
                                                 ------------       ------------
          Net cash provided by financing
            activities                              14,284             36,226
                                                 ------------       ------------

Increase in cash and cash equivalents               24,478             17,566

Cash and cash equivalents at beginning
  of period                                         16,357             18,487
                                                 ------------       ------------
Cash and cash equivalents at end of period          40,835             36,053
Securities available-for-sale                       11,411             49,334
                                                 ------------       ------------

Total cash and securities available-for-sale     $  52,246          $  85,387
                                                 ============       ===========
Noncash Investing Activity:
  Deconsolidation of minority interest in
    real estate partnership                      $   9,102          $       -
                                                 ============       ============
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements.
                                  Page 5 of 28
<PAGE>

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation

The interim  unaudited  condensed  consolidated  financial  statements have been
prepared by the Company  pursuant to the rules and regulations of the Securities
and Exchange Commission and in accordance with accounting  principles  generally
accepted in the United States.  Accordingly,  certain  information  and footnote
disclosures  normally included in annual financial  statements have been omitted
or  condensed.   In  the  opinion  of  management,   all  necessary  adjustments
(consisting  of normal  recurring  accruals and  adjustments)  have been made to
provide a fair presentation. The operating results for the six months ended June
30, 2001 are not necessarily  indicative of the results that may be expected for
the year  ending  December  31,  2001.  For  further  information,  refer to the
consolidated financial statements and footnotes included in the Company's latest
annual report on Form 10-K filed with the Securities and Exchange Commission.

Note 2 - New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards (SFAS) No. 133, "Accounting for Derivatives and
Hedging  Activities"  ("SFAS No. 133"),  as amended by SFAS No. 137 and SFAS No.
138,  which  establishes  accounting  and  reporting  standards  for  derivative
instruments,  including  derivative  instruments  embedded  in other  contracts,
(collectively  referred  to as  derivatives)  and for  hedging  activities.  The
Company  adopted  SFAS No. 133 in the first  quarter of 2001 and has  determined
that it had no  significant  impact on its  financial  condition  or  results of
operations.

In June 2001,  the  Financial  Accounting  Standards  Board issued SFAS No. 141,
"Business  Combinations"  ("SFAS No. 141") and SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"),  effective for fiscal years beginning after
December 15, 2001. Under the new rules, goodwill and intangible assets deemed to
have indefinite  lives will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.

The  Company  will  apply the new rules on  accounting  for  goodwill  and other
intangible  assets beginning in the first quarter of 2002. The Company is in the
process of determining  the impact of the  application  of the  non-amortization
provisions of the statement.  During 2002, the Company will perform the first of
the required impairment tests of goodwill and indefinite lived intangible assets
as of January 1, 2002 and has not yet determined  what the effect of these tests
will be on the earnings and financial position of the Company.

Note 3 - Deconsolidation and Acquisitions

Through April 19, 2001 the Company's  consolidated  financial statements include
the  accounts of the Company and BDP Realty  Associates  ("BDP"),  a real estate
trust owned by stockholders  and certain key employees of the Company whose real
estate was leased  exclusively  by the Company.  Effective  with the date of the
acquisition of the Company's  headquarter  facilities  from BDP, the Company has
deconsolidated  BDP and eliminated the net assets,  principally  real estate and
minority  interest  included in the Company's  consolidated  balance sheet as of
that date. The Company's headquarter  facilities was purchased from BDP for cash
at fair market value as determined by independent  appraisers for  approximately
$15.0 million  during the second  quarter of 2001, which has been recorded
as property and equipment.

In May 2001, the Company acquired PVI, LLC for approximately $1.0 million.  This
acquisition has been accounted for under the purchase method of accounting.  The
purchase price has been  allocated  based on estimated fair market values at the
date of acquisition,  principally software, which will be amortized over a three
year period.

                                  Page 6 of 28

<PAGE>

In June  2001,  the  Company  acquired  Vogt  Management  Consulting,  Inc.  for
approximately  $1.1 million.  This  acquisition has been accounted for under the
purchase   method  of  accounting.   The  purchase  price  has  been  allocated,
principally  to goodwill,  based on estimated  fair market values at the date of
acquisition.

Note 4 - Restructuring Charge

On  June  21,  2000  the  Company  announced  the  implementation  of a  product
discontinuance  and restructuring  program.  The Company halted  development and
discontinued  sales efforts on certain product lines that have failed to achieve
business targets or were deemed  non-strategic to the business going forward. As
a result,  the Company  implemented a workforce  reduction of approximately five
percent.  The  restructuring  program  resulted  in  a  charge  to  earnings  of
approximately  $21.0 million in the second  quarter of 2000, in connection  with
costs  associated with product  discontinuations,  principally  settlements with
existing  users,  of   approximately   $16.0  million  and  employee   severance
arrangements  of  approximately   $5.0  million.   Workforce  related  accruals,
consisting  principally of employee  severance costs,  were established based on
specific  identification  of  employees to be  terminated,  along with their job
classification  or functions,  and their location.  Substantially  all workforce
related  actions  were  completed  during the third  quarter  of 2000,  with the
exception of product  related  "sunset"  support teams.  As of June 30, 2001 the
Company had a balance of $9.3 million  related to accrued  restructuring  costs.
Cash  expenditures  related to these accruals are estimated to be  approximately
$6.9 million.  The remaining balance of approximately  $2.4 million represents a
provision  for the  estimated  write-off  of accounts  receivable  that will not
affect cash. These accounts  receivable  write-offs are expected to be finalized
by September 30, 2001.

Note 5 - Sale of Investment in Subsidiary and Other Related Matters

On January  8, 2001,  the  Company  sold  certain  operations  of  Channelhealth
Incorporated   (ChannelHealth)  to  Allscripts,  Inc.,  a  leading  provider  of
point-of-care   e-prescribing   and   productivity   solutions  for  physicians.
ChannelHealth  provides  a  set  of  Internet-based  clinical  and  productivity
solutions for  physicians  that brings the power of the Internet to the practice
of  medicine.  IDX  retained  the Patient and  e-Commerce  Channels,  which were
previously part of ChannelHealth, enabling IDX to integrate an Internet solution
that leverages its core competencies in physician practice  management  systems.
In addition  to the sale,  the  Company  has  entered  into a 10-year  strategic
alliance whereby  Allscripts will become the exclusive provider of point-of-care
clinical  applications  sold by IDX to physician  practices.  As a result of the
transaction,  the Company is entitled to  representation  on Allscripts Board of
Directors.

On January 8, 2001 Allscripts acquired ChannelHealth in exchange for 8.6 million
shares,  or 21.3% of Allscripts  common stock.  IDX received  approximately  7.5
million shares of Allscripts  common stock (the  Allscripts  shares) in exchange
for its shares of  ChannelHealth  stock.  The  Allscripts  shares  received  are
subject to  restrictions  on any transfer of the  securities for a period of one
year from the date of the  transaction  and,  after one year, on the transfer of
more than 25% of the  Allscripts  shares in any one year,  and 16.67% in any one
month. IDX recorded the Allscripts shares at fair value of $29.5 million,  which
included a discount from market value due to restrictions on transfer, resulting
in a $35.5  million gain on the  transaction.  The reported gain is greater than
the fair value of the stock  received  due to the  Company's  negative  carrying
value at the time of the sale of the underlying investment in ChannelHealth. IDX
accounts for its investment in Allscripts under the equity method of accounting.

                                  Page 7 of 28

<PAGE>

Summary financial information for Allscripts for the three and six months ended
June 30, 2001 is as follows:

<TABLE>
<CAPTION>
                                               (in thousands)
                               Three months ended         Six months ended
                               June 30, 2001              June 30, 2001
                               ------------               -------------
  <S>                          <C>                        <C>

  Revenue                      $19,119                    $35,718
  Gross profit                   2,305                      3,316
  Net loss                     (27,728)                   (58,528)
</TABLE>


In the first quarter of 2000, the Company  determined  that an asset  impairment
existed related to goodwill acquired in the purchase of  ChannelHealth,  Inc., a
Massachusetts  corporation  acquired in April 1999. In January 2000, the Company
made the  decision to seek a primary  provider of content and  transactions  for
Channelhealth  Incorporated,  and decided to no longer  utilize  certain  assets
acquired in  connection  with the  purchase of  ChannelHealth,  Inc. The Company
recognizes  impairment losses on long-lived assets when indicators of impairment
are present and future  undiscounted  cash flows are insufficient to support the
assets'  recovery.  The amount of the impairment loss is recognized  based on an
analysis of  discounted  cash flows  estimated  to be derived  from the impaired
asset. This asset impairment was recognized during the first quarter of 2000 and
is reflected as a pre-tax loss on impairment of goodwill of  approximately  $5.8
million.

Note 6 - Income Taxes

The 2001 effective tax rate is higher than the statutory rate principally due to
the non-deductible nature of certain costs related to the sale of ChannelHealth.
The  effective tax rate for the remainder of 2001 is expected to be lower due to
the absence of nondeductible  transaction costs in subsequent  interim reporting
periods.  The  2000 tax  benefit  is lower  than the  statutory  rate due to the
non-deductible loss on impairment of goodwill related to ChannelHealth, Inc. for
which no tax benefit was recognizable.

Note 7 - Segment Information

SFAS No. 131 requires the reporting of information  regarding operating segments
in annual  financial  statements  and requires  selected  information  for those
segments to be presented in interim  financial  reports issued to  stockholders.
SFAS No. 131 also requires related  disclosures about major customers,  products
and  services,  and  geographic  areas.  Operating  segments are  identified  as
components of an enterprise about which separate discrete financial  information
is available for evaluation by the chief  operating  decision maker, or decision
making group, in making decisions regarding how to allocate resources and assess
performance.  During  the second  quarter  of 1999,  the  Company  acquired  two
companies that have separate and distinct  financial  information  and operating
characteristics.  As  discussed  in  Note 5  above,  the  Company  sold  certain
operations  of  ChannelHealth,  specifically  its Internet  Services and Content
segment on January 8, 2001. Accordingly, this segment is not reported in 2001.

The  Company's   operating   segments  have   separate   management   teams  and
infrastructures that offer different products and services.  Accordingly,  these
operating  segments have been  classified as  reportable  segments  (information
systems  and  services,  medical  transcription  services  and in 2000  Internet
services and content).

Information   Systems  and   Services:   This   segment   contains  IDX  Systems
Corporation's  healthcare information solutions that include software,  hardware
and related services. IDX solutions enable healthcare  organizations to redesign
patient care and other  workflow  processes in order to improve  efficiency  and
quality.  The  principal  markets for this  segment  include  physician  groups,
management service  organizations,  hospitals,  and integrated delivery networks
primarily located in the United States.

                                  Page 8 of 28

<PAGE>

Internet  Services  and  Content:  This  segment  is not  reported  in 2001 as a
separate  business  segment due to the acquisition of the Internet  Services and
Content operations of ChannelHealth by Allscripts on January 8, 2001.
Medical   Dictation  and

Transcription  Services:  This  segment  contains  EDiX,  a provider  of medical
transcription  outsourcing services.  EDiX's principal markets include hospitals
and large physician group practices primarily located in the United States.

The Company evaluates the performance of its operating segments based on revenue
and operating  income.  Intersegment  revenues are  immaterial.  No one customer
accounts  for  greater  than 10% of revenue for any  reportable  segment for the
three month and six month periods ended June 30, 2001.  EDiX's revenues from one
major  customer  amounted  to 10.5% and  10.2%,  respectively,  of EDiX's  total
revenue during the three and six month periods ended June 30, 2000.

Summarized financial information concerning the Company's reportable segments is
shown in the following table (in thousands):

<TABLE>
<CAPTION>
                           Information  Internet     Medical Dictation Total
                           Systems and  Services     and Transcription
                           Services     and Content  Services
                           -----------------------------------------------------
<S>                        <C>          <C>          <C>              <C>
For the three months ended
  June 30, 2001
Net operating revenues     $ 77,340     $    -       $ 24,023         $101,393
Operating income (loss)         127          -            904            1,031
Identifiable operating
  assets                    252,552          -         32,534          285,056


For the six months ended
  June 30, 2001
Net operating revenues     $147,126     $    -      $ 46,076          $193,202
Operating income (loss)      (1,737)         -         1,777                40
Identifiable operating
  assets                    252,522          -        32,534           285,056


For the three months ended
  June 30, 2000
Net operating revenues     $ 60,469     $ 1,532     $ 17,595         $ 79,596
Operating income (loss)     (31,269)     (6,299)         879          (36,689)
Identifiable operating
  assets                    241,049      30,029       20,380          291,458


For the six months ended
  June 30, 2000
Net operating revenues     $119,294     $ 2,751     $ 34,273         $156,318
Operating income (loss)     (36,105)    (17,092)       1,729          (51,468)
Identifiable operating
  assets                    241,049      30,029       20,380          291,458

</TABLE>


Corporate  headquarters  assets are  included  in the  Information  Systems  and
Services  segment.  Substantially  all of the  Company's  operations  are in the
United States. The financial  information disclosed herein represents all of the
material  financial  information  related to the Company's  principal  operating
segments.

Note 8 - Comprehensive Income

Total  comprehensive  loss for the quarter  ended June 30, 2001 amounted to $2.4
million compared to a comprehensive loss of $22.0 million for the same period in
2000. Total comprehensive income for the six months ended June 30, 2001 amounted
to $17.4 million compared to a comprehensive  loss of $32.4 million for the same
period in 2000.  Comprehensive income includes unrealized gains or losses on the
Company's  available-for-sale  securities  that are  included as a component  of
stockholders' equity.

                                  Page 9 of 28

<PAGE>
Note 9 - Earnings Per Share Information
The following sets forth the computation of basic and diluted earnings per
share:

<TABLE>
<CAPTION>
                                     THREE MONTHS ENDED    SIX MONTHS ENDED
                                           JUNE 30,              JUNE 30,
                                     2001        2000      2001        2000
                                     ----        ----      ----        ----
<S>                                  <C>         <C>       <C>         <C>
Numerator:
  Net income (loss)                  $ (2,277)  $(22,023)  $17,483     $(32,522)
                                     ---------  --------   ---------   ---------
Numerator for basic and diluted
  income (loss) loss per share       $ (2,277)  $(22,023)  $17,483     $(32,522)
                                     ---------  --------   ---------   ---------
Denominator:

  Basic weighted-average shares
    outstanding                        28,476    28,029      28,455      27,993
  Effect of employee stock options          -         -         331           -
                                     --------   --------   ---------   ---------
Denominator for diluted income
  (loss) per share                     28,476    28,029      28,786      27,993
                                     --------   --------   ---------   ---------
  Basic income (loss) per share      $  (0.08)  $ (0.79)   $   0.61    $  (1.16)
  Diluted income (loss) per share    $  (0.08)  $ (0.79)   $   0.61    $  (1.16)
                                     =========  ========   =========   =========
</TABLE>

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

You should read the following discussion together with the condensed financial
statements and related notes appearing elsewhere in this Quarterly Report on
Form 10-Q.  This Item contains forward-looing statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities and
Exchange Act of 1934 that involve risks and uncertainties.  Actual results may
differ materially from those included in such forward-looing statements.
Factors which could cause actual results to differ materially include those set
forth under "Forward-Looking Information and the Factors Affecting Future
Performance" commencing on page 16, as well as those otherwise discussed in
this section and elsewhere in this Quarterly Report on Form 10-Q.

GENERAL

The Company reported a net loss of $2.3 million, or $0.08 per diluted share, for
the second  quarter of 2001 as compared to a net loss of $22.0  million or $0.79
per  diluted share for the second  quarter of 2000.  Excluding the effect of the
equity in loss of an  unconsolidated  affiliate of $5.5 million,  the net income
for the three months  ended June 30, 2001 was  $994,000 or $0.03 per share.  The
Company  reported net income of $17.5 million,  or $0.61 per diluted share,  for
the six months ended June 30, 2001 as compared to a net loss of $32.5 million or
$1.16 per diluted  share for the same period in 2000.  Excluding  the effects of
the gain on sale of an investment in ChannelHealth of $35.5 million,  a realized
gain on investment in an unrelated entity of $5.8 million and the equity in loss
of an  unconsolidated  affiliate  of $11.5  million,  the net income for the six
months ended June 30, 2001 was $821,000 or $0.03 per share. Excluding the effect
of  charges  of  $21.0  million   related  to  a  product   discontinuance   and
restructuring  program  announced  on June 21, 2000 and the $5.8 million loss on
impairment of goodwill associated with ChannelHealth, Inc., the net loss for the
six months ended June 30, 2000 was $13.8 million or $0.49 per share.

Although the Company's operating results as described above have improved, the
Company expects that additional costs related to the Company's User Conference
and increased costs related to product development for its LawtWord product will
be incurred during the quarter ending September 30, 2001.  As a result, the
Company anticipates higher operating costs than during the second quarter of
2001.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THREE MONTHS ENDED JUNE 30, 2000


                                 Page 10 of 28
<PAGE>

REVENUES
The Company's total revenues increased to $101.4 million during the three months
ended June 30, 2001 from $79.6 million in the  corresponding  period in 2000, an
increase of $21.8 million or 27.4%.  Revenues  from systems  sales  increased to
$33.7  million  during  the three  months  ended June 30,  2001  (33.2% of total
revenues)   compared  to  $21.1  million  (26.5%  of  total   revenues)  in  the
corresponding  period in 2000,  an  increase  of $12.6  million  or 59.6%.  This
increase was  primarily  due to an increase in sales of the  Company's  systems.
Revenues from maintenance and service fees increased to $67.7 million during the
three months ended June 30, 2001 (66.8% of total  revenues)  from $58.5  million
(73.5% of total  revenues) in the  corresponding  period in 2000, an increase of
$9.2 million or 15.8%.  The increase in revenues  from maintenance and service
fees is primarily due to increased medical transcription service fee revenue
from EDiX.

During  2000 and  continuing  into the first  quarter  of 2001,  certain  of the
Company's customers delayed making purchasing  decisions with respect to certain
of the  Company's  software  systems  resulting  in longer sales cycles for such
systems.  Management  believes  such  delays  are due to a  number  of  factors,
including customer  organization  changes,  government  approvals,  pressures to
reduce expenses,  product complexity,  competition,  and customer  preoccupation
with internal  Year 2000 issues.  While the Company  believes  these factors are
temporary,  they may continue to cause  reductions or delays in spending for new
systems and services in the future.

COST OF SALES AND SERVICES
The cost of sales and  services  increased  to $65.1  million  during  the three
months  ended June 30, 2001 from $60.7  million in the  corresponding  period in
2000,  an increase of $4.4  million or 7.3%.  The  increase in cost of sales and
services as compared to the prior year resulted  from growth in client  services
expenses,  primarily  related to medical  transcription  costs. The gross profit
margin on systems sales and services increased to 35.8% in the second quarter of
2001 from 23.8% for the same period in 2000. The increase in gross profit margin
as a percentage of sales is due to a number of factors including: an increase in
sales of certain IDX  systems  with higher  margins;  the sale of  ChannelHealth
which  experienced a negative gross margin of 43.9% during the second quarter of
2000  primarily due to high fixed costs  relative to its low sales volume due to
the early stage of this  business'  development;  and an increase in maintenance
and service  revenue.  IDX's core  business,  information  systems and services,
gross  profit  margin as a  percentage  of sales  increased  to 40.0% during the
second  quarter of 2001 from 27.0% for the same period in 2000 due to  increased
higher margin systems sales combined with an increase in maintenance and service
revenue.  The gross  profit  margin  for the  Company's  medical  dictation  and
transcription  business  segment  (EDiX)  increased as a percentage  of sales to
22.4% in 2001 from 18.8% in 2000 due to increased operational efficiencies.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses increased to $23.9 million during
the three months ended June 30, 2001 from $21.4 million during the corresponding
period in 2000,  an increase of $2.5 million or 11.6%.  As a percentage of total
revenues, selling, general and administrative expenses decreased to 23.6% during
the three  months  ended June 30,  2001 from 26.9% for the same  period in 2000.
IDX's core business selling,  general and administrative expenses increased $4.4
million  primarily due to an increase in general  administrative  costs combined
with a  decrease  in  corporate  overhead  absorption  related  to the  sale  of
ChannelHealth.  EDiX's selling,  general and  administrative  expenses increased
$1.8 million or 85.1% during the second  quarter of 2001 as compared to the same
period in the prior year  primarily  due to  increased  costs to  support  sales
growth. In the prior year  ChannelHealth's  selling,  general and administrative
expenses  were $3.7  million  during the second  quarter of 2000 which  includes
sales and marketing expenses and administrative start up expenses.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  decreased to $11.4 million during the three
months  ended June 30, 2001 from $13.2  million in the  corresponding  period in
2000, a decrease of $1.8 million or 13.7%.  The decrease is primarily due to the
sale of ChannelHealth on January 8, 2001.  ChannelHealth  incurred approximately
$1.9 million in research and development  costs in the comparable  period in the
prior year. As a percentage of total revenues, research and development expenses
decreased to 11.2% of revenue for the second  quarter of 2001 from 16.5% for the
corresponding  period in 2000.  IDX's core  business  research  and  development
expenses  decreased  $135,000  primarily  due to an increase in personnel  costs
offset by the  capitalization  of $660,000 of software  development costs during
the three  months ended June 30, 2001.  Research  and  development  costs in the
medical  dictation and  transcription  business  segment  (EDiX)  increased from
$313,000 in 2000 to $562,000 in 2001.

                                 Page 11 of 28
<PAGE>

OTHER INCOME, NET
Interest income was approximately  $626,000 during the second quarter of 2001 as
compared to $2.2  million for the same period in 2000.  The decrease in interest
income is primarily due to a lower average  invested balance in 2001 as compared
to 2000.

EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE
IDX  currently  owns  approximately  20%  of the  outstanding  common  stock  of
Allscripts and records its investment under the equity method of accounting. IDX
records  its  interest  in  the  losses  of  Allscripts  as a  reduction  to its
investment  account.  The equity loss during the second quarter of 2001 was $5.5
million on a pre-tax basis.

INCOME TAXES
Income  taxes for the quarter  ended June 30, 2001 were  provided  for at 40.0%.
Income taxes for the quarter ended June 30, 2000 were provided for at 38.2%. The
lower rate in 2000 was principally due to a lower state effective tax. Excluding
the impact of transaction  costs related to the sale of  ChannelHealth  that are
non-deductible for income tax purposes,  the Company  anticipates an incremental
effective tax rate of  approximately  40.0% for the remainder of the year ending
December  31, 2001 which may result in an overall  lower  effective  tax rate in
subsequent interim reporting periods. The ultimate effective tax rate depends on
the extent of pre-tax earnings subject to the incremental tax rate of 40.0%. The
net  deferred  tax assets of  approximately  $14.6  million  are  expected to be
realized by reducing future taxable income.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO SIX MONTHS ENDED JUNE 30, 2000

REVENUES
The Company's  total revenues  increased to $193.2 million during the six months
ended June 30, 2001 from $156.3 million in the corresponding  period in 2000, an
increase of $36.9 million or 23.6%.  Revenues  from systems  sales  increased to
$59.8  million  during  the six  months  ended  June 30,  2001  (31.0%  of total
revenues)   compared  to  $42.7  million  (27.3%  of  total   revenues)  in  the
corresponding  period in 2000,  an  increase  of $17.1  million  or 40.0%.  This
increase  was  primarily  due to  additional  sales  of the  Company's  systems.
Revenues from  maintenance  and service fees  increased to $133.4 million during
the six months ended June 30, 2001 (69.0% of total revenues) from $113.6 million
(72.7% of total  revenues) in the  corresponding  period in 2000, an increase of
$19.8 million or 17.4%.  The increase in revenues from  maintenance  and service
fees is primarily  due to increased  medical  transcription  service fee revenue
from EDiX  combined  with an increase in  maintenance  and  consulting  services
provided by IDX's core business.


COST OF SALES AND SERVICES
The cost of sales and services increased to $128.4 million during the six months
ended June 30, 2001 from $115.8 million in the corresponding  period in 2000, an
increase of $12.6  million or 10.9%.  The increase in cost of sales and services
as compared to the prior year resulted from growth in client services  expenses,
primarily  related to medical  transcription  costs combined with an increase in
personnel costs. The gross profit margin on systems sales and services increased
to 33.5% in the first six months of 2001 from 25.9% for the same period in 2000.
The increase in gross profit  margin as a percentage of sales is due to a number
of factors  including:  an increase in sales of certain IDX systems  with higher
margins;  the sale of ChannelHealth which experienced a negative gross margin of
38.5%  during the first six  months of

                                 Page 12 of 28

<PAGE>

2000  primarily due to high fixed costs  relative to its low sales volume due to
the early stage of this business'  development;  and increased  maintenance  and
service revenue.  IDX's core business,  information systems and services,  gross
profit margin as a percentage  of sales  increased to 37.8% during the first six
months of 2001 from 29.6% for the same  period in 2000 due to an increase in
higher margin system sales and increased  maintenance and service  revenue.  The
gross  profit  margin for the  Company's  medical  dictation  and  transcription
business  segment (EDiX)  increased as a percentage of sales to 19.8% during the
first six months of 2001 from 18.4% for the same period in 2000 due to increased
operational efficiencies.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses increased to $42.9 million during
the six months ended June 30, 2001 from $39.8 million  during the  corresponding
period in 2000,  an increase of $3.1 million or 7.8%.  As a percentage  of total
revenues, selling, general and administrative expenses decreased to 22.2% during
the six months ended June 30, 2001 from 25.5% for the same period in 2000. IDX's
core  business  selling,  general and  administrative  expenses  increased  $7.5
million primarily due to a decrease in corporate overhead  absorption related to
the sale of  ChannelHealth  combined with an increase in general  administrative
costs.  EDiX's  selling,  general and  administrative  expenses  increased  $2.4
million or 59.8%  during the first six  months of 2001 as  compared  to the same
period in the prior year  primarily  due to  increased  costs to  support  sales
growth. In the prior year  ChannelHealth's  selling,  general and administrative
expenses  were $6.8 million  during the first six months of 2000 which  includes
sales and marketing expenses and administrative start up expenses.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  decreased to $21.9  million  during the six
months  ended June 30, 2001 from $25.3  million in the  corresponding  period in
2000, a decrease of $3.4 million or 13.8%.  The decrease is primarily due to the
sale of ChannelHealth on January 8, 2001.  ChannelHealth  incurred approximately
$3.4  million in research  and  development  costs during the same period in the
prior year. As a percentage of total revenues, research and development expenses
decreased  to 11.3% of  revenue  for the first  half of 2001 from  16.2% for the
corresponding  period in 2000.  IDX's core  business  research  and  development
expenses decreased $437,000 primarily due to the capitalization of approximately
$900,000 of software development costs (net of  amortization)  during  the six
months  ended June 30,  2001 offset by increased personnel costs.  Research  and
development costs in the medical  dictation and  transcription  business segment
(EDiX)  increased from $590,000  during the six month period in 2000 to $977,000
for the same period in 2001.

LOSS ON IMPAIRMENT OF GOODWILL
During  the  first  quarter  of  2000,  the  Company  determined  that an  asset
impairment  existed  related to goodwill  acquired  in the 1999  purchase of the
Company's initial  investment in an Internet  services and content provider.  In
January  2000,  the Company  made the  decision  to use an external  provider of
content and transactions for  ChannelHealth  and discontinued the use of certain
assets. This goodwill impairment was recognized during the first quarter of 2000
and is reflected as a pre-tax loss on  impairment  of goodwill of  approximately
$5.8 million.

OTHER INCOME
Interest  income was  approximately  $1.6 million during the first six months of
2001 as compared to $3.6  million for the same period in 2000.  The  decrease in
interest income is primarily due to a lower average  invested balance in 2001 as
compared to 2000.

GAIN ON SALE OF INVESTMENT IN SUBSIDIARY
On January 8, 2001,  Allscripts  acquired  IDX's  holdings in  ChannelHealth  in
exchange  for  approximately  7.5  million  shares of  Allscripts  common  stock
(Allscripts  shares). The Allscripts shares received are subject to restrictions
on any transfer of the  securities for a period of one year from the date of the
transaction  and  after  one  year,  on the  transfer  of more  than  25% of the
Allscripts shares in any one year, and 16.67% in any one month. IDX recorded the
Allscripts shares at fair value of $29.5 million, which included a discount from
market value due to the four year restrictions on transfer, resulting in a $35.5

                                 Page 13 of 28
<PAGE>

million gain on the  transaction.  IDX accounts for its investment in Allscripts
under the  equity  method of  accounting.  As a result of the  transaction,  the
Company is entitled to representation on Allscripts Board of Directors.

REALIZED GAIN ON INVESTMENT
Other income in 2001  includes a $5.8 million  realized gain on an investment in
an unrelated  investment  partnership that was recorded during the first quarter
of 2001.

EQUITY IN LOSS OF UNCONSOLIDATED AFFILIATE
IDX  currently  owns  approximately  20%  of the  outstanding  common  stock  of
Allscripts and records its investment under the equity method of accounting. IDX
records  its  interest  in  the  losses  of  Allscripts  as a  reduction  to its
investment  account.  The  equity  loss  during the first six months of 2001 was
$11.5 million on a pre-tax basis.

INCOME TAXES
Income taxes for the six months  ended June 30, 2001 were  provided for at 44.0%
which  reflects a higher rate than the Company's  historical  effective rate and
the  statutory  rate of 40.0%.  The higher  rate in 2001 is  principally  due to
transaction costs related to the sale of ChannelHealth  that are  non-deductible
for income tax purposes. Income taxes for the six months ended June 30,2000 were
provided for at 34.1%. The lower rate in 2000 was principally due to a lower
state effective tax rate combined with the non-deductible  nature of the loss on
goodwill impairment related to ChannelHealth Inc. in January of 2000.  Excluding
the impact of transaction  costs related to the sale of  ChannelHealth  that are
non-deductible for income tax purposes,  the Company  anticipates an incremental
effective tax rate of  approximately  40.0% for the remainder of the year ending
December  31, 2001 which may result in an overall  lower  effective  tax rate in
subsequent interim reporting periods. The ultimate effective tax rate depends on
the extent of pre-tax earnings subject to the incremental tax rate of 40.0%. The
net  deferred  tax assets of  approximately  $14.6  million  are  expected to be
realized by reducing future taxable income.

NEW ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" ("SFAS No. 141") and SFAS No. 142, "Goodwill and Other
Intangible Assets" ("SFAS No. 142"), effective for fiscal years beginning after
December 15, 2001.  Under the new rules, goodwill and intangible assets deemed
to have indefinitive lives will no longer be amortized but will be subject to
annual impairment tests in accordance with the Statements.  Other intangible
assets will continue to be amortized over their useful lives.

The Company will apply the new rules on accounting for goodwill and other
intangible assets beginning in the first quarter of 2002.  The Company is in the
process of determining the impact of the application of the non-amortization
provisions of the statement.  During 2002, the Company will perform the first of
the required impairment tests of goodwill and indefinite lived intangible
assets as of January 1, 2002 and has not yet determined what the effect of these
tests will be on the earnings and financial position of the Company.

LIQUIDITY AND CAPITAL RESOURCES
Cash, cash equivalents and marketable securities  available-for-sale at June 30,
2001 were $52.2 million, a decrease of $18.5 million from December 31, 2000.

Net cash (used in) provided by operations is principally comprised of net income
(loss)  and  depreciation  and is  primarily  affected  by the net effect of the
change in accounts receivable, accounts payable and accrued expenses. Due to the
nature of the Company's  business,  accounts  receivable,  deferred  revenue and
accounts  payable   fluctuate  due  to,  among  other  things,   the  length  of
installation  efforts which are dependent upon the size of the transaction,  the
changing  business  plans  of the  customer,  the  effectiveness  of  customers'
management  and general  economic  conditions.  In the first six months of 2001,
accounts receivable from customers have been collected on average within 98 days
which  represents  a  decrease  of 20 days in terms of  average  days to collect
receivables  from  customers  as compared  to the annual  average in 2000 of 118
days.

                                 Page 14 of 28

<PAGE>

Cash flows related to investing activities have historically been related to the
purchase of  computer  and office  equipment,  leasehold  improvements,  and the
purchase and sale of investment  grade marketable  securities.  Through June 30,
2001   the    Company    has    spent    approximately    $14.4    million    on
construction-in-progress  related to a $16.0 million  expansion of its Corporate
headquarters   facility.  In  addition,  the  Company  purchased  its  Corporate
headquarters  facility from a related party on April 19, 2001 for  approximately
$15.0 million.  Investing activities may also include purchases of interests in,
loans to and acquisitions of businesses for access to complementary products and
technologies.  During  the  second  quarter  of 2001,  the  Company  acquired  a
consulting  firm for  approximately  $1.0  million  and a software  company  for
approximately  $1.1 million.  The Company expects these  activities to continue.
There can be no assurance that the Company will be able to successfully complete
any such purchases or acquisitions in the future.

Cash flows from  financing  activities  historically  relate to the  issuance of
common stock  through the exercise of employee  stock  options and in connection
with the employee stock  purchase plan. In addition  during the first quarter of
2000, an unrelated  party  invested  approximately  $30.0  million,  and related
parties invested  approximately $3.1 million in Channelhealth  Incorporated,  at
the time a majority owned subsidiary, by purchasing redeemable preferred stock.

The  Company has a revolving  demand  line of credit  with a bank  allowing  the
Company to borrow up to $15.0 million bearing  interest at the bank's base rate.
As of June 30,  2001 the Company had $12.0  million  outstanding  on the line of
credit.

The Company expects that its requirements for office facilities and other office
equipment will grow as staffing  requirements  dictate.  The Company's operating
lease  commitments  consist  primarily  of  office  leasing  for  the  Company's
operating facilities. In April 2000, the Company entered into a new 12-year term
operating lease for office space in Seattle, Washington, commencing in 2003. The
Company  plans to increase the number of its  professional  staff during 2001 to
meet anticipated  sales volume and to support research and development  efforts.
To the extent necessary to support increases in staffing, the Company may obtain
additional office space.

The Company purchased its headquarters in South Burlington, Vermont on April 19,
2001 for  approximately  $15 million from BDP Realty;  a related entity that was
included in the Company's  consolidated  financial statements through that date.
As a result, the net assets of BDP Realty, principally real estate and related
minority interest of approximately $9.1 million was eliminated in the Company's
consolidated balance sheet.  The real estate was purchased for $15.0 million in
cash based upon an independent appraisal of fair market value and was
capitalized in property and equipment.The  Company  is nearing  completion  on
construction  on an  expansion  of its corporate  headquarters  facility in
South Burlington,  Vermont,  which began in November 1999, and is considering
various options for financing including a bank financing or funding from
operations.  From time to time, based on the Company's requirements,   the
Company  may  consider  other  purchases  of  land  or  the construction  of
additional  office space.  Currently,  the Company has made no material lease or
purchase  commitments other than the purchase of the Company's headquarters
mentioned above.

The Company  believes  that  currently  available  funds will be  sufficient  to
finance its operating  requirements at least through the next twelve months.  To
date,  inflation  has not had a material  impact on the  Company's  revenues  or
income.

                                 Page 15 of 28

<PAGE>


FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING FUTURE PERFORMANCE


This  Quarterly  Report on Form 10-Q contains  "forward-looking  statements"  as
defined in Section 21E of the  Securities  and Exchange  Commission Act of 1934.
For this purpose, any statements contained in this Quarterly Report that are not
statements of historical  fact may be deemed to be  forward-looking  statements.
Words such as "believes,"  "anticipates," "plans," "expects," "will" and similar
expressions  are intended to identify  forward-looking  statements.  There are a
number of important  factors that could cause results to differ  materially from
those indicated by these forward-looking statements, including among others, the
factors set forth below. If any risk or uncertainty  identified in the following
factors  actually  occurs,  IDX's  business,  financial  condition and operating
results  would likely  suffer.  In that event,  the market price of IDX's common
stock could  decline and you could lose all or part of the money you paid to buy
IDX's common stock.

The  Company  undertakes  no  obligation  to update  or  revise  forward-looking
statements to reflect  changed  assumptions,  the  occurrence  of  unanticipated
events or changes in future operating results,  financial  condition or business
over time.

Because of these and other  factors,  past financial  performance  should not be
considered  an  indicator  of  future  performance.  Investors  should  not  use
historical trends to anticipate future results.

The following  important factors affect IDX's business and operations  generally
or affect more than one segment of our business and operations:

QUARTERLY  OPERATING RESULTS MAY VARY. The Company's quarterly operating results
have  varied in the past and may vary in the future.  IDX expects its  quarterly
results of operations to continue to fluctuate. Because a significant percentage
of IDX's expenses are relatively  fixed, the following factors could cause these
fluctuations:

o   delays in customers purchasing decisions due to a variety of factors such as
    consideration and management changes;
o   long sales cycles;
o   long installation and implementation cycles for the larger, more complex and
    costlier systems;
o   recognizing revenue at various points during the installation process;
o   timing of new product and service introductions and product upgrade
    releases; and
o   long sales and implementation cycles of IDX's customers.

In light of the above,  IDX  believes  that its  results of  operations  for any
particular  quarter or fiscal year are not  necessarily  meaningful  or reliable
indicators of future performance.

VOLATILITY  OF STOCK  PRICE.  IDX has  experienced,  and  expects to continue to
experience  fluctuations  in  its  stock  price  due  to a  variety  of  factors
including:

o   actual or anticipated  quarterly variations in operating results;
o   changes in expectations of future financial performance;
o   changes in estimates of securities analysts;
o   market conditions particularly in the computer software and Internet
    industries;

                                 Page 16 of 28

<PAGE>

o    announcements of technological innovations, including Internet delivery of
     information and use of application service provider technology;
o    new product introductions by IDX or its competitors;
o    delay in customers purchasing decisions due to a variety of factors;
o    market prices of competitors; and
o    healthcare reform measures and healthcare regulation.

These  fluctuations  have had a  significant  impact on the market  price of our
common stock,  and may have a  significant  impact on the future market price of
our common stock.

These fluctuations may affect operating results as follows:

o    ability to transact stock acquisitions; and
o    ability to retain and incent key employees.

FINANCIAL  TRENDS.  Year over year net  income  and cash  from  operations  have
generally   declined   since  1998.  In  2000,  IDX  generated  a  net  loss  of
approximately  $36 million.  If these  negative  trends  continue,  IDX may have
difficulty financing future growth and funding operating initiatives,  including
future acquisitions.

NEW PRODUCT DEVELOPMENT AND RAPIDLY CHANGING TECHNOLOGY.  To be successful,  IDX
must enhance its existing  products,  respond  effectively to technology changes
and help its clients adopt new technologies. In addition, IDX must introduce new
products  and  technologies  to meet the  evolving  needs of its  clients in the
healthcare  information systems market. IDX may have difficulty in accomplishing
this because of:

o    the continuing evolution of industry standards suchas as transaction
     standards pursuant to the Health Insurance Portability and Accountability
     Act of 1996; and
o    the creation of new technological developments such as Internet and
     application service provider technology.

IDX is  currently  devoting  significant  resources  toward the  development  of
enhancements   to  its   existing   products,   particularly   in  the  area  of
Internet-based  functionality  and the  migration  of  existing  products to new
hardware and  software  platforms,  including  relational  database  technology,
object-oriented   programming  and  application  service  provider   technology.
However,  IDX may not  successfully  complete these product  developments or the
adaptation in a timely  fashion,  and IDX's  current or future  products may not
satisfy the needs of the healthcare  information  systems  market.  Any of these
developments  may  adversely  affect  IDX's  competitive  position or render its
products or technologies noncompetitive or obsolete.

CHANGES AND  CONSOLIDATION  IN THE HEALTHCARE  INDUSTRY.  IDX currently  derives
substantially  all of its revenues from sales of financial,  administrative  and
clinical  healthcare   information  systems  and  related  services  within  the
healthcare industry. As a result, the success of IDX is dependent in part on the
political and economic conditions in the healthcare industry.

Virtually  all of IDX's  customers  and the other  entities with which IDX has a
business  relationship  operate in the healthcare industry and, as a result, are
subject to governmental regulation,  including Medicare and Medicaid regulation.
Accordingly,  IDX's  customers  and the  other  entities  with  which  IDX has a
business   relationship   are  affected  by  changes  in  such  regulations  and
limitations in governmental spending for Medicare and Medicaid programs.  Recent
actions by Congress  have  limited  governmental  spending  for the Medicare and
Medicaid programs,  limited payments to hospitals and other providers under such
programs,  and  increased  emphasis  on  competition  and  other  programs  that
potentially  could  have an  adverse  effect  on IDX's  customers  and the other
entities with which IDX has a business  relationship.  In

                                 Page 17 of 28
<PAGE>


addition, Federal and state legislatures have considered proposals to reform the
U.S.  healthcare  system at both the Federal and state level. If enacted,  these
proposals   could  increase   government   involvement   in  healthcare,   lower
reimbursement  rates and  otherwise  change the  business  environment  of IDX's
customers  and the other  entities  with which IDX has a business  relationship.
IDX's   customers  and  the  other  entities  with  which  IDX  has  a  business
relationship  could react to these  proposals  and the  uncertainty  surrounding
these  proposals by curtailing  or deferring  investments,  including  those for
IDX's products and services.

In addition,  many healthcare  providers are  consolidating to create integrated
healthcare  delivery systems with greater market power.  These providers may try
to use their market power to negotiate  price  reductions for IDX's products and
services.  If IDX is forced to reduce its prices,  its  operating  margins would
decrease.  As the healthcare  industry  consolidates,  competition for customers
will become more intense and the  importance  of acquiring  each  customer  will
become greater.

COMPETITION  FOR  HEALTHCARE  INFORMATION  SYSTEMS.  The market  for  healthcare
information  systems is intensely  competitive,  rapidly evolving and subject to
rapid technological  change. IDX believes that the principal competitive factors
in this market include the breadth and quality of system and product  offerings,
the features and  capabilities  of the systems,  the price of system and product
offerings,   the  ongoing  support  for  the  systems,  and  the  potential  for
enhancements and future compatible products.

Some  of the  IDX's  competitors  have  greater  financial,  technical,  product
development, marketing and other resources than IDX, and some of its competitors
offer  products  that  it does  not  offer.  The  Company's  principal  existing
competitors include Cerner  Corporation,  Eclipsys  Corporation,  McKesson HBOC,
Inc. and Shared Medical Systems Corporation, which was acquired by Siemans AG in
2000,  each of which offers a suite of products  that compete with many of IDX's
products.  There are  other  competitors  that  offer a more  limited  number of
competing products.  Many of IDX's competitors have also announced or introduced
Internet  strategies  that will compete  with IDX's  Internet  applications  and
services. IDX may be unable to compete successfully against these organizations.
In addition,  IDX expects that major  software  information  systems  companies,
large   information   technology   consulting   service   providers  and  system
integrators,  Internet-based  start-up companies and others  specializing in the
healthcare industry may offer competitive products or services.

PRODUCT   LIABILITY   CLAIMS.   Any  failure  by  IDX's  products  that  provide
applications  relating to patient  medical  histories and treatment  plans could
expose IDX to product liability claims.  These potential claims may exceed IDX's
current insurance  coverage.  Unsuccessful  claims could be costly to defend and
divert  management time and resources.  In addition,  IDX cannot make assurances
that it will  continue  to have  appropriate  insurance  available  to it in the
future at commercially reasonable rates.

KEY  PERSONNEL.  The success of IDX is dependent to a significant  degree on its
key management, sales, marketing, and technical personnel. To be successful IDX,
must attract,  motivate and retain highly skilled managerial,  sales, marketing,
consulting and technical personnel, including programmers,  consultants, systems
architects  skilled  in the  technical  environments  in  which  IDX's  products
operate. Competition for such personnel in the software and information services
industries is intense.  IDX does not maintain "key man" life insurance  policies
on any of its  executives.  Not all IDX personnel  have executed  noncompetition
agreements.

GOVERNMENT  REGULATION.  Virtually all of IDX's customers and the other entities
with which IDX has a business  relationship  operate in the healthcare  industry
and, as a result, are subject to governmental regulation. Because IDX's products
and  services are designed to function  within the  structure of the  healthcare
financing and reimbursement systems currently in place in the United States, and
because IDX is pursuing a strategy of  developing  and  marketing  products  and
services that support its customers'

                                 Page 18 of 28
<PAGE>



regulatory and compliance  efforts,  IDX may become subject to the reach of, and
liability under, these regulations.

The Federal  Anti-Kickback  Law,  among other  things,  prohibits  the direct or
indirect  payment or receipt of any  remuneration  for  Medicare,  Medicaid  and
certain  other  Federal  or  state  healthcare  program  patient  referrals,  or
arranging for or  recommending  referrals or other business paid for in whole or
in  part  by the  federal  health  care  programs.  Violations  of  the  Federal
Anti-Kickback  Law may  result in civil and  criminal  sanction  and  liability,
including the temporary or permanent  exclusion of the violator from  government
health  programs,  treble damages and imprisonment for up to five years for each
violation. If the activities of a customer of IDX or other entity with which IDX
has a business  relationship were found to constitute a violation of the Federal
Anti-Kickback  Law and IDX, as a result of the provision of products or services
to such customer or entity,  was found to have  knowingly  participated  in such
activities,  IDX could be  subject to  sanction  or  liability  under such laws,
including the exclusion of IDX from government  health programs.  As a result of
exclusion from government health programs,  IDX customers would not be permitted
to make any payments to IDX.

The  Federal  Civil  False  Claims  Act and the  Medicare/Medicaid  Civil  Money
Penalties  regulations  prohibit,  among other things,  the filing of claims for
services  that were not provided as claimed,  which were for services  that were
not medically necessary, or which were otherwise false or fraudulent. Violations
of these laws may result in civil damages, including treble and civil penalties.
In  addition  the  Medicare/Medicaid  and other  Federal  statutes  provide  for
criminal  penalties for such false  claims.  If, as a result of the provision by
IDX of products or services to its  customers or other  entities  with which IDX
has a business  relationship,  IDX  provides  assistance  with the  provision of
inaccurate  financial reports to the government under these regulations,  or IDX
is found to have knowingly  recorded or reported data relating to  inappropriate
payments made to a healthcare provider,  IDX could be subject to liability under
these laws.

The Health Insurance Portability and Accountability Act of 1996 (HIPAA) contains
provisions  regarding  standardization,  privacy,  security,  and administrative
simplification  in  healthcare.  As a result of  regulations  now proposed under
HIPAA, IDX will make investments to support customer  operations in areas,  such
as:

o   electronic data transactions;
o   computer system security; and
o   patient privacy.

Although it is not  possible  to  anticipate  the final form of all  regulations
under HIPAA, IDX has made and expects to continue to make investments in product
enhancements  to  support  customer  operations  that are  regulated  by  HIPAA.
Responding to HIPAA's impact may require IDX to make investments in new products
or charge  higher  prices.  It may be expensive  to implement  security or other
measures designed to comply with any new legislation or regulation.

The United States Food and Drug  Administration  has  promulgated a draft policy
for the regulation of computer  software  products as medical  devices under the
1976 Medical  Device  Amendments to the Federal Food,  Drug and Cosmetic Act. To
the extent that computer software is a medical device under the policy,  IDX, as
a manufacturer  of such products,  could be required,  depending on the product,
to:

o    register and list its products with the FDA;
o    notify the FDA and demonstrate substantial equivalence to other products on
o    the market before marketing such products; or obtain FDA approval by
     demonstrating safety and effectiveness before marketing a product.

Depending on the intended use of a device,  the FDA could  require IDX to obtain
extensive data from clinical studies to demonstrate safety or effectiveness,  or
substantial equivalence. If the FDA requires this

                                 Page 19 of 28
<PAGE>



data,  IDX would be required to obtain  approval  of an  investigational  device
exemption before undertaking clinical trials.  Clinical trials can take extended
periods of time to complete.  IDX cannot  provide  assurances  that the FDA will
approve or clear a device  after the  completion  of such  trials.  In addition,
these  products  would be subject to the Federal Food,  Drug and Cosmetic  Act's
general controls,  including those relating to good manufacturing  practices and
adverse  experience  reporting.  Although it is not possible to  anticipate  the
final form of the FDA's  policy with regard to  computer  software,  IDX expects
that the FDA is likely  to become  increasingly  active in  regulating  computer
software intended for use in healthcare settings regardless of whether the draft
is finalized or changed.  The FDA can impose  extensive  requirements  governing
pre- and post-market conditions like service investigation,  approval,  labeling
and  manufacturing.  In  addition,  the FDA can  impose  extensive  requirements
governing development controls and quality assurance processes.

SYSTEM ERRORS AND  WARRANTIES.  IDX's  healthcare  information  systems are very
complex. As with complex systems offered by others, IDX's healthcare information
systems may contain errors,  especially when first introduced.  IDX's healthcare
information systems are intended to provide information to healthcare  providers
for use in the diagnosis and  treatment of patients.  Therefore,  users of IDX's
products  may have a greater  sensitivity  to system  errors than the market for
software products  generally.  Failure of an IDX customer's system to perform in
accordance  with its  documentation  could  constitute  a breach of warranty and
require IDX to incur additional  expense in order to make the system comply with
the documentation. If such failure is not timely remedied, it could constitute a
material breach under a contract  allowing the client to cancel the contract and
subject IDX to liability.

POTENTIAL INFRINGEMENT OF PROPRIETARY RIGHTS OF OTHERS. If any of IDX's products
violate third party  proprietary  rights,  IDX may be required to reengineer its
products or seek to obtain licenses from third parties to continue  offering its
products  without  substantial  reengineering.  Any efforts to reengineer  IDX's
products or obtain  licenses from third parties may not be successful,  in which
case IDX may be forced to stop  selling  the  infringing  product  or remove the
infringing  functionality  or  feature.  IDX may also  become  subject to damage
awards as a result of infringing the proprietary  rights of others,  which could
cause IDX to incur additional losses and have an adverse impact on its financial
position.  IDX does not  conduct  comprehensive  patent  searches  to  determine
whether the technologies  used in its products  infringe patents held by others.
In addition,  product development is inherently  uncertain in a rapidly evolving
technological  environment  in which there may be numerous  patent  applications
pending,  many of which are  confidential  when  filed,  with  regard to similar
technologies.

                                 Page 20 of 28

<PAGE>


LIMITED PROTECTION OF PROPRIETARY TECHNOLOGY.  IDX's success and competitiveness
are  dependent to a  significant  degree on the  protection  of its  proprietary
technology.  IDX relies  primarily on a combination of copyrights,  trade secret
laws and  restrictions  on  disclosure  to protect its  proprietary  technology.
Despite  these  precautions,  others  may be able to  copy or  reverse  engineer
aspects of IDX's  products,  to obtain and use  information  that IDX regards as
proprietary or to independently  develop similar  technology.  Litigation may be
necessary in the future to enforce or defend IDX's proprietary  technology or to
determine  the  validity  and scope of the  proprietary  rights of others.  This
litigation,  whether  successful or  unsuccessful,  could result in  substantial
costs and diversion of management and technical resources.

CONFLICTS  OF  INTERESTS.  Richard  E.  Tarrant,  Chief  Executive  Officer  and
Director,  and Robert H. Hoehl,  Chairman of the Board of Directors,  indirectly
own, through various  entities,  real estate which IDX leases in connection with
its operations. During 2000, IDX paid an aggregate of approximately $1.8 million
in connection with these leases including the Company's headquarters  facilities
in South Burlington, Vermont. IDX purchased the headquarter facility from a real
estate  entity  majority owned by Richard E.  Tarrant  and Robert H. Hoehl for a
purchase price of  approximately  $15.0 million on April 19, 2001. In connection
with the remaining  related  entity   arrangements,   the  economic  interests
of these executives and directors and IDX may diverge.

RISKS  ASSOCIATED WITH  ACQUISITION  STRATEGY.  IDX may continue to grow in part
through  either  acquisitions  of  complementary   products,   technologies  and
businesses or alliances with complementary businesses. IDX may not be successful
in these  acquisitions  or  alliances,  or in  integrating  any such acquired or
aligned  products,  technologies  or  businesses  into its current  business and
operations.  Factors  which may  affect  IDX's  ability  to expand  successfully
include:

o    the generation of sufficient financing to fund potential acquisitions and
     alliances;
o    the successful identification and acquisition of products, technologies or
     businesses;
o    effective integration and operation of the acquired or aligned products,
     technologies or businesses despite technical difficulties, geographic
     limitations and personnel issues; and
o    overcoming significant competition for acquisition and alliance
     opportunities from companies that have significantly greater financial and
     management resources.

STRATEGIC ALLIANCE WITH ALLSCRIPTS  HEALTHCARE  SOLUTIONS.  In January 2001, IDX
entered into a ten-year strategic alliance with Allscripts  Healthcare Solutions
to  cooperatively  develop,  market and sell  integrated  clinical  and practice
management  products.  During the term of the alliance,  IDX is prohibited  from
cooperating  with direct  competitors  of  Allscripts  to develop or provide any
products similar to or in competition  with Allscripts  products in the practice
management systems market.  Also,  pursuant to the strategic alliance agreement,
IDX has guaranteed that  Allscripts will have gross revenues  resulting from the
alliance (less any commissions  paid to IDX) of at least $4.5 million for fiscal
year 2001,  and IDX will have to pay  Allscripts  the  excess,  if any,  of $4.5
million  over  Allscripts'  actual gross  revenues for fiscal year 2001.  If the
strategic alliance is not successful, Allscripts' gross revenues for fiscal year
2001 are less than $4.5 million,  or the  restrictions  placed on IDX during the
term of the  strategic  alliance  prohibit IDX from  successfully  marketing and
selling certain products and services, IDX's operating results may suffer.

                                 Page 21 of 28

<PAGE>


RESTRICTIONS ON LIQUIDATION OF INVESTMENT IN ALLSCRIPTS HEALTHCARE SOLUTIONS. In
January 2001 IDX received  approximately  7.5 million  shares of common stock of
Allscripts Healthcare Solutions in connection with the acquisition by Allscripts
of IDX's majority owned subsidiary, ChannelHealth Incorporated. IDX entered into
a stock rights and restrictions  agreement with  Allscripts,  pursuant to which,
among  other  things,  IDX agreed to  restrictions  on the sale of its shares of
Allscripts  common stock. In general,  IDX is prohibited from selling any shares
for one year after the date of  Allscripts'  acquisition of  ChannelHealth,  and
after one year,  IDX is  prohibited  from  selling more than 25% of it shares of
Allscripts  common  stock in any  one-year,  and  16.67% in any one  month.  The
restrictions  on IDX's  ability to sell shares of  Allscripts  common stock will
make it difficult  for IDX to liquidate its  investment  in  Allscripts  and may
adversely affect the value of such investment.

ANTI-TAKEOVER   DEFENSES.   IDX's  Second  Amended  and  Restated   Articles  of
Incorporation   and  Second  Amended  and  Restated   Bylaws   contain   certain
anti-takeover provisions, which could deter an unsolicited offer to acquire IDX.
For example, IDX's board of directors is divided into three classes, only one of
which will be elected at each  annual  meeting.  These  provisions  may delay or
prevent a change in control of IDX.


                                 Page 22 of 28

<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

IDX does  not  currently  use  derivative  financial  instruments.  The  Company
generally  places its securities  available-for-sale  investments in high credit
quality  instruments, primarily U.S.  Government and Federal Agency obligations,
tax-exempt  municipal  obligations and corporate  obligations  with  contractual
maturities  of a year or less.  We do not  expect  any  material  loss  from our
marketable security investments.

Internationally, IDX primarily invoices customers in United States currency. The
Company is not currently  exposed to foreign exchange rate fluctuations and does
not enter into  foreign  currency  hedge  transactions.  Through  June 30, 2001,
foreign  currency  fluctuations  have not had a material impact on our financial
position or results of operations.

Investments  in both fixed rate and floating rate interest  earning  instruments
carry a degree of interest rate risk.  Fixed rate securities may have their fair
market value adversely  impacted due to a rise in interest rates, while floating
rate  securities  may produce less income than expected if interest  rates fall.
Due in part to these  factors,  our future  investment  income may fall short of
expectations  due to  changes  in  interest  rates or we may  suffer  losses  in
principal if forced to sell  securities  that may experience a decline in market
value due to changes in interest rates. A hypothetical  10% increase or decrease
in interest  rates,  however,  would not have a material  adverse  effect on our
financial condition.

Interest income on the Company's  investments is included in "Other Income." The
Company  accounts for cash  equivalents  and  securities  available-for-sale  in
accordance  with  Statement of  Financial  Accounting  Standards  (SFAS) No. 115
"Accounting  for  Certain  Investments  in Debt  and  Equity  Securities."  Cash
equivalents  are short-term  highly liquid  investments  with original  maturity
dates of three  months or less.  Cash  equivalents  are  carried at cost,  which
approximates  fair market value.  The Company's  investments  are  classified as
securities available-for-sale and are recorded at fair value with any unrealized
gain or loss recorded as an element of stockholders' equity.


                                 Page 23 of 28

<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS


     On January 18, 2001, the Company  commenced a lawsuit  against Epic Systems
     Corporation,  a competitor  of the  Company,  the  University  of Wisconsin
     Medical Foundation (the Foundation),  and two individuals  claiming,  among
     other  things,  that trade  secrets of the  Company  involving  its IDXtend
     medical  group   practice   system  were   wrongfully   disclosed  to,  and
     misappropriated  by, Epic in a series of  meetings  that took place in 1998
     and 1999. All of the defendants  deny the Company's  claims.  The Company's
     lawsuit seeks damages and  injunctive  relief and was brought in the United
     States  District  Court  for  the  Western  District  of  Wisconsin  and is
     entitled, IDX Systems Corporation v. Epic Systems Corporation,  et al., No.
     01C-0037-S.  The Foundation has brought a counterclaim  against the Company
     claiming that its lawsuit interferes with a contract between the Foundation
     and Epic, and that the  confidentiality  provisions in IDX's contracts with
     the Foundation are invalid.  The counterclaim seeks damages and declaratory
     judgment. The Company denies the counterclaim.

     On April 2, 2001, Epic filed an Answer denying the essential elements of
     the Company's claims, and asserted counterclaims  against the Company. Epic
     alleges that the  Company's  claims  asserting its trade secret rights were
     brought  in bad faith,  with an intent to injure  Epic  competitively,  and
     thereby  violated  Sections 1 and 2 of the  Sherman Act because the company
     allegedly  possesses monopoly power in the U.S. market for medical practice
     information  systems.  Epic also  claims  that this  same  alleged  conduct
     constitutes intentional interference with its contract with the Foundation.
     The   counterclaim   seeks   treble   damages.   The  Company   denies  the
     counterclaims.

     On July 31, 2001, the Company's lawsuit against Epic, the Foundation and
     the individuals was dismissed with prejudice and the counterclaims of Epic
     and the Foundation were dismissed with prejudice.  The Company has appealed
     the dismissal of its lawsuit to the United States Court of Appeals.

     The Company is from time to time involved in routine litigation incidental
     to the conduct of its business. The Company believes that no such currently
     pending  routine  litigation  to  which it is party  will  have a  material
     adverse effect on its financial condition or results of operations.

                                 Page 24 of 28
<PAGE>



ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

           None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

           Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

           The Company held its 2001 Annual Meeting of Stockholders on May 21,
           2001. Of the 28,464,096 shares of common stock outstanding and
           entitled to vote at this meeting, 26,486,232 were represented at this
           meeting, in person or by proxy. The following matters were voted upon
           at the Annual Meeting.

           1.   Robert H. Hoehl, Stuart H. Altman, Ph.D. and Mark F. Wheeler,
                M.D. were elected to serve for a term of three years as Class
                III Directors.  The remaining terms of Richard E. Tarrant,
                Henry M. Tufo, M.D., Steven M. Lash, Frank T. Sample, and Allen
                Martin continued after the meeting and Peter W. Van Etten
                resigned as a Director as of the date of the Annual Meeting.
                The result of the vote with respect to each nominee for
                office was as follows:
<TABLE>
<CAPTION>
           Nominees                 Votes "For"     Votes "Against"   Abstained
           <S>                      <C>             <C>               <C>

           Robert H. Hoehl          26,393,998      0                 92,234
           Stuart H. Altman, Ph.D.  26,434594       0                 51,638
           Mark F. Wheeler, M.D.    26,389,512      0                 96,720
</TABLE>

           2.   An amendment to the Company's 1995 Stock Option Plan to increase
                the total number of shares of common stock of the Company
                authorized for issuance thereunder from 4,500,000 to 8,500,000
                was approved. The result of the vote with respect to this
                amendment was as follows:
<TABLE>
<CAPTION>

                For              Against        Abstain       Broker Non-Votes
                <S>              <C>            <C>           <C>

                16,508,299       4,910,674      20,313        4,974,946
</TABLE>

           3.   An amendment to the Company's 1995 Employee Stock Purchase Plan
                to increase the total number of shares of common stock of the
                Company authorized for issuance thereunder from 1,400,000 to
                2,100,000 was approved. The result of the vote with respect to
                this amendment was as follows:
<TABLE>
<CAPTION>

                For              Against        Abstain       Broker Non-Votes
                <S>              <C>            <C>           <C>

                19,194,621       2,298,004      19,821        4,973,786
</TABLE>

           4.   An amendment to the Company's 1995 Director Option Plan to
                increase the total number of shares of common stock of the
                Company authorized for issuance thereunder from 80,000 to
                160,000 was approved. The result of the vote with respect to
                this amendment was as follows:
<TABLE>
<CAPTION>

                For              Against        Abstain       Broker Non-Votes
                <S>              <C>            <C>           <C>

                18,163,216       3,324,417      24,813        4,973,786
</TABLE>

                                 Page 25 of 28
<PAGE>


ITEM 5.  OTHER INFORMATION

         Shareholder's Proposal for 2001 Annual Meeting
         As set forth in the Company's Proxy Statement for its 2001 Annual
         Meeting of Stockholders, proposals of stockholders intended to be
         included in the Company's proxy statement for the 2002 Annual Meeting
         of Stockholders must be received by the Company at its principal office
         in South Burlington, Vermont not later than December 24, 2001.

         Stockholders who wish to make a proposal at the 2002 Annual
         Meeting--other than one that will be included in the Company's proxy
         materials--must notify the Company no later than March 9, 2002. If a
         stockholder who wishes to present a proposal fails to notify the
         Company by this date, the proxies that management solicits for the
         meeting will have discretionary authority to vote on the stockholder's
         proposal if it is properly brought before the meeting.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a) The exhibits filed as part of this Form 10-Q are listed on the Exhibit Index
immediately preceding such exhibits, which Exhibit Index is incorporated herein
by reference.

(b) There were four Forms 8-K filed during the second quarter of 2001:

     On April 2, 2001 the Company filed a report on Form 8-K, reporting the IDX
     News Release dated April 2, 2001 concerning an agreement entered into
     between the Company and WebMD Corporation regarding their relationship.

     On April 4, 2001 the Company filed a report on Form 8-K, reporting the
     Addendum I to Agreement by and between the Company and WebMD Corporation
     as of March 31, 2001.

     On April 12, 2001 the Company filed a report on Form 8-K, reporting that on
     April 2, 2001 Epic Systems filed an Answer denying the essential elements
     of the Company's claims, and asserted counterclaims against the Company.

     On April 27, 2001 the Company filed a report on Form 8-K, reporting that on
     April 19, 2001 the Company completed the purchase of land and buildings
     located at the Company's headquarters in South Burlington, Vermont.



                                 Page 26 of 28

<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.

                                  IDX SYSTEMS CORPORATION




Date:  August 6, 2001             By: /S/ JOHN A. KANE
                                      ____________________________
                                      John A. Kane,
                                      Vice President, Finance and
                                      Administration, Chief Financial
                                      Officer and Treasurer
                                      (Principal Financial and
                                      Accounting Officer)


                                 Page 27 of 28
<PAGE>



                                  EXHIBIT INDEX

         The following exhibits are filed as part of this Quarterly Report on
Form 10-Q:

<TABLE>
<CAPTION>

Exhibit No.       Description
----------        -----------
<S>               <C>

10.1              Employment, Noncompetition and Nondisclosure
                  Agreement by and between the Company and Lawrence
                  A. Krassner dated as of June 11, 2001

10.2              1995 Stock Option Plan as amended through
                  May 21, 2001

10.3              1995 Employee Stock Purchase Plan as amended
                  through May 21, 2001

10.4              1995 Director Stock Option Plan as amended
                  through May 21, 2001

</TABLE>



                                 Page 28 of 28