<PAGE>   1
                                 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: DECEMBER 31, 1996

                                       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,
                     SUITE 204, 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     
                                              ---    ---
     As of January 31, 1997, there were outstanding 7,197,938 shares of Common
Stock, par value $.001, of the registrant.






                                       1




<PAGE>   2


                            KENSEY NASH CORPORATION

                        QUARTER ENDED DECEMBER 31, 1996



                                     INDEX

                                                                            



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

                   ITEM 1. FINANCIAL STATEMENTS
                           Condensed Consolidated Balance Sheets
                            as of December 31, 1996  (Unaudited) and June 30, 1996 ...........    3

                           Condensed Consolidated Statements of Operations
                            for the three months and six months ended
                            December 31, 1996 and 1995 (Unaudited) ...........................    4

                           Condensed Consolidated Statements of Cash Flows
                            for the six months ended December 31, 1996 and 1995 (Unaudited) ..    5

                           Notes to Condensed Consolidated Financial Statements (Unaudited) ..    6

                   ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                           FINANCIAL CONDITION AND RESULTS OF OPERATIONS .....................    9


PART II - OTHER INFORMATION

                   ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS ...............   13

                   ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ..................................   13

SIGNATURES ...................................................................................   14
</TABLE>

                                       2




<PAGE>   3

ITEM 1.         FINANCIAL STATEMENTS


                         PART I - FINANCIAL INFORMATION

                           KENSEY NASH CORPORATION
                    CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,      JUNE 30,
                                                                                           1996            1996
                                                                                       ------------     ----------
                                                                                        (UNAUDITED)
<S>                                                                                     <C>            <C>
ASSETS
Current assets:
 Cash and cash equivalents.........................................................     $ 4,808,581     $ 4,549,707
 Short-term investments............................................................       3,692,325       7,184,244
 Trade receivables.................................................................       1,163,862         914,502
 Other receivables (including approximately $27,000 and $21,000 at December 31,
  1996 and June 30, 1996, respectively, due from employees) (Note 6)...............         169,767       1,017,811
 Inventory.........................................................................         641,909         412,843
 Prepaid expenses, accrued interest and other......................................         384,926         259,906
                                                                                         ----------      ----------
  Total current assets.............................................................      10,861,370      14,339,013                 
                                                                                         ----------      ----------
Property, plant and equipment, at cost:                                                 
 Leasehold improvements............................................................       2,178,578       1,828,106
 Machinery, furniture and equipment................................................       2,426,710       1,878,993
                                                                                         ----------      ----------
  Total............................................................................       4,605,288       3,707,099
 Accumulated depreciation..........................................................      (1,644,952)     (1,344,329)
                                                                                         ----------      ----------
  Net property, plant and equipment................................................       2,960,336       2,362,770
                                                                                         ----------      ----------
Other assets:
 Restricted investments (Note 5)...................................................       2,917,539       2,917,539
 Leased property under capital leases, less accumulated amortization of $91,195 and
  $102,692 at December 31, 1996 and June 30, 1996, respectively....................         126,329         112,047
 Noncompete agreement, less accumulated amortization of $98,353 and $88,351 at
  December 31, 1996 and June 30, 1996, respectively................................           1,647          11,649
                                                                                         ----------      ----------
  Total other assets...............................................................       3,045,515       3,041,235
                                                                                         ----------      ----------
Total..............................................................................     $16,867,221     $19,743,018
                                                                                         ==========      ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable..................................................................     $   356,874     $   839,437
 Accrued expenses..................................................................         214,640         400,813
 Current portion of long-term debt and line of credit (Note 4).....................          22,604       6,356,824
 Current portion of capital lease obligations......................................          47,425          43,807
 Deferred revenue..................................................................           3,750          20,000
                                                                                         ----------      ----------
  Total current liabilities........................................................         645,293       7,660,881
                                                                                         ----------      ----------
Deferred revenue (Note 2) .........................................................       2,959,068
Obligations under capital leases...................................................          92,265          81,348
Long term debt.....................................................................          77,396
                                                                                         ----------      ----------
  Total liabilities................................................................       3,774,022       7,742,229
                                                                                         ----------      ----------

Commitments and Contingencies (Note 5)
Stockholders' equity:
 Preferred stock, $.001 par value, 100,000 shares authorized, no shares issued or
  outstanding at December 31, 1996 and June 30, 1996...............................  
 Common stock, $.001 par value, 25,000,000 shares authorized,  7,197,782 and
  7,156,493 shares issued and outstanding at December 31, 1996 and June 30, 1996,
  respectively.....................................................................           7,198           7,156
Capital in excess of par value.....................................................      34,189,640      33,815,216
Accumulated deficit................................................................     (21,103,639)    (21,821,583)
                                                                                         ----------      ----------
 Total stockholders' equity........................................................      13,093,199      12,000,789
                                                                                         ----------      ----------
Total..............................................................................     $16,867,221     $19,743,018
                                                                                         ==========      ==========
</TABLE>

See notes to condensed consolidated financial statements.



                                       3







<PAGE>   4



                            KENSEY NASH CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

                                  (UNAUDITED)




<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED           SIX MONTHS ENDED               
                                                              DECEMBER 31,                 DECEMBER 31,
                                                        ------------------------------------------------------
                                                           1996           1995         1996          1995
                                                        ---------       -------      --------       -------
<S>                                                  <C>              <C>            <C>          <C>
Revenues:
 Net sales.......................................      $  888,409     $   375,532    $1,492,155    $   778,481
 Research and development........................         742,109         551,917     1,361,472        882,028
 Milestone fees..................................                                     1,050,000
 Royalty income..................................          81,864          37,129       136,864         70,560
                                                        ---------       ---------     ---------      ---------
  Total revenues.................................       1,712,382         964,578     4,040,491      1,731,069
                                                        ---------       ---------     ---------      ---------
Operating costs and expenses:                        
 Cost of products sold...........................         711,515         489,915     1,278,756        964,090
 Research and development........................       1,110,596         834,323     2,201,281      1,747,251
 Selling, general and administrative.............         517,242         627,365       973,775      1,278,231
 Deferred compensation, officers and directors...                         898,617                    1,493,576
                                                         ---------       ---------     ---------      ---------
  Total operating costs and expenses.............       2,339,353       2,850,220     4,453,812      5,483,148
                                                         ---------       ---------     ---------      ---------
Loss from operations.............................        (626,971)     (1,885,642)     (413,321)    (3,752,079)
                                                         ---------       ---------     ---------      ---------
Other income (expense):                              
 Interest expense................................          (1,099)       (313,728)     (172,851)      (644,756)
 Interest income.................................         149,179          31,814       327,336         33,675
 Insurance settlement............................         968,761                       968,761
 Other...........................................           7,359            (276)        8,017         21,284
                                                        ---------       ---------     ---------      ---------
  Total other income (expense) --net.............       1,124,200        (282,190)    1,131,263       (589,797)
                                                        ---------       ---------     ---------      ---------
Net income (loss)................................      $  497,229     $(2,167,832)   $  717,942    $(4,341,876)
                                                        =========       =========     =========      =========
Earnings (loss) per common share.................           $0.07          $(0.44)        $0.10         $(0.92)
                                                        =========       =========     =========      =========
Weighted average common shares outstanding.......       7,360,023       4,976,665     7,329,733      4,711,551
                                                        =========       =========     =========      =========
</TABLE>

See notes to condensed consolidated financial statements.

                                       4




<PAGE>   5


                            KENSEY NASH CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

                                  (UNAUDITED)



<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED
                                                                          DECEMBER 31,
                                                                       ---------------------
                                                                         1996          1995
                                                                       ---------     -------
<S>                                                                <C>              <C>

Operating activities:
 Net income (loss).............................................    $    717,942     $ (4,341,876)
 Adjustments to reconcile net loss to net cash
 used in operating activities:
  Depreciation and amortization................................         335,698          194,413
  Loss on sale of property, plant and equipment................                            3,999
  Deferred compensation........................................                        1,728,110
  Interest expense not requiring cash..........................                          306,477
 Changes in assets and liabilities which provided (used) cash:
  Accounts receivable..........................................         598,684         (500,088)
  Prepaid expenses, accrued interest and other current assets..        (125,020)         (22,528)
  Inventory....................................................        (229,066)          82,495
  Accounts payable and accrued expenses........................        (668,736)        (263,978)
  Increase in deferred revenue accounts........................       2,942,818
                                                                     ----------       ----------
Net cash provided (used) in operating activities...............       3,572,320       (2,812,976)
                                                                     ----------       ----------
Investing activities:
  Sale (purchase) of investments...............................       3,491,919       (9,914,160)
  Additions to property, plant and equipment...................        (898,189)
                                                                     ----------       ----------
Net cash provided by (used in) investing activities............       2,593,730       (9,914,160)
                                                                     ----------       ----------
Financing activities:
  Principal payments under capital leases......................         (24,818)         (28,000)
  Proceeds from long-term debt.................................         100,000        
  Repayments of long-term debt.................................      (6,356,824)      (6,744,124)
  Proceeds from line of credit.................................                        1,037,327
  Net advance borrowings and repayments........................                          181,336
  Proceeds from issuance of common stock.......................         374,466       29,127,474
                                                                     ----------       ----------
Net cash (used in) provided by financing activities............      (5,907,176)      23,574,013
                                                                     ----------       ----------
Increase in cash and cash equivalents..........................         258,874       10,846,877
Cash and cash equivalents, beginning of period.................       4,549,707            7,866
                                                                     ----------       ----------
Cash and cash equivalents, end of period.......................    $  4,808,581     $ 10,854,743
                                                                     ==========       ==========
Supplemental disclosure of cash flow information:
  Cash paid during the period for interest.....................    $    178,851     $  2,749,676
                                                                     ==========       ==========
</TABLE>

See notes to condensed consolidated financial statements.

                                       5



<PAGE>   6


                            KENSEY NASH CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                                  (UNAUDITED)

NOTE 1 --CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

     BASIS OF PRESENTATION

      The condensed consolidated balance sheet at June 30, 1996 has been
      condensed from the audited balance sheet at that date.  The condensed
      consolidated balance sheet at December 31, 1996, the condensed
      consolidated statements of operations for the three months and the six
      months ended December 31, 1996 and 1995 and the condensed consolidated
      statements of cash flows for the six months ended December 31, 1996 and
      1995 have been prepared by Kensey Nash Corporation (the "Company") and
      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, results of operations and cash flows at December 31, 1996 and
      for all periods presented have been made.

      Certain information and note disclosures normally included in the
      Company's annual financial statements prepared in accordance with
      generally accepted accounting principles have been condensed or omitted.
      These condensed consolidated financial statements should be read in
      conjunction with the financial statements and notes thereto included in
      the Company's June 30, 1996 consolidated financial statements filed with
      the Securities and Exchange Commission on Form 10-K.  The results of
      operations for the period ended December 31, 1996 are not necessarily
      indicative of operating results for the full year.

      NET INCOME (LOSS) PER SHARE
      For the three months and the six months ended December 31, 1996, net
      income per share is computed using the weighted average number of shares
      of common stock outstanding.  Common equivalent shares from options are
      included in the computation (using the treasury stock method) when their
      effect is dilutive.  For the three months and the six months ended
      December 31, 1995 the weighted average common shares outstanding have
      been increased by 446,437 shares which is the number of Common Stock
      equivalents issued within one year of the Company's public offering, with
      exercise or issue prices below the initial public offering price.

      STATEMENT OF CASH FLOWS
      For purposes of reporting cash flows, all highly liquid investments with
      original maturities of three months or less are considered cash
      equivalents.

      INVESTMENTS
      Investments at December 31, 1996 and June 30, 1996 consist of short-term
      Certificates of Deposit and U.S. Treasury Bills.  Such investments have
      been classified as available for sale securities except for those pledged
      as collateral which are included in restricted investments (see Note 5).
      As of December 31, 1996 and June 30, 1996, the fair market value of all
      investments approximates original cost.

      NEW ACCOUNTING PRONOUNCEMENTS
      Effective July 1, 1996, the Company formally adopted Statement of
      Financial Accounting Standards ("SFAS") No. 121. "Accounting for the
      Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
      Of".  This statement requires that long-lived assets be reviewed for
      impairment whenever events or changes in circumstances indicate that the
      carrying amount of an asset may not be recoverable.  The resultant
      impairment, if any, is measured based on the fair value of the asset.
      The adoption of SFAS No. 121 did not have a material impact on the
      Company.

                                       6



 
<PAGE>   7



      Effective July 1, 1996, the Company formally adopted SFAS No. 123,
      "Accounting for Stock-based Compensation Plans."  The Company will adopt
      this statement by disclosing the proforma net income and net earnings per
      share amounts assuming the fair value method in the fiscal year end 1997
      financial statements, as required.  As a result, the adoption of this
      statement will not have any impact on reported results of operations and
      financial position.

NOTE 2 -- ANGIO-SEAL PRE-MARKET APPROVAL

      On September 30, 1996, the Company received pre-market approval for the 8
      French ("F") size Angio-Seal device (the "Angio-Seal") from the Food and
      Drug Administration (the "FDA").  Under the Company's licensing agreement
      (the "Licensing Agreement") with American Home Products ("AHP"), a
      milestone fee of $1,050,000 was earned upon receipt of FDA approval.
      Also under the Licensing Agreement, the Company received a $3,000,000
      advance on future royalties. Royalties are credited 50% against the
      advance as earned.  Accordingly, the advance (less 50% of royalties
      earned subsequent to FDA approval) has been recorded as deferred revenue
      of $2,959,068 by the Company at December 31, 1996.


NOTE 3 -- INVENTORY

      Inventory primarily includes the cost of material utilized in the
      processing of the Company's products.  Inventory is as follows:



<TABLE>
<S>              <C>                <C>
                      DECEMBER 31, 1996   JUNE 30, 1996
                      -----------------   -------------
Raw Materials             $597,880          $394,043
Work in Process             44,029            18,800
                          --------          --------
Total                     $641,909          $412,843
                          ========          ========
</TABLE>

NOTE 4 -- LINE OF CREDIT AND LONG TERM DEBT

      At June 30, 1996, the amount available under the Company's credit
      agreement with AHP (the "Credit Agreement") was $5,000,000.  Debt
      outstanding under the Credit Agreement included accrued interest of
      $1,356,824 at June 30, 1996.  Interest accrued at a rate of prime plus 2%
      (10.25% at June 30, 1996) and was payable at maturity.  Loans made under
      this facility matured at the earlier of receipt of pre-market approval
      for the Angio-Seal from the FDA or December 31, 1996, and were therefore
      classified as a current obligation at June 30, 1996.  Under the terms of
      the Credit Agreement, AHP could offset fiscal 1997 milestones and
      advances against amounts due under the Credit Agreement at maturity.


      Upon FDA approval for the Angio-Seal on September 30, 1996, the balance
      outstanding under the Credit Agreement, including principal and interest,
      was $6,517,348. The Company repaid such amount, net of the milestone and
      royalty offset of $4,050,000, in October 1996.  There are no further
      amounts available or due under the Credit Agreement.


      In October 1996, the Company entered into a $100,000 revolving credit and
      term loan agreement (the "Agreement") bearing  interest at a fixed rate
      of 8.75%.  Under the terms of the Agreement the Company may borrow up to
      $100,000 for the acquisition of capital equipment.  On March 1, 1997, the
      line of credit converts to a term loan due in 36 monthly installments of
      principal and interest.  The Agreement is collateralized by a first
      security interest in the equipment purchased with the proceeds.  At
      December 31, 1996, the Company had borrowed $100,000 under the Agreement.



                                       7




<PAGE>   8



NOTE 5 -- COMMITMENTS AND CONTINGENCIES

      The Company entered into an agreement whereby the Company pledged
      $2,917,539 in investments as collateral to secure certain bank loans to
      employees which were used by such employees for the payment of taxes
      incurred by such employees as the result of the receipt of Common Stock
      in settlement of the Employee Stock Rights.  In exchange for the Company
      pledging collateral for such loans, each affected employee has pledged
      their Common Stock as collateral to the Company.  The balance outstanding
      on such employee loans was $2,143,266 at December 31, 1996.

NOTE 6 -- MAJOR DAMAGE TO FACILITY

      On January 8, 1996, the Company's facility sustained significant damage
      from a roof collapse resulting from a major snowstorm.  The production of
      the Company's products was halted until the destroyed facilities could be 
      reconstructed.  Construction was completed in late March 1996 and
      production resumed at such time.  The Company maintains insurance for
      both property damage and business interruption.  The policy providing the
      coverage is subject to a $1,000 deductible. Under the property damage
      portion of the policy, the Company recovered $1,186,619 as final
      settlement for property damage in fiscal year 1996. Of this amount,
      $500,000 was received during fiscal year 1996 and  the remaining $686,619
      recorded as a component of other receivables at June 30, 1996 and
      received in July 1996.

      Under the business interruption portion of the policy, the Company
      recovered $1,309,882 as final settlement for loss of earnings in December
      1996.  Of this amount, $287,742 representing incurred continuing fixed
      payroll costs and related benefits, which were covered expenses under the
      policy, had been recorded as a component of other receivables at June 30,
      1996.  The related cost of products sold, selling, general and
      administrative expense and research and development expense was offset in
      the consolidated statements of operations at June 30, 1996.  The
      remainder of the settlement, net of related fees, has been recorded as a
      separate component of other income at December 31, 1996.


NOTE 7 -- INCOME TAXES

      As of June 30, 1996, the Company had net operating loss carryforwards
      for federal and state tax purposes totaling $17.2 and $1 million,
      respectively.  As such, no provision has been made for income taxes for
      the six months ended December 31, 1996.

                                       8



<PAGE>   9



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

         OVERVIEW



     The Company designs, develops and manufactures a proprietary line of
absorbable medical devices for the sealing of arterial punctures created during
diagnostic and therapeutic cardiovascular procedures such as angiography,
angioplasty, atherectomy and the placement of stents.  The Company's
proprietary principal product, the Angio-Seal, has been designed to provide a
safe, effective and rapid method of sealing arterial punctures.  The Company's
goal is to replace the current standard of care, manual compression, with the
Angio-Seal by introducing a device which allows for faster treatment, reduced
procedure cost and increased patient comfort.  The time required for manual
pressure generally ranges from 10 to 30 minutes and in some instances several
hours.  The Angio-Seal is designed to take a trained physician less than two
minutes to place and eliminate the need for manual pressure following the
procedure.  The Company is developing other sizes of the Angio-Seal, including
6F and 10F sizes (together with Angio-Seal, the "Angio-Seal Product Line"), to
address broader market applications.  In addition to the Angio-Seal Product
Line, the Company manufactures its proprietary collagen for use by third
parties, and is developing additional products related to its puncture closure
technology, including the Laparo-Seal, a device for closing punctures from
laparoscopic surgery, and a rotary catheter for application in opening occluded
bypass grafts.


     The Company has a strategic relationship with AHP whereby AHP will
manufacture and market the Angio-Seal Product Line worldwide.  The 8F
Angio-Seal was approved for sale in Europe (CE Mark) in September 1995 and in
the United States in September 1996.  The Angio-Seal is also approved for sale
in Canada and Australia.


   THREE MONTHS ENDED DECEMBER 31, 1996 COMPARED TO THREE MONTHS ENDED
   DECEMBER  31, 1995


     Revenues for these periods consisted of net sales, research and
development revenue, milestone fees and royalty income.  Revenues increased 78%
to $1,712,000 in the three months ended December 31, 1996 from $965,000 in the
three months ended December 31, 1995.  Net sales of products increased 137% to
$888,000 from $376,000 for the three months ended December 31, 1996 and 1995,
respectively.  Research and development revenues increased 34% to $742,000 from
$552,000 for the three months ended December 31, 1996 and 1995, respectively.
The increase in net sales was mainly attributable to the increased demand for
the Angio-Seal in Europe and increased clinical and marketing device
requirements.  The increase in research and development revenues relates to
increased activity in contract research and development revenue from AHP for
the clinical trial program and for additional sizes of and product enhancements
to the Angio-Seal Product Line.  Royalty income increased 120% to $82,000 from
$37,000 in the three months ended December 31, 1996 and 1995, respectively.
This increase reflects a greater number of units sold in the European market
versus the same quarter a year earlier as well initial sales in the U.S. market
due to the receipt of FDA approval on September 30 1996.   As the Company and
AHP increase production and continue to introduce the Angio-Seal in Europe and
in the United States, the Company expects royalty income to become a
significant source of revenue.  Royalty rates are based on volume of units sold
and are comparable in both the domestic and foreign licensing agreements with
AHP.

     Cost of products sold increased 45% to $712,000 in the three months ended
December 31, 1996 from $490,000 in the three months ended December  31, 1995.
This increase reflects greater net sales of products offset by manufacturing
efficiencies realized as production levels rise.


                                       9




<PAGE>   10


     Research and development expense, including regulatory and clinical
expense, increased 33% to $1,111,000 in the three months ended December 31,
1996 from $834,000 in the three months ended December 31, 1995.  This increase
was primarily due to an increase in personnel costs and outside expenses in
conjunction with the development of the Angio-Seal Product Line, Laparo-Seal
and rotary technology.  The Company expects research and development expense to
continue at recent levels as it develops additional sizes of the Angio-Seal,
investigates and develops new products, conducts clinical trials, seeks
regulatory approval for its products and implements manufacturing improvements
related to the collagen business.

     Selling, general and administrative expense decreased 18% to $517,000
in the three months ended December 31, 1996 from $627,000 in the three months
ended December 31, 1995.  This decrease was primarily due to the recording of
deferred compensation for employees other than officers and directors of
$291,000 in the quarter ended December 31, 1995 offset by investor relation
and regulatory reporting expenses, related to being a publicly held company,
incurred in the three months ended December 31, 1996. Since the Company's
initial public offering (the "IPO") in December 1995, no deferred compensation
expense has been incurred.

     Deferred compensation expense, officers and directors, of $899,000 in the
three months ended December 31, 1995 resulted from the recording of deferred
compensation prior to the IPO.

     Interest expense significantly decreased to $1,000 in the three months
ended December 31, 1996 from $314,000 in the three months ended December 31,
1995.  This decrease was due to the repayment of certain investor notes with
the proceeds of the IPO in December 1995 as well as the repayment of the Credit
Agreement in October 1996 following receipt of FDA approval. Interest income
increased to $149,000 in the three months ended December 31, 1996 from $32,000
in the three months ended December 31, 1995.  The three months ended December
31, 1996 reflects interest earned on the cash equivalents and investments
purchased with the proceeds of the IPO.

      During the three months ended December 31, 1996, the Company received
$1,310,000 in final settlement of the business interruption portion of their
insurance claim, of which $969,000 was recorded as other income.

     SIX MONTHS ENDED DECEMBER 31, 1996 COMPARED TO SIX MONTHS ENDED 
     DECEMBER  31, 1995


     Revenues for these periods consisted of net sales, research and
development revenue, milestone fees and royalty income.  Revenues increased
133% to $4,040,000 in the six months ended December 31, 1996 from $1,731,000 in
the six months ended December 31, 1995.  Net sales of products increased 92% to
$1,492,000 from $778,000 for the six months ended December 31, 1996 and 1995,
respectively.  Research and development revenues increased 54% to $1,361,000
from $882,000 for the six months ended December 31, 1996 and 1995,
respectively.  The increase in net sales was mainly attributable to the
increased demand for the Angio-Seal in Europe and increased clinical device and
marketing device requirements.  The increase in research and development
revenues relates to increased activity in contract research and development
from AHP for the clinical trial program and for additional sizes of and product
enhancements to the Angio-Seal Product Line.  The $1.05 million milestone fee
in the six months ended December 31, 1996 represents the final milestone under
the License Agreement with AHP which was earned by the Company upon receipt of
FDA pre-market approval.  Royalty income increased 94% to $137,000 from $71,000
in the six months ended December 31, 1996 and 1995, respectively.  This
increase reflects initial Angio-Seal sales in the U.S. market, following FDA
approval, as well as a greater number of units sold in the European market
versus the same period a year earlier.   As the Company and AHP increase
production and continue to introduce the Angio-Seal in Europe and in the United
States, the Company expects royalty income to become a significant source of
revenue.  Royalty rates are based on volume of units sold and are comparable in
both the domestic and foreign licensing agreements with AHP.

     Cost of products sold increased 33% to $1,279,000 in the six months ended
December 31, 1996 from $964,000 in the six months ended December 31, 1995.
This increase reflects greater net sales of products offset by manufacturing
efficiencies realized as production levels rise.


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<PAGE>   11


     Research and development expense, including regulatory and clinical
expense, increased 26% to $2,201,000 in the six months ended December 31, 1996
from $1,747,000 in the six months ended December 31, 1995.  This increase was
primarily due to an increase in personnel costs and outside expenses in
conjunction with the development of the Angio-Seal Product Line, Laparo-Seal
and rotary technology.  The Company expects research and development expense to
continue at recent levels as it develops additional sizes of the Angio-Seal,
investigates and develops new products, conducts clinical trials, seeks
regulatory approval for its products and implements manufacturing improvements
related to the collagen business.

        Selling, general and administrative expense decreased 24% to $974,000
in the six months ended December 31, 1996 from $1,278,000 in the six months
ended December 31, 1995.  This decrease was primarily due to the recording of
deferred compensation for employees other than officers and directors of
$589,000 in the six months ended December 31, 1995 offset by investor relation
and regulatory reporting expenses, incurred in relation to being a publicly
held company, in the six months ended December 31, 1996.  Since the Company's
IPO in December 1995, no deferred compensation expense has been incurred.

     Deferred compensation expense, officers and directors, of $1,494,000 in
the six months ended December 31, 1995 resulted from the recording of deferred
compensation prior to the IPO.

     Interest expense decreased 73% to $173,000 in the six months ended
December 31, 1996 from $645,000 in the six months ended December 31, 1995.
This decrease was due to the repayment of the  Credit Agreement in October 1996
in connection with receipt of  FDA approval of the Angio-Seal as well as the
repayment of certain investor notes with the proceeds of the IPO in December
1995.   Interest income increased to $327,000 in the six months ended December
31, 1996 from $34,000 in the six months ended December 31, 1995.  The six
months ended December 31, 1996 reflects interest earned on the cash equivalents
and investments purchased with the proceeds of the IPO.

     During the six months ended December 31, 1996, the Company received
$1,310,000 in final settlement of the business interruption portion of their
insurance claim, of which $969,000 was recorded as other income.

     LIQUIDITY AND CAPITAL RESOURCES

     The Company has financed its operations since inception through the sale
of equity securities, licensing of technology, research and development
arrangements, debt and product sales.  On December 13, 1995, the Company
completed the IPO, issuing 2.7 million shares of Common Stock at $12.00 per
share, resulting in approximately $29.1 million in net proceeds to the Company.
The proceeds have been and are being used primarily for research and
development, including clinical trials; expansion of the Company's
manufacturing capabilities; repayment of certain indebtedness; and working
capital and general corporate purposes.

     Net cash provided by the Company's operating activities during the six
months ended December 31, 1996 was $3,572,000 compared to a use of $2,813,000
for the six months  ended December 31, 1995.  This fluctuation was primarily
due to the recording of deferred revenue in conjunction with the receipt of
$3,000,000 in advance royalties from AHP in October 1996 as well as net income
of  $718,000 for the period ended December 31, 1996 compared to a net loss of
$4,342,000 for the period ending December 31, 1995.  The net loss for the
period ended December 31, 1995 was significantly offset by non-cash adjustments
for deferred compensation and interest expense.  Changes in asset and liability
balances for the six months ended December 31, 1996 (excluding the deferred
revenue change) resulted in a $424,000 use of cash in operating activities
offset by $336,000 of non-cash adjustments for depreciation and interest
expense.

     Capital expenditures were $898,000 for the six months ended December 31,
1996, $489,000 of which related to reconstruction and expansion of the
Company's facility.  The remaining capital expenditures related to the
expansion of the Company's manufacturing capabilities.

     The Company's cash, cash equivalents and short-term investments were
$8,501,000 at December 31, 1996.  In addition, the Company has pledged
$2,918,000 in investments (not included in the $8,501,000) as collateral to
secure bank loans made to employees for the payment of taxes incurred by


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<PAGE>   12


such employees as a result of their receipt of Common Stock in settlement of
the Employee Stock Rights at the time of the IPO.  In exchange for the
Company's pledging this collateral, the employees have pledged their Common
Stock as collateral to the Company.

     The Company repaid $6,517,000 of debt and accrued interest outstanding
under the AHP Credit Agreement in October 1996.  The debt matured upon FDA
pre-market approval of the Angio-Seal which was received on September 30, 1996.
The FDA approval  required AHP to pay the Company a total of $4,050,000 (a
$1,050,000 milestone fee earned upon approval and a $3,000,000 royalty
advance).  The Company used the milestone fee, royalty advance and cash on hand
to repay the Credit Agreement balance.

     The Company anticipates that its results of operations will fluctuate for
the foreseeable future due to a number of factors.  Such factors include AHP's
performance in the marketing, manufacturing and distribution of the Angio-Seal
Product Line, the timing of future regulatory approvals in the United States
and in countries outside of Europe including Japan, the results of ongoing and
planned clinical trials for the Angio-Seal and other products, the acceptance
of the Company's products in the marketplace and competitive products generally
and in particular those designed for the sealing of arterial site punctures.

     The Company plans to continue to expend substantial resources in funding
clinical trials to gain regulatory approvals, make additional marketing claims
and continue to expand research and development activities for the Angio-Seal,
Laparo-Seal, rotary technology and biomaterials products.

     The Company believes the IPO proceeds combined with cash generated from
operations will be sufficient to meet the Company's operating and capital
requirements for at least the next twelve months.

     SUBSEQUENT EVENT

     The Company announced on January 27, 1997 a voluntary recall by
Sherwood-DaviS & Geck, a subsidiary of AHP, of six Angio-Seal lots distributed
in the United States and three Angio-Seal lots distributed in Europe. Kensey
Nash believes that this recall will involve less than 1,000 devices. 

     This action was taken because the companies have identified a potential
for a very low incidence of damage to a component of the Angio-Seal device
during the assembly process at the manufacturing facility of Sherwood-Davis &
Geck's affiliate, Quinton Instrument Company.  This potential damage may result
in an unexpected break of the suture during product use. Modification of the
manufacturing process is being implemented to correct the problem and the FDA
as well as the appropriate international regulatory authorities have been
notified.

     It is expected the new supplies of the Angio-Seal device will be
available in the United States by March 31, 1996. International product supply
should not be affected by this recall, as the majority of this product is
manufactured by Kensey Nash, with final assembly at the Sherwood-Davis & Geck
Tullamore, Ireland facility.  In addition, clinical trials will not be affected
as those devices are also manufactured by Kensey Nash.

     Statements contained in this Form 10-Q that are not historical facts are
forward-looking statements that are made pursuant to the Safe Harbor provisions
of the Private Securities Litigation Reform Act of 1995.  The Company cautions
that a number of important factors could cause the Company's actual results for
fiscal 1997 and beyond to differ materially from those in any forward-looking
statements made by, or on behalf of, the Company.  These important factors
include, without limitation, the time, effort and priority level that AHP
attaches to the Angio-Seal and AHP's ability to successfully market and
manufacture the Angio-Seal, the Company's ability to manufacture Angio-Seal
components, timing of future FDA approvals, announcements of technological
innovations or the introduction of new products by the Company or its
competitors, competition by rival developers of puncture closure devices,
general business conditions in the healthcare industry and general economic
conditions. 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 the Common
Stock.


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<PAGE>   13


                          PART II - OTHER INFORMATION

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

     a)   Kensey Nash Corporation annual meeting was held on December 4, 1996.

     b)   Proxies were solicited by Kensey Nash Corporation and there was no
          solicitation in opposition to the nominees listed in the proxy
          statement.  All such nominees were elected as recommended in the
          proxy statement pursuant to the vote of the stockholders as follows:  

                                      For        Withheld
                                      ---        --------
          Douglas G. Evans         5,569,639      4,788
          Walter R. Maupay, Jr.    5,569,449      4,978

     c)   The First Amended and Restated Employee Incentive Compensation Plan 
          was approved by a vote of:

                For        5,163,030
                Against      303,039
                Abstain        2,850

     d)   The First Amended and Restated Nonemployee Directors' Stock Option 
          Plan was approved by a vote of:

                For        5,391,044
                Against       48,591
                Abstain        5,700

     e)   Deloitte & Touche LLP were ratified as independent auditors of the
          Company's financial statements by a vote of:

                For        5,567,208
                Against        2,699
                Abstain        4,520


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

     A. Exhibits.

        None

     B. Reports on Form 8-K.

        None

    C.  Financial Data Schedule


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<PAGE>   14


                                   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:  February 14, 1997        By: /s/ Joseph W. Kaufmann
                                    --------------------------------------
                                    Joseph W. Kaufmann
                                    President, Chief Executive Officer and
                                    Chief Financial Officer





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