Exhibit 99.1

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

The discussion and analysis that follows should be read in conjunction with the
Consolidated Financial Statements and related notes included elsewhere in this
report.


We have made the following acquisitions which affect the comparison of the
results of operations on a year to year basis. All acquisitions, except Central
Pharmacy Services, Inc., have been accounted for under the purchase method and,
accordingly, the results of operations of the acquired entities are included in
the Company's financial statements from the respective dates of acquisition.

The IV One Companies - Effective January 1995, we, through our Priority
Healthcare Corporation ("Priority") subsidiary, acquired all of the outstanding
stock of the IV One Companies ("IV One") in a cash transaction. IV One is
comprised of IV-1, Inc., IV-One Services, Inc. and National Pharmacy Providers,
Inc. These companies focus on high acuity specialty pharmacy services for
patients requiring home and ambulatory infusion therapy. Effective as of the
close of business on December 31, 1998, IV-One Services, Inc. and National
Pharmacy Providers, Inc. were merged into IV-1, Inc. and the name of IV-1, Inc.
was changed to Priority Healthcare Pharmacy, Inc.

Priority Healthcare Services Corporation - In January 1996, we formed a new
subsidiary, National Infusion Services, Inc. ("NIS"). Effective February 8,
1996, we, through our NIS subsidiary, purchased the assets of the infusion
services division of Infectious Disease of Indiana P.S.C. NIS is a provider of
quality care to patients in a variety of settings. In February of 1997, the
corporate name was changed from NIS to Priority Healthcare Services Corporation
("PHSC").

Tennessee Wholesale Drug Company - Effective July 31, 1997, we acquired
substantially all of the operating assets and assumed most of the liabilities of
Tennessee Wholesale Drug Company ("TWD"). TWD is a full-line, full-service
wholesale drug company with a distribution facility in Nashville, Tennessee.

Grove Way Pharmacy - Effective August 6, 1997, Priority acquired substantially
all of the assets of Grove Way Pharmacy, Inc. ("Grove Way"), a specialty
distributor of vaccines located in Castro Valley, California.

Central Pharmacy Services, Inc. - On August 31, 1999, we completed the merger
with Central Pharmacy Services, Inc. ("CPSI") of Atlanta, Georgia for
approximately $55 million of our Common Stock. CPSI operates specialized
pharmacies in 27 cities located in 13 states. These pharmacies prepare and
deliver unit dose radiopharmaceuticals for use in nuclear imaging procedures in
hospitals and clinics. The transaction was accounted for as a pooling of
interests and the financial statements for the periods ended December 31, 1998,
1997 and 1996 are based on the assumption that the companies were combined for
the full periods.

On December 31, 1998, we distributed to the holders of our Common Stock all of
the 10,214,286 shares of Priority Class A Common Stock owned by us on the basis
of .448 shares of Priority Class A Common Stock for each share of our Common
Stock outstanding on the record date, December 15, 1998. The two classes of
Priority Common Stock entitle holders to


the same rights and privileges, except that holders of shares of Priority Class
A Common Stock are entitled to three votes per share on all matters submitted to
a vote of holders of Priority Common Stock and holders of shares of Priority
Class B Common Stock are entitled to one vote per share on such matters. As a
result of the distribution, Priority ceased to be our subsidiary as of December
31, 1998 and, therefore, their assets, liabilities and equity are not included
in the December 31, 1998 BWI Consolidated Balance Sheet. However, their results
of operations, net of minority interest, for the year ended December 31, 1998
are included in the BWI Consolidated Statement of Earnings as Priority was our
subsidiary for the full year of 1998.

Results of Operations.

Net sales for 1998, 1997 and 1996 were $7,654 million, $7,334 million and $5,335
million, respectively. The 4% increase in 1998 sales over 1997 and the 37%
increase in 1997 over 1996 were generated primarily through internal growth. In
all years, CPSI sales accounted for less than 1% of total sales. In 1998,
brokerage type sales ("brokerage sales") experienced a 23% decrease from 1997.
This was the result of the loss of the Rite Aid business. Brokerage sales had
increased by 43% from 1996 to 1997. This was the result of the consolidation
within the wholesale and chain drug industries. Brokerage sales generate very
little gross margin, however, they provide for increased working capital and
support our programs to attract more direct store delivery business from chain
customers. Sales from our inventory ("from stock sales") increased 49% in 1998.
These sales include sales from our inventory to chain customers and direct store
delivery business. Direct store delivery sales increased by 50% in 1998 and
increased to 51% of total sales in 1998. These sales were only 35% of total
sales in 1997. The increase in direct store delivery sales as a percent of total
sales was caused by the combination of our loss of the Rite Aid brokerage sales
business and our ability to expand our presence in the direct store delivery
portion of the business through increased sales to existing customers and the
addition of new customers. In both periods, the increase related to pricing was
approximately equal to the increase in the Consumer Price Index. Net sales for
Priority for 1998, 1997 and 1996 were $276 million, $231 million and $158
million, respectively. This growth was generated internally and reflected
primarily the addition of new customers, new product introductions (including
the new Rebetron treatment for Hepatitis-C), additional sales to existing
customers and, to a lesser extent, the acquisition of Grove Way Pharmacy and
inflationary price increases.

Gross margins for 1998, 1997 and 1996 were $206 million, $153 million and $128
million, respectively. The increases in gross margins from 1997 to 1998 and from
1996 to 1997 resulted primarily from internal growth. The acquisition of TWD
accounted for approximately 23% of the increase from 1996 to 1997 and had
substantially less impact from 1997 to 1998. The impact in 1998 is difficult to
quantify as the Baltimore, Maryland and Tampa, Florida warehouses of TWD were
closed in 1998 and their customers subsequently serviced out of existing
facilities. Gross margins as a percent of net sales increased to 2.69% in 1998
from 2.08% in 1997. This increase was the result of the change in mix away from
the lower margin brokerage sales to the higher margin from stock sales and the
increased higher margin sales of CPSI. The change in mix resulted from both the
loss of the Rite Aid brokerage sales business and the increased direct store
delivery sales. Gross margins as a percent of net sales declined from 2.40% in
1996 to 2.08% in 1997. This decrease was the result of the substantial increase
in low margin brokerage sales and a shift in the business mix of from stock
sales to more managed care business. In all years, the pressure on sell side
margins continued and the purchasing gains associated with pharmaceutical price
inflation remained relatively constant. Gross margins for Priority for 1998,
1997 and 1996 were $31.1 million, $23.2 million and $17.2 million, respectively.
Gross margins as a percent of sales for 1998, 1997 and 1996 were 11.30%,


10.01% and 10.85%, respectively. The increase in 1998 margins over 1997 margins
is primarily attributed to the change in sales mix resulting from significantly
higher sales by Priority Pharmacy which generated higher gross margins than
those of Priority Distribution. The reduction in 1997 from 1996 is attributed to
increased competition and a change in sales mix to the lower margin wholesale
distribution business.

Other income in 1998, 1997 and 1996 represented finance charges on certain
customers' receivables and gains on the sale of assets. The 1998 balance also
includes approximately $200,000 of interest related to the note from the CEO of
the Company.

Selling, general and administrative ("SGA") expenses were $118.3 million, $89.4
million and $77.4 million in 1998, 1997 and 1996, respectively. The primary
reasons for the increase in SGA from 1997 to 1998 and from 1996 to 1997 were
normal inflationary increases and costs to support the growing direct store
delivery business of Bindley Western Drug Company, the alternate care/alternate
site business of Priority and the nuclear pharmacy expansion of CPSI. The cost
increases related to the direct store delivery and alternate care/alternate site
businesses include, among others, delivery expense, warehouse expense, and labor
costs, which are variable with the level of sales volume. However, management
remains focused on controlling SGA through improved technology, better asset
management and opportunities to consolidate distribution centers. This focus has
resulted in a decrease in SGA expense as a percent of from stock sales to 2.85%
in 1998 from 3.21% in 1997 and 3.61% in 1996. Non recurring charges related to
the startup, consolidation and closing of certain divisions were $200,000 in
1998, $575,000 in 1997 and $200,000 in 1996. SGA for Priority was $14.0 million
in 1998, $10.6 million in 1997 and $8.4 million in 1996. As a percent of sales,
SGA for 1998 was 5.1% as compared to 4.6% in 1997. This increase was the result
of expenses associated with the opening of the Grove City, Ohio facility, which
opened in November, 1997, training and payroll costs from hiring additional
sales personnel at Priority Pharmacy and increased overall costs of being a
publicly traded company. The increase in 1997 SGA from 1996 was attributed to
the above mentioned normal costs to support this business. SGA as a percent of
sales actually decreased from 5.3% in 1996 to 4.6% in 1997. SGA for CPSI
increased in all years as a result of continued expansion through the opening of
new nuclear pharmacies.

Depreciation and amortization was $8.9 million, $8.2 million and $7.4 million in
1998, 1997 and 1996, respectively. These increases were the result of the
inclusion of acquired entities and the depreciation and amortization on new
facilities and equipment, particularly in management information systems and
systems to support customer needs. Depreciation and amortization for Priority
increased from $1 million in 1996 to $1.2 million for both 1997 and 1998. These
increases also resulted from depreciation on new equipment, particularly
management information systems.

Interest expense for 1998, 1997 and 1996 was $18.6 million, $16.2 million and
$13.2 million, respectively. The average short-term borrowings outstanding were
$249 million, $152 million and $119 million at an average short-term interest
rate of 6.3%, 6.4% and 6.4% for 1998, 1997 and 1996, respectively. We also have
in place a private placement of $30 million Senior Notes due December 27, 1999
at an interest rate of 7.25%. Interest expense associated with these Notes was
approximately $2.2 million in both 1998 and 1997.

In the fourth quarter of 1998, we recorded a one-time, pre-tax charge of
approximately $19.0 million, which approximated $14.0 million on an after-tax
basis. Of the $19.0 million charge, $11.0 million represented a non-cash charge
for the acceleration of the amortization of compensation related to restricted
stock grants in connection with the Priority spin-off, $7.0


million represented the non-cash write-off of goodwill that has been carried on
the books from an acquisition dating back to early 1996 and $1.0 million
represented the settlement of litigation associated with that acquisition. See
also, Note 6 -Intangibles, Note 9 - Long-term Debt, Note 12 - Capital Stock and
Note 16 -Legal Proceedings, of the Company's financial statements for further
discussion.

The provision for income taxes represented 44.1%, 39.0% and 42.2% of earnings
before taxes in 1998, 1997 and 1996, respectively. The increase in the 1998
effective rate was attributable to the nondeductible element of restricted stock
grants expensed in 1998.

On January 11, 1996, we were informed by the U.S. Attorney's office in
Indianapolis that the Drug Enforcement Administration ("DEA") was alleging
multiple violations of the recordkeeping and reporting regulations of the
Controlled Substances Act ("Act") resulting from a routine inspection of our
Indianapolis Distribution Center during January and February 1994. On November
7, 1996, we entered into a Civil Consent Decree with the United States and the
DEA resolving all issues relating to its Indianapolis Distribution Center's
alleged failure to comply with the Act. In exchange for the settlement of all
civil and administrative issues, we paid $700,000, and agreed to pay an
additional $300,000 if we did not substantially comply with the terms of the
Civil Consent Decree over the next two years. The settlement charge recognized
by the Company in 1996 included professional fees of $112,000. On December 15,
1998, we were advised by the U. S. Attorney's office in Indianapolis that we had
fully complied with the terms of the 1996 Civil Consent Decree and, accordingly,
the civil penalty of $300,000 would not be imposed.

On October 7, 1996 we and our subsidiary, National Infusion Services (now known
as Priority Healthcare Services Corporation) ("PHSC"), were named as defendants
in an action filed by Thomas G. Slama, M.D. in the Superior Court of Hamilton
County, Indiana. Dr. Slama is a former director of the company and formerly was
Chief Executive Officer and President of PHSC. The complaint alleged breach of
contract and defamation arising from the termination of Dr. Slama's employment
with PHSC in October 1996. On October 26, 1998, Dr. Slama filed a Second Amended
Complaint which added Priority and William E. Bindley as defendants and stated
additional claims for breach of contract, breach of oral contract, breach of
fiduciary duty, securities fraud and conversion. Pursuant to an Indemnification
and Hold Harmless Agreement we indemnified and held harmless Priority and its
subsidiaries from and against any and all costs, damages, charges and expenses
(including without limitation legal and other professional fees) which Priority
might incur or which may be charged against Priority in any way based upon,
connected with or arising out of the lawsuit filed by Dr. Slama. All defendants
answered the complaint, denied the merits of Dr. Slama's claims, and also filed
a counterclaim against Dr. Slama which sought, among other things, declaratory
relief, compensatory and (in some instances) treble damages, punitive damages,
attorneys' fees, interest and costs. On December 31, 1998, a Settlement
Agreement was executed by and among the parties named above pursuant to which
mutual releases were obtained and, on January 4, 1999, a one-time payment of
$875,000 was made by the company to Dr. Slama. The corresponding Joint
Stipulation of Dismissal was approved by the Court on January 11, 1999.

Liquidity-Capital Resources.

On October 29, 1997, Priority consummated an initial public offering ("IPO").
Priority registered 2,300,000 shares of Class B Common Stock, all of which were
sold in a firm commitment underwriting at an aggregate offering price of $33.35
million. After underwriters' discount of


$2.32 million and expenses incurred by Priority in conjunction with the IPO of
$1.05 million, the net offering proceeds to Priority were approximately $29.98
million.

On December 31, 1998, we distributed to the holders of our Common Stock all of
the 10,214,286 shares of Priority Class A Common Stock owned by us on the basis
of .448 shares of Priority Class A Common Stock for each share of our Common
Stock outstanding on the record date, December 15, 1998. The two classes of
Priority Common Stock entitle holders to the same rights and privileges, except
that holders of shares of Priority Class A Common Stock are entitled to three
votes per share on all matters submitted to a vote of holders of Priority Common
Stock and holders of shares of Priority Class B Common Stock are entitled to one
vote per share on such matters. As a result of the distribution, Priority ceased
to be our subsidiary. From the date of the IPO until the December 31, 1998
distribution to the holders of our Common Stock, we owned 81.6% of the
outstanding common stock of Priority. In 1998, the amount of net earnings
associated with the minority interest was $1.9 million as compared to $212,000
in 1997.

Our operations consumed $78.9 million in cash for the year ended December 31,
1998. The use of funds resulted from increases in inventories and a decrease in
accounts payable. The increase in inventory resulted from the significant
increase in direct store delivery sales and the new bulk inventory acquisition
and purchasing management programs with certain customers. The reduction of
accounts payable is attributed to the timing of payments of invoices and the
reduction of brokerage type sales to Rite Aid. These uses of cash were offset by
the decrease in accounts receivables resulting from the reduction of brokerage
type sales to Rite Aid. We continue to closely monitor working capital in
relation to economic and competitive conditions. However, the emphasis on direct
store delivery business will continue to require both net working capital and
cash.

Capital expenditures were predominantly for the construction of the new
corporate headquarters building, the construction of a new warehouse facility in
Westbrook, Maine, the expansion and automation of existing warehouses and the
investment in additional management information systems and other systems to
support customer needs. Total expenditures were $34.5 million during 1998.

Effective July 31, 1997, we purchased substantially all of the operating assets
and assumed most of the liabilities and contractual obligations of TWD. We
expended approximately $27 million for the acquisition of TWD, which
approximated the fair value of the net assets acquired.

Effective August 6, 1997, Priority acquired substantially all of the operating
assets and assumed most of the liabilities of Grove Way Pharmacy, Inc., a
specialty distributor of vaccines and injectables located in Castro Valley,
California. The amount expended approximated the fair value of the net assets
acquired.

On August 27, 1997, we called for redemption on September 12, 1997 all of our
outstanding 6 1/2% Convertible Subordinated Debentures Due 2002 at a redemption
price of $1,039 per $1,000 principal amount of Debentures plus accrued interest
through the redemption date. Debenture holders could elect to convert their
debentures into shares of our common stock through September 12, 1997, which was
the redemption date. Holders of all but $119,000 principal amount of the
$67,350,000 outstanding Debentures elected to convert their Debentures into
common stock at the rate of 50.4 shares of common stock for each $1,000
principal amount of Debentures. The redemption reduced our long-term debt by
$67,350,000 and increased by 3.4 million the number of issued shares of our
common stock.


We hold a note receivable with a principal balance of $3.2 million from the CEO
of the Company. The proceeds of this note, which bears interest at 6.5% per
annum and matures on December 16, 2000, were used by the CEO to exercise stock
options. The note provides for annual interest only payments with outstanding
interest and principal to be repaid at maturity.

In December 1998, we established a receivables securitization facility (the
"Receivables Facility") pursuant to which we sell substantially all of our
receivables arising in connection with the sale of goods or the rendering of
services ("Receivables") to Bindley Western Funding Corporation ("Funding
Corp."), a wholly owned special purpose corporation subsidiary. The Receivables
are sold to Funding Corp. on a continuous basis, and the cash generated by sales
of interests in the Receivables or by collections on the Receivables retained is
used by Funding Corp. to, among other things, purchase additional Receivables
originated by the Company. The assets of Funding Corp. will be available first
and foremost to satisfy claims of Funding Corp. creditors.

In connection with the Receivables Facility, Funding Corp. entered into a
Receivables Purchase Agreement, dated as of December 28, 1998, with Falcon Asset
Securitization Corporation ("Falcon"), an affiliate of The First National Bank
of Chicago ("First Chicago"), certain other financial institutions (collectively
with Falcon, the "Purchasers"), and First Chicago, as Agent. Pursuant to the
Receivables Purchase Agreement, Funding Corp. may, from time to time, sell
interests in the Receivables ("Receivables Interests") to the Agent for the
benefit of the Purchasers. Each Receivables Interest has an associated Discount
Rate and Tranche Period applicable to it, as selected by Funding Corp. The
Discount Rate may, at Funding Corp.'s election, be the Base Rate (the corporate
prime or base rate announced from time to time by First Chicago) or, with
respect to the Receivables Interests purchased by Falcon, the CP Rate
(generally, a commercial paper related rate based on Falcon's funding charges)
or, with respect to the Receivables Interests purchased by other Purchasers, the
LIBO Rate (generally, LIBOR for the applicable Tranche Period, plus 1/25% per
annum). The Receivables Facility terminates on December 27, 1999, and is subject
to final termination on December 28, 2003, subject to earlier termination in
certain events. At December 31, 1998, there were $224 million of Receivables
Interests outstanding, bearing a Discount Rate of 5.5% per annum. We account for
the Receivables Facility as a financing transaction in our consolidated
financial statements.

In connection with the implementation of the Receivables Facility, on December
28, 1998, we renegotiated our bank line of credit and now have $174.5 million of
available credit. For 1998, the net decrease in borrowings under the bank credit
agreement was $127.5 million. At December 31, 1998, we had borrowed $19.5
million under the bank credit agreement and had a remaining availability of $155
million.

At December 31, 1998, we owed to Priority $16.5 million. This amount is due on
demand and represents loans of excess cash balances of Priority to us on a
short-term basis, bearing interest at our average incremental borrowing rate. At
December 31, 1998, the incremental borrowing rate was 6.3%.

We believe that our cash on hand, bank line of credit, Receivables Facility and
working capital management efforts are sufficient to meet future working capital
requirements.

Our primary exposure to market risk consists of changes in interest rates on
borrowings. An increase in interest rates would adversely affect our operating
results and the cash flow available to fund operations and expansion. Based on
the average variable borrowings for 1998, an increase of 10% in our average
variable borrowing rate would result in a $2.2 million


annual increase in interest expense. Conversely, a 10% decrease in the average
variable borrowing rate would result in a $2.2 million annual decrease in
interest expense. We continually monitor this risk and review the potential
benefits of entering into hedging transactions, such as interest rate swaps, to
mitigate the exposure to interest rate fluctuations. At December 31, 1998, we
were not a party to any hedging transactions.

Our principal working capital needs are for inventory and accounts receivable.
We sell inventory to our chain drug warehouse and other customers on various
payment terms. This requires significant working capital to finance inventory
purchases and entails accounts receivable exposure in the event any of our chain
warehouse or other major customers encounter financial difficulties. Although we
monitor closely the creditworthiness of our major customers and, when feasible,
obtain security interests in the inventory sold, there can be no assurance that
we will not incur some collection loss on chain drug or other major customer
accounts receivable in the future.

Year 2000.

The year 2000 poses a unique set of challenges to those industries reliant on
information technology. As a result of the methods employed by early
programmers, many software applications and operational programs may be unable
to distinguish the year 2000 from the year 1900. If not effectively addressed,
this problem could result in the production of inaccurate data, or in the worst
cases, the inability of the systems to continue to function altogether. We and
other companies in the same business are vulnerable to the dependence on
distribution and communications systems.

Our Daily Sales System, which controls ordering, pricing, inventory control, and
shipping and which accounts for 70% of our total investment in software, was
initially designed and programmed to comply with the Year 2000 challenge. We
anticipate that our remaining systems will be fully Year 2000 compliant by the
end of the second quarter of 1999. Furthermore, all software purchases within
the past three years have been guaranteed to be compliant by the vendor. We have
upgraded and replaced our hardware and network systems for reasons other than
Year 2000 compliance, however, and such new hardware and network systems will be
fully tested during 1999 to ensure that they are also Year 2000 compliant. We
estimate that the total cumulative costs relating to its efforts to make our
systems compliant for the Year 2000 will be approximately $1 million, of which
approximately $340,000 had been incurred as of December 31, 1998.

We believe that the expenditures required to bring our systems into compliance
will not have a material adverse effect on our performance. However, the Year
2000 problem is pervasive and complex and can potentially affect any computer
process. Accordingly, no assurance can be given that the Year 2000 compliance
can be achieved without additional unanticipated expenditures and uncertainties
that might affect future financial results.

Moreover, to operate our business, we rely on governmental agencies, utility
companies, telecommunications companies, shipping companies, suppliers and other
third party service providers over which we can assert little control. Our
ability to conduct our business is dependent upon the ability of these third
parties to avoid Year 2000 related disruptions. We are in the process of
contacting our third party service providers about their Year 2000 readiness,
but we have not yet received any assurances from any such third parties about
their Year 2000 compliance. If our key third party service providers do not
adequately address their Year 2000 issues, our business may be materially
affected, which could result in a material adverse effect


on our results of operations and financial condition.

We have not to date developed any contingency plans, as such plans will depend
on the responses from our third party service providers, in the event we or any
key third party providers should fail to become Year 2000 compliant. If
required, critical functions could be handled on a manual basis until such time
that the Year 2000 malfunction was identified and resolved.

Inflation.

Our financial statements are prepared on the basis of historical costs and are
not intended to reflect changes in the relative purchasing power of the dollar.
Because of our ability to take advantage of forward purchasing opportunities, we
believe that our gross profits generally increase as a result of manufacturers'
price increases in the products we distribute. Gross profits may decline if the
rate of price increases by manufacturers declines.

Generally, price increases are passed through to customers as they are received
by the Company and therefore reduce the negative effect of inflation. Other non-
inventory cost increases, such as payroll, supplies and services, have been
partially offset during the past three years by increased volume and
productivity.

Forward Looking Statements.

Certain statements included in this annual report which are not historical facts
are forward looking statements. Such forward looking statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. These forward looking statements involve certain risks and
uncertainties including, but not limited to, changes in interest rates,
competitive pressures, changes in customer mix, financial stability of major
customers, investment procurement opportunities, asserted and unasserted claims,
changes in government regulations or the interpretation thereof and our ability
and the entities with which we transact business to modify or redesign their
computer systems to work properly in the year 2000, which could cause actual
results to differ from those in the forward looking statements.

Quantitative and Qualitative Disclosures About Market Risk.

See discussion above in Management's Discussion and Analysis of Financial
Condition and Results of Operations.