<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   (Mark One)

           [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                For the quarterly period ended December 31, 2000

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
              For the transition period from _________ to _________

                           Commission File No. 0-19842
                                               -------

                             POLYMEDICA CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

        MASSACHUSETTS                                            04-3033368
------------------------------                               -------------------
State or other jurisdiction of                                (I.R.S. Employer
incorporation or organization                                Identification No.)

 11 STATE STREET, WOBURN, MASSACHUSETTS                                  01801
----------------------------------------                              ----------
(Address of principal executive offices)                              (Zip Code)

Registrant's telephone number, including area code                (781) 933-2020
                                                                  --------------


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.  Yes _X_   No

     The total number of shares of the registrant's Common Stock issued as of
February 13, 2001, was 13,275,993, which includes 101,201 shares held in
treasury.


<PAGE>   2


                             POLYMEDICA CORPORATION

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                             Page
                                                                             ----

<S>                                                                          <C>
PART I  -         FINANCIAL INFORMATION

Item 1  -         Unaudited Financial Statements

                  Consolidated Balance Sheets at
                           December 31, 2000 and March 31, 2000                3

                  Consolidated Statements of Operations
                           for the three and nine months ended
                           December 31, 2000 and 1999                          5

                  Consolidated Statements of Cash Flows
                           for the nine months ended
                           December 31, 2000 and 1999                          6

                  Notes to Consolidated Financial Statements                   7

Item 2  -         Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                         13

Item 3  -         Quantitative and Qualitative Disclosures About Market
                  Risk                                                        24

PART II -         OTHER INFORMATION

Item 1  -         Legal Proceedings                                           25

Item 4  -         Submission of Matters to a Vote of Security Holders         25

Item 6  -         Exhibits and Reports on Form 8-K                            25

Signatures                                                                    26

</TABLE>


                                       2
<PAGE>   3


                         PART I - FINANCIAL INFORMATION

ITEM 1.   UNAUDITED FINANCIAL STATEMENTS


                             POLYMEDICA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)


<TABLE>
<CAPTION>
                                                           DECEMBER 31,
                                                              2000            MARCH 31,
                                                           (UNAUDITED)          2000
                                                           -----------        ---------
<S>                                                        <C>                <C>
ASSETS

Current assets:
      Cash and cash equivalents                             $ 40,313          $ 40,687
      Accounts receivable (net of allowances of
         $12,045 and $10,745 as of December 31 and
         March 31, 2000, respectively)                        46,073            39,763
      Inventories                                             13,027             8,979
      Deferred tax asset                                       4,389             4,389
      Prepaid expenses and other
         current assets                                        1,429               905
                                                            --------          --------

              Total current assets                           105,231            94,723

Property, plant and equipment, net                            20,664            16,557
Intangible assets, net                                        33,292            35,000
Direct response advertising, net                              37,544            28,078
Other assets                                                   2,426             1,238
                                                            --------          --------

              Total assets                                  $199,157          $175,596
                                                            ========          ========
</TABLE>


  The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.


                                       3
<PAGE>   4


                             POLYMEDICA CORPORATION
                           CONSOLIDATED BALANCE SHEETS
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                         DECEMBER 31,
                                                                            2000              MARCH 31,
                                                                         (UNAUDITED)            2000
                                                                         ------------         ---------

<S>                                                                      <C>                  <C>
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                      $ 12,287            $ 14,082
    Accrued expenses                                                        14,211               8,118
    Current portion of long-term debt and capital lease
       obligations                                                             575                 564
                                                                          --------            --------

              Total current liabilities                                     27,073              22,764

Long-term debt and capital lease obligations                                 1,099               2,768
Deferred income taxes                                                       13,914              13,914
Other long-term liabilities                                                  1,152                  --
                                                                          --------            --------

              Total liabilities                                             43,238              39,446

Commitments

Shareholders' equity:
      Preferred stock $0.01 par value; 2,000,000 shares
        authorized, none issued or outstanding                                  --                  --
      Common stock $.01 par value; 50,000,000 shares
        authorized; 13,275,993 and 13,108,667 issued
        as of December 31 and March 31, 2000,
        respectively                                                           133                 131
      Treasury stock, at cost, (102,000 and 2,203 shares as
        of December 31 and March 31, 2000, respectively)                    (3,067)                (68)
      Additional paid-in capital                                           114,877             113,488
      Retained earnings                                                     43,976              22,599
                                                                          --------            --------

              Total shareholders' equity                                   155,919             136,150
                                                                          --------            --------

              Total liabilities and shareholders' equity                  $199,157            $175,596
                                                                          ========            ========
</TABLE>


  The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.


                                       4
<PAGE>   5


                             POLYMEDICA CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     DEC. 31,    DEC. 31,      DEC. 31,     DEC. 31,
                                                       2000        1999          2000         1999
                                                     --------    --------      --------     --------

<S>                                                  <C>         <C>           <C>          <C>
Net revenues                                         $56,826      $42,437      $162,465      $109,936

Cost of sales                                         19,228       17,569        57,566        46,422
                                                     -------      -------      --------      --------

Gross margin                                          37,598       24,868       104,899        63,514

Selling, general and administrative
  expenses                                            25,524       17,303        72,257        45,890
                                                     -------      -------      --------      --------

Income from operations                                12,074        7,565        32,642        17,624

Other income and expense:
   Investment income                                     737          487         2,103           686
   Interest expense                                      (51)        (101)         (199)       (1,283)
   Other income and expense                             (178)          --          (452)           --
                                                     -------      -------      --------      --------
                                                         508          386         1,452          (597)

Income before income taxes                            12,582        7,951        34,094        17,027
Income tax provision                                   4,693        3,061        12,717         6,555
                                                     -------      -------      --------      --------

Income before extraordinary loss                       7,889        4,890        21,377        10,472

Extraordinary loss on retirement of debt, net of
    related taxes                                         --       (1,332)           --        (1,332)
                                                     -------      -------      --------      --------

Net income                                           $ 7,889      $ 3,558      $ 21,377      $  9,140
                                                     =======      =======      ========      ========

Net income per weighted average share:

    Basic, before extraordinary loss on
        retirement of debt                           $   .60      $   .38      $   1.62      $   1.00
    Basic                                            $   .60      $   .28      $   1.62      $    .88

    Diluted, before extraordinary loss on
        retirement of debt                           $   .58      $   .37      $   1.57      $    .94
    Diluted                                          $   .58      $   .27      $   1.57      $    .82

    Weighted average shares, basic                    13,214       12,762        13,176        10,437

    Weighted average shares, diluted                  13,643       13,192        13,627        11,190
</TABLE>


  The accompanying notes are an integral part of these unaudited consolidated
                             financial statements.


                                       5
<PAGE>   6


                             POLYMEDICA CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED DEC. 31,
                                                                           2000          1999
                                                                         --------      --------

<S>                                                                      <C>           <C>
Cash flows from operating activities:
    Net income                                                           $ 21,377      $  9,140
    Adjustments to reconcile net income to net cash flows
      from operating activities:
        Depreciation and amortization                                       3,839         2,710
        Amortization of direct-response advertising                        13,737         6,170
        Direct-response advertising                                       (23,203)      (12,702)
        Extraordinary loss on retirement of debt                               --         2,165
        Provision for inventory obsolescence                                1,240           252
        Provision for bad debts                                            12,299         7,536
        Provision for sales allowances                                      9,129         6,448
        Loss on investments                                                   357            --
        Changes in assets and liabilities:
           Accounts receivable                                            (27,738)      (16,162)
           Inventories                                                     (6,685)       (1,214)
           Prepaid expenses and other assets                                  359        (1,314)
           Accounts payable                                                (1,795)       (3,066)
           Accrued expenses                                                 7,472         6,834
                                                                         --------      --------

                Total adjustments                                         (10,989)       (2,343)
                                                                         --------      --------

                Net cash flows from operating activities                   10,388         6,797
                                                                         --------      --------

Cash flows from investing activities:
    Investment in other assets                                               (200)           --
    Proceeds from sale of certain assets                                      400            --
    Purchase of property, plant and equipment                              (6,305)       (4,787)
                                                                         --------      --------

                Net cash flows from investing activities                   (6,105)       (4,787)
                                                                         --------      --------

Cash flows from financing activities:
    Net proceeds from secondary offering                                       --        52,205
    Proceeds from issuance of common stock                                  2,224         2,139
    Repurchase of common stock                                             (3,831)           --
    Contributions to deferred compensation plan                            (1,277)           --
    Reduction of obligations under capital leases                            (391)           --
    Repayment of senior debt and notes payable                             (1,382)      (19,606)
    Premium paid on debt extinguishments                                       --        (1,806)
    Repayment of line of credit                                                --        (4,000)
    Repayment of officer notes receivable                                      --            68
                                                                         --------      --------

                Net cash flows from financing activities                   (4,657)       29,000
                                                                         --------      --------

                Net increase/(decrease) in cash and cash equivalents         (374)       31,010

                Cash and cash equivalents at beginning of period           40,687        10,191
                                                                         --------      --------
                Cash and cash equivalents at end of period               $ 40,313      $ 41,201
                                                                         ========      ========

    Supplemental disclosure of cash flow information:
    Receipt of notes receivable from sale of certain assets              $  1,213            --
    Assets purchased under capital leases                                     116            --
</TABLE>


   The accompanying notes are an integral part of these unaudited consolidated
                              financial statements.


                                       6
<PAGE>   7


                             POLYMEDICA CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


1.   The unaudited consolidated financial statements included herein have been
prepared by PolyMedica Corporation ("PolyMedica" or the "Company") pursuant to
the rules and regulations of the Securities and Exchange Commission and include,
in the opinion of management, all adjustments, consisting of normal, recurring
adjustments, necessary for a fair presentation of interim period results.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. The
Company believes, however, that its disclosures are adequate to make the
information presented not misleading. The results for the interim periods
presented are not necessarily indicative of results to be expected for the full
fiscal year. It is suggested that these interim consolidated financial
statements be read in conjunction with the audited consolidated financial
statements included in the Company's Annual Report on Form 10-K for the fiscal
year ended March 31, 2000 and its unaudited Quarterly Reports on Form 10-Q for
the periods ended June 30 and September 30, 2000.

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reported
period. Actual results could differ from those estimates. In addition, certain
amounts in the prior period financial statements have been reclassified to
conform with the current year presentation.

2.   Included in other assets is restricted cash of $1.28 million and $0 as of
December 31 and March 31, 2000, respectively, which represents amounts set aside
by the Company under 401(k) Shadow and Pension Plans. The related liability is
included in other long-term liabilities.

3.   Inventories consist of the following:
     (In thousands)

<TABLE>
<CAPTION>
                                    Dec. 31,         March 31,
                                      2000             2000
                                    -------          -------

<S>                                 <C>              <C>
           Raw materials            $   388          $  848
           Work in process              592             505
           Finished goods            12,047           7,626
                                    -------          ------
                                    $13,027          $8,979
                                    =======          ======
</TABLE>


4.   In accordance with Statement of Position 93-7 ("SOP 93-7"), the Company
incurred and capitalized direct-response advertising of $6.88 million and $5.02
million in the three months ended December 31, 2000 and 1999, respectively. The
Company expenses in the period all other advertising that does not meet the
requirements of SOP 93-7. A total of $5.23 million and $2.53


                                       7
<PAGE>   8


million in direct-response advertising was amortized and charged to selling,
general and administrative expense for the three months ended December 31, 2000
and 1999, respectively. A total of $23.20 million and $12.70 million of
direct-response advertising was capitalized in the nine months ended December
31, 2000 and 1999, respectively. A total of $13.74 million and $6.17 million was
amortized and charged to selling, general and administrative expense for the
nine months ended December 31, 2000 and 1999, respectively. Management assesses
the realizability of the amounts of direct-response advertising costs reported
as assets at each balance sheet date by comparing the carrying amounts of such
assets to the probable remaining future net benefits expected to result directly
from such advertising.

5.   Sales allowances are recorded for estimated product returns using
historical return data and are recorded as a reduction of revenue. These
allowances are adjusted quarterly to reflect actual returns and trends. During
the three months ended December 31, 2000 and 1999, the Company provided for
sales allowances at a rate of approximately 4.9% and 5.7% of gross sales,
respectively. During the nine months ended December 31, 2000 and 1999, the
Company provided for sales allowances at a rate of approximately 5.3% and 5.5%
of gross sales, respectively.

6.   Approximately $40.91 million and $27.99 million of revenues for the three
months ended December 31, 2000 and 1999, respectively, were billed to Medicare
on behalf of the Company's customers for products and services provided by the
Company to Medicare beneficiaries. For the nine months ended December 31, 2000
and 1999, respectively, $116.04 million and $68.26 million of revenues were
billed to Medicare on behalf of the Company's customers for products and
services provided by the Company to Medicare beneficiaries.

7.   The Company has historically recognized revenue after receipt of a customer
order and shipment of the related product has taken place. As of December 31,
2000, gross unbilled receivables for products shipped, included in gross
accounts receivable of $58.12 million, were $16.72 million as compared with
$20.16 million included in gross accounts receivable of $50.51 million as of
March 31, 2000. Approximately $13.35 million and $15.62 million of the total
unbilled receivable balances as of December 31 and March 31, 2000,
respectively, represent amounts to be billed to Medicare. Unbilled receivables
generally arise when the Company has shipped products pursuant to customer
orders, however, the required documentation to bill Medicare or other third
party payers has not been accumulated. (See Note 11.)


                                       8
<PAGE>   9


8.   Calculations of earnings per share are as follows:

<TABLE>
<CAPTION>
(In thousands, except per share data)                                Three Months Ended                 Nine Months Ended
                                                                  Dec. 31,         Dec. 31,         Dec. 31,         Dec. 31,
                                                                    2000             1999             2000             1999
                                                                  --------         --------         --------         --------

<S>                                                               <C>              <C>              <C>              <C>
Net income                                                        $ 7,889          $ 3,558          $21,377          $ 9,140

BASIC:
Weighted average common stock outstanding, net of
     treasury stock, end of period                                 13,214           12,762           13,176           10,437
Net income per common share, basic                                $   .60          $   .28          $  1.62          $   .88
                                                                  =======          =======          =======          =======

DILUTED:
Weighted average common stock outstanding, net of
     treasury stock, end of period                                 13,214           12,762           13,176           10,437
Weighted average common stock equivalents                             429              430              451              753
                                                                  -------          -------          -------          -------
Weighted average common stock and common stock
     equivalents outstanding, net of treasury stock, end
     of period
                                                                   13,643           13,192           13,627           11,190
Net income per common share, diluted                              $   .58          $   .27          $  1.57          $   .82
                                                                  =======          =======          =======          =======
</TABLE>

     Options to purchase 652,500 and 209,000 shares of common stock were
outstanding during the three months ended December 31, 2000 and 1999,
respectively, but were not included in the computation of diluted earnings per
share because the options' exercise price was greater than the average market
price of the common shares. During the nine months ended December 31, 2000 and
1999, options to purchase 0 and 234,000 shares of common stock, respectively,
were outstanding but were not included in the computation of diluted earnings
per share because the options' exercise price was greater than the average
market price of the common shares.

9.   The Company's total net income and comprehensive income was $7.89 million
and $3.56 million for the three months ended December 31, 2000 and 1999,
respectively. For the nine months ended December 31, 2000 and 1999, total net
income and comprehensive income was $21.38 million and $9.14 million,
respectively.

10.  The Company has three reportable segments:

     Chronic Care - The Company sells diabetes supplies and related products,
and until November 2000, sold adult nutrition supplies through its Chronic Care
segment. It offers a wide array of diabetes products from a full range of
name-brand manufacturers, contacts the patient's doctor to obtain the required
prescription information and written documentation, files the appropriate
insurance forms and bills Medicare and private insurers directly. This service
frees the patient from paying for his or her chronic disease-related upfront
expenses and offers the convenience of free home delivery of supplies.

     Professional Products - The Company develops, manufactures, and distributes
prescription urology products and sells respiratory products to
Medicare-eligible seniors.


                                       9
<PAGE>   10


     Consumer Healthcare - The Company offers the AZO line of products which
includes OTC ("over-the-counter") female urinary tract discomfort products and
home medical diagnostic kits; and, until September 2000, was a distributor of
private-label and branded digital thermometers. In September 2000, the Company
sold certain assets of its Consumer Healthcare segment. (See Note 14 for
information on the sale.)

     Depreciation and amortization expense attributable to the Company's
corporate headquarters is allocated to the operating segments according to the
segment's relative percentage of total revenue. However, segment assets
belonging to the Company's corporate headquarters are not allocated, as they are
considered separately for management evaluation purposes. As a result of these
allocations, the segment information may not be indicative of the financial
position or results of operations that would have been achieved had these
segments operated as unaffiliated entities. The depreciation and amortization
amounts below include amortization of direct-response advertising. Information
concerning the operations in these reportable segments is as follows:

<TABLE>
<CAPTION>
                                                Three months ended                   Nine months ended
                                             Dec. 31,         Dec. 31,          Dec. 31,         Dec. 31,
(In thousands)                                 2000             1999              2000             1999
                                             --------         --------          --------         --------
<S>                                          <C>              <C>               <C>              <C>
NET REVENUES:
Chronic Care                                  $43,389          $34,063          $123,213         $ 89,673
Professional Products                          11,712            4,650            31,332            9,524
Consumer Healthcare                             1,725            3,724             7,920           10,739
                                              -------          -------          --------         --------
Total                                         $56,826          $42,437          $162,465         $109,936
                                              =======          =======          ========         ========

DEPRECIATION AND AMORTIZATION:
Chronic Care                                  $ 3,831          $ 2,569          $ 10,818         $  6,866
Professional Products                           2,732              915             6,732            1,963
Consumer Healthcare                                --               19                26               51
                                              -------          -------          --------         --------
Total                                         $ 6,563          $ 3,503          $ 17,576         $  8,880
                                              =======          =======          ========         ========

INCOME BEFORE INCOME TAXES:
Chronic Care                                  $ 8,788          $ 5,928          $ 24,756         $ 12,914
Professional Products                           2,962            1,346             9,344            2,157
Consumer Healthcare                               832              677                (6)           1,956
                                              -------          -------          --------         --------
Total                                         $12,582          $ 7,951          $ 34,094         $ 17,027
                                              =======          =======          ========         ========
</TABLE>

<TABLE>
<CAPTION>
                                             Dec. 31,         March 31,
                                               2000             2000
                                             --------         ---------
<S>                                          <C>               <C>
SEGMENT ASSETS:
Chronic Care                                 $ 96,844         $ 81,513
Professional Products                          55,461           44,384
Consumer Healthcare                             1,991            6,504
Corporate Headquarters                         44,861           43,195
                                             --------         --------
Total                                        $199,157         $175,596
                                             ========         ========
</TABLE>


                                       10
<PAGE>   11


11.  In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities", which establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts and for hedging activities. In June
2000, the FASB issued SFAS No. 138, "Accounting for Derivative and Certain
Hedging Activities, an Amendment of SFAS No. 133". This accounting standard
amended the accounting and reporting standards of SFAS No. 133 for certain
derivative and hedging activities. The Company will adopt SFAS No. 133, as
amended, in the first quarter of fiscal year 2002. The adoption of SFAS No. 133
is not expected to have a material impact on the Company's financial position or
results of operations.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
(SAB 101), subsequently updated by SAB 101B. SAB 101 and SAB 101B summarize
certain of the Staff's views in applying generally accepted accounting
principles to revenue recognition in financial statements. The Company is
required to adopt SAB 101 no later than the fourth quarter of fiscal year 2001.
The Company has determined that SAB 101 will result in a change in the timing of
revenue recognition for products shipped to customers who have placed orders,
but from whom the Company has not yet received a written Authorization of
Benefits form and Doctor's Order which are required to bill Medicare and other
third-party payers. The Company will record the cumulative effect of this change
in accounting principle as of April 1, 2000 in its Annual Report on Form 10-K
for the year ended March 31, 2001. The Company expects that revenue for the
fiscal year ended March 31, 2001 to be reported under SAB 101 will not be
materially different than revenue that would be reported for the same period
under the Company's existing revenue recognition policy.

     In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of APB Opinion No.
25 and, among other issues, clarifies the following: the definition of an
employee for purposes of applying APB Opinion No. 25, the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of previously fixed stock
options or awards, and the accounting for an exchange of stock compensation
awards in a business combination. FIN 44 was effective July 1, 2000, but certain
conclusions in FIN 44 cover specific events that occurred after either December
15, 1998 or January 12, 2000. The adoption of FIN 44 does not have a material
impact on the Company's financial position or results of operations.

12.  As of December 31, 2000, the Company had no outstanding balance under its
existing $10.0 million revolving credit facility. Under this facility, the
Company is required to be in compliance with certain financial covenants. The
interest rate is tied to the Company's funded debt to EBITDA ratio and was 8.50%
as of December 31, 2000.

13.  In June 2000, the Company's board of directors authorized the repurchase of
up to 1,000,000 shares of the Company's common stock on the open market. In the
three months


                                       11
<PAGE>   12


ended December 31, 2000, 102,000 shares were repurchased under this program for
$3.06 million. In the nine months ended December 31, 2000, 122,000 shares were
repurchased for $3.83 million.

14.  In September 2000, the Company sold certain assets of its thermometry and
compliance products business which were included in the Consumer Healthcare
segment. Under the terms of the sale, the purchaser paid the Company $300,000 in
cash and issued to the Company a promissory note in the face amount of $1.12
million at a 7% interest rate, maturing September 20, 2003. The transaction
resulted in an immaterial loss which was included in other income and expense on
the Company's consolidated statements of operations.

15.  In November 2000, the Company filed an amendment to a shelf registration
statement it had originally filed in April 2000, to enable it to offer from time
to time, shares of its common stock having an aggregate value of up to $100
million. The Securities and Exchange Commission declared the shelf registration
statement effective during the quarter ended December 31, 2000. No shares of
common stock had been sold under this shelf registration statement as of
February 12, 2001.

16.  On November 27, 2000, Richard Bowe SEP-IRA filed a purported class action
lawsuit in the United States District Court for the District of Massachusetts
(the "Bowe Complaint") against the Company and one of its officers. The Bowe
Complaint claims violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks unspecified
damages, attorneys' fees and costs. The Bowe Complaint also refers to a magazine
article published in November 2000 reporting an alleged investigation by the
Federal Bureau of Investigation of the Company and its Liberty Medical Supply
division. On December 19, 2000, Trust Advisors Equity Plus LLC filed a purported
class action lawsuit in the United States District Court for the District of
Massachusetts (the "Trust Advisors Complaint") against the Company and one of
its officers. The Trust Advisors Complaint asserts the same claims, makes the
same allegations and seeks the same relief as the Bowe Complaint. On January 26,
2001, the plaintiffs in the Bowe and Trust Advisors Complaints moved to
consolidate the Bowe and Trust Advisors Complaints and to be appointed as lead
plaintiffs in the consolidated action pursuant to the Section 21D(a)(3)(B) of
the Securities Exchange Act of 1934. The Court has not yet ruled on this motion.
The Company and the other defendant are scheduled to respond to the Complaints
on or before March 20, 2001. The Company believes it has meritorious defenses to
the claims made in the Bowe and Trust Advisors Complaints and intends to contest
these Complaints vigorously. The Company has not, to date, been contacted by the
FBI about an investigation.


                                       12

<PAGE>   13


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

OVERVIEW

Business

     PolyMedica Corporation is a leading provider of direct-to-consumer
specialty medical products and services, conducting business in the Chronic
Care, Professional Products and Consumer Healthcare markets. We sell diabetes
and related products, and until November 2000, sold adult nutrition supplies
through our Chronic Care segment. Our AZO brand holds a leading position in the
over-the-counter urinary health market. We distribute AZO female urinary
discomfort and similar AZO products to food and drug retailers nationwide,
through our Consumer Healthcare segment. We also market, manufacture and
distribute a broad line of prescription urological and suppository products and
provide direct-to-consumer prescription respiratory supplies and services to
Medicare-eligible seniors suffering from chronic obstructive pulmonary disease
("COPD") through our Professional Products segment.

     SAB 101 and SAB 101B summarize certain of the SEC's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. We are required to adopt SAB 101 no later than the fourth quarter
of fiscal year 2001. We have determined that SAB 101 will result in a change in
the timing of revenue recognition for products shipped to customers who
have placed orders, but from whom we have not yet received a written
Authorization of Benefits form and Doctor's Order required to bill Medicare and
other third-party payers. Historically, our policy was to recognize revenue
upon the shipment of products.

     Expense items include cost of sales and selling, general and administrative
expenses.

     -    Cost of sales consists primarily of purchased finished goods for sale
          in our markets and, to a lesser extent, materials and overhead costs
          for products that it manufactures in its facility; and

     -    Selling, general and administrative expenses consist primarily of
          expenditures for personnel and benefits, as well as allowances for bad
          debts, rent, amortization of capitalized direct-response advertising
          costs and other amortization and depreciation.

Chronic Care

     We are a national direct-mail provider of diabetes and, until November
2000, sold adult nutrition supplies through our Chronic Care segment. Since
acquiring Liberty Medical Supply, Inc. ("Liberty") in August 1996, we have
devoted a large part of our resources to the growth of our Chronic Care segment,
resulting in substantial increases in revenues and earnings generated from the
segment during each of the 2001, 2000, 1999, 1998 and 1997 fiscal years. We
intend to continue this emphasis in the future.

     We have over 500,000 customer records in our database and over 295,000
active Medicare-eligible diabetes customers, many of whom suffer from other
chronic diseases, to whom we sell name-brand products. We deliver products to
customers' homes and bill Medicare and private insurance directly for those
supplies that are reimbursable. We meet the needs of seniors suffering from
these diseases by:


                                       13
<PAGE>   14


     -    providing mail order delivery of supplies direct to our customers'
          homes;

     -    billing Medicare and/or private insurance directly;

     -    providing 24-hour telephone support to customers; and

     -    using sophisticated software and advanced order fulfillment systems to
          provide products and support quickly and efficiently.

     In the United States, there are approximately 6.3 million seniors who have
diabetes. With our database of over 295,000 active Medicare-eligible diabetes
customers, we serve approximately 4.7% of the diabetes marketplace. While many
of the 6.3 million seniors with diabetes are covered by managed care or reside
in extended care facilities, we believe that the balance are potential customers
of ours.

     In the quarter ended March 31, 2000, we commenced marketing studies and
began shipping products in the adult nutrition market. After analyzing early
experience in the adult nutrition market, we concluded that it did not meet our
business model requirements and in the quarter ended December 31, 2000, we
ceased doing business in this market.

     Co-branding Agreement

     In the quarter ended December 31, 2000, we signed a co-branding agreement
with Abbott Laboratories, Inc. This agreement covers sales to diabetics of
Abbott's new MediSense "Optium" brand blood glucose meter also featuring
"Liberty, Delivering Better Health" on its label. We began shipments in December
2000 of the co-branded blood glucose meters, featuring state-of-the-art
biosensor technology, along with related test strips and control solutions to
Liberty customers nationwide.

Professional Products

     We are a national direct-mail provider of prescription respiratory supplies
and also market, manufacture and distribute a broad line of prescription
urological and suppository products through our Professional Products segment.
Similar to the service we provide in our Chronic Care segment, we deliver
prescription respiratory supplies to customers' homes and bill Medicare and
private insurance directly for reimbursable supplies. As a participating
Medicare provider and third-party insurance biller, we provide a simple,
reliable way for seniors to obtain their supplies for respiratory disease
treatment. In 1998, Medicare expenditures for two key drugs for the treatment of
respiratory disease, albuterol and ipratropium, were in excess of $400 million.
As of December 31, 2000, we had approximately 25,000 active customers for our
respiratory disease supplies.

     We also own one of the broadest lines of branded prescription urology
products (excluding anti-infectives). Our urology products include urinary
analgesics, anti-spasmodics, local anesthetics and suppositories. URISED(R),
CYSTOSPAZ(R) and CYSTOSPAZ-M(R) analgesics and anti-spasmodics provide effective
symptomatic relief for urinary pain, burning and spasms. Many urology offices,
as well as hospitals, purchase the local anesthetic ANESTACON(R) for use in
diagnostic procedures and the catheterization process. B&O(R) and AQUACHLORAL(R)
suppositories are used by patients unable to tolerate oral dosages of


                                       14
<PAGE>   15


systemic analgesics and sedatives. Our primary customers for these urology
products are large drug wholesalers in the United States.

Consumer Healthcare

     Our Consumer Healthcare products are focused on female urinary tract
discomfort. Three of our products include AZO-STANDARD(R), which provides relief
from urinary tract discomfort, AZO-CRANBERRY(R), a dietary supplement which
helps maintain a healthy urinary tract and AZO TEST STRIPS(TM), an in-home
urinary tract infection testing kit which allows patients to call their doctors
with testing results. In April 1999, we began shipping two new homeopathic
botanical products, AZO MENOPAUSE(TM) and AZO CONFIDENCE(TM). AZO MENOPAUSE
offers relief from hot flashes and related symptoms. AZO CONFIDENCE is used for
the relief of symptoms of incontinence. An additional two products, AZO
YEAST(TM) and AZO PMS(TM) were introduced in the year ended March 31, 2000,
which serve to provide relief from yeast infections and pre-menstrual syndrome,
respectively.

     In September 2000, we sold certain assets of our thermometry and compliance
products business which were included in the Consumer Healthcare segment. Under
the terms of the sale, we received $300,000 in cash and a promissory note in the
face amount of $1.12 million at a 7% interest rate, maturing September 20, 2003.
The transaction resulted in an immaterial loss which was included in other
expense on our consolidated statements of operations.

Growth Strategy

     Our growth strategy includes the following elements:

     -    continue growth in our Chronic Care and Professional Products segments
          by expanding our customer base and product offerings;

     -    expand non-Medicare initiatives; and

     -    add complementary products and businesses.

Other

     We do not believe our net product sales, in the aggregate, are subject to
material seasonal fluctuations.

     In accordance with Statement of Position 93-7, direct-response advertising
and associated costs for all periods presented are capitalized and amortized to
selling, general and administrative expenses on an accelerated basis. Management
assesses the realizability of the amounts of direct-response advertising costs
reported as assets at each balance sheet date by comparing the carrying amounts
of such assets to the probable remaining future net benefits expected to result
directly from such advertising.


                                       15
<PAGE>   16


     Other advertising, promotional, and marketing costs are charged to earnings
in the period in which they are incurred. Promotional and sample costs whose
benefit is expected to assist future sales are expensed as the related materials
are used.

     We operate from manufacturing or distribution facilities located in
Massachusetts and Florida. Virtually all of our product sales are denominated in
U.S. dollars.

     Period to period comparisons of changes in net revenues are not necessarily
indicative of results to be expected for any future period.


                                       16
<PAGE>   17


RESULTS OF OPERATIONS

Three Months Ended December 31, 2000 Compared to Three Months Ended December 31,
1999

     Pretax income was $12.58 million in the three months ended December 31,
2000, a 58.2% increase as compared with $7.95 million in the three months ended
December 31, 1999. The Company's income before extraordinary loss on retirement
of debt, increased by 61.3% to $7.89 million, or $0.58 per diluted common share,
for the three months ended December 31, 2000, as compared with $4.89 million, or
$0.37 per diluted common share, for the three months ended December 31, 1999.
This increase is primarily the result of greater net revenues and improved gross
margins (see below), partially offset by increased selling, general and
administrative expenses incurred to further our expansion efforts.

     Total net revenues increased by 33.9% to $56.83 million in the three months
ended December 31, 2000 as compared with $42.44 million in the three months
ended December 31, 1999. This increase is primarily the result of the growth in
net revenues from our Chronic Care and Professional Products segments which
increased 27.4% and 151.8%, respectively, in the three months ended December 31,
2000 as compared with the three months ended December 31, 1999. (See Note 10 for
segment information.)

     Net revenues in the Chronic Care segment increased by 27.4% to $43.39
million in the three months ended December 31, 2000 as compared with $34.06
million in the three months ended December 31, 1999. This growth is due to new
customer sales as a result of our direct-response advertising spending, as well
as recurring shipments to existing customers. We currently expect our
promotional and direct-response advertising spending to continue in order to
further the expansion of our Chronic Care segment.

     Net revenues from Professional Products increased 151.8% to $11.71 million
in the three months ended December 31, 2000 as compared with $4.65 million in
the three months ended December 31, 1999. This increase is mainly attributable
to shipments of respiratory products in the three months ended December 31,
2000, due to new customer sales as a result of our direct-response advertising
spending. Sales of respiratory products commenced in August 1999. As with our
Chronic Care segment, we currently expect our promotional and direct-response
advertising spending to continue in order to further the expansion of our
Professional Products segment.

     Net revenues from Consumer Healthcare products decreased 53.7% to $1.73
million in the three months ended December 31, 2000 as compared with $3.72
million in the three months ended December 31, 1999, primarily as a result of
the sale of our thermometry and compliance products business in September 2000.
(See Note 14 for information on the sale.)

     As a percentage of total net revenues, overall gross margins were 66.2% in
the three months ended December 31, 2000 and 58.6% in the three months ended
December 31, 1999. Gross margins in the three months ended December 31, 2000
increased due to improved gross margins in the Chronic Care and Professional
Products segments, resulting from favorable product mix and period promotional
pricing from suppliers.


                                       17
<PAGE>   18


     As a percentage of total net revenues, selling, general and administrative
expenses were 44.9% for the three months ended December 31, 2000 as compared
with 40.8% for the three months ended December 31, 1999. Selling, general and
administrative expenses increased by 47.5% in the three months ended December
31, 2000 to $25.52 million as compared with $17.30 million in the three months
ended December 31, 1999. This increase is primarily attributable to increased
advertising expense for our Chronic Care and Professional Products segments.

     Investment income increased by 51.3% to $737,000 in the three months ended
December 31, 2000 as compared with $487,000 in the three months ended December
31, 1999, as we earned interest on higher average cash balances primarily as a
result of proceeds from our October 1999 secondary public offering. Interest
expense decreased by 49.9% to $51,000 in the three months ended December 31,
2000 as compared with $101,000 in the three months ended December 31, 1999, due
to the October 1999 retirement of the Guaranteed Senior Secured Notes due
January 31, 2003 to the John Hancock Mutual Life Insurance Company.

Nine Months Ended December 31, 2000 Compared to Nine Months Ended December 31,
1999

     Pretax income was $34.09 million in the nine months ended December 31,
2000, a 100.2% increase as compared with $17.03 million in the nine months ended
December 31, 1999. The Company's income before extraordinary loss on retirement
of debt, increased by 104.2% to $21.38 million, or $1.57 per diluted common
share, for the nine months ended December 31, 2000, as compared with $10.47
million, or $0.94 per diluted common share, for the nine months ended December
31, 1999. This increase is primarily the result of greater net revenues and
improved gross margins (see below), partially offset by increased selling,
general and administrative expenses incurred to further our expansion efforts.

     Total net revenues increased by 47.8% to $162.46 million in the nine months
ended December 31, 2000 as compared with $109.94 million in the nine months
ended December 31, 1999. This increase is primarily the result of the growth in
net revenues from our Chronic Care and Professional Products segments, which
increased 37.4% and 229.0%, respectively, in the nine months ended December 31,
2000 as compared with the nine months ended December 31, 1999. (See Note 10 for
segment information.)

     Net revenues in the Chronic Care segment increased by 37.4% to $123.21
million in the nine months ended December 31, 2000 as compared with $89.67
million in the nine months ended December 31, 1999. This growth is due to new
customer sales as a result of our direct-response advertising spending, as well
as recurring shipments to existing customers. We currently expect our
promotional and direct-response advertising spending to continue in order to
further the expansion of our Chronic Care segment.

     Net revenues from Professional Products increased 229.0% to $31.33 million
in the nine months ended December 31, 2000 as compared with $9.52 million in the
nine months ended December 31, 1999. This increase is mainly attributable to
shipments of respiratory products in the nine months ended December 31, 2000,
due to new customer sales as a result of our direct-response advertising
spending. Sales of respiratory products commenced in August 1999. As with our
Chronic Care segment, we currently expect our promotional and direct-response
advertising spending to continue in order to further the expansion of our
Professional Products segment.

     Net revenues from Consumer Healthcare products decreased 26.2% to $7.92
million in the nine months ended December 31, 2000 as compared with $10.74
million in the nine months ended December 31, 1999, primarily as a result of the
sale of our thermometry and compliance products business in September 2000. (See
Note 14 for information on the sale.)


                                       18
<PAGE>   19

     As a percentage of total net revenues, overall gross margins were 64.6% in
the nine months ended December 31, 2000 and 57.8% in the nine months ended
December 31, 1999. Gross margins in the nine months ended December 31, 2000
increased due to improved gross margins in the Chronic Care and Professional
Products segments, resulting from favorable product mix and period promotional
pricing from suppliers, partially offset by reduced gross margins in our
Consumer Healthcare segment resulting from additional provisions for inventory
obsolescence.

     As a percentage of total net revenues, selling, general and administrative
expenses were 44.5% for the nine months ended December 31, 2000 as compared with
41.7% for the nine months ended December 31, 1999. Selling, general and
administrative expenses increased by 57.5% in the nine months ended December 31,
2000 to $72.26 million as compared with $45.89 million in the nine months ended
December 31, 1999. This increase is primarily attributable to increased
advertising expense for our Chronic Care and Professional Products segments.

     Investment income increased by 206.7% to $2.10 million in the nine months
ended December 31, 2000 as compared with $686,000 in the nine months ended
December 31, 1999 as we earned interest on higher average cash balances
primarily as a result of proceeds from our October 1999 secondary public
offering. Interest expense decreased by 84.5% to $199,000 in the nine months
ended December 31, 2000 as compared with $1.28 million in the nine months ended
December 31, 1999, due to the October 1999 retirement of the Guaranteed Senior
Secured Notes due January 31, 2003 to the John Hancock Mutual Life Insurance
Company.

Liquidity and Capital Resources

     Since our inception, we have raised $109.34 million in gross equity capital
through public offerings, including $55.88 million from the October 1999 sale of
2,629,599 shares of common stock.

     As of December 31, 2000, we had working capital of $78.16 million,
including cash and cash equivalents of $40.31 million, which compares with
working capital of $71.96 million, including cash and cash equivalents of $40.69
million, as of March 31, 2000.

     Net accounts receivable were $46.07 million and $39.76 million as of
December 31 and March 31, 2000, respectively. The increase in net accounts
receivable is primarily the result of record shipments in our Chronic Care and
Professional Products segments. As of December 31, 2000, gross unbilled
receivables included in overall gross accounts receivable of $58.12 million,
were $16.72 million as compared with $20.16 million included in gross accounts
receivable of $50.51 million as of March 31, 2000.

     We incurred and capitalized direct-response advertising of $6.88 million
and $5.02 million in the three months ended December 31, 2000 and 1999,
respectively. We expense in the


                                       19
<PAGE>   20


period all other advertising that does not meet the requirements of SOP 93-7. A
total of $5.23 million and $2.53 million in direct-response advertising was
amortized and charged to selling, general and administrative expense for the
three months ended December 31, 2000 and 1999, respectively. A total of $23.20
million and $12.70 million of direct-response advertising was capitalized in the
nine months ended December 31, 2000 and 1999, respectively. A total of $13.74
million and $6.17 million was amortized and charged to selling, general and
administrative expense for the nine months ended December 31, 2000 and 1999,
respectively.

     Management assesses the realizability of the amounts of direct-response
advertising costs reported as assets at each balance sheet date by comparing the
carrying amounts of such assets to the probable remaining future net benefits
expected to result directly from such advertising. As of December 31 and March
31, 2000, accumulated amortization was $30.70 million and $16.96 million, which
resulted in a net capitalized direct-response advertising asset of $37.54
million and $28.08 million, respectively.

     In June 2000, the Company's board of directors authorized the repurchase of
up to 1,000,000 shares of the Company's common stock on the open market. In the
three months ended December 31, 2000, 102,000 shares were repurchased under this
program for $3.06 million. In the nine months ended December 31, 2000, 122,000
shares were repurchased for $3.83 million.

     We expect that our current working capital, revolving credit facility and
funds generated from future operations will be adequate to meet our liquidity
and capital requirements for current operations. In the event that we undertake
to make acquisitions of complementary businesses, products or technologies, we
may require substantial additional funding beyond currently available working
capital and funds generated from operations. We are conducting an active search
for the strategic acquisition of complementary businesses, products or
technologies which leverage our marketing, sales and distribution
infrastructure. We currently have no commitments or agreements with respect to
any such acquisition.

FACTORS AFFECTING FUTURE OPERATING RESULTS

     The statements contained in this Report that are not purely historical are
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including,
but not limited to, statements regarding our expectations, hopes, intentions or
strategies regarding the future. Forward-looking statements include, among
others: statements regarding future benefits from our advertising and
promotional expenditures; statements regarding future net revenue levels;
statements regarding product development, introduction and marketing; and
statements regarding future acquisitions. All forward-looking statements
included in this Report are based on information available to us on the date
hereof, and we assume no obligation to update any such forward-looking
statements. It is important to note that our actual results could differ
materially from those in such forward-looking statements.

     Our future operating results remain difficult to predict. We continue to
face many risks and uncertainties which could affect our operating results,
including without limitation, those described below.


                                       20
<PAGE>   21


We could experience significantly reduced profits if Medicare changes, delays or
denies reimbursement

     Sales of a significant portion of our Chronic Care and Professional
Products supplies will depend on the continued availability of reimbursement of
our customers by government and private insurance plans. Any reduction in
Medicare reimbursement currently available for our products would reduce our
revenues. Without a corresponding reduction in the cost of such products, the
result would be a reduction in our overall profit margin. Similarly, any
increase in the cost of such products would reduce our overall profit margin
unless there was a corresponding increase in Medicare reimbursement. Our profits
could also be affected by the imposition of more stringent regulatory
requirements for Medicare reimbursement. Any failure to comply with required
Medicare reimbursement procedures could result in delays or loss of
reimbursement and other sanctions, including fines and loss of Medicare provider
status.

We plan to continue our rapid expansion; if we do not manage our growth
successfully; our growth and profitability may slow or stop

     We have expanded our operations rapidly and plan to continue to expand.
This expansion has created significant demand on our administrative, operational
and financial personnel and other resources. Additional expansion in existing or
new markets could strain these resources and increase our need for capital. Our
personnel, systems, procedures, controls and existing space may not be adequate
to support further expansion.

The profitability of our Chronic Care and Professional Products segments will
decrease if we do not receive recurring orders from customers

     We generally incur losses and negative cash flow with respect to the first
order for Chronic Care and respiratory products, included in our Professional
Products segment, from a customer, due primarily to the marketing and regulatory
compliance costs associated with initial customer qualification. Accordingly,
the profitability of these segments depends in large part, on recurring and
sustained reorders. Reorder rates are inherently uncertain due to several
factors, many of which are outside our control, including changing customer
preferences, competitive price pressures, customer transition to extended care
facilities, customer mortality and general economic conditions.

We could experience significantly reduced profits from our Chronic Care segment
if improved technologies that eliminate the need for consumable testing supplies
are developed for glucose monitoring

     The majority of our Chronic Care net revenues are from consumable testing
supplies, used to draw and test small quantities of blood for the purpose of
measuring and monitoring glucose levels. Numerous research efforts are underway
to develop more convenient and less intrusive glucose measurement techniques.
The commercialization and widespread acceptance of new technologies that
eliminate or reduce the need for consumable testing supplies could negatively
affect our Chronic Care business.


                                       21
<PAGE>   22


We could be liable for harm caused by products that we sell

     The sale of medical products entails the risk that users will make product
liability claims. A product liability claim could be expensive. Our insurance
may not provide adequate coverage against these claims.

We could lose customers and revenues to new or existing competitors who have
greater financial or operating resources

     Competition from other sellers of products offered through our Chronic
Care, Professional Products and Consumer Healthcare segments, manufacturers of
healthcare products, pharmaceutical companies and other competitors is intense
and expected to increase. Many of our competitors and potential competitors are
large companies with well-known names and substantial resources. These companies
may develop products and services that are more effective or less expensive than
any that we are developing or selling. They may also promote and market these
products more successfully than we promote and market our products.

Loss of use of manufacturing or data storage facilities would significantly
reduce revenues and profits from our Consumer Healthcare and Professional
Products businesses

     We manufacture some of our Professional Products and many of our AZO
products at our facility in Woburn, Massachusetts. In addition, we process and
store most of our customer data in our facility in Port St. Lucie, Florida. If
we cannot use any of these facilities as a result of the FDA, Occupational
Safety and Health Administration or other regulatory action, fire, natural
disaster or other event, our revenues and profits will decrease significantly.
We might also incur significant expense in remedying the problem or securing an
alternative manufacturing or data storage source.

If we or our suppliers do not comply with applicable government regulations, we
may be prohibited from selling our products

     Many of our products that we sell are regulated by the FDA and other
regulatory agencies. If any of these agencies mandate a suspension of production
or sales of our products or mandate a recall, we may lose sales and incur
expense until we are in compliance with the regulations or change to another
acceptable supplier.

We could have difficulty selling our Consumer Healthcare and Professional
Products if we cannot maintain and expand our sales to distributors

     We rely on third party distributors to market and sell our Consumer
Healthcare and some of our Professional Products. Our sales of Consumer
Healthcare and Professional Products will therefore depend in part on our
maintaining and expanding marketing and distribution relationships with
pharmaceutical, medical device, personal care and other distributors and on the
success of those distributors in marketing and selling our products.

Shortening or eliminating amortization of our direct-response advertising costs
could adversely affect our operating results


                                       22
<PAGE>   23


     Any accounting or business change that shortens or eliminates the
amortization period of our direct-response advertising costs could result in
accelerated charges against our earnings.

Our quarterly revenues or operating results could vary, which may cause the
market price of our securities to decline

     We have experienced fluctuations in our quarterly operating results and
anticipate that such fluctuations could continue. Results may vary significantly
depending on a number of factors, including:

     -    changes in reimbursement guidelines and amounts;
     -    changes in regulations affecting the healthcare industry;
     -    changes in the mix or cost of our products;
     -    the timing of customer orders;
     -    the timing and cost of our advertising campaigns; and
     -    the timing of the introduction or acceptance of new products and
          services offered by us or our competitors.

We may make acquisitions that will strain our financial and operational
resources

     We regularly review potential acquisitions of businesses and products.
Acquisitions involve a number of risks that might adversely affect our financial
and operational resources, including:

     -    diversion of the attention of senior management from important
          business matters;
     -    amortization of substantial goodwill;
     -    difficulty in retaining key personnel of an acquired business;
     -    failure to assimilate operations of an acquired business;
     -    failure to retain the customers of an acquired business;
     -    possible operating losses and expenses of an acquired business;
     -    exposure to legal claims for activities of an acquired business prior
          to acquisition; and
     -    incurrence of debt and related interest expense.

Our stock price could be volatile, which could result in substantial losses for
investors

     The trading price of our common stock has been volatile and is likely to
continue to be volatile. The stock market in general, and the market for
healthcare-related companies in particular, has experienced extreme volatility.
This volatility has often been unrelated to the operating performance of
particular companies. Investors may not be able to sell their common stock at or
above the price at which they purchased the stock. Prices for the common stock
will be determined in the marketplace and may be influenced by many factors,
including variations in our financial results, changes in earnings estimates by
industry research analysts, investors' perceptions of us and general economic,
industry and market conditions.

We may issue preferred stock with rights senior to the common stock

     Our articles of organization authorize the issuance of up to 2,000,000
shares of preferred stock without stockholder approval. The shares may have
dividend, voting, liquidation and other


                                       23
<PAGE>   24


rights and preferences that are senior to the rights of the common stock. The
rights and preferences of any such class or series of preferred stock would be
established by our board of directors in its sole discretion.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     We do not believe that we have any material market risk exposure with
respect to derivative or other financial instruments that would require
disclosure under this item.


                                       24
<PAGE>   25


                           PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     On November 27, 2000, Richard Bowe SEP-IRA filed a purported class action
lawsuit in the United States District Court for the District of Massachusetts
(the "Bowe Complaint") against the Company and one of its officers. The Bowe
Complaint claims violations of Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and seeks unspecified
damages, attorneys' fees and costs. The Bowe Complaint also refers to a magazine
article published in November 2000 reporting an alleged investigation by the
Federal Bureau of Investigation of the Company and its Liberty Medical Supply
division. On December 19, 2000, Trust Advisors Equity Plus LLC filed a purported
class action lawsuit in the United States District Court for the District of
Massachusetts (the "Trust Advisors Complaint") against the Company and one of
its officers. The Trust Advisors Complaint asserts the same claims, makes the
same allegations and seeks the same relief as the Bowe complaint. On January 26,
2001, the plaintiffs in the Bowe and Trust Advisors Complaints moved to
consolidate the Bowe and Trust Advisors Complaints and to be appointed as lead
plaintiffs in the consolidated action pursuant to the Section 21D(a)(3)(B) of
the Securities Exchange Act of 1934. The Court has not yet ruled on this motion.
The Company and the other defendant are scheduled to respond to the Complaints
on or before March 20, 2001. The Company believes it has meritorious defenses to
the claims made in the Bowe and Trust Advisors Complaints and intends to contest
these Complaints vigorously. The Company has not, to date, been contacted by the
FBI about an investigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At a Special Meeting of Stockholders held on November 28, 2000, the
following proposal was approved:

<TABLE>
<CAPTION>
PROPOSAL                                                      FOR                 AGAINST               ABSTAIN
--------                                                      ---                 -------               -------

<S>                                                        <C>                   <C>                    <C>
To approve an amendment to
   the Articles of Organization
   increasing the number of authorized
   shares of Common Stock from
   20,000,00 to 50,000,000                                 10,063,746            1,943,736               25,244
</TABLE>


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

     There are no exhibits following this report.

(b)  REPORTS ON FORM 8-K

     Current report on Form 8-K dated December 14, 2000.


                                       25
<PAGE>   26


                                   SIGNATURES


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


                                        POLYMEDICA CORPORATION
                                        ----------------------------------------
                                        (registrant)


                                        /s/ Steven J. Lee
                                        ----------------------------------------
                                        Steven J. Lee
                                        Chairman and Chief Executive Officer
                                        (Principal Executive Officer)


                                        /s/ Eric G. Walters
                                        ----------------------------------------
                                        Eric G. Walters
                                        Chief Financial Officer and Clerk
                                        (Principal Financial and Accounting
                                         Officer)


Dated: February 14, 2001


                                       26