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

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

                                    FORM 10-Q

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

                  For the Quarterly Period Ended March 31, 1999
                         -------------------------------

                         Commission File Number 0-26816

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

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

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

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

    Indicate  by check mark  whether the  registrant  has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports).

                               Yes X           No

    Indicate by check mark whether the  registrant has been subject to such
filing requirements for the past 90 days.

                              Yes   X          No

    The number of shares  outstanding  of the  registrant's  common
stock as of May 11, 1999 was 27,680,111.
================================================================================
                        [Exhibit index begins on Page 19]




<PAGE>



                             IDX SYSTEMS CORPORATION
                                    FORM 10-Q
                  For the Quarterly Period Ended March 31, 1999

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                       Page
PART I.  FINANCIAL INFORMATION                                         ----
<S>      <C>                                                           <C>


ITEM 1.  Interim Financial Statements:

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

        b) Condensed consolidated  statements of operations for 
           the three months ended March 31, 1999 and 1998 (unaudited)..4

        c) Condensed consolidated  statements of cash flows for the 
           three months ended March 31, 1999 and 1998 (unaudited)......5

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

ITEM 2.  Management's discussion and analysis of financial
         condition and results of operations...........................8

PART II. OTHER INFORMATION

ITEM 1.  Legal proceedings.............................................19

ITEM 2.  Changes in securities.........................................19

ITEM 3.  Defaults upon senior securities...............................19

ITEM 4.  Submission of matters to a vote of security holders...........19

ITEM 5.  Other information.............................................19

ITEM 6.  Exhibits and reports on Form 8-K..............................19

SIGNATURES.............................................................20

EXHIBIT INDEX..........................................................21

</TABLE>












                                  Page 2 of 26


<PAGE>


PART I.   FINANCIAL INFORMATION

Item 1.   Interim Financial Statements

                             IDX SYSTEMS CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                      
                                         March 31                DECEMBER 31
                                           1999                     1998
                                         (UNAUDITED)
                                         ----------              -----------
<S>                                      <C>                     <C>    

ASSETS
Cash and marketable securities           $ 113,845               $ 124,517
Accounts receivable, net                    85,580                  99,345
Other current assets                         9,789                   4,997
Deferred tax asset                           4,720                   4,720
                                         ---------               ---------
Total current assets                       213,934                 233,579

Property and equipment, net                 35,342                  31,905
Capitalized software costs, net                591                     665
Other assets                                18,426                  15,868
Deferred tax asset                           2,307                   2,307
                                         ---------               ---------
                                            56,666                  50,745
                                         ---------               ---------

Total assets                             $ 270,600               $ 284,324
                                         =========               =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable, accrued expenses
   and other liabilities                 $  29,535               $  31,162
Income taxes                                     -                   5,429
Deferred revenue                            15,931                  18,239
                                         ---------               ---------
Total current liabilities                   45,466                  54,830

Minority interest                            9,259                   8,988
Stockholders' equity                       215,875                 220,506
                                         ---------               ---------
                                           225,134                 229,494
                                         ---------               ---------

Total liabilities and stockholders'
   equity                                $ 270,600               $ 284,324
                                         =========               =========
</TABLE>



          See Notes to the Condensed Consolidated Financial Statements

NOTE: The balance sheet at December 31, 1998 has been derived from the audited 
financial statements at that date.


                                  Page 3 of 26

<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Interim Financial Statements

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

                                          THREE MONTHS ENDED
                                              MARCH 31
                                          1999         1998
                                          ----         ----
<S>                                       <C>          <C>       

REVENUES
Systems sales                             $22,851      $38,966
Maintenance and service fees               37,330       33,771
                                          -------      -------
Total revenues                             60,181       72,737

OPERATING EXPENSES
Cost of sales                              39,961       37,248
Selling, general and
   administrative                          18,538       13,752
Research and development                   13,548       10,316
Merger and related charges                      -        3,201
                                          -------      -------
Total operating expenses                   72,047       64,517
                                         --------      -------
Operating income (loss)                   (11,866)       8,220
Interest and other income (expense), net     (534)       1,122
                                          -------      -------
Income (loss) before income taxes         (12,400)       9,342
Income tax provision (benefit)             (5,500)       4,940
                                          -------      -------
Net income (loss)                         $(6,900)      $4,402
                                          =======      =======

Basic earnings (loss) per share           $ (0.26)      $ 0.17
                                          =======      =======
Basic weighted average shares
    outstanding                            26,654       26,155
                                          =======      =======

Diluted earnings (loss) per
   share                                  $ (0.26)      $ 0.16
                                          =======      =======
Diluted weighted average shares
   outstanding                             26,654       27,007
                                          =======      =======
</TABLE>



          See Notes to the Condensed Consolidated Financial Statements


                                  Page 4 of 26


<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Interim Financial Statements

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

                                                       THREE MONTHS ENDED
                                                              MARCH 31
                                                    1999                 1998
                                                    ----                 ----
<S>                                                 <C>                  <C>

OPERATING ACTIVITIES

Net income (loss)                                   $(6,900)             $4,402
Adjustments to reconcile net income(loss) to net
  cash provided by (used in ) operating activities:
     Depreciation and amortization                    3,065               2,490
     Deferred tax benefit, net of acquisitions            -                (517)
     Increase in allowance for doubtful accounts        356                  31
     Minority interest                                  271                 741
     Loss on investment                               1,642                   -
     Write-off of acquired in-process
       research & development costs                       -               3,201
     Changes in operating assets and liabilities,
       net of business acquisitions:
          Accounts receivable                        13,409              (4,522)
          Other current assets                       (4,792)              1,688
          Accounts payable, accrued liabilities       
             and other liabilities                   (1,618)             (3,860)
          Income taxes payable                       (5,429)                  -
          Deferred revenue                           (2,308)             (2,008)
                                                    -------             -------
Net cash provided by (used in) operating activities  (2,304)             1,646

INVESTING ACTIVITIES
Purchase of property and equipment, net              (6,428)             (4,156)
Purchase of securities available-for-sale, net      (59,179)            (36,076)
Sale of securities available-for-sale                78,659              33,178
Business acquisitions                                     -              (4,000)
Other assets, net                                    (4,200)                  -
                                                    -------             -------
Net cash provided by (used in) investing activities   8,852             (11,054)

FINANCING ACTIVITIES
Proceeds from sale of common stock                    2,327               6,060
Contributions to affiliates, net                          -               6,000
Principal repayments of debt                             (9)             (6,066)
                                                    -------             -------
Net cash provided by financing activities             2,318               5,994
                                                    -------             -------
Increase (decrease) in cash and cash equivalents      8,866              (3,414)
Cash and cash equivalents at beginning of period     10,953              14,061
                                                    -------             -------
Cash and cash equivalents at end of period          $19,819             $10,647
                                                    =======             =======
</TABLE>

          See Notes to the Condensed Consolidated Financial Statements
                                  Page 5 of 26

<PAGE>

PART I.  FINANCIAL INFORMATION

Notes to Condensed Consolidated Financial Statements


Note 1 - Basis of Presentation

The interim unaudited  consolidated  financial  statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission and in accordance  with  generally  accepted  accounting  principles.
Accordingly,  certain information and footnote  disclosures normally included in
annual  financial  statements have been omitted or condensed.  In the opinion of
management,  all  necessary  adjustments  have  been  made  to  provide  a  fair
presentation.  The  operating  results for the three months ended March 31, 1999
are not necessarily  indicative of the results that may be expected for the year
ending  December 31, 1999. For further  information,  refer to the  consolidated
financial  statements  and  footnotes  included in the  Company's  latest annual
report on Form 10-K.

Note 2 - New Accounting Standards

In March 1998, the American  Institute of Certified  Public  Accountants  issued
Statement  of  Position  ("SOP")  98-1,  Accounting  for the  Costs of  Computer
Software Developed or Obtained for Internal Use, which the Company adopted as of
December 31, 1998. SOP 98-1 requires capitalization of certain costs incurred in
connection  with  developing or obtaining  internal use  software.  In the prior
year, the Company expensed such costs as incurred. The effect of this accounting
change was to reduce the net loss for the three  months  ended March 31, 1999 by
$95,000  and had no  impact on the loss per  share.  There was no effect on net
income for the quarter ended March 31, 1998 for this accounting change.

Note 3 - Business Acquisitions

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

On April 23, 1999, the Company acquired EDiX Corporation ("EDiX"), a provider of
medical  transcription  outsourcing  services to hospitals  and large  physician
group  practices.  The terms of the agreement  provide for the  shareholders and
optionholders  of EDiX to receive  approximately  1,000,000 shares of IDX common
stock. Based on the closing price of the IDX common stock on April 23, 1999, the
transaction is valued at  approximately  $16.7  million,  plus the assumption of
EDiX  debt  of  approximately  $14.0  million.  In  addition,  IDX  loaned  EDiX
approximately $5.0 million,  subject to certain  conditions,  to provide working
capital to EDiX prior to the closing. This transaction is not expected to dilute
earnings per share in 1999 compared to 1998. The EDiX  organization will operate
as  EDiX,  a  division  of IDX  Systems  Corporation.  The  acquisition  will be
accounted  for as a pooling of interest for the quarter  ended June 30, 1999 and
all  historical  information  of the Company will be restated to include  EDiX's
operating results in future reporting periods.

Additionally,  the Company  acquired an 80% interest in  ChannelHealth,  Inc. on
April  1,  1999  for  $6.5  million  and may  pay an  additional  $3.0  million,
contingent upon certain  performance goals.  ChannelHealth will be combined with
other  web  technology  initiatives  in a  separate  tracking  division.  It  is
anticipated  that this division  will lose  approximately  $10.0 million  pretax
during 1999. The acquisition will be accounted for under the purchase method.






                                  Page 6 of 26

<PAGE>

PART I.  FINANCIAL INFORMATION

Note 4 - Comprehensive Income

As of  January  1,  1998  the  Company  adopted  Statement  No.  130,  Reporting
Comprehensive  Income (FAS 130). FAS 130 establishes new rules for the reporting
and display of comprehensive income and its components; however, the adoption of
this  statement  had no  impact on the  Company's  net  income or  shareholders'
equity.  Statement  130  requires  unrealized  gains or losses on the  Company's
available-for-sale  securities which prior to adoption were reported  separately
in shareholders'  equity, to be included in other  comprehensive  income.  Total
comprehensive  income  (loss) for the quarter  ended March 31, 1999  amounted to
($7.0) million compared to $4.4 million in the same period in 1998.

Note 5- Segment Information

In June 1997,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related  Information." The Company adopted SFAS No. 131 effective
with the fiscal year ended December 31, 1998. SFAS No. 131 establishes standards
for  reporting  information  regarding  operating  segments in annual  financial
statements and requires selected  information for those segments to be presented
in  interim  financial  reports  issued  to  stockholders.  SFAS  No.  131  also
establishes  standards for related  disclosures about major customers,  products
and  services,  and  geographic  areas.  Operating  segments are  identified  as
components of an enterprise about which separate discrete financial  information
is available for evaluation by the chief  operating  decision maker, or decision
making  group,  in  making  decisions  how  to  allocate  resources  and  assess
performance.  The Company views its  operations and manages its business to date
as  principally  one  segment,  healthcare  information  solutions  that include
software, hardware and related services.

Substantially  all of the Company's  operations are in the United States. No one
customer accounted for 10% or more of the Company's revenues in 1999 or 1998. As
a result,  the financial  information  disclosed  herein  represents  all of the
material  financial  information  related to the Company's  principal  operating
segment.

Note 6 - Earnings Per Share Information

In February 1997, the Financial  Accounting Standards Board issued Statement No.
128, Earnings Per Share, which the Company adopted on December 31, 1997. At that
time,  the Company  changed the method  used to compute  earnings  per share and
restated all prior periods.  Under the new  requirements  for calculating  basic
earnings  per share,  the  dilutive  effect of stock  options is  excluded.  The
following sets forth the computation of basic and diluted earnings per share:

<TABLE>
<CAPTION>

                                       Three Months Ended
                                           March 31
                                         1999       1998
<S>                                    <C>        <C>    


Numerator:
   Net income (loss)                   $(6,900)   $ 4,402
                                       -------    -------
Numerator for basic and diluted
      earnings (loss) per share        $(6,900)   $ 4,402

Denominator:
   Denominator for basic earnings
     (loss) per share--
     weighted-average shares           26,654      26,155
   Effect of employee stock options         -         852
                                       ------     -------
     Denominator for diluted earnings
       (loss) per share                26,654      27,007
Basic earnings (loss) per share        $(0.26)     $ 0.17
                                       ======     =======
Diluted earnings (loss) per share      $(0.26)     $ 0.16
                                       ======     =======
</TABLE>

                                  Page 7 of 26
<PAGE>

PART I.  FINANCIAL INFORMATION

Note 6 - Reclassifications

Certain  prior  period  amounts have been  reclassified  to conform with current
period presentations.


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

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

GENERAL

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

The Company reported a net loss of ($6.9) million, or ($0.26) per share, for the
first  quarter of 1999 as  compared  to net income of $4.4  million or $0.16 per
share, for the first quarter of 1998. Excluding the nonrecurring write-off of an
investment  of $1.6  million,  the net loss for the quarter ended March 31, 1999
was ($6.0) million or ($0.22) per share.  Excluding nonrecurring expenses in the
prior year for costs associated with the acquisition of Trego Systems, Inc., the
Company  reported net income of $7.5 million,  or $0.28 per share, for the first
quarter of 1998.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998

REVENUES
The Company's total revenues  decreased to $60.2 million during the three months
ended March 31, 1999 from $72.7 million in the  corresponding  period in 1998, a
decrease of ($12.5) million or (17.3%). Revenues from systems sales decreased to
$22.9  million  during the three  months  ended  March 31,  1999 (38.0% of total
revenues)   compared  to  $39.0  million  (53.6%  of  total   revenues)  in  the
corresponding  period in 1998,  a decrease of ($16.1)  million or  (41.4%).  The
decrease  was  primarily  due to a delay  in  current  and  potential  customers
purchasing decisions combined with a decrease in installations of certain of the
Company's  LastWord and IDXtend  systems.  Revenues from maintenance and service
fees  increased  to $37.3  million  during the three months ended March 31, 1999
(62.0% of total  revenues) from $33.7 million  (46.4% of total  revenues) in the
corresponding period in 1998, an increase of $3.6 million or 10.5%. The increase
in revenues from  maintenance and service fees was due principally to additional
maintenance  revenues  resulting  from the  continued  growth  in the  Company's
installed client base.

During  the  quarter  ended  March 31,  1999,  certain  of the  Company's  large
customers  delayed  making  purchasing  decisions with respect to certain of the
large software systems comprised of multiple products, resulting in longer sales
cycles for such systems.  Management believes such delays are due to a number of
factors,  including customer  organizational  changes,  governmental  approvals,
product  complexity,  competition and customer  preoccupation with internal Year
2000  issues.  The Company is unable to  determine  and is  therefore  uncertain
whether such factors constitute a trend or will continue into future periods.
                                  Page 8 of 26

<PAGE>


PART I.  FINANCIAL INFORMATION

COST OF SALES
The cost of sales and  services  increased  to $40.0  million  during  the three
months ended March 31, 1999 from $37.2  million in the  corresponding  period in
1998,  an increase of $2.8 million or 7.3%.  The gross profit  margin on systems
sales and  services  decreased  to 33.6% during the three months ended March 31,
1999 from  48.8% in the  corresponding  period in 1998.  The  decrease  in gross
profit was  primarily  due to fixed costs and  overhead  expenses in relation to
decreased  revenue  from  installations  of the  Company's  LastWord and IDXtend
systems  which  typically  include a greater  percentage  of  software  and less
services than installations of the Company's earlier systems sales.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and administrative  expenses increased to $18.6 million during
the three  months ended March 31, 1999 from $13.8  million in the  corresponding
period in 1998,  an increase of $4.8 million or 34.8%.  As a percentage of total
revenues, selling, general and administrative expenses increased to 30.8% during
the three  months ended March 31, 1999 from 18.9% in 1998 due to the increase in
expense  combined  with the lower  revenue base for the period.  The increase in
total selling, general and administrative expenses during the three months ended
March 31,  1999 was  principally  due to an  increase  in the  Company's  sales,
marketing and  administrative  staff which  management  believes is necessary to
support the continued growth of the Company.

RESEARCH AND DEVELOPMENT
Research and  development  expenses  increased to $13.5 million during the three
months ended March 31, 1999 from $10.3  million in the  corresponding  period in
1998,  an increase of $3.2 million or 31.3%.  The  increase is primarily  due to
hiring  additional  staff and outside  consultants to support the development of
additional products including IDXsiteand web technology aplications, and for the
costs of efforts to address Year 2000 issues. As a percentage of total revenues,
research  and  development  expenses  increased to 22.5% during the three months
ended March 31, 1999 from 14.2% for the three months  ended March 31, 1998.  The
increase as a  percentage  of sales for the three months ended March 31, 1999 as
compared to the prior year, is due to the  additional  personnel and  consulting
expenses combined with the lower revenue base for the period.

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

OTHER INCOME (EXPENSE)
Interest income  remained  comparable at  approximately  $1.4 million during the
first  quarters  of 1999 and 1998.  There was no  interest  expense in the first
quarter of 1999 compared to $43,000 for the same period in the prior year. Other
expense  included the write off of an  investment of $1.6 million in the quarter
ended March 31, 1999.

INCOME TAXES
Income taxes for the quarter  ended March 31, 1999 were provided at 44% which is
higher than the Company's  historical statutory rate of 40% due to the effect of
certain tax credits. The provision for income taxes for the three months ended
March 31, 1998 was provided at  approximately  53%. The higher rate in the prior
year is due to a portion of the  charges  incurred  in the first  quarter  ended
March 31, 1998 related to the  acquisition  of Trego  Systems,  Inc.  which were
non-deductible for income tax purposes. The Company anticipates an effective tax
rate of approximately 40% for the year ending December 31, 1999.

SUBSEQUENT EVENTS
On April 23, 1999, the Company acquired EDiX Corporation ("EDiX"), a provider of
medical  transcription  outsourcing  services to hospitals  and large  physician
group  practices.  The terms of the agreement  provide for the  shareholders and
optionholders  of EDiX to receive  approximately  1,000,000 shares of IDX common
stock. Based on the closing price of the IDX common stock on April 23, 1999, the
transaction is valued at  approximately  $16.7  million,  plus the assumption of
EDiX  debt  of  approximately  $14.0  million.  In  addition,  IDX  loaned  EDiX
approximately $5.0 million,  subject to certain  conditions,  to provide working
capital to EDiX prior to the closing. This transaction is not expected to dilute
earnings per share in 1999 compared to 1998. The EDiX  organization will operate
as EDiX, a division of IDX Systems Corporation.

                                  Page 9 of 26

<PAGE>


PART I.  FINANCIAL INFORMATION


Additionally,  the Company  acquired an 80% interest in  ChannelHealth,  Inc. on
April  1,  1999  for  $6.5  million  and may  pay an  additional  $3.0  million,
contingent upon certain  performance goals.  ChannelHealth will be combined with
other  web  technology  initiatives  in a  separate tracking division.  It is
anticipated  that this  division  will lose  approximately  $9.0 million  pretax
during 1999.

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

Cash flows from  operations  are  principally  comprised  of net income  (loss),
depreciation and amortization,  and are primarily  affected by the net effect of
the change in accounts receivable, accounts payable and accrued expenses. Due to
the nature of the Company's business, accounts receivable,  deferred revenue and
accounts payable fluctuate  considerably due to, among other things,  the length
of  the  installation   efforts  which  are  dependent  upon  the  size  of  the
transaction,  the changing business plans of the customer,  the effectiveness of
customers'  management and general  economic  conditions.  In general,  accounts
receivable from customers have been collected within 85 to 105 days.

Cash flows related to investing  activities have principally been related to the
purchase  of  computer  and  office  equipment,   leasehold  improvements,   the
acquisition of complementary products,  businesses,  technology and the purchase
and sale of investment  grade marketable  securities.  The Company expects these
activities  to continue.  During the quarter  ended March 31, 1999,  the Company
also  acquired a building in South  Burlington,  Vermont with 15,000 square feet
for  approximately  $1.1 million which will be used for additional office space.
Subsequent to March 31, 1999,  the Company  acquired an  additional  building in
South Burlington Vermont with 51,210 square feet for approximately $6.4 million.
Also  subsequent  to the  balance  sheet  date of March 31,  1999,  the  Company
acquired EDiX Corporation  ("EDiX").  The terms of the agreement provide for the
shareholders and optionholders of EDiX to receive approximately 1,000,000 shares
of IDX common stock. Based on the closing price of the IDX common stock on April
23, 1999, the  transaction is valued at  approximately  $16.7 million,  plus the
assumption  of EDiX  debt of  approximately  $14.0  million.  Additionally,  the
Company  acquired an 80%  interest in  ChannelHealth,  Inc. on April 1, 1999 for
$6.5 million and may pay an  additional  $3.0 million,  contingent  upon certain
performance  goals.  There can be no assurance  that the Company will be able to
successfully complete other purchases or acquisitions in the future.

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

Cash, cash  equivalents and marketable  securities at March 31, 1999 were $113.8
million,  a decrease from the December 31, 1998 balance of $124.5  million.  The
Company  has a  revolving  line of credit  with a bank  allowing  the Company to
borrow up to $5.0  million  bearing  interest at the prime  rate.  There were no
borrowings as of March 31, 1999 or 1998.

The Company expects that its requirements for office facilities and other office
equipment will grow as staffing  requirements  dictate.  The Company's operating
lease  commitments  consist  primarily  of  office  leasing  for  the  Company's
operating facilities. The Company plans to continue increasing the number of its
professional  staff during 1999 to meet anticipated  sales volume and to support
research and development  efforts.  To the extent necessary to support increases
in staffing, the Company intends to obtain additional office space.

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

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


                                  Page 10 of 26


<PAGE>


PART I.  FINANCIAL INFORMATION




YEAR 2000

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

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

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

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

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

Internal Use Systems.  Based upon the Company's  assessment efforts to date, the
Company believes that certain  Internal Use Systems will require  replacement or
modification, and to date the Company has replaced or modified some Internal Use
Systems. In addition, in the ordinary course of replacing and upgrading Internal
Use Systems,  the Company attempts to obtain  replacements that it believes will
not  fail as a  result  of Year  2000  Issues.  The  Company  has  substantially
completed  its  assessment  efforts  with  respect to  Internal  Use Systems and
expects that its remediation efforts will be

                                  Page 11 of 26

<PAGE>

PART I.  FINANCIAL INFORMATION


completed by the fourth quarter of 1999. The Company is currently engaged in but
has not  completed  contingency  planning  to address  personnel,  resource  and
technical Year 2000 Issues  relating to  foreseeable  scenarios that may develop
despite its current and planned remediation  efforts. The Company estimates that
as of March  31,  1999 it had  completed  approximately  63% of its  efforts  in
connection  with Year 2000 Issues  relating to its  Internal  Use  Systems.  The
projects  comprising  the  remaining  37% of such efforts are in process and are
expected to be substantially completed on or about the fourth quarter of 1999.
The majority of the remaining work is associated with finalizing the Company's
contingency plan, analyzing landlord's responses for facilities leased by IDX,
and completing the desktop touch project which evaluates the possible need for 
upgrades on non-IDX desktop applications.

The  Company  has mailed  letters  or  otherwise  communicated  with many of its
significant  vendors of Internal  Use Systems and related  service  providers to
determine the extent to which Year 2000 Issues  affect  products and services of
such  vendors and  providers.  As of March 31,  1999,  the Company had  received
responses  from  approximately  85% of such  third  parties,  and  78% of  these
companies  have provided  written  assurances  that they expect to  successfully
address their  significant  Year 2000 Issues on a timely  basis.  The Company is
engaged in but has not completed  efforts to communicate  with other vendors and
service providers involved in its Internal Use Systems to request more responses
to its communications and to verify the responses received. Due to uncertainties
associated with vendors and service providers,  the Company is unable to predict
whether  Year 2000 Issues  involved  in its  Internal  Use  Systems  will have a
material  adverse effect on the Company's  business,  results of operations,  or
financial condition, despite the Company's current assessment to the contrary.

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

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

The Company  develops,  markets and supports many  different  products,  and the
amount of effort applied with respect to individual products varies from product
to product.  The Company  estimates  that as of March 31, 1999 it had  completed
approximately  87% of the development  efforts relating to Year 2000 versions of
all of the Company Software Products.  The projects comprising the remaining 13%
of these  efforts are in process and expected to be  substantially  completed in
the third quarter of 1999.  The Company  estimates that as of March 31, 1999, it
had completed  approximately 58% of the deployment efforts relating to Year 2000
versions of all Company Software Products. The projects comprising the remaining
42% of  these  efforts  are in  process  and are  expected  to be  substantially
completed  in the third  quarter of 1999,  but the  Company  expects to continue
efforts to  remediate  and  maintain  Year 2000  versions  of  Company  Software
Products in customer  environments and to support customers' efforts relating to
Year 2000 Issues through the early part of 2000.



                                  Page 12 of 26
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PART I.  FINANCIAL INFORMATION


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

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

COSTS
The Company estimates that the cost of its efforts to successfully  address Year
2000 Issues will be approximately  $18.3 million,  of which  approximately  $5.6
million  relates to Internal  Use Systems and $12.7  million  relates to Company
Software  Products.  Because the Company  develops,  markets,  and supports many
different products,  the amount of effort applied with respect to individual
products  varies from  product to product.  All  expenditures  to fund Year 2000
Issue  efforts  have  been  and  will  continue  to  be  funded  from  operating
expenditures  for fiscal years 1997 through early 2000,  except for $.8 million,
which is expected to be incurred and  capitalized in 1999. As of March 31, 1999,
the Company had incurred  approximately  $10.4 million  related to its Year 2000
Issue  assessment,   remediation,  testing,  and  contingency  planning  efforts
identification,  which is approximately 57% of the total projected costs of such
efforts.  Of the amount of costs  incurred to date,  approximately  $2.1 million
relates to Internal  Use  Systems,  which is  approximately  38% of the total of
estimated costs for such efforts,  and $8.3 million relates to Company  Software
Products,  which is  approximately  65% of the total of estimated costs for such
efforts.

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

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

                                  Page 13 of 26
<PAGE>

PART I.  FINANCIAL INFORMATION


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

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


FACTORS AFFECTING FUTURE RESULTS

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

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

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

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

        .  new product introductions by IDX or its competitors;

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

        .  healthcare reform measures.



                                  Page 14 of 26
<PAGE>

PART I.  FINANCIAL INFORMATION


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

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

IDX Expects its Quarterly  Operating Results to Fluctuate and its Customer Sales
and Installation  Requirements to Change.  IDX expects its quarterly  results of
operations to continue to fluctuate.  Because a significant  percentage of IDX's
expenses  are  relatively   fixed,  the  following  factors  could  cause  these
fluctuations:

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

        .    the volume and timing of systems sales and installations;

        .    recognizing revenue at various points during the installation 
             process; and

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

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

In light of the above,  IDX  believes  that its  results of  operations  for any
particular  quarter or fiscal year are not  necessarily  meaningful  or reliable
indicators of future performance.  Future period-to-period fluctuations may have
a material adverse effect on IDX's results of operations, financial condition or
business.

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

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

                                  Page 15 of 26
<PAGE>

PART I.  FINANCIAL INFORMATION


IDX May Not be Successful in Implementing its Acquisition Strategy.  IDX intends
to  continue  to grow in  part  through  either  acquisitions  of  complementary
products,   technologies   and  businesses  or  alliances   with   complementary
businesses.  IDX may not be successful in these acquisitions or alliances, or in
integrating  any such acquired or aligned  products,  technologies or businesses
into its current business and operations. Factors which may affect IDX's ability
to expand successfully include:

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

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

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

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

IDX's Success  Depends on New Product  Development and Its Ability to Respond to
Rapidly  Changing  Technology.  To be successful,  IDX must enhance its existing
products,  respond  effectively to technology changes and help its clients adopt
new technologies. In addition, IDX must sell additional products to its existing
client base and  introduce  new products and  technologies  to meet the evolving
needs of its clients in the healthcare  information systems market. IDX may have
difficulty in accomplishing this because of factors including:

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

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

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

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

        .    process transactions;

        .    send invoices;

        .    conduct communications; or

        .    engage in similar normal business activities.
                                  Page 16 of 26

<PAGE>


PART I.  FINANCIAL INFORMATION


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

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

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

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

IDX May Be Faced With Product Liability Claims Exceeding Its Insurance Coverage.
Any failure by IDX's  products  that  provide  applications  relating to patient
medical  histories  and  treatment  plans could expose IDX to product  liability
claims.  These potential claims may exceed IDX's current insurance  coverage.  A
successful  claim brought against IDX in excess of its insurance  coverage could
have a material adverse effect on IDX's results of operations. Even unsuccessful
claims could be costly to defend and divert  management  time and resources.  In
addition,  IDX  cannot  assure  you that it will  continue  to have  appropriate
insurance available to it in the future at commercially reasonable rates.

IDX's Success is Significantly Dependent on Key Personnel. The success of IDX is
dependent to a significant degree on its key management,  sales, marketing,  and
technical  personnel.  To be successful  IDX must  attract,  motivate and retain
highly skilled managerial, sales, marketing, consulting and technical personnel,
including  programmers,  consultants,  and  systems  architects  skilled  in the
technical  environments  in which IDX's products  operate.  Competition for such
personnel in the software and information  services  industries is intense.  The
loss of key personnel,  or the inability to hire or retain qualified  personnel,
could have a material  adverse effect on IDX's results of  operations.  IDX does
not maintain "key man" life insurance policies on its executives. Not all
IDX personnel have executed noncompetition agreements.

IDX May Be Adversely Affected By Changes in the Healthcare Industry and by 
Government Healthcare Reform Proposals.  IDX's products are designed to 
function within the structure of the healthcare financing and reimbursement


                                  Page 17 of 26
<PAGE>

PART I.  FINANCIAL INFORMATION


system currently being used in the United States. During the past several years,
the healthcare  industry has been subject to increasing  levels of  governmental
regulation of, among other things, reimbursement rates and capital expenditures.
From time to time,  Congress has  considered  proposals to reform the healthcare
system.  If enacted,  these  proposals may increase  government  involvement  in
healthcare,  lower  reimbursement  rates  and  otherwise  change  the  operating
environment  for  IDX's  clients.  Healthcare  organizations  may react to these
proposals  and the  uncertainty  surrounding  these  proposals by  curtailing or
deferring  investments,  including  those for IDX's  products and services.  IDX
cannot  predict with any  certainty  what impact these  proposals or  healthcare
reforms  might  have  on its  results  of  operations,  financial  condition  or
business.

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

        .    register and list its products with the FDA;

        .    notify the FDA and demonstrate substantial equivalence to other 
             products on the market before marketing such products;or

        .    obtain FDA approval by demonstrating safety and effectiveness 
             before marketing a product.

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

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

IDX May Have  Conflicts  of  Interests  With  Some of its  Executives  Which May
Adversely Affect IDX. Richard E. Tarrant, President, Chief Executive Officer and
Director,  and Robert H. Hoehl,  Chairman of the Board of Directors,  indirectly
own, through various  entities,  real estate which IDX leases in connection with
its  operations.  During  1998,  IDX paid an aggregate  of  approximately  $4.2
million in  connection  with these  leases.  In  November  1998,  IDX  announced
tentative  plans to expand one of its facilities  located on land owned by these
executives, however the Company has not yet made any commitments to finalize
those plans.

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

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



                                  Page 18 of 26

<PAGE>


PART II. OTHER INFORMATION


Item 1.  LEGAL PROCEEDINGS

                  None.


Item 2.  CHANGES IN SECURITIES

                  None.


Item 3.  DEFAULTS UPON SENIOR SECURITIES

                  Not applicable.


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

                  None.

Item 5.  OTHER INFORMATION

                  None.


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K.

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

(b) On March 8, 1999, the Company filed a report on Form 8-K,  reporting the IDX
News  Release  dated March 5, 1999  concerning  the  expected  loss in the first
quarter of 1999. No financial statement was filed with such report.

(c) On April 22, 1999, the Company filed a report on Form 8-K, reporting two IDX
News Releases dated April 21, 1999  concerning the results of operations for the
first  quarter of 1999 and the  purchase  of 80% of the stock of  ChannelHealth,
Inc.

















                                  Page 19 of 26


<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: May 14, 1999                     By: /s/ John A. Kane
                                           --------------------
                                           John A. Kane,
                                           Vice President, Finance and
                                           Administration, Chief Financial
                                           Officer and Treasurer
                                           (Principal Financial and
                                           Accounting Officer)





































                                  Page 20 of 26



<PAGE>



                                  Exhibit Index
                                  -------------


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

<TABLE>
<CAPTION>



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

99A             Letter Agreement between BDP Realty Associates and
                IDX Systems Corporation dated as of March 23, 1999.        22

99B             Lease Extension between IDS Realty Trust and IDX
                Systems Corporation dated as of June 15, 1998 and
                executed April 12 1999.                                    25

27              Financial Data Schedule                                    27

</TABLE>



































                                  Page 21 of 26

<PAGE>
                                                                    EXHIBIT 99A





                                                         March 23, 1999


Mr. Ronald L. Roberts
BDP Realty Associates
1400 Shelburne Road
Burlington, VT  05402

Re:      1500 Shelburne Road

Dear Ron:

This letter  constitutes our request to enter into a letter agreement  extending
the 1500 Shelburne Road Lease on a month-to-month basis. IDX proposes continuing
the same terms as agreed to in the letter  agreement  of August 16, 1995, a copy
of which is attached.

                                            Sincerely,

                                            /s/ MICHELLE A. RUSSO

                                            Michelle A. Russo
                                            Mgr., Administration

cc:  Robert W. Baker, Jr., Esq.

AGREED AND ACCEPTED:

IDX SYSTEMS CORPORATION                     BDP REALTY ASSOCIATES



By:/s/ MICHELLE A. RUSSO                    By:/s/ RONALD L. ROBERTS
   ---------------------                       ---------------------
   Michelle A. Russo                           Ronald L. Roberts

Dated: March 23, 1999                       Dated: March 23, 1999









                                  Page 22 of 26
<PAGE>



                              BDP REALTY ASSOCIATES
                               1400 SHELBURNE ROAD
                              BURLINGTON, VT 05402

                                           as of August 16, 1995


IDX Systems Corporation
Attention:  John A. Kane
1400 Shelburne Road
Burlington, VT  05402
        
Re:  1500 Shelburne Road

Dear Jack:

         As general  partners  of BDP  Realty  Associates  ("BDP"),  we agree to
revive,  renew and amend the Lease  Agreement  dated  July 6, 1979 and Notice to
Extend Lease Term dated August 1, 1987 ("Lease") between BDP Realty  Associates,
as lessor,  and IDX  Systems  Corporation,  formerly  known as  Burlington  Data
Processing, Inc., as lessee, under the following terms:

         1.       Lessor:                            BDP Realty Associates

         2.       Lessee:                            IDX Systems Corporation

         3.       Date of Lease Renewal:             As of December 9, 1993

         4.       Lease Renewal Term:                From December 9, 1993 
                                                     through December 31, 1998

         5.       Leased Premises:                   Building and land located 
                                                     at 1500 Shelburne Road

         6.       Basic Annual Rent:                $154,800 [$12,900 per month]

         7.       Option to Renew:                   Additional two  (2)  years,
                                                     with  the ability  to 
                                                     increase   the rental
                                                     rate to the current
                                                     fair  market   value,   per
                                                     appraisal  or  valuation by
                                                     qualified  person  selected
                                                     by the parties.

         8.       Triple Net Lease:                  Tenant is responsible for
                                                     all operating expenses, 
                                                     taxes, maintenance,  
                                                     repairs, (structural and
                                                     otherwise).











                                  Page 23 of 26


<PAGE>

                                                                        Page 2
                                                         as of August 16, 1995
                                                      BDP Realty Associates to
                                                      IDX Systems Corporation


          BDP and IDX agree and accept the above terms. IDX acknowledges
its approval and acceptance of the above terms by executing below.

                                      Very truly yours,



                                      BDP REALTY ASSOCIATES

                                      /s/ RICHARD E. TARRANT

                                      Richard E. Tarrant, General Partner

                                      /s/ ROBERT H. HOEHL

                                      Robert H. Hoehl, General Partner



AGREED AND ACCEPTED:

IDX Systems Corporation


By:  /s/ JOHN A. KANE
     John A. Kane, Vice President

Date:  August 21, 1995

















                                  Page 24 of 26


<PAGE>

                                                                    EXHIBIT 99B


                                 LEASE EXTENSION


         This Lease Extension is made effective as of the 15th day of June, 1998
by and between Richard E. Tarrant,  Trustee of IDS Realty Trust, a trust created
under  Declaration  of Trust dated October 1, 1981, and recorded in the Norfolk,
Massachusetts  County  Registry of Deeds in Book 5947,  Page 335, as lessor (the
"Lessor") and IDX Systems  Corporation,  a Vermont  corporation,  as lessee (the
"Lessee").

         WHEREAS,  the  Lessor  and the  Lessee  are  parties  to  that  certain
Indenture of Lease dated as of December 1,1981, as revived,  renewed and amended
by letter agreement dated June 29, 1995 (the "Lease"), whereby the Lessor leases
to the Lessee and the Lessee  leases  from the Lessor  certain  land and remises
commonly  known as 882-888  Commonwealth  Avenue in Brookline,  Norfolk  County,
Massachusetts (the "Leased Premises");

         WHEREAS, the term of the Lease expired on June 15, 1998;

         WHEREAS, the Lessee has an option to renew the term of the Lease for an
additional  two (2) years,  and the Lessee  desires to  exercise  that option to
renew;

         NOW THEREFORE,  in consideration of the terms, conditions and covenants
contained herein and in the Lease, the parties hereby agree as follows:

         1. Extension of Lease.  The Lessee hereby exercises its option to renew
the term of the Lease for an additional  two (2) years such that the term of the
Lease will expire on June 15, 2000.

2. Terms and  Conditions  of Renewal Term.  During the renewal term,  all of the
terms and  conditions  of the Lease shall apply with the exception of the option
to renew;  the Lessee shall not have any further option to renew the term of the
Lease.

         IN WITNESS  WHEREOF,  the parties  have caused  this  instrument  to be
executed on the dates set forth below,  but this instrument  shall be effective,
and the parties hereto shall be bound by the terms hereof, as of June 15, 1998.

/s/ NANETTE W. O'LEARY            /s/ RICHARD E. TARRANT
------------------------          ------------------------------
Witness                           Richard E. Tarrant, Trustee of IDS Realty
                                  Trust, a trust created under Declaration of
                                  Trust dated October 1, 1981
/s/ ROBERT W. BAKER, JR.
------------------------          IDX Systems Corporation, a Vermont corporation
Witness
                                  By: /s/ JOHN A. KANE
                                  --------------------------
                                  Its CFO and duly
                                  authorized agent


                                  Page 25 of 26


<PAGE>


STATE OF VERMONT
COUNTY OF CHITTENDEN

                  On this 6th day of April,  1999, before me appeared Richard E.
Tarrant, who, being by me duly sworn, did say that he is the sole trustee of IDS
Realty Trust,  and he acknowledged  the foregoing  instrument to be his free act
and deed and his free act and deed in his capacity as trustee.

                                  /s/ DIANE L. BROWN
                                  ---------------------------------
                                  Notary Public
                                  My Commission Expires: 2/10/2003


STATE OF VERMONT
COUNTY OF CHITTENDEN

                  On this 12th day of April,  1999,  before me appeared  John A.
Kane,  who,  being  by me  duly  sworn,  did say  that  he is the  CFO and  duly
authorized agent of IDX Systems  Corporation,  and he acknowledged the foregoing
instrument  to be his free act and deed and his free act and deed of IDX Systems
Corporation.

                                  /s/ DIANE L. BROWN
                                  ---------------------------------
                                  Notary Public
                                  My Commission Expires: 2/10/2003





























                                  Page 26 of 26