================================================================================

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

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                  For the Quarterly Period Ended June 30, 1999
                         -------------------------------

                         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  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).

                          Yes   X           No

          Indicate by check mark whether the registrant 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 August 11, 1999 was 27,773,439.
================================================================================
                        [Exhibit index begins on Page 24]




<PAGE>



                             IDX SYSTEMS CORPORATION
                                    FORM 10-Q
                  For the Quarterly Period Ended June 30, 1999

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           Page
PART I.  FINANCIAL INFORMATION                                             ----

<S>      <C>                                                               <C>

ITEM 1.  Interim Financial Statements:

a)       Condensed consolidated balance sheets as of June 30, 1999
         and December 31, 1998 (unaudited).................................3

b)       Condensed consolidated statements of operations for the three
         and six months ended June 30, 1999 and 1998 (unaudited)...........4

c)       Condensed consolidated statements of cash flows for the six
         months ended June 30, 1999  and 1998 (unaudited)..................5

d)       Notes to condensed consolidated financial statements (unaudited)..6

ITEM 2.  Management's discussion and analysis of financial condition and
         results of operations.............................................9

PART II. OTHER INFORMATION

ITEM 1.  Legal proceedings.................................................22

ITEM 2.  Changes in securities.............................................22

ITEM 3.  Defaults upon senior securities...................................22

ITEM 4.  Submission of matters to a vote of security holders...............22

ITEM 5.  Other information.................................................22

ITEM 6.  Exhibits and reports on Form 8-K..................................22

SIGNATURES.................................................................23

EXHIBIT INDEX..............................................................24

</TABLE>









                                  Page 2 of 24
<PAGE>

PART I.   FINANCIAL INFORMATION

Item 1.   Interim Financial Statements

                             IDX SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>


                                         June 30,                December 31,
                                           1999                     1998
                                         ---------               ------------

<S>                                      <C>                     <C>

ASSETS
Cash and marketable securities           $  70,619               $ 125,132
Accounts receivable, net                   111,795                 102,179
Income taxes receivable                      4,703                       -
Other current assets                        11,684                   5,403
Deferred tax asset                           4,720                   4,720
                                         ---------               ---------

Total current assets                       203,521                 237,434

Property and equipment, net                 50,573                  35,949
Capitalized software costs, net                525                     665
Other assets                                17,178                  12,868
Deferred tax asset                           2,307                   2,307
                                         ---------               ---------


Total assets                             $ 274,104               $ 289,223
                                         =========               =========


LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
   and other liabilities                 $  44,914               $  38,484
Short term debt                                  -                   5,611
Income taxes                                     -                   5,429
Deferred revenue                            18,313                  18,239
                                         ---------               ---------

Total current liabilities                   63,227                  67,763

Long term debt                                   -                   2,261
Minority interest                            9,235                   8,988
Stockholders' equity                       201,642                 210,211
                                         ---------                --------



Total liabilities and stockholders'
   equity                                $ 274,104               $ 289,223
                                         =========               =========

</TABLE>




          See Notes to the Condensed Consolidated Financial Statements


                                  Page 3 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Interim Financial Statements

                             IDX SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                               Three Months Ended         Six Months Ended
                                   June 30,                   June 30,
                               1999         1998          1999          1998
                               -------      -------       -------       ------
<S>                            <C>          <C>           <C>           <C>

REVENUES
Systems sales                  $37,727      $43,719       $ 60,579     $82,685

Maintenance and service fees    53,528       42,443        100,326      82,286
                               -------      -------        -------     -------

Total revenues                  91,255       86,162        160,905     164,971

OPERATING EXPENSES
Cost of sales                   56,295       48,094        105,098      92,461
Selling, general and
   administrative               21,212       16,189         41,199      31,163
Research and development        13,423       11,938         27,188      22,438
Nonrecurring charge              4,045            -          4,045       3,201
                               -------      -------        -------     -------

Total operating expenses        94,975       76,221        177,530     149,263

Operating income (loss)         (3,720)       9,941        (16,625)     15,708
Interest and other income, net     790        1,025          1,259       1,996
Loss on impairment of asset          -            -         (1,642)          -
                               -------      -------        -------     -------


Income (loss) before income
   taxes                        (2,930)      10,966        (17,008)     17,704
Income tax provision (benefit)    (680)       5,400        ( 6,180)     10,340
                               -------      -------        --------    -------

Net income (loss)              $(2,250)     $ 5,566       $(10,828)    $ 7,364
                               =======      =======       ========     =======


Basic earnings (loss) per
   share                       $ (0.08)     $  0.20       $  (0.39)    $  0.27
                               =======      =======       ========     =======

Basic weighted average shares
    outstanding                 27,682       27,294         27,668      27,225
                               =======      =======       ========     =======


Diluted earnings (loss) per
   share                       $ (0.08)     $  0.20       $ (0.39)     $  0.26
                               =======      =======       =======      =======

Diluted weighted average shares
   outstanding                  27,682       28,181        27,668       28,094
                               =======      =======       =======      =======
</TABLE>


          See Notes to the Condensed Consolidated Financial Statements

                                  Page 4 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Interim Financial Statements

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

                                                        Six Months Ended
                                                           June 30,
                                                    1999                 1998
                                                   -------              --------
<S>                                                <C>                  <C>

OPERATING ACTIVITIES
Net income (loss)                                  $(10,828)            $ 7,364
Adjustments to reconcile net income(loss) to net
  cash provided by (used in ) operating activities:
     Depreciation and amortization                    7,094               6,076
     Deferred tax benefit, net of acquisitions            -                (517)
     Increase in allowance for doubtful accounts        109                  88
     Minority interest                                  247                  21
     Loss on investment                               1,642                   -
     Write-off of acquired in-process
       research & development costs                       -               3,201
     Changes in operating assets and liabilities,
       net of business acquisitions:
          Accounts receivable                        (9,725)            (11,069)
          Other current assets                       (2,347)              3,424
          Accounts payable and accrued expenses       6,331              (3,780)
          Income taxes payable                      (10,132)              3,007
          Deferred revenue                               74              (3,906)
                                                    -------             -------

Net cash (used in) provided by operating activities (17,535)              3,909

INVESTING ACTIVITIES
Purchase of property and equipment, net             (19,180)             (7,429)
Purchase of securities available-for-sale, net     (129,372)            (47,168)
Sale of securities available-for-sale               179,462              43,430
Business acquisitions                                (6,500)                  -
Other assets, net                                    (5,683)             (5,778)
                                                    -------             -------

Net cash provided by (used in) investing activities  18,727             (16,945)

FINANCING ACTIVITIES
Proceeds from sale of common stock                    2,460               7,767
Contributions to affiliates, net                          -               6,500
Proceeds from debt issuances                          3,501               5,342
Principal repayments of debt                        (11,373)             (7,738)
                                                    -------              ------
Net cash (used in) provided by financing activities  (5,412)             11,871
                                                    -------             -------

Decrease in cash and cash equivalents                (4,220)             (1,165)
Cash and cash equivalents at beginning of period     11,558              14,741
                                                    -------             -------

Cash and cash equivalents at end of period          $ 7,338             $13,576
                                                    =======             =======
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements

                                  Page 5 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Notes to Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation

All  financial  information  for  previously  reported  periods  included in the
accompanying  interim unaudited condensed  consolidated  financial statements of
IDX Systems  Corporation  ("Company"  or "IDX") has been restated to reflect the
combined  operations  of IDX and EDiX  Corporation  ("EDiX")  as a result of the
merger,  more  fully  described  in Note 3,  which has been  accounted  for as a
pooling of interests in the quarter  ended June 30, 1999.  No  adjustments  were
required to conform the financial reporting policies of IDX and EDiX for periods
presented.

The interim unaudited  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  generally  accepted  accounting  principles.
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  have  been  made  to  provide  a  fair
presentation.  The operating  results for the six months ended June 30, 1999 are
not  necessarily  indicative  of the results  that may be expected  for the year
ending  December 31, 1999. For further  information,  refer to the  consolidated
financial  statements  and  footnotes  included in the  Company's  latest annual
report on Form 10-K.

Note 2 - New Accounting Standards

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  ("SOP")  98-1,  "Accounting  for the Costs of  Computer
Software  Developed or Obtained for Internal Use",  which the Company adopted as
of December 31, 1998. SOP 98-1 requires capitalization of certain costs incurred
in connection with developing or obtaining  internal use software.  In the prior
year, the Company expensed such costs as incurred. This accounting change had no
effect on net income  (loss) for the three  months  ended June 30, 1999 and June
30, 1998 and for the six month periods ended June 30, 1999 and June 30, 1998.

Note 3 - Business Acquisitions

On February 23, 1998, the Company  recorded  charges of $3.2 million  related to
the  acquisition of contract  management  system  technology from Trego Systems,
Inc. for cash of $4.0  million.  The  acquisition  was  accounted  for under the
purchase  method.   The  charges  were  expensed  as  in-process   research  and
development  in  connection  with  the  Company's  development  of a  healthcare
contract management system.

On April 23, 1999, the Company acquired EDiX Corporation ("EDiX"), a provider of
medical  transcription  outsourcing  services to hospitals  and large  physician
group  practices.  The terms of the agreement  provided for the shareholders and
optionholders  of EDiX to receive  approximately  1,000,000 shares of IDX common
stock. Based on the closing price of the IDX common stock on April 23, 1999, the
transaction is valued at  approximately  $16.7  million,  plus the assumption of
EDiX debt of  approximately  $14.0 million.  This transaction is not expected to
dilute earnings per share in 1999 compared to 1998. The EDiX  organization  will
operate as EDiX, a division of IDX Systems Corporation.

The acquisition has been accounted for as a pooling of interests for the quarter
ended  June 30,  1999 and all  historical  information  of the  Company  for all
periods presented has been restated to include EDiX's operating results.  During
the second  quarter ended June 30, 1999,  the Company  recorded  charges of $4.0
million  related to the  acquisition  of EDiX.  The charges  were  comprised  of
transaction  costs of $2.4 million,  write-offs and  adjustments  for long-lived
assets, principally computer equipment, of $1.4 million and other merger related
costs of $0.2 million,  principally related to integration costs incurred during
the period and the termination of leases and other contractual obligations.

On April 1, 1999, the Company  acquired an 80% interest in  ChannelHealth,  Inc.
for $6.5 million and may pay an additional $3.0 million, contingent upon certain
performance  goals.  The  acquisition  will be accounted  for under the purchase
method.
                                  Page 6 of 24

<PAGE>

PART I.  FINANCIAL INFORMATION

On June 23, 1999, the Company acquired all of the assets of  DietSite.com,  Inc.
for $1.5  million.  DietSite.com  is a website which  includes  disease-oriented
dietary  information  with  extensive  proprietary  content on diets,  vitamins,
herbals and nutritionals.  ChannelHealth, Inc. and DietSite.com will be managed
and operated with the Company's other web technology initiatives as a separate
business unit or tracking division, within the Company.

Note 4 - Income taxes

The tax benefit in 1999 is lower than that expected  based on the statutory rate
principally  due to the  non-deductible  nature  of  certain  transaction  costs
related to business  acquisitions.  The 1998 tax  provision  is higher than that
expected based on the statutory rate principally due to losses of EDiX for which
no tax benefit has been recognized.

Note 5 - Comprehensive Income

As of January 1, 1998,  the Company  adopted  Statement of Financial  Accounting
Standard (SFAS) No. 130, "Reporting  Comprehensive Income". SFAS 130 establishes
new  rules  for the  reporting  and  display  of  comprehensive  income  and its
components;  however,  the  adoption  of this  statement  had no  impact  on the
Company's net income or stockholders' equity. SFAS 130 requires unrealized gains
or losses on the Company's available-for-sale securities which prior to adoption
were  reported  separately  in  stockholders'  equity,  to be  included in other
comprehensive  income.  Total comprehensive  income (loss) for the quarter ended
June 30, 1999  amounted to ($2.3)  million  compared to $5.4 million in the same
period in 1998. Total comprehensive  income (loss) for the six months ended June
30, 1999 amounted to ($10.9) million compared to $7.3 million in the same period
in 1998.

Note 6- Segment Information

In June 1997,  the  Financial  Accounting  Standards  Board issued SFAS No. 131,
"Disclosures  about  Segments of an  Enterprise  and Related  Information."  The
Company  adopted SFAS No. 131 effective  with the fiscal year ended December 31,
1998. SFAS No. 131  establishes  standards for reporting  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  establishes  standards  for 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 how to
allocate resources and assess performance. Up to and including the first quarter
of 1999,  the Company  has viewed its  operations  and  managed its  business as
principally one segment, healthcare information solutions that include software,
hardware and related  services.  During the second  quarter of 1999, the Company
acquired two companies  which have separate and distinct  financial  information
and  operating  characteristics.   When  applicable,  the  information  for  the
reportable  segments has been restated for the prior year in order to conform to
the 1999 presentation.

The  Company's  three  business  units  have  separate   management   teams  and
infrastructures  that offer different  products and services,  and as such, have
been classified as three reportable segments  (information systems and services,
internet  initiatives,   and  medical  transcription  services).

Information  Systems  and  Services:  This  reportable  segment  consists of 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.

IDX.com - Internet  Initiatives:  This  reportable  segment  consists  of an 80%
interest in ChannelHealth, an internet web-portal for physicians combined with a
marketing site for pharmaceutical  products,  including the website DietSite.com
which  provides  nutritional  analysis and  information,  and various  other web
enabled   products.   IDX.com   strategy   is  to  deliver   comprehensive   web
technology-based  services.  The  principal  markets  for this  segment  include
pharmaceutical companies, healthcare product distributors,  healthcare providers
including physicians,  hospitals, and integrated delivery networks, and patients
primarily located in the United States.

                                  Page 7 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

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

The  accounting  policies  of the  reportable  segments  are the  same as  those
described in Note 1 of the Notes to Consolidated  Financial  Statements filed in
the 1998 form 10-K.  The Company  evaluates  the  performance  of its  operating
segments  based  on  revenue  and  operating  income.   Intersegment  sales  are
immaterial.  No one  customer  accounts  for greater than 10% in revenue for any
reportable  segment,  with the exception of EDiX.  During the quarter ended June
30, 1999 and June 30, 1998,  EDiX's sales to one major customer  amounted to 37%
and 36% of total revenue respectively. During the six months ended June 30, 1999
and June 30, 1998,  EDiX's sales to the same customer amounted to 40% and 35% of
total revenue respectively.

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

<TABLE>
<CAPTION>

                           IDX Healthcare
                           Information     IDX.com -
                           Systems and     Internet
                           Services        Initiatives    EDiX      Total
                           --------------------------------------------------
<S>                        <C>             <C>            <C>       <C>


FOR THE THREE MONTHS
ENDED JUNE 30, 1999

Net operating revenues     $ 77,514        $ 2,561       $ 11,180   $ 91,255
Operating income (loss)       3,054         (2,739)        (4,035)    (3,720)
Identifiable operating
  assets                    260,060          1,768         12,276    274,104


FOR THE SIX MONTHS ENDED
JUNE 30, 1999

Net operating revenues     $ 137,695       $ 2,561       $ 20,649   $160,905
Operating loss                (8,810)       (2,739)        (5,076)   (16,625)
Identifiable operating
   assets                    260,060         1,768         12,276    274,104


FOR THE THREE MONTHS
ENDED JUNE 30, 1998

Net operating revenues     $  79,364                     $  6,798   $ 86,162
Operating income (loss)       12,247                       (2,306)     9,941
Identifiable operating
   assets                    250,686                        9,257    259,943


FOR THE SIX MONTHS ENDED
JUNE 30, 1998

Net operating revenues     $ 152,101                     $ 12,870   $164,971
Operating income (loss)       20,467                       (4,759)    15,708
Identifiable operating
   assets                    250,686                        9,257    259,943
</TABLE>


Substantially  all of the Company's  operations are in the United  States.  As a
result,  the  financial  information  disclosed  herein  represents  all  of the
material  financial  information  related to the Company's  principal  operating
segments.



                                  Page 8 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Note 6 - Earnings Per Share Information

The Company utilizes SFAS No. 128 to compute earnings per share.  Under SFAS No.
128, the dilutive effect of stock options is excluded.  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,
                                  1999         1998          1999        1998

<S>                               <C>          <C>           <C>         <C>
                                  -----        -----         -----       -----
Numerator:
   Net income (loss)              $(2,250)    $ 5,566        $(10,828)   $ 7,364
                                  -------     -------        ---------   -------
Numerator for basic and diluted
      earnings (loss) per share   $(2,250)    $ 5,566        $(10,828)   $ 7,364

Denominator:
   Denominator for basic earnings
     (loss) per share--
     weighted-average shares       27,682      27,294          27,668     27,225
   Effect of employee stock options     -         887               -        869
                                   ------      ------         -------    -------

 Denominator for diluted earnings
       (loss) per share            27,682      28,181          27,668     28,094
                                   ------      ------         -------     ------
Basic earnings (loss) per share   $ (0.08)    $  0.20         $ (0.39    $  0.27
                                  =======     =======         =======    =======
Diluted earnings (loss) per share $ (0.08)    $  0.20         $ (0.39)   $  0.26
                                  =======     =======         =======    =======
</TABLE>


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

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

GENERAL

This Management's  Discussion and Analysis of Financial Condition and Results of
Operations  includes a number of  forward-looking  statements  which reflect the
Company's current views with respect to future events and financial performance.
These forward-looking  statements are subject to certain risks and uncertainties
including  those  discussed  below that  could  cause  actual  results to differ
materially  from  historical  results  or  those  anticipated.   Words  such  as
"believes,"  "may," "plans,"  "anticipates,"  "expects,"  "intends," and similar
expressions are intended to identify forward-looking statements, but are not the
exclusive means of identifying such statements.  In addition, the disclosures in
the  section on page 14 under the caption  "Factors  Affecting  Future  Results"
consists  principally  of a discussion of risks which may affect future  results
and are thus, in their entirety, forward-looking in nature. Readers are urged to
carefully  review and  consider the various  disclosures  made by the Company in
this report and in the Company's  other reports  filed with the  Securities  and
Exchange  Commission that attempt to advise interested  parties of the risks and
factors that may affect the Company's business.

The Company reported a net loss of ($2.2) million, or ($0.08) per share, for the
second  quarter of 1999 as compared  to net income of $5.6  million or $0.20 per
share, for the second quarter of 1998.  Excluding the effect of the nonrecurring
charge for the acquisition of EDiX  Corporation of $4.0 million,  the net income
for the  quarter  ended June 30, 1999 was $0.7  million or $0.02 per share.  The
Company  reported a net loss of ($10.8)  million,  or ($0.39) per share, for the
first six months of 1999 as compared to net income of $7.4  million or $0.26 per
diluted share, for the first six months of 1998.



                                  Page 9 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Excluding  the effect of the  nonrecurring  charge for the  acquisition  of EDiX
Corporation of $4.0 million, the net loss for the six months ended June 30, 1999
was ($7.0) million or ($0.25) per share.  Excluding nonrecurring expenses in the
prior year for costs associated with the acquisition of Trego Systems, Inc., the
Company  reported net income of $9.3 million,  or $0.33 per share, for the first
six months of 1998.


RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1999 COMPARED TO THREE MONTHS ENDED JUNE 30, 1998

REVENUES
The Company's total revenues  increased to $91.3 million during the three months
ended June 30, 1999 from $86.2 million in the  corresponding  period in 1998, an
increase of $5.1 million or 5.9%. Revenues from systems sales decreased to $37.7
million  during the three months  ended June 30, 1999 (41.3% of total  revenues)
compared to $43.7 million (50.7% of total revenues) in the corresponding  period
in 1998, a decrease of $6.0 million or (13.7%).  The decrease was  primarily due
to a delay in current and potential  customers'  purchasing  decisions  combined
with a  decrease  in  installations  of  certain of the  Company's  IDXtend  and
LastWord systems.  Revenues from maintenance and service fees increased to $53.5
million  during the three months  ended June 30, 1999 (58.7% of total  revenues)
from $42.4  million  (49.3% of total  revenues) in the  corresponding  period in
1998,  an  increase of $11.1  million or 26.1%.  The  increase in revenues  from
maintenance  and  service  fees  was  due  to  additional  maintenance  revenues
resulting from the continued  growth in the Company's  installed client base and
increased transcription service fee revenue from EDiX.

During the quarter ended June 30, 1999, certain of the Company's large customers
delayed  making  purchasing  decisions  with  respect  to  certain  of the large
software  systems  comprised  of multiple  products,  resulting  in longer sales
cycles for such systems.  Management believes such delays are due to a number of
factors,  including customer  organizational  changes,  governmental  approvals,
product  complexity,  competition and customer  preoccupation with internal Year
2000 issues.  The Company is unable to determine whether such factors constitute
a trend and will continue into future periods.

COST OF SALES
The cost of sales and  services  increased  to $56.3  million  during  the three
months  ended June 30, 1999 from $48.1  million in the  corresponding  period in
1998,  an increase of $8.2 million or 17.1%.  The gross profit margin on systems
sales and  services  decreased  to 38.3%  during the three months ended June 30,
1999 from  44.2% in the  corresponding  period in 1998.  The  decrease  in gross
profit was  primarily  due to fixed costs and  overhead  expenses in relation to
decreased  revenue from  installations of the Company's  systems which typically
include a greater percentage of software than services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses increased to $21.2 million during
the three  months  ended June 30, 1999 from $16.2  million in the  corresponding
period in 1998,  an increase of $5.0 million or 31.0%.  As a percentage of total
revenues, selling, general and administrative expenses increased to 23.2% during
the three months  ended June 30, 1999 from 18.8% in 1998.  The increase in total
selling,  general and administrative expenses during the three months ended June
30, 1999 was primarily due to an increase in the Company's sales,  marketing and
administrative  staff  infrastructure  which management believes is necessary to
support the long-term growth of the Company.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  increased to $13.4 million during the three
months  ended June 30, 1999 from $11.9  million in the  corresponding  period in
1998, an increase of $1.5 million or 12.4%. The increase is primarily due to the
hiring of additional staff and outside consultants to support the development of
additional products including IDXsite and web technology  applications,  and for
the costs of efforts to  address  Year 2000  issues.  As a  percentage  of total
revenues,



                                  Page 10 of 24
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PART I.  FINANCIAL INFORMATION

research  and  development  expenses  increased to 14.7% during the three months
ended June 30, 1999 from 13.9% for the three  months  ended June 30,  1998.  The
increase as a  percentage  of sales for the three  months ended June 30, 1999 as
compared  to the prior  year,  is due to  additional  personnel  and  consulting
expenses.

INTEREST AND OTHER INCOME
Interest  income  decreased  to  approximately  $1.3  million  during the second
quarter of 1999  compared  to $1.5  million for the  comparable  period in 1998.
Interest  expense remained  comparable at approximately  $0.2 million during the
second quarters of 1999 and 1998.

INCOME TAXES
Income taxes for the quarter ended June 30, 1999 were  benefited at 23.2 % which
is lower than the Company's  historical  statutory rate of 40.0 % due to certain
charges related to the acquisition of EDiX which are  non-deductible  for income
tax purposes. The provision for income taxes for the three months ended June 30,
1998 was provided for at approximately 49.2 %. The higher rate in the prior year
is due to the combined  financial  statement,  including a net loss for EDiX for
which no tax  benefit  was  recognized.  In  addition,  a portion of the charges
incurred in the first quarter ended March 31, 1998 related to the acquisition of
Trego  Systems,  Inc. were  nondeductible  for income tax purposes.  The Company
anticipates an effective tax rate of  approximately  40.0 % for the remainder of
the year ending December 31, 1999.


SIX MONTHS ENDED JUNE 30, 1999 COMPARED TO SIX MONTHS ENDED JUNE 30, 1998

REVENUES
The Company's  total revenues  decreased to $160.9 million during the six months
ended June 30, 1999 compared to $165.0  million in the  corresponding  period in
1998,  a decrease  of $4.1  million  or  (2.5%).  Revenues  from  systems  sales
decreased to $60.6  million  during the six months ended June 30, 1999 (37.6% of
total  revenues)  compared to $82.7  million  (50.1% of total  revenues)  in the
corresponding  period in 1998,  a  decrease  of $22.1  million or  (26.7%).  The
decrease  was  primarily  due to a delay in  current  and  potential  customers'
purchasing decisions combined with a decrease in installations of certain of the
Company's  LastWord and IDXtend  systems.  Revenues from maintenance and service
fees  increased  to $100.3  million  during the six months  ended June 30,  1999
(62.4% of total  revenues) from $82.3 million  (49.9% of total  revenues) in the
corresponding  period in 1998,  an  increase  of $18.0  million  or  21.9%.  The
increase in revenues  from  maintenance  and service fees was due to  additional
maintenance  revenues  resulting  from the  continued  growth  in the  Company's
installed client base and increased transcription service fee revenue from EDiX.

During  the six months  ended June 30,  1999,  certain  of the  Company's  large
customers  delayed  making  purchasing  decisions with respect to certain of the
large software systems comprised of multiple products, resulting in longer sales
cycles for such systems.  Management believes such delays are due to a number of
factors,  including customer  organizational  changes,  governmental  approvals,
product  complexity,  competition and customer  preoccupation with internal Year
2000 issues.  The Company is unable to determine whether such factors constitute
a trend and will continue into future periods.

COST OF SALES
The cost of sales and services increased to $105.1 million during the six months
ended June 30, 1999 from $92.5 million in the  corresponding  period in 1998, an
increase of $12.6 million or 13.7%. The gross profit margin on systems sales and
services decreased to 34.7% during the six months ended June 30, 1999 from 44.0%
in the corresponding period in 1998.


                                  Page 11 of 24
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PART I.  FINANCIAL INFORMATION

The  decrease in gross  profit was  primarily  due to fixed  costs and  overhead
expenses in relation to decreased  revenue from  installations  of the Company's
LastWord and IDXtend  systems which  typically  include a greater  percentage of
software than of services.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses increased to $41.2 million during
the six months  ended  June 30,  1999 from  $31.2  million in the  corresponding
period in 1998, an increase of $10.0 million or 32.2%.  As a percentage of total
revenues, selling, general and administrative expenses increased to 25.6% during
the six months  ended June 30,  1999 from 18.9% in 1998.  The  increase in total
selling,  general and  administrative  expenses during the six months ended June
30, 1999 was  principally due to an increase in the Company's  sales,  marketing
and administrative  staff  infrastructure which management believes is necessary
to support the long-term growth of the Company.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  increased to $27.2  million  during the six
months  ended June 30, 1999 from $22.4  million in the  corresponding  period in
1998, an increase of $4.7 million or 21.2%. The increase is primarily due to the
hiring of additional staff and outside consultants to support the development of
additional products including IDXsite and web technology  applications,  and for
the costs of efforts to  address  Year 2000  issues.  As a  percentage  of total
revenues,  research and development  expenses  increased to 16.9% during the six
months  ended June 30, 1999 from 13.6% for the six months  ended June 30,  1998.
The increase as a percentage  of sales for the six months ended June 30, 1999 as
compared to the prior year, is due to the  additional  personnel and  consulting
expenses.

NONRECURRING CHARGE - MERGER AND RELATED COSTS
During the first six months ended June 30, 1999, the Company recorded charges of
$4.0 million  related to the  acquisition of EDiX. The charges were comprised of
transaction  costs of $2.4 million,  write-offs and  adjustments  for long-lived
assets, principally computer equipment, of $1.4 million and other merger related
costs of $0.2 million,  principally related to integration costs incurred during
the period and the termination of leases and other contractual obligations.

NONRECURRING  CHARGE - WRITE-OFF OF ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT
On February 23, 1998, the Company recorded  nonrecurring charges of $3.2 million
related to the acquisition of contract management technology from Trego Systems,
Inc. for cash of $4.0  million.  The  acquisition  was  accounted  for under the
purchase  method.   The  charges  were  expensed  as  in-process   research  and
development  in  connection  with  the  Company's  development  of a  healthcare
contract management system.

INTEREST AND OTHER INCOME (EXPENSE)
Interest  income  decreased to  approximately  $2.7 million during the first six
months of 1999  compared to $3.0  million for the same period in 1998.  Interest
expense increased to $0.9 million during the first two quarters of 1999 compared
to $0.4 million for the same period in the prior year.  The increase in interest
expense is primarily due to EDiX Corporation.

LOSS ON IMPAIRMENT OF ASSET
Other  expense  included the  write-off of an  investment of $1.6 million in the
quarter ended March 31, 1999.

INCOME TAXES
Income  taxes for the six months  ended June 30,  1999 were  benefited  at 36.3%
which is lower than the Company's  historical  statutory rate of 40.0% primarily
due  to  certain   charges   related  to  the  acquisition  of  EDiX  which  are
non-deductible  for income tax purposes.  The provision for income taxes for the
six months ended June 30, 1998 was provided at  approximately  58.4%. The higher
rate in the prior year is due to the combined financial  statement,  including a
net loss for EDiX for  which no tax  benefit  was  recognized.  In  addition,  a
portion of the  charges  incurred  in the first  quarter  ended  March 31,  1998
related to the acquisition of Trego Systems, Inc. were non-deductible for income
tax purposes. The Company anticipates an effective tax rate of approximately 40%
for the remainder of the year ending December 31, 1999.


                                  Page 12 of 24
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PART I.  FINANCIAL INFORMATION

LIQUIDITY AND CAPITAL RESOURCES
Since its  inception  in 1969,  the Company has funded its  operations,  working
capital needs and capital expenditures primarily from operations.  The proceeds
from its initial  public  offering in 1995 have been used for general
corporate purposes.

Cash flows from  operations  are  principally  comprised  of net income  (loss),
depreciation and amortization,  and are 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  considerably due to, among other things,  the length
of the installation  efforts which are dependent upon,  among other things,  the
size of the  transaction,  the  changing  business  plans of the  customer,  the
effectiveness  of customers'  management  and general  economic  conditions.  In
general, accounts receivable from customers have been collected within 85 to 112
days.

Cash flows related to investing  activities have principally been related to the
purchase  of  computer  and  office  equipment,   leasehold  improvements,   the
acquisition of complementary products,  businesses,  technology and the purchase
and sale of investment  grade marketable  securities.  The Company expects these
activities to continue.  During the six months ended June 30, 1999,  the Company
acquired  two  buildings in South  Burlington,  Vermont for  approximately  $7.5
million with  approximately  66,000 square feet that will be used for additional
office space. On April 23, 1999 the Company acquired EDiX Corporation  ("EDiX").
The terms of the agreement  provided for the shareholders  and  optionholders of
EDiX to receive approximately 1,000,000 shares of IDX common stock. Based on the
closing  price of the IDX common stock on April 23,  1999,  the  transaction  is
valued at  approximately  $16.7  million,  plus the  assumption  of EDiX debt of
approximately  $14.0  million that was paid off during the six months ended June
30, 1999.  Additionally,  the Company acquired an 80% interest in ChannelHealth,
Inc. on April 1, 1999 for $6.5 million and may pay an  additional  $3.0 million,
contingent  upon  certain  performance  goals.  On June 23,  1999,  the  Company
acquired  all  of  the  assets  of   DietSite.com,   Inc.   for  $1.5   million.
ChannelHealth,  Inc.  and  DietSite.com  will be managed and  operated  with the
Company's  other web  technology  initiatives  as a separate  business  unit or,
tracking  division,within the Company. It is anticipated that this division will
lose  approximately  $10.0 million pretax during 1999. There can be no assurance
that the  Company  will be able to  successfully  complete  other  purchases  or
acquisitions in the future.

Cash flows from financing  activities  historically relate to the sale of common
stock through the exercise of employee stock options and in connection  with the
employee stock purchase plan. During 1998 other financing  activities related to
the recapitalization of the real estate affiliate from debt to equity.

Cash,  cash  equivalents  and marketable  securities at June 30, 1999 were $70.6
million,  a decrease from the December 31, 1998 balance of $125.1 million.  This
decrease is primarily due to the investing activities referred to above combined
with a use of cash for operations due to the operating loss of $10.8 million for
the six months ended June 30, 1999.  The Company has a revolving  line of credit
with a bank allowing the Company to borrow up to $5.0 million  bearing  interest
at the prime rate. There were no borrowings as of June 30, 1999 or 1998.

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. The Company plans to continue increasing the number of its
professional  staff during 1999 to meet anticipated  sales volume and to support
research and development  efforts.  To the extent necessary to support increases
in staffing, the Company intends to obtain additional office space.

The Company believes that current  operating 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.

The Company has announced  plans to expand its  facilities at Shelburne  Road in
South  Burlington,  Vermont and is considering  various  options,  including the
purchase of additional land and the construction of additional  office space. To
date, the Company has made no lease or purchase  commitments  other than the two
building purchases mentioned above.


                                  Page 13 of 24
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PART I.  FINANCIAL INFORMATION

YEAR 2000

INTRODUCTION
Software  applications  that use only two digits to  identify a year in the date
field may fail or  create  errors in the year 2000  ("Year  2000  Issues").  The
Company has taken significant steps to address Year 2000 Issues.

The  Company's  internally  used computer  equipment,  software and devices with
embedded  technology--including  both  information  systems and  non-information
systems (together,  "Internal Use Systems")--may  fail to operate properly or as
expected  due to Year 2000  Issues.  This  could  result in a system  failure or
miscalculations causing disruption of the Company's operations,  including among
other things,  a temporary  inability to process  transactions,  send  invoices,
conduct  communications,  or engage in similar normal  business  activities.  In
addition,  computer  software  products  sold,  marketed,  and  supported by the
Company ("Company Software Products") and the products of third parties that are
distributed  by the  Company  or others or may be  necessary  for  operation  of
Company Software Products ("Third Party Products"), may fail to operate properly
or as expected due to Year 2000  Issues.  Such  failures  could result in system
failures  or  miscalculations   causing  disruption  of  customers'  operations,
including  among other things,  a temporary  inability to process  transactions,
send invoices,  conduct  communications,  treat  patients,  or engage in similar
normal business activities. Further, products and services used by the Company's
customers, but not supplied by the Company, could fail to operate properly or as
expected  due to Year 2000  Issues.  Customers'  efforts to plan for such events
could  result in the  deferral,  delay or  cancellation  by customers of current
installations of and plans to purchase Company Software Products.

STATE OF READINESS
The Company has  undertaken  various  initiatives  intended to address Year 2000
Issues with respect to Internal  Use Systems,  Company  Software  Products,  and
Third Party Products.  The Company has established  working groups whose primary
functions are to: (i) develop and  implement  the  Company's  definition of Year
2000  readiness;  (ii) assess  Internal  Use Systems,  Third Party  Products and
Company  Software  Products for Year 2000  Issues;  (iii)  monitor  development,
testing and remediation efforts with respect to Company Software Products;  (iv)
monitor  testing of Company  Software  Products  and Third Party  Products,  (v)
review customer preparations to implement Year 2000 releases of Company Software
Products; (vi) monitor and coordinate the Company's deployment plans and results
with respect to Year 2000 releases of Company Software  Products;  (vii) monitor
and coordinate  contingency plans with respect to Internal Use Systems,  Company
Software Products and Third Party Products;  and (viii) provide  centralization,
accuracy and  consistency  of the Company's  communications  regarding Year 2000
Issues.

The  Company  has  engaged  independent  experts to assist in its  efforts  with
respect  to  Year  2000  Issues.  The  Company  has  employed  such  experts  to
independently  evaluate and verify its methodologies and state of readiness.  In
addition,  the Company has employed  experts to  independently  evaluate certain
critical Internal Use Systems.

Although the Company's efforts to address Year 2000 issues do not fall precisely
into sequential  phases,  generally these efforts are comprised of an assessment
phase, a development phase (only with respect to Company Software  Products),  a
deployment or remediation phase, a preliminary contingency planning phase, and a
final stage contingency planning phase.

Internal Use Systems.  Based upon the Company's  assessment efforts to date, the
Company believes that certain  Internal Use Systems will require  replacement or
modification, and to date the Company has replaced or modified some Internal Use
Systems. In addition, in the ordinary course of replacing and upgrading Internal
Use Systems,  the Company attempts to obtain  replacements that it believes will
not  fail as a  result  of Year  2000  Issues.  The  Company  has  substantially
completed  its  assessment  efforts  with  respect to  Internal  Use Systems and
expects that its remediation  efforts will be completed by the fourth quarter of
1999.  The Company is  currently  engaged in but has not  completed  contingency
planning to address personnel,  resource and technical Year 2000 Issues relating
to  foreseeable  scenarios  that may  develop  despite  its  current and planned
remediation  efforts.  The  Company  estimates  that as of June 30,  1999 it had
completed  approximately  88% of its efforts in connection with Year 2000 Issues
relating to its Internal Use Systems. The projects


                                  Page 14 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

comprising  the remaining 12% of such efforts are in process and are expected to
be substantially  completed on or about the fourth quarter of 1999. The majority
of the remaining work is associated  with  finalizing the Company's  contingency
plan,  analyzing  landlord's  responses for facilities leased by IDX, completing
evaluation of the possible need for upgrades on non-IDX desktop applications and
plan validation.

The  Company  has mailed  letters  or  otherwise  communicated  with many of its
significant  vendors of Internal  Use Systems and related  service  providers to
determine the extent to which Year 2000 Issues  affect  products and services of
such  vendors and  providers.  As of June 30,  1999,  the  Company had  received
responses  from  approximately  95% of such  third  parties,  and  92% of  these
companies  have provided  written  assurances  that they expect to  successfully
address their  significant  Year 2000 Issues on a timely  basis.  The Company is
engaged in but has not completed  efforts to communicate  with other vendors and
service providers involved in its Internal Use Systems to request more responses
to its communications and to verify the responses received. Due to uncertainties
associated with vendors and service providers,  the Company is unable to predict
whether  Year 2000 Issues  involved  in its  Internal  Use  Systems  will have a
material  adverse effect on the Company's  business,  results of operations,  or
financial condition, despite the Company's current assessment to the contrary.

Third Party  Products.  The Company  works  closely with vendors of  significant
Third Party Products and has  communicated  with them to determine the extent to
which  their  products  and  services  are or will be Year  2000  compliant.  In
addition,  the Company is testing or plans to test Year 2000 releases of certain
Third Party Products. Based upon its current assessment, the Company believes it
has received  adequate  assurances that significant  Third Party Product vendors
expect to successfully  address their  significant  Year 2000 Issues on a timely
basis.  Due to uncertainties  associated with Third Party Product  vendors,  the
Company is unable to  predict  whether a material  adverse  effect on  business,
results of operations,  or financial  condition may result from Year 2000 Issues
related to Third Party Products, despite the Company's current assessment to the
contrary.

Company Software  Products.  The Company began development of Year 2000 versions
of some Company  Software  Products in 1997 and  continues  to progress  through
development cycles with respect to some Company Software  Products.  The Company
began  deploying  Year 2000  releases of Company  Software  Products in 1998 and
expects to complete  deployment of such releases during the second half of 1999.
The Company  continues to test and monitor  performance of Year 2000 releases of
Company  Software  Products in  customer  environments.  The Company  expects to
deliver  and deploy  maintenance  releases of Company  Software  Products in the
ordinary  course of business  to  remediate  any Year 2000 Issues as  identified
during and after deployment of Year 2000 releases of Company Software  Products.
Based on the Company's assessment,  the Company believes continuing efforts will
be required to assist  customers in deploying  and testing Year 2000 releases of
Company Software Products in their unique  environments.  The Company expects an
increase in service and support  effort levels as the year 2000  approaches  and
into the early months of the year 2000.

The Company  develops,  markets and supports many  different  products,  and the
amount of effort applied with respect to individual products varies from product
to product.  The  Company  estimates  that as of June 30, 1999 it had  completed
approximately  91% of the development  efforts relating to Year 2000 versions of
all of the Company Software  Products,  including 90% of such efforts related to
EDiX.  The projects  comprising the remaining 9% of these efforts are in process
and expected to be  substantially  completed in the third  quarter of 1999.  The
Company  estimates that as of June 30, 1999, it had completed  approximately 86%
of the deployment efforts relating to Year 2000 versions of all Company Software
Products,  including 50% of deployment  efforts related to EDiX's products.  The
projects  comprising  the  remaining 14% of these efforts are in process and are
expected to be  substantially  completed in the third  quarter of 1999,  but the
Company expects to continue efforts to remediate and maintain Year 2000 versions
of Company Software Products in customer  environments and to support customers'
efforts relating to Year 2000 Issues through the early part of 2000.





                                  Page 15 of 24
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PART I.  FINANCIAL INFORMATION

The Company is currently engaged in but has not completed  contingency  planning
to address company-wide personnel,  resource, technical and communication issues
relating to its service and  remediation  efforts.  The Company expects that its
development,  remediation,  testing, deployment and contingency planning efforts
with  respect  to  Company  Software  Products  will  continue  up to and beyond
December 31, 1999,  but expects the level of  development  and  deployment  will
decrease in the second half of 1999.

Contingency  Plans and Risks.  The Company has begun,  but not yet completed,  a
comprehensive analysis of the company-wide  operational,  business and financial
problems (including possible loss of revenue),  if any, that would be reasonably
likely to result  from the  impact of  unresolved  Year 2000  Issues,  including
possible:  (i) failure by the  Company  and  vendors of Third Party  Products to
complete  efforts  to avoid or  minimize  Year 2000  Issues  on a timely  basis,
including  failure of Internal Use Systems,  Company Software Products and Third
Party  Products to be Year 2000 ready;  (ii) failure of Customers to be ready to
or cooperate in the deployment of Year 2000 ready  versions of Company  Software
Products and Third Party Products on a timely basis;  and (iii) delay,  deferral
or cancellation by customers of current  installations and prospective  purchase
decisions  with respect to Company  Software  Products.  The Company has not yet
completed  its  contingency  plans  relating  to Year  2000  scenarios  it deems
sufficiently  probable to merit contingency  planning,  but it has substantially
completed  its  preliminary  phase  of  contingency   planning  and  expects  to
substantially  complete its  contingency  planning by the third quarter of 1999.
Such contingency final stage planning will encompass "worst case" scenarios that
assume the failure of significant  communications and computing  infrastructures
of  the  Company,  its  customers  and  suppliers,  together  with  failures  of
governmental   and  utility   infrastructures,   including   those   related  to
transportation and energy.

COSTS
The Company estimates that the cost of its efforts to successfully  address Year
2000 Issues will be approximately  $17.8 million,  of which  approximately  $5.2
million relates to Internal Use Systems, $0.6 million relates to EDiX, and $12.0
million  relates to Company  Software  Products.  Because the Company  develops,
markets, and supports many different products, the amount of effort applied with
respect to individual products varies from product to product.  All expenditures
to fund Year 2000 Issue  efforts  have been and will  continue to be recognized
as operating expenses for fiscal years 1997 through early 2000, except for $0.8
million,  which is expected to be incurred and  capitalized  in 1999. As of June
30, 1999, the Company had incurred  approximately  $12.7 million  related to its
Year 2000 Issue  assessment,  remediation,  testing,  and  contingency  planning
efforts identification,  which is approximately 71% of the total projected costs
of  such  efforts.  Of the  amount  of  costs  incurred  as of  June  30,  1999,
approximately   $3.3  million   relates  to  Internal  Use  Systems,   which  is
approximately  57% of the total of estimated  costs for such  efforts,  and $9.4
million relates to Company Software Products,  which is approximately 78% of the
total of estimated costs for such efforts.

Unless  all  material  Year 2000  Issues are  timely  and  properly  identified,
assessed,  and remediated,  and unless adequate  contingency  plans are properly
formulated,  Year 2000  Issues may  materially  adversely  impact the  Company's
business, financial condition and results of operations, or adversely affect the
Company's  relationships  with  customers,  suppliers  or  others.  The  Company
believes that Year 2000 Issues could cause failures in important elements of the
computing and communications  infrastructures of the Company,  its customers and
suppliers and also Company Software Products and Third Party Products.  Further,
the Company  expects that it and its  customers  and  suppliers  may  experience
failures of such  systems the causes of which will be  difficult  to  determine,
requiring the application of resources for diagnostic  purposes.  If the Company
has  not  developed  adequate  contingency  plans  and  means  to  address  such
contingencies,  Year 2000 Issues could materially adversely impact the Company's
business, financial condition and results of operations, or adversely affect the
Company's relationships with customers, suppliers or others.

The costs,  timing and  scheduling of deployment and  installation  of Year 2000
versions of Company Software  Products and Third Party Products,  as well as the
ability  of the  Company  to assist  customers  in the  installation  of Company
Software Products, will depend in part on the readiness, ability and cooperation
of  customers  and  their  suppliers.   Due  to  uncertainties  associated  with
customers'  readiness,  cooperation and sources of products and services,  there
can be no assurance that Year 2000 Issues will not materially  adversely  affect
the  Company's  business,  results of  operations,  or financial  condition,  or
adversely affect the Company's relationships with customers, vendors or others.

                                  Page 16 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Some  customers  and  prospects  of the  Company  operate in  complex  computing
environments that include products and services not supplied by the Company. The
costs,  timing and  scheduling  by customers of work related to Year 2000 Issues
involving  such products and services may cause some  customers and prospects to
defer current  projects or  prospective  purchase  decisions  regarding  Company
Software  Products.  If Year 2000 Issues cause  customers and prospects to defer
current projects or prospective  purchase  decisions,  the Company's  financial,
business  and  operational  goals may be deferred or may not be realized at all,
with the result that the Company's business, results of operations, or financial
condition  could  be  materially   adversely  affected.   Due  to  uncertainties
associated  with  customers and  prospects,  there can be no assurance that Year
2000 Issues will not materially adversely affect the Company's business, results
of  operations,  or  financial  condition  or  adversely  affect  the  Company's
relationships with customers, vendors or others.

The costs of the Company's Year 2000  identification,  assessment,  remediation,
testing, deployment and contingency planning efforts, and the dates on which the
Company  believes it will  complete such  efforts,  are based upon  management's
current best estimates,  which were derived using numerous assumptions regarding
future  events,  including  the  continued  availability  of certain  resources,
third-party remediation plans, and other factors. There can be no assurance that
these  estimates  will prove to be  accurate,  and actual  results  could differ
materially from those currently  anticipated.  Specific factors that could cause
such material  differences  include, but are not limited to, the availability of
and cost of personnel trained in Year 2000 Issues,  the ability to correctly and
effectively identify,  assess,  remediate, and test all relevant computer codes,
equipment,  and embedded technology,  and similar uncertainties,  the ability of
the Company to timely install and deploy Year 2000 releases of Company  Software
Products, a failure of the Company to provide, obtain or make available adequate
resources  to assist  customers  in  installing  Year 2000  releases  of Company
Software  Products and Third Party Products.  As a result of any of such factors
alone or in combination,  the Company may experience an increase in warranty and
other claims. In addition,  since there is no uniform  definition of "compliance
with Year 2000," and since the Company sells a myriad of different  combinations
of products and services  under varying  contractual  terms,  the Company is not
able to assess or estimate  the  possible  impact of such  possible  claims.  No
assurance can be given that the aggregate  cost of defending and resolving  such
claims,  if any, will not materially  adversely affect the Company's  results of
operations.  Although some of the Company's  agreements with  manufacturers  and
others from whom it purchases products for resale contain  provisions  requiring
such parties to indemnify the Company under some circumstances,  there can be no
assurance that such indemnification arrangements will cover all of the Company's
liabilities  and costs related to claims by third  parties  related to Year 2000
Issues.

FACTORS AFFECTING FUTURE RESULTS

IDX Stock Prices May Continue to be Volatile.  IDX has experienced,  and expects
to continue to  experience  fluctuations  in its stock price due to a variety of
factors including:

        .  delay in customers purchasing decisions due to a variety of factors
           such as consolidation, management changes and year 2000 problems;

        .  market prices of competitors such as McKesson HBOC, Inc.;

        .  announcements of technological innovations, including Internet
           delivery of information and use of relational database technology;

        .  new product introductions by IDX or its competitors;

        .  market conditions particularly in the computer software and hardware
           industries; and

        .  healthcare reform measures, such as those contemplated by the
           Balanced Budget Act of 1997.




                                  Page 17 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

These  fluctuations  could have a significant  impact on future market prices of
IDX's common stock.  On March 5, 1999 IDX  announced  that it expected a loss of
($0.22) - ($0.28) per share in the quarter ending March 31, 1999. Following this
announcement, the IDX share price declined. On April 30, 1999, the last reported
sale price of IDX  common  stock on the  Nasdaq  National  Market was $16.25 per
share and on June 30, 1999,  such price was $22.5625.  On December 31, 1998, the
last reported sale price of IDX common stock on the Nasdaq  National  Market was
$44.00.  These prices represent  declines of 63% and 49%,  respectively,  in the
value of IDX stock since December 31, 1998.

Variation  in  Financial  Trends  in Net  Income  and Cash from  Operations  May
Continue.  Year over year net income and cash from  operations  have  fluctuated
since 1995. IDX's net income was $20.6 million in 1995. Net income fell to $16.7
million in 1996 and $8.0 million in 1997. Net income  increased to $30.2 million
in 1998. Cash from operations was $21.7 million in 1995,  $10.4 million in 1996,
$9.8 million in 1997,  and $23.4 million in 1998. On March 5, 1999 IDX announced
that based on currently available information,  the after tax loss for the first
quarter  ending March 31, 1999 was expected to be ($5.0) to ($7.0)  million.  If
these  negative  trends were to continue,  IDX may have  difficulty in financing
future  growth  and  funding  its   operating   initiatives   including   future
acquisitions.

IDX Expects its Quarterly  Operating Results to Fluctuate and its Customer Sales
and Installation  Requirements to Change.

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:

        .    delay in customers purchasing decisions due to a variety of factors
             such as consolidation, management changes and year 2000 problems;

        .    the volume and timing of systems sales and installations;

        .    recognizing revenue at various points during the installation
             process;

        .    the sales and implementation cycles of IDX's customers; and

        .    general reductions in spending by IDX's customers and healthcare
             reform measures.


In  addition,  the timing of new product and service  introductions  and product
upgrade  releases and general  economic  conditions  can impact IDX's  quarterly
operating results.

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.  Future period-to-period fluctuations may have
a material adverse effect on IDX's results of operations, financial condition or
business.

IDX May Experience  Challenges and Incur  Substantial  Costs in Integrating  the
Operations of EDiX.

EDiX  may  present  IDX  operational  challenges,   and  IDX  expects  to  incur
significant  pre-tax  charges in  association  with the merger.  If IDX fails to
successfully  integrate the  operations or management of the two  companies,  it
could  have a  material  adverse  effect on the  combined  entity's  results  of
operations, financial condition or business.

IDX May Not be Successful in Implementing its Acquisition Strategy.  IDX intends
to  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:

        .    the successful identification and acquisition of products,
             technologies or businesses;

                                  Page 18 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

        .    effective integration and operation of the acquired or aligned
             products, technologies or businesses despite technical
             difficulties, geographic limitations and personnel issues; and

        .    overcoming significant competition for acquisition and alliance
             opportunities from companies that have significantly
             greater financial and management resources, such as McKesson HBOC,
             Inc. and Shared Medical Systems Corporation.

The failure to successfully integrate any significant products,  technologies or
businesses  could have a material adverse effect on IDX's results of operations,
financial condition or business.

IDX's Success  Depends on New Product  Development and Its Ability to Respond to
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 sell additional products to its existing
client base and  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 factors including:

        .    evolving industry standards, for example, Health Level Seven;

        .    new technological developments, for example, the web technology.

IDX is  currently  devoting  significant  resources  toward the  development  of
enhancements  to its existing  products,  particularly  in the announced area of
web-based  functionality  and the migration of existing products to new hardware
and  software   platforms   including   relational   database   technology   and
object-oriented  programming.  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.

IDX May Be Adversely  Affected by Year 2000 Problems.  In the year 2000 software
applications  that use only two digits to  identify a year in the date field may
fail or create errors.  IDX uses computer  equipment,  software and devices with
embedded  technology,  including both  information  systems and  non-information
systems, that may not be year 2000 compliant despite IDX's continuing efforts to
assess,  remediate,  and test such equipment,  software and devices.  This could
result  in a system  failure  or  miscalculations  causing  disruption  of IDX's
operations, including among other things, a temporary inability to:

        .    process transactions;

        .    send invoices;

        .    conduct communications; or

        .    engage in similar normal business activities.

In addition,  IDX sells computer  software products and distributes the products
of third parties that may not be year 2000  compliant  despite IDX's  continuing
efforts to assess and test these products.  This could result in system failures
or miscalculations  causing disruption of customers' operations,  including,  in
addition to the types of disruptions  described above, a temporary disruption in
their ability to treat  patients.  Further,  products and services used by IDX's
customers,  but not supplied by IDX, may not be year 2000  compliant.  Customers
may defer current installations of and plans to purchase IDX products until they
have completed their own year 2000 assessment.  Any of these problems could have
a material adverse effect on IDX's results of operations, financial condition or
business.



                                  Page 19 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

IDX does not believe that the year 2000 issues will pose significant operational
problems  for IDX.  However,  if year 2000 issues are not  properly  identified,
assessed and resolved, it could have a material adverse effect on the results of
operations,  financial  condition or business of IDX. In addition if actual year
2000 remediation  costs are higher than IDX estimated costs, it could materially
adversely affect IDX's results of operations, financial condition or business.

The nature of IDX's  business and its  relationships  with its customers make it
difficult  to assess the  magnitude of IDX's  potential  exposure as a result of
year 2000 issues.  IDX is engaged in the business of  developing,  marketing and
supporting  computer software.  IDX's software is often used by its customers in
conjunction  with other  vendors'  products and services.  The ability of IDX to
assist its customers in the development and  installation of year 2000 compliant
versions of IDX software products will depend in part on the readiness,  ability
and  cooperation  of  its  customers  and  their  suppliers.  In  addition,  the
purchasing  patterns of IDX customers and potential customers may be affected by
year 2000 issues.  The cost,  timing and scheduling by customers of work related
to year 2000  issues  involving  IDX's  products  and  services  may cause  some
customers to defer or forego projects or purchase decisions.  IDX sells a number
of different  combinations  of products and services  under varying  contractual
terms. There is no widely accepted  definition of year 2000 compliance.  Certain
of IDX's  customers  may assert  breach of warranty or other claims  against IDX
relating to year 2000 compliance.  Any of these factors may adversely affect the
results of operations.

Product Sales Within the Healthcare  Industry May Decline  Causing IDX to Suffer
Financially.  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,  any  factor
adversely  affecting this industry and these sales could have a material adverse
effect on IDX. In  addition,  even though  IDX's  annual  sales have  increased,
future  revenues  associated  with existing  products may decline as a result of
factors like price  competition.  IDX may not be able to continue its success in
marketing its current, new or enhanced products.  Moreover, IDX may be unable to
maintain its current pricing for existing products.

IDX May Be Faced With Product Liability Claims Exceeding Its Insurance Coverage.
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.  A
successful  claim brought against IDX in excess of its insurance  coverage could
have a material adverse effect on IDX's results of operations. Even unsuccessful
claims could be costly to defend and divert  management  time and resources.  In
addition,  IDX  cannot  assure  you that it will  continue  to have  appropriate
insurance available to it in the future at commercially reasonable rates.

IDX's Success is Significantly Dependent on 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,  and  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.  The
loss of key personnel,  or the inability to hire or retain qualified  personnel,
could have a material  adverse effect on IDX's results of  operations.  IDX does
not maintain "key man" life insurance policies on its executives.
Not all IDX personnel have executed noncompetition agreements.

IDX May Be  Adversely  Affected  By Changes in the  Healthcare  Industry  and by
Government Healthcare Reform Proposals.  IDX's products are designed to function
within the  structure  of the  healthcare  financing  and  reimbursement  system
currently  being used in the United States.  During the past several years,  the
healthcare  industry  has been  subject  to  increasing  levels of  governmental
regulation of, among other things, reimbursement rates and capital expenditures.
From time to time,  Congress has considered and adopted  proposals to reform the
healthcare  system.  These  proposals  may increase  government  involvement  in
healthcare,  lower  reimbursement  rates  and  otherwise  change  the  operating
environment  for IDX's clients.  Legislation  such as the Balanced Budget Act of
1997 will  lower  reimbursement  rates and may  result in  reduced  spending  by
certain healthcare  organizations.  Healthcare  organizations may react to these
proposals  and the  uncertainty  surrounding  these  proposals by  curtailing or
deferring  investments,  including  those for IDX's  products and services.  IDX
cannot  predict with any  certainty  what impact these  proposals or  healthcare
reforms,  such as the  Balanced  Budget Act of 1997 might have on its results of
operations, financial condition or business.

                                  Page 20 of 24
<PAGE>

PART I.  FINANCIAL INFORMATION

Governmental  Regulation  May Impose New Burdens and Costs on IDX's  Operations.
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:

        .    register and list its products with the FDA;

        .    notify the FDA and demonstrate substantial equivalence to other
             products on 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 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 FDC 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.

In order to ensure continued  compliance with changing government  standards and
regulations,  IDX monitors  regulations  affecting its business  including those
mandated by the Health Insurance Portability and Accountability Act of 1996.

IDX May Have  Conflicts  of  Interests  With  Some of its  Executives  Which May
Adversely Affect IDX. 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 1998, IDX paid an aggregate of approximately $4.2 million in
connection with these leases. In November 1998, IDX announced tentative plans to
expand one of its facilities located on land owned by these executives,  however
the Company has not yet made any commitments to finalize those plans.

In  connection  with  these  arrangements,   the  economic  interests  of  these
executives and directors and IDX may diverge.  In response,  IDX has created the
Committee  on   Independent   Director   Transactions   to  review  and  approve
transactions of this nature.  IDX believes that these  arrangements were entered
into on an arm's length  basis on terms that were no less  favorable to IDX than
could have been obtained from unaffiliated third parties.

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.










                                  Page 21 of 24
<PAGE>

PART II. OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

         On June 11,  1999,  a lawsuit was served on the  Company.  Eleven other
         companies  engaged in various  aspects  of the  healthcare  information
         systems  business have also been sued in the same lawsuit.  The lawsuit
         was  brought  in the  United  States  District  Court for the  Northern
         District of Texas Fort Worth  Division and is entitled  Allcare  Health
         Management  System,  Inc. v.  Cerner  Corporation,  et al.,  and claims
         damages  for patent  infringement.  The  Company is  investigating  the
         claims made in the lawsuit and will respond  accordingly.  Based upon a
         preliminary  investigation to date, the Company believes the lawsuit is
         without merit and intends to vigorously defend against it.

         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.


Item 2.  CHANGES IN SECURITIES

                  None.


Item 3.  DEFAULTS UPON SENIOR SECURITIES

                  Not applicable.


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

                  None.

Item 5.  OTHER INFORMATION

                  None.


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.














                                  Page 22 of 24

<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 13, 1999                     By: /S/ JOHN A. KANE
                                              -------------------------------
                                              John A. Kane,
                                              Vice President, Finance and
                                              Administration, Chief Financial
                                              Officer and Treasurer
                                              (Principal Financial and
                                              Accounting Officer)





































                                  Page 23 of 24
<PAGE>

                                  Exhibit Index


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

<TABLE>
<CAPTION>



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

27                       Financial Data Schedule                      25

</TABLE>








































                                  Page 24 of 24