Contact:
                                                                  Aruna Lalwaney
                                                                    800/578-3268
                                                         aruna.lalwaney@daou.com
                                                                    www.daou.com


DAOU SYSTEMS, INC. ANNOUNCES $100 MILLION, FIVE-YEAR INFORMATION TECHNOLOGY 
CONTRACT WITH SAINT MARY'S HEALTH NETWORK, RENO, NEVADA

SAN DIEGO--(BW HealthWire)--Jan. 11, 1999--DAOU Systems, Inc. (Nasdaq:DAOU 
- -news) announced today an approximately $100 million Information Systems 
Outsourcing contract with Saint Mary's Health Network, Reno, Nevada. 

The contract, which spans over five years, encompasses DAOU Systems, Inc. 
providing a complete range of Information Technology (IT) outsourcing 
solutions to Saint Mary's Health Network. 

Georges Daou, chief executive officer of DAOU Systems, Inc., stated, "We 
have successfully completed a comprehensive acquisition strategy, and now 
provide a full complement of IT outsourcing services including, Application 
Implementation, Communications Infrastructure, including voice, video, the 
network and the desktop, Consulting and Data Integration. 

"DAOU will leverage its relationships with the leading Healthcare 
Information Services (HIS) vendors, hardware vendors and apply our expertise 
to improve the effectiveness of Saint Mary's IT operations. Our partnering 
with Saint Mary's represents the first major fulfillment of our ability to 
provide a full range of, single source, value-added solutions."

Jeff Bills, president and CEO of Saint Mary's Health Network, stated, "We 
are very pleased to have DAOU handle all of our Information Technology needs. 
They have demonstrated to us over the years that they can enhance our 
productivity and efficiency, and ultimately help us deliver better 
healthcare. That is why we have entered into this strategic partnership."

Saint Mary's has allocated the approximately $100 million agreement across 
professional services, vendor support contracts and capital expenditures to 
execute their IT strategy under DAOU management. DAOU management will be 
responsible for the entire IT budget and currently plans to have about 60 
employees on site and leverage its industry relationships to enhance support 
contracts where possible. 

DAOU also plans to utilize its own nearly 800 person workforce to deliver on 
portions of the operating budget that DAOU services can handle productively 
and economically for Saint Mary's. The contract, which spans five years, has 
a renewal option for a sixth year. 

DAOU Systems, Inc. is a provider of integrated Information Technology (IT) 
solutions and services to the U.S. healthcare industry. DAOU's capabilities 
range from up-front strategic consulting to IT system design, implementation 
and long-term tactical support. DAOU's IT offerings include data,



voice and video networking, applications consulting and implementation, as 
well as operational and Internet solutions. 

DAOU has nearly 800 employees, and has provided services to more than 1,300 
healthcare organizations, including many of the nation's top 100 integrated 
delivery systems. DAOU's clients include organizations such as Catholic 
Health Care West, The Cleveland Clinic, Mercy Health Services, Saint Barnabas 
Health Care, and Humana Healthcare. More information about DAOU Systems can 
be found at www.daou.com on the World Wide Web. 

Except for the historical information contained herein, the matters discussed 
in this press release are forward-looking statements that involve numerous 
risks and uncertainties. The company's actual results could differ materially 
from those projected in such forward-looking statements and will depend upon 
a number of factors, including those discussed in the company's filings with 
the Securities Exchange Commission and other press releases of the company.