864736v1
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549



                                    FORM 8-K


                             Current Report Pursuant
                          to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934


         Date of report (Date of earliest event reported): July 12, 1999

                             ISOLYSER COMPANY, INC.
             (Exact Name of Registrant as Specified in Its Charter)

                                     Georgia
                 (State or Other Jurisdiction of Incorporation)

      0-24866                                           58-1746149
(Commission File Number)                    (I.R.S. Employer Identification No.)

             4320 International Boulevard, Norcross, Georgia 30093
               (Address of Principal Executive Offices (Zip Code)

                                 (770) 806-9898
              (Registrant's Telephone Number, Including Area Code)


          (Former Name or Former Address, if Changed Since Last Report)

864736v1



Item 2.  Acquisition or Disposition of Assets

         On July 12, 1999,  Isolyser Company,  Inc.  ("Isolyser") and its wholly
owned  subsidiary,  MedSurg  Industries,  Inc.  ("MedSurg"),  sold to Allegiance
Healthcare  Corporation  ("Allegiance")  substantially  all of their assets used
primarily in the business (the "Business") of assembling,  packaging,  marketing
and selling  procedure  kits and trays,  and  Isolyser  granted to  Allegiance a
worldwide   exclusive   license  (the   "License")  to  Isolyser's   proprietary
technologies to make, use and sell products made from material (the  "Material")
which can be  dissolved  and  disposed  of through  sanitary  sewer  systems for
healthcare applications. Allegiance is not an "affiliate" of Isolyser within the
meanings of the Securities  Act of 1933, as amended.  The purchase price payable
for such assets and license  consisted of  approximately  $31.3 million in cash,
the  assumption  by Allegiance  of certain  liabilities  of Isolyser and MedSurg
relating to the Business,  and Allegiance's agreement that Isolyser would be the
sole  supplier  during the term of the License of Material to  Allegiance  which
would at least include a certain  minimum  quantity of fabric to be purchased by
Allegiance from Isolyser. The purchase price was negotiated at arms' length.

Item 7.  Financial Statements and Exhibits

         (a)      Financial Statements of Businesses Acquired:

                  Not applicable.

         (b)      Pro Forma Financial Information:

                  The required unaudited pro forma financial information will be
filed not more than sixty days after the date this current report must be filed.

         (c)      Exhibits:

2.1*+               Asset  Purchase  Agreement  dated  as  of  May  25,  1999,
                    among Allegiance, Isolyser and MedSurg

2.2*+               First Amendment to Asset Purchase Agreement dated as of
                    July 12, 1999, among Allegiance, Isolyser and MedSurg

2.3 (1)*            Supply and License Agreement dated as of July 12, 1999,
                    between Isolyser and Allegiance

2.4 (1)*            Contract  Manufacturing  Agreement dated as of July 12,
                    1999, among Allegiance, Isolyser and MedSurg

2.5*                Escrow  Agreement  dated  as of  July  12,  1999  among
                    Allegiance,  The First  National  Bank of  Chicago  and
                    Isolyser

99.1*               Press Release captioned "Isolyser Announces  Completion
                    of Its Sale of MedSurg  Industries  and License of OREX
                    Technology to Allegiance" dated July 13, 1999

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

*    Filed herewith.

+    In accordance  with Item  601(b)(2) of Regulation  S-K, the schedules  have
     been omitted and a list briefly  describing  the  schedules is contained in
     the  table  of  contents  to  the  Exhibit.  The  Registrant  will  furnish
     supplementally  a copy  of any  omitted  schedule  to the  Commission  upon
     request.

(1)  Isolyser  has  applied  for  confidential  treatent  of  portions  of  this
     Agreement.  Accordingly,  portions  thereof  have  been  omitted  and filed
     separately with the Securities and Exchange Commission.





864736v1



                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has caused  this  report to be duly signed on its behalf by the
undersigned hereunto duly authorized.


                               ISOLYSER COMPANY, INC.



                               By:  /s/ PETER A. SCHMITT
                                    ---------------------------------------
                                    Peter A. Schmitt, Executive Vice President
                                    and Chief Financial Officer


Dated:  July 27, 1999

864736v1



                                 EXHIBIT INDEX

EXHIBIT NO.         DESCRIPTION
- -----------         -----------

 2.1*+              Asset  Purchase  Agreement  dated  as of May 25,  1999,
                    among Allegiance, Isolyser and MedSurg

 2.2*+              First Amendment to Asset Purchase Agreement dated as of
                    July 12, 1999, among Allegiance, Isolyser and MedSurg

 2.3 (1)*           Supply and License Agreement dated as of July 12, 1999,
                    between Isolyser and Allegiance

 2.4 (1)*           Contract  Manufacturing  Agreement dated as of July 12,
                    1999, among Allegiance, Isolyser and MedSurg

 2.5*               Escrow  Agreement  dated  as of  July  12,  1999  among
                    Allegiance,  The First  National  Bank of  Chicago  and
                    Isolyser

 99.1*              Press Release captioned "Isolyser Announces  Completion
                    of Its Sale of MedSurg  Industries  and License of OREX
                    Technology to Allegiance" dated July 13, 1999

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

*    Filed herewith.

+    In accordance  with Item  601(b)(2) of Regulation  S-K, the schedules  have
     been omitted and a list briefly  describing  the  schedules is contained in
     the  table  of  contents  to  the  Exhibit.  The  Registrant  will  furnish
     supplementally  a copy  of any  omitted  schedule  to the  Commission  upon
     request.

(1)  Isolyser  has  applied  for  confidential  treatent  of  portions  of  this
     Agreement.  Accordingly,  portions  thereof  have  been  omitted  and filed
     separately with the Securities and Exchange Commission.