<PAGE>


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

                                     FORM 10-Q

Mark One:

[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities 
     Exchange Act of 1934

                 For the quarterly period ended March 31, 1997  or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities 
     Exchange Act of 1934

                    For the transition period from ____ to ____

                           Commission file number 0-27214

                                  GYNECARE, INC.
              (Exact name of registrant as specified in its charter)

                    Delaware                           94-3197941
         -------------------------------          ---------------------
         (State or other jurisdiction of           (I.R.S. Employer 
          incorporation or organization)           Identification No.)


                     235 Constitution Drive, Menlo Park, CA 94025
           ------------------------------------------------------------
           (Address of principal executive offices, including zip code)

       Registrant's telephone number, including area code:  (415) 614-2500

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 requirement for the past 90 days.

                                 Yes [ X ] No [    ]

                  The number of shares of Common Stock outstanding 
                         as of May 9, 1997 was 8,300,004.


<PAGE>

                                 TABLE OF CONTENTS

                                                                    Page
                                                                    -----
Part I.  Financial Information

     Item 1.  Financial Statements

              Condensed Balance Sheets at March 31, 1997 
              and December 31, 1996                                   3
              
              Statements of Operations for the three months ended 
              March 31, 1997 and 1996                                 4
              
              Statements of Cash Flows for the three months
              ended March 31, 1997 and 1996                           5
              
              Notes to Condensed Financial Statements                 6

     Item 2.  Management's Discussion and Analysis of Financial
              Condition and Results of Operations                     7

Part II.  Other Information

     Item 6.  Exhibits and Reports on Form 8-K                       13

Signatures                                                           14


                                    2

<PAGE>

PART I.   FINANCIAL INFORMATION

Item 1.   Financial Statements

                                 GYNECARE, INC.

                            CONDENSED BALANCE SHEETS
                                   (UNAUDITED)


<TABLE>
<CAPTION>

                                                             MARCH 31,         DECEMBER 31,
                                                                1997              1996
                                                            -------------    --------------
<S>                                                         <C>              <C>
                                         ASSETS
Current assets:  
  Cash and cash equivalents                                  $ 4,029,000     $ 3,823,000
  Short-term investments                                       6,331,000       9,248,000
  Accounts receivable, net                                       388,000         457,000
  Inventories                                                    332,000         424,000
  Prepaids and other current assets                              198,000         254,000
                                                             -----------     -----------
   Total current assets                                       11,278,000      14,206,000
Property and equipment, net                                    1,381,000       1,419,000
Prepaid royalties                                              1,931,000       1,900,000
Other assets                                                     868,000         873,000
                                                             -----------     -----------
Total assets                                                 $15,458,000     $18,398,000
                                                             -----------     -----------
                                                             -----------     -----------
                                       LIABILITIES
Current liabilities:
  Accounts payable                                           $   648,000     $   481,000
  Accrued expenses                                               582,000         634,000
  Current portion of long-term debt                              313,000         291,000
                                                             -----------     -----------
   Total current liabilities                                   1,543,000       1,406,000
Long-term debt, net of current portion                           362,000         458,000
                                                             -----------     -----------
   Total liabilities                                           1,905,000       1,864,000
                                                             -----------     -----------

                                   STOCKHOLDERS' EQUITY
Common Stock                                                       8,000           8,000
Additional paid-in-capital                                    33,751,000      33,748,000
Deferred compensation                                           (347,000)       (387,000)
Accumulated deficit                                          (19,859,000)    (16,835,000)
                                                             -----------     -----------
   Total stockholders' equity                                 13,553,000      16,534,000
                                                             -----------     -----------
    Total liabilities and stockholders' equity               $15,458,000     $18,398,000
                                                             -----------     -----------
                                                             -----------     -----------
</TABLE>


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

                                          3

<PAGE>

                              GYNECARE, INC.

                         STATEMENTS OF OPERATIONS
                               (UNAUDITED)

<TABLE>
<CAPTION>
                                                               THREE MONTHS
                                                              ENDED MARCH 31,
                                                         -----------------------
                                                            1997           1996
                                                        -----------    -----------
<S>                                                     <C>            <C>
Revenues                                                $   269,000    $   257,000
Cost of goods sold..................................        398,000        321,000
                                                        -----------    -----------
  Gross profit......................................       (129,000)       (64,000)
Operating expenses:
  Research and development..........................      1,202,000      1,161,000
  Selling, general and administrative ..............      1,811,000      1,059,000
                                                        -----------    -----------
   Total operating expenses.........................      3,013,000      2,220,000
                                                        -----------    -----------
Loss from operations................................     (3,142,000)    (2,284,000)
Interest income, net................................        118,000        236,000
                                                        -----------    -----------
Net loss ...........................................    $(3,024,000)   $(2,048,000)
                                                        -----------    -----------
                                                        -----------    -----------
Net loss per share..................................    $     (0.36)   $     (0.25)
                                                        -----------    -----------
                                                        -----------    -----------
Shares used in computing net loss per share.........      8,298,000      8,155,000
                                                        -----------    -----------
                                                        -----------    -----------
</TABLE>

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


                                          4

<PAGE>

                                   GYNECARE, INC.

                              STATEMENTS OF CASH FLOWS
                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS 
                                                                          ENDED MARCH 31,
                                                                 -------------------------------
                                                                       1997             1996
                                                                 --------------    -------------
<S>                                                              <C>               <C>
Cash flows from operating activities:
  Net loss...................................................      $(3,024,000)     $(2,048,000)
  Adjustments to reconcile net loss to net cash
   used in operating activities:
  Depreciation and amortization..............................           69,000           72,000
  Amortization of deferred compensation......................           40,000           41,000
  Provision for doubtful accounts............................           86,000            3,000
  Changes in operating assets and liabilities:
   Accounts receivable.......................................          (17,000)        (157,000)
   Inventories...............................................           92,000           14,000
   Prepaids and other current assets.........................           56,000           29,000
   Other assets..............................................           (1,000)          (8,000)  
   Accounts payable..........................................          167,000         (497,000)
   Accrued expenses..........................................          (52,000)          93,000
                                                                 --------------    -------------
    Net cash used in operating activities....................       (2,584,000)      (2,458,000)
                                                                 --------------    -------------
Cash flows from investing activities:
  Acquisition of property and equipment......................          (56,000)        (100,000)
  Acquisition of patent rights and
   related technical information.............................               --         (400,000)
  Purchase of investments....................................               --      (14,336,000)
  Maturity of investments....................................        2,917,000               --
                                                                 --------------    -------------
   Net cash provided by/(used in) investing activities.......        2,861,000      (14,836,000)
                                                                 --------------    -------------

Cash flows from financing activities:
  Proceeds from issuance of Common Stock.....................            3,000               --
  Payments on debt...........................................          (74,000)         (73,000)                 
                                                                 --------------    -------------
   Net cash used in financing activities.....................          (71,000)         (73,000)
                                                                 --------------    -------------
Net increase (decrease) in cash and cash equivalents.........          206,000      (17,367,000)
Cash and cash equivalents at beginning of period.............        3,823,000       22,330,000
                                                                 --------------    -------------
Cash and cash equivalents at end of period...................      $ 4,029,000      $ 4,963,000
                                                                 --------------    -------------
                                                                 --------------    -------------
  Supplemental cash flow information:
  Interest paid during the period............................      $    18,000      $    18,000
                                                                 --------------    -------------
                                                                 --------------    -------------

</TABLE>
       
                   The accompanying notes are an integral part 
                      of these condensed financial statements.


                                        5

<PAGE>


                                           
                                   GYNECARE, INC.
                      NOTES TO CONDENSED FINANCIAL STATEMENTS
                                   MARCH 31, 1997
                                    (UNAUDITED)

1.   BASIS OF PRESENTATION
    
     In the opinion of management, the accompanying unaudited financial
     statements have been prepared by the Company in accordance with generally
     accepted accounting principles for interim financial information and
     pursuant to the rules and regulations of the Securities and Exchange
     Commission.  All adjustments, consisting of only normal recurring
     adjustments, necessary for a fair presentation have been included.  The
     results of operations for the three month period ended March 31, 1997 are
     not necessarily indicative of the results to be expected for any other
     interim period or for the entire year.

     The financial statements should be read in conjunction with the audited 
     financial statements and notes thereto included in Gynecare's
     (the Company's) Annual Report on Form 10-K, for the year ended December 31,
     1996, filed with the Securities and Exchange Commission pursuant to Section
     13 of the Securities Exchange Act of 1934.

2.   CASH, CASH EQUIVALENTS, SHORT-TERM INVESTMENTS AND INVESTMENTS

     All highly liquid investments purchased with an original maturity of ninety
     days or less are considered to be cash equivalents.  The Company accounts
     for investments under Statement of Financial Accounting Standards No. 115
     "Accounting for Certain Investments in Debt and Equity Securities"
     (SFAS No. 115), whereby investments that are deemed by management to be 
     held-to-maturity are reported at amortized cost.  All investments as of
     March 31, 1997 are classified as held-to-maturity and are carried at
     amortized cost, which approximates fair market value.

3.   INVENTORIES

     Inventories are stated at the lower of cost (first-in, first-out) or
     market. The components of inventory are:

                                      March 31,               December 31,
                                        1997                      1996
                                      --------                ------------
     Raw materials                    $148,000                  $121,000
     Work-in-process                    45,000                   105,000
     Finished goods                    139,000                   198,000
                                      --------                  --------
                                      $332,000                  $424,000
                                      --------                  --------
                                      --------                  --------

4.   RECENT ACCOUNTING PRONOUNCEMENTS

     In February 1997, the Financial Accounting Standards Board issued Statement
     of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128),
     which specifies the computation, presentation and disclosure requirements
     for earnings per share.  SFAS 128 supercedes Accounting Principles Board
     Opinion No. 15 and is effective for financial statements issued for periods
     ending after December 15, 1997.  SFAS 128 requires restatement of all
     prior-period earnings per share data presented after the effective date.  
     SFAS will not have a material impact on the Company's financial position,
     results of operations or cash flows.

                                       6

<PAGE>

PART I.  Continued

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

     THIS SECTION OF THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS 
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES.  THE 
COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE RESULTS DISCUSSED 
IN THE FORWARD-LOOKING STATEMENTS.  FACTORS THAT MIGHT CAUSE SUCH A 
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE SUBSECTION 
ENTITLED "FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK" 
COMMENCING ON PAGE 8.

This Management's Discussion and Analysis of Financial Condition and Results 
of Operations (MD&A) should be read in conjunction with the MD&A contained in 
the Company's Annual Report on Form 10-K for the fiscal year ended December 
31, 1996.

RESULTS OF OPERATIONS

     Revenues increased 5% to $269,000 in the first quarter of fiscal 1997 
from $257,000 in the first quarter of fiscal 1996. Substantially all of the 
revenues to-date have been generated from international sales of the 
ThermaChoiceTM Uterine Balloon TherapyTM system.  The growth in revenues in 
the first quarter of 1997 over the first quarter of fiscal 1996 was primarily 
due to shipments of the VersaPointTM system. Shipments of the VersaPoint 
system commenced during the fourth quarter of fiscal 1996.

     Cost of goods sold increased 24% to $397,000 in the first quarter of 
fiscal 1997 compared to $321,000 in the first quarter of fiscal 1996. This 
increase was primarily the result of underutilized capacity at the Company's 
new manufacturing facility in Menlo Park, California during the first three 
months of fiscal 1997 compared to the corresponding period in 1996.
     
     The Company's research and development expenses increased 4% to 
$1,202,000 for the quarter ended March 31, 1997 from $1,161,000 for the 
corresponding period in fiscal 1996.  This increase was primarily due to 
increased expenditures associated with the continuing development of the 
ThermaChoice Uterine Balloon Therapy and VersaPoint systems.
     
     The Company's selling, general and administrative expenses increased 71% 
to $1,811,000 for the first quarter of fiscal 1997 from $1,059,000 for the 
corresponding period in fiscal 1996.  The increase was primarily the result 
of Gynecare's increased investment in sales and marketing activities 
including retention of direct marketing personnel in Canada and several other 
European countries, the Company's ongoing efforts to obtain reimbursement in 
international markets, and managing the international distributor network.  
Growth in the Company's sales and marketing, accounting and administrative 
staff from eleven employees at March 31, 1996 to twenty-one at March 31, 1997 
further contributed to the increase in selling, general and administrative 
expenses.

     Net interest income decreased to $119,000 for the quarter ended March 
31, 1997 from $236,000 for the corresponding period in fiscal 1996.  The 
decrease is primarily the result of the decreased level of cash and 
investments held by the Company during the first quarter of fiscal 1997 
compared to those held during fiscal 1996.  This decreased level of cash and 
investments is the result of expending such resources to fund continuing 
operations.
     
     As a result of all of the above factors, the Company's total net loss 
increased to $3,022,000 for the quarter ended March 31, 1997 from $2,048,000 
for the corresponding period ended March 31, 1996.

LIQUIDITY AND CAPITAL RESOURCES
     
     Since inception, the Company's cash expenditures have significantly 
exceeded its revenues, resulting in an accumulated deficit of $19,859,000 at 
March 31, 1997.  The Company has funded its operations primarily through the 
private placement of equity securities aggregating $15,361,000 during 1994 
and 1995 and the completion of its initial public offering in November 1995 
aggregating net proceeds of $15,223,000.

                                         7

<PAGE>

     Cash used by the Company's operations was $2,584,000 for the quarter 
ended March 31, 1997 as compared to $2,458,000 for the corresponding period 
in fiscal 1996.  Cash was used during the first quarter of fiscal 1997 to 
primarily fund the expansion of marketing programs for the ThermaChoice 
Uterine Balloon Therapy system in international markets, the costs of 
obtaining reimbursement in existing markets, the ongoing development of the 
Uterine Balloon Therapy and VersaPoint systems, and increased general and 
administrative expenses to support expanded operations.

     The Company's capital expenditures for the first quarter of fiscal 1997 
and for the corresponding period in fiscal 1996 were $56,000 and $100,000, 
respectively.  The decreased level of capital expenditures during the first 
quarter of fiscal 1997 compared to the corresponding period in fiscal 1996 
was due primarily due to reduced capital requirements to support U.S. 
clinical studies of the ThermaChoice Uterine Balloon Therapy system which 
commenced in January 1996.  The patient treatment phase of this study ended 
in October 1996. 

     During the first quarter of fiscal 1996, the Company exercised its 
option to extend its license and OEM supply agreement with Gyrus Medical, 
Ltd. ("Gyrus") to include use of the VersaPoint technology in the field of 
laparoscopy.  A $400,000 deposit on this OEM supply agreement was made in 
March 1996.  Additional deposits of up to $600,000 will be due over the next 
12 to 24 months.

     At March 31, 1997, the Company had outstanding borrowings totaling 
$675,000 under two secured credit facilities.  Borrowings bear interest at 
the bank's prime rate plus 1.25%-1.50% per annum, are required to be repaid 
in monthly installments over 30 months, and are secured by a pledge of all of 
the Company's equipment and fixtures.
     
     The Company believes that its cash, cash equivalents and investments 
together with interest thereon will be sufficient to fund its operations and 
capital requirements through December 31, 1997.  The estimate of this time 
period is a forward-looking statement involving risks and uncertainties, 
including the timing of FDA approval of the ThermaChoice Uterine Balloon 
Therapy system and demand for and market acceptance of the Company's 
products, the progress of the Company's clinical research and product 
development programs, the receipt of and the time required to obtain 
regulatory clearances and approvals, the resources the Company devotes to 
developing, manufacturing and marketing its products, the resources required 
to hire and develop a direct sales force in the United States, the resources 
required to expand manufacturing capacity and facilities requirements, the 
costs of obtaining reimbursement for use of the Company's ThermaChoice 
Uterine Balloon Therapy and VersaPoint systems in new and existing markets, 
and other factors.  As such, there can be no assurance that the Company will 
not require additional financing prior to the end of 1997 and, therefore, may 
be required to seek to raise additional funds through bank facilities, debt 
or equity offerings or other sources of capital prior to such time.   
Additional funding may not be available when needed or on terms acceptable to 
the Company, which would have a material adverse effect on the Company's 
business, financial condition and results of operations.

RECENT ACCOUNTING PRONOUNCEMENTS

     In February 1997, the Financial Accounting Standards Board issued 
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" 
(SFAS 128), which specifies the computation, presentation and disclosure 
requirements for earnings per share.  SFAS 128 supersedes Accounting 
Principles Board Opinion No. 15 and is effective for financial statements 
issued for periods ending after December 15, 1997.  SFAS 128 requires 
restatement of all prior-period earnings per share data presented after the 
effective date.  SFAS will not have a material impact on the Company's 
financial position, results of operations or cash flows.

FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK

     Gynecare operates in a rapidly changing environment that involves a 
number of uncertainties, some of which are beyond the Company's control.  In 
addition to the uncertainties described elsewhere in this report, these 
uncertainties include:

     DEPENDENCE ON A LIMITED NUMBER OF PRODUCTS.  Currently, the ThermaChoice 
Uterine Balloon Therapy and VersaPoint systems are the only products being 
marketed by the Company.  The Company will be required to obtain regulatory 
approvals, including PMA approval from the FDA, before the ThermaChoice 
Uterine Balloon Therapy system can be marketed in the United States and in 
certain foreign countries, including Japan.  There can be no assurance that the

                                    8
<PAGE>

Company's efforts will be successful or that the ThermaChoice Uterine Balloon 
Therapy system will be safe or effective, capable of being manufactured in 
commercial quantities at acceptable costs, approved by appropriate regulatory 
or reimbursement authorities or successfully marketed. The Company's 
VersaPoint system has only recently received FDA clearance for marketing in 
the United States, and the Company has made limited shipments of the system.  
Furthermore, because the ThermaChoice Uterine Balloon Therapy and VersaPoint 
systems represent the Company's principal near-term focus, the Company could 
be required to cease operations if these products are not successfully 
commercialized.  In addition, the continuing follow-up phase of the U.S. 
clinical trials of the ThermaChoice Uterine Balloon Therapy system may 
identify significant technical or other obstacles to be overcome prior to 
obtaining necessary regulatory or reimbursement approvals. Although there has 
been a significant success rate in the   patients treated to date under the 
current protocol for the ThermaChoice Uterine Balloon Therapy system, there 
is only limited follow-up data for such patients.  As a result, there can be 
no assurance that the success rate of the procedure will be sustainable or 
will not decrease over time.  If the ThermaChoice Uterine Balloon Therapy 
system does not prove to be safe and effective in long-term follow up of 
clinical trials, there would be a material adverse effect on the Company's 
business, financial condition and results of operations.
     
     LIMITED OPERATING HISTORY AND REVENUES; ANTICIPATED FUTURE LOSSES.  The 
Company has generated only limited revenues to date and has experienced net 
losses since its inception.  As of March 31, 1997, the Company had an 
accumulated deficit of $19.9 million.  The Company expects its operating 
losses to continue for at least the next several years. In addition, the 
Company expects that it will continue to expend substantial resources in 
funding clinical trials in support of regulatory and reimbursement approvals, 
expansion of marketing and sales activities and research and development.  
There can be no assurance that the ThermaChoice Uterine Balloon Therapy and 
VersaPoint systems will be successfully commercialized or that the Company 
will achieve significant revenues from either international or domestic 
sales.  In addition, there can be no assurance that the Company will achieve 
or sustain profitability in the future.
     
     UNCERTAINTY OF MARKET ACCEPTANCE.  The Company's success is dependent 
upon acceptance of the ThermaChoice Uterine Balloon Therapy and VersaPoint 
products by the medical community as reliable, safe and cost-effective 
treatments for dysfunctional uterine bleeding and benign pathology. The 
Company is unable to predict how quickly, if at all, its products will be 
accepted by the medical community or, if accepted, the number of procedures 
that will be performed.  The medical indications that can be treated with the 
ThermaChoice Uterine Balloon Therapy and VersaPoint systems can also be 
treated by surgery, drugs or other medical devices.  Although the Company 
believes that its products have certain advantages over competing products 
and technologies, the Company does not have long-term clinical data 
demonstrating such advantages.  There can be no assurance that any such 
advantages will be clinically significant.  The ThermaChoice Uterine Balloon 
Therapy and VersaPoint systems are designed to be used with a local 
anesthetic in a clinic or physician's office.  If physicians recommend or 
require that the procedures using the ThermaChoice or VersaPoint products be 
performed under general anesthesia in a hospital or outpatient surgery center 
instead of under local anesthesia in a clinic or physician's office, market 
acceptance of the products would be adversely affected, which would have a 
material adverse effect on the Company's business, financial condition and 
results of operations.  Although the Company believes that the ThermaChoice 
system may be adaptable to other uterine bleeding disorders, there can be no 
assurance that the product will be clinically effective for any other 
indications, that regulatory approval of the product for such other 
indications could be obtained, that treatment of such conditions would be 
commercially feasible or that additional markets for any such indications 
will develop.  Obtaining FDA approval to market the ThermaChoice Uterine 
Balloon Therapy system for other indications is likely to require a long 
period of time and considerable expense. Patient population estimates are 
subject to inherent uncertainties, and the Company is unable to determine 
with any degree of certainty the number of patients for any indication or the 
number of patients who are suitable for treatment.

     POTENTIAL FLUCTUATIONS IN FUTURE QUARTERLY RESULTS.  The Company expects 
that its operating results will fluctuate significantly from quarter to 
quarter in the future and will depend on a number of factors, many of which 
are outside the Company's control.  These factors include actions relating to 
regulatory and reimbursement matters, the extent to which the Company's 
products gain market acceptance, the rate at which the Company establishes 
its network of distributors and direct sales personnel in the U.S. and 
internationally, the timing and size of customer purchases, which may be 
influenced by volume purchase discounts and extended payment terms, the 
progress of  the Company's PMA application to the FDA for the ThermaChoice 
Uterine Balloon Therapy system, and competition.

                                        9

<PAGE>

     LIMITED MANUFACTURING EXPERIENCE; DEPENDENCE ON SINGLE CONTRACT 
MANUFACTURERS AND SOLE SOURCE SUPPLIERS; SCALE-UP RISK.  The Company only 
recently commenced manufacture of certain components of its products and 
depends on contract manufacturers for the production of certain components of 
the ThermaChoice Uterine Balloon Therapy system and the entire VersaPoint 
system.  The Company expects to continue to depend on such manufacturers for 
the foreseeable future.  The integration of the Company's operations into new 
facilities, which occurred in November 1995, has resulted and may continue to 
result in inefficiencies.  Specifically, manufacturers often encounter 
difficulties in production of new products, including problems involving 
production yields, quality control and assurance, component supply and 
shortages of qualified personnel.  The Company may experience a shortage of 
manufacturing capacity if the new facility fails to operate as planned.  
Although the Company intends to maintain sufficient levels of inventory to 
avoid any material disruption resulting from the continuing scale-up of the 
new facility and transition to in-house manufacturing, there can be no 
assurance that the Company will be able to manufacture and supply sufficient 
quantities of products to meet product requirements for commercial sales.  
Additionally, any delay or difficulty in continuing manufacturing activities 
at the new facility, or the inability of the Company's contract manufacturers 
to supply required materials and the Company subsequently not being able to 
successfully find an alternative source of supply in a timely manner, may 
have a material adverse effect on the Company's business, financial condition 
and results of operations.  For the foreseeable future, the Company expects 
that manufacturing start-up and overhead costs spread over low production 
volumes combined with the cost of using contract manufacturers to produce the 
ThermaChoice controller and VersaPoint system will continue to have an 
adverse effect on gross margins.
     
     LIMITED INTERNATIONAL DISTRIBUTION; NO U.S. DISTRIBUTION.  To date, 
substantially all of the Company's sales have been outside the United States, 
and the Company anticipates that a significant portion of its revenues for 
the next year will continue to be derived from international sales.  The 
Company currently markets and sells its products internationally through a 
network of distributors.  The Company's international sales are dependent 
upon the marketing efforts of, and sales by, these distributors.  The Company 
may also rely on these distributors to assist it in obtaining reimbursement 
approvals from both government and private insurers in certain international 
markets.  In general, the Company has chosen to operate through small 
distribution firms because of its belief that these firms will devote greater 
attention to the Company's products. The use of small distributors increases 
the risks associated with financial instability, which includes the risk that 
distributors will cease operations or will be unable to satisfy financial 
obligations to the Company.  If a distributor were to fail to invest adequate 
capital promoting the Company's products or were to cease operations, the 
Company would likely be unable to achieve significant sales in the territory. 
Gynecare also does not currently have any distribution in the United States. 
There can be no assurance that the Company will establish U.S. distribution 
networks for the ThermaChoice Uterine Balloon Therapy and VersaPoint systems 
in a timely manner.  The failure to establish such distribution would have a 
material adverse effect on the Company's business, financial condition and 
results of operations.

     A number of other risks are inherent in international operations and 
transactions.  International sales and operations may be limited or disrupted 
by the imposition of government controls, export license requirements, 
political instability, trade restrictions, changes in tariffs, difficulties 
in managing international operations and fluctuations in foreign currency 
exchange rates.  There can be no assurance that the Company will be able to 
successfully commercialize the ThermaChoice Uterine Balloon Therapy system, 
VersaPoint system, or any future product in any market.
     
     UNCERTAINTY RELATING TO THIRD-PARTY REIMBURSEMENT.  The Company's 
success will be dependent upon, among other things, its ability to obtain 
satisfactory reimbursement from health care payers for the ThermaChoice 
Uterine Balloon Therapy and VersaPoint systems.  The Company does not expect 
that third-party reimbursement will be available, if at all, for use of the 
ThermaChoice Uterine Balloon Therapy system in the United States unless and 
until FDA approval is received.  Third-party reimbursement for the VersaPoint 
system and the ThermaChoice Uterine Balloon Therapy system, once FDA approval 
is received, would be dependent upon decisions by the HCFA for Medicare, as 
well as by individual health maintenance organizations, private insurers and 
other payors.  While the Company believes that the ThermaChoice Uterine 
Balloon Therapy procedure may be reimbursed in the United States under 
existing procedure codes for endometrial ablation and that the VersaPoint 
procedure may be reimbursed under existing procedure codes for surgical 
resection, there can be no assurance that this will occur or that the 
reimbursement under these codes will be adequate.  Given the efforts to 
control and decrease healthcare costs in recent years, there can be no 
assurance that any reimbursement will be sufficient to assure profitability.

                                       10

<PAGE>

     Reimbursement systems in international markets vary significantly by 
country, and by region within some countries, and reimbursement approvals 
must be obtained on a country by country basis.  Many international markets 
have government managed health care systems that govern reimbursement for new 
devices and procedures. In most markets, there are private insurance systems 
as well as government managed systems.  Large scale market acceptance of the 
ThermaChoice Uterine Balloon Therapy and VersaPoint systems will depend on 
the availability and level of reimbursement in international markets targeted 
by the Company.  Currently, neither the ThermaChoice Uterine Balloon Therapy 
system nor the VersaPoint system has been approved for reimbursement in any 
international market.  Obtaining reimbursement approvals can require 12 to 18 
months or longer.  There can be no assurance that the Company will obtain 
reimbursement in any country within a particular time, for a particular 
amount, or at all.

     GOVERNMENT REGULATION.  The manufacture and sale of medical devices, 
including the ThermaChoice Uterine Balloon Therapy and VersaPoint systems, 
are subject to extensive regulation by numerous government authorities in the 
United States and other countries.  The ThermaChoice Uterine Balloon Therapy 
system is subject to the FDA's PMA requirements.  As a result, the Company 
will not be able to commence marketing and commercial sales of the 
ThermaChoice Uterine Balloon Therapy system in the United States unless and 
until it receives PMA approval for marketing of such product from the FDA.  
In October 1996, the Company completed the patient treatment phase of its 
U.S. clinical study for the ThermaChoice Uterine Balloon Therapy system and 
the follow-up data collected to-date has indicated overall success in patient 
treatment.  However, there can be no assurance as to whether long-term safety 
and efficacy data collected during clinical trials will be sufficient to 
support a PMA filing or whether the Company will receive PMA approval for the 
ThermaChoice system.  In addition, if approval is received, there can be no 
assurance that it would not be for a more limited indication than the Company 
has requested, which could limit the addressable market of the ThermaChoice 
Uterine Balloon Therapy system and have a material adverse effect on the 
Company's business, financial condition and results of operations.  There can 
be no assurance that the Company will not be required to conduct additional 
clinical trials for the ThermaChoice Uterine Balloon Therapy system which may 
result in substantial costs and delays.  In addition, changes in existing 
regulations or adoption of new government regulations or policies could 
prevent or delay regulatory approval of the Company's products.  Furthermore, 
if PMA approval is granted, subsequent modifications to the approved device 
or manufacturing process may require a PMA supplement or may require the 
submission of a new PMA, which could require substantial additional clinical 
efficacy data and FDA review.  Failure to obtain PMA approval or to obtain 
such approval on a timely basis would have a material adverse effect on the 
Company's business, financial condition and results of operations.

     In the United States, the VersaPoint system required clearance from the 
FDA under a 510(k) application.  This application was filed in June 1996 and 
cleared in November 1996.  However, if the Company wished to propose 
modifications or enhancements to the VersaPoint system or use the system for 
other indications such as laparoscopic indications, and such major changes 
could affect the safety or effectiveness of the device, a new 510(k) 
submission would be required.  In such a case, the Company may be prohibited 
from marketing the modified product until the 510(k) notice is cleared by the 
FDA.  Such a prohibition could have a material adverse effect on the 
Company's business, financial condition and results of operations.
     
     The Company will be required to adhere to applicable FDA regulations 
regarding Good Manufacturing Practices (GMP) and similar regulations in other 
countries, which include testing, control and documentation requirements.  
The Company's success will depend in part on its ability to manufacture its 
products in compliance with GMP and EN 46001 and other regulatory 
requirements, in sufficient quantities and in a timely manner, while 
maintaining product quality and acceptable manufacturing costs.  Failure to 
increase production volumes in a timely or cost-effective manner or to 
maintain compliance with GMP and EN 46001 and other regulatory requirements 
could have a material adverse effect on the Company's business, financial 
condition and results of operations.

     Regulatory approvals, if granted, may include significant limitations on 
the indicated uses for which the products may be marketed.  FDA enforcement 
policy strictly prohibits the marketing of approved medical devices for 
unapproved uses.  Failure to comply with applicable regulatory requirements, 
including marketing products for unapproved uses, could result in, among 
other things, FDA warning letters, fines, injunctions, civil penalties, 
recall or seizure of products, total or partial suspension of production, 
refusal of the government to grant premarket clearance or premarket approval 
for devices, withdrawal of approvals and criminal prosecution, which would 
have a material adverse effect on the Company's business, financial condition 
and results of operations.

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<PAGE>

     Sales of medical devices outside of the United States are subject to 
international regulatory requirements that vary from country to country.  The 
requirements for approval for sale internationally may differ from those 
required for FDA approval.  In Europe, the Company will be required to obtain 
the certifications necessary to enable the CE mark to be affixed to the 
Company's products by mid-calendar 1998 in order to continue commercial sales 
in member countries of the European Union.  Although the Company has obtained 
all such certifications for its ThermaChoice Uterine Balloon Therapy system, 
there can be no assurance that it will be able to obtain certifications for 
its VersaPoint product or other future products in a timely manner, if at 
all.  A failure to obtain any such certifications could have a material 
adverse effect on the Company's business, financial condition and results of 
operations.
     
     DEPENDENCE ON LICENSES, PATENTS AND PROPRIETARY TECHNOLOGY.  The 
Company's success depends in part on its ability to retain licenses, obtain 
patent protection for products and processes, and preserve its trade secrets 
and proprietary technology.  The Company's one issued United States patent 
was assigned to the Company by Origin pursuant to a royalty-bearing agreement 
covering potential future modifications to the ThermaChoice Uterine Balloon 
Therapy system.  Additionally, pursuant to such agreement, the Company 
granted to Origin a non-exclusive, royalty-free license under such patent for 
use in fields other than gynecology.  The validity and breadth of claims 
covered in medical device technology patents involve complex legal and 
factual questions and, therefore, may be highly uncertain.  No assurance can 
be given that any patents will be issued from pending patent applications or 
from any future patent applications, that the scope of any patent protection 
will exclude competitors or provide competitive advantages to the Company, 
that any of the Company's patents will be held valid if subsequently 
challenged or that others will not claim rights in or ownership of the 
patents and other proprietary rights held by the Company.  For example, one 
of the Company's competitors filed a third party observation investigating 
prior art patents as they relate to a European patent application licensed to 
the Company for the ThermaChoice product.  As a result, the claims were 
amended and the patent will be issued.  This competitor has filed a similar 
action in connection with the Company's prosecution of corresponding patents 
in Australia, the resolution of which is still pending.  Further, the Company 
believes such competitor recently filed in the U.S. Patent Trademark Office a 
request for re-examination of two issued patents related to the Company's 
ThermaChoice product which request for re-examination has been granted by the 
Patent Trademark Office based on certain prior art references presented to 
such office, certain of which were the subject of the European observation.  
There can be no assurance that these patents will be held valid after the 
re-examination proceeding or, that if held invalid, would not have a material 
adverse effect on the Company's business, financial condition or results of 
operations.  Furthermore, certain of the Company's licenses provide that the 
license rights revert back to the licensers in the event of material breach 
of the license agreements, including failure to pay minimum royalty amounts 
or milestone payments when due, or failure to purchase certain quantities of 
product from the licenser.  To the extent license rights are involved, the 
Company is dependent upon technology licensers to prosecute their patents in 
the United States and in foreign countries.  The reversion of rights under 
the Company's license agreements or failure of the licensers to fully 
prosecute patents would have a material adverse effect on the Company's 
business, financial condition and results of operations.

     There has been substantial litigation regarding patent and other 
intellectual property rights in the medical device industry.  Litigation, 
which could result in substantial cost to and diversion of effort by the 
Company, may be necessary to enforce patents issued or licensed to the 
Company, protect trade secrets or know-how owned by the Company, defend the 
Company against claimed infringement of the rights of others or determine the 
ownership, scope or validity of the proprietary rights of the Company and 
others.  An adverse determination in any such litigation could subject the 
Company to significant liabilities to third parties, require the Company to 
seek licenses from third parties and prevent the Company from manufacturing, 
selling or using its products, any of which could have a material adverse 
effect on the Company's business, financial condition and results of 
operations. In the event of such an adverse determination, there can be no 
assurance whether a license would be offered on terms acceptable to the 
Company, or at all.
     
     POTENTIAL VOLATILITY OF STOCK PRICE.  The securities markets have, from 
time to time, experienced significant price and volume fluctuations that may 
be unrelated to the operating performance of particular companies.  The 
market prices of the Common Stock of many publicly-held medical device 
companies have in the past been, and can in the future be expected to be, 
especially volatile.  Announcements of technological innovations or new 
products by the Company or its competitors, developments or disputes 
concerning patents or proprietary rights, regulatory developments, the 
issuance of new or changed stock market analyst reports and recommendations, 
and economic and other external factors, as well as 

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<PAGE>


period-to-period fluctuations in the Company's financial results, may have a 
significant impact on the market price of the Common Stock.
     
     FUTURE CAPITAL NEEDS.  The Company's capital requirements depend on a 
number of factors, including the timing of FDA approval of the ThermaChoice 
Uterine Balloon Therapy system and demand for and market acceptance of the 
Company's products, the progress of the Company's clinical research and 
product development programs, the receipt of and the time required to obtain 
regulatory clearances and approvals, the resources the Company devotes to 
developing, manufacturing and marketing its products, the resources required 
to hire and develop a direct sales force in the United States, the resources 
required to expand manufacturing capacity and facilities requirements, the 
costs of obtaining reimbursement for use of the Company's ThermaChoice 
Uterine Balloon Therapy and VersaPoint systems in new and existing markets, 
and other factors.  Consequently, although there can be no assurance that the 
Company will not require additional financing prior to the end of 1997, the 
Company believes that its cash, cash equivalents and short-term investments 
together with interest thereon will be sufficient to fund its operations and 
capital requirements through December 31, 1997.  The estimate of this time 
period is a forward-looking statement involving risks and uncertainties and 
actual results may differ materially as a result of a number of factors 
including those noted above.  Should additional be required, such funding may 
not be available when needed or on terms acceptable to the Company, which 
would have a material adverse effect on the Company's business, financial 
condition and results of operations.

     CONTROL BY DIRECTORS AND PRINCIPAL STOCKHOLDERS.  The directors and 
principal stockholders of the Company, and certain of their affiliates, own 
approximately 64% of the Company's outstanding Common Stock.  Accordingly, 
these persons, individually and as a group, may be able to effectively 
control the Company and direct its affairs and business, including any 
determination with respect to the acquisition or disposition of assets by the 
Company, future issuances of Common Stock or other securities by the Company, 
declaration of dividends on the Common Stock and the election of directors.  
Such concentration of ownership may also have the effect of delaying, 
deferring or preventing a change in control of the Company.
     
PART II.  OTHER INFORMATION

Item 6.   (a)   Exhibits

                10.1 Employment Agreement between the Company and Roseanne 
                     Hirsch dated as of April 21, 1997

                11.1 Computation of Net Loss Per Share

                27.1 Financial Data Schedule

          (b)   Reports on Form 8-K

                     No Reports on Form 8-K were filed during the quarter.


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<PAGE>

                                    
                              SIGNATURES

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

                              GYNECARE, INC.


                              By: /s/ MALCOLM M. FARNSWORTH, JR.
                                  ---------------------------------------
                                  Malcolm M. Farnsworth, Jr.
                                  Vice President, Finance and   
                                  Chief Financial Officer (Principal
                                  Financial Officer), Secretary


                                  Date:       May 14, 1997      
                                        ------------------------



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