<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: MARCH 31, 2003

                                       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: 0-27120


                             KENSEY NASH CORPORATION
             (Exact name of registrant as specified in its charter)


            DELAWARE                                   36-3316412
  (State or other jurisdiction              (IRS Employer Identification No.)
of incorporation or organization)


 MARSH CREEK CORPORATE CENTER, 55 EAST UWCHLAN AVENUE, EXTON, PENNSYLVANIA 19341
              (Address of principal executive offices and zip code)


       Registrant's telephone number, including area code: (610) 524-0188


         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 by check mark whether the registrant is an accelerated filer
(as defined in rule 12b-2 of the Exchange Act ). Yes  X   No
                                                     ---

         As of April 30, 2003, there were outstanding 11,138,515 shares of
Common Stock, par value $.001, of the registrant.



<PAGE>


                             KENSEY NASH CORPORATION
                          QUARTER ENDED MARCH 31, 2003


                                      INDEX


<TABLE>
<CAPTION>
                                                                                                               PAGE
                                                                                                               ----
<S>     <C>                                                                                                    <C>
PART I - FINANCIAL INFORMATION

         ITEM 1.   FINANCIAL STATEMENTS
                           Consolidated Balance Sheets
                             as of March 31, 2003 (Unaudited) and June 30, 2002............................      3

                           Consolidated Statements of Operations
                             for the three and nine months ended March 31, 2003
                             and 2002 (Unaudited)..........................................................      4

                           Consolidated Statements of Stockholders' Equity as of
                             March 31, 2003 (Unaudited) and June 30, 2002..................................      5

                           Consolidated Statements of Cash Flows
                             for the nine months ended March 31, 2003 and 2002 (Unaudited).................      6

                           Condensed Notes to Consolidated Financial Statements (Unaudited)................      7

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

         ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..............................     18

         ITEM 4.   CONTROLS AND PROCEDURES.................................................................     18


PART II - OTHER INFORMATION

         ITEM 1.   LEGAL PROCEEDINGS.......................................................................     19

         ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K........................................................     19


SIGNATURES.................................................................................................     20

CERTIFICATIONS.............................................................................................     21
</TABLE>



                                       2
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.    FINANCIAL STATEMENTS


KENSEY NASH CORPORATION
CONSOLIDATED BALANCE SHEETS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                 MARCH 31,
ASSETS                                                                             2003             JUNE 30,
CURRENT ASSETS:                                                                 (UNAUDITED)           2002
                                                                                ------------      ------------
<S>                                                                             <C>               <C>
    Cash and cash equivalents                                                   $ 15,825,770      $  3,632,395
    Investments                                                                   25,182,585        28,241,868
    Trade receivables, net of allowance for doubtful accounts of $152,268
       and $42,500 at March 31, 2003 and June 30, 2002, respectively               3,456,375         3,331,046
    Royalties receivable                                                           4,152,502         3,370,997
    Officer loans                                                                  1,962,523         1,882,369
    Other receivables (including approximately $46,000 and $45,000 at
       March 31, 2003 and June 30, 2002, respectively, due from employees)           556,423           274,620
    Inventory                                                                      3,494,778         2,518,924
    Deferred tax asset, current portion                                              375,936         1,306,693
    Prepaid expenses and other                                                     2,121,823         1,160,834
                                                                                ------------      ------------
           Total current assets                                                   57,128,715        45,719,746
                                                                                ------------      ------------

  PROPERTY, PLANT AND EQUIPMENT, AT COST:
    Leasehold improvements                                                         6,720,781         6,116,775
    Machinery, furniture and equipment                                            13,845,431        11,229,083
    Construction in progress                                                       1,623,607         1,950,427
                                                                                ------------      ------------
           Total property, plant and equipment                                    22,189,819        19,296,285
    Accumulated depreciation                                                      (9,960,322)       (7,985,357)
                                                                                ------------      ------------
           Net property, plant and equipment                                      12,229,497        11,310,928
                                                                                ------------      ------------

  OTHER ASSETS:
    Restricted investments                                                                --         2,113,072
    Deferred tax asset, non-current portion                                        1,075,715         1,615,584
    Acquired patents, net of accumulated amortization of $1,356,961 and
       $1,159,692 at March 31, 2003 and June 30, 2002, respectively                2,739,405         2,936,674
    Goodwill, net of accumulated amortization of $100,037 at March 31, 2003
       and June 30, 2002                                                           3,284,303         3,284,303
                                                                                ------------      ------------
           Total other assets                                                      7,099,423         9,949,633
                                                                                ------------      ------------
  TOTAL                                                                         $ 76,457,635      $ 66,980,307
                                                                                ============      ============

  LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES:
    Accounts payable                                                            $  2,357,375      $  1,726,370
    Accrued expenses                                                               3,625,642         1,084,475
    Current portion of debt                                                          821,584           978,902
    Deferred revenue                                                                 322,625           293,035
                                                                                ------------      ------------
           Total current liabilities                                               7,127,226         4,082,782
                                                                                ------------      ------------

  LONG TERM PORTION OF DEBT                                                          434,261         1,330,484
                                                                                ------------      ------------
           Total liabilities                                                       7,561,487         5,413,266
                                                                                ------------      ------------

  COMMITMENTS AND CONTINGENCIES

  STOCKHOLDERS' EQUITY:
    Preferred stock, $.001 par value, 100,000 shares authorized,
       no shares issued or outstanding at March 31, 2003 and June 30, 2002                --                --
    Common stock, $.001 par value, 25,000,000 shares authorized,
       10,859,842 and 10,748,455 shares issued and outstanding at
       March 31, 2003 and June 30, 2002,  respectively                                10,860            10,748
    Capital in excess of par value                                                69,270,012        67,289,436
    Accumulated deficit                                                             (383,878)       (5,585,885)
    Accumulated other comprehensive loss                                                (846)         (147,258)
                                                                                ------------      ------------
           Total stockholders' equity                                             68,896,148        61,567,041
                                                                                ------------      ------------
  TOTAL                                                                         $ 76,457,635      $ 66,980,307
                                                                                ============      ============
</TABLE>


See notes to consolidated financial statements.



                                        3
<PAGE>

KENSEY NASH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                             MARCH 31,                           MARCH 31,
                                                    ------------------------------     -------------------------------
                                                        2003              2002             2003               2002
<S>                                                 <C>               <C>               <C>               <C>
  REVENUES:
    Net sales                                       $  7,249,690      $  4,209,622      $ 18,765,321      $ 13,060,499
    Research and development                             246,678           198,120           611,311           478,853
    Royalty income                                     4,171,353         2,818,180        11,725,845         7,388,280
                                                    ------------      ------------      ------------      ------------
             Total revenues                           11,667,721         7,225,922        31,102,477        20,927,632
                                                    ------------      ------------      ------------      ------------

  OPERATING COSTS AND EXPENSES:
    Cost of products sold                              3,239,491         2,062,734         8,560,081         6,277,640
    Research and development                           3,690,769         2,813,438        10,245,484         7,877,592
    Selling, general and administrative                1,885,142         1,269,627         5,090,324         3,172,772
                                                    ------------      ------------      ------------      ------------
             Total operating costs and expenses        8,815,402         6,145,799        23,895,889        17,328,004
                                                    ------------      ------------      ------------      ------------
  INCOME FROM OPERATIONS                               2,852,319         1,080,123         7,206,588         3,599,628
                                                    ------------      ------------      ------------      ------------

  OTHER INCOME:
    Interest income                                      266,938           472,415           954,789         1,427,485
    Interest expense                                     (34,536)          (54,103)         (120,291)         (174,339)
    Other (expense) income                                  (501)            2,000              (110)           (4,481)
                                                    ------------      ------------      ------------      ------------
             Total other income - net                    231,901           420,312           834,388         1,248,665
                                                    ------------      ------------      ------------      ------------
  INCOME BEFORE INCOME TAXES                           3,084,220         1,500,435         8,040,976         4,848,293
  Income tax expense                                  (1,125,596)         (517,650)       (2,838,969)       (1,672,661)
                                                    ------------      ------------      ------------      ------------
  NET INCOME                                        $  1,958,624      $    982,785      $  5,202,007      $  3,175,632
                                                    ============      ============      ============      ============
  BASIC EARNINGS PER SHARE                          $       0.18      $       0.09      $       0.48      $       0.30
                                                    ============      ============      ============      ============
  DILUTED EARNINGS PER SHARE                        $       0.17      $       0.09      $       0.46      $       0.28
                                                    ============      ============      ============      ============
  WEIGHTED AVERAGE COMMON
    SHARES OUTSTANDING                                10,814,830        10,722,148        10,775,696        10,641,469
                                                    ============      ============      ============      ============
  DILUTED WEIGHTED AVERAGE COMMON
    SHARES OUTSTANDING                                11,556,775        11,361,024        11,403,112        11,240,536
                                                    ============      ============      ============      ============
</TABLE>


See notes to consolidated financial statements.


                                       4
<PAGE>

KENSEY NASH CORPORATION
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                              CAPITAL                    ACCUMULATED
                                           COMMON STOCK      IN EXCESS                      OTHER
                                      --------------------    OF PAR     ACCUMULATED    COMPREHENSIVE   COMPREHENSIVE
                                        SHARES     AMOUNT      VALUE       DEFICIT     (LOSS) / INCOME     INCOME       TOTAL
<S>                                   <C>         <C>       <C>          <C>           <C>              <C>          <C>
BALANCE, JUNE 30, 2001                10,509,431  $10,509   $63,974,745  $(10,196,713)   $ (227,414)                 $53,561,127
  Exercise of stock options              239,024      239     3,314,691                                                3,314,930
  Net income                                                                4,610,828                  $4,610,828      4,610,828
  Foreign currency translation
    adjustment                                                                              39,379         39,379         39,379
  Change in unrealized gain on
    investments (net of tax)                                                                40,777         40,777         40,777
                                                                                                       ----------
  Comprehensive income                                                                                 $4,690,984
                                      ----------  -------   -----------  ------------    ---------     ==========    -----------
BALANCE, JUNE 30, 2002                10,748,455  $10,748   $67,289,436  $ (5,585,885)   $(147,258)                  $61,567,041
                                      ----------  -------   -----------  ------------    ---------                   -----------
  Exercise of stock options              111,387      112     1,605,026                                                1,605,138
  Stock options granted to
    non-employee                                                375,550                                                  375,550
  Net income                                                                5,202,007                  $5,202,007      5,202,007
  Foreign currency translation
    adjustment                                                                              (5,642)        (5,642)        (5,642)
  Change in unrealized gain on
    investments (net of tax)                                                               152,054        152,054        152,054
                                      ----------  -------   -----------  ------------    ---------     ----------    -----------
  Comprehensive income                                                                                 $5,348,419
                                                                                                       ==========
BALANCE, MARCH 31, 2003 (Unaudited)   10,859,842  $10,860   $69,270,012  $   (383,878)   $    (846)                  $68,896,148
                                      ==========  =======   ===========  ============    =========                   ===========
</TABLE>


See notes to consolidated financial statements.



                                       5
<PAGE>

KENSEY NASH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                                                                                MARCH 31,
                                                                    ------------------------------
                                                                        2003              2002
<S>                                                                 <C>               <C>
OPERATING ACTIVITIES:
  Net income                                                        $  5,202,007      $  3,175,632
  Adjustments to reconcile net income to net cash provided by
       operating activities:
       Depreciation and amortization                                   2,211,196         1,583,956
  Changes in assets and liabilities which (used) provided cash:
       Accounts receivable                                            (1,268,791)          425,488
       Deferred tax asset                                              1,470,626         1,447,217
       Prepaid expenses and other current assets                        (604,217)         (732,356)
       Inventory                                                        (975,854)         (969,496)
       Accounts payable and accrued expenses                           3,172,172          (385,641)
       Deferred revenue                                                   29,590           204,224
                                                                    ------------      ------------
        Net cash provided by operating activities                      9,236,729         4,749,024
                                                                    ------------      ------------

INVESTING ACTIVITIES:
  Additions to property, plant and equipment                          (2,893,534)       (2,316,096)
  Sale of investments                                                 33,325,000        12,195,000
  Purchase of investments                                            (30,133,847)      (14,953,050)
                                                                    ------------      ------------
        Net cash provided by (used in) investing activities              297,619        (5,074,146)
                                                                    ------------      ------------

FINANCING ACTIVITIES:
  Principal payments under capital leases                                     --            (1,937)
  Repayments of long term debt                                        (1,053,541)         (675,231)
  Purchase of restricted investments                                     (48,927)               --
  Sale of restricted investments                                       2,161,999                --
  Proceeds from exercise of stock options                              1,605,138         2,221,743
                                                                    ------------      ------------
        Net cash provided by financing activities                      2,664,669         1,544,575
                                                                    ------------      ------------

EFFECT OF EXCHANGE RATE ON CASH                                           (5,642)               --
INCREASE IN CASH AND CASH EQUIVALENTS                                 12,199,017         1,219,453
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                         3,632,395         2,841,963
                                                                    ------------      ------------

CASH AND CASH EQUIVALENTS, END OF PERIOD                            $ 15,825,770      $  4,061,416
                                                                    ============      ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest                                            $    120,291      $    174,339
                                                                    ============      ============
  Cash paid for income taxes                                        $     53,597      $     80,000
                                                                    ============      ============

SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITY:
  Increase in prepaid expense related to
        non-employee stock options  (See Note 6)                    $    375,550      $
                                                                    ============      ============
</TABLE>


See notes to consolidated financial statements.


                                       6
<PAGE>

                             KENSEY NASH CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1  -- CONSOLIDATED FINANCIAL STATEMENTS

    BASIS OF PRESENTATION

    The consolidated balance sheet as of March 31, 2003, consolidated statements
    of operations for the three and nine months ended March 31, 2003 and 2002,
    consolidated statement of stockholders' equity for the nine months ended
    March 31, 2003 and consolidated statements of cash flows for the nine months
    ended March 31, 2003 and 2002 of Kensey Nash Corporation (the Company) have
    not been audited by the Company's independent auditors. In the opinion of
    management, all adjustments (which include only normal recurring
    adjustments) necessary to present fairly the financial position at March 31,
    2003 and June 30, 2002, results of operations for the three and nine months
    ended March 31, 2003 and 2002, stockholders' equity for the nine months
    ended March 31, 2003 and for the year ended June 30, 2002 and cash flows for
    the nine months ended March 31, 2003 and 2002 have been made.

    Certain information and note disclosures normally included in the Company's
    annual financial statements, prepared in accordance with accounting
    principles generally accepted in the United States of America, have been
    condensed or omitted. These consolidated financial statements should be read
    in conjunction with the financial statements and notes thereto included in
    the Company's consolidated financial statements filed with the Securities
    and Exchange Commission (SEC) in the Company's Annual report on Form 10-K
    for the fiscal year ended June 30, 2002. The results of operations for the
    three and nine month periods ended March 31, 2003 are not necessarily
    indicative of operating results for the full year.

    Certain reclassifications have been made to prior period balances to conform
    to the current period presentation.

    PRINCIPLES OF CONSOLIDATION AND BASIS OF PRESENTATION

    The consolidated financial statements include the accounts of Kensey Nash
    Corporation, Kensey Nash Holding Company and Kensey Nash GmbH. All
    intercompany transactions and balances have been eliminated. Kensey Nash
    Holding Company, incorporated in Delaware in January 1992, was formed to
    hold title to certain Company patents and has no operations. Kensey Nash
    GmbH, incorporated in Germany in January 2002, was formed for the purpose of
    European sales and marketing of the TriActiv(R) Balloon Protected Flush
    Extraction System, which was commercially launched in Europe in May 2002.

    The preparation of the consolidated financial statements in conformity with
    accounting principles generally accepted in the United States of America
    necessarily requires management to make estimates and assumptions. These
    estimates and assumptions, which may differ from actual results, will affect
    the reported amounts of assets and liabilities and disclosure of contingent
    assets and liabilities at the dates of the financial statements, as well as
    the reported amounts of revenue and expense during the periods.

    CASH, CASH EQUIVALENTS AND INVESTMENTS

    Cash and cash equivalents represent cash in banks and short-term investments
    having an original maturity of less than three months. Our investment
    portfolio consists primarily of high quality U.S. government, municipal and
    corporate securities and certificates of deposit with maturities ranging
    from three to fourteen years. The portfolio includes only available for sale
    marketable securities with secondary or resale markets. See Comprehensive
    Income below for the treatment of unrealized holding gains and losses.

    EXPORT SALES

    There were $0 and $186,996 in export sales from the Company's U.S.
    operations to unaffiliated customers in Europe in the three and nine months
    ended March 31, 2003, respectively. Export sales for the three and nine
    months ended March 31, 2002 were $74,390 and $338,302, respectively.

    REVENUE RECOGNITION

    The Company recognizes revenue under the provisions of Staff Accounting
    Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements (SAB
    101). Accordingly, sales revenue is recognized when the related




                                       7
<PAGE>

    product is shipped. All product is shipped F.O.B. shipping point. Revenue
    under research and development contracts is recognized as the related costs
    are incurred. Advance payments received for products or services are
    recorded as deferred revenue and are recognized when the product is shipped
    or services are performed.

    The Company receives a 9% royalty on every Angio-Seal(TM) unit sold by St.
    Jude Medical, its licensee. The Company recognizes the royalty revenue, in
    accordance with the Licensing Agreement between the Company and St. Jude
    Medical, at the end of each month when St. Jude Medical advises the Company
    of the total Angio-Seal sales dollars for the month. Royalty payments are
    received within 45 days of the end of each calendar quarter.

    EARNINGS PER SHARE

    Earnings per share are calculated in accordance with SFAS No. 128, Earnings
    per Share, which requires the Company to report both basic and diluted
    earnings per share (EPS). Basic and diluted EPS are computed using the
    weighted average number of shares of common stock outstanding, with common
    equivalent shares from options included in the diluted computation when
    their effect is dilutive.

    STOCK-BASED COMPENSATION

    Stock-based compensation cost is accounted for under SFAS No. 123,
    Accounting for Stock-Based Compensation (SFAS No. 123), which permits
    continued application of the intrinsic value method of Accounting Principles
    Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25).
    Under the intrinsic value method, compensation cost represents the excess,
    if any, of the quoted market price of the Company's common stock at the
    grant date over the amount the grantee must pay for the stock. The Company's
    policy is to grant stock options at the fair market value at the date of
    grant. Options granted to non-employees, as defined under SFAS No. 123, is
    recorded as compensation expense. The Company did not grant any options to
    non-employees for the three and nine months ended March 31, 2002. See Note 6
    for options granted to a non-employee in October 2002.

    In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
    Compensation - Transition and Disclosure - an amendment of FASB Statement
    No. 123, Accounting for Stock-Based Compensation (SFAS No. 148). The Company
    implemented the "disclosure only" provisions of SFAS No. 148 in the period
    ended December 31, 2002. Accordingly, no compensation cost has been
    recognized for the Company's two stock option plans. Had compensation cost
    for the plans been determined based on the fair market value of the options
    at the grant date, consistent with the provisions of SFAS No. 123, as
    amended by SFAS No. 148, the Company's fully-taxed net income and earnings
    per share for the three and nine months ended March 31, 2003 and 2002 would
    have been reduced to the pro forma amounts below:


<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED                  NINE MONTHS ENDED
                                                                        MARCH 31,                          MARCH 31,
                                                             --------------------------------   ---------------------------------
                                                                  2003               2002              2003               2002
<S>                                                          <C>                <C>              <C>                <C>
  Net income, as reported                                    $   1,958,624      $     982,785    $   5,202,007      $   3,175,632
    Deduct: Total stock-based employee compensation
    expense determined under fair value based method
    for all awards, net of related tax effects                    (418,768)          (551,868)      (1,269,239)        (2,930,147)
                                                             -------------      -------------    -------------      -------------
  Pro forma net income                                       $   1,539,856      $     430,917    $   3,932,768      $     245,485

  Earnings per share:
     Basic - as reported                                     $        0.18      $        0.09    $        0.48      $        0.30
                                                             =============      =============    =============      =============
     Basic - pro forma                                       $        0.14      $        0.04    $        0.36      $        0.02
                                                             =============      =============    =============      =============
     Diluted - as reported                                   $        0.17      $        0.09    $        0.46      $        0.28
                                                             =============      =============    =============      =============
     Diluted - pro forma                                     $        0.13      $        0.04    $        0.34      $        0.02
                                                             =============      =============    =============      =============
</TABLE>


    COMPREHENSIVE INCOME

    The Company accounts for comprehensive income under the provisions of SFAS
    No. 130, Reporting Comprehensive Income (SFAS No. 130). Accordingly,
    accumulated other comprehensive income (loss) is shown




                                       8
<PAGE>

    in the consolidated statements of stockholders' equity at March 31, 2003 and
    June 30, 2002, and is comprised of unrealized gains and losses on the
    Company's available-for-sale securities and foreign currency translation
    adjustments. The tax effect of other comprehensive income for the nine
    months ended March 31, 2003 and for the fiscal year ended June 30, 2002 was
    $78,000, and $21,000, respectively.

    GOODWILL

    Goodwill represents the excess of cost over the fair value of the
    identifiable net assets of THM Biomedical, Inc. (THM), a company acquired in
    September 2000. Effective July 1, 2001, the Company adopted SFAS No. 141,
    Business Combinations (SFAS No. 141) and SFAS No. 142, Goodwill and Other
    Intangible Assets (SFAS No. 142). SFAS No. 141 requires that the purchase
    method of accounting be used for all business combinations subsequent to
    June 30, 2001 and specifies criteria for recognizing intangible assets
    acquired in a business combination. Under SFAS No. 142, goodwill and
    intangible assets with indefinite useful lives are no longer amortized, but
    are subject to annual impairment tests. Intangible assets with definite
    useful lives will continue to be amortized over their respective useful
    lives. The early adoption of SFAS No. 142 did not result in the
    reclassification of any intangible assets, changes in the amortization
    periods for those intangible assets with definite lives or the impairment of
    any intangible assets.

    NEW PRONOUNCEMENTS

    In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
    Obligations (SFAS No. 143). SFAS No. 143 addresses accounting standards for
    obligations associated with the retirement of tangible long-lived assets and
    the associated asset retirement costs and was effective for the Company's
    fiscal year beginning July 1, 2002. The adoption of this statement did not
    have a material impact on the Company's financial position or operations.

    In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment
    or Disposal of Long-Lived Assets (SFAS No. 144). This SFAS retains the
    requirements of SFAS No. 121 to (a) recognize an impairment loss only if the
    carrying amount of a long-lived asset is not recoverable from its
    undiscounted cash flow and (b) measure an impairment loss as the difference
    between the carrying amount and fair value of the asset. SFAS No. 144
    establishes a single model for accounting for long-lived assets to be
    disposed of by sale and was effective for the Company's fiscal year
    beginning July 1, 2002. The adoption of this statement did not have a
    material impact on the Company's financial position or operations.

    In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
    with Exit or Disposal Activities (SFAS No. 146), which requires that a
    liability for a cost associated with an exit or disposal activity be
    recognized when the liability is incurred rather than at the date of a
    commitment to an exit or disposal plan and nullifies Emerging Issues Task
    Force (EITF) 94-3. SFAS No. 146 applies to exit or disposal activities
    initiated after December 31, 2002. SFAS No. 146 did not have a material
    impact on the Company's financial position or operations.

    In November 2002, the FASB issued Financial Interpretation No. 45 (FIN 45),
    Guarantor's Accounting and Disclosure Requirements for Guarantees, Including
    Indirect Guarantees of Others. FIN 45 requires that a liability be recorded
    in the guarantor's balance sheet upon issuance of a guarantee. In addition,
    FIN 45 requires disclosure about the guarantees that an entity has issued,
    including a reconciliation of changes in the entity's product warranty
    liabilities. The initial recognition and initial measurement provisions of
    FIN 45 are applicable on a prospective basis to guarantees issued or
    modified after December 31, 2002, irrespective of the guarantor's fiscal
    year end. The disclosure requirements of FIN 45 are effective for financial
    statements of interim or annual periods ending after December 15, 2002. The
    adoption of this standard is not expected to have a material impact on the
    Company's financial position or operations.

    In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
    Compensation - Transition and Disclosure - an amendment of FASB Statement
    No. 123, Accounting for Stock-Based Compensation, to provide alternative
    methods of transition for a voluntary change to the fair value based method
    of accounting for stock-based employee compensation. In addition, SFAS No.
    148 amends the disclosure requirements of SFAS No. 123 to require prominent
    disclosures in both annual and interim financial statements about the method
    of accounting for stock-based employee compensation and the effect of the
    method used on reported results, which is effective for the Company's
    interim period beginning January 1, 2003. The Company implemented the
    "disclosure only" provisions of SFAS No. 148 in the period ended
    December 31, 2002.



                                       9
<PAGE>

    In January 2003, the FASB issued Financial Interpretation No. 46 (FIN 46),
    Consolidation of Variable Interest Entities, an interpretation of Accounting
    Research Bulletin 51, Consolidated Financial Statements. FIN 46 requires
    that unconsolidated variable interest entities be consolidated with their
    primary beneficiaries and applies immediately to variable interest entities
    created after January 31, 2003 and to existing entities in periods beginning
    after June 15, 2003. The Company is not affiliated with a variable interest
    entity and will adopt the provisions of FIN 46, at such time as they become
    applicable to the Company.

    In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133 on
    Derivative Instruments and Hedging Activities, which amends and clarifies
    financial accounting and reporting for derivative instruments, including
    certain derivative instruments embedded in other contracts (collectively
    referred to as derivatives) and for hedging activities under FASB Statement
    No. 133, Accounting for Derivative Instruments and Hedging Activities. SFAS
    No. 149 is effective for contracts entered into or modified, and for hedging
    relationships designated, after June 30, 2003. Other provisions of SFAS No.
    149 that relate to SFAS No. 133 implementation issues should continue to be
    applied in accordance with their respective dates. The Company's adoption of
    SFAS No. 149 is not expected to have a material impact on the Company's
    financial position or operations.

NOTE 2 -- INVENTORY

    Inventory is stated at the lower of cost (determined by the average cost
    method, which approximates first-in, first-out) or market. Inventory
    primarily includes the cost of material utilized in the processing of the
    Company's products and is as follows:


<TABLE>
<CAPTION>
                                      MARCH 31,             JUNE 30,
                                         2003                 2002
                                      ----------          -----------
<S>                                   <C>                 <C>
          Raw materials               $2,752,550          $ 2,193,438
          Work in process                742,228              325,486
                                      ----------          -----------
          Total                       $3,494,778          $ 2,518,924
                                      ==========          ===========
</TABLE>


NOTE 3 -- THM ACQUISITION

    On September 1, 2000 the Company acquired THM, a developer of porous,
    biodegradable, tissue-engineering devices for the repair and replacement of
    musculoskeletal tissues, for approximately $10.5 million plus acquisition
    costs of approximately $239,000. The transaction was financed with $6.6
    million of the Company's cash and a note payable to the former shareholders
    of THM in the amount of $4.5 million (the Acquisition Obligation). The
    Acquisition Obligation was due in equal quarterly installments of $281,250
    beginning on December 31, 2000 and ending on September 30, 2004.
    Accordingly, the present value of the cash payments (discounted based upon
    the Company's then available borrowing rate of 7.5%) of $3,833,970 was
    recorded as a liability on the Company's consolidated financial statements,
    with a remaining balance of $1,255,845 and $2,309,385 at March 31, 2003 and
    June 30, 2002, respectively. As of March 31, 2003 we have repaid certain
    debt holders thereby reducing the Company's remaining quarterly installments
    to $223,256 through September 30, 2004.

NOTE 4 -- OFFICER LOANS

    The Company has granted loans to a current officer of the Company totaling
    $2.0 million, which were for personal use and are collateralized by the
    officer's stock. Interest on the loans ranges from 5.25% to 7% and is based
    on the prime rate of interest. Total interest income earned by the Company
    on these loans for the three months ended March 31, 2003 and 2002,was
    $25,934 and $24,255, respectively, and for the nine months ended March 31,
    2003 and 2002 was $80,154 and $65,036, respectively, and has been
    capitalized into the loan balance. No additional principal amounts were
    loaned in the three and nine months ended March 31, 2003. Interest and
    principal on the loans were due at the earlier of the sale of a portion of
    the officer's stock or March 2003. Under the Sarbanes-Oxley Act of 2002,
    these loans could not be renewed or extended after their due date. The
    officer has entered into a program of exercising stock options and selling
    the underlying stock in order to pay off these loans. As of May 15, 2003,
    $1.2 million has been repaid, reducing the principal balance to $0.8
    million. It is anticipated that the balance of these loans will be repaid
    within 60 days.




                                       10
<PAGE>

NOTE 5 -- COMMITMENTS AND CONTINGENCIES

    As of June 30, 2002, the Company had pledged $2,113,072 in investments as
    collateral to secure a bank loan to an officer, which was used by the
    officer for the payment of taxes incurred as the result of the receipt of
    Common Stock at the time of the Company's initial public offering in
    December 1995. In exchange for the Company pledging collateral for such
    loans, the affected officer had pledged his Common Stock as collateral to
    the Company. The balance outstanding on such officer loans was $1,726,780 at
    December 31, 2002. The Company's security pledge related to these loans was
    released by the bank on February 13, 2003 when the officer's loan from the
    bank was repaid in full.

NOTE 6 -- CONSULTING CONTRACTS

    In October 2002, the Company granted options to purchase 50,000 shares of
    common stock to a physician pursuant to a five-year consulting agreement
    related to the development of a carotid artery application for the
    TriActiv(R) Balloon Protected Flush Extraction System.

    The Company has calculated the fair value of these non-employee options in
    accordance with SFAS No.123, as $375,550 using the Black-Scholes
    option-pricing model. This amount was recorded as prepaid consulting expense
    and an increase to additional paid in capital at December 31, 2002. The
    prepaid expense is being amortized to research and development expense over
    the five-year term of the agreement. Accordingly, $18,778 and $37,555, was
    recorded as a component of research and development expense for the three
    and nine months ended March 31, 2003, respectively.

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

The following discussion and analysis should be read in conjunction with our
financial statements and the related notes included in this report and the
Company's audited consolidated financial statements filed with the Securities
and Exchange Commission in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 2002.

OVERVIEW

We are a leader in cardiovascular medical technology and have significant
experience and expertise in the design, development, manufacture and processing
of absorbable biomaterials for medical applications. The Angio-Seal(TM) Vascular
Closure Device (Angio-Seal), of which we were the original designer, developer
and manufacturer, is currently the leader in the arterial puncture closure
device market, estimated to be a potential $600 million to $1 billion annual
market. The Angio-Seal is designed to seal and close femoral artery punctures
made during diagnostic and therapeutic cardiovascular catheterizations. St. Jude
Medical, Inc. (St. Jude Medical) acquired the worldwide license to the
Angio-Seal in March of 1999. St. Jude Medical develops, manufactures, markets,
and distributes the product worldwide. Additionally, we developed the
TriActiv(R) Balloon Protected Flush Extraction System (the TriActiv), a device
designed to provide distal protection during saphenous vein graft treatment.
This market opportunity is currently estimated at $300 to $500 million annually.
The TriActiv was commercially launched in Europe in May 2002 and is in clinical
trials in the United States. In addition, we have significant experience in
designing, developing, manufacturing and processing proprietary biomaterials
products for the orthopaedics, cardiology, drug/biologics delivery, periodontal,
general surgery and wound care markets. We intend to continue to leverage our
proprietary knowledge and expertise in all of these markets to develop new
products and technologies and to explore additional applications for our
existing products.

Revenues. Our revenues consist of three components: net sales, research and
development revenue and royalty income.

Net Sales. Net sales is comprised of sales of absorbable biomaterials products
and the TriActiv.

          Biomaterials. The biomaterials component of net sales represents the
          sale of our biomaterials products to customers for use in the
          following markets: orthopaedics, cardiology, drug/biologics delivery,
          periodontal,





                                       11
<PAGE>

          general surgery and wound care. In 1997, our biomaterials sales were
          comprised almost 100% of the absorbable collagen and polymer
          components of the Angio-Seal supplied to our strategic alliance
          partner. Since that time, we have experienced significant sales growth
          in our biomaterials products as we have expanded our customer base and
          marketing activities, increased sales to existing customers and
          assisted in the development of new product offerings. For fiscal 2002,
          the Angio-Seal components represented 42% of our total biomaterial
          sales. For the three and nine months ended March 31, 2003, the
          Angio-Seal components represented 49% and 55%, respectively, of our
          total biomaterials sales. We believe the growth in our overall
          biomaterials sales, which was 70% and 42% in the three and nine months
          ended March 31, 2003 over the comparable periods in fiscal 2002, will
          continue because of greater acceptance by the medical community of
          biomaterials and technological advances which have expanded the
          applications for our biomaterials products.

          TriActiv. The TriActiv was commercially launched in Europe in the
          fourth quarter of fiscal 2002. We are selling direct to the market in
          Germany and through distributors throughout the rest of Europe. We
          have entered into distribution agreements for sales in the United
          Kingdom, Ireland, Switzerland, Austria, and Italy as of March 31, 2003
          and are in the process of identifying distributors for the rest of
          Europe. While TriActiv sales were less than 2% and 1% of our total
          sales for the three and nine months ended March 31, 2003,
          respectively, we anticipate the TriActiv will become a more
          significant component of our net sales during the remainder of fiscal
          2003 and beyond as we gain new accounts in the European markets. We
          anticipate commercial launch of TriActiv in the U.S. in the second
          half of fiscal 2004.

Research and Development Revenue. Research and development revenue in the three
and nine months ended March 31, 2003 was derived from two National Institute of
Standards & Technology (NIST) grants and one National Institute of Health (NIH)
grant. Under the first grant, we are researching cartilage regeneration
utilizing our porous tissue matrix (PTM) technology. We received all remaining
funds under this grant in our second quarter of fiscal 2003. In addition, in
October 2001, we received a second NIST grant, under which we are researching a
synthetic vascular graft also utilizing our PTM technology. This grant will
continue through early fiscal year 2005. Under the NIH grant, we are researching
sustained or controlled release of chemotherapeutic drugs for the treatment of
breast cancer utilizing our PTM technology. This grant will continue through
early fiscal year 2004.

Royalty Income. We receive a royalty on every Angio-Seal unit sold worldwide. We
anticipate sales of the Angio-Seal will continue to grow as St. Jude Medical
continues to expand its sales and marketing efforts and releases future
generations of the Angio-Seal and as market adoption of vascular closure devices
increases. As a result, we expect that royalty income will continue to be a
significant source of revenue. Our current royalty rate is 9%. The original rate
of 12% was contractually reduced from 12% to 9%, in accordance with our
licensing agreements during the quarter ended December 31, 2000, when a
cumulative one million Angio-Seal units had been sold. There will be one further
decrease in the royalty rate, to 6%, upon reaching four million cumulative units
sold. While we previously anticipated this reduction would occur in our fiscal
year 2005, exceptionally strong Angio-Seal sales in the first half of fiscal
2003, as well as current and forecasted market growth trends have lead us to
revise our estimate. We now anticipate that this final rate reduction will occur
in late fiscal 2004. As of March 31, 2003 approximately 2.7 million Angio-Seal
units have been sold.

Cost of Products Sold. We have experienced an overall increase in gross margin
during the three and nine months ended March 31, 2003, reflecting the higher
volume of our biomaterials products. This increased volume from both our
existing customers and new customers has resulted in manufacturing efficiencies.
The volume increase also results in our fixed costs being spread over a greater
number of units. We anticipate the gross margin on our biomaterials products
will continue to improve with continued increased sales volume. This increase in
gross margin will be partially offset by lower gross margins associated with
initial production quantities of the TriActiv, as we expect margins on the
initial TriActiv sales to be minimal due to the start-up nature of the
manufacturing process. As a result of this product mix, for fiscal 2003, we
believe our total gross margin, across all product lines, will be only slightly
improved over fiscal 2002. As volumes increase and the manufacturing process
matures for the TriActiv, we expect the gross margin on TriActiv to increase.

Research and Development Expense. Research and development expense consists of
expenses incurred for the development of our proprietary technologies, such as
the TriActiv System, absorbable biomaterials products and technologies and other
development programs, including expenses under the NIST and NIH programs. In
December




                                       12
<PAGE>

2001, we began our TriActiv U.S. pivotal clinical study, a planned 500-800
patient randomized trial. We had initially been approved to conduct the study at
up to 50 sites, but we have received Food and Drug Administration (FDA) approval
to increase the number of sites to 75 around the U.S. We anticipate trial
enrollment will continue through the first quarter of fiscal 2004. We anticipate
research and development expense will continue to increase as we pursue
commercialization of the TriActiv System in the United States, as well as
explore opportunities for our other technologies, including the continued
development of proprietary biomaterials technologies.

Selling, General and Administrative Expense. Selling, general and administrative
expenses include general and administrative costs, as well as costs related to
the sales and marketing of our products. The costs of our patent litigation are
also included within selling, general and administrative expenses. The sales and
marketing component of selling, general and administrative expenses has
increased as we commercialized the TriActiv in Europe in May 2002 and move
toward commercialization of the TriActiv in the U.S. Effective January 2002, we
established a subsidiary in Germany, Kensey Nash Europe GmbH, and hired a Vice
President of European sales. We have established a European sales and marketing
team and will continue to add personnel to this team as required to meet our
clinical and sales goals. This team will sell the product direct in the German
market and support our distributor relationships in the rest of Europe. We
anticipate sales and marketing expenses will continue to increase as we expand
our European sales team and prepare for U.S. commercial launch. We also continue
to evaluate opportunities for commercialization of the TriActiv in the United
States and to expand the marketing efforts for our biomaterials business.

CRITICAL ACCOUNTING POLICIES

Our "critical accounting policies" are those that require application of
management's most difficult, subjective, or complex judgments, often as a result
of the need to make estimates about matters that are inherently uncertain and
may change in future periods. We have identified the following as our critical
accounting policies: revenue recognition and accounting for stock-based
compensation.

Revenue Recognition. We recognize revenue under the provisions of Staff
Accounting Bulletin (SAB) No. 101, Revenue Recognition in Financial Statements
(SAB 101). Accordingly, sales revenue is recognized when the related product is
shipped. All of our shipments are F.O.B. shipping point. Revenue under research
and development contracts is recognized as the related costs are incurred.
Royalty revenue is recognized as the related product is sold. Advance payments
received for products or services are recorded as deferred revenue and are
recognized when the product is shipped or services are performed.

Stock-Based Compensation. We account for stock-based compensation costs under
SFAS No. 123, Accounting for Stock-Based Compensation (SFAS No. 123), as amended
by SFAS No. 148 which permits continued application of the intrinsic value
method of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees (APB 25). Under the intrinsic value method, compensation
cost represents the excess, if any, of the quoted market price of the Company's
common stock at the grant date over the amount the grantee must pay for the
stock. Our policy is to grant stock options at the fair market value at the date
of grant. Therefore, we have not recognized any compensation expense for options
granted to employees. We account for stock-based awards to non-employees using
the fair value method in accordance with SFAS No. 123, which requires using a
Black-Scholes option-pricing model to determine the fair value of the option at
the original grant date. Options granted to non-employees, as defined under SFAS
No. 123, (as amended by SFAS No. 148) and EITF 96-18, are recorded as expense
over the service period.


RESULTS OF OPERATIONS

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2003 AND 2002

Total Revenues. Total revenues increased 61% to $11.7 million in the three
months ended March 31, 2003 from $7.2 million in the three months ended March
31, 2002. Net sales of products increased 72% to $7.2 million from $4.2 million
for the three months ended March 31, 2003 and 2002, respectively as we continue
to increase sales to existing customers and expand sales to new customers. Net
sales for the three months ended March 31, 2003 consisted almost entirely of
biomaterials sales, as TriActiv sales were less than 2% of total sales. Sales
for the three months ended March 31, 2002 consisted entirely of biomaterials
sales.



                                       13
<PAGE>

Research and Development Revenues. Research and development revenues increased
25% to $247,000 from $198,000 for the three months ended March 31, 2003 and
2002, respectively. These revenues consist of amounts generated under our NIST
and NIH grants. The increase over the prior year primarily reflects increased
activity under the synthetic vascular graft grant which generated $222,000 in
revenue for the three months ended March 31, 2003 compared to $93,000 for the
three months ended March 31, 2002. Also contributing to the increase was the
start of our NIH breast cancer drug delivery grant in January 2003, which
generated $25,000 in revenue for the three months ended March 31, 2003. This
increased activity was offset by a decrease of $105,000 in articular cartilage
grant revenue over the comparable period in the prior year, as this project
concluded in October 2002.

Royalty Income. Royalty income increased 48% to $4.2 million from $2.8 million
in the three months ended March 31, 2003 and 2002, respectively. This increase
reflects a greater number of units sold as well as an increase in the average
selling price for the Angio-Seal. Royalty units increased 42% as approximately
248,000 Angio-Seal units were sold to end-users during the three months ended
March 31, 2003 compared to approximately 175,000 units sold during the three
months ended March 31, 2002. We believe that this unit increase was due to St.
Jude Medical's increased sales and marketing efforts, resulting in market share
gains for the Angio-Seal product line in both the U.S. and European markets.

Cost of Products Sold. Cost of products sold increased 57% to $3.2 million in
the three months ended March 31, 2003 from $2.1 million in the three months
ended March 31, 2002. While overall cost of products sold increased, gross
margin also increased 4 points or 8%, from 51% to 55%, in the three months ended
March 31, 2002 and 2003, respectively, reflecting the high margins on our
biomaterials products and continued allocation of overhead across increased
sales volumes, resulting in a decrease in per unit costs.

Research and Development Expense. Research and development expense increased 31%
to $3.7 million in the three months ended March 31, 2003 compared to $2.8
million in the three months ended March 31, 2002. This increase was attributable
to our continued development efforts on the TriActiv, including clinical trial
expenses. While research and development expenses continue to increase in
dollars, they are decreasing as a percentage of total revenue and declined to
32% from 39% for the three month periods ended March 31, 2003 and March 31,
2002, respectively. Research and development expenses related to the TriActiv
increased $686,000, or 37%, to $2.6 million in the three months ended March 31,
2003 from $1.9 million in the three months ended March 31, 2002. We also
continued to expand our development efforts on our biomaterials products
including our work under the NIST and NIH grants. Biomaterials-related spending
increased $237,000, or 26%, to $1.1 million in the three months ended March 31,
2003 from $901,000 in the three months ended March 31, 2002.

Selling, General and Administrative Expense. Selling, general and administrative
expense increased 48% to $1.9 million in the three months ended March 31, 2003
from $1.3 million in the three months ended March 31, 2002. This increase was
primarily the result of increased sales and marketing expenses, which increased
$491,000 to $1,004,000 in the three months ended March 31, 2003 from $513,000 in
the three months ended March 31, 2002. This increase related to TriActiv
European sales and marketing efforts. In addition, general and administrative
expenses increased $125,000, to $881,000, in the three months ended March 31,
2003 from $756,000 in the three months ended March 31, 2002. This increase was
attributable to several factors, including a $156,000 increase in personnel
costs in support of our continued sales and research and development growth. In
addition, professional services and public company expenses, including audit and
legal fees, D&O insurance, board of director costs, and SEC filing fees
increased $45,000, primarily as a result of the requirements of the
Sarbanes-Oxley Act of 2002. Offsetting these higher expenses were our legal fees
incurred in connection with our patent infringement suit (See Part II; Item
1-Legal Proceedings). These fees decreased to $3,000 for the three months ended
March 31, 2003 from $79,000 for the three months ended March 31, 2002.

Net Interest Income. Interest expense decreased 36% to $35,000 in the three
months ended March 31, 2003 from $54,000 in the three months ended March 31,
2002. This decrease was the result of a lower principal balance on the THM
Acquisition Obligation as we continue to make the required quarterly payments
and as a result of the early repayment to certain debt holders. Interest income
decreased by 43% to $267,000 in the three months ended March 31, 2003 from
$472,000 in the three months ended March 31, 2002. Although our cash and
investment balances have increased, this increase was more than offset by lower
interest rates.



                                       14
<PAGE>

Other Income (Expense). Other non-operating income/(expense) was $(501) and
$2,000 for the three months ended March 31, 2003 and 2002, respectively,
representing gains/(losses) on the disposals of fixed assets.

COMPARISON OF NINE MONTHS ENDED MARCH 31, 2003 AND 2002

Revenues. Revenues increased 49% to $31.1 million in the nine months ended March
31, 2003 from $20.9 million in the nine months ended March 31, 2002. Net sales
of products increased 44%, to $18.8 million from $13.1 million for the nine
months ended March 31, 2003 and 2002, respectively. Net sales for the nine
months ended March 31, 2003 consisted almost entirely of biomaterials sales, as
TriActiv sales were less than 1% of total sales. Sales for the nine months ended
March 31, 2002 consisted entirely of biomaterials sales.

Research and Development Revenues. Research and development revenues increased
28% to $611,000 from $479,000 for the nine months ended March 31, 2003 and 2002,
respectively. In the prior fiscal year, revenues were generated under the NIST
articular cartilage development grant for the entire nine months and under the
NIST vascular graft grant for six of the nine months, as this grant was obtained
in October 2001. The increase over the prior fiscal year reflects the additional
three months of the synthetic vascular graft grant, which generated $393,000 in
revenue for the nine months ended March 31, 2003, compared to $158,000 for the
nine months ended March 31, 2002. Also contributing to the increase was the
start of our NIH breast cancer drug delivery grant in January 2003, which
generated $25,000 in revenue for the nine months ended March 31, 2003. This
increased activity was offset by a decrease of $128,000 in articular cartilage
grant revenue over the comparable period in the prior year, as this project
concluded in October 2002.

Royalty Income. Royalty income increased 59% to $11.7 million from $7.4 million
in the nine months ended March 31, 2003 and 2002, respectively. This increase
reflects a greater number of units sold as well as an increase in the average
selling price for the Angio-Seal. Royalty units increased 49% as approximately
695,000 Angio-Seal units were sold to end-users during the nine months ended
March 31, 2003 compared to approximately 466,000 units sold during the nine
months ended March 31, 2002. We believe that this unit increase was due to St.
Jude Medical's increased sales and marketing efforts, resulting in market share
gains for the Angio-Seal product line in both the U.S. and European markets.

Cost of Products Sold. Cost of products sold increased 36% to $8.6 million in
the nine months ended March 31, 2003 from $6.3 million in the nine months ended
March 31, 2002. While overall cost of products sold increased, gross margin also
increased 2 points, or 4%, to 54% from 52%. This increase reflects the high
margins on our biomaterials products as well as continued allocation of overhead
across greater sales volumes, resulting in a decrease in per unit costs.

Research and Development Expense. Research and development expense increased 30%
to $10.2 million in the nine months ended March 31, 2003 from $7.9 million in
the nine months ended March 31, 2002. This increase was mainly attributable to
our continued development efforts on the TriActiv System, including clinical
trial expenses. While research and development expenses continue to increase in
dollars, they are decreasing as a percentage of total revenue and declined to
33% from 38% for the nine month periods ended March 31, 2003 and March 31, 2002,
respectively. Research and development expenses related to the TriActiv
increased $1.6 million, or 31%, to $6.8 million in the nine months ended March
31, 2003 from $5.2 million in the nine months ended March 31, 2002. We also
continued to expand our development efforts on our biomaterials products,
including our work under the NIST and NIH grants. Biomaterials related spending
increased $755,000, or 28%, to $3.4 million in the nine months ended March 31,
2003 from $2.7 million in the nine months ended March 31, 2002. We expect
research and development expense to increase as we investigate and develop new
products, conduct clinical trials and seek regulatory approvals for our
proprietary products.

Selling, General and Administrative. Selling, general and administrative expense
increased 60% to $5.1 million in the nine months ended March 31, 2003 from $3.2
million in the nine months ended March 31, 2002. This increase was primarily the
result of sales and marketing expenses, which increased to $2.4 million in the
nine months ended March 31, 2003 from $1.1 million in the nine months ended
March 31, 2002, primarily due to increased TriActiv European sales and marketing
efforts. In addition, general and administrative expenses increased 32%, or
$662,000, to $2.7 million in the nine months ended March 31, 2003 from $2.1
million in the nine months ended March 31, 2002. This increase was attributable
to $410,000 of increased personnel costs to support our continued sales and
research and




                                       15
<PAGE>

development growth as well as to support various new requirements under the
Sarbanes-Oxley Act. In addition, professional services and public company
expenses, including audit and legal fees, D&O insurance, board of directors
costs and SEC filing fees increased $153,000 primarily as a result of new
requirements under the Sarbanes-Oxley Act in addition to our continued growth.
Also contributing to the higher expenses was a $108,000 increase in the
allowance for doubtful accounts primarily reflecting a reserve for a receivable
from a company which has filed for bankruptcy. This reserve represented
approximately 50% of the customer's balance at the time it filed for bankruptcy.
Litigation expenses for our patent infringement suit decreased to $91,000 for
the nine months ended March 31, 2003 from $129,000 for the nine months ended
March 31, 2002 (See Part II; Item 1-Legal Proceedings).

Net Interest Income. Interest expense decreased 31% to $120,000 in the nine
months ended March 31, 2003 from $174,000 in the nine months ended March 31,
2002. This decrease was the result of a lower principal balance on the THM
Acquisition Obligation, as we continued to make the required quarterly payments
and as a result of the early repayment to certain debt holders. Interest income
decreased to $955,000 in the nine months ended March 31, 2003 from $1.4 million
in the nine months ended March 31, 2002. Although our cash and investment
balances increased, this increase was more than offset by lower interest rates.

Other Income (Expense). Other non-operating income/(expense) was $(110) and
$(4,481) for the nine months ended March 31, 2003 and 2002, respectively,
representing net losses on the disposal of fixed assets.

LIQUIDITY AND CAPITAL RESOURCES

Net cash provided by our operating activities was $9.2 million and $4.7 million
in the nine months ended March 31, 2003 and 2002, respectively. In the nine
months ended March 31, 2003, changes in asset and liability balances provided
$1.8 million of cash, in addition to net income of $5.2 million and non-cash
depreciation and amortization of $2.2 million. In the nine months ended March
31, 2002, changes in asset and liability balances used $11,000 of cash, in
addition to net income of $3.2 million and non-cash depreciation and
amortization of $1.6 million.

Our cash, cash equivalents and investments were $41.0 million at March 31, 2003.
At December 31, 2002 we had $1.7 million in restricted investment accounts. We
had pledged this $1.7 million in investments as collateral to secure a bank loan
made to an officer to pay taxes incurred by this officer when he received common
stock at the time of our initial public offering. The Company's security pledge
related to these loans was released by the bank on February 13, 2003 when the
officer's loans from the bank were repaid in full.

We have a $5.1 million capital spending plan for fiscal 2003, of which $2.9
million has been spent on machinery, equipment, furniture and fixtures and
leasehold improvements through March 31, 2003. These expenditures are related to
the continued expansion of our manufacturing capabilities for our biomaterials
and TriActiv product lines, as well as support of overall company growth.

We have a $1.3 million obligation to the former shareholders of THM, a company
we acquired in September 2000. The obligation was due in equal quarterly
installments of $281,250, which began on December 31, 2000 and end on September
30, 2004. As of February 28, 2003 we had repaid certain former shareholders of
THM thereby reducing our remaining quarterly installments to $223,256 through
September 30, 2004.

We plan to continue to spend substantial amounts to fund clinical trials, to
gain regulatory approvals and to continue to expand research and development
activities, particularly for the TriActiv and our biomaterials products. We
believe our current cash and investment balances, in addition to cash generated
from operations, will be sufficient to meet our operating and capital
requirements through at least the next 12 months. Our future capital
requirements and the adequacy of available funds will depend, however, on
numerous factors, including market acceptance of our existing and future
products; the successful commercialization of products in development; progress
in our product development efforts; the magnitude and scope of such efforts;
progress with pre-clinical studies, clinical trials and product clearance by the
FDA and other agencies; the cost and timing of our efforts to expand our
manufacturing capabilities; the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights; competing
technological and market developments; and the development of strategic
alliances for the marketing of certain of our products. There can be no
assurance that we will generate cash from operations in future periods.



                                       16
<PAGE>

The terms of any future equity financing may be dilutive to our stockholders and
the terms of any debt financing may contain restrictive covenants which limit
our ability to pursue certain courses of action. Our ability to obtain financing
is dependent on the status of our future business prospects, as well as
conditions prevailing in the relevant capital markets. No assurance can be given
that any additional financing will be made available to us or will be available
on acceptable terms should such a need arise.

Our estimate of the time periods for which our cash and cash equivalents will be
adequate to fund operations is a forward looking statement within the meaning of
Private Securities Litigation Reform Act of 1995 and is subject to risks and
uncertainties. Actual results may differ materially from those contemplated in
such forward-looking statements. In addition to those described above, factors
which may cause such a difference are set forth below under the caption "Risks
Related to Our Business" as well as under the heading "Risk Factors" in our
annual report on Form 10-K.

ACQUISITION OF THM BIOMEDICAL, INC.

On September 1, 2000, we acquired THM, a developer of porous, biodegradable,
tissue-engineering devices for the repair and replacement of musculoskeletal
tissues, for approximately $10.5 million plus acquisition costs of approximately
$228,000. The transaction was financed with $6.6 million in cash and a note
payable to the former shareholders of THM in the amount of $4.5 million (the
Acquisition Obligation). The Acquisition Obligation was due in equal quarterly
installments of $281,250, which began on December 31, 2000 and end on September
30, 2004. Accordingly, the present value of the cash payments (discounted based
upon our available borrowing rate of 7.5%) of $3.9 million was recorded as a
liability on the Company's financial statements, with a remaining balance of
$1.3 million and $2.3 million at March 31, 2003 and June 30, 2002, respectively.
As of February 28, 2003 we had repaid certain debt holders of THM thereby
reducing our remaining quarterly installments to $223,256 through September
2004.

Since the date of the acquisition, as planned, we have primarily devoted our
development efforts of the acquired PTM technology to an articular cartilage
application, a synthetic vascular graft, and a sustained release
chemotherapeutic drug treatment, and have expended approximately $1,073,000,
$851,000, and $30,000, respectively on such efforts through March 31, 2003. In
addition, we received 510(k) approval for a proprietary PTM based product,
ImproVise(TM), an absorbable cement flow restrictor for use in certain
orthopaedic surgical procedures.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report includes forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934. We have based these forward-looking
statements largely on our current expectations and projections about future
events and trends affecting our business. In this report, the words "believe",
"may", "will", "estimate", "continue", "anticipate", "intend", "expect", "plan"
and similar expressions, as they relate to Kensey Nash, our business or our
management, are intended to identify forward-looking statements, but they are
not exclusive means of identifying them.

A number of risks, uncertainties and other factors could cause our actual
results, performance, financial condition, cash flows, prospects and
opportunities to differ materially from those expressed in, or implied by, the
forward-looking statements. These risks, uncertainties and other factors
include, among other things:

     -    general economic and business conditions, both nationally and in our
          markets;

     -    our expectations and estimates concerning future financial performance
          and financing plans;

     -    the impact of competition;

     -    anticipated trends in our business;

     -    existing and future regulations affecting our business;

     -    strategic alliances and acquisition opportunities; and

     -    other risk factors listed under "Risks Related to Our Business" below.



                                       17
<PAGE>

Except as expressly required by required by the federal securities laws, we
undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise
after the date of this report. Our results of operations in any past period
should not be considered indicative of the results to be expected for future
periods. Fluctuations in operating results may also result in fluctuations in
the price of our common stock.

RISKS RELATED TO OUR BUSINESS

There are many risk factors that could adversely affect our business, operating
results and financial condition. These risk factors, described in detail in our
Annual Report on Form 10-K, include but are not limited to:

-    our ability to successfully commercialize the TriActiv System in the
     European Union;

-    our ability to obtain regulatory approval for the TriActiv System in the
     United States;

-    subsequent to regulatory approval in the U.S., our ability to successfully
     commercialize the TriActiv System;

-    our reliance on revenues from the Angio-Seal product line;

-    the performance of St. Jude Medical as the manufacturer, marketer and
     distributor of the Angio-Seal product;

-    our dependence on the continued growth and success of our biomaterials
     products and customers;

-    our dependence on our biomaterials customers for marketing and obtaining
     regulatory approval for their products;

-    our ability to obtain any additional required funding for future
     development and marketing of the TriActiv System, as well as our
     biomaterials products;

-    the competitive markets for our products and our ability to respond more
     quickly than our competitors to new or emerging technologies and or changes
     in customer requirements;

-    the acceptance of our products by the medical community;

-    our dependence on key vendors and key personnel;

-    the use of hazardous materials which could expose us to future
     environmental liabilities; o our ability to expand our management systems
     and controls to support anticipated growth;

-    dilution of ownership interests of our stockholders by stock issuances in
     future acquisitions or strategic alliances;

-    risks related to our intellectual property, including patent and
     proprietary rights and trademarks; and

-    risks related to our industry, including potential for litigation, ability
     to obtain reimbursement for our products and our products' exposure to
     extensive government regulation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our interest income and expense are sensitive to changes in the general level of
interest rates. In this regard, changes in interest rates affect the interest
earned on our cash, cash equivalents and investments.

Our investment portfolio consists primarily of high quality U.S. government,
municipal and corporate securities and certificates of deposit with maturities
ranging from three to fourteen years. We mitigate default risk by investing in
what we believe are safe and high credit quality securities and by monitoring
the credit rating of investment issuers. The portfolio includes only marketable
securities with secondary or resale markets and there are limitations regarding
duration of investments. These available-for-sale securities are subject to
interest rate risk and decrease in market value if interest rates increase. At
March 31, 2003, our total portfolio consisted of approximately $25.2 million of
investments, with maturities ranging from three to fourteen years. While our
investments may be sold at anytime because the portfolio includes available for
sale marketable securities with secondary or resale markets, we generally hold
securities until the earlier of their call date or their maturity. Therefore, we
do not expect our results of operations or cash flows to be materially impacted
due to a sudden change in interest rates. We had $1.3 million in outstanding
debt at March 31, 2003, related to the acquisition of THM.

ITEM 4. CONTROLS AND PROCEDURES

      (a) Our Chief Executive Officer and the Chief Financial Officer of the
Company (its principal executive officer and principal financial officer,
respectively) have concluded, based on their evaluation as of a date within




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<PAGE>

90 days prior to the date of the filing of this Report, that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in the reports filed or submitted by it
under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms, and include controls and procedures designed to ensure that information
required to be disclosed by the Company in such reports is accumulated and
communicated to the Company's management, including our Chief Executive Officer
and the Chief Financial Officer of the Company, as appropriate to allow timely
decisions regarding required disclosure.

       (b) There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of such evaluation.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We, along with St. Jude Medical, filed a patent infringement suit against
Perclose, Inc., a competitor in the puncture closure market. The original suit,
filed in 1998, along with a subsequent amendment filed in 1999, both filed in
Federal District Court for the Eastern District of Pennsylvania, claim that
Perclose infringes our U.S. patent numbers 5,676,689 and 5,861,004. These
patents cover systems and methods related to sealing percutaneous punctures. We
seek damages and an order to permanently enjoin Perclose from making, using or
selling products that infringe these patents. In November, 1999, Abbott
Laboratories acquired Perclose.

Perclose filed four counterclaims against our suit in answer to the complaint.
The first counterclaim seeks to declare our patents invalid and not infringed.
The additional counterclaims asserted by Perclose allege that our claims are
frivolous and assert various antitrust counter-claims, including price
discrimination, predatory pricing and attempted monopolization of the puncture
closure market.

The U.S. District Court, Eastern District of Pennsylvania, entered a Markman
hearing Order regarding claims interpretation, in favor of the defendant
Perclose. The judge denied our Motion for Reconsideration on August 21, 2001,
and the parties stipulated a Final Judgement, which was entered on October 19,
2001. On November 15, 2001, we filed a timely Notice of Appeal, thereby
initiating an appeal in the Court of Appeals for the Federal circuit (CAFC).
Oral arguments were heard on December 3, 2002. On February 5, 2003 the CAFC
issued its opinion in which it affirmed the District Court's decision. We are
not appealing the decision and, therefore, the case is concluded. The Company
has expensed legal costs, as a component of selling, general and administrative
expenses, as services have been incurred. No further expenses are anticipated.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

A.   Exhibits.

     99.1   Certification of Chief Executive Officer pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.

     99.2   Certification of Chief Financial Officer pursuant to Section 906 of
            the Sarbanes-Oxley Act of 2002.


B.   Reports on Form 8-K.

     1.     Kensey Nash Corporation filed a Form 8-K on April 16, 2003 to
            furnish its press release announcing its results of operations and
            financial position as of and for the three and nine month periods
            ended March 31, 2003 (Form 8-K Items 7 and 9 - Information furnished
            in Item 9 deemed furnished under Item 12).



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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.

KENSEY NASH CORPORATION

Date: May 15, 2003                                By: /s/ Wendy F. DiCicco
                                                     ---------------------------
                                                     Wendy F. DiCicco
                                                     Chief Financial Officer




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<PAGE>


                                 CERTIFICATIONS

I, Joseph W. Kaufmann, certify that:

    1. I have reviewed this quarterly report on Form 10-Q of Kensey Nash
    Corporation;

    2. Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this quarterly report;

    3. Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

    4. The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

        a)  designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

        b)  evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

        c)  presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

    5. The registrant's other certifying officer and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent function):

        a)  all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

        b)  any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

    6. The registrant's other certifying officer and I have indicated in this
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.

Dated: May 15, 2003

                                          /s/ Joseph W. Kaufmann
                                          --------------------------------------
                                          Joseph W. Kaufmann
                                          Chief Executive Officer,
                                          President and Secretary


                                       21
<PAGE>



    I, Wendy F. DiCicco, certify that:

    1. I have reviewed this quarterly report on Form 10-Q of Kensey Nash
    Corporation;

    2. Based on my knowledge, this quarterly report does not contain any untrue
    statement of a material fact or omit to state a material fact necessary to
    make the statements made, in light of the circumstances under which such
    statements were made, not misleading with respect to the period covered by
    this quarterly report;

    3. Based on my knowledge, the financial statements, and other financial
    information included in this quarterly report, fairly present in all
    material respects the financial condition, results of operations and cash
    flows of the registrant as of, and for, the periods presented in this
    quarterly report;

    4. The registrant's other certifying officer and I are responsible for
    establishing and maintaining disclosure controls and procedures (as defined
    in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

        a)  designed such disclosure controls and procedures to ensure that
            material information relating to the registrant, including its
            consolidated subsidiaries, is made known to us by others within
            those entities, particularly during the period in which this
            quarterly report is being prepared;

        b)  evaluated the effectiveness of the registrant's disclosure controls
            and procedures as of a date within 90 days prior to the filing date
            of this quarterly report (the "Evaluation Date"); and

        c)  presented in this quarterly report our conclusions about the
            effectiveness of the disclosure controls and procedures based on our
            evaluation as of the Evaluation Date;

    5. The registrant's other certifying officer and I have disclosed, based on
    our most recent evaluation, to the registrant's auditors and the audit
    committee of registrant's board of directors (or persons performing the
    equivalent function):

        a)  all significant deficiencies in the design or operation of internal
            controls which could adversely affect the registrant's ability to
            record, process, summarize and report financial data and have
            identified for the registrant's auditors any material weaknesses in
            internal controls; and

        b)  any fraud, whether or not material, that involves management or
            other employees who have a significant role in the registrant's
            internal controls; and

    6. The registrant's other certifying officer and I have indicated in this
    quarterly report whether or not there were significant changes in internal
    controls or in other factors that could significantly affect internal
    controls subsequent to the date of our most recent evaluation, including any
    corrective actions with regard to significant deficiencies and material
    weaknesses.


Dated: May 15, 2003
                                          /s/ Wendy F. DiCicco, CPA
                                          --------------------------------------
                                          Wendy F. DiCicco, CPA
                                          Chief Financial Officer




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