TORONTO (JUNE 26, 2002) – MDS Inc. (TSX: MDS, NYSE: MDZ), an international health and life sciences company, and ARUP Laboratories of Salt Lake City, UT today announced a new collaborative alliance. Under this agreement, ARUP will serve as the primary esoteric reference laboratory for MDS managed regional laboratories in the United States. ARUP will work with their hospital and integrated delivery networks to make them aware of MDS capabilities in helping hospital networks to create core laboratories and build their outreach capabilities. The agreement is structured to foster mutual growth for both health care organizations, specifically supporting the strategic directions of both MDS and ARUP in the expansion of regional-based hospital laboratory services in the United States. MDS and ARUP are also exploring ways to broaden the strategic alignment between their organizations.

“MDS and ARUP share a common vision, with complementary strengths and business practices. This makes this new alliance a natural progression in our long-standing business relationship,” said Cam Crawford, President of MDS Laboratory Services. Both organizations believe in the development of regional laboratory services and integrated delivery networks, focused on the local hospital delivery system, as the basis for delivering critical, high quality care. “MDS and ARUP have different health care capabilities and cater to different elements of the regional model. Working together gives our clients a broader service offering,” noted Ronald Weiss, MD, MBA, Senior Vice-President of Business Development at ARUP Laboratories.

MDS and ARUP have collaborated on other projects, including the development of new assays and automation. MDS and ARUP developed new assays using the MDS Sciex tandem mass spectrometry instrumentation. These include new assays for methylmalonic acid and urine catecholamines. The mass spectrometry instrumentation provided the necessary sensitivity and accuracy, supported by technical and project assistance from MDS.

ARUP installed an Automated Transport and Sorting System built by MDS AutoLab and developed a rules-based order-entry computer system, Expert Specimen Processing (ESP), to complement the automation. This combined automated system enables specimens to reach the testing area as soon as two hours earlier, with higher accuracy and efficiency. The system allows ARUP's highly skilled professionals to focus their activities on the interpretive and consultative aspects of laboratory service. Also, the rate at which ARUP hires new employees has slowed dramatically, simply due to the automation of repetitive handling steps.

About MDS Inc.
As part of MDS Inc. (TSX: MDS; NYSE: MDZ), an international health and life sciences company, MDS Diagnostic Services is a leading provider of laboratory services in North America and manages more than 300 operations directly and on behalf of partners such as Duke University Health System, Baptist Memorial Healthcare Corporation, and the Toronto University Health Network. The MDS Inc. focus is on advancing health through science. It does this by providing: laboratory testing, imaging agents for nuclear medicine testing, sterilization systems for medical and consumer products, research services to speed discovery and development of new drugs, therapy systems for planning and delivery of cancer treatment, analytical instruments to assist in the development of new drugs, and medical/surgical supplies. MDS employs more than 10,000 highly skilled people at its global operations on five continents. For more information, visit www.mdsdx.com or www.mdsintl.com.

About ARUP Laboratories
ARUP Laboratories is a national full-service reference laboratory owned by the University of Utah. ARUP is a worldwide leader in innovative laboratory research and development, led by the efforts of the ARUP Institute for Clinical and Experimental Pathology, LLC. With revenue of greater than $140 million and more than 1,300 employees, ARUP offers over 2,000 tests and test combinations, ranging from routine cytology screens to highly esoteric molecular and genetic assays. ARUP's clients include university teaching hospitals, multi-hospital groups, major commercial laboratories, group purchasing organizations, military and government facilities, and major pharmaceutical firms. Further information on ARUP Laboratories can be obtained on the Internet at www.aruplab.com.

Contact Information:

Larry T. Eiler
Eiler Communications
734-761-3399
larry@eilerpr.com