DIANON Systems, Inc. reports second quarter sales and earnings.

STRATFORD, Conn.--(BUSINESS WIRE)--July 30, 1996--DIANON Systems, Inc. (NASDAQ:DIAN) today reported that sales for the second quarter ended June 30, 1996 were $13.7 million, a 20% increase over the second quarter of 1995. Net income was $514,000, compared to a loss of $353,000 for the second quarter of 1995. Earnings per share were $.08 during the second quarter of 1996 compared to a loss of $(.07) per share in the second quarter of 1995.

Sales for the first six months of 1996 were $26.1 million, up 19% over the first six months of 1995. Net income was $802,000 compared to a loss of $197,000 for the first six months of 1995. Earnings per share were $0.13 during the first six months of 1996 compared to a loss of $(.04) for the first six months of 1995. -0-

                           SECOND QUARTER         6 MONTHS YEAR-TO-DATE
                           1996     1995           1996       1995
                           (000)    (000)    %     (000)      (000)   %

Net Sales                $13,674  $11,384   20%   $26,093  $21,866   19%

Gross Profit               7,193    6,440   12%    13,473   12,229   10%

Income/(Loss) From
  Operations                 817     (643)          1,222      (372)
Net Interest Income           85       20             185        24
Provision/(Benefit)
  For Taxes                  388     (270)            605      (151)
Net Income/(Loss)         $  514    $(353)         $  802     $(197)

Earnings Per Share        $  .08    $(.07)         $ 0.13    $(0.04)

For the six months ending June 30, earnings before depreciation, amortization, and other special changes including severance, executive recruiting and relocation, investment write downs, international restructuring reserves, interest and taxes were $2,528,000 in 1996 compared to $2,155,000 in 1995.

Kevin Johnson, who joined the Company in early May as President, said, "Our growing emphasis on anatomic pathology is generating substantial business growth for the Company. Building on our successful record in urology pathology, we have introduced pathology services which cover a broader range of organ sites. These new testing services have expanded our physician base to include gastroenterologists, gynecologists and dermatologists. In the second quarter of 1996, the number of biopsies processed from new services introduced in 1995 and 1996 approached the number of biopsies from services introduced from 1986 through 1994."

He added, "I came to DIANON because it has a quality reputation, member and provider access, information systems and cost-effective services needed to grow in the managed care marketplace. With over a decade of experience in specialized urology pathology services, we are leveraging our high quality reporting, technology and physician skills to compete in markets which have heretofore been served primarily by local pathologists or by large clinical chemistry laboratories.

"DIANON has unique access to physicians who require pathology services through the largest specialized pathology salesforce in the United States. The quality of our information systems and our databases make it possible to produce unique information products for physicians, patients and MCO's such as our new Patient Counseling Report."

Richard Sandberg, Chairman of the Board, commented, "Based on results for the first half of the year, we are increasing our earnings estimates for 1996. Management believes that the Company could report earnings per share of $.30 to $.35 in 1996 as compared to our earlier forecast in which we estimated that the Company could report earnings per share in excess of $.25 in 1996. The year's results are subject to a number of uncertainties, including but not limited to, future trends in the Company's business, spending necessary to support the Company's strategy, and the outcome of the Company's share repurchase program."

For the year ended December 31, 1995, the Company reported earnings per share of $.02 after substantial charges for amortization, severance, executive recruiting and relocation, investment write downs, and international restructuring reserves.

Previously the Company announced its intention to acquire up to 1.1 million shares of the Company's common stock in open market transactions. To date such purchases have amounted to approximately 374,000 shares and may continue from time to time.

The forward-looking statements in this news release are based on assumptions that the Company believes are reasonable, but are subject to a wide range of risks and uncertainties, including those relating to reimbursement rates and coverage, state and national regulatory compliance, maintaining above average quality, as well as those from competitive pressures. Further information regarding factors that could affect the Company's results is included in the Company's SEC filings, including its Form 10-K for the year ended December 31, 1995.

DIANON Systems, Inc. provides a full line of anatomic pathology testing services and a number of specialized clinical pathology testing services to patients, physicians and managed care organizations in the United States.

DIANON Systems Annual Meeting will be held at the Company's office in Stratford, Connecticut on September 11, 1996 at 10:00 A.M.

CONTACT: Richard A. Sandberg

Chairman of the Board

203/381-4022