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

                                  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, 2003

                                       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.)

                                  40 IDX Drive
                           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
                                      ----      ----
            Indicate by check mark whether the registrant is an accelerated
filer (as defined in Rule 12b-2 of the Exchange Act).

                                  Yes  X     No
                                      ----      ----

The number of shares outstanding of the registrant's common stock as of July 9,
2003 was 29,379,721.
================================================================================

<PAGE>



                             IDX SYSTEMS CORPORATION
                                    FORM 10-Q
                       For the Period Ended June 30, 2003


                                TABLE OF CONTENTS


                                                                            Page
                                                                            ----
PART I.   FINANCIAL INFORMATION

         Item 1.   Interim Financial Statements (Unaudited)

         Condensed Consolidated Balance Sheets .............................3

         Condensed Consolidated Statements of Income .......................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..............................16

         Item 3.  Quantitative and Qualitative Disclosures About
           Market Risk......................................................35

         Item 4.  Controls and Procedures ..................................35

PART II. OTHER INFORMATION

         Item 1.  Legal Proceedings ........................................36

         Item 2.  Changes In Securities and Use of Proceeds.................38

         Item 3.  Defaults Upon Senior Securities ..........................38

         Item 4.  Submission of Matters to a Vote of Security Holders ......38

         Item 5.  Other Information ........................................38

         Item 6.  Exhibits and Reports on Form 8-K .........................39


SIGNATURES..................................................................40


EXHIBIT INDEX...............................................................41



                                  Page 2 of 41

<PAGE>



PART I.   FINANCIAL INFORMATION

ITEM 1.   INTERIM FINANCIAL STATEMENTS

                             IDX SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

                                              June 30,             December 31,
                                                2003                   2002
                                           -------------          --------------

     ASSETS
     Cash                                  $  15,447              $  40,135
     Marketable securities                    75,235                 14,300
     Account receivable, net                  93,537                 86,596
     Refundable income taxes                   6,847                  7,590
     Prepaid and other current assets          8,873                  8,169
     Deferred tax asset                        2,566                  2,033
     Assets of discontinued operations             -                 42,099
                                           ---------              ---------
     TOTAL CURRENT ASSETS                    202,505                200,922

     Property and equipment, net              80,978                 71,038
     Capitalized software costs, net           1,793                  2,126
     Goodwill, net                             2,508                  2,411
     Other assets                             14,002                 13,778
     Deferred tax asset                        1,570                  1,570
                                           ---------              ---------
     TOTAL ASSETS                          $ 303,356              $ 291,845
                                           =========              =========



     LIABILITIES AND STOCKHOLDERS' EQUITY
     Accounts payable, accrued expenses
       and other liabilities               $  50,926              $  56,647
     Deferred revenue                         21,960                 17,969
     Notes payable to bank                         -                 18,727
     Liabilities of discontinued
       operations                                  -                  6,289
                                           ---------              ---------
     TOTAL CURRENT LIABILITIES                72,886                 99,632

     Commitments and contingencies                 -                      -

     Stockholders' equity                    230,470                192,213
                                           ---------              ---------

     TOTAL LIABILITIES AND STOCKHOLDERS'
       EQUITY                              $ 303,356              $ 291,845
                                           =========              =========

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.




                                  Page 3 of 41



<PAGE>


                             IDX SYSTEMS CORPORATION
                   CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                    (IN THOUSANDS, EXCEPT FOR PER SHARE DATA)
                                   (UNAUDITED)

                                     Three Months Ended      Six Months Ended
                                          June 30,               June 30,
                                     ------------------      ----------------
                                     2003       2002         2003      2002
                                     ------------------      ----------------
REVENUES
System sales                         $ 36,786   $ 26,182     $ 69,327  $ 53,398
Maintenance and service fees           61,493     58,879      121,393   112,586
                                     --------   --------     --------  --------
TOTAL REVENUES                         98,279     85,061      190,720   165,984

OPERATING EXPENSES
Cost of system sales                   11,508      8,588       23,300    17,813
Cost of maintenance and services       43,690     41,889       85,351    82,998
Selling, general and administrative    21,058     17,638       41,512    36,219
Software development costs             14,228     12,427       27,578    24,090
                                     --------   --------     --------  --------
TOTAL OPERATING EXPENSES               90,484     80,542      177,741   161,120
                                     --------   --------     --------  --------

OPERATING INCOME                        7,795      4,519       12,979     4,864

OTHER INCOME (EXPENSE)
Other income (expense)                    (38)       232           86       505
Gain on sale of investment in
  subsidiary                                -          -            -     4,273
                                     --------   --------     --------  --------
TOTAL OTHER INCOME (EXPENSE)              (38)       232           86     4,778
                                     --------   --------     --------  --------

Income before income taxes              7,757      4,751       13,065     9,642

Income tax provision                   (2,327)    (1,568)      (3,919)   (3,182)
                                     --------   --------     --------  --------

NET INCOME FROM CONTINUING
  OPERATIONS                            5,430      3,183        9,146     6,460

DISCONTINUED OPERATIONS
Income (loss) from discontinued
  operations, net of income taxes         311       (420)         426       430
Gain on sale of discontinued
   operations, net of income taxes     26,400          -       26,400         -
                                     -------    --------     --------  --------
INCOME (LOSS) FROM DISCONTINUED
  OPERATIONS                           26,711       (420)      26,826       430
                                     --------   --------     --------  --------

NET INCOME                           $ 32,141   $  2,763     $ 35,972  $  6,890
                                     ========   ========     ========  ========

BASIC EARNINGS (LOSS) PER SHARE
Income from continuing operations    $   0.19   $   0.11     $   0.31  $   0.22
Income (loss) from discontinued
  operations                         $   0.91   $  (0.01)    $   0.92  $   0.02
                                     --------   --------     --------  --------
BASIC EARNINGS PER SHARE             $   1.10   $   0.10     $   1.23  $   0.24
                                     ========   ========     ========  ========
Basic weighted average shares
  outstanding                          29,195     28,875       29,184    28,858
                                     ========   ========     ========  ========

DILUTED EARNINGS (LOSS) PER SHARE
Income from continuing operations    $   0.18   $   0.11     $   0.31  $   0.22
Income (loss) from discontinued
  operations                         $   0.91   $  (0.01)    $   0.91  $   0.01
                                     --------   --------     --------  --------
DILUTED EARNINGS PER SHARE           $   1.09   $   0.09     $   1.22  $   0.24
                                     ========   ========     ========  ========
Diluted weighted average shares
  outstanding                          29,456     29,162       29,436    29,088
                                     ========   ========     ========  ========

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

                                  Page 4 of 41
<PAGE>
                             IDX SYSTEMS CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
                                                     SIX MONTHS ENDED
                                                          JUNE 30,
                                            ------------------------------------
                                                2003                2002
                                            ----------------   -----------------
OPERATING ACTIVITIES:
Net income                                  $   35,972         $    6,890
Less:  Income from discontinued
         operations, net of income taxes           426                430
       Gain on disposal of discontinued
         operations, net of income taxes        26,400                  -
                                            ----------------   -----------------
Net income from continuing operations            9,146              6,460
Adjustments to reconcile net income to
    net cash provided by (used in)
    operating activities:
       Depreciation                              6,093              5,604
       Amortization                              1,226              1,170
       Deferred tax asset                        2,019                  -
       Increase in allowance for doubtful
         accounts                                  588                708
       Gain on sale of investment in
         subsidiary                                  -             (4,273)
       Loss on disposition of asset                  -                 93
       Changes in operating assets and
         liabilities:
          Accounts receivable                   (7,530)            (7,990)
          Prepaid expenses and other assets     (1,642)            (3,460)
          Accounts payable and accrued
            expenses                            (5,844)            (3,236)
          Federal and state income taxes           744              4,355
          Deferred revenue                       3,991                354
                                            ----------------   -----------------
             Net cash provided by (used in)
               operating activities from
               continuing operations             8,791               (215)


INVESTING ACTIVITIES:
Purchase of property and equipment, net        (17,349)            (7,489)
Purchase of marketable securities             (182,374)           (18,744)
Proceeds from sale of marketable securities    121,439             27,293
Proceeds from the sale of EDiX Corporation,
  net of cash transferred and transaction
  costs                                         54,852                  -
Other assets                                      (997)            (7,498)
                                            ----------------   -----------------
             Net cash used in investing
               activities from continuing
               operations                      (24,429)            (6,438)

FINANCING ACTIVITIES:
Proceeds from sale of common stock               1,980              2,204
Proceeds from debt issuance                     23,727             18,727
Repayment of debt issuance                     (42,454)           (15,000)
                                            ----------------   -----------------
             Net cash (used in) provided
               by financing activities
               from continuing operations      (16,747)             5,931
                                            ----------------   -----------------

Net cash used in continuing operations         (32,385)              (722)
Net cash provided by (used in) discontinued
  operations                                     7,697             (4,534)
                                            ----------------   -----------------
Net decrease in cash and cash equivalents      (24,688)            (5,256)

Cash and cash equivalents at beginning of
  period                                        40,135             38,083
                                            ----------------   -----------------
Cash and cash equivalents at end of period      15,447             32,827
Marketable securities                           75,235              9,767
                                            -----------------  -----------------

Total cash and marketable securities        $   90,682         $   42,594
                                            =================  =================

Supplemental Cash Flow Information
Cash paid for interest                      $      176         $       40
Cash paid for income taxes                  $      338         $        -

Non-cash Investing Activity:
Issuance of restricted stock                $      314         $        -

            SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.


                                  Page 5 of 41

<PAGE>


              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Nature of Business and Basis of Presentation

IDX Systems Corporation ("IDX" or the "Company") provides healthcare information
systems and services to large integrated healthcare delivery enterprises
principally located in the United States and Canada. Revenues are derived from
the licensing of software, hardware sales, and provision of maintenance and
services related to systems sales. Through June 18, 2003, the Company also
derived revenues from the provision of medical transcription services through
its wholly owned subsidiary, EDiX Corporation ("EDiX").

On June 18, 2003, the Company completed the sale of EDiX to Total eMed, Inc.
("TEM"), a medical transcription company based in Franklin, Tennessee. EDiX was
accounted for as a discontinued operation and therefore, EDiX's results of
operations and cash flows have been removed from the Company's results of
continuing operations and cash flows for all periods presented in this Quarterly
Report on Form 10-Q. EDiX's assets and liabilities as of December 31, 2002 have
been reported in the Condensed Consolidated Balance Sheets as assets and
liabilities of discontinued operations. See Note 13 for further information on
the sale of EDiX.

Certain reclassifications of prior period data have been made to conform to the
current reporting period.

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, and the accompanying unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and accompanying notes included in the Company's Annual Report on Form 10-K
filed for the year ended December 31, 2002, with the Securities and Exchange
Commission on March 31, 2003. 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 three and six
month periods ended June 30, 2003 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2003.

Note 2 - Accounting for Stock Based Compensation

The Company accounts for its stock-based compensation plan under Accounting
Principal Bulletin Opinion ("APB") No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. Statement of Financial Accounting Standard (SFAS) No. 123, ACCOUNTING
FOR STOCK-BASED COMPENSATION, establishes the fair-value-based method of
accounting for stock-based compensation plans. The Company has adopted the
disclosure-only alternative for options granted to employees and directors under
SFAS No. 123, which requires disclosure of the pro forma effects on earnings as
if SFAS No. 123 had been adopted, as well as certain other information. Options
granted to scientific advisory board members and other non-employees are
recorded at fair value based on the fair value measurement criteria of SFAS No.
123.

The Company has computed the pro forma disclosures required under SFAS No. 123
for all stock options granted to employees and directors of the Company as of
June 30, 2003 and 2002, using the Black-Scholes option pricing model prescribed
by SFAS No. 123.

The assumptions used for the three and six month periods ended June 30, 2003 and
2002 are as follows:

                                  Page 6 of 41

<PAGE>


                               THREE MONTHS ENDED           SIX MONTHS ENDED
                                    JUNE 30,                    JUNE 30,
                               ------------------           -----------------
                               2003          2002           2003         2002
                               ------------------           -----------------

Risk-free interest rates -
  stock option plan            2.46 %        4.09 %         2.62 %       4.42 %
Risk-free interest rates -
  employee stock purchase
  plan                          .98 %        1.75 %          .98 %       1.75 %
Expected lives - stock
  option plan                 4 years        4 years        4 years     4 years
Expected lives - employee
  stock purchase plan         1/2 year       1/2 year       1/2 year    1/2 year
Expected volatility           50.3 %         51.5 %         45.1 %      50.0 %
Dividend yield                   0 %            0 %            0 %         0 %
Weighted average fair value
  of grants - stock option
  plan                        $ 5.98         $ 7.09         $ 5.68      $ 6.73
Weighted average fair value
  of grants - employee stock
  purchase plan               $ 5.11         $ 3.79         $ 5.11      $ 3.79

The effect of applying SFAS No. 123 would be as follows:


                                    THREE MONTHS ENDED       SIX MONTHS ENDED
                                        JUNE 30,                 JUNE 30,
                                    ------------------      -----------------
(IN THOUSANDS, EXCEPT FOR PER       2003        2002       2003         2002
SHARE DATA)                         ----        ----       ----         ----
---------------------------------
Net income as reported              $32,141    $2,763   $ 35,972     $ 6,890
Deduct:
Total stock-based compensation
  under fair value based methods,
  net of tax                          (2,117)     (1,554)    (3,306)     (2,764)
                                    ---------------------  ---------------------
Pro froma net income - SFAS 123     $ 30,024    $  1,209   $ 32,666     $ 4,126
                                    --------------------------------------------

Basic net income per share:
    As reported                     $   1.10    $   0.10   $   1.23     $  0.24
    Pro forma - SFAS 123            $   1.03    $   0.04   $   1.12     $  0.14

Diluted net income per share:
    As reported                     $   1.09    $   0.09   $   1.22     $  0.24
    Pro forma - SFAS 123            $   1.02    $   0.04   $   1.11     $  0.14



Note 3 - New Accounting Standards

In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. ("FIN") 45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF
OTHERS." FIN 45 clarifies the disclosure requirements made by a guarantor in its
interim and annual statements explaining that a guarantor must recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
imposed by issuing a guarantee. The disclosure provisions of FIN 45 are
effective for financial statements of interim or annual periods ending after
December 15, 2002. The provisions for initial recognition and measurement are
effective on a prospective basis for guarantees that are issued or modified
after December 31, 2002, irrespective of a guarantor's fiscal year-end. The
provisions of FIN 45 do not have a material impact on the financial position of
IDX.

In January 2003, the FASB issued FIN 46, "CONSOLIDATION OF VARIABLE INTEREST
ENTITIES," to expand upon and strengthen existing accounting guidance that
addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity. Until now, a company generally has
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. FIN 46 changes that guidance by
requiring a variable interest entity, as defined in FIN 46, to be consolidated
by a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or is entitled to receive a majority
of the entity's residual returns or both. FIN 46 also requires disclosure about

                                  Page 7 of 41
<PAGE>



variable interest entities that the company is not required to consolidate but
in which it has a significant variable interest. The consolidation requirements
of FIN 46 apply immediately to variable interest entities created after January
31, 2003 and to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company currently leases an office
building from 4901 LBJ Ltd. Partnership, a Vermont limited partnership and an
affiliate of the Company ("LBJ"). The Company's lease agreements with LBJ are
reviewed and approved by certain independent members of the Board of Directors.
On June 30, 2003, LBJ entered into a purchase and sale agreement to sell the
real estate currently leased by the Company to an unrelated third party. The
Company will continue to lease the real estate from the new owners under a
modified lease arrangement, which will require approval by certain independent
members of the Board of Directors of the Company who have no financial interest
in the transaction. Under FIN 46, the Company may be required to consolidate LBJ
effective in the third quarter of 2003 and is currently evaluating the impact
such consolidation may have on its financial statements.

In December  2002,  the FASB issued SFAS No. 148,  "ACCOUNTING  FOR  STOCK-BASED
COMPENSATION--TRANSITION  DISCLOSURE,  AN AMENDMENT OF FASB  STATEMENT NO. 123".
SFAS No. 148 provides  alternative  methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No. 123 to require more prominent and more frequent disclosure in financial
statements regarding the effects of stock-based compensation.  The provisions of
SFAS No. 148 are effective for fiscal and interim  periods ending after December
15, 2002.  The Company  will  continue to apply APB No. 25 as the method used to
account for stock-based employee  compensation  arrangements,  where applicable,
but has adopted the disclosure requirements of SFAS No. 148.

Note 4 - Business Combinations and Divestitures

On June 18, 2003, the Company sold all the capital stock of EDiX to TEM in
exchange for $64.0 million in cash. See Note 13 for further information on the
sale of EDiX.

In April 2002, the Company acquired a minority interest in Stentor, Inc.
("Stentor"), one of the Company's strategic partners, by exercising a warrant to
purchase 562,069 shares of preferred stock of Stentor. The Company paid
approximately $7.5 million to purchase the preferred shares. Stentor is a
California based medical informatics company with products for medical image and
information management. The warrant was issued to the Company in November 2000
in connection with an alliance agreement that was entered into by the parties to
jointly develop a medical image and information management system ("MIMS")
combining the Company's Imaging Suite(TM) product with the image distribution
technology from Stentor. This investment will be carried at cost. There is
currently no public market for the preferred shares of Stentor.

On January 8, 2001, the Company sold certain operations of its majority owned
subsidiary, ChannelHealth Incorporated ("ChannelHealth") to Allscripts
Healthcare Solutions, Inc. ("Allscripts"), a leading provider of point-of-care
e-prescribing and productivity solutions for physicians. In addition to the
sale, the Company entered into a ten-year strategic alliance whereby Allscripts
is the exclusive provider of point-of-care clinical applications sold by IDX to
physician practices.

In exchange for its 87% ownership of ChannelHealth,  IDX received  approximately
7.5 million shares (subject to certain resale  restrictions as discussed  below)
of Allscripts  common stock,  which  represented  approximately  a 20% ownership
interest in Allscripts.  IDX recorded these shares of Allscripts common stock at
an estimated fair value of $29.5 million,  which included a discount from market
value  due to  restrictions  on  transfer.  At  the  time  of  the  transaction,
ChannelHealth's  liabilities  exceeded  its  assets,  resulting  in a gain after
transaction  costs  of  approximately  $40  million.  Pursuant  to the  Alliance
Agreement,  IDX guaranteed that  Allscript's  gross revenues  resulting from the
alliance  (less any  commissions  paid to IDX)  would  amount  to at least  $4.5
million for fiscal year 2001. Due to this contingency, IDX deferred $4.5 million
of the gain as of the date of the  transaction  and  recognized  a gain of $35.5
million in 2001. An additional  gain of $4.3 million was recognized in the first
quarter of 2002 when the contingency was resolved.

IDX accounts for its investment in Allscripts under the equity method of
accounting. Under the equity method of accounting, IDX recognized its pro-rata
share of Allscripts 2001 losses resulting in the elimination of the carrying
value of this investment during the third quarter of 2001. IDX has not recorded
its share of Allscripts losses since then. As of June 30, 2003, the Company's

                                  Page 8 of 41
<PAGE>

unrecorded share of Allscripts cumulative losses amounts to $68.4 million. At
June 30, 2003, the estimated market value of the Company's investment in
Allscripts is approximately $27.7 million based on the closing price per share
of Allscripts common stock on the NASDAQ National Market. The fair market value
would be discounted to reflect the Company's restricted ability to sell only 25%
of its initial shares of Allscripts common stock in any one year.

As of June 30, 2003, the Company has sold an aggregate of approximately 14,000
shares of Allscripts common stock, which has not materially changed its
ownership interest in Allscripts.

Summary audited financial information for Allscripts for 2002 is as follows (in
thousands):

                                  TWELVE MONTHS
                                      ENDED
                                  DECEMBER 31,
                                      2002
                                  -------------

     Revenue                      $   78,802
     Gross profit                     19,871
     Net loss                        (15,233)


                                     AS OF
                                   DECEMBER 31,
                                     2002
                                  -------------

     Current assets               $   63,095
     Non-current assets               41,258
     Current liabilities              18,369
     Non-current liabilities             163

Summary unaudited financial information for Allscripts for the three and six
months ended June 30, 2003 and 2002 is as follows (in thousands):

                               THREE MONTHS ENDED           SIX MONTHS ENDED
                                    JUNE 30,                    JUNE 30,
                               ------------------           ----------------
                               2003        2002             2003       2002
                               ----        ----             ----       ----

     Revenue                  $ 19,670     $ 20,094         $ 39,700   $ 38,867
     Gross profit                6,517        4,970           12,705      8,792
     Net loss                   (2,071)      (3,962)          (4,177)    (9,986)


Note 5 - Lease Abandonment Charge

In 1999, the Company entered into a lease for new office space in Seattle.
Although the Company continued to utilize the existing space, an active search
for a sublessor was initiated and has been ongoing. In 2002, the Company
determined it would consolidate its Seattle operations into the new office space
and abandoned the space subject to the former lease. Due to the depressed
Seattle real estate market and the inability to obtain a sublessor, the Company
recorded a lease abandonment charge of $9.2 million in its core information
systems and services business segment in the fourth quarter of 2002. The lease
abandonment charge is related to lease payments of approximately $7.9 million
through the end of the lease term in 2005 and non-cash write-offs of certain
leasehold improvements of approximately $1.3 million. As of December 31, 2002,
the Company had an accrual balance of $9.2 million. During the first six months
of 2003, leasehold improvements of $1.3 million were written off and lease
payments of approximately $1.4 million were made. Of the $6.5 million accrual
remaining at June 30, 2003, approximately $1.6 million will be paid during the
remainder of 2003 and approximately $4.9 million thereafter. In the event that
the Company is able to secure a sub-tenant to assume its prior lease in a future
reporting period, the present value of the future sub-lease income would be

                                  Page 9 of 41

<PAGE>


recorded as a reduction in expenses under the lease abandonment caption in the
financial statements in the period in which the sub-lease agreement is signed.

Note 6 - Restructuring Charges

On September 28, 2001, the Company announced its plan to restructure and realign
its large physician group practice business. The Company implemented a workforce
reduction and restructuring program affecting approximately four percent of the
Company's employees. The restructuring program resulted in a charge to earnings
of approximately $19.5 million during the fourth quarter of 2001, comprised of
costs associated with employee severance arrangements of approximately $5.5
million, lease payment costs of approximately $5.2 million and equipment and
leasehold improvement write-offs related to the leased facilities and workforce
reduction of $8.8 million. Substantially all workforce reduction related actions
were completed during the fourth quarter of 2001. As of December 31, 2002, the
Company had an accrual balance of $2.9 million, primarily related to leased
facilities, of which approximately $900,000 million was paid during the first
half of 2003. Of the $2.0 million accrual balance at June 30, 2003,
approximately $1.0 million will be paid during the remainder of 2003 and
approximately $1.0 million thereafter.

Note 7 - Segment Information

On June 18, 2003, the Company completed the sale of EDiX to TEM. Effective with
the sale, the Company's continuing operations are classified into one reportable
business segment, Information Systems and Services. Information Systems and
Services consist of IDX'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 and Canada.
Through the first quarter of 2003, the Company had an additional segment,
medical transcription services, which provided medical transcription outsourcing
services for hospitals and large physician group practices primarily located in
the United States. This segment has been discontinued effective this quarter
with the sale of EDiX to TEM and is reflected in discontinued operations (see
Note 13). Accordingly, because the Company currently operates under one business
segment, segment information is no longer being disclosed separately. Operating
results for the discontinued transcription services segment have been restated
to exclude general corporate overhead previously allocated to the segment and
interest charged on certain inter-company loans, net of income taxes.

Note 8 - Accrued Expenses

Accrued expenses consist of the following (in thousands):

                                             JUNE 30,            DECEMBER 31,
                                              2003                  2002
                                           -----------           ------------
Accounts Payable                           $   13,347            $   15,189
Employee compensation and benefits             11,440                14,886
Restructuring charges                           1,993                 2,869
Accrued expenses                                6,643                 6,855
Reserve for lease abandonment charges           6,485                 9,183
Other                                          11,018                 7,665
                                           -----------           -----------
                                           $   50,926            $   56,647
                                           -----------           -----------

Note 9 - Income Taxes

The Company's 2003 and 2002 effective tax rate for continuing operations is
lower than the statutory rate, primarily due to research credits. The net
deferred tax assets as of June 30, 2003 of approximately $4.1 million are
expected to be realized by generating future taxable income and are otherwise
recoverable through available tax planning strategies.


                                 Page 10 of 41

<PAGE>

Note 10 - Comprehensive Income

Total comprehensive income for the three months ended June 30, 2003 amounted to
$32.1 million compared to $2.8 million for the same period in 2002. Total
comprehensive income for the six months ended June 30, 2003 amounted to $36.0
million compared to a comprehensive income of $6.9 million for the same period
in 2002. Comprehensive income includes unrealized gains or losses on the
Company's marketable securities that are included as a component of
stockholders' equity.

Note 11 - Earnings Per Share Information

The following sets forth the computation of basic and diluted earnings per share
(in thousands, except for per share data):

                              THREE MONTHS ENDED          SIX MONTHS ENDED
                                   June 30,                   June 30,
                              ------------------          ----------------
                              2003          2002          2003        2002
                              ----          ----          ----        ----

Numerator:
  Net Income                  $ 32,141      $  2,763      $ 35,972    $  6,890
                              ----------------------      --------------------

Denominator:
  Basic weighted average
    shares outstanding          29,195        28,875       29,184       28,858
  Effect of employee stock
    options                        261           287          252          230
                              ----------------------      --------------------
Denominator for diluted
  income per share              29,456        29,162       29,436       29,088
                              ----------------------      --------------------
Basic earnings per share      $   1.10      $   0.10      $  1.23      $  0.24
                              ----------------------      --------------------
Diluted earnings per share    $   1.09      $   0.09      $  1.22      $  0.24
                              ----------------------      --------------------

Options to acquire 3,702,934 and 1,719,018 shares of the Company's common stock
for the three months ended June 30, 2003 and 2002, respectively, were excluded
from the calculation of diluted earnings per share, as the effect would not have
been dilutive. Options for 3,267,859 and 2,444,900 shares for the six month
periods ended June 30, 2003 and 2002, respectively, were excluded from the
calculation of diluted earnings per share as the effect would not have been
dilutive.

Note 12 - Financing Arrangements

The Company has a revolving line of credit agreement (the "Line") allowing the
Company to borrow up to $40.0 million subject to certain restrictions. The Line
is secured by deposit accounts, accounts receivable and other assets and bears
interest at the bank's base rate plus .25%. At June 30, 2003 the rate on the
Line was 4.25% and no amounts were outstanding. The Line will expire on June 27,
2005.

Note 13 - Discontinued Operations

On June 18,  2003,  the Company  completed  the sale of EDiX to TEM. The Company
received $64.0 million in cash from TEM in exchange for all the capital stock of
EDiX,  recognizing a gain of $26.4 million,  net of tax. The Company transferred
approximately $8.2 million of cash as part of the EDiX business,  resulting in a
net cash inflow  related to the EDiX sale of $54.9  million,  net of transaction
costs.  The Stock Purchase and Sale Agreement,  dated April 10, 2003, as amended
between the Company and TEM, provides for an adjustment of the purchase price to
the  extent  the  amount  of  working  capital   (current  assets  less  current
liabilities) of EDiX as of June 18, 2003 does not equal $20,796,000. The working
capital will be determined  based upon a balance  sheet  prepared as of June 18,
2003,  which will be audited by an independent  accounting firm and completed on
or before October 16, 2003.

EDiX represented the Company's medical transcription services segment (See Note
7).


Page 11 of 41

<PAGE>

The following is a summary of operating results for EDiX through the date of
closing of the sale date of EDiX (in thousands):



                      APRIL 1, 2003   THREE MONTHS   JANUARY 1,     SIX MONTHS
                      THROUGH         ENDED          2003 THROUGH   ENDED
                      JUNE 18, 2003   JUNE 30, 2002  JUNE 18, 2003  JUNE 30,2003
                      -------------   -------------  -------------  ------------

Revenues              $     26,175    $     27,682   $     54,810   $    54,630
                      -------------   -------------  -------------  ------------

Pre-tax income (loss)
  from discontinued
  operations                   956           (627)          1,121           642
Pre-tax gain on
  disposal of
  discontinued
  operations                23,849              -          23,849             -
(Provision) benefit
  for income taxes
  from income (loss)
  from discontinued
  operations                  (645)           207            (695)         (212)
Benefit for income
  taxes from the gain
  on disposal of
  discontinued
  operations                 2,551              -           2,551             -
                      ------------    -------------  -------------- ------------
Income (loss) from
  discontinued
  operations, net of
  tax                 $     26,711    $      (420)   $     26,826   $       430
                      ------------    -------------  -------------- ------------

The gain on the disposal of EDiX resulted in an income tax benefit of $2.6
million. The Company's tax basis in the stock of EDiX exceeded the net proceeds
from the sale, resulting in a capital loss on the sale for tax purposes. A tax
benefit arises from this deductible temporary difference, which more likely than
not will reverse in the foreseeable future and be realized.


Note 14- Commitments and Contingencies

LEASES:

At June 30, 2003, minimum lease payments, net of sublease proceeds, for certain
facilities and equipment under noncancelable leases are as follows (in
thousands):


                                 Page 12 of 41

<PAGE>



     Year                                                   Total
     ---------------------------------------------------    --------------------

     2003 remaining                                         $     7,364
     2004                                                        13,833
     2005                                                        14,194
     2006                                                        12,543
     2007                                                        11,680
     Thereafter                                                  84,285
                                                            --------------------
                                                            $   143,899
                                                            --------------------

Of the $7.4 million due in 2003, $276,000 is due to LBJ, a related party
described below. Of the amounts due for the years 2004 through 2007, an
aggregate of $1.9 million is due to LBJ. All other amounts are due to unrelated
third parties. Of the $143.9 million in future minimum lease payments,
approximately $6.5 million was accrued in 2002 as a lease abandonment charge.
See Note 5.

Richard E. Tarrant, Chairman of the Company's Board of Director's, is the
President and a director of LBJ Real Estate Inc., a Vermont corporation ("LBJ
Real Estate"). Certain executive officers of LBJ Real Estate are also directors
or executive officers of the Company, including Robert H. Hoehl, a director of
the Company, and John A. Kane, the Company's Chief Financial Officer, who also
serves as a director of LBJ Real Estate. The stockholders of LBJ Real Estate
include Messrs. Tarrant and Hoehl and an independent individual. LBJ Real Estate
holds a 1% general partnership interest in LBJ, and Messrs. Hoehl, Tarrant, and
Kane and Mr. Robert F. Galin, the Company's Senior Vice President of Sales, and
two other employees of the Company hold 72.95% limited partnership interest. The
Company leases an office building from LBJ. On June 30, 2003, LBJ entered into a
purchase and sale agreement to sell the real estate currently leased by the
Company to an unrelated third party. The Company will continue to lease the real
estate from the new owners under a modified lease arrangement, which will
require approval by certain independent members of the Board of Directors of the
Company who have no financial interest in the transaction.

Total rent expense was approximately $6.0 million and $5.1 million for the six
months ended June 30, 2003 and 2002, respectively. Total rent paid to LBJ was
approximately $276,000 and $279,000 during the six months ended June 30, 2003
and 2002, respectively.

INDEMNIFICATIONS:

IDX includes indemnification provisions in software license agreements with its
customers. These indemnification provisions include provisions indemnifying the
customer against losses, expenses, and liabilities from damages that could be
awarded against the customer in the event that IDX's software is found to
infringe upon a patent or copyright of a third party. The scope of remedies
available under these indemnification obligations is limited by the software
license agreements. IDX believes that its internal business practices and
policies and the ownership of information, works and rights agreements signed by
all employees limits IDX's risk in paying out any claims under these
indemnification provisions. To date IDX has not been subject to any litigation
and has not had to reimburse any customers for any losses associated with these
indemnification provisions.

Note 15 - Legal Proceedings

In late 2001, the Company finalized a "Cooperative Agreement" with a
non-regulatory federal agency within the U.S. Commerce Department's Technology
Administration, NIST, whereby the Company agreed to lead a $9.2 million,
multi-year project awarded by NIST. The project entails research and development
to be conducted by the Company and its partners in the grant. Subsequently, an
employee of the Company made allegations that the Company had illegally
submitted claims for labor expenses and license fees to NIST. The Company
informed NIST of the employee's allegations. The Company has conducted an
investigation, and based on this investigation, the Company believes the
employee's allegations are without merit.

The Company believes the employee has likely filed an action under the Federal
False Claims Act under seal in the Federal District Court for the Western
District of Washington with respect to the alleged improper claims, sometimes

                                 Page 13 of 41

<PAGE>


referred to as a "Qui Tam" complaint. The Company has no information regarding
the specific allegations in the Qui Tam complaint. Further, the Company has no
information concerning the amount of money at issue in the Qui Tam complaint or
in any action the employee may bring claiming damages for alleged retaliatory
actions by the Company. The Company has not been informed if the U.S. Attorney's
office will pursue the claims. The Company has not yet been served with legal
process detailing the allegations and no discovery has taken place. The Company
believes that any allegations in the Qui Tam complaint are without merit, and
the Company intends to vigorously defend against them.

In April 2003, the Company filed a complaint against the employee with the
United States District Court for the Western District of Washington, entitled
IDX SYSTEMS CORPORATION V. MAURICIO LEON (case no. C03-972R). The Company's
lawsuit asks the Court to grant a declaratory judgment stating that, should the
Company terminate the employee's employment, such action would not constitute
retaliation for alleged whistle-blowing activities in violation of the Federal
False Claims Act or the Sarbanes-Oxley Act and would not constitute a violation
of the employee's rights under other laws. The Company believes its lawsuit is
meritorious and intends to vigorously pursue relief through prosecution of the
lawsuit.

In May 2003, the employee filed a complaint against the Company with the U.S.
Department of Labor, pursuant to Section 1514A of the Sarbanes-Oxley Act of
2002. The employee's complaint asserts that, notwithstanding the employee's
allegations, Company management conspired to continue to defraud the government
by allowing fraudulent activities to continue uncorrected and by concealing and
avoiding its obligations to report any and all fraudulent activities to the
proper authorities. In addition, the employee's complaint alleges that the
Company acted to retaliate, harass and intimidate the employee in contravention
of the Sarbanes-Oxley Act's whistleblower provisions. The employee's complaint
requests relief including, but not limited to, reinstatement, back-pay, with
interest, and compensation for any damages sustained by the employee as a result
of the alleged discrimination. The Company believes that all claims by the
employee are without merit and will vigorously defend against them.

In addition, in May 2003, the employee filed a complaint against the Company
with the Federal District Court for the Western District of Washington, entitled
MAURICIO A. LEON, M.D. V. IDX SYSTEMS CORPORATION (case no CV03 1158P) asserting
that the Company had knowledge that the employee engaged in "protected activity"
and retaliated against the employee in violation of the False Claims Act. In
addition, the employee alleges that the Company violated the Americans with
Disabilities Act and its Washington State counterpart in part through
retaliation against the employee for exercising the employee's rights under the
federal and state discrimination laws. The employee also asserts other causes of
action including wrongful termination in violation of public policy, fraudulent
inducement to enter into an employment contract with the Company, and negligent
and intentional infliction of emotional distress. The employee requests relief
including, but not limited to, an injunction against the Company enjoining and
restraining the Company from the alleged harassment and discrimination, wages,
damages, attorneys' fees, interest and costs. The Company believes that all
claims in the employee's lawsuit are without merit and will vigorously defend
itself against them.

In June 2003, the employee also filed with the Washington District Court a
motion for injunctive relief requesting an order reinstating the employee's pay
and benefits pending the outcome of the litigation. On June 30, 2003, the
Company filed a response in opposition to the employee's motion for injunctive
relief. The Company believes that the assertions made in the employee's motion
for injunctive relief are without merit and will continue vigorously to contest
the motion.

There are additional claims made by the employee against the Company, including
a charge with the U.S. Equal Employment Opportunity Commission, claiming that
the employee was discriminated against in violation of the Americans with
Disabilities Act, the processing of which the EEOC has subsequently terminated
through a Notice of Right to Sue. In addition, based on a media report, the
employee has also apparently filed a claim with the Office of Civil Rights of
Health and Human Services based on an assertion that the Company retaliated
against him by allegedly releasing medical information in violation of the
requirements of the Health Insurance Portability and Accountability Act or 1996.
The Company has not received notice of the charge from the agency, and the
agency will not confirm the claim has been filed. The Company intends vigorously
to defend against the claims.


                                 Page 14 of 41

<PAGE>

All actions are in the preliminary scheduling phase, which has been extended to
allow the employee to find new legal counsel following the suspension of his
former attorney's license to practice law, and discovery has not commenced.

In April 2000, the Company commenced a lawsuit for damages caused by wrongful
cancellation and material breach of contract by St. John Health System (SJHS),
in the United States District Court for Eastern District of Michigan, entitled
IDX SYSTEMS CORPORATION V. ST. JOHN HEALTH SYSTEM (case no 00-71631).
Subsequently, SJHS commenced a lawsuit against the Company in the Circuit Court
of Wayne County, Michigan, claiming unspecified damages against the Company for
anticipatory repudiation, breach of contract, tort and fraud. On motion of the
Company, SJHS's lawsuit was removed to and consolidated in the federal court. In
its answer to the Company's lawsuit, SJHS asserted the same claims previously
asserted in its state court action. In September 2001, SJHS specified damage
claims of approximately $77.0 million in allegedly lost savings, and in January
2002 raised another theory of alleged unspecified damages for "cover" (system
replacement costs). On September 30, 2002, the United States District Court for
the Eastern District of Michigan dismissed all of SJHS's claims of fraud, tort
and breach of contract, and SJHS's claims for alleged lost savings and
consequential damages, leaving only its claim for anticipatory repudiation. On
October 15, 2002, SJHS requested reconsideration of these rulings. On March 28,
2003, the Court denied SJHS's request for reconsideration of its September
ruling and also barred SJHS from introducing any evidence concerning, or making
any arguments concerning, its claims for "cover" damages. On May 20, 2003, the
parties filed a "Proposed Joint Final Pretrial Order" in which SJHS listed
alleged damages of approximately $13.8 million, including approximately $5.6
million in alleged "out-of-pocket," "resources," "labor" and other costs and
approximately $5.9 million in "replacement" hardware and software. IDX has moved
to dismiss all of these damages claims on grounds that they are barred by the
Court's prior orders and by the contract's exclusion against consequential or
incidental damages. Those motions are pending before the Court. The Company
believes the claims of SJHS are without merit and continues to vigorously defend
itself and prosecute its own claims for damages. The lawsuit is in the trial
preparation stage, and trial is scheduled to commence on October 2, 2003.

From time to time, the Company is a party to or may be threatened with
litigation in the ordinary course of its business. The Company regularly
analyzes current information including, as applicable, the Company's defenses
and insurance coverage and, as necessary, provides accruals for probable and
estimable liabilities for the eventual disposition of these matters.



                                 Page 15 of 41

<PAGE>



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

YOU  SHOULD  READ  THE   FOLLOWING   DISCUSSION   TOGETHER  WITH  THE  CONDENSED
CONSOLIDATED  FINANCIAL STATEMENTS AND RELATED NOTES APPEARING ELSEWHERE IN THIS
QUARTERLY  REPORT ON FORM 10-Q.  THIS ITEM CONTAINS  FORWARD-LOOKING  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-LOOKING
STATEMENTS.  FACTORS  WHICH  COULD  CAUSE  ACTUAL  RESULTS TO DIFFER  MATERIALLY
INCLUDE THOSE SET FORTH UNDER "FORWARD-LOOKING INFORMATION AND FACTORS AFFECTING
FUTURE  PERFORMANCE",  AS WELL AS THOSE OTHERWISE  DISCUSSED IN THIS SECTION AND
ELSEWHERE IN THIS QUARTERLY REPORT ON FORM 10-Q.  UNLESS OTHERWISE  SPECIFIED OR
THE CONTEXT  REQUIRES  OTHERWISE,  THE TERMS "WE", "US", "OUR" AND THE "COMPANY"
REFER TO IDX SYSTEMS CORPORATION AND ITS SUBSIDIARIES.
GENERAL

Founded in 1969, IDX Systems Corporation provides information technology
(software and service) solutions to maximize value in the delivery of healthcare
by improving the quality of patient service, enhancing medical outcomes and
reducing the costs of care. Healthcare providers purchase IDX systems, which are
designed to be complementary and functionally rich; to improve their patients'
experience through simpler access, safer care delivery and more streamlined
accounting.

Our revenue growth is driven by demand for new healthcare information technology
systems and services as well as installation, maintenance and service to our
existing customers, which total more than 3,300 installation sites and include
more than 138,000 physicians. Earnings growth is driven primarily by software
sales, which yield significantly higher gross profit margins than our other
revenue components - hardware and services.

We believe our biggest opportunity for both revenue and earnings growth will be
driven by the increasing demand for safer care delivery and improved business
performance - both of which we believe can be significantly improved through
automation.

We measure our financial performance by monitoring revenue and backlog from
systems and services, days sales outstanding, recurring revenue, gross profit
margin, operating profit margin and bookings.

Our revenues from continuing operations increased to $98.3 million for the
second quarter of 2003 from $85.1 million for the same period in 2002. Systems
sales, which include software and hardware sales, increased 40.5% in the second
quarter of 2003, while maintenance and service fees grew 4.4% as compared to the
same period in the prior year.

We reported operating income from continuing operations of $7.8 million for the
second quarter of 2003 as compared to operating income from continuing
operations of $4.5 million for the same period in 2002, an increase of $3.3
million. In the second quarter of 2003, we reported net income from continuing
operations of $5.4 million, or $0.19 basic earnings per share, as compared to
net income from continuing operations of $3.2 million, or $0.11 per share, for
the same period in 2002, an increase of approximately $2.2 million.

We consider operating results from continuing operations excluding special items
to be the most relevant benchmark of our core operating performance. Our
management believes this pro forma measure helps indicate underlying trends in
our business performance and uses this measure to manage the business and
evaluate our performance. A reconciliation of pro forma to GAAP is included
below:


                                 Page 16 of 41

<PAGE>

                                   THREE MONTHS ENDED      SIX MONTHS ENDED
                                        JUNE 30,               JUNE 30,
   (IN THOUSANDS)                  2003          2002      2003        2002
                                   ----          ----      ----        ----
------------------------------

   Net income from continuing
     operations                    $ 5,430       $  3,183  $  9,146    $  6,460
      Gain on sale of investment
        in subsidiary                    -              -         -      (4,273)
      Tax effect of included
        special items                    -              -         -       1,410

                                   ---------------------------------------------
   Pro forma net income from
     continuing operations         $ 5,430       $  3,183  $  9,146    $  3,597
                                   ---------------------------------------------


In our earnings announcement, dated July 22, 2003, we indicated that we remained
comfortable with our 2003 revenue guidance of $400.0-$406.0 million from
continuing operations and earnings guidance of $0.73 per share from continuing
operations. This guidance assumes a 30% tax rate and no special items in 2003.

MATTERS AFFECTING ANALYSIS

On June 18, 2003, the Company completed the disposition of its wholly owned
subsidiary, EDiX Corporation ("EDiX"), to Total eMed, Inc. ("TEM"), a medical
transcription company based in Franklin, Tennessee. With the sale of EDiX, we no
longer provide medical transcription outsourcing services, and effective this
quarter, the financial statements have been restated to reflect EDiX as a
discontinued operation for all periods presented in this report. For purposes of
this Quarterly Report on Form 10-Q, the discussion will relate to our
Information Systems and Services segment as such segment is currently operated.
As a result, EDiX is no longer being discussed as a separate segment. The
results of EDiX through June 18, 2003 are discussed in the Results of Operations
section below under Discontinued Operations.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations
are based upon our consolidated financial statements, which have been prepared
in accordance with accounting principles generally accepted in the United
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities, revenues and expenses, and related disclosures of contingent assets
and liabilities at the date of our financial statements. Those estimates are
based on our experience; terms of existing contracts, our observance of trends
in the industry, information provided by our customers and information available
from other outside sources, which are believed to be reasonable under the
circumstances. Actual results may differ from these estimates under different
assumptions or conditions.

The following critical accounting policies affect the more significant judgments
and estimates used in the preparation of our consolidated financial statements,
and may potentially result in materially different results under different
assumptions and conditions. We have identified the following as critical
accounting policies to our Company:

     o    revenue recognition,
     o    allowance for doubtful accounts,
     o    capitalization of software development costs,
     o    income taxes,
     o    restructuring and lease abandonment charges, and
     o    accounting for litigation, commitments and contingencies.

REVENUE RECOGNITION - We license software and sell hardware and related
ancillary products to customers through our direct sales force. We generally
recognize revenue from software license, hardware, and related ancillary product
revenues using the residual method when:

     o    persuasive evidence of an arrangement exists, which is typically when
          a customer has signed a non-cancelable sales and software license
          agreement;

                                 Page 17 of 41

<PAGE>

     o    delivery, which is typically FOB shipping point, is complete for the
          software (either physically or electronically), hardware and related
          ancillary products;

     o    the customer's fee is deemed to be fixed or determinable and free of
          contingencies or significant uncertainties;

     o    collectibility is probable; and

     o    vendor specific objective evidence of fair value exists for all
          undelivered elements, typically maintenance and professional services.

Under the residual method, we defer revenue recognition of the fair value of the
undelivered elements and we allocate the remaining portion of the arrangement
fee to the delivered elements and recognize it as revenue, assuming all other
conditions for revenue recognition have been satisfied. We recognize
substantially all of our product revenue in this manner. If we cannot determine
the fair value of any undelivered element included in an arrangement, we will
defer revenue recognition until all elements are delivered, services are
performed or until fair value can be objectively determined.

As part of an arrangement, we typically sell maintenance contracts as well as
professional services to customers. Maintenance services include telephone and
Web-based support as well as rights to unspecified upgrades and enhancements,
when and if we make them generally available. Professional services are deemed
to be non-essential and typically are for implementation planning, loading of
software, installation of hardware, training, building simple interfaces,
running test data, and assisting in the development and documentation of process
rules, and best practices consulting.

We recognize revenues from maintenance services ratably over the term of the
maintenance contract period based on vendor specific objective evidence of fair
value. Vendor specific objective evidence of fair value is based upon the amount
charged for maintenance when purchased separately, which is typically the
contract's renewal rate. Maintenance services are typically stated separately in
an arrangement.

We generally recognize revenues from professional services based on vendor
specific objective evidence of fair value when: (1) a non-cancelable agreement
for the services has been signed or a customer's purchase order has been
received; and (2) the professional services have been delivered. Vendor specific
objective evidence of fair value is based upon the price charged when
professional services are sold separately and is typically based on an hourly
rate for professional services.

Our arrangements with customers generally include acceptance provisions.
However, these acceptance provisions are typically based on our standard
acceptance provision, which provides the customer with a right to a refund if
the arrangement is terminated because the product did not meet our published
specifications. This right generally expires 30 days after installation. The
product is deemed accepted unless the customer notifies us otherwise. Generally,
we determine that these acceptance provisions are not substantive and
historically have not been exercised, and therefore should be accounted for as a
warranty in accordance with Statement of Financial Accounting Standards No. 5.

At the time we enter into an arrangement, we assess the probability of
collection of the fee and the terms granted to the customer. Our typical payment
terms include a deposit and subsequent payments based on specific milestone
events and dates. Our payment terms are less than 90 days and typically amounts
are due within 30 days of invoice date. If we consider the payment terms for the
arrangement to be extended or if the arrangement includes a substantive
acceptance provision, we defer revenue not meeting the criterion for recognition
under SOP 97-2 and classify this revenue as deferred revenue, including deferred
product revenue. We recognize deferred revenue, assuming all other conditions
for revenue recognition have been satisfied, when the payment of the arrangement
fee becomes due and/or when the uncertainty regarding acceptance is resolved as
generally evidenced by written acceptance or payment of the arrangement fee.

Additionally, we periodically enter into certain long-term contracts where we
generally recognize revenue on a percentage of completion basis using
labor-input measures. We recognize losses, if any, on fixed price contracts when


                                 Page 18 of 41

<PAGE>

the loss is determined. We record revenue in excess of billings on long-term
service contracts as unbilled receivables and include in trade accounts
receivable. We record billings in excess of revenue recognized on service
contracts as deferred revenue until revenue recognition criteria are met.

ALLOWANCE FOR DOUBTFUL ACCOUNTS - IDX maintains an allowance for doubtful
accounts to reflect estimated losses resulting from the inability of customers
to make required payments. We base this allowance on estimates after
consideration of factors such as the composition of the accounts receivable
aging and bad debt history and our evaluation of the financial condition of the
customers. If the financial condition of customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional
allowances and bad debt expense may be required. We typically do not require
collateral. Historically, our estimates have been adequate to cover accounts
receivable exposures.

CAPITALIZATION OF SOFTWARE DEVELOPMENT COSTS - We expense all costs incurred in
the research, design and development of software for sale to others until
technological feasibility is established. Technological feasibility is
established when planning, designing, coding and testing activities have been
completed so that the working model is consistent with the product design as
confirmed by testing. Thereafter, we capitalize and amortize software
development costs to software development expense on a straight-line basis over
the lesser of 18 months or the estimated lives of the respective products,
beginning when the products are offered for sale. We expense costs incurred in
the development of software for internal use until it becomes probable that
these developments will provide additional functionality that will benefit
future periods. Thereafter, we capitalize and amortize certain costs to
operating expense on a straight-line basis over the lesser of five years or the
estimated economic life of the software. While we believe that our current
estimates and the underlying assumptions regarding capitalized software
development costs are appropriate, future events could necessitate adjustments
to these estimates resulting in additional software development expense in the
period of adjustment.

INCOME TAXES - Our valuation allowance relating to the net deferred tax assets
is based on our assessment of historical pre-tax income as well as tax planning
strategies designed to generate future taxable income. These strategies include
estimates and involve judgment relating to certain unrealized gains in our
investment in common stock of an equity investee. To the extent that facts and
circumstances change, these tax-planning strategies may no longer be sufficient
to support the deferred tax assets and we may be required to increase the
valuation allowance. To the extent that we generate future taxable income
against which these tax assets may be applied, some portion or all of the
valuation allowance would be reversed and an increase in net income would
consequently be reported in future years.

RESTRUCTURING AND LEASE ABANDONMENT CHARGES - We have recorded restructuring and
lease abandonment charges associated with restructuring plans approved by
management over the last three years. These reserves include estimates
pertaining to employee separation costs and real estate lease obligations. The
reserve associated with lease obligations could be materially affected by
factors such as the ability to obtain subleases, the creditworthiness of
sub-lessees, market value of properties, and the ability to negotiate early
termination agreements with lessors. While we believe that our current estimates
regarding lease obligations are adequate, future events could necessitate
significant adjustments to these estimates.

ACCOUNTING FOR LITIGATION, COMMITMENTS AND CONTINGENCIES - We are currently
involved in certain legal proceedings, which, if unfavorably determined, could
have a material adverse effect on our operating results and financial condition.
In connection with our assessment of these legal proceedings, we must determine
if an unfavorable outcome is probable and evaluate the costs for resolution of
these matters, if reasonably estimable. We have developed these determinations
and related estimates in consultation with outside counsel handling our defense
in these matters and are based upon an analysis of potential results, assuming a
combination of litigation and defense strategies. See Part II, Item 1 "Legal
Proceedings" and Note 15 of Notes to Condensed Consolidated Financial Statements
included in this Quarterly Report on Form 10-Q.

The above listing is not intended to be a comprehensive list of all of our
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by generally accepted accounting
principles, with no need for management's judgment in their application. There
are also areas in which management's judgment in selecting any available
alternative would not produce a materially different result. See our audited
consolidated financial statements and notes thereto contained in our Annual

                                 Page 19 of 41

<PAGE>

Report on Form 10-K for the year ended December 31, 2002, which contain
accounting policies and other disclosures required by generally accepted
accounting principles.


RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2003 COMPARED TO THREE MONTHS
ENDED JUNE 30, 2002

REVENUES

The Company's total revenues increased to $98.3 million during the three months
ended June 30, 2003 from $85.1 million for the same period in 2002, an increase
of $13.2 million or 15.5%. Revenues from systems sales increased to $36.8
million during the three months ended June 30, 2003 (37.4% of total revenues)
from $26.2 million for the same period in 2002 (30.8% of total revenues), an
increase of $10.6 million or 40.5%. Software license revenue increased $8.3
million and hardware and third party software revenue increased $2.3 million as
compared to the prior year.

Revenues from maintenance and service fees increased to $61.5 million during the
three months ended June 30, 2003 (62.6% of total revenues) from $58.9 million
for the same period in 2002 (69.2% of total revenues), an increase of $2.6
million or 4.4%. The increase was primarily due to annual maintenance price
increases combined with an increase in installed base and a $1.5 million
increase in installation, consulting and other services.

COST OF SALES

The cost of system sales increased to $11.5 million during the three months
ended June 30, 2003 from $8.6 million for the same period in 2002, an increase
of $2.9 million or 33.7%. The increase in cost of system sales is primarily a
result of an increase in hardware included as a component of sales of the
Company's system sales. The gross margin on systems sales increased to 68.7%
during the three months ended June 30, 2003 from 67.2% for the same period in
2002. Fluctuations in the gross profit margin as a percentage of system sales
typically result from the revenue mix of software license revenue, which has a
higher gross profit margin, and hardware and third party software sales, which
have a lower gross profit margin. The increase in the gross profit margin as a
percentage of sales was primarily due to the increase in higher margin software
license revenue as a percentage of total system sales in second quarter 2003 as
compared to second quarter 2002.

The cost of maintenance and services increased to $43.7 million during the three
months ended June 30, 2003 from $41.9 million for the same period in 2002, an
increase of $1.8 million or 4.3%. The gross profit margin on maintenance and
service fees increased slightly to 29.0% during the three months ended June 30,
2003 as compared to 28.9% for the same period in 2002. The increase in margin
was primarily due to increased maintenance revenue, which was only partially
offset by growth in service and maintenance expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Total selling, general and administrative expenses increased to $21.1 million
during the three months ended June 30, 2003 from $17.6 million for the same
period in 2002, an increase of $3.5 million or 19.3%. This increase was
primarily due to increases in personnel related expenses of $1.5 million, in
occupancy expenses of $1.1 million, in travel related expenses of $700,000 and
various other expenses of $200,000. As a percentage of total revenues, total
selling, general and administrative expenses was 21.4% for the three months
ended June 30, 2003 as compared to 20.7% for the same period in 2002.

SOFTWARE DEVELOPMENT COSTS

Total software development costs increased to $14.2 million during the three
months ended June 30, 2003 from $12.4 million for the same period in 2002, an
increase of $1.8 million or 14.5%. As a percentage of total revenues, total
software development costs decreased slightly to 14.5% during the three months

                                 Page 20 of 41

<PAGE>


ended June 30, 2003 from 14.6% for the same period in 2002. As a percentage of
total system sales, total software development costs decreased to 38.7% during
the three months ended June 30, 2003 from 47.5% for the same period in 2002.
This decrease as a percentage of total system sales, was primarily due to the
higher systems sales amount in the three months ended June 30, 2003. The $1.8
million increase in total software development costs was primarily due to an
increase in salary related expenses.

As described in Note 1 of our audited consolidated financial statements and
notes thereto contained in our Annual Report on Form 10K for the year ended
December 31, 2002, which contain accounting policies and other disclosures
required by generally accepted accounting principles, software development costs
incurred subsequent to the establishment of technological feasibility until
general release of the related products are capitalized. Historically, costs
incurred during beta site testing have not been material; however, as the
Company develops products that use more complex technologies as well as more
comprehensive clinical systems, the time and effort required to complete beta
site testing may be significantly more extensive. Consequently, capitalized
software development costs may become more significant in future reporting
periods. Approximately $602,000 and $833,000 of total software development costs
were capitalized during the three months ended June 30, 2003 and 2002,
respectively. Amortization of software development costs was approximately
$470,000 and $588,000 during the three months ended June 30, 2003 and 2002,
respectively.

LEASE ABANDONMENT CHARGE

In the fourth quarter 2002, the Company recorded a lease abandonment charge of
$9.2 million in its core information systems and services business segment. The
lease abandonment charge is related to asset impairment and rent obligations
through 2005 under the lease agreement associated with the Company's former
Seattle office. In 2002, the Company determined it would consolidate its Seattle
operations into the new office space and abandon the space subject to the former
lease. The Company has been unable to secure a sub-tenant to assume its prior
lease. The lease abandonment charge consisted of costs related to the net
present value of future lease payments of approximately $7.9 million and
non-cash write-offs of certain leasehold improvements of approximately $1.3
million. During the three months ended June 30, 2003, lease payments of
approximately $650,000 were made. As of June 30, 2003, the Company had an
accrual balance of $6.5 million primarily related to leased facilities, of which
approximately $1.6 million will be paid during the remainder of 2003, and
approximately $4.9 million thereafter. In the event that the Company is able to
secure a sub-tenant to assume its prior lease in a future reporting period, the
present value of the future sub-lease income would be recorded as a reduction in
expenses under the lease abandonment caption in the financial statements in the
period in which the sub-lease agreement is signed.

OTHER INCOME (EXPENSE)

Total interest income decreased to approximately $164,000 during the three
months ended June 30, 2003 as compared to $279,000 for the same period in 2002.
This decrease is primarily due to lower interest rates in the three months ended
June 30, 2003 as compared to rates in the same period in 2002. Interest income
is expected to increase during the remainder of 2003, due to the receipt of
sales proceeds from the EDiX transaction on June 18, 2003. Total interest
expense increased to approximately $202,000 during the three months ended June
30, 2003 from $69,000 during the same period in 2002, primarily due to higher
balances on short-term borrowings.

INCOME TAXES

The Company recorded total income tax expense of approximately $2.3 million
during the three months ended June 30, 2003, resulting in an effective tax rate
from continuing operations of 30.0%. This is lower than the Company's historical
tax rate of 40.0% primarily due to the utilization of previously reserved net
operating losses and research and experimentation credits to offset income
taxes. The Company recorded income tax expense of approximately $1.6 million
during the three months ended June 30, 2002, an effective tax rate of 33.0%.
This favorable rate is also primarily the result of research and experimentation
credits. The sale of EDiX is not expected to have an impact on the Company's
effective tax rate for 2003. The Company anticipates a consolidated effective
tax rate of approximately 30.0% for the year ending December 31, 2003. The net
deferred tax assets as of June 30, 2003 of approximately $4.1 million are
expected to be realized by generating future taxable income and are otherwise
recoverable through available tax planning strategies.


                                 Page 21 of 41

<PAGE>

DISCONTINUED OPERATIONS

For the period April 1, 2003 through June 18, 2003 (date of sale), EDiX
generated transcription services revenues of $26.2 million, as compared to $27.7
million for the three months ended June 30, 2002. Pre-tax income was $956,000
for the period April 1, 2003 through June 18, 2003, as compared to a pre-tax
loss of $642,000 for the three months ended June 30, 2002. Net income was
$311,000 for the period April 1, 2003 through June 18, 2003 as compared to a net
loss of $420,000 for the three months ended June 30, 2002. The increase in
pre-tax profitability, was primarily due to lower selling, general and
administrative expenses, primarily related to travel, advertising, professional
fees, and bad debt expense. The tax rate for discontinued operations was 67.5%
for the period April 1, 2003 through June 18, 2003 as compared to 33% for the
three months ended June 30, 2002 primarily due to certain state tax payments.

GAIN ON SALE OF DISCONTINUED OPERATIONS

On June 18, 2003, the Company completed the sale of EDiX to TEM. Pursuant to a
Stock Purchase and Sale Agreement, dated April 10, 2003, as amended, between the
Company and TEM ("the EDiX Sale Agreement"), the Company received $64.0 million
in cash from TEM in exchange for all the capital stock of EDiX, recognizing a
gain of $26.4 million, net of tax. The EDiX Sale Agreement provides for an
adjustment of the purchase price to the extent the amount of working capital
(current assets less current liabilities) of EDiX as of June 18, 2003 does not
equal $20,796,000. The working capital will be determined based upon a balance
sheet prepared as of June 18, 2003, which will be audited by an independent
accounting firm and completed on or before October 16, 2003. See Note 13 of the
Notes to Condensed Consolidated Financial Statements.


SIX MONTHS ENDED JUNE 30, 2003 COMPARED TO SIX MONTHS
ENDED JUNE 30, 2002

REVENUES

The Company's total revenues increased to $190.7 million during the six months
ended June 30, 2003 from $166.0 million for the same period in 2002, an increase
of $24.7 million or 14.9%. Revenues from systems sales increased to $69.3
million during the six months ended June 30, 2003 (36.3% of total revenues) from
$53.4 million for the same period in 2002 (32.2% of total revenues), an increase
of $15.9 million or 29.8%. Software license revenue increased $10.7 million and
hardware and third party software revenue increased $5.2 million as compared to
the prior year.

Revenues from maintenance and service fees increased to $121.4 million during
the six months ended June 30, 2003 (63.6% of total revenues) from $112.6 million
for the same period in 2002 (67.8% of total revenues), an increase of $8.8
million or 7.8%. The increase was primarily due to annual maintenance price
increases combined with an increase in installed base and a $4.1 million
increase in installation, consulting and other services.

COST OF SALES

The cost of system sales increased to $23.3 million during the six months ended
June 30, 2003 from $17.8 million for the same period in 2002, an increase of
$5.5 million or 30.9%. The increase in cost of system sales was primarily a
result of an increase in hardware included as a component of sales of the
Company's systems sales. The gross margin on systems sales was 66.4% during the
six months ended June 30, 2003 as compared to 66.6% for the same period in 2002.
Fluctuations in the gross profit margin as a percentage of system sales
typically result from the revenue mix of software license revenue, which has a
higher gross profit margin, and hardware and third party software sales, which
have a lower gross profit margin. The decrease in the gross profit margin as a
percentage of sales was primarily due to the increase in lower margin hardware
and third party software sales as a component of system sales in the first six
months of 2003 as compared to the first six months of 2002.


                                 Page 22 of 41

<PAGE>

The cost of maintenance and services increased to $85.4 million during the six
months ended June 30, 2003 from $83.0 million for the same period in 2002, an
increase of $2.4 million or 2.8%. The gross profit margin on maintenance and
service fees increased to 29.7% during the six months ended June 30, 2003 from
26.3% for the same period in 2002. The increase in margin was primarily due to
increased maintenance revenue, which was only partially offset by growth in
service and maintenance expenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Total selling, general and administrative expenses increased to $41.5 million
during the six months ended June 30, 2003 from $36.2 million for the same period
in 2002, an increase of $5.3 million or 14.6%. This increase was primarily due
to increases in personnel related expenses of $2.5 million, occupancy expenses
of $1.6 million, travel related expenses of $800,000, insurance expenses of
$400,000, and telecommunications expenses of $300,000. Professional fees also
declined by $800,000. As a percentage of total revenues, total selling, general
and administrative expenses remained flat at 21.8% for the six months ended June
30, 2003 as compared to the same period in 2002.

SOFTWARE DEVELOPMENT COSTS

Total software development costs increased to $27.6 million during the six
months ended June 30, 2003 from $24.1 million for the same period in 2002, an
increase of $3.5 million or 14.5%. As a percentage of total revenues, total
software development costs remained flat at 14.5% during the six months ended
June 30, 2003 as compared to the same period in 2002. As a percentage of total
system sales, total software development costs decreased to 39.8% during the six
months ended June 30, 2003 from 45.1% for the same period in 2002. The $3.5
million increase in total software development costs was primarily due to an
increase in salary related expenses.

As described in Note 1 of our audited consolidated financial statements and
notes thereto contained in our Annual Report on Form 10K for the year ended
December 31, 2002, which contain accounting policies and other disclosures
required by generally accepted accounting principles, software development costs
incurred subsequent to the establishment of technological feasibility until
general release of the related products are capitalized. Historically, costs
incurred during beta site testing have not been material, however, as the
Company develops products that use more complex technologies as well as more
comprehensive clinical systems, the time and effort required to complete beta
site testing may be significantly more extensive. Consequently, capitalized
software development costs may become more significant in future reporting
periods. Approximately $716,000 and $1.7 million of total software development
costs were capitalized during the six months ended June 30, 2003 and 2002,
respectively. Amortization of software development costs was approximately $1.1
million and $1.0 million during the six months ended June 30, 2003 and 2002,
respectively.

LEASE ABANDONMENT CHARGE

In the fourth quarter 2002, the Company recorded a lease abandonment charge of
$9.2 million in its core information systems and services business segment. The
lease abandonment charge is related to asset impairment and rent obligations
through 2005 under the lease agreement associated with the Company's former
Seattle office. In 2002, the Company determined it would consolidate its Seattle
operations into the new office space and abandon the space subject to the former
lease. The Company has been unable to secure a sub-tenant to assume its prior
lease. The lease abandonment charge consisted of costs related to the net
present value of future lease payments of approximately $7.9 million and
non-cash write-offs of certain leasehold improvements of approximately $1.3
million. During the first six months of 2003, leasehold improvements of $1.3
million were written off and lease payments of approximately $1.4 million were
made. As of June 30, 2003, the Company had an accrual balance of $6.5 million
primarily related to leased facilities, of which approximately $1.6 million will
be paid during the remainder of 2003, and approximately $4.9 million thereafter.
In the event that the Company is able to secure a sub-tenant to assume its prior
lease in a future reporting period, the present value of the future sub-lease
income would be recorded as a reduction in expenses under the lease abandonment
caption in the financial statements in the period in which the sub-lease
agreement is signed.


                                 Page 23 of 41

<PAGE>

OTHER INCOME (EXPENSE)

Total interest income decreased to approximately $410,000 during the six months
ended June 30, 2003 as compared to $605,000 for the same period in 2002. This
decrease was primarily due to lower interest rates in the six months ended June
30, 2003 as compared to rates in the same period in 2002. Total interest expense
increased to approximately $324,000 during the six months ended June 30, 2003
from $122,000 during the same period in 2002, primarily due to higher balances
on short-term borrowings.

GAIN ON SALE OF INVESTMENT IN SUBSIDIARY

On January 8, 2001, the Company sold certain of the net assets and operations of
its majority owned subsidiary, ChannelHealth to Allscripts, a public company
providing point-of-care electronic prescribing and productivity solutions for
physicians. In addition to the sale, the Company entered into a ten-year
strategic alliance agreement with Allscripts (the "Alliance Agreement"), whereby
Allscripts is the exclusive provider of point-of-care clinical applications sold
by the Company to physician practices.

Pursuant to the Alliance Agreement, the Company guaranteed that Allscripts gross
revenues resulting from the alliance (less any commissions paid to the Company)
would amount to at least $4.5 million for fiscal year 2001. Due to this
contingency, IDX deferred $4.5 million of the gain as of the date of the
transaction and recognized a gain of $35.5 million in 2001. An additional gain
of $4.3 million was recognized in the first quarter of 2002 when the contingency
was resolved. See Note 4 of the Notes to Condensed Consolidated Financial
Statements.

INCOME TAXES

The Company recorded total income tax expense of approximately $3.9 million
during the six months ended June 30, 2003, resulting in an effective tax rate
from continuing operations of 30%. This is lower than the Company's historical
tax rate of 40.0% primarily due to the utilization of previously reserved net
operating losses and research and experimentation credits to offset income
taxes. The Company recorded income tax expense of approximately $3.2 million
during the six months ended June 30, 2002, an effective tax rate of 33.0%. This
favorable rate was also primarily the result of research and experimentation
credits. The sale of EDiX is not expected to have an impact on the Company's
effective tax rate for 2003. The Company anticipates a consolidated effective
tax rate of approximately 30.0% for the year ending December 31, 2003. The net
deferred tax assets as of June 30, 2003 of approximately $4.1 million are
expected to be realized by generating future taxable income and are otherwise
recoverable through available tax planning strategies.

DISCONTINUED OPERATIONS

For the period January 1, 2003 through June 18, 2003 (date of sale), EDiX
generated transcription services revenues of $54.8 million, as compared to $54.6
million for the six months ended June 30, 2002. Pre-tax income was $1.1 million
for the period January 1, 2003 through June 18, 2003 as compared to $642,000 for
the six months ended June 30, 2002. Net income was $426,000 for the period
January 1, 2003 through June 18, 2003 as compared to $430,000 for the six months
ended June 30, 2002. The increase in pre-tax income was primarily due to lower
selling, general and administrative expenses, namely related to travel,
advertising, professional fees, and bad debt expense. The tax rate for
discontinued operations was 62% for the six months ended June 30, 2003 as
compared to 33% for the six months ended June 30, 2002 primarily due to certain
state tax payments.

GAIN ON SALE OF DISCONTINUED OPERATIONS

On June 18, 2003, the Company completed the sale of EDiX to TEM. Pursuant to the
EDiX Sale Agreement, the Company received $64.0 million in cash from TEM in
exchange for all the capital stock of EDiX, recognizing a gain of $26.4 million,
net of tax. The EDiX Sale Agreement provides for an adjustment of the purchase
price to the extent the amount of working capital (current assets less current
liabilities) of EDiX as of June 18, 2003 does not equal $20,796,000. The working
capital will be determined based upon a balance sheet prepared as of June 18,
2003, which will be audited by an independent accounting firm and completed on
or before October 16, 2003. See Note 13 of the Notes to Condensed Consolidated
Financial Statements.


                                 Page 24 of 41

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

The Company principally has funded its operations, working capital needs and
capital expenditures from operations and short-term borrowings under revolving
secured bank lines of credit.

Net cash provided by or used in continuing operations is principally comprised
of net income or loss and is primarily affected by the net effect of the change
in accounts receivable, accounts payable, accrued expenses and non-cash items
relating to depreciation and amortization, deferred taxes, the sale of
ChannelHealth, and certain components of lease abandonment and restructuring
charges. Accounts receivable, deferred revenue and accounts payable fluctuate
considerably due to the nature of the Company's business, including, 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. During the six months
ended June 30, 2003, accounts receivable from customers have been collected on
average within 87 days, which represents a decrease of 4 days as compared to the
year ended December 31, 2002 and a decrease of 3 days as compared to the six
months ended June 30, 2002.

The sale of EDiX is not expected to have an adverse impact on the future
liquidity of IDX. Since the acquisition of EDiX in 1999 until the disposition in
June 2003, IDX had contributed cash to support the on-going operations of EDiX.

Cash flows related to investing activities from continuing operations have
historically been related to the purchase of computer and office equipment,
leasehold improvements and the purchase and sale of investment grade marketable
securities. The Company invested approximately $6.5 million on the acquisition
and implementation of an enterprise resource planning system during 2002 and
plans to invest an additional amount of approximately $11.5 million during 2003
related to this system implementation. This quarter, the cash flows provided by
investing activities also included the receipt of $54.9 million from the sale of
EDiX, net of transaction costs and net of $8.2 of cash transferred as part of
the EDiX business.  See Note 13 of the Notes to Condensed Consolidated Financial
Statements.

In addition, investing activities from continuing operations may also include
purchases of, interests in, loans to and acquisitions of businesses for access
to complementary products and technologies. The Company expects to continue in
these activities during 2003. In April 2002, the Company acquired a minority
interest in Stentor, Inc., one of the Company's strategic partners, by
exercising a warrant to purchase 562,069 shares of preferred stock of Stentor,
Inc. for $7.5 million. Each preferred share is convertible, at any time at the
option of the holder, into one share of common stock of Stentor, Inc., subject
to certain adjustments. In addition, the preferred shares are not entitled to
dividends but are entitled to a liquidation preference equal to the amount paid
by the Company to purchase such shares.

Cash flows from financing activities from continuing operations historically
relate to the issuance of shares of the Company's common stock through the
exercise of employee stock options and in connection with the Company's employee
stock purchase plan and proceeds from the lines of credit.

Cash, cash equivalents and marketable securities at June 30, 2003 were $90.7
million, an increase of $36.2 million from December 31, 2002 due primarily as a
result of the sale of EDiX. The Company entered into a new revolving line of
credit agreement during the second quarter of 2002 allowing the Company to
borrow up to $40.0 million, subject to certain restrictions. This line of credit
is secured by deposit accounts, accounts receivable and other assets of the
Company and certain of its subsidiaries and bears interest at the bank's base
rate plus .25%. At June 30, 2003 the rate on the line was 4.25% and no amounts
were outstanding. This line of credit is subject to certain terms and conditions
and will expire on June 27, 2005.

In addition to existing financing arrangements, the Company owns, through a
wholly owned subsidiary, approximately 7.5 million shares of common stock of
Allscripts, a public company listed on the NASDAQ National Market under the
symbol "MDRX". This investment is accounted for under the equity method. The
Company recorded an equity loss during 2001 of $17.6 million on a pre-tax basis
that reduced the balance of the Company's investment carrying balance in
Allscripts to zero. The estimated market value of this investment is
approximately $27.7 million as of June 30, 2003 based on the closing price per
share of Allscripts common stock on June 30, 2003 on the NASDAQ National Market.
The estimated market value would be discounted to reflect the Company's
restricted ability to sell only 25% of its initial shares of Allscripts common
stock in any one year.

                                 Page 25 of 41
<PAGE>


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 leases for the Company's operating
facilities. The Company plans to increase its professional staff during 2003 as
needed to meet anticipated sales volume and to support research and development
efforts for certain products. To the extent necessary to support increases in
staffing, the Company may obtain additional office space.

As of June 30, 2003, the Company has not entered into other material lease or
purchase commitments not disclosed above or in the table below.

OPERATING LEASES

        Year                                                 Total
        ---------------------------------------              -------------------

                                                             (in thousands)
        2003 remaining                                       $     7,364
        2004                                                      13,833
        2005                                                      14,194
        2006                                                      12,543
        2007                                                      11,680
        Thereafter                                                84,285
                                                             -------------------
                                                             $   143,899
                                                             -------------------

Of the $7.4 million due in 2003, $276,000 is due to 4901 LBJ Ltd. Partnership, a
Vermont limited partnership ("LBJ"), a related party described below. Of the
amounts due for years 2004 through 2007, an aggregate of $1.9 million is due to
LBJ. All other amounts are due to unrelated third parties. Approximately $6.5
million of this obligation has been accrued in 2002 as a lease abandonment
charge. See Note 5 of the Notes to Condensed Consolidated Financial Statements.

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.


During the six months ended June 30, 2003, the Company did not engage in:

     o    material off-balance sheet activities, including the use of structured
          finance or special purpose entities;

     o    trading activities in non-exchange traded contracts; or

     o    transactions with persons or entities that benefit from their
          non-independent relationship with the Company, other than as described
          below.


Richard E. Tarrant, Chairman of the Company's Board of Director's, is the
President and a director of LBJ Real Estate Inc., a Vermont corporation ("LBJ
Real Estate"). Certain executive officers of LBJ Real Estate are also directors
or executive officers of the Company, including Robert H. Hoehl, a director of
the Company, and John A. Kane, the Company's Chief Financial Officer, who also
serves as a director of LBJ Real Estate. The stockholders of LBJ Real Estate
include Messrs. Tarrant and Hoehl and an independent individual. LBJ Real Estate
holds a 1% general partnership interest in LBJ, and Messrs. Hoehl, Tarrant, and
Kane and Mr. Robert F. Galin, the Company's Senior Vice President of Sales, and
two other employees of the Company hold 72.95% limited partnership interest.

The Company leases an office building from LBJ. Lease agreements are based on
fair market value rents and are reviewed and approved by certain independent

                                 Page 26 of 41
<PAGE>

members of the Board of Directors. Total rent paid to LBJ was approximately
$276,000 and $279,000 during the six months ended June 30, 2003 and 2002,
respectively, related to this issue.

On June 30, 2003, LBJ entered into a purchase and sale agreement to sell the
real estate currently leased by the Company to an unrelated third party. The
Company will continue to lease the real estate from the new owners under a
modified lease arrangement, which will require approval by certain independent
members of the Board of Directors of the Company who have no financial interest
in the transaction. Under Financial Accounting Standards Board Interpretation
No. 46 ("FIN 46"), the Company may be required to consolidate LBJ effective in
the third quarter of 2003 and is currently evaluating the impact such
consolidation may have on its financial statements.

The Company leases office space to Allscripts in Burlington, Vermont. Total rent
received from Allscripts was approximately $101,000 and $98,000 during the six
months ended June 30, 2003 and 2002, respectively.

NEW ACCOUNTING STANDARDS

In November 2002, the Financial Accounting Standards Board ("FASB") issued FASB
Interpretation No. ("FIN") 45, "GUARANTOR'S ACCOUNTING AND DISCLOSURE
REQUIREMENTS FOR GUARANTEES, INCLUDING INDIRECT GUARANTEES OF INDEBTEDNESS OF
OTHERS." FIN 45 clarifies the disclosure requirements made by a guarantor in its
interim and annual statements explaining that a guarantor must recognize, at the
inception of a guarantee, a liability for the fair value of the obligation
imposed by issuing a guarantee. The disclosure provisions of FIN 45 are
effective for financial statements of interim or annual periods ending after
December 15, 2002. The provisions for initial recognition and measurement are
effective on a prospective basis for guarantees that are issued or modified
after December 31, 2002, irrespective of a guarantor's fiscal year-end. The
provisions of FIN 45 do not have a material impact on the financial position of
IDX.

In January 2003, the FASB issued FIN 46, "CONSOLIDATION OF VARIABLE INTEREST
ENTITIES," to expand upon and strengthen existing accounting guidance that
addresses when a company should include in its financial statements the assets,
liabilities and activities of another entity. Until now, a company generally has
included another entity in its consolidated financial statements only if it
controlled the entity through voting interests. FIN 46 changes that guidance by
requiring a variable interest entity, as defined in FIN 46, to be consolidated
by a company if that company is subject to a majority of the risk of loss from
the variable interest entity's activities or is entitled to receive a majority
of the entity's residual returns or both. FIN 46 also requires disclosure about
variable interest entities that the company is not required to consolidate but
in which it has a significant variable interest. The consolidation requirements
of FIN 46 apply immediately to variable interest entities created after January
31, 2003 and to older entities in the first fiscal year or interim period
beginning after June 15, 2003. Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable interest entity was established. The Company currently leases an office
building from LBJ. The Company's lease agreements with LBJ are based on fair
market value rents and are reviewed and approved by certain independent members
of the Board of Directors. On June 30, 2003, LBJ entered into a purchase and
sale agreement to sell the real estate currently leased by the Company to an
unrelated third party. The Company will continue to lease the real estate from
the new owners under a modified lease arrangement, which would also require
approval by certain independent members of the Board of Directors. Under FIN 46,
the Company may be required to consolidate LBJ effective in the third quarter of
2003 and is currently evaluating the impact such consolidation may have on its
financial statements.

In December  2002,  the FASB issued SFAS No. 148,  "ACCOUNTING  FOR  STOCK-BASED
COMPENSATION--TRANSITION  DISCLOSURE,  AN AMENDMENT OF FASB  STATEMENT NO. 123".
SFAS No. 148 provides  alternative  methods of transition for a voluntary change
to  the  fair  value  based  method  of  accounting  for  stock-based   employee
compensation.  In addition,  SFAS No. 148 amends the disclosure  requirements of
SFAS No. 123 to require more prominent and more frequent disclosure in financial
statements regarding the effects of stock-based compensation.  The provisions of
SFAS No. 148 are effective for fiscal and interim  periods ending after December
15, 2002.  The Company  will  continue to apply APB No. 25 as the method used to
account for stock-based employee  compensation  arrangements,  where applicable,
but has adopted the disclosure requirements of SFAS No. 148.


                                 Page 27 of 41

<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 EXCHANGE 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,
STATEMENTS REGARDING THE HEALTH CARE INDUSTRY, STATEMENTS REGARDING OUR
PRODUCTS, PRODUCT DEVELOPMENT AND INFORMATION TECHNOLOGY, STATEMENTS REGARDING
FUTURE REVENUE OR OTHER FINANCIAL TRENDS, STATEMENTS REGARDING FUTURE
ACQUISITIONS, STRATEGIC ALLIANCES, OR OTHER AGREEMENTS, AND STATEMENTS REGARDING
OUR INTELLECTUAL PROPERTY. IF ANY RISK OR UNCERTAINTY IDENTIFIED IN THE
FOLLOWING FACTORS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION AND
OPERATING RESULTS WOULD LIKELY SUFFER. IN THAT EVENT, THE MARKET PRICE OF IDX'S
COMMON STOCK COULD DECLINE.

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 the Company's 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,
          typically based on milestones; and

     o    timing of new product and service introductions and product upgrade
          releases.

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.

FINANCIAL TRENDS. Although the Company's results from operations have been
fairly stable during 2002 and the first six months of 2003, since 1999 the
Company's revenue and results from operations have been volatile. During 2000
and 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 were due to a
number of factors, including customer organization changes, government
approvals, pressures to reduce expenses, product complexity, competition and the
September 11 national tragedy. While the Company believes these factors were
temporary, they may continue to cause reductions or delays in spending for new
systems and services in the future. If these delays reoccur, they may cause
unanticipated revenue volatility, decreased revenue visibility and affect the
future financial performance of the Company.

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:

                                 Page 28 of 41
<PAGE>

     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;

     o    announcements of technological innovations, including Internet
          delivery of information, clinical information systems advances, 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    our ability to transact stock acquisitions; and

     o    our ability to retain and incent key employees.


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

     o    the continuing evolution of industry standards, for example, standards
          pursuant to the Health Insurance Portability and Accountability Act of
          1996; and

     o    the creation of new technological developments, for example, Internet
          and application service provider technologies.

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 architecture 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, medical transcription services and
other related services within the healthcare industry. As a result, the success
of IDX is dependent in part on political and economic conditions as they relate
to the healthcare industry.


                                 Page 29 of 41

<PAGE>

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 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
likely 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 the system and
product offerings, the ongoing support for the systems, the potential for
enhancements and future compatible products.

Some of IDX's competitors have greater financial, technical, product
development, marketing and other resources than IDX, and some of its competitors
offer products that we do not offer. The Company's principal existing
competitors include Eclipsys Corporation, McKesson Corporation, Medquist, Inc.,
Siemans AG, Epic Systems Corporation, GE Medical and Cerner Corporation. Each of
these competitors offer 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. 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, and others specializing in the healthcare industry may offer
competitive products or services. In October 2001, Pfizer, IBM and Microsoft
announced the creation of a joint venture known as Amicore to develop
applications to automate the administrative, clinical and financial functions of
a medical practice and connect the practice to groups, laboratories, pharmacies
and other providers for physicians and physician groups.

PRODUCT LIABILITY CLAIMS. Any failure by IDX's products that provide
applications relating to patient medical histories, diagnostic procedures, and
treatment plans could expose IDX to product liability claims for personal injury
and wrongful death. 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.

PRODUCT MALFUNCTION FINANCIAL CLAIMS. Any failure by IDX's eCommerce electronic
claims submission service, or by elements of IDX's systems that provide elements
of claims submitted by its clients could expose IDX to liability claims for
incorrect billing and electronic 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,

                                 Page 30 of 41

<PAGE>

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. IDX does not maintain "key man" life insurance policies
on any of its executives with the exception of Richard E. Tarrant. Not all of
IDX personnel have executed noncompetition agreements. Such agreements, even if
executed, are difficult and expensive to enforce, and enforcement efforts could
result in substantial costs and diversion of management and technical resources.

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' 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.

HIPAA AND RELATED REGULATIONS

Federal regulations issued in accordance with the Health Insurance Portability
and Accountability Act of 1996, or HIPAA, impose national health data standards
on health care providers that conduct electronic health transactions, health
care clearinghouses that convert health data between HIPAA-compliant and
non-compliant formats and health plans. Collectively, these groups, including
most of IDX's customers and IDX's e-Commerce Services clearinghouse business,
are known as covered entities. These HIPAA standards include:

        o     data security standards that require covered entities to
              implement administrative, physical and technological
              safeguards to ensure the confidentiality, integrity,
              availability and security of individually identifiable health
              information in electronic form;

        o     transaction and code set standards that prescribe transaction
              formats and code sets for electronic health transactions; and

        o     privacy standards that protect individual privacy by limiting
              the uses and disclosures of individually identifiable health
              information.


                                 Page 31 of 41
<PAGE>

The privacy standards imposed by HIPAA have been in effect for most covered
entities since April 14, 2003, while the compliance deadline for the data
security standards is April 20, 2005.

All covered  entities must comply with the transaction and code set standards by
October 16, 2003. It is possible  that some covered  entities,  including  IDX's
customers and IDX's Services  clearinghouse  business,  will not be sufficiently
prepared to meet these transaction requirements,  potentially causing disruption
in the current claim submission and payment cycles, which could adversely affect
IDX's  customers'  ability to pay IDX for its  services  and  products and could
adversely impact anticipated  revenue of IDX's eCommerce Services  clearinghouse
business.   In  addition,  if  payers  connected  to  IDX's  eCommerce  Services
clearinghouse  business are not ready to process compliant claims  transactions,
IDX could  experience  loss of anticipated  revenue.  Further,  since the entire
healthcare system, including IDX's eCommerce Services clearinghouse business and
its customers,  who use IDX's  information  systems to generate claims data, has
not operated at full capacity using the newly-mandated standard transactions, it
is possible  that  currently  undetected  errors may cause  rejection of claims,
extended payment cycles, system implementation delays, cash flow reduction, with
the attendant risk of liability and claims against the Company.

The effect of HIPAA on IDX's business is difficult to predict and there can be
no assurances that IDX will adequately address the business risks created by
HIPAA and its implementation or that IDX will be able to take advantage of any
resulting business opportunities. IDX may incur significant expenses relating to
compliance with HIPAA. Furthermore, IDX is unable to predict what changes to
HIPAA, or the regulations issued pursuant to HIPAA, might be made in the future
or how those changes could affect its business or the costs of compliance with
HIPAA.

States may adopt privacy or security standards that are more stringent than the
federal HIPAA privacy standards. This may lead to different restrictions for
handling health information. As a result, IDX's customers may demand information
technology solutions that are adaptable to reflect different and changing
regulatory requirements. In the future, federal or state governmental
authorities may impose additional restrictions on the collection, use,
transmission and other disclosures of health information. IDX cannot predict the
potential impact that these future rules, as finally approved, may have on its
business. However, the demand for IDX's products may decrease if IDX is not able
to develop and offer products that can address the regulatory challenges and
compliance obligations facing its customers.

MEDICAL DEVICE REGULATIONS

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 the market before marketing such products; or

     o    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 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

                                 Page 32 of 41

<PAGE>

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 all complex information systems, 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 expenses 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.

A security breach could damage IDX's reputation or result in liability. IDX
retains and transmits confidential information, including patient health
information, in its processing centers and other facilities. It is critical that
these facilities and infrastructure remain secure and be perceived by the
marketplace as secure. IDX may be required to expend significant capital and
other resources to protect against security breaches and hackers or to alleviate
problems caused by breaches. Despite the implementation of security measures,
this infrastructure or other systems that we interface with, including the
Internet and related systems, may be vulnerable to physical break-ins, hackers,
improper employee or contractor access, computer viruses, programming errors,
attacks by third parties or similar disruptive problems. Any compromise of our
security, whether as a result of our own systems or systems that they interface
with, could reduce demand for IDX's services and products.

Customer satisfaction and IDX's business could be harmed if IDX's eCommerce
Services clearinghouse business experiences delays, failures or loss of data in
its systems. IDX relies on WebMD Envoy to provide some transactions for IDX's
eCommerce Services clearinghouse business. The occurrence of a major
catastrophic event or other system failure at any of IDX's facilities, at WebMD
Envoy's facilities, or at any third party facility, including telecommunications
provider facilities, could interrupt data processing or result in the loss of
stored data, which could harm IDX's business.


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.

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, patents, 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 continue to be necessary 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.

RISKS ASSOCIATED WITH ACQUISITION STRATEGY. IDX may 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,

                                 Page 33 of 41
<PAGE>


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 2001, IDX entered
into a ten-year strategic alliance with Allscripts 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.
If the strategic alliance is not successful, 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. Additionally, if Allscripts or the Company breaches the strategic
alliance, it may also leave the Company without critical clinical components for
its information systems offerings in the physician group practice markets.

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. Prior to January 2006, IDX is prohibited from selling
more than 25% of its shares of Allscripts common stock in any one year, and
16.67% of such 25% in any one month. The restrictions on IDX's ability to sell
shares of Allscripts common stock may 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.

DISRUPTION IN THE ECONOMY. The terrorist events of September 11, 2001, as well
as new terrorists threats, the war in Iraq and the possibility of war in other
areas of the Middle East, have sensitized the Company and many other businesses
to the potential disruption that such activities can have on the economy, the
business cycle and, ultimately on the financial performance of these
organizations. It is impossible to know whether such terrorist or military
activities will continue, and whether, and to what extent, they may cause a
disruption which may have a material adverse effect on the business and
financial condition of the Company.

                                 Page 34 of 41


<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES 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 invoices customers in United States currency. The Company
is exposed to minimal foreign exchange rate fluctuations and does not enter into
foreign currency hedge transactions. Through June 30, 2003, 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 rates on short-term borrowings with floating rates carry a degree of
interest rate risk. Our future interest expense may increase if interest rates
fluctuate. Interest expense was immaterial in the first six months of 2003 and
2002.

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 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.

ITEM 4.  CONTROLS AND PROCEDURES.

The Company's management, with the participation of the Company's chief
executive officer and chief financial officer, evaluated the effectiveness of
the Company's disclosure controls and procedures (as defined in Rules 13a-15(e)
and 15d-15(e) under the Securities Exchange Act of 1934) as of June 30, 2003.
Based on this evaluation, the Company's chief executive officer and chief
financial officer concluded that, as of June 30, 2003, the Company's disclosure
controls and procedures were (1) designed to ensure that material information
relating to the Company, including its consolidated subsidiaries, is made known
to the Company's chief executive officer and chief financial officer by others
within those entities, particularly during the period in which this report was
being prepared and (2) effective, in that they provide reasonable assurance that
information required to be disclosed by the Company in the reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.

No change in the Company's internal control over financial reporting (as defined
in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the
fiscal quarter ended June 30, 2003 that has materially affected, or is
reasonably likely to materially affect, the Company's internal control over
financial reporting.

                                 Page 35 of 41


<PAGE>


PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

In late 2001, the Company finalized a "Cooperative Agreement" with a
non-regulatory federal agency within the U.S. Commerce Department's Technology
Administration, NIST, whereby the Company agreed to lead a $9.2 million,
multi-year project awarded by NIST. The project entails research and development
to be conducted by the Company and its partners in the grant. Subsequently, an
employee of the Company made allegations that the Company had illegally
submitted claims for labor expenses and license fees to NIST. The Company
informed NIST of the employee's allegations. The Company has conducted an
investigation, and based on this investigation, the Company believes the
employee's allegations are without merit.

The Company believes the employee has likely filed an action under the Federal
False Claims Act under seal in the Federal District Court for the Western
District of Washington with respect to the alleged improper claims, sometimes
referred to as a "Qui Tam" complaint. The Company has no information regarding
the specific allegations in the Qui Tam complaint. Further, the Company has no
information concerning the amount of money at issue in the Qui Tam complaint or
in any action the employee may bring claiming damages for alleged retaliatory
actions by the Company. The Company has not been informed if the U.S. Attorney's
office will pursue the claims. The Company has not yet been served with legal
process detailing the allegations and no discovery has taken place. The Company
believes that any allegations in the Qui Tam complaint are without merit, and
the Company intends to vigorously defend against them.

In April 2003, the Company filed a complaint against the employee with the
United States District Court for the Western District of Washington, entitled
IDX SYSTEMS CORPORATION V. MAURICIO LEON (case no. C03-972R). The Company's
lawsuit asks the Court to grant a declaratory judgment stating that, should the
Company terminate the employee's employment, such action would not constitute
retaliation for alleged whistle-blowing activities in violation of the Federal
False Claims Act or the Sarbanes-Oxley Act and would not constitute a violation
of the employee's rights under other laws. The Company believes its lawsuit is
meritorious and intends to vigorously pursue relief through prosecution of the
lawsuit.

In May 2003, the employee filed a complaint against the Company with the U.S.
Department of Labor, pursuant to Section 1514A of the Sarbanes-Oxley Act of
2002. The employee's complaint asserts that, notwithstanding the employee's
allegations, Company management conspired to continue to defraud the government
by allowing fraudulent activities to continue uncorrected and by concealing and
avoiding its obligations to report any and all fraudulent activities to the
proper authorities. In addition, the employee's complaint alleges that the
Company acted to retaliate, harass and intimidate the employee in contravention
of the Sarbanes-Oxley Act's whistleblower provisions. The employee's complaint
requests relief including, but not limited to, reinstatement, back-pay, with
interest, and compensation for any damages sustained by the employee as a result
of the alleged discrimination. The Company believes that all claims by the
employee are without merit and will vigorously defend against them.

In addition, in May 2003, the employee filed a complaint against the Company
with the Federal District Court for the Western District of Washington, entitled
MAURICIO A. LEON, M.D. V. IDX SYSTEMS CORPORATION (case no CV03 1158P) asserting
that the Company had knowledge that the employee engaged in "protected activity"
and retaliated against the employee in violation of the False Claims Act. In
addition, the employee alleges that the Company violated the Americans with
Disabilities Act and its Washington State counterpart in part through
retaliation against the employee for exercising the employee's rights under the
federal and state discrimination laws. The employee also asserts other causes of
action including wrongful termination in violation of public policy, fraudulent
inducement to enter into an employment contract with the Company, and negligent
and intentional infliction of emotional distress. The employee requests relief
including, but not limited to, an injunction against the Company enjoining and
restraining the Company from the alleged harassment and discrimination, wages,
damages, attorneys' fees, interest and costs. The Company believes that all
claims in the employee's lawsuit are without merit and will vigorously defend
itself against them.

In June 2003, the employee also filed with the Washington District Court a
motion for injunctive relief requesting an order reinstating the employee's pay
and benefits pending the outcome of the litigation. On June 30, 2003, the
Company filed a response in opposition to the employee's motion for injunctive


                                 Page 36 of 41

<PAGE>

relief. The Company believes that the assertions made in the employee's motion
for injunctive relief are without merit and will continue vigorously to contest
the motion.

There are additional claims made by the employee against the Company, including
a charge with the U.S. Equal Employment Opportunity Commission, claiming that
the employee was discriminated against in violation of the Americans with
Disabilities Act, the processing of which the EEOC has subsequently terminated
through a Notice of Right to Sue. In addition, based on a media report, the
employee has also apparently filed a claim with the Office of Civil Rights of
Health and Human Services based on an assertion that the Company retaliated
against him by allegedly releasing medical information in violation of the
requirements of the Health Insurance Portability and Accountability Act or 1996.
The Company has not received notice of the charge from the agency, and the
agency will not confirm the claim has been filed. The Company intends vigorously
to defend against the claims.

All actions are in the preliminary scheduling phase, which has been extended to
allow the employee to find new legal counsel following the suspension of his
former attorney's license to practice law, and discovery has not commenced.

In April 2000, the Company commenced a lawsuit for damages caused by wrongful
cancellation and material breach of contract by St. John Health System (SJHS),
in the United States District Court for Eastern District of Michigan, entitled
IDX SYSTEMS CORPORATION V. ST. JOHN HEALTH SYSTEM (case no 00-71631).
Subsequently, SJHS commenced a lawsuit against the Company in the Circuit Court
of Wayne County, Michigan, claiming unspecified damages against the Company for
anticipatory repudiation, breach of contract, tort and fraud. On motion of the
Company, SJHS's lawsuit was removed to and consolidated in the federal court. In
its answer to the Company's lawsuit, SJHS asserted the same claims previously
asserted in its state court action. In September 2001, SJHS specified damage
claims of approximately $77.0 million in allegedly lost savings, and in January
2002 raised another theory of alleged unspecified damages for "cover" (system
replacement costs). On September 30, 2002, the United States District Court for
the Eastern District of Michigan dismissed all of SJHS's claims of fraud, tort
and breach of contract, and SJHS's claims for alleged lost savings and
consequential damages, leaving only its claim for anticipatory repudiation. On
October 15, 2002, SJHS requested reconsideration of these rulings. On March 28,
2003, the Court denied SJHS's request for reconsideration of its September
ruling and also barred SJHS from introducing any evidence concerning, or making
any arguments concerning, its claims for "cover" damages. On May 20, 2003, the
parties filed a "Proposed Joint Final Pretrial Order" in which SJHS listed
alleged damages of approximately $13.8 million, including approximately $5.6
million in alleged "out-of-pocket," "resources," "labor" and other costs and
approximately $5.9 million in "replacement" hardware and software. IDX has moved
to dismiss all of these damages claims on grounds that they are barred by the
Court's prior orders and by the contract's exclusion against consequential or
incidental damages. Those motions are pending before the Court. The Company
believes the claims of SJHS are without merit and continues to vigorously defend
itself and prosecute its own claims for damages. The lawsuit is in the trial
preparation stage, and trial is scheduled to commence on October 2, 2003.

From time to time, the Company is a party to or may be threatened with
litigation in the ordinary course of its business. The Company regularly
analyzes current information including, as applicable, the Company's defenses
and insurance coverage and, as necessary, provides accruals for probable and
estimable liabilities for the eventual disposition of these matters.


                                 Page 37 of 41

<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 2003 Annual Meeting of Stockholders on May 19,
         2003. Of the 29,228,147 shares of common stock outstanding and entitled
         to vote at this meeting 25,699,060 were represented at this meeting, in
         person or by proxy. The following matters were voted upon at the Annual
         Meeting; there were no broker non-votes for any of the matters.

         1.   William L. Asmundson was elected to serve for a term of two years
              as a Class I Director. Henry M. Tufo, David P. Hunter, Connie R.
              Curran and James H. Crook, Jr. were elected to serve for a term of
              three years as Class II Directors. The remaining terms of Stuart
              H. Altman, Ph.D., Robert H. Hoehl, Richard E. Tarrant, Allen
              Martin, Esq. and Mark F. Wheeler, M.D. continued after the
              meeting. The results of the vote with respect to each nominee for
              director was as follows:

                                             For                  Withheld
                                             ---                  --------

                  William L. Asmundson       25,565,134             133,925
                  Henry M. Tufo, M.D.        25,558,398             140,662
                  David P. Hunter            24,595,561           1,104,498
                  Curran R. Curran           25,569,234             129,825
                  James H. Crook, Jr.        25,549,796             149,263

         2.    An amendment to the Company's 1995 Stock Option Plan to
               increase the maximum number of shares with respect to which
               options may be granted to any participant in a calendar year
               from 147,000 to 700,000 shares was approved. The result of the
               vote with respect to this amendment was as follows:

                        For              Against           Abstain
                        ---              -------           -------
                        22,729,779       2,951,191         18,089


ITEM 5.  OTHER INFORMATION

         Stockholder's Proposal for 2004 Annual Meeting

         As set forth in the Company's Proxy Statement for its 2003 Annual
         Meeting of Stockholders, proposals of stockholders intended to be
         included in the Company's proxy statement for the 2004 Annual Meeting
         of Stockholders must be received by the Company at its principal office
         in South Burlington, Vermont not later than December 22, 2003.

         Stockholders who wish to make a proposal at the 2004 Annual Meeting -
         other than one that will be included in the Company's proxy materials -
         must notify the Company no later than March 7, 2004. 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.


                                 Page 38 of 41
<PAGE>


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)   The registrant filed the following reports on Form 8-K during the
              second quarter of 2003:

              On April 14, 2003, the registrant filed a report on Form 8-K
              announcing it had entered into a definitive agreement whereby
              Total eMed, Inc. would acquire EDiX Corporation, a wholly owned
              subsidiary of the Company.

              On April 30, 2003, the registrant filed a report on Form 8-K
              reporting results for the first quarter of 2003.

              On April 30, 2003, the registrant filed a report on Form 8-K/A to
              amend its Initial Form 8-K filed on that date to correct a
              typographical error.



                                 Page 39 of 41

<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 1, 2003              By: /S/ JOHN A. KANE
                                       __________________________________
                                       John A. Kane,
                                       Sr. Vice President, Finance and
                                       Administration, Chief Financial
                                       Officer and Treasurer
                                       (Principal Financial and
                                       Accounting Officer)







                                 Page 40 of 41
<PAGE>




                                  EXHIBIT INDEX
                                  -------------


Exhibit No.       Description
-----------       -----------

10.1              Amendment No. 4 to 1995 Stock Option Plan

10.2              Amendment No. 1, dated June 19, 2003, to Loan and Security
                  Agreement dated as of June 27, 2002 by and among IDX Systems
                  Corporation, IDX Information Systems Corporation, IDX
                  Investment Corporation, EDiX Corporation and Heller Healthcare
                  Finance, Inc.

10.3              Amended and Restated Revolving Credit Note, dated June 19,
                  2003, by IDX Systems Corporation, IDX Information Systems
                  Corporation and IDX Investment Corporation in favor of Heller
                  Healthcare Finance, Inc.

31.1              Certification of the CEO of IDX Systems Corporation pursuant
                  to Rule 13a-14(a) of the Securities Exchange Act of 1934,
                  as amended

31.2              Certification of the CFO of IDX Systems Corporation pursuant
                  to Rule 13a-14(a) of the Securities Exchange Act of 1934,
                  as amended

32                Certification of the CEO and CFO of IDX Systems Corporation
                  pursuant to 18 U.S.C. Section 1350



                                 Page 41 of 41