<PAGE>

================================================================================

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

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

                                   FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

     For the quarterly period ended June 30, 2001

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

     For the transition period from ___________________ to ___________________

                       Commission File Number 000-27855

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

                           DATA CRITICAL CORPORATION
            (Exact name of Registrant as specified in its charter)

             Delaware                                        91-1901482
     (State or other jurisdiction                        (I.R.S. Employer
  of incorporation or organization)                     Identification No.)

                     19820 North Creek Parkway, Suite 100
                           Bothell, Washington 98011
                   (Address of principal executive offices)

                                (425) 482-7000
             (Registrant's telephone number, including area code)

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

     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 [ ]

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock as of the latest practicable date: 17,961,159 shares of common
stock, $.001 par value, at August 10, 2001.

================================================================================

                                       1
<PAGE>

                           DATA CRITICAL CORPORATION

                                    CONTENTS

<TABLE>
<CAPTION>
                                                                                                    Page
                                                                                                    ----
<S>        <C>                                                                                       <C>
                         PART I. FINANCIAL INFORMATION

ITEM 1.    CONSOLIDATED FINANCIAL STATEMENTS.......................................................   3

ITEM 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...  11

ITEM 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............................  39

                          PART II.   OTHER INFORMATION

ITEM 2.    CHANGES IN SECURITIES AND USE OF PROCEEDS...............................................  40

ITEM 4.    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.....................................  40

ITEM 6.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K........................  40

</TABLE>

                                       2
<PAGE>

                         PART I. FINANCIAL INFORMATION

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

                           DATA CRITICAL CORPORATION

                          CONSOLIDATED BALANCE SHEETS

               (In thousands, except share and per share amounts)

<TABLE>
                                                                                         June 30,      December 31,
                                                                                           2001            2000
                                                                                      -------------    ------------
                                                                                       (Unaudited)
<S>                                                                                   <C>             <C>
                               ASSETS
                               ------
Current Assets:
 Cash and cash equivalents...........................................................      $ 14,176        $ 19,948
 Accounts receivable, net of allowance of $540 and $283, respectively................         8,144           2,785
 Inventories, net....................................................................         4,891           2,113
 Prepaid expenses and other..........................................................           285             742
                                                                                           --------        --------
   Total current assets..............................................................        27,496          25,588
Note receivable from officer.........................................................           120             171
Investment in and advances to unconsolidated affiliate...............................           321           3,274
Property, equipment and software, net................................................         3,634           2,463
Intangible assets, net...............................................................        13,814          11,487
Other assets, net....................................................................           172             687
                                                                                           --------        --------
   Total assets......................................................................      $ 45,557        $ 43,670
                                                                                           ========        ========

               LIABILITIES AND STOCKHOLDERS' EQUITY
               ------------------------------------
Current Liabilities:
 Current portion of notes payable and capital leases.................................           140             147
 Accounts payable....................................................................         3,164           1,413
 Deferred revenues...................................................................         2,883           1,806
 Other current liabilities...........................................................         6,826           4,356
                                                                                           --------        --------
   Total current liabilities.........................................................        13,013           7,722
Notes payable and capital leases, net of current portion.............................            15              70
                                                                                           --------        --------
   Total liabilities.................................................................        13,028           7,792
                                                                                           --------        --------
Commitments and contingencies
Stockholders' Equity
 Preferred stock, $0.001 par value; 3,000,000 authorized, 0 issued
  and outstanding, respectively......................................................            --              --
 Common stock and additional paid-in capital, $.001 par value, 25,000,000
  shares authorized; 17,118,240 and 12,019,695 shares issued and outstanding,
  respectively.......................................................................        90,620          77,823
 Treasury stock at cost; 811,217 and 707,167 shares, respectively....................        (2,151)         (1,909)
 Deferred compensation...............................................................        (1,414)         (1,029)
 Accumulated deficit.................................................................       (54,526)        (39,007)
                                                                                           --------        --------
   Total stockholders' equity........................................................        32,529          35,878
                                                                                           --------        --------
   Total liabilities and stockholders' equity........................................      $ 45,557        $ 43,670
                                                                                           ========        ========
</TABLE>

      The accompanying notes are an integral part of these balance sheets.

                                       3
<PAGE>

                           DATA CRITICAL CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                   (In thousands, except per share amounts)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                          For the                         For the
                                                     Three Months Ended               Six Months Ended
                                                          June 30,                        June 30,
                                                    ---------------------           --------------------
                                                      2001          2000              2001        2000
                                                    --------      -------           --------     -------
<S>                                               <C>          <C>                 <C>         <C>
Revenue.........................................    $  4,846      $ 4,616           $ 10,573     $ 8,321
Cost of revenue.................................       2,652        1,723              4,958       3,195
                                                    --------      -------           --------     -------
  Gross margin..................................       2,194        2,893              5,615       5,126
                                                    --------      -------           --------     -------
Operating expenses:
  Acquired in-process research and development..       2,800        2,800              2,800       2,800
  Research and development......................       1,802        1,508              3,349       2,786
  Sales and marketing...........................       1,363        2,128              2,950       3,685
  General and administrative....................       2,133        1,639              4,004       3,102
  Depreciation and amortization.................         875          418              1,684         651
  Restructuring.................................       3,450            -              3,450           -
                                                    --------      -------           --------     -------
     Total operating expenses...................      12,423        8,493             18,237      13,024
                                                    --------      -------           --------     -------
    Loss from operations........................     (10,229)      (5,600)           (12,622)     (7,898)
Loss on investments.............................      (3,250)           -             (3,250)          -
Interest income (expense), net..................         148          505                353         781
                                                    --------      -------           --------     -------
Net loss attributable to common stock...........    $(13,331)     $(5,095)          $(15,519)    $(7,117)
                                                    ========      =======           ========     =======

Basic and diluted loss per common share.........      $(1.01)      $(0.45)            $(1.23)     $(0.65)
                                                    ========      =======           ========     =======

Weighted average shares used to calculate basic
 and diluted loss per common share..............      13,214       11,228             12,578      10,906
                                                    ========      =======           ========     =======
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                           DATA CRITICAL CORPORATION

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                     (In thousands, except share amounts)
                                  (Unaudited)


<TABLE>
<CAPTION>
                                              Common Stock
                                             and Additional
                                             Paid-in Capital
                                          ---------------------  Treasury     Deferred     Accumulated   Stockholders'
                                            Shares      Amount     Stock    Compensation     Deficit         Equity
                                          -----------  --------  ---------  -------------  ------------  --------------
<S>                                       <C>          <C>       <C>        <C>            <C>           <C>
Balance, December 31, 2000..............  12,019,695    $77,823   $(1,909)       $(1,029)     $(39,007)       $ 35,878
Common stock options and warrants
 exercised..............................      26,897         28        --             --            --              28
Common stock issued.....................      13,581        100         9             --            --             109
Common stock issued for VitalCom, Inc...   5,165,167     10,976        --             --            --          10,976
Common stock purchased for treasury, net    (107,100)        --      (251)            --            --            (251)
Assumption of VitalCom, Inc options.....          --        789        --             --            --             789
Deferred stock compensation.............          --        904        --           (904)           --              --
Amortization of deferred stock                    --         --        --            519            --             519
 compensation...........................
Net loss................................          --         --        --             --       (15,519)        (15,519)
                                          ----------    -------   -------        -------      --------        --------
Balance, June 30, 2001..................  17,118,240    $90,620   $(2,151)       $(1,414)     $(54,526)       $ 32,529
                                          ==========    =======   =======        =======      ========        ========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       5
<PAGE>

                           DATA CRITICAL CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                  (Unaudited)

<TABLE>
<CAPTION>
                                                                                            For the Six Months Ended
                                                                                                    June 30,
                                                                                            ------------------------
                                                                                              2001           2000
                                                                                            --------       ---------
<S>                                                                                         <C>            <C>
Cash Flows From Operating Activities:
  Net loss................................................................................    $(15,519)     $(7,117)
  Adjustments to reconcile net loss to net cash used in operating activities:
     Depreciation and amortization........................................................       1,843          721
     Amortization of deferred stock compensation..........................................         519          248
     Acquired in-process research and development.........................................       2,800        2,800
     Loss on investments..................................................................       3,250           --
     Loss on disposal of assets...........................................................         943           --
     Non cash interest charge.............................................................          16          186
     Issuance of common stock for compensation............................................          36           --
     Changes in assets and liabilities:
        Accounts receivable...............................................................        (937)      (1,507)
        Inventories.......................................................................        (382)        (348)
        Prepaid expenses and other current assets.........................................         485           95
        Accounts payable and other current liabilities....................................       1,311          549
        Deferred revenues.................................................................         250         (291)
                                                                                              --------      -------
           Net cash used in operating activities..........................................      (5,385)      (4,664)
                                                                                              --------      -------
Cash Flows From Investing Activities:
  Loan to Elixis Corporation..............................................................          --         (200)
  Cash paid in the acquisition of Elixis Corporation, net of cash acquired................          --          (85)
  Cash acquired in the acquisition of VitalCom Inc., net of cash paid.....................         332           --
  Repayment of notes to officers..........................................................          51           --
  Purchases of property and equipment.....................................................        (172)        (812)
  Other assets............................................................................        (385)         (15)
                                                                                              --------      -------
           Net cash used in investing activities..........................................        (174)      (1,112)
                                                                                              --------      -------
Cash Flows From Financing Activities:
  Proceeds from issuance of common stock and stock purchase option, net...................         100        9,984
  Purchase of treasury stock, net.........................................................        (251)          --
  Payment on lines of credit..............................................................          --          (45)
  Payment on notes payable and capital leases.............................................         (62)      (2,213)
                                                                                              --------      -------
           Net cash provided by financing activities......................................        (213)       7,726
                                                                                              --------      -------
Net increase in cash and cash equivalents.................................................      (5,772)       1,950
Cash and cash equivalents at beginning of period..........................................      19,948       33,976
                                                                                              --------      -------
Cash and cash equivalents at end of period................................................    $ 14,176      $35,926
                                                                                              ========      =======

Supplemental disclosure of non-cash investing and financing activity
  Cash paid for interest..................................................................    $     13      $    47
  Common stock issued to acquire Elixis Corporation.......................................          --      $ 2,441
  Common stock issued to acquire VitalCom Inc.............................................    $ 10,976           --
</TABLE>

        The accompanying notes are an integral part of these statements.

                                       6
<PAGE>

                           DATA CRITICAL CORPORATION

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

1.  The Company and Basis of Presentation

     Data Critical Corporation and its subsidiaries, Data Critical or the
Company, designs, manufactures, markets, installs and supports wireless health
information communication systems for use by caregivers. The Company's
technology enables access to patient-specific vital signs and other diagnostic
data. Its alarm notification systems transmit complex and time-critical patient
data over a wireless network and enable remote access through either its
proprietary interactive device, a personal computer or the Internet.

     Within the healthcare industry, the Company historically has focused on the
hospital and physician markets and has derived substantially all of its revenue
from two operating segments, Hospital Systems and Physician Systems. On May 2,
2001, the Company announced that it would undertake a restructuring of its
operations to focus on its core business, Hospital Systems. After completion of
the Company's acquisition of VitalCom Inc., the Company announced on June 15,
2001, that it would consolidate its headquarters and operations to its Tustin,
CA facility, the current headquarters for the Company's VitalCom subsidiary, and
would reduce its workforce further, to an approximate total of 210 employees. As
of July 31, 2001, the Company had reduced its workforce to 242 employees. On
July 19, 2001, the Company entered into a merger agreement with General Electric
Company, or GE, pursuant to which GE agreed to purchase each outstanding share
of Data Critical common stock for $3.75. As a result of the transaction, on
August 13, 2001, the Company announced that it had suspended its consolidation
and move of operations to Tustin in anticipation of its proposed acquisition by
General Electric Company. If the Company is required to reimplement the
consolidation, either because the proposed transaction with GE fails to occur or
for any other reason, the fact that the consolidation has been suspended and
reinitiated could result in a higher total cost of consolidation. In addition,
the Company would be exposed to significant additional costs associated with the
delay. Additionally, the Company currently contemplates closing or selling some
or all of its Physician Systems business in connection with, or as a result of,
the restructuring, notwithstanding the suspension of the consolidation of
operations to Tustin.

     The Company distributes its non-OEM wireless alarm notification systems
exclusively through Medtronic Physio-Control. The Company also relies on
Medtronic Physio-Control for installation and follow-up services for those
products. Medtronic Physio-Control guaranteed minimum end-user distribution
targets and minimum payments in exchange for its exclusive distributorship. The
Company sells its PatientNet suite of products through direct sales efforts. The
Company also markets and sells its products through cross-marketing and OEM
relationships with its strategic partners.

     Medtronic did not meet its minimum end-user distribution targets in the
second quarter of 2001. At the end of the quarter, a $2.5 million invoice was
billed to Medtronic for its minimum contractual obligations. To date, Medtronic
has not paid this receivable to Data Critical and the matter is under dispute.
Data Critical will not recognize these revenues until this dispute is resolved.

     The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions for Form 10-Q and
Article 10 of Regulation S-X. Accordingly, 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 the rules and regulations of the Securities and Exchange Commission,
or SEC. In the opinion of the Company's management, the statements include all
adjustments necessary (which are of a normal and recurring nature) for the fair
presentation of the results of the interim periods presented. These consolidated
financial statements should be read in conjunction with the Company's audited
consolidated financial statements for the year ended December 31, 2000 included
in the Company's Form 10-K filed with the SEC on April 2, 2001.

2.  Summary of Significant Accounting Principles

     The financial statements consolidate the accounts of Data Critical
Corporation and its majority owned subsidiaries. All intercompany transactions
have been eliminated.

                                       7
<PAGE>

                           DATA CRITICAL CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

Use of Estimates

     The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make 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 revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Inventories

     The Company's initial products are made up of the Company's proprietary
software applications, which it integrates with hardware that is acquired from
third parties as well as hardware made by third parties to the Company's
specifications. Inventories consist primarily of the Company's hardware product,
components to make the product and other third-party equipment, all of which is
stated at the lower of cost or market, using the first-in, first-out method.

<TABLE>
<CAPTION>
                                                  June 30,     December 31,
                                               --------------  -------------
                                                         2001           2000
                                                       ------         ------
                                                      (In thousands)
<S>                                            <C>             <C>
   Purchased components......................          $3,860         $2,350
   Work in progress..........................             358             --
   Finished goods............................             673             42
                                                       ------         ------
                                                       $4,891         $2,392
                                                       ======         ======
</TABLE>

3.  Net Loss Per Share

     In accordance with SFAS No. 128, "Computation of Earnings Per Share," basic
loss per share is computed by dividing net loss attributable to common stock
(net loss less preferred stock redemption obligation accretion and dividend
requirements) by the weighted average number of shares of common stock
outstanding during the period. Diluted loss per share is computed by dividing
net loss attributable to common stock by the weighted average number of common
and dilutive common equivalent shares outstanding during the period. Common
equivalent shares consist of the shares of common stock issuable upon the
conversion of the mandatorily redeemable preferred stock (using the if-converted
method) and shares issuable upon the exercise of stock options and warrants
(using the treasury stock method); common equivalent shares are excluded from
the calculation as their effect is antidilutive. Accordingly, basic and diluted
loss per share are equivalent.

     The following potential common shares have been excluded from the
computation of diluted net loss per share for all periods presented because the
effect would have been anti-dilutive.

<TABLE>
<CAPTION>
                                                                    Six Months Ended
                                                                        June 30,
                                                                 -----------------------
                                                                   2001           2000
                                                                 -------       ---------
<S>                                                              <C>           <C>
   Shares issuable under stock options and warrants.........     233,633       1,823,480
</TABLE>

4.  Segment Reporting

     The Company evaluates the performance of its segments based on earnings
before interest, taxes, depreciation and amortization, or EBITDA. EBITDA
includes the allocation of certain corporate expenses to the segments. Segment
data includes intersegment revenues. The table below presents information about
reported segments for the six months ending June 30, 2001 and 2000 (in
thousands).

                                       8
<PAGE>

                           DATA CRITICAL CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

<TABLE>
<CAPTION>
                                                  Six Months Ended
                                                      June 30,
                                              ------------------------
                                               2001             2000
                                              -------          -------
<S>                                           <C>              <C>
  Hospital Systems
     Revenue.............................     $ 9,868          $ 7,892
     Operating income (loss).............         (27)             834

  Physician Systems
     Revenue.............................         705              429
     Operating loss......................      (1,466)          (2,112)

  Consolidated and Other
     Revenue.............................          --               --
     Operating loss......................      (3,186)          (3,160)
                                              -------          -------
  Consolidated Segment Totals
     Revenue.............................      10,573            8,321
     Operating loss......................     $(4,679)         $(4,438)
                                              =======          =======
</TABLE>

     The following table reconciles consolidated segment operating loss to the
Company's consolidated net loss.

<TABLE>
<CAPTION>
                                                           Six Months Ended
                                                                June 31,
                                                      -------------------------
                                                         2001             2000
                                                      --------          -------
<S>                                                   <C>              <C>
  Consolidated segment operating loss...............  $ (4,679)         $(4,438)
  Unallocated interest income, net..................       344              772
  Depreciation and amortization.....................    (1,684)            (651)
  Restructuring charges.............................    (3,450)              --
  Loss on equity investments........................    (3,250)              --
  Acquired in-process research and development......    (2,800)          (2,800)
                                                      --------          -------
     Net............................................  $(15,519)         $(7,117)
                                                      ========          =======
</TABLE>

5.  Acquisitions

     On June 7, 2001 Data Critical acquired VitalCom Inc., a leading provider of
wireless patient monitoring systems, pursuant to an Agreement and Plan of Merger
by and among Data Critical, VitalCom and Viper Acquisition Corp., a wholly owned
subsidiary of Data Critical. Pursuant to the merger agreement, Viper Acquisition
Corp. merged with and into VitalCom and VitalCom survived the merger as a wholly
owned subsidiary of Data Critical. At the effective time of the merger, each
outstanding share of VitalCom common stock was exchanged for 0.62 shares of the
Data Critical common stock, which resulted in the issuance of 5,165,167 shares
of Data Critical common stock. In addition, Data Critical assumed outstanding
employee options to purchase VitalCom common stock with the exercise price and
number of shares subject to such options appropriately adjusted to reflect the
common stock exchange ratio.

                                       9
<PAGE>

                           DATA CRITICAL CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)

     This acquisition was accounted for as a purchase and, accordingly, the
financial statements reflect valuation of all assets, including identifiable
intangibles, at their estimated fair market values. VitalCom's results of
operations are included in the accompanying statements of operations from the
date of the acquisition. Under the purchase method of accounting, the purchase
price is allocated to the net assets acquired based on their estimated fair
value. The following represents the purchase price allocation for VitalCom (in
thousands).

<TABLE>
<CAPTION>
                                                 Purchase
                                                  Price
                                                Allocation
                                                ----------
<S>                                             <C>
Tangible Assets................................   $ 7,676
Product Technology.............................     3,000
Assembled Workforce............................       820
In-process research and development............     2,800
Goodwill.......................................       777
                                                  -------
 Total Consideration...........................   $15,073
                                                  =======
</TABLE>

     The following unaudited pro forma information has been prepared assuming
VitalCom had been acquired as of January 1, 2000. The pro forma information is
presented for informational purposes only and is not necessarily indicative of
what would have occurred if the acquisition had been made as of January 1, 2000.
In addition, the pro forma information is not intended to be a projection of
future results.

<TABLE>
<CAPTION>
               Pro forma information                    Year Ended
               ---------------------                   December 31,
     (In thousands, except per share amounts)              2000
                                                       ------------
<S>                                                    <C>
Revenue..............................................     $37,965
Net loss.............................................     $22,911
Loss per common share basic and diluted..............     $ (1.34)
</TABLE>

6.  RESTRUCTURING CHARGE

      Primarily as a result of the acquisition of VitalCom and other
acquisitions completed in 2000, during the second quarter of 2001 the Company
adopted plans to restructure and consolidate operations, resulting in charges
related to the consolidation of duplicate functions and activities. These
actions resulted in a reduction of approximately 92 employees or approximately
34% of Data Critical's workforce. Reductions in force were spread across all of
the Company's functions and locations. The restructuring also resulted in a
reduction in total facilities, including the closing of our Seattle office, a
partial closing of our Bothell facility and the impairment of certain assets.

      Restructuring charges are primarily comprised of costs associated with
employee severance, cancellation of lease agreements, and impairments of
abandoned technologies, property and equipment. These charges amounted to
approximately $3.5 million for the quarter ended June 30, 2001. At June 30,
2001, current liabilities included approximately $2.2 million in connection with
this restructuring.

     As of June 30, 2001, the following amounts were recorded (in thousands):

<TABLE>
<CAPTION>
                                                                        Impairment    Abandonment
                                                                            of            and
                                                           Employee     technology   impairment of
                                                          severance        and        facilities,
                                                         and related    intangible    property and
                                                           expenses       assets       equipment      Total
                                                         -----------    ----------   -------------   -------
<S>                                                      <C>           <C>           <C>              <C>
2001 restructuring charges                                  $1,463        $1,543            $444      $3,450
Write-offs/payments                                            241           993               3       1,237
                                                         ---------------------------------------------------
Restructuring accrual balance at June 30, 2001              $1,223        $  550            $441      $2,213
                                                         ===================================================
</TABLE>

      The above provisions and related restructuring reserves are estimates
based on the Company's current knowledge. Adjustments to the restructuring
provisions may be necessary in the future based on further developments
regarding restructuring related costs.

7.  Subsequent Events

     On July 19, 2001 Data Critical announced it had signed a definitive
agreement to be acquired by the GE Medical Systems division of General Electric
Company, or GE. Pursuant to an agreement and plan of merger by and among Data
Critical, GE and Ether Merger Corp., an indirect wholly owned subsidiary of GE,
Ether will merge with and into Data Critical and Data Critical will survive the
merger as an indirect wholly owned subsidiary of GE. Data Critical stockholders
will receive $3.75 per share payable in cash for each share of Data Critical
common stock owned. The merger, which is subject to the approval of Data
Critical stockholders, regulatory approvals and other customary conditions, is
expected to be completed by the end of third quarter of 2001. In connection with
the merger agreement, Data Critical granted GE an option to acquire newly issued
shares of Data Critical common stock, representing 19.9% of its total shares
outstanding, at the $3.75 per share. In addition, stockholders representing 33%
of outstanding shares of Data Critical common stock have agreed, among other
things, to vote their shares in favor of the proposed merger. The merger
agreement has been approved by the board of directors of Data Critical.

                                       10
<PAGE>

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

Forward-Looking Statements

     In this quarterly report on Form 10-Q, the words "Data Critical," "the
Company," "we," "us," and "our" refer to Data Critical Corporation and its
wholly owned subsidiaries. Some of our statements in this report are forward-
looking statements that involve risks and uncertainties. These forward-looking
statements include statements about our plans, objectives, expectations,
intentions and future financial performance and other statements that are not
historical facts. We use words such as anticipates, believes, expects, future
and intends, and similar expressions, to identify forward-looking statements,
but the absence of these words does not mean that the statement is not forward-
looking. You should not unduly rely on these forward-looking statements, which
apply only as of the date of this report. Data Critical assumes no obligation to
update any forward-looking statements contained in this report. Our actual
results could differ significantly from those anticipated in the forward-looking
statements for many reasons, including the risks described under "Important
Factors That May Affect Our Business, Our Results of Operations and Our Stock
Price" on page 23 of this report.

Overview

     We commenced operations in April 1993 to develop healthcare communications
solutions for caregivers needing immediate notification of, and response to,
time-critical patient data. From 1993 through 1996, the majority of our effort
focused on expanding our research and development efforts, refining our business
plan and developing industry and strategic plans.

     We commercially launched StatView in early 1998. StatView provided our
primary source of revenue for 1998, 1999 and 2000, and we anticipate that it
will continue to represent a substantial portion of our revenue for the next 12
to 18 months. We commercially launched AlarmView and FlexView in 2000.

     In 2000 we reorganized into two strategic business unit groups offering
products and services tailored for particular market segments. Statement of
Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an
Enterprise and Related Information," requires us to describe our reportable
segments and provide data consistent with the data that our management uses when
allocating resources and assessing performance.

     Our reportable segments are composed of two divisions:

     .  Hospital Systems -- that portion of our business composed of designing,
        manufacturing, marketing and servicing technologies for use primarily
        within the hospital environment is classified as the Hospital Systems
        segment; and

     .  Physician Systems -- that portion of our business composed of designing,
        manufacturing, marketing and servicing hand-held and Internet-based
        wireless technologies for use by physicians and other healthcare
        professionals environment is classified as the Physician Systems
        segment.

                                      11
<PAGE>

     On May 2, 2001, we announced that we would undertake a restructuring of our
operations to focus on our core business, Hospital Systems. After completion of
our acquisition of VitalCom Inc., described below, we announced on June 15,
2001, that we would consolidate our headquarters and operations to our Tustin,
CA facility, the current headquarters for our VitalCom subsidiary, and would
reduce our workforce further, to an approximate total of 210 employees. As of
July 31, 2001, we had reduced our workforce to 242 employees.

     On July 19, 2001, we announced that we had signed a definitive agreement to
be acquired by the GE Medical Systems division of GE. Holders of shares of our
common stock will receive $3.75 per share payable in cash for each share held.
The transaction, which is subject to stockholder and regulatory approvals and
other customary conditions, is expected to be completed by the end of third
quarter of 2001. In connection with the definitive agreement, we granted GE an
option to acquire newly issued shares of our common stock representing 19.9% of
our total outstanding shares, at an exercise price of $3.75 per share. In
addition, stockholders representing 33% of our total outstanding shares have
agreed, among other things, to vote their shares in favor of the proposed
transaction. The agreement has been approved by our board of directors.

     As a result of the proposed transaction, on August 13, 2001, we announced
that we had suspended our consolidation and move of operations to Tustin. If the
Company is required to reimplement the consolidation, either because the
proposed transaction with GE fails to occur or for any other reason, the fact
that the consolidation has been suspended and reinitiated could result in a
higher total cost of consolidation. In addition, the Company would be exposed to
significant additional costs associated with the delay.

     We anticipate that the percentage of our revenue and expenses attributable
to our Physician Systems business will decrease as a result of both our
acquisition of VitalCom as well as the related restructuring, if it occurs. For
the six month period ending June 30, 2001, the percentage of our revenue
attributable to Physician Systems was 6.7%, compared to 5.1% during the same
period in 2000. We are currently contemplating closing or selling some or all of
our Physician Systems business in connection with, or as a result of, the
restructuring, notwithstanding the suspension of our consolidation of operations
to Tustin.

     On June 7, 2001 we acquired VitalCom Inc. pursuant to an agreement and plan
of merger by and among Data Critical, VitalCom and Viper Acquisition Corp., a
wholly owned subsidiary of Data Critical. Pursuant to the merger agreement,
Viper Acquisition Corp. merged with and into VitalCom and VitalCom survived the
merger as a wholly owned subsidiary of Data Critical. At the effective time of
the merger, each outstanding share of VitalCom common stock was exchanged for
0.62 shares of our common stock, which resulted in the issuance of 5,165,167
shares of our common stock. In addition, outstanding employee options to
purchase VitalCom common stock were assumed by Data Critical, with the exercise
price and number of shares subject to such options appropriately adjusted to
reflect the common stock exchange ratio.

     This acquisition was accounted for as a purchase transaction including the
acquisition of VitalCom technology and the hiring of approximately 132
employees. In the second quarter of 2001, we wrote off $2.8 million of in-
process research and development in connection with the VitalCom acquisition.

     In 1991, VitalCom introduced its computer network for ECG data, providing
acquisition, interpretation and distribution of patient ECG information.
VitalCom's OpenNet application, introduced in the first half of 1996, expanded
VitalCom's network capability to multi-parameter applications by wirelessly
collecting patient information from other manufacturers' patient monitoring and
life support equipment. In November 1997, VitalCom introduced its SiteLink
application, which allows a tertiary hospital to link its enterprise wide
patient monitoring system to one at a remote facility via fractional T-1 lines
or other common WAN infrastructures. In July 2000, VitalCom announced a new
patent pending suite of products--the "PatientNet Wireless Network(TM)", to be
sold by its direct sales force and through its OEM channels. These new products
utilize elements of micro-cellular telephone technology and wireless LAN
technology to obtain physiological data from patients in a highly secure and
reliable data link and transport that data back to a central control center
using standard Ethernet protocols and architecture. In addition, PatientNet
wireless network transmits in the 608-614 WMTS (Wireless Medical Telemetry
Service) protected medical band, which the FCC in 2000 dedicated for exclusive
use by medical telemetry and radio astronomy.

     In connection with the VitalCom acquisition, we conducted a valuation of
the assets acquired from VitalCom, including core technology, assembled
workforce and in-process research and development, utilizing the following major
assumptions: the revenue and margin contribution of each technology (in-process
and future yet-to-be defined); the percentage of carryover of technology from
products under development and products scheduled for development in the future;
the expected life of the technology; anticipated module development and module

                                       12
<PAGE>

introduction schedules; revenue forecasts, including expected aggregate growth
rates for the business as a whole and expected growth rates for the internet
content provider industry; forecasted operating expenses, including selling,
general and administrative expenses, as a percentage of revenues; and a rate of
return of 22.5% utilized to discount to present value the cash flows associated
with the in-process technologies.

     As of the date of acquisition, we estimated that the PatientNet and other
acquired technologies were 60% completed. The percentage completed pre-
acquisition for this technology was based primarily on the evaluation of three
major factors: time-based data, cost-based data, and complexity-based data.

     As a part of the valuation discussed above management estimates and
assumptions were made. While we believe that the assumptions were made in good
faith and were reasonable when made, such estimates and assumptions remain
largely untested, as the technology is not yet in service and the other products
have been in service for only a limited period of time. Accordingly, our
estimates and assumptions may prove to be inaccurate, and we may not realize the
revenues, gross profit, growth rates, expense levels or other variables set
forth in such estimates and assumptions. See "Important Factors That May Affect
Our Business, Our Results of Operations and Our Stock Price."

     Shortly after completion of the VitalCom acquisition, we estimated the cost
to complete initial development and integration of this technology to be
approximately $2.3 million. The magnitude of development efforts needed to
complete these initial developments is periodically reviewed by us. See
"Important Factors That May Affect Our Business, Our Results of Operations and
Our Stock Price."

     The PatientNet technology must be developed in a manner compatible with the
changing protocols and standards that are emerging in the industry, and will be
greatly influenced by emerging trends, protocols and standards.

     We are currently unable to quantify the impact of the PatientNet technology
on the Company's current and future results of operations, liquidity and capital
resources. However, we anticipate that sales of PatientNet, along with sales of
StatView, products will comprise a substantial portion of our revenues in the
next 12 to 18 months.

     We anticipated receiving a number of synergies as a result of the VitalCom
acquisition, including gaining knowledgeable staff and acquiring products and
services at least partially developed, which together may reduce time-to-market
for subsequent wireless product development and implementation. We anticipate
that any successful wireless products or services will, when generating material
revenues, yield economies of scale in company-wide selling, general and
administrative expenses. However, there can be no assurance that we will realize
any of such benefits. See "Important Factors That may Affect Our Business, Our
Results of Operations and Our Stock Price."

     For the year ended December 31, 2000, substantially all our Hospital
Systems revenues were derived through:

     .  direct sales by our sales and marketing force (approximately 80%); and

     .  OEM sales and sales through strategic partner alliances (approximately
        17%).

                                       13
<PAGE>

     Prior to January 1, 2001 we distributed our Hospital Systems products
through our direct sales force and our third party OEM relationships. Pursuant
to our strategic distribution alliance with Medtronic Physio-Control, we have
changed our method of distribution of Hospital Systems products and services and
no longer utilize a direct sales force, except for distribution of our VitalCom
products. We expect that revenues related to our Hospital Systems will continue
to be generated primarily by our Strategic Partners and, therefore, our success
will substantially depend on the efforts of these third-parties. For the six
months ended June 30, 2001, the breakdown of sources for our Hospital Systems
revenues were as follows:

     .  direct sales by our sales and marketing force (approximately 43%); and

     .  OEM sales and sales through strategic partner alliances (approximately
        57%).

Results of Operations

     The following table sets forth for the periods indicated the percentage of
revenue of certain line items included in Data Critical's statement of
operations:

<TABLE>
<CAPTION>
                                                          Three Months                 Six Months
                                                             Ended                       Ended
                                                            June 30,                    June 30,
                                                    ------------------------     -------------------------
                                                       2001          2000          2001            2000
                                                    ----------     ---------     ---------     -----------
<S>                                                 <C>            <C>           <C>           <C>
Revenue                                                  100.0%        100.0%        100.0%          100.0%
Cost of revenue                                           54.7%         37.3%         46.9%           38.4%
                                                    ----------     ---------     ---------     -----------
      Gross margin                                        45.3%         62.7%         53.1%           61.6%
                                                    ----------     ---------     ---------     -----------
Operating expenses:
   Acquired in-process R&D                                57.8%         60.7%         26.5%           33.6%
   Research and development                               37.2%         32.7%         31.7%           33.5%
   Sales and marketing                                    28.1%         46.1%         27.9%           44.3%
   General and administrative                             44.0%         35.5%         37.9%           37.3%
   Depreciation and amortization                          18.1%          9.1%         15.9%            7.8%
   Restructuring charges                                  71.2%          0.0%         32.6%            0.0%
                                                    ----------     ---------     ---------     -----------
      Total operating expenses                           127.4%        123.3%        113.4%          122.9%
                                                    ----------     ---------     ---------     -----------
      Loss from operations                               -82.1%        -60.7%        -60.3%          -61.3%

Interest income                                            3.1%          4.4%          3.3%            9.4%
                                                    ----------     ---------     ---------     -----------
      Net loss                                           -79.1%        -56.2%        -56.9%          -51.9%
                                                    ==========     =========     =========     ===========
</TABLE>

                                       14
<PAGE>

     Revenues

     The following table presents our total revenues for the three and six
months ended June 30, 2001 and 2000 (in millions, except percentages):

<TABLE>
<CAPTION>
                                    Three Months Ended                       Six Months Ended
                                         June 30,                                June 30,
                             --------------------------------      ------------------------------------
                                  2001              2000                 2001                2000
                             --------------    --------------      ----------------     ---------------
<S>                          <C>     <C>       <C>     <C>         <C>       <C>        <C>      <C>
Revenues
Hospital Systems..........   $ 4.5    93.7%    $ 4.5    97.6%      $  9.9     93.3%     $ 7.9     94.9%
Physician Systems.........     0.3     6.3%      0.1     2.4%         0.7      6.7%        .4      5.1%
                             -----             -----               ------               -----
    Total Revenues........   $ 4.8   100.0%    $ 4.6   100.0%      $ 10.6    100.0%     $ 8.3    100.0%
                             =====             =====               ======               =====
</TABLE>

Hospital Systems Revenues


     Through December 31, 2000, we primarily sold our Hospital Systems products
and services through a national direct field sales force, co-marketing alliances
with strategic partners and OEM arrangements. Our direct sales force regularly
worked together with the sales teams of our strategic partners, in particular
Agilent, Siemens and Welch Allyn Protocol. Effective January 1, 2001, Medtronic
Physio-Control became the exclusive non-OEM distributor of our wireless alarm
notification systems for in-hospital use. Our agreement with Medtronic Physio-
Control significantly changes our business model from a strategy of direct
distribution of our hospital alarm notification products to a heavy reliance on
third-party distribution. We expect to sell our alarm notification products
through our OEM relationships.

     In addition, through our VitalCom subsidiary we market our PatientNet suite
of products through direct sales calls, product demonstration at select
reference sites, on-site product evaluations, participation in trade shows and
advertising in trade publications. We market PatientNet suite of products to
OEMs (notably Datascope) though expansion of existing product offerings, sales
calls and participation in trade shows.

     For the three months ended June 30, 2001, revenues from sales of Hospital
Systems products and services were $4.5 million virtually unchanged from the
same period in 2000. Data Critical's distribution partner, Medtronic Physio-
Control, did not meet its minimum end-user distribution targets in the second
quarter of 2001. At the end of the quarter, a $2.5 million invoice was billed to
Medtronic for its minimum contractual obligations. To date, Medtronic has not
paid this receivable to Data Critical and the matter is under dispute. Data
Critical will not recognize these revenues until this dispute is resolved. This
decline was offset by $1.4 million through our acquisition of VitalCom and $1.1
million through our acquisition of Paceart.

     Revenues from direct sales of our Hospital Systems products and services
are generally recognized upon installation; revenue from OEM sales of our
products and services is generally recognized upon shipment; revenue generated
from installation and training fees is recognized upon completion of the related
services; and revenue from annual software maintenance fees is deferred and
recognized over the term of the applicable agreement. These revenue recognition
principles are consistent with Statement of Position 97-2, Software Revenue
Recognition, as amended by Statements of Position 98-4 and 98-9. We will
generally recognize revenue upon shipment of Hospital Systems products and
services sold through Medtronic Physio-Control.

     For the six months ended June 30, 2001, revenues from sales of Hospital
Systems products and services increased from $7.9 million to $9.9 million, or
approximately 25% over the comparable period of 2000. Of this increase, we
incurred a $1.5 million decline in sales of our Hospital View Family systems
through direct and OEM sales, strategic partner sales and other miscellaneous
hospital revenue. This decline was offset by $1.4 million through our
acquisition of VitalCom and $2.1 million through our acquisition of Paceart.

                                       15
<PAGE>

Physician Systems Revenues

     Revenues from sales of our Physician Systems products and services consist
primarily of sales of subscriptions to our WebChart product and wireless and
handheld applications including PocketChart and services associated with those
products. Subscription fees consist of recurring charges primarily from users of
our Internet-based, wireless and application service provider, or ASP, products.
Service fees consist of installation services and support contracts for our
Physician Systems products.

     For the three months ended June 30, 2001, revenues from sales of Physician
Systems products and services increased from $113,000 to $306,000, or
approximately 171% over the comparable period of 2000. For the six months
ended June 30, 2001, revenues from sales of Physician Systems products and
services increased from $428,000 to $705,000, or approximately 65% over the
comparable period of 2000. Because of competitive pressures and the start-up
nature of our Physician Systems business, our revenues and operating margins
remain minimal.

     Due to our recently announced restructuring, we anticipate that the
percentage of our revenue attributable to our Physician Systems products will
decrease. For the six month period ending June 30, 2001, the percentage of our
total revenue attributable to Physician Systems was 6.7%, compared to 5.1%
during the comparable period in 2000. We are currently contemplating closing or
selling some or all of our Physician Systems business in connection with, or as
a result of, the restructuring.

     We currently hold an account receivable in the amount of $872,000 that is
due and payable by our strategic partner Edwards Lifesciences. Edwards
Lifesciences has indicated that it disputes the amount owed. We are currently
considering alternatives for collection of this account payable. An inability to
collect on this account would reduce our net revenue and would decrease the
absolute and relative amount of our Physician Systems revenues.

Deferred Revenues

     Deferred revenue was $2.9 million at June 30, 2001 and $1.8 million at June
30, 2000. Our deferred revenue results primarily from the recognition of
Hospital Systems products shipped but not installed as well as software
maintenance fees. We recognize revenue that had been deferred upon shipment when
the system is installed and we generally recognize software maintenance
agreement revenue over one-year terms. The increase in deferred revenue is
primarily a result of our acquisition of VitalCom. We expect that deferred
revenue from both system installations and software maintenance agreements will
represent a smaller percentage of revenue in future periods as a result of our
recent distribution alliance with Medtronic Physio-Control and will be offset
through direct sales of products through our VitalCom subsidiary.

                                       16
<PAGE>

Operating Expenses

     The following table and related discussion highlights our operating
expenses for the three and six months ended June 30, 2001 and 2000 (in
thousands, except percentages).

<TABLE>
<CAPTION>
                                                Three Months Ended                      Six Months Ended
                                                     June 30,                               June 30,
                                        ---------------------------------     ------------------------------------
                                             2001               2000                2001                 2000
                                        ---------------------------------     ------------------------------------
<S>                                     <C>        <C>     <C>        <C>     <C>         <C>      <C>         <C>
Revenue                                 $4,846     100%    $4,616     100%    $10,573     100%     $ 8,321     100%
Cost of revenue                          2,652      55%     1,723      37%      4,958      47%       3,195      38%
                                        ---------------------------------     ------------------------------------
       Gross margin                      2,194      45%     2,893      63%      5,615      53%       5,126      62%
                                        ---------------------------------     ------------------------------------

Operating expenses:
   Research and development              1,802      37%     1,508      33%      3,349      32%       2,786      33%
   Sales and marketing                   1,363      28%     2,128      46%      2,950      28%       3,685      44%
   General and administrative            2,133      44%     1,639      36%      4,004      38%       3,102      37%
   Depreciation and amortization           875      18%       418       9%      1,684      16%         651       8%
                                        ---------------------------------     ------------------------------------
       Total operating expenses          6,173     127%     5,693     123%     11,987     113%      10,224     123%
                                        ---------------------------------     ------------------------------------
</TABLE>

     Cost of revenue for Hospital Systems products includes cost of purchased
components, cost of contract manufacturing, labor for assembly and installation,
and overhead. Although a number of the components used in our Hospital Systems
products are readily available, some of these components are specifically
manufactured for us. Due to the significant investment in capital equipment that
would be necessary to manufacture these items in-house and the relatively low
volumes we require, we have chosen to utilize contract manufacturing firms to
manufacture these components. We generally purchase these components under
contracts that provide for fixed unit costs with incentives for process and
design improvements that result in future manufacturing cost savings.

     Cost of revenue for Physician Systems includes costs associated with
building, maintaining, installing and upgrading our physician software
applications, data centers and purchased hardware.

     For the three months ended June 30, 2001, the combined cost of revenues for
Hospital Systems and Physician Systems increased from $1.7 million to $2.7
million, or approximately 59% over the comparable period in 2000. As a
percentage of revenue gross margins were 46% for our Hospital Systems business
and 30% for our Physician Systems business. The decrease in gross margin of 45%
for the 3 months ended June 30, 2001 from 63% in the comparable period of 2000
was greater than expected due to product mix, transitional and contractual
issues under our new distribution alliance with Medtronic Physio-Control,
marginally offset by higher margins from our Paceart business, 61%, and
VitalCom, 57%. In addition to purchasing alarm notification systems, our
strategic partners purchased licenses with higher margins in order to satisfy
their obligations to us. For the three months ended June 30, 2001, our margin
dollar contribution was 96% from Hospital Systems and 4% from Physician Systems.

     For the six months ended June 30, 2001, the combined cost of revenues for
Hospital Systems and Physician Systems increased from $2.7 million to $4.5
million, or approximately 67% over the comparable period in 2000. As a
percentage of revenue gross margins were 54% for our Hospital Systems business
and 31% for our Physician Systems business. The decrease in gross margin of 53%
for the 6 months ended June 30, 2001 from 62% in the comparable period of 2000
was due to product mix, transitional and contractual issues under our new
distribution alliance with Medtronic Physio-Control, marginally offset by higher
margins from our Paceart business, 59%, and VitalCom, 57%. In addition to
purchasing alarm notification systems, our strategic partners purchased licenses
with higher margins in order to satisfy their obligations to us. For the six
months ended June 30, 2001, our margin dollar contribution was 96% from Hospital
Systems and 4% from Physician Systems.

                                       17
<PAGE>

Research and Development

     Research and development expenses consist primarily of costs incurred for
new application development, software application upgrades, and for enhancements
to and maintenance of our product offerings. Typical expenses include salaries,
travel and contract engineering services. We believe research and development
costs will continue to increase in absolute dollars as we expand our product and
service offerings.

     For the three months ended June 30, 2001, research and development expenses
for Hospital Systems business and Physician Systems business combined increased
from $1.5 million to $1.8 million, or approximately 20% over the comparable
period in 2000. Of these expenses, $1.5 million, or 83%, related to our Hospital
Systems business while $300,000, or 17%, related to our Physician Systems
business. This increase in total research and development expenses was primarily
due to the incremental effect of assets and companies acquired during 2000 and
2001, as well as an increase in the number of technical employees required to
support additional growth in the number of products and services. Research and
development expenses represented 37% of total revenues for the period ended June
30, 2001 compared to 33% of total revenues for the comparable period of 2000.
This increase in research and development expenses as a percentage of total
revenues reflects our decreased revenues.

     For the six months ended June 30, 2001, research and development expenses
for Hospital Systems business and Physician Systems business combined increased
from $2.8 million to $3.3 million, or approximately 18% over the comparable
period in 2000. Of these expenses, $2.4 million, or 73%, related to our Hospital
Systems business while $0.9 million, or 27%, related to our Physician Systems
business. This increase in total research and development expenses was primarily
due to the incremental effect of assets and companies acquired during 2000, as
well as an increase in the number of technical employees required to support
additional growth in the number of products and services. Research and
development expenses represented 32% of total revenues for the period ended June
30, 2001 compared to 33% of total revenues for the comparable period of 2000.
This increase in research and development expenses as a percentage of total
revenues reflects our decreased revenues.

     Our VitalCom subsidiary, prior to its acquisition by Data Critical,
historically spent substantial portions of its revenue on research and
development expenses. We anticipate that our research and development costs
could rise, in both absolute and relative terms, as a result of our acquisition
of VitalCom. This increase in research and development costs may be offset by
savings achieved through our proposed restructuring and consolidation of
operations.

Sales and Marketing

     Sales and marketing expenses include costs to acquire and retain users of
our products and services, the operating expenses associated with our company-
wide ongoing sales and marketing efforts, and other general marketing costs to
support our products and services. Expenses include personnel, sales
commissions, trade show and advertising expenses, telecommunications costs and
consulting fees. As a result of our acquisition of VitalCom, costs associated
with sales of our PatientNet product will likely result in an overall increase
in direct sales costs.

     For the three months ended June 30, 2001, sales and marketing expenses for
our Hospital Systems business and our Physician Systems business combined
decreased from $2.1 million to $1.4 million, or approximately 33% over the
comparable period in 2000. As a percentage of revenues for the period ended June
30, 2001, sales and marketing expenses were 28%, compared to 46% of total
revenues for the comparable period in 2000 as a result of the decrease in our
sales and marketing expenses. The overall decline in sales and marketing
expenses for our Hospital Systems business was a result of our distribution
alliance with Medtronic Physio-Control. These declines were offset by
approximately $623,000 of expenses incurred in acquisitions that occurred
subsequent to the second quarter of 2000.

     For the six months ended June 30, 2001, sales and marketing expenses for
our Hospital Systems business and our Physician Systems business combined
decreased from $3.7 million to $3.0 million, or approximately 19% over the
comparable period in 2000. As a percentage of revenues for the period ended June
30, 2001, sales and marketing expenses were 28%, compared to 44% of total
revenues for the comparable period in 2000 as a result of

                                       18
<PAGE>

the increase in our total revenues. The overall increase in sales and marketing
expenses were primarily a result of $852,000 in additional expenses incurred
from acquisitions subsequent to the first six months of 2000.

     We expect sales commissions related to our Hospital Systems alarm
notification products to increase as a result of our acquisition of VitalCom.

General and Administrative

     General and administrative expenses consist primarily of costs related to
the finance, administrative and other personnel functions necessary to support
our business. We believe general and administrative expenses will continue to
increase as we expand staff and incur professional accounting, finance and legal
expenses.

     For the three months ended June 30, 2001, general and administrative
expenses for our Hospital Systems business and Physician Systems business
combined increased from $1.6 million to $2.1 million, or 31% over the comparable
period in 2000. Approximately $270,000 of the increase in general and
administrative costs resulted from acquisitions completed subsequent to the
second quarter of 2000. The additional $500,000 in general and administrative
expenses, are general increases for such items as fees for commercial and
director and officer insurance, professional accounting, finance and legal
services associated with compliance with public reporting requirements and other
strategic initiatives.

     For the six months ended June 30, 2001, general and administrative expenses
for our Hospital Systems business and Physician Systems business combined
increased from $3.1 million to $4.0 million, or 29% over the comparable period
in 2000. Approximately $521,000 of the increase in general and administrative
costs resulted from acquisitions completed subsequent to the second quarter of
2000. The additional $380,000 in general and administrative expenses, are
general increases for such items as fees for commercial and director and officer
insurance, professional accounting, finance and legal services associated with
compliance with public reporting requirements and other strategic initiatives.

Depreciation and Amortization

     Combined depreciation and amortization expense for Hospital Systems and
Physician Systems increased to $896,000 for the three months ended June 30,
2001, compared to $418,000 for the same period in 2000. The increase during 2001
resulted primarily of goodwill amortization from our acquisition of Elixis in
April 2000 and our acquisition of Paceart in September 2000.

     Combined depreciation and amortization expense for Hospital Systems and
Physician Systems increased to $1.7 million for the six months ended June 30,
2001, compared to $651,000 for the same period in 2000. The increase during 2001
resulted primarily of goodwill amortization from our acquisition of Elixis in
April 2000 and our acquisition of Paceart in September 2000.

     We expect an increase in depreciation and amortization as a result of our
acquisition of VitalCom.

Restructuring

     Primarily as a result of the merger and acquisitions completed in 2000 and
2001, we adopted certain restructuring plans during the quarter ended June 30,
2001. The restructuring plans resulted in restructuring charges related to the
consolidation of duplicate functions and activities. These actions resulted in a
reduction of approximately 92 employees or approximately 34% of the workforce,
across essentially all of our personnel functions and locations, a reduction in
total facilities, including the closing of our Seattle facility, a partial

                                       19
<PAGE>

closing of our Bothell offices and the impairment of certain assets in
accordance with SFAS 121. Restructuring charges are primarily comprised of costs
associated with employee severance, cancellation of lease agreements, and
impairments of abandoned technologies and property and equipment. These charges
amounted to approximately $3.5 million for the quarter ended June 30, 2001. At
June 30, 2001, approximately $2.2 million relating to these programs was
included in current liabilities.

Investment losses

     In the fourth quarter of 2000, we invested $3.3 million in a private
company, PocketScript, Inc. We account for this investment at cost unless
circumstances indicate the carrying amount of the investment may not be
recoverable. With respect to investments in non-public companies, our management
performs on-going reviews based on quantitative and qualitative measures. In
evaluating its non-public company investments, management determined a range of
market values based on a combination of the following valuation methods where
applicable: recent funding rounds; changes in investment's market value since
the date of investment relative to the non-public company's stock price, the
value of comparable companies, the NASDAQ composite index, a composite of
companies that operate within the non-public company's industry and market price
multiples of comparable companies. The fair value of PocketScript was determined
from the range of possible values, after considering the strength of
PocketScript's financial position, future prospects and risk profile of the
company. During the second quarter of 2001, the Company recorded a non-cash
impairment charge of approximately $3.3 million related to its investment in
PocketScript. As a result, investment losses were $3.3 million for the three
months ended June 30, 2001. There was no such loss for the same period in 2000.

Interest Income, Net

     Interest income, net consists of interest income net of interest expense.
For the three months ended June 30, 2001, interest income, net was $148,000, a
decrease of $57,000, or 28%, compared to the same period in 2000. The decrease
occurred because our average balances of our cash, cash equivalents and short-
term investments declined from 2000 to 2001.

     For the six months ended June 30, 2001, interest income, net was $353,000,
a decrease of $428,000 or 55% compared to the same period in 2000. The decrease
occurred because our average balances of our cash, cash equivalents and short-
term investments declined from 2000 to 2001. During the 12 month period between
July 1, 2000 and June 30, 2001 we used approximately $21.8 million in cash, net.

Liquidity and Capital Resources

     The following table shows our net operating loss before depreciation and
amortization (in thousands):

<TABLE>
<CAPTION>
                                                                                          June 30,
                                                                              -------------------------------
                                                                                   2001              2000
                                                                              -------------      ------------
<S>                                                                             <C>                 <C>
   Net operating loss......................................................     $(15,519)           $(7,117)
   Depreciation and amortization...........................................        1,684                651
                                                                                --------            -------
   Net operating loss before depreciation and amortization.................     $(13,835)           $(6,466)
                                                                                ========            =======
</TABLE>

                                       20
<PAGE>

     The following table and related discussion highlights our cash flows for
the six months ended June 30, 2001 and 2000 (in thousands):

<TABLE>
<CAPTION>
                                                                                           Six Months Ended
                                                                                               June 30,
                                                                                   --------------------------------
                                                                                       2001               2000
                                                                                   -------------      -------------
<S>                                                                                <C>                <C>
   Net cash used in operating activities...................................           $(5,385)           $(4,664)
   Net cash used in investing activities...................................              (174)            (1,112)
   Net cash provided by financing activities...............................              (213)            (7,726)
</TABLE>

     As of June 30, 2001, we had $14.2 million of cash and cash equivalents,
down from $19.9 million as of December 31, 2000. The net $5.7 million decrease
was comprised of $5.4 million used in operating activities, $174,000 used in
investing activities and $213,000 used in financing activities. Working capital
decreased $3.4 million to $14.5 million as of June 30, 2001 from $17.9 million
at December 31, 2001.

     As of June 30, 2001, our principal commitments consisted of obligations
outstanding under operating leases. Since inception, we have satisfied our
liquidity needs primarily from the net proceeds of approximately $64.7 million
generated through private and public sales of common and preferred stock and, to
a lesser extent, from bank borrowings and advance deposits received from
customers on open order.

     Net cash used in operating activities was $5.4 million during the six
months ended June 30, 2001 and $4.7 million in the comparable period in 2000.
Net cash used in operating activities for each of these periods consisted
primarily of net losses reduced by the noncash effect of assumed in process
research and development and write offs of investments, and increases in
accounts receivable, inventories, prepaid expenses and other current assets
partially offset by changes in accounts payable and other current liabilities,
deferred revenue and depreciation and amortization.

     Net cash used in investing activities was $174,000 during the six months
ended June 30, 2001, and $1.1 million in the comparable period in 2000.
Investing activities in the second quarter of 2001 included a $52,000 repayment
by one of our officers of a loan from Data Critical, offset by $54,000 in
purchases of property and equipment and $363,000 in payments related to the
pending acquisition of VitalCom. Investing activities in the second quarter of
2000 included a $200,000 advance to Elixis Corporation, a company we acquired in
April 2000, and approximately $264,000 for the purchase of property and
equipment.

     Net cash used in financing activities was $213,000 during the six months
ended June 30, 2001, and net cash provided by financing activities was $7.7
million for the same period in 2000. Financing activities in the second quarter
of 2001 included $100,000 in proceeds from issuances of common stock offset by
$251,000 for repurchases of our common stock and $22,000 for payments on capital
leases. Financing activities in the second quarter of 2000 included $70,000 in
proceeds from issuance of common stock offset by $43,000 for payments on lines
of credit and $1.1 million for payments on notes payable and capital leases.

     As of June 30, 2001 we have repurchased a total of 811,217 shares of our
outstanding common stock at an aggregate purchase price of approximately $2.2
million or $2.71 per share. We may continue to make repurchases pursuant to the
program, which would affect our liquidity and earnings per share.

     We currently anticipate that we will continue to experience an increase in
our operating expenses as we enter new markets for our products and services,
increase our marketing activities, increase our research and development
spending, develop new distribution channels, expand our infrastructure, and
improve our operational and financial systems. These operating expenses will
consume a significant amount of our cash resources. Management believes that our
current cash balances and our anticipated revenue growth will be sufficient to
meet our anticipated cash needs for working capital and capital expenditures
through 2001. Our projections of future cash needs and cash flows, however, are
subject to substantial uncertainty. Factors that may affect our future capital
requirements include, among others, the value of our investments, our decreased
stock option value and purchases made pursuant

                                       21
<PAGE>

to our stock repurchase program. If current cash and cash that may be generated
from future operations are insufficient to satisfy our liquidity requirements,
we may need to seek additional funds through public or private equity financing,
or from other sources, including the sale of certain of our assets. However, we
may be unable to obtain adequate or favorable financing, and any financing we
obtain may dilute the ownership interest of our shareholders prior to the
financing. In addition, we may, from time to time, consider the acquisition of,
or investment in, complementary businesses, products, services and technologies,
which might impact our liquidity.

     Another factor that may affect our revenue and our revenue growth is our
reliance on third parties for sales of our product. We planned to derive a
substantial portion of our revenue in 2001 from our recent agreements with
Medtronic Physio-Control and Agilent. If either of these parties fail to perform
as expected, our revenue will decrease and our liquidity will be negatively
affected. In such event, we may be required to reduce our planned capital
expenditures, such as for research and development, sell some or all of our
assets, or cease doing business.

     The percentage of our revenue attributable to sales to or through Medtronic
and Agilent was 52% for the six months ended June 30, 2001. Accordingly, as
anticipated, we have derived a substantial portion of our revenue so far in 2001
from sources other than direct sales. As a result of our recent acquisition of
VitalCom, however, we anticipate that direct sales of our PatientNet suite of
products will cause an increase in the amount and percentage of our revenues
attributable to direct sales by our sales and marketing force.

     Data Critical's distribution partner, Medtronic Physio-Control, did not
meet its minimum end-user distribution targets in the second quarter of 2001. At
the end of the quarter, a $2.5 million invoice was billed to Medtronic for its
minimum contractual obligations. To date, Medtronic has not paid this receivable
to Data Critical and the matter is under dispute. Data Critical will not
recognize these revenues until this dispute is resolved. This resulted in a
shortfall of $2.5 million in anticipated revenue for the second quarter of 2001.

     In addition, we recognized a non-cash loss of $3.3 million on decreased
value in equity investments, all of which was attributable to a write-down of
our investment in PocketScript.

Lines of Credit; Notes Payable

     We have two standby letters of credit of approximately $170,000 each,
secured by certificates of deposit. As of June 30, 2001, no borrowings were
outstanding under these lines of credit. The instruments were issued to provide
collateral for our lease of our Bothell, Washington facility. These certificates
automatically renew each March and December for as long as the letters of credit
are in place and we maintain adequate cash reserves for collateralization.

     We have a lease line of credit for up to $1.0 million, comprised of
$800,000 to finance equipment and $200,000 to finance equipment, leasehold
improvements and software. No additional advances under the lease line are
available. Advances were payable over 36 months in equal installments. We had
outstanding borrowings of $76,000 as of June 30, 2001. As part of this lease
line, the lender received a warrant to purchase 12,500 shares of our Series D
preferred stock at an exercise price of $4.00 per share. This warrant, which
became exercisable for 12,500 shares of our common stock upon completion of our
initial public offering, expires on November 9, 2005.

     Additionally in April 1999, we established a finance lease facility
totaling $214,000. The finance lease agreements were funded in three
installments from April to August 1999 and were secured by the leased property.
The leases are payable in 36 equal installments plus 16.6% interest on the
declining balances. We had outstanding borrowings of $76,000 as of June 30,
2001.

     As of June 30, 2001, our principal commitments consisted of obligations
outstanding under operating leases. We lease approximately 17,000 square feet in
a single facility located in Bothell, Washington pursuant to a lease that
expires in 2004. We maintain a facility for our Hospital Systems business used
primarily as an advanced development laboratory in approximately 8,400 square
feet of space in Oklahoma City, Oklahoma under a lease that

                                       22
<PAGE>

expires in December 2006. In connection with our acquisition of VitalCom Inc. we
acquired a 46,000 square foot facility in Tustin, California maintained under a
lease expiring in June 2005, with an option to extend through June 2010. The
Tustin facility is a hospital systems facility. Our Paceart division of our
Hospital Systems business operates out of a 7,500 square feet of office space in
Fairfield, New Jersey under a lease that expires in 2004. Our Physician Systems
business uses approximately 10,600 square feet of office space in Houston, Texas
under a lease that expires in March 2004, and 7,257 square feet of office space
in Seattle, Washington under a lease expiring in 2005. The annual cost of these
leases during 2001 is approximately $1.4 million, subject to annual adjustments.
We also maintain certain agreements with suppliers to purchase components and
estimate these noncancelable obligations to be $550,000 for 2001. We have a
commitment to purchase airtime charges from a wholesaler in the amount of
$300,000 in 2001 regardless of whether or not we are able to pass these charges
on to our customers. As a result of the restructuring we undertook in May 2001,
the Company accrued the entire $600,000 commitment as of June 30, 2001 as a
restructuring charge. Although we have no other material commitments, we may
experience an increase in our capital expenditures and lease and supplier
commitments consistent with our anticipated growth in our operations,
infrastructure and personnel.

Important Factors That May Affect Our Business, Our Results of Operations and
Our Stock Price

We have incurred losses since inception and may never be profitable, which could
result in a decline in the value of our common stock and a loss of your
investment.

     We expect to continue to incur operating losses through the end of 2001,
and possibly longer. We experienced net losses of $8.6 million from inception
through December 31, 1997, $5.8 million in 1998, $6.8 million in 1999 and an
additional $13.9 million in 2000. As of June 30, 2001, our accumulated deficit
was approximately $54.5 million. We anticipate incurring significant marketing,
product development and general and administrative expenses and, as a result, we
will need to generate significantly higher revenue to achieve and sustain
profitability. We may never earn profits and, if the company does become
profitable, it may be unable to sustain or increase profitability on a quarterly
or annual basis. As a result, the market price of our stock may decline.

Failure to complete the proposed acquisition by GE could negatively impact our
stock price, business and operations.

     Completion of our proposed acquisition by GE is contingent upon approval of
our stockholders, FCC and FDA regulatory approval, anti-trust and Hart Scott
Rodino approval and other standard terms and conditions pursuant to the merger
agreement. If our proposed acquisition by GE is not completed, we may suffer the
following harms:

     .  if the current market price of our common stock reflects an assumption
        by the market that the acquisition will occur, then the price of our
        common stock may decline;

     .  we may be required to pay GE a termination fee, which would harm our
        liquidity and earnings and our ability to enter into other transactions;

     .  significant costs related to the merger, such as legal and accounting
        fees and the expenses and fairness opinion fees of our financial
        advisor, must be paid even if the acquisition is not completed;

     .  possible uncertainty on the part of our customers, potential customers,
        and employees concerning our plans for the future; and

     .  it might be difficult for us to enter into a transaction similar to the
        proposed acquisition by GE or to engage in other strategic transactions
        for a significant period of time.

                                       23
<PAGE>

     In addition, we recently suspended our planned consolidation of operations
to our Tustin, California facility in anticipation of our acquisition by GE. If
the acquisition is not completed, we will need to incur additional expenses in
resuming our consolidation plans and may suffer loss of personnel, missed
opportunity and other costs as a result of the delay in effecting the planned
consolidation.

Our business may fail if Medtronic Physio-Control, Agilent and Datascope do not
successfully perform their agreements with us.

     By entering into our distribution agreement with Medtronic Physio-Control
and our license agreement with Agilent, we now rely on these two companies for
sales and installations of most of our Hospital Systems. Prior to this change,
direct sales of our three key products-StatView, AlarmView and FlexView-
accounted for 68% of the net sales of our Hospital Systems. Consistent with our
new distribution model, we transferred substantially all of our Hospital Systems
sales and installation force to Medtronic Physio-Control.

     Pursuant to our agreement with Medtronic Physio-Control, Medtronic Physio-
Control has agreed to:

     .  integrate our Hospital Systems sales force with Medtronic Physio-
        Control's existing sales force;

     .  train the existing Medtronic Physio-Control sales force to sell our
        Hospital Systems , including StatView, AlarmView and FlexView;

     .  market and distribute our products, including StatView, AlarmView and
        FlexView;

     .  include our products in international sales and marketing programs;

     .  include our products in Medtronic Physio-Control's national accounts
        contracts, which provide access to large national hospital chains;

     .  include our products in the global healthcare exchange, an on-line
        marketplace for medical devices and healthcare products;

     .  provide installation and field services for our Hospital Systems; and

     .  meet minimum sales and end-user distribution levels.

     If Medtronic Physio-Control and Agilent do not successfully perform, we
will need to rebuild our direct sales and installation forces or find a new
distributor to sell and install our products. If we are unsuccessful in
rebuilding our sales force or in finding alternate means to distribute and
install our products, our business will fail.

     VitalCom's OEM product sales, which represented approximately 58%, 69% and
52% of its total net revenues in 1998, 1999 and 2000, have historically been to
a small number of OEM customers. In 1998, Datascope Corporation accounted for
approximately 23% of VitalCom's total revenues. In 1999, Datascope accounted for
approximately 34% of VitalCom's total revenues. In 2000, Datascope accounted for
28% of VitalCom's total revenues. If we lost Datascope as a VitalCom customer,
or Datascope reduced the amount of products it purchases from our VitalCom
subsidiary, it would significantly harm our business, operating results and
financial condition.

If Agilent or Medtronic Physio-Control fail to distribute our products to their
customers, we could receive reduced minimum payment guaranties or our
relationships with those companies could end, resulting in significant harm to
our business.

     Under their agreements with us, Medtronic Physio-Control and Agilent
guaranty payment of minimum quarterly revenues to us. If either company fails to
meet those minimums through sales to our customers in any quarter, it is
obligated to meet its minimums by purchasing product from us for its own
account.

     Under our license agreement with Agilent, we have agreed to the amount of
the minimums for each quarter of 2001 and 2002. The parties have agreed to
renegotiate minimums annually thereafter. If the parties fail to agree on
minimums for any subsequent period, the license arrangement may cease to be
exclusive and the guarantied payment obligation will be terminated.

                                      24
<PAGE>

     Under the Medtronic Physio-Control distribution agreement, the guarantied
obligations are renegotiated annually for periods after 2001 to levels
reflective of actual historical sales by Medtronic Physio-Control to our
customers. The Medtronic Physio-Control agreement allows us to terminate the
agreement in the event that Medtronic Physio-Control fails to sell a specified
percentage of its minimum sales obligations to its customers in two consecutive
quarters. This minimum end-user distribution percentage target was not met in
the first and second quarter of 2001. In addition, Medtronic Physio-Control
failed to purchase and pay for products from us for its own account in order to
comply with its guaranty of minimum revenues to us. As a result, we experienced
a shortfall of $2.5 million in anticipated revenues for the second quarter of
2001.

     We cannot assure you that we will be able to enforce our agreement with
Medtronic Physio-Control. Pursuant to these provisions related to minimum
obligations, the minimum payment obligations of Agilent and Medtronic Physio-
Control to us may be reduced or, in the case of Medtronic Physio-Control, the
agreement terminated by us. If this happens and we are unable to find an
alternate means to distribute and install our products and services, our
business will fail.

If our relationships with our strategic corporate partners are not successful,
our business will be harmed.

     We depend on several of our partners for key functions, such as sales and
distribution of our products. From time to time, we may disagree with our
partners on business strategy, product development or the interpretation and
performance of contracts. Our key distribution partners, such as Medtronic
Physio-Control, Agilent, Datascope and Tyco, have substantially more resources
than we do. We are more dependent on these relationships than are our key
partners. Because of these disparities, we may be:

     .  unable to fully enforce our rights under our agreements with our
        partners;

     .  forced to settle contract disputes in a manner adverse to our interests;

     .  forced to renegotiate key terms of our agreements, such as pricing and
        minimum sales requirements; and

     .  unable to replace services provided to us by our partners if these
        relationships fail.

     If we are unable to successfully manage our relationships with our
partners, our business will be unsuccessful.

Our inability to maintain or expand sales of StatView or our other Hospital
Systems will reduce our revenue.

     During 1998 and 1999, all of our revenue was derived from sales of our
Hospital Systems . A substantial portion of these sales came from sales of
StatView. During 2000, approximately 90% of our total revenue was derived from
sales of our Hospital Systems and approximately 76% of our total revenue was
attributable to sales of StatView. As a result of our recently announced
restructuring, we expect sales of our Hospital Systems will represent an even
greater percentage of our total revenue. Any factors that reduce the pricing of,
demand for or market acceptance of StatView or our other Hospital Systems ,
including competition or technological change, could significantly reduce our
revenue and harm our business.

                                      25
<PAGE>

Sales of enterprise-wide monitoring systems by our VitalCom subsidiary have been
lower than expected, and our future success is dependant, in part, on our
ability to achieve greater sales of those products.

     Since 1995, VitalCom's sales levels for its enterprise-wide monitoring
systems have been lower than expected. VitalCom has also invested in
infrastructure and incurred expenses at levels that reflected its expectation of
higher sales. As a result, VitalCom has incurred net losses in each year since
1995. If we do not successfully increase sales of our enterprise-wide monitoring
systems in future periods, our business, operating results and financial
condition will continue to be materially adversely affected. In addition,
although we have installed our enterprise-wide monitoring products in more than
100 hospitals, our products may be rejected by the market, resulting in lower
sales.

The sales cycle for our enterprise-wide monitoring systems is long, which
requires that we expend substantial amounts of money pursuing potential sales
that may not be completed.

     Because replacement or substantial upgrades to clinical information systems
typically involves a major commitment of capital, healthcare providers generally
undergo an extended review and approval process before making such an
expenditure. This review and approval process is becoming more complex, more
financially oriented and increasingly subject to overall integration into the
hospital's information systems planning. The sales cycle for our enterprise-wide
monitoring systems, sold through our VitalCom subsidiary, has typically been
nine to eighteen months from the time we initially contact a customer to the
time we receive a purchase order. We expend substantial time, effort and money
during the sales cycle preparing a contract proposal and negotiating a purchase
order without any guarantee that the potential customer will ultimately purchase
a system. Any significant or ongoing failure to reach definitive agreements with
customers has in the past, and may in the future, substantially harm our
business, operating results and financial condition.

The integration of operations as a result of our acquisition of VitalCom will be
complex, time consuming and expensive and may harm the results of operations of
the combined company.

     The anticipated benefits of our acquisition of VitalCom will depend in part
on whether we can integrate our operations in an efficient and effective manner.
Successful integration will require favorably combining each company's:

     .  business culture and management style;

     .  business operations, including manufacturing, sales, marketing and
        distribution operations;

     .  strategic business goals;

     .  business development efforts;

     .  geographically separate facilities; and

     .  research and development efforts.

     The combined company may not accomplish this integration successfully. The
diversion of management's attention to the integration effort and any difficulty
encountered in combining operations could cause the interruption of, or a loss
of momentum in, the activities of either or both of the companies' businesses.
Furthermore, employee morale may suffer, and the combined company may have
difficulty retaining key engineers, managers and other employees. Finally, even
if integration is successful, the combined company may not achieve the cost
savings originally expected or intended as a result of the merger. If the
combined company cannot successfully accomplish integration of our and
VitalCom's operations efficiently or effectively, the combined company's
business will be harmed.

                                      26
<PAGE>

Our acquisition of VitalCom will result in costs of integration and transaction
expenses that could harm combined financial results.

     If the benefits of our acquisition with VitalCom do not exceed the costs of
the acquisition, including the dilution to our stockholders resulting from the
issuance of shares of Data Critical common stock in the merger, our financial
results, including earnings per share, could be harmed. We estimate that we will
incur additional aggregate direct transaction costs of approximately $2.1
million associated with the VitalCom acquisition and related severance costs of
approximately $0.3 million. We also have incurred, and will continue to incur,
integration costs after completion of the acquisition.

     Actual costs may substantially exceed our expectations. In addition,
unanticipated expenses associated with integrating the two companies may arise.
As a result, our business may be harmed. We incurred a non-cash charge of $1.8
million in the second quarter of 2001 to reflect our write-off of VitalCom's in-
process research and development efforts. We may also incur additional charges
in subsequent quarters to reflect costs associated with the merger.

Because our existing capital resources may be insufficient to fund our product
and business development efforts, we may have to curtail or cease operations.

     We may need to raise additional capital sooner than presently anticipated
to:

     .  support expansion;

     .  integrate the operations of Data Critical and VitalCom;

     .  develop new or enhanced systems;

     .  respond to competitive pressures;

     .  acquire complementary businesses or technologies; or

     .  take advantage of other unanticipated opportunities.

     Although we expect that our current cash resources are sufficient to meet
our planned capital requirements for at least the next 12 months, if cash
generated from operations is insufficient to satisfy our working capital and
capital expenditure requirements, we may be required to sell additional equity
or debt securities or obtain additional credit facilities. Additional capital,
if needed, may be unavailable on satisfactory terms, if at all. Our failure to
raise additional capital on acceptable terms when needed would require the
company to scale back our operations, reduce our work force and sell or license
to others technology it would otherwise seek to develop or commercialize itself.
Our inability to raise adequate additional capital in a timely manner could
force the company to forego business opportunities, curtail our development or
even cease operations.

If former VitalCom stockholders who have agreed not to sell their Data Critical
common stock for 90 days after the VitalCom merger sell some or all of their
shares, our stock price may suffer.

     As part of their voting agreements with us delivered in connection with the
VitalCom merger, some former VitalCom stockholders have agreed not to sell the
Data Critical common stock they receive in the merger until September 5, 2001,
pursuant to applicable securities laws. At the end of this period, these holders
will be able to sell their Data Critical common stock to the public. Sales of
any significant portion of these shares in the public market after the
restrictive period, or the perception that these sales could occur, could cause
the market price of our common stock to decrease.

                                      27
<PAGE>

The products of our VitalCom subsidiary may compete with the products of our
current strategic partners, which could result in conflict and reduced revenues.

     VitalCom's existing products compete with the products of several
companies, including Agilent, from whom we currently derive substantial
revenues. Thus, we are competing directly with at least one of our largest
customers. Agilent may elect to end its relationship with us or, alternately,
reduce the volume of products it purchases in response to the competitive
pressures between us. If this happens, our revenues and results of operations
will suffer.

Data Critical proprietary technology may be incompatible with VitalCom's
technology.

     We believe that combining technologies of Data Critical and VitalCom will
enable the combined company to develop products that are technologically
superior to those of our competitors. However, the technologies of the two
companies, when combined, may not yield any technological advances. In addition,
if the technologies of the two companies are not readily compatible, or are
incompatible, then the combined company may experience substantial delays in, or
impediments to, integrating their technologies and introducing new products.
This may result in excess costs or customer defections, and the combined company
may lose any technological advantage that it has or had over our competitors. If
this happens, the revenues and results of operations of the combined company
will be harmed.

Even if we are successful in combining the technologies of Data Critical and
VitalCom, our business will be unsuccessful if new technologies and related
products are rejected by the marketplace.

     Our success depends upon hospitals accepting our products. Even if we are
successful in combining the technologies of Data Critical and VitalCom, the
marketplace may reject products and technologies that are new to the
marketplace. The marketplace may be reluctant to use our information delivery
systems because of negative assumptions or perceptions regarding its products
and technologies. If we are unable to create or maintain a market for new
products, our business will be harmed.

Our competing methods of distributing our Hospital Systems may cause conflicts
among our partners and distributors and confusion of the end-user, resulting in
harm to our business.

     We distribute our Hospital Systems both through our distribution partners
and our OEM partners. In some cases these two channels compete for sales to the
same end customers. These conflicts could lead to disputes between our partners,
disputes between the company and our partners and confusion of the end customer.
Our failure to manage these issues successfully could result in harm to our
distribution process and reduce our revenues.

Our quarterly financial results are likely to fluctuate and are not an
indication of the company's future performance.

     Our revenue in any quarter depends significantly on the timing of systems
shipped and installations completed. Any unexpected delays or cancellations of
shipments or installations at the end of a quarter could substantially reduce
revenue in that quarter, hurt our revenue and impair our business in future
periods. Because we do not know when, or if, our potential customers will place
orders, finalize contracts and permit installation, the company cannot
accurately predict revenue and profitability for future quarters. In addition,
we receive higher revenue and gross margin on direct sales, including those made
through our alliances with strategic partners, than it does on OEM sales.
Consequently, the mix of sales between distribution channels will have a
significant impact on quarterly and annual revenue and profitability.

     Because the market for our products is new and evolving, it is very
difficult to predict future financial results. We plan to significantly increase
our marketing, research and development and general and administrative expenses
in 2001. Our expenses are partially based on our expectations regarding future
reven ues, and are largely fixed in

                                      28
<PAGE>

nature, particularly in the short term. As a result, if our revenues in a period
do not meet our expectations, our stock price will likely suffer.

     As a result of our distribution alliances with Medtronic Physio-Control and
Agilent, and the significant role each company plays in distributing our
products, our quarterly financial results are likely to fluctuate based on the
sales of our products made by these companies.

     We believe that quarter-to-quarter comparisons of our financial statements
are not meaningful. It is likely that in future quarters our revenue and
earnings may be below the expectations of securities analysts and investors and,
as a result, the price of our common stock may decline. Our revenue and earnings
have varied in the past, and we expect that they will continue to vary
significantly from quarter to quarter.

Our business will be unsuccessful if our technology and products are rejected by
the marketplace.

     Our success depends on hospitals accepting our products. The marketplace
may reject our methods of wirelessly transmitting time-critical patient data
through networked or non-networked monitoring equipment. The wireless
transmission of time-critical patient data is new to the marketplace. The
marketplace may be reluctant to use our information delivery systems because of
negative assumptions or perceptions regarding the reliability, accuracy,
security and safety of transmitting complex and time-critical patient data over
wireless devices. If we are unable to create or maintain a market for our
products, our business will fail.

     Additionally, acceptance of some of our products requires a fundamental
change in the way medical information is communicated and managed by doctors and
patients. Physicians may be unwilling to administer healthcare remotely or to
integrate our products into their daily office workflow. The marketplace may
reject the use of wireless technology to transmit personal or sensitive patient
information. If this happens, our business may suffer.

We depend on third-party single-source and limited-source suppliers for
necessary components for our Hospital Systems , which could impede our ability
to supply product and harm our business.

     We use third-party suppliers and manufacturers to purchase necessary
components and to manufacture and test key parts of our Hospital Systems ,
including the StatView receiver and the AlarmView transmitter. Certain
components, including the bitmap display, are presently only available from a
single source. Other parts and components that we rely on are available from
limited sources. Because our choice of suppliers is limited, it may be unable to
obtain key components in sufficient quantities, if at all, or at commercially
reasonable prices. If this happens:

     .  our manufacturing costs could increase;

     .  our delivery of finished product could be delayed;

     .  customers could delay payment or cancel orders; and

     .  our production process could become economically unfeasible;
        possibly resulting in declining revenues and harm to our business.

Our business will be harmed if we fail to keep pace with technological
innovation in our industry.

     The industries in which we operate are characterized by rapid technological
change, changes in end-user preferences and the emergence of new industry
standards and practices that could render our existing systems and proprietary
technology obsolete. Our success depends, in part, on our ability to continue to
enhance our existing systems and to develop new systems that meet the changing
needs of our customers. If we are unable to develop and introduce in a timely
manner new and enhanced systems that incorporate the latest developments in
medical

                                      29
<PAGE>

equipment and wireless communications technologies, our sales will be harmed.
The pace of change in information-dependent markets, such as the healthcare
industry, is rapid and there are frequent new product introductions and evolving
industry standards. We may be unsuccessful in responding to technological
developments and changing customer needs. In addition, our systems may become
obsolete due to the adoption of new technologies or standards by our customers
or competitors. We have experienced development delays in the past and may
experience similar or more significant delays in the future. Difficulties in
system development could materially delay or even prevent the successful
introduction or marketing of new or enhanced systems, which could substantially
harm our business. Our inability to successfully develop, introduce and market
new or enhanced products or services may harm our business.

Our VitalCom subsidiary has focused its research and development and new product
efforts on products that use bands that the FCC recently assigned to medical
telemetry devices, and our future success is dependent, in part, on our ability
to achieve adequate sales of those products.

     VitalCom joined a task force created in 1998 by the American Hospital
Association, or AHA, and the FDA. The task force was formed to respond to issues
of potential interference by high definition television, or HDTV, land mobile
users and low-power television with the frequencies of wireless patient-
monitoring devices known as telemetry devices. The task force's mission was to
identify protected spectrum candidates for future medical telemetry use,
evaluate such use and make recommendations to the FCC. The task force petitioned
the FCC to allocate the UHF 608 MHz to 614 MHz band primarily for medical use.
In June 2000 the FCC approved a new rule requiring hospitals and independent
healthcare networks to evaluate whether their medical telemetry systems are at
risk of interference by other types of devices and to take appropriate measures
to reduce that risk. The FCC recommended that hospitals and healthcare networks
use telemetry systems operating in the new wireless medical telemetry service,
or WMTS, frequency bands and stated that, as of October 2002, it would no longer
certify new equipment designed to operate in the previously used band. VitalCom
has spent considerable amounts of money researching and developing products that
operate in the new band, and our business, operating results and financial
condition could be substantially harmed if hospitals and independent healthcare
networks decide not to move their wireless telemetry systems to the new band.
Developing radio frequency transmitter and receiver products is complicated and
expensive and has diverted VitalCom's research and development resources from
other projects. Our competitors may gain a competitive advantage over us if the
new frequency does not become widely accepted, and any additional development
costs associated with expanding our UHF radio frequency product offerings could
substantially harm our business, operating results and financial condition.
Future regulatory changes could significantly affect our operations by diverting
its development efforts, making current products obsolete or increasing the
opportunity for additional competition, which could substantially harm our
business, operating results and financial condition.

If we are unable to successfully integrate the companies and businesses that we
have acquired or may in the future acquire, our business may suffer.

     In addition to our acquisition of VitalCom, we acquired the businesses of
Physix in 1999 and Elixis and Paceart in 2000 and VitalCom in 2001. We may make
additional acquisitions in the future. Acquisitions entail numerous risks,
including:

     .  difficulties in integrating the operations, products, management and
        employees of the companies involved;

     .  loss of key employees;

     .  disruption of our ongoing business;

     .  our inability to maintain key business relationships that the acquired
        entities have established; and

     .  improperly evaluating new services and technologies or otherwise being
        unable to fully exploit the anticipated opportunity.

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<PAGE>

     In addition, we recently announced a restructuring of operations, resulting
in a significant reduction in the number of employees in our Physician Systems
business. As a result of this restructuring, we may elect to sell some or all of
our Physician Systems business, including assets acquired in the acquisitions of
Physix and Elixis. If such a sale occurs, we may nevertheless retain liabilities
associated with our Physician Systems business. If this happens, our business
could be harmed.

     If we undertake future acquisitions, we may issue dilutive securities,
assume or incur additional debt obligations, incur large one-time expenses, and
acquire intangible assets that would result in significant future expense. Also,
the Financial Accounting Standards Board, or FASB, is contemplating eliminating
pooling of interests accounting for acquisitions and has voted to eliminate the
immediate write-off of acquired in-process research and development. The effect
of these changes would be to increase the portion of the purchase price for any
future acquisitions that must be charged to our cost of revenues and operating
expenses in the periods following any such acquisitions. Any of these events
could harm our business.

Our investments in other companies may decline in value, which would harm our
earnings and liquidity.

     We have in the past, and may in the future, make investments in other
companies in the e-commerce healthcare market. The value of those investments
may decline. If this happens, we could be required to write off some or all of
those investments, and our earnings and liquidity would suffer.

Our infrastructure may be unable to keep pace with, and as a result hinder, our
growth.

     We have rapidly and significantly expanded our operations and expects this
expansion to continue. Our revenue grew from $471,000 in 1997 to $4.1 million in
1998, and from $9.5 million in 1999 to $17.8 million in 2000. Our rapid growth
has placed significant strain on our administrative, operational and financial
resources and has resulted in ever-increasing responsibilities for our
management personnel. We will be unable to effectively manage our business if we
cannot timely and successfully alleviate the strain on our resources caused by
our rapid growth.

We may be unable to effectively compete, which would harm our business.

     We face competition from a number of companies, including SpaceLabs Medical
Inc., which competes with both our Data Critical and VitalCom products. Many
other companies selling products using traditional methods of patient
monitoring, including direct patient oversight and monitoring through wired
systems and voice communications, are well positioned to compete with us. If
these companies enter this market, we may be unable to effectively compete and
our growth and revenue may suffer.

     Many of our potential competitors have longer operating histories,
significantly greater financial, technical, marketing and other resources,
better name recognition and a larger installed base of customers than we do.
Many of our potential competitors may also have well-established relationships
with our existing and prospective customers. Due to these and other advantages,
our potential competitors may develop products comparable or superior to our
systems or adapt more quickly to new technologies, evolving industry standards,
new product introductions or changing customer requirements. In addition, there
is the possibility that one or more of our strategic partners or other medical
equipment manufacturers may decide to develop products that directly compete
with our systems. We also expect that competition will increase as a result of
medical equipment, wireless and software industry consolidation. Increased
competition is likely to result in price reductions, reduced gross margins and
loss of market share, any of which could cause our revenue to decline.

As a result of our acquisition of VitalCom we sell products that compete with
our strategic partners.

     Our PatientNet suite of products competes directly with those of our
strategic partners including GE, Agilent, Siemens and Protocol Welch Allyn who
sell our wireless alarm notification systems. As a result, we may face
increasing difficulty in our relationships with these partners as a result of
this competition. If this were to occur, our partners might have less incentive
to sell our wireless alarm notification products, which would reduce our overall
sales. If we were unable to rebuild a direct sales force for these products, or
adequately enforce our rights under these partnership agreements, our business
would suffer.

If we lose members of our senior management team, or if we do not timely hire a
permanent chief executive officer, we may be unable to successfully manage our
business or achieve our objectives.

     Our success will depend significantly on the continued contributions of our
senior management team, many of whom would be difficult to replace. In
particular, we believe that our future success depends on Dr. David Albert,

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<PAGE>

chief scientist and chairman emeritus of the board, and Michael Singer,
executive vice president of corporate development and chief financial officer.

     We currently have a new interim chief executive officer who has held that
position since February 2001. As a result of our proposed acquisition by GE we
have suspended our search for a permanent chief executive officer. If we fail to
complete the transaction with GE our reinitiated search may be hindered by a
number of factors outside our control, including limitations on the number of
qualified candidates, hiring competition from similarly situated companies and
the unwillingness of qualified candidates to relocate near the company's
business headquarters. If we could not hire a permanent chief executive officer
in a timely manner, or were unable to find a qualified candidate, we may be
unable to manage our business successfully or otherwise achieve our objectives,
which would harm our business.

Our business has been negatively impacted in recent years by turnover in its
management team.

     A number of changes in our management team have occurred in recent years.
Prior to the acquisition, VitalCom's chief executive officer changed in 1997,
its vice president, research and development changed in 1998, its vice
president, sales and chief financial officer changed in 1999, and its vice
president of sales changed in 2000. In addition, we currently have a new interim
chief executive officer who has held that position since February 2001.
Furthermore, as a result of our restructuring plan, we have lost a number of key
officers and employees. These management changes have caused disruptions in our
day-to-day operations, have interrupted continuity in customer relationships and
have created delays in sales cycles and product release schedules. Although we
believe that our existing senior management will successfully improve our
business, operating results and financial condition, we cannot assure you that
these changes have not substantially harmed, and will not in future periods
substantially harm, our business, operating results and financial condition.

We may be unable to hire and retain the personnel necessary to support our
expanding business, which could threaten our future growth.

     We believe our future success will depend in large part on our ability to
identify, attract and retain engineering, marketing, and customer service and
support personnel. Because of the complexity of our systems and technologies, we
need to retain and hire engineers with high levels of experience in designing
complex systems. In addition, although we have recently entered into a strategic
distribution alliance with an intent to enhance our product distribution
capabilities, we may need to nevertheless substantially expand our sales
operations and marketing efforts, both domestically and internationally, in
order to increase market awareness and sales of our systems. Our systems require
a sophisticated sales effort targeted at several people within the information
technology departments of our prospective customers. We will also need to
increase our customer service and support organization to support new customers
and the expanding needs of existing customers.

     There are a limited number of people with the necessary technical skills we
require. We must compete with many other companies for these personnel, and
cannot assure you that it will be able to hire and retain them in sufficient
numbers. Failure to hire and retain the personnel necessary to support our
expanding business could threaten our future growth and harm our business.

Our patents and proprietary technology may not provide it with any benefit, and
the patents of others may prevent us from commercializing our products, which
could harm our business.

     Our ability to compete effectively will depend in part on our ability to
develop, maintain and license proprietary aspects of our technology, and to
operate without infringing the proprietary rights of others. Our patents may not
adequately protect our technology from the competing use of others. In addition,
patent applications we file may not result in the issuance of any patents.

     Our products incorporate technologies that are the subject of patents
issued to, or patent applications filed by, others. We have obtained licenses
for some technologies and may negotiate to obtain additional licenses for
technologies patented by others. However, we may not be able to obtain licenses
for technology patented by others on commercially reasonable terms, if at all,
or develop alternative technology. Our current and future proprietary technology
and licenses of technology may not be adequate for the operation of our
business. The failure to obtain

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<PAGE>

necessary patents and licenses or to identify and implement alternative
technologies would prevent us from commercializing some of our products under
development and would harm our business.

Litigation or enforcement of claims of intellectual property infringement could
require us to spend substantial amounts of money and could impair our
operations.

     We may become subject to infringement claims and litigation or interference
proceedings to determine the right to use, sell or license intellectual property
rights. We have received correspondence from other parties asserting ownership
of intellectual property that is or may be incorporated in our products and
products under development. In addition, we have notified other parties of the
existence of patents or trademarks owned or licensed by us that we believe may
be incorporated in those parties' products. Some of this correspondence has
included offers to negotiate the licensing of the intellectual property. These
matters may result in litigation to determine the enforceability, scope and
validity of the intellectual property. Litigation, if successful against us,
could seek to recover damages as a result of any sales of the products and to
enjoin further sales of such products, either of which could harm our business.

     Litigation may result in significant expenses to us and significant
diversion of effort by our technical and management personnel, regardless of the
outcome. Litigation could result in our patent or trademark applications not
having priority over others, or failing to provide protection against
competitors with similar intellectual property. Any patents or trademarks issued
to us may be challenged, invalidated or circumvented in the future and the
competitive advantage provided by the rights created under the patents,
trademarks or licenses lost. The outcome of litigation is inherently uncertain
and we cannot assure you that a court would not find the third-party claims
valid or that we had no successful defense to such claims. An adverse outcome in
litigation or the failure to obtain a necessary license could subject us to
significant liability and could prevent us from selling our products. If this
occurs, our business could be harmed.

     We also rely on trade secrets, technical know-how and continuing invention
to develop and maintain our competitive position. Others may independently
develop substantially equivalent proprietary information and techniques or
otherwise gain access to our trade secrets or disclose such technology, and we
may be unable to protect our trade secrets or our rights to our trade secrets,
which could harm our business.

If our existing licensing relationship with the licensor of key wireless
technology is terminated, our business will be harmed.

     We currently hold an exclusive license from a third-party licensor of key
wireless technology that allows us to manufacture and produce a significant
portion of our wireless monitoring and networking devices based on certain
portions of the licensor's patented technology. In exchange for this exclusive
license, we must pay royalties to the licensor for each device manufactured that
incorporates the licensor's patented technology.

     Our ability to successfully develop, manufacture and market our products
depends significantly on our ability to maintain our relationship and license
terms with this licensor. Our license agreement with this licensor may be
terminated early on short notice by the licensor under certain circumstances,
including the breach of a material term by us or a change in control of Data
Critical that is materially adverse to the licensor. Additionally, if we fail to
pay royalty payments to this licensor or otherwise fail to perform our
obligations under our license agreement, the licensor can terminate the license.
If the licensor terminates our agreement with us, we would have limited means to
commercialize our products and our revenue would be significantly reduced. The
termination of this license would harm our business.

Federal and state legislation and regulation affecting the healthcare industry
could severely restrict our ability to operate our business.

     We are subject to federal and state legislation and regulation affecting
the healthcare industry. The federal and state governments extensively regulate
the confidentiality and release of patient records. Additional legislation

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<PAGE>

governing the distribution of medical records and health information has been
proposed and, in some cases, enacted, at both the federal and state levels. It
may be expensive to implement security or other measures designed to comply with
any new legislation. Moreover, we may be restricted or prevented from delivering
patient records or health information electronically.

     Other legislation currently being considered at the federal level could
also negatively affect our business. For example, the Health Insurance
Portability and Accountability Act of 1996, or HIPAA, mandates the use of
standard transactions and identifiers by October 2002, and prescribes privacy
measures and other provisions that are required by April 2003. Because we intend
to market some of our services as meeting these regulatory requirements, our
success will also depend on other healthcare participants complying with these
regulations.

     A federal law commonly known as the Medicare/Medicaid anti-kickback law,
and several similar state laws, prohibits payments that are intended to induce
physicians or others to acquire, arrange for or recommend the acquisition of
healthcare products or services. Another federal law, commonly known as the
Stark law, prohibits physicians from referring Medicare and Medicaid patients
for designated health services to entities with which they have a financial
relationship, unless that relationship qualifies for an explicit exception to
the referral ban. The application and interpretation of these laws are complex
and difficult to predict and could constrain our financial and marketing
relationships.

     These laws and other existing or newly enacted laws and regulations
applicable to the healthcare industry could harm our business.

State restrictions on the practice of medicine may negatively affect our
activities and reduce our revenues.

     The laws in some states prohibit some business entities, such as Data
Critical, from practicing medicine. This is commonly referred to as the
prohibition against the "corporate practice of medicine." These laws generally
prohibit us from employing physicians to practice medicine or from directly
furnishing medical care to patients. Each state requires licensure for the
practice of medicine within that state, and some states consider the receipt of
an electronic transmission of selected healthcare information in that state to
be the practice of medicine. Some states have similar prohibitions on corporate
practice and licensure requirements for other regulated healthcare professions
(for example, nurse practitioners or pharmacists). These laws restrict our
activities and the extent to which we can provide medical advice to consumers
and physicians. If challenged, our activities may be found to violate these
laws. To the extent that we expand internationally, we may face similar
restrictions on our activities outside the United States. These laws and other
existing or newly enacted laws and regulations applicable to the healthcare
industry could harm our business.

If we fail to comply with current or future laws or regulations governing the
collection, dissemination, use and confidentiality of patient health
information, our business could be harmed.

     Consumers sometimes enter private health information about themselves or
their family members when using our services. Physicians or other healthcare
professionals who use our products will directly enter health information about
their patients, including information that constitutes a medical record under
applicable law, that we will store on our computer systems. Also, our systems
record use patterns when consumers access our databases that may reveal health-
related information or other private information about the user. Numerous
federal and state laws and regulations, the common law, and contractual
obligations govern collection, dissemination, use and confidentiality of
patient-identifiable health information, including:

     .  state privacy and confidentiality laws;

     .  our contracts with customers and partners;

     .  state laws regulating healthcare professionals such as physicians,
        pharmacists and nurse practitioners;

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<PAGE>

     .  Medicaid laws;

     .  HIPAA and related rules proposed by the Department of Health and Human
        Services; and

     .  Health Care Financing Administration standards for Internet transmission
        of health data.

     The U.S. Congress has considered proposed legislation that would establish
a new federal standard for protecting and using health information. In addition,
the laws of other countries also govern using and disclosing of health
information. Any failure by us or our personnel or partners to comply with any
of these legal and other requirements could result in material liability.
Although we have systems in place for safeguarding patient health information
from unauthorized disclosure, these systems may not preclude successful claims
against us for violation of applicable law or other requirements. Other third-
party sites or links that consumers access through our web sites also may not
maintain systems to safeguard this health information, or may circumvent systems
we put in place to protect the information from disclosure. In some cases, we
may place our content on computers that are under the physical control of
others, which may increase the risk of an inappropriate disclosure of health
information. For example, we currently contract out the hosting of our web sites
to third parties. In addition, future laws or changes in current laws may
necessitate costly modifications to our systems.

     In early 2001, the Department of Health and Human Services finalized
proposed regulations at the federal level authorized under HIPAA. These
regulations establish a new federal standard for privacy of health information.
These regulations, compliance with which will not be required any sooner than
April 14, 2003, may directly regulate some aspects of our business. Achieving
compliance with these regulations could cost us significant amounts or delay or
prevent implementation of our business model. Any noncompliance by us could
result in civil and criminal penalties.

     Furthermore, we may expand sales of our systems to international markets.
An expansion would require us to comply with a wide variety of foreign laws and
practices, tariffs and other trade barriers. Our failure to obtain the necessary
regulatory approvals in foreign markets on a timely basis would harm our
business.

We may experience substantial delays or difficulties in obtaining required
governmental approvals, which could hinder our ability to distribute our
existing systems or introduce future systems.

     As a manufacturer of wireless telecommunications systems, we are regulated
under the Communications Act of 1934 and FCC regulations, as well as the
applicable laws and regulations of the various states administered by state
public service commissions. Regulatory requirements affecting our operations may
change. Any changes may hurt our business by hindering our ability to compete
with other wireless telecommunications product manufacturers, to continue
providing our existing products and services or to introduce future systems or
system enhancements.

     The manufacturing, marketing and sales of medical devices, including many
of our products, are subject to regulation by the FDA. In addition, certain
material changes or modifications to the intended use, labeling, technological
characteristics or manufacturing of cleared or approved medical devices are also
subject to FDA clearance or approval. Generally, before a new medical device can
be introduced into the market in the United States, the manufacturer or
distributor must obtain FDA clearance by filing a 510(k) pre-market notification
or obtain approval of a pre-market approval, or PMA, application. If a medical
device manufacturer or distributor can establish that a device is "substantially
equivalent" to a legally marketed FDA 510(k) cleared device for which the FDA
has not called for PMA's, the manufacturer or distributor may seek clearance
from the FDA to market the device by filing a 510(k) pre-market notification.
The 510(k) pre-market notification may need to be supported by appropriate data,
which may include clinical data, establishing the claim of substantial
equivalence to the satisfaction of the FDA. If a manufacturer or distributor of
a medical device cannot establish substantial equivalence, the proposed device
must be approved through a PMA application, which must be supported by clinical
data. The PMA application approval process can be expensive, uncertain and
lengthy. To date, we have received clearance from the FDA to market our current
products through the 510(k) pre-market notification process. Failure to receive
or delays in receipt of FDA clearances or approvals, including the need for
extensive clinical trials or additional data as a prerequisite to clearance or
approval, could substantially harm our business, operating results and financial

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<PAGE>

condition. Sales of medical devices and components outside of the United States
are subject to international regulatory requirements that vary from country to
country. Changes in FDA regulatory requirements requiring us to modify our
compliance procedures may be costly and time consuming and could interrupt or
terminate the sales of certain of our products. We may be unable to obtain
further clearance or approvals for our products or components on a timely basis,
if at all. Delays in receipt of, loss of, or failure to receive, FDA approvals
or clearances could harm our business.

     In addition, we face potential FDA regulation of software that we develop
for use with our products. Some computer applications and software are
considered medical devices and are subject to regulation by the FDA. To the
extent that FDA regulations are applicable to any of our software products and
services, it will be time consuming, burdensome and expensive to comply with
those regulations and could delay or prevent introduction of new software
products or services.

     Because we are a provider of healthcare-related systems, extensive and
frequently changing federal regulations govern the licensing, conduct of
operations, and other aspects of our business. Federal certification and
licensing programs establish standards for day-to-day operation of our research
and manufacturing facilities. Regulatory agencies verify our compliance with
these standards through periodic inspections. Although we have been found to be
in compliance with all these standards to date, our facilities may fail future
inspections conducted to ensure compliance with federal or any other applicable
licensing or certification laws. Any such failure could harm our business.

FDA and FTC regulations on advertising and promotional activities may be
burdensome and may harm our ability to provide some applications or services,
which could lead to higher-than-anticipated costs or lower-than-anticipated
revenue.

     Complying with FDA and FTC advertising and promotion regulations may be
time consuming, burdensome and expensive and could negatively affect our ability
to continue providing some of our products, or to introduce new products in a
timely manner. This may result in higher-than-anticipated costs or lower-than-
anticipated revenues.

     Any current or future regulatory requirements that the FDA or the FTC
impose on us or our advertisers and sponsors could harm us by:

     .  making it harder to persuade pharmaceutical, biotechnology and medical
        device companies to advertise or promote their products, or to sponsor
        programs that we offer to healthcare professionals and the public;

     .  restricting our ability to continue to provide some of our services or
        web content, or to introduce new services or web content in a timely
        manner; or

     .  making it more expensive and time consuming to comply with new
        requirements.

     As a result, we might lose advertising or sponsorship revenue, spend
significant amounts of our limited resources on regulatory experts in the area
of FDA or FTC compliance, or receive adverse publicity that harms our business.

Political, economic and regulatory changes and consolidation in the healthcare
industry could force us to make costly modifications to how we price and sell
our systems, which could substantially reduce revenues and harm our business.

     The healthcare industry is highly regulated and is influenced by changing
political, economic and regulatory factors. These factors affect the purchasing
practices and operation of healthcare organizations. Changes in current
healthcare financing and reimbursement systems could cause us to make unplanned
modifications to our systems or result in delays or cancellations of orders.
Federal and state legislatures have periodically considered programs to reform
or amend the U.S. healthcare system at both the federal and state levels. These
programs may contain

                                      36
<PAGE>

proposals to increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which healthcare
industry participants operate. Healthcare industry parti cipants may respond by
reducing or postponing investment decisions, including investments in our
systems. We do not know what effect these proposals would have on our business.
Many healthcare providers are consolidating to create integrated healthcare
delivery systems with greater market power. These providers may try to use their
market power to negotiate price reductions for our systems. If we are forced to
reduce our prices, our business may be harmed.

Our activities may expose us to malpractice and other liabilities inherent in
healthcare delivery, which could substantially harm our business.

     We may be exposed to malpractice or other liabilities against which it may
not be adequately insured, resulting in substantial harm to our business. Our
systems provide data for use by caregivers, consumers and other healthcare
participants. This data may be obtained from our caregiver customers, strategic
partners, other third parties or, with patient consent, from the aggregation of
patient health records. Claims for injuries relating to the use of this data may
be made in the future. Also, patients who file lawsuits against caregivers often
name as defendants all persons or companies with any relationship to the
caregivers. As a result, patients may file lawsuits against us based on
treatment provided by caregivers who use our systems. In addition, a court or
government agency may take the position that our delivery of health information
directly, including through licensed caregivers, or by delivery of information
by a third-party site that a consumer accesses through our web sites, exposes us
to malpractice or other personal injury liability for wrongful delivery of
healthcare services or erroneous health information. The amount of insurance we
maintain with insurance carriers may be insufficient to cover all of the losses
we might incur from these claims and legal actions. In addition, insurance for
some risks is difficult, impossible or too costly to obtain and, as a result, we
may be unable to purchase insurance for some types of risks.

If our customers experience system defects, delays in transmission or security
breaches with our systems, we could face damage to our business reputation and
potential legal liability.

     Our customer satisfaction and reputation could be harmed if we or our
customers experience any system defects, delays, failures or loss of data. We
depend on the efficient operation of wireless networks and, for some of our
products, the Internet for communication. A major catastrophic event or other
event beyond our control, including a major security breach in the transmission
of data on our systems or a well-publicized compromise of Internet security,
could cause loss of revenue and market share, damage our reputation and result
in liability. In addition, our systems may be vulnerable to computer viruses,
programming errors, attacks by third parties or similar disruptive problems.
Furthermore, patient care could suffer and we could be liable if our systems
fail to deliver correct information in a timely manner. We have experienced
defects in our products in the past, including our StatView receivers, which
were the subject of a voluntary field action. We may experience defects in the
future. Our contracts attempt to limit our liability arising from our errors.
These provisions may not be enforceable, however, and even if enforceable, they
may not protect us from future liability. While we have general liability and
product liability insurance, including coverage for errors and omissions, we may
be unable to obtain or continue this insurance on reasonable terms in the
future. In addition, our insurance may be insufficient to cover large claims,
and our insurer could disclaim coverage on claims. If we are liable for an
uninsured or underinsured claim, or if our premiums increase significantly, our
business could be harmed.

We may face product liability claims, which could harm our business.

     The testing, manufacturing and marketing of medical devices entails an
inherent risk of product liability claims. We have experienced defects in our
products in the past, including our StatView receivers, which were the subject
of a voluntary field action. We may experience defects in the future. These
defects could potentially result in liability to us. Potential product liability
claims may exceed the amount of our insurance coverage or may be excluded from
coverage under the terms of the policy. Our existing insurance may not be
renewable at a cost and level of coverage comparable to that presently in
effect, if at all. In the event that we are held liable for a claim against
which we are not indemnified or for damages exceeding the limits of our
insurance coverage, that claim could exceed our total assets and could harm our
business.

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<PAGE>

Significant fluctuations in the market price of our common stock could result in
securities class action claims against us, which could harm our business.

     The trading price of our common stock has been and may continue to be
volatile. The stock market in general, and the market for technology companies
in particular, has experienced extreme volatility that often has been unrelated
to the operating performance of particular companies. These broad market and
industry fluctuations may decrease the trading price of our common stock,
regardless of our actual operating performance, and may make it difficult for
you to resell your shares at or above the price at which you purchased them.
Securities class action claims have been brought against companies in the past
where volatility of the market price of that company's securities has taken
place. This kind of litigation could be very costly and could divert our
management's attention and resources. Any negative determination in this
litigation could also subject us to significant liabilities, any or all of which
could harm us.

State laws, our certificate of incorporation, our stockholder rights plan and
certain provisions in our important contracts may inhibit potential acquisition
bids that could be beneficial for stockholders.

     Delaware law and Washington law may inhibit potential acquisition
proposals. We are restricted by the antitakeover provisions of the Delaware
General Corporation Law, which regulates corporate acquisitions. Delaware law
prevents us from engaging in a business combination with any interested
stockholder for three years following the date that the stockholder became an
interested stockholder.

     For purposes of Delaware law, a business combination includes a merger or
consolidation or the sale of more than 10% of our assets. In general, Delaware
law defines an interested stockholder as any entity or person beneficially
owning 15% or more of the outstanding voting stock of a corporation and any
entity or person affiliated with or controlling or controlled by the entity or
person. Under Delaware law, a Delaware corporation may opt out of the
antitakeover provisions. We do not intend to "opt out" of these antitakeover
provisions of Delaware law. The laws of Washington, where our principal
executive offices are located, also impose restrictions on some transactions
between foreign corporations and significant stockholders. Chapter 23B.19 of the
Washington Business Corporation Act prohibits a target corporation, with
exceptions, from engaging in significant business transactions with an acquiring
person for a period of five years after the acquisition, unless the transaction
or acquisition of the shares is approved by a majority of the members of the
target corporation's board of directors prior to the time of acquisition. A
corporation may not "opt out" of this statute and, therefore, we anticipate this
statute will apply to it. Depending on whether we meet the definition of a
target corporation, Chapter 23B.19 of the WBCA may have the effect of delaying,
deferring or preventing a change in control of Data Critical.

     In addition, we have adopted provisions in our certificate of incorporation
that may discourage potential acquisition proposals and delay or prevent a
change in control of Data Critical. These provisions include the following:

     .  our board of directors may issue up to 3 million shares of preferred
        stock and determine the applicable powers, preferences and rights and
        the qualifications, limitations or restrictions of the stock, including
        voting rights, without any vote or further action by stockholders;

     .  our directors are elected to staggered three-year terms;

     .  stockholders cannot call special meetings;

     .  the nomination of a Data Critical director or the taking of certain
        actions requires advance notice; and

     .  our stockholders cannot take action by written consent.

     In accordance with the above-described provisions, our board of directors
adopted a stockholder rights plan on June 14, 2000, which was amended on July
19, 2001 to carve out any transaction with GE. Upon any person so acquiring 20%
or more of our common stock (other than in a transaction approved by the board
of directors), the

                                      38
<PAGE>

rights would entitle the holders (other than the acquiring holder) to acquire
(by paying the then current Exercise Price) shares of our common stock having a
market value equal to twice the then current Exercise Price. If after the rights
become exercisable and we are subsequently acquired by another company or
person, the rights would further entitle the holder to acquire shares of the
common stock of the acquiring entity (by payment of the Exercise Price), again
having a market value of twice the then current Exercise Price. The certificate
of designations of our Series A participating Preferred Stock, which creates the
purchase rights, has been filed as an exhibit to our registration statement
dated July 12, 2000, and you should refer to that registration statement for the
complete terms and conditions of the rights.

     Finally, we have entered into commercial agreements containing change-of-
control provisions that may inhibit potential acquisitions of Data Critical. A
change of control of Data Critical may result in the loss or material
modification of some of our commercial agreements, including agreements that
provide us with significant amounts of revenue or access to material technology.
The loss of such contracts would make Data Critical less valuable, and thus less
attractive to potential acquirors.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our exposure to market risk for changes in interest rates relates primarily
to the increase or decrease in the amount of interest income we can earn on our
investment portfolio and on the increase or decrease in the amount of any
interest expense we must pay with respect to outstanding debt instruments. The
risk associated with fluctuating interest expense is limited, however, to the
exposure related to those debt instruments and credit facilities which are tied
to market rates. We do not plan to use derivative financial instruments in our
investment portfolio. We plan to protect and preserve the value of our invested
principal funds by limiting default risk, market risk and investment risk. We
plan to mitigate default risk by investing in low-risk securities. At June 30,
2001 we had an investment portfolio of money market funds, commercial securities
and U.S. Government securities, including those classified as short-term
investments, of $14.2 million, as compared to $19.9 million at December 31,
2000. We have assessed our vulnerability to certain market risks, including
interest rate risk associated with financial instruments included in cash and
cash equivalents. Due to the short-term nature of these investments and our
investment policies and procedures, we believe that interest rate fluctuations
related to these financial instruments do not pose a material risk to us.

                                      39
<PAGE>

PART II.  OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

     On November 8, 1999, our registration statement on Form S-1, file number
333-78059, became effective. The offering has terminated as a result of all of
the shares offered being sold. The aggregate price of the shares of Data
Critical common stock offered and sold was $40.3 million. After accounting for
approximately $2.8 million in underwriting discounts and commissions and
$932,000 in other expenses, we received proceeds of $36.5 million.

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

     We held an annual meeting of Data Critical stockholders on June 7, 2001. Of
the 11,949,323 shares outstanding as of the record date for the annual meeting,
10,833,885 shares, or 91.08% of the total shares eligible to vote at the annual
meeting, were represented in person or by proxy. The following matters were
approved by Data Critical stockholders at the annual meeting:

     1)  The approval of the issuance of shares of Data Critical common stock in
         the merger of Viper Acquisition Corp., a wholly owned subsidiary of
         Data Critical, with and into VitalCom Inc. Our stockholders cast
         6,380,045 votes in favor of the issuance and 68,338 votes against. In
         addition, there were 19,885 abstentions and 4,415,617 broker non-votes.

     2)  The amendment of the Data Critical Corporation 1999 Stock Option Plan
         to increase the number of shares of common stock issuable under the
         Plan by 750,000 for a total of 2,700,937 shares reserved for issuance.
         Our stockholders cast 6,027,548 votes in favor of this proposal, and
         399,765 votes against. In addition there were 40,955 abstentions and
         4,415,617 broker non-votes.

     3)  The election of George M. Middlemas and David B. Swedlow to serve as
         Class II members of our board of directors, with terms expiring in
         2004. Our stockholders cast 10,834,900 votes cast in favor of Mr.
         Middlemas and 10,833,930 votes in favor of Dr. Swedlow.

     4)  The ratification of the board's appointment of Arthur Andersen LLP as
         our independent public accountants for the 2001 fiscal year. Our
         stockholders cast 10,835,202 votes in favor of this proposal, 28,633
         votes against and 20,050 abstentions.

ITEM 6.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

     (a)  The following documents are filed as a part of this report:

<TABLE>
<CAPTION>
(1)  Financial Statements                                                                           Page
<S>                                                                                                 <C>
Data Critical Corporation Consolidated Balance Sheets at June 30, 2001 and December 31, 2000.......   3

Data Critical Corporation Consolidated Statements of Operations for the three months
 ended June 30, 2000 and 2001 and the six months ended June 30, 2000 and 2001......................   4

Data Critical Corporation Consolidated Statements of Stockholders' Equity for the six months ended
 June 30, 2001.....................................................................................   5

Data Critical Corporation Consolidated Statements of Cash Flows for the six  months ended
 June 30, 2001 and 2000............................................................................   6

Data Critical Corporation Notes to Consolidated Financial Statements...............................   7
</TABLE>

                                      40
<PAGE>

     (2)  Financial Statement Schedules

     All schedules are omitted because they are not applicable or the required
     information is shown in the consolidated financial statements or notes
     thereto.

     (3)  Exhibits

<TABLE>
<CAPTION>
   Number                                                 Description
   -----                                                  -----------
<S>           <C>
   2.1(F)     Agreement and Plan of Merger, dated as of July 19, 2001, by and among General Electric Company,
              Ether Merger Corp. and Data Critical Corporation (exhibit 2.1)

   2.2(F)     Stock Option Agreement, dated as of July 19, 2001, between Data Critical Corporation and General
              Electric Company (exhibit 2.2)

   2.3(F)     Form of Stockholder Agreement between General Electric Company and certain stockholders of Data
              Critical Corporation (exhibit 2.3)

   3.1(A)     Amended and Restated Certificate of Incorporation of Data Critical Corporation (exhibit 3.2)

   3.2(A)     Amended and Restated Bylaws of Data Critical Corporation (exhibit 3.3)

   3.3(D)     Amendment No. 1 to Amended and Restated Bylaws of Data Critical Corporation (exhibit 3.4)

   3.4(B)     Certificate of Designations of Rights, Preferences and Privileges of Series A Participating
              Preferred Stock of Data Critical Corporation (exhibit 3.3)

   4.1(C)     Rights Agreement, dated June 15, 2000, between Data Critical Corporation and ChaseMellon
              Shareholder Services, L.L.C. (exhibit 2.1)

   4.2(E)     Amendment, dated as of July 19, 2001,  to Preferred Share Rights Agreement between Data Critical
              Corporation and Mellon Investor Services LLC (exhibit 2.1)

  10.1(E)*    Amendment, dated as of April 2, between Data Critical and Medtronic Physio-Control Corp. (exhibit
              10.1)

    10.2      Amendment No. 1 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Frank T. Sample

    10.3      Amendment No. 1 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Bradley R. Harlow

    10.4      Amendment No. 2 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Robert A. May

    10.5      Employment Letter Agreement, dated June 21, 2001, between Data Critical Corporation and Paul
              Nicholson

    10.6      Letter Agreement, dated as of July 2, 2001, between Data Critical Corporation and Dr. David E.
              Albert

    10.7      Amendment No. 1 to Employment Agreement, dated as of July 2, 2001, between Data Critical
              Corporation and Richard L. Earnest
</TABLE>

                                      41
<PAGE>

<TABLE>
<S>           <C>
    10.8      Third Amendment to Employment Agreement, dated as of July 2, 2001, between Data Critical
              Corporation and Michael E. Singer

    10.9      Fourth Amendment to Employment Agreement, dated as of July 18, 2001, between Data Critical
              Corporation and Michael E. Singer

   10.10      Letter Agreement, dated as of July 18, 2001, between Data Critical Corporation and Michael E.
              Singer

   10.11      First Amendment to License and Distribution Agreement, dated as of June 30, 2001, between Data
              Critical Corporation and Agilent Technologies, Inc.
</TABLE>

--------------
* Confidential treatment requested.

(A) Incorporated by reference to the designated exhibit to Data Critical's
    registration statement on Form S-1, as amended (File No. 333-78059) filed on
    May 7, 1999.

(B) Incorporated by reference to the designated exhibit to Data Critical's
    quarterly report on Form 10-Q for the period ended June 30, 2000.

(C) Incorporated by reference to the designated exhibit to Data Critical's
    registration statement on Form 8-A filed on July 12, 2000.

(D) Incorporated by reference to the designated exhibit to Data Critical's
    quarterly report on Form 10-Q for the period ended September 30, 2000.

(E) Incorporated by reference to the designated exhibit to Data Critical's
    current report on Form 8-K filed on April 12, 2001.

(F) Incorporated by reference to the designated exhibit to Data Critical's
    current report on Form 8-K filed on July 23, 2001.

     (b)  Reports on Form 8-K

     On April 12, 2001 we filed a current report on Form 8-K with respect to an
Amendment between Data Critical and Medtronic Physio-Control Corp.

     On May 2, 2001 we filed a current report on Form 8-K regarding a
restructuring of operations and reduction in workforce.

     On June 18, 2001 we filed a current report on Form 8-K regarding
consolidation of operations at our Tustin, CA facility and related changes in
senior management.

     On June 21, 2001 we filed a current report on Form 8-K regarding approval
of the merger with VitalCom Inc. by Data Critical stockholders.

     On June 21, 2001 we filed a current report on Form 8-K regarding the
completion of the merger with VitalCom Inc.

     On July 23, 2001 we filed a current report on Form 8-K regarding our
entering into a definitive agreement and plan of merger with General Electric
Company.

                                      42
<PAGE>

                                  SIGNATURES

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

                                       DATA CRITICAL CORPORATION
                                       (Registrant)

Date: August 14, 2001

                                       By:         /s/ Michael E. Singer
                                           ------------------------------------
                                                    Michael E. Singer
                                           Executive Vice President and Chief
                                              Financial Officer (Authorized
                                                  Officer and Principal
                                                   Financial Officer)

                                      43
<PAGE>

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
   Number                                                 Description
   ------                                                 -----------
<S>           <C>
   2.1(F)     Agreement and Plan of Merger, dated as of July 19, 2001, by and among General Electric Company,
              Ether Merger Corp. and Data Critical Corporation (exhibit 2.1)

   2.2(F)     Stock Option Agreement, dated as of July 19, 2001, between Data Critical Corporation and General
              Electric Company (exhibit 2.2)

   2.3(F)     Form of Stockholder Agreement between General Electric Company and certain stockholders of Data
              Critical Corporation (exhibit 2.3)

   3.1(A)     Amended and Restated Certificate of Incorporation of Data Critical Corporation (exhibit 3.2)

   3.2(A)     Amended and Restated Bylaws of Data Critical Corporation (exhibit 3.3)

   3.3(D)     Amendment No. 1 to Amended and Restated Bylaws of Data Critical Corporation (exhibit 3.4)

   3.4(B)     Certificate of Designations of Rights, Preferences and Privileges of Series A Participating
              Preferred Stock of Data Critical Corporation (exhibit 3.3)

   4.1(C)     Rights Agreement, dated June 15, 2000, between Data Critical Corporation and ChaseMellon
              Shareholder Services, L.L.C. (exhibit 2.1)

   4.2(E)     Amendment, dated as of July 19, 2001,  to Preferred Share Rights Agreement between Data Critical
              Corporation and Mellon Investor Services LLC (exhibit 2.1)

  10.1(E)*    Amendment, dated as of April 2, between Data Critical and Medtronic Physio-Control Corp. (exhibit
              10.1)

    10.2      Amendment No. 1 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Frank T. Sample

    10.3      Amendment No. 1 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Bradley R. Harlow

    10.4      Amendment No. 2 to Employment Agreement, dated as of June 15, 2001, between Data Critical
              Corporation and Robert A. May

    10.5      Employment Letter Agreement, dated June 21, 2001, between Data Critical Corporation and Paul
              Nicholson

    10.6      Letter Agreement, dated as of July 2, 2001, between Data Critical Corporation and Dr. David E.
              Albert

    10.7      Amendment No. 1 to Employment Agreement, dated as of July 2, 2001, between Data Critical
              Corporation and Richard L. Earnest

    10.8      Third Amendment to Employment Agreement, dated as of July 2, 2001, between Data Critical
              Corporation and Michael E. Singer

    10.9      Fourth Amendment to Employment Agreement, dated as of July 18, 2001, between Data Critical
              Corporation and Michael E. Singer
</TABLE>

                                      44
<PAGE>

<TABLE>
<S>           <C>
   10.10      Letter Agreement, dated as of July 18, 2001, between Data Critical Corporation and Michael E.
              Singer

   10.11      First Amendment to License and Distribution Agreement, dated as of June 30, 2001, between Data
              Critical Corporation and Agilent Technologies, Inc.
</TABLE>

--------------
 *  Confidential Treatment requested.

(A) Incorporated by reference to the designated exhibit to Data Critical's
    registration statement on Form S-1, as amended (File No. 333-78059) filed on
    May 7, 1999.

(B) Incorporated by reference to the designated exhibit to Data Critical's
    quarterly report on Form 10-Q for the period ended June 30, 2000.

(C) Incorporated by reference to the designated exhibit to Data Critical's
    registration statement on Form 8-A filed on July 12, 2000.

(D) Incorporated by reference to the designated exhibit to Data Critical's
    quarterly report on Form 10-Q for the period ended September 30, 2000.

(E) Incorporated by reference to the designated exhibit to Data Critical's
    current report on Form 8-K filed on April 12, 2001.

(F) Incorporated by reference to the designated exhibit to Data Critical's
    current report on Form 8-K filed on July 23, 2001.

                                      45