<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

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

                  For the quarterly period ended March 31, 1998

                         Commission File Number 0-19841

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

Delaware                                               22-2542664
(State or other jurisdiction of                        (I.R.S. employer
incorporation or organization)                         Identification No.)

303 College Road East, Princeton, New Jersey           08540
(Address of Principal Executive Offices)               (Zip Code)

                                 (609) 243-9300
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

      Yes    /X/                                         No / /

The number of shares outstanding of each of the Issuer's classes of common stock
as of the latest practicable date.

<TABLE>
<CAPTION>
Class                                                     April 29, 1998

<S>                                                      <C>
Common Stock, $ .15 par value                             13,223,710
</TABLE>
<PAGE>   2
                               i-STAT CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                      PAGE
                                                                                      NUMBER
                                                                                      ------

<S>                                                                                  <C>
PART I   FINANCIAL INFORMATION

         ITEM 1 - Financial Statements

         Consolidated Condensed Statements of Operations and Comprehensive Income
            for the three months ended March 31, 1998 and 1997 ....................     3

         Consolidated Condensed Balance Sheets
            as of March 31, 1998 and December 31, 1997 ............................     4

         Consolidated Condensed Statements of Cash Flows for the three
            months ended March 31, 1998 and 1997 ..................................     5

         Notes to Consolidated Condensed Financial Statements .....................   6-8

         ITEM 2 - Management's Discussion and Analysis of Financial
                  Condition and Results of Operations .............................  9-12

PART II  OTHER INFORMATION

         ITEM 1 - Legal Proceedings ...............................................    13

         ITEM 6 - Exhibits and Reports on Form 8-K ................................    14

SIGNATURES ........................................................................    15
</TABLE>


                                       2
<PAGE>   3
                               i-STAT CORPORATION

                 CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                            AND COMPREHENSIVE INCOME
           (In thousands of dollars, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                      Three Months Ended
                                                           March 31,
                                               --------------------------------
                                                    1998                1997
                                               ------------        ------------
<S>                                            <C>                 <C>
Net sales ..............................       $      8,786        $      7,806

Cost of sales ..........................              7,690               6,333
                                               ------------        ------------
          Gross profit .................              1,096               1,473
                                               ------------        ------------
Operating expenses:

     Research and development ..........              1,769               1,569

     General and administrative ........              1,855               1,507

     Consolidation of operations .......                736                  --

     Sales and marketing ...............              3,272               2,732
                                               ------------        ------------
       Total operating expenses ........              7,632               5,808
                                               ------------        ------------
          Operating loss ...............             (6,536)             (4,335)
                                               ------------        ------------
Other income (expense), net ............                409                 341
                                               ------------        ------------
Net loss ...............................             (6,127)             (3,994)
                                               ------------        ------------
Other comprehensive income/(loss)
     Foreign currency translation ......                 (7)                  1
                                               ------------        ------------
Comprehensive loss .....................       $     (6,134)       $     (3,993)
                                               ============        ============
Basic and diluted net loss per share ...       $      (0.40)       $      (0.30)
                                               ============        ============
Shares used in computing basic and
     diluted net loss per share ........         15,355,804          13,362,138
                                               ============        ============
</TABLE>

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


                                       3
<PAGE>   4
                               i-STAT CORPORATION
                      CONSOLIDATED CONDENSED BALANCE SHEETS
           (In thousands of dollars, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                               March 31,       December 31,
                                                                                 1998              1997
                                                                               ---------       -----------
<S>                                                                            <C>              <C>
                              ASSETS
Current assets:

     Cash and cash equivalents .........................................       $  28,758        $  32,914

     Accounts receivable, net ..........................................           4,456            5,206

     Inventories .......................................................           5,902            5,927

     Prepaid expenses and other current assets .........................             707              775
                                                                               ---------        ---------
          Total current assets .........................................          39,823           44,822

Plant and equipment, net of accumulated depreciation of
     $17,942 and $16,858 ...............................................          12,925           12,619

Other assets ...........................................................           1,588            1,729
                                                                               ---------        ---------
          Total assets .................................................       $  54,336        $  59,170
                                                                               =========        =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

     Accounts payable ..................................................       $   2,193        $   2,174

     Accrued expenses ..................................................           4,892            3,733

     Deferred revenue ..................................................             223              218
                                                                               ---------        ---------
          Total current liabilities ....................................           7,308            6,125
                                                                               ---------        ---------
Stockholders' equity:

     Preferred Stock, $.10 par value, shares authorized 7,000,000:

          Series A Junior Participating Preferred Stock, $.10 par value,
          1,500,000 shares authorized; none issued .....................              --               --

          Series B Preferred Stock, $.10 par value,
          2,138,702 shares authorized and issued .......................             214              214

     Common Stock, $.15 par value, shares authorized 25,000,000;
          shares issued 13,224,227 at March 31, 1998 and 13,203,527 at
          December 31, 1997 ............................................           1,984            1,981

     Additional paid-in capital ........................................         209,879          209,594

     Other, net ........................................................            (384)            (194)

     Accumulated deficit ...............................................        (164,407)        (158,273)

     Accumulated other comprehensive loss related to
          foreign currency translation .................................            (258)            (277)
                                                                               ---------        ---------
               Total stockholders' equity ..............................          47,028           53,045
                                                                               ---------        ---------
               Total liabilities and stockholders' equity ..............       $  54,336        $  59,170
                                                                               =========        =========
</TABLE>

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


                                       4
<PAGE>   5
                               i-STAT CORPORATION
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                            (In thousands of dollars)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                              Three Months Ended
                                                                                  March 31,
                                                                           ------------------------
                                                                             1998            1997
                                                                           --------        --------
<S>                                                                        <C>             <C>
Cash flows from operating activities:
     Net loss ......................................................       $ (6,127)       $ (3,994)
     Adjustments to reconcile net loss to net cash used in operating
          activities ...............................................            930             107
     Change in assets and liabilities ..............................          2,193             574
                                                                           --------        --------
          Net cash used in operating activities ....................         (3,004)         (3,313)
                                                                           --------        --------
Cash flows from investing activities:
     Purchase of equipment .........................................         (1,390)         (1,349)
     Other .........................................................            (45)            (29)
                                                                           --------        --------
          Net cash used in investing activities ....................         (1,435)         (1,378)
                                                                           --------        --------
Cash flows from financing activities:
     Proceeds from sale of Common Stock ............................            288             102
                                                                           --------        --------
          Net cash provided by financing activities ................            288             102
                                                                           --------        --------
Effect of currency exchange rate changes on cash ...................             (5)            (27)
                                                                           --------        --------
Net decrease in cash and cash equivalents ..........................         (4,156)         (4,616)
Cash and cash equivalents at beginning of period ...................         32,914          28,417
                                                                           --------        --------
Cash and cash equivalents at end of period .........................       $ 28,758        $ 23,801
                                                                           ========        ========
</TABLE>

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


                                       5
<PAGE>   6
                               i-STAT CORPORATION

              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

1.       Basis of Presentation

         The information presented as of March 31, 1998 and 1997, and for the
         periods then ended, is unaudited, but includes all adjustments
         (consisting only of normal recurring accruals) which the management of
         i-STAT Corporation (the "Company") believes to be necessary for the
         fair presentation of results for the periods presented. The results for
         the interim periods are not necessarily indicative of results to be
         expected for the year. The year end consolidated condensed balance
         sheet data was derived from the audited financial statements, but does
         not include all disclosures required by generally accepted accounting
         principles. These condensed financial statements should be read in
         conjunction with the Company's audited financial statements for the
         year ended December 31, 1997, including the Notes thereto, which were
         included as part of the Company's Annual Report on Form 10-K, File No.
         0-19841.

2.       Net Loss Per Share

         The Company has adopted Statement of Financial Accounting Standards No.
         128 "Earnings Per Share" which requires the presentation of basic
         earnings per share (EPS), and diluted earnings per share. Basic EPS
         excludes dilution and is computed by dividing income available to
         common stockholders by the weighted-average number of common shares
         outstanding for the period. Diluted EPS reflects the potential dilution
         that could occur if securities or other contracts to issue common stock
         were exercised or converted into common stock or resulted in the
         issuance of common stock that then shared in the earnings of the
         entity. The Company has not included potential common shares in the
         diluted per-share computation as the result is antidilutive.

         The numerator and denominator of the basic and diluted per share
         computations were as follows:

<TABLE>
<CAPTION>
In thousands of dollars, except shares and per share amount                    For the Quarter Ended March 31, 1998
-------------------------------------------------------------------------------------------------------------------
                                                              Loss              Shares     Per-Share Amount Before
                                                                                          Comprehensive Income/(Loss)
<S>                                                         <C>               <C>         <C>

Basic and diluted EPS
Loss available to Common Stockholders                       $(6,127)          15,355,804             $(0.40)
                                                            -----------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
In thousands of dollars, except shares and per share amount                    For the Quarter Ended March 31, 1997
-------------------------------------------------------------------------------------------------------------------
                                                              Loss              Shares     Per-Share Amount Before
                                                                                          Comprehensive Income/(Loss)
<S>                                                         <C>               <C>         <C>
Basic and diluted EPS
Loss available to Common Stockholders                       $(3,994)          13,362,138              $(0.30)
                                                            ------------------------------------------------
</TABLE>

         Basic and diluted net loss per share is calculated using the weighted
         average number of common shares and preferred shares outstanding for
         all periods presented. Preferred shares have been included in the
         calculations since their date of issuance as they are convertible into
         common shares on a 1:1 basis and have substantially the same
         characteristics as common stock.

         Options to purchase 2,279,396 shares of common stock at $1.50 - $34.11
         per share, which expire on various dates from May 1998 to January,
         2008, were outstanding at March 31, 1998. These shares were not
         included in the computation of diluted EPS because the effect would be
         antidilutive due to the net loss.

         Recently Issued Accounting Pronouncements:

         The Company has adopted Statement of Financial Accounting Standards No.
         130, "Reporting Comprehensive Income", which establishes standards for
         the reporting and display of comprehensive income and its components in
         a full set of financial statements. The adoption of this Statement had
         no impact on the Company's net loss or stockholders' equity. Statement
         No. 130 requires foreign currency translation adjustments, which prior
         to adoption were reported separately in stockholders' equity, to be
         included in other comprehensive earnings. Prior year financial
         statements have been reclassified to conform to the requirements of
         Statement No. 130.


                                       6
<PAGE>   7
                               i-STAT CORPORATION
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

                                   (continued)

         In June 1997, the FASB issued Statement of Financial Accounting
         Standards No. 131 " Disclosures about Segments of an Enterprise and
         Related Information" which establishes standards for the way that
         public business enterprises report information about operating
         segments, geographic areas, products and major customers. The Company
         is required to adopt this standard as of the end of 1998 and is
         currently evaluating the impact of this standard on the Company's
         required disclosure.

         In February 1998, the FASB issued Statement of Financial Accounting
         Standards No. 132 "Employers' Disclosures about Pensions and Other
         Postretirement Benefits." This statement modifies financial statement
         disclosures related to pension and other postretirement plans,
         including standardization of disclosures for pension plans and other
         postretirement plans, permitting the aggregation of information
         regarding certain plans, additional disclosures related to the change
         in benefit obligations and the fair value of plan assets, and
         elimination of certain other disclosures. As with SFAS Nos. 130 and
         131, this statement addresses disclosure issues and therefore will not
         have an effect on the Company's financial position or results of
         operations, and the Company is required to adopt this standard as of
         the end of 1998.

         Reclassification:

         Certain reclassifications have been made to 1997 amounts to conform
         them to the 1998 presentation.

3.       Inventories

         Inventories consist of the following:

<TABLE>
<CAPTION>
                                          March 31, 1998       December 31, 1997
                                          --------------       -----------------
                                                 (In thousands of dollars)

<S>                                       <C>                  <C>
         Raw materials                        $1,959                 $2,206
         Work in process                       2,483                  1,482
         Finished goods                        1,460                  2,239
                                              ------                 ------
                                              $5,902                 $5,927
                                              ======                 ======
</TABLE>


4.       Commitments and Contingencies

         The Company is a defendant in a case entitled Nova Biomedical
         Corporation, Plaintiff v. i-STAT Corporation, Defendant. The Complaint,
         which was filed in the United States District Court for the District of
         Massachusetts on June 27, 1995, alleges infringement by i-STAT of
         Nova's U.S. Patent No. 4,686,479. In February 1998, the Court entered
         summary judgement in favor of the Company on the issue of patent
         infringement. Accordingly, the Company has been found not to infringe,
         either literally or under the patent law "doctrine of equivalents",
         Nova's patent. However, if the plaintiff should appeal and prevail on
         this issue, a prospect which the Company believes to be highly
         unlikely, it could have a material impact on the financial position,
         results of operations and cash flows of the Company. The Company had
         asserted and is pursuing counterclaims under the antitrust laws
         alleging that Nova commenced the action knowing that the patent was not
         infringed and that it has reason to believe that the patent was invalid
         and unenforceable.

         The Company is a defendant in a class action complaint entitled Susan
         Kaufman, on behalf of herself and all other similarly situated,
         Plaintiff, v. i-STAT Corporation, William P. Moffitt, Lionel M.
         Sterling, Imants R. Lauks and Matthias Plum, Jr. The class action was
         brought by Susan Kaufman on her behalf and on behalf of all purchasers
         of the Company's Common Stock between May 9, 1995 and March 19, 1996.
         The complaint, which was filed in the Superior Court of New Jersey in
         Mercer County on June 19, 1996, alleges New Jersey common law fraud and
         negligent misrepresentation, and is predicated on a "fraud on the
         market" theory in connection with


                                       7
<PAGE>   8
                               i-STAT CORPORATION
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
                                   (unaudited)

                                   (continued)

         certain sales of i-STAT stock by the Company's chief executive officer,
         chief technology officer and two outside directors during a nine-month
         period. The plaintiffs seek unspecified compensatory damages, interest
         and payment of all costs and expenses incurred in connection with the
         class action. The Company believes the complaint is without merit and,
         on April 28, 1998, the Court entered summary judgment in favor of all
         the defendants. However, if the plaintiff should appeal and prevail in
         this matter, it could have a material impact on the financial position,
         results of operations and cash flows of the Company.

         The Company is a defendant in a case entitled Customedix Corporation,
         Plaintiff v. i-STAT Corporation, Defendant. The Complaint, which was
         filed in the United States District Court for the District of
         Connecticut on December 26, 1996, alleges infringement by i-STAT of
         Customedix's U.S. Patent No. 4,342,964. The Plaintiff seeks injunctive
         relief and an accounting for i-STAT's profits and the damages to
         Customedix from such alleged infringement. The case currently is in the
         preliminary stages of discovery. The Company intends to contest the
         case vigorously and does not believe that it has infringed the
         Customedix patent. The Company has obtained an opinion from recognized
         patent counsel to the effect that no infringement has occurred.
         However, if the plaintiff should prevail in this matter, it could have
         a material impact on the financial position, results of operation and
         cash flows of the Company.

5.       Consolidation of Operations

         In January 1998, the Company decided to consolidate all its cartridge
         assembly operations in its manufacturing facility in Ontario, Canada.
         In order to facilitate this move, the Company will relocate its
         cartridge assembly operation in Plainsboro, New Jersey to its
         manufacturing facility in Ontario, Canada. The relocation of cartridge
         assembly is anticipated to commence in May 1998 and be completed by
         August 1998. As a result of this consolidation of operations, 66
         employees in the cartridge assembly operations were notified during the
         quarter that they would be terminated. The Company's lease for its
         instrument operations, engineering, customer support, selected research
         and development, marketing and administrative facility in Princeton,
         New Jersey, expires in September 1998. The Company anticipates that it
         will relocate these activities to another building in the general area
         of Princeton, New Jersey. The charge to earnings in 1998 for these
         relocations, including severance and retention payments to affected
         employees, the physical move of equipment, rent and utilities on the
         unoccupied Plainsboro facility until that lease expires in February
         1999, and readdressing packaging, marketing materials and stationery,
         and miscellaneous costs is estimated to be approximately $1.7 million,
         with approximately $0.7 million being recorded as a charge to earnings
         in the three months ended March 31, 1998. The charge to earnings in the
         first quarter of 1998 comprises approximately $0.4 million for
         severance and retention payments, and approximately $0.3 million for
         lease costs in respect of the unoccupied Plainsboro facility.
         Retention payments are charged to expense over the retention period.


                                       8
<PAGE>   9
                               i-STAT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

         The Company develops, manufactures and markets medical diagnostic
products for blood analysis that provide healthcare professionals with immediate
and accurate critical diagnostic information at the point of patient care. The
Company markets and distributes its products in the United States and Canada
principally through its own direct sales and marketing organization, in Japan
through Japanese marketing partners, in Europe through Hewlett-Packard Company
("HP") and in South America through selected distribution channels. The Company
and HP also jointly market the Company's products into the critical care
departments of hospitals in the United States which meet certain criteria. The
Company is actively planning market introduction into other foreign markets,
including but not limited to, through its arrangements with HP.

         The Company's revenues are affected principally by the number of
hospitals using the i-STAT(R) System and the rate at which i-STAT's disposable
cartridges are used by these hospitals. This, in turn, is highly dependent upon
the willingness of hospitals to adapt their traditional blood diagnostic testing
approaches to the point-of-care system advocated by the Company. During 1997 the
Company continued to focus its marketing efforts primarily on potential large
scale adopters of the i-STAT System. Such high volume customers tend to require
a longer sales cycle as the marketing focus with respect to such customers is on
having these customers re-engineer or replace their "stat" lab departments with
the i-STAT System, as compared to other potential customers who may be using the
i-STAT System as a supplement to their existing arrangements. To further this
strategy, in early 1997 the Company expanded its policy of offering substantial
price discounts to high volume users. These volume discounts are only provided
to customers who commit to purchase 18,000 or more cartridges per year, with the
highest discounts going to purchasers of 120,000 or more cartridges per year.
The Company believes that this strategy will accelerate the rate of market
penetration for its products and thus have a beneficial long-term effect upon
revenue growth. However, the near-term rate of growth in sales revenue and gross
margin will be adversely impacted by both the longer sales cycle and the lower
cartridge prices that such high volume customers may receive.

         Pursuant to a technology collaboration between the Company and HP, in
November 1997 HP commenced selling a patient monitoring system (the "Integrated
Analyzer") which integrates all of the blood diagnostics capabilities of the
i-STAT System. In the long-term, the Company hopes to realize significant
cartridge revenue growth and royalty revenues from the sale of the Integrated
Analyzer by HP. However, in the near-term revenue growth from sales of the
Integrated Analyzer is expected to be insignificant because of the uncertainties
associated with new product introduction and because some of the initial
purchasers of the Integrated Analyzer will be existing users of the hand-held
analyzer sold by the Company.

Results of Operations

         Three Months Ended March 31, 1998

         The Company generated revenues of approximately $8.8 million and $7.8
million for the three months ended March 31, 1998 and 1997, respectively,
including international revenues (as a percentage of total revenues) of $2.5
million (28.2%) and $2.3 million (28.9%), respectively. Sales to the Company's
Japanese marketing partners represented approximately 10.9% and 21.8% of the
Company's worldwide sales for the three months ended March 31, 1998 and 1997,
respectively. International sales included deferred Japanese revenue of
approximately $0.8 million (9.9% of total revenues) for the three months ended
March 31, 1997. There was no comparable deferred revenue in the three months
ended March 31, 1998, as the balance of such deferred revenue was fully
amortized to income at December 31, 1997.

         The $1.8 million (25.4%) increase in product revenues (excluding the
deferred revenue of $0.8 million in the same period of the prior year) was
primarily due to increased shipment volume of the Company's cartridges
reflecting higher cartridge consumption by existing hospital customers and the
addition of new hospital customers in the U.S. and internationally. Worldwide
cartridge shipments increased 36.1% to 1,284,575 units in the three months ended
March 31, 1998, from 943,975 units in the three months ended March 31, 1997.
Revenues from the increased cartridge shipments were partially offset by lower
worldwide average selling prices per cartridge, which declined from
approximately $5.64 to $4.90 per cartridge in the same periods. Cartridge
average selling prices are expected to continue to decline as the customer mix
shifts to higher volume customers that receive lower cartridge list price.


                                       9
<PAGE>   10
                               i-STAT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)

         Gross profit decreased by approximately $0.4 million to $1.1 million in
the quarter ended March 31, 1998, compared with a gross profit of $1.5 million
in the quarter ended March 31, 1997. The prior year number for the same period
includes approximately $0.8 million of deferred Japanese revenue. Exclusive of
deferred revenue, gross profit on product revenue increased by approximately
$0.4 million (57%) from $0.7 million to $1.1 million. To the extent that sales
volume increases, the Company expects its gross profit to improve as
manufacturing costs (including direct labor and a large component of overhead)
are spread over a larger number of product units.

         The Company incurred research and development costs (as a percentage of
sales) of approximately $1.8 million (20.1%) and $1.6 million (20.1%) for the
three months ended March 31, 1998 and 1997, respectively, consisting of costs
associated with the personnel, material, equipment and facilities necessary for
conducting new product development. The Company's current research and
development program includes the development of tests for the measurement of
coagulation, which are scheduled to move into the production phase towards the
end of 1998. The Company also is studying the development of tests to measure
enzymes, hematology parameters (such as platelets and white blood cell counts)
and other analytes. Consequently, research and development expenditures are
expected to increase significantly over the next three years. The amount and
timing of such increase will depend upon numerous factors including the level of
activity at any point in time, the breadth of the Company's development
objectives and the success of its development programs.

         The Company incurred general and administrative expenses (as a
percentage of sales) of approximately $1.9 million (21.1%) and $1.5 million
(19.3%) for the three months ended March 31, 1998 and 1997, respectively.
General and administrative expenses consisted primarily of salaries and benefits
of personnel, office costs, professional fees and other costs necessary to
support the Company's infrastructure. The dollar increase from year to year is
primarily attributable to increased legal fees and expenses associated with the
defense of the Nova patent infringement action and other legal matters, and the
Company's increased need for management personnel and other services to support
its growth.

         In January 1998, the Company decided to consolidate all its cartridge
assembly operations in its manufacturing facility in Ontario, Canada. In order
to facilitate this move, the Company will relocate its cartridge assembly
operation in Plainsboro, New Jersey to its manufacturing facility in Ontario,
Canada. The relocation of cartridge assembly is anticipated to commence in May
1998 and be completed by August 1998. As a result of this consolidation of
operations, 66 employees in the cartridge assembly operations were notified
during the quarter that their employment would be terminated. The Company's
lease for its instrument operations, engineering, customer support, selected
research and development, marketing and administrative facility in Princeton,
New Jersey, expires in September 1998. The Company anticipates that it will
relocate these activities to another building in the general area of Princeton,
New Jersey. The charge to earnings in 1998 for these relocations, including
severance and retention payments to affected employees, the physical move of
equipment, rent and utilities on the unoccupied Plainsboro facility until that
lease expires in February 1999, and readdressing packaging, marketing materials
and stationery, and miscellaneous costs is estimated to be approximately $1.7
million, with approximately $0.7 million being recorded as a charge to earnings
in the three months ended March 31, 1998. The charge to earnings in the first
quarter of 1998 comprises approximately $0.4 million for severance and retention
payments, and approximately $0.3 million for lease costs in respect of the
unoccupied Plainsboro facility. Retention payments are charged to expense over
the retention period. The Company expects the consolidation to reduce future
manufacturing and operating costs by approximately $2.0 million per year,
commencing in the fourth quarter of 1998. Such savings will come from lower
personnel costs, after hiring 52 employees for the expanded cartridge assembly
operations in Ontario, Canada, and lower rent, utilities and other overhead
expenses.                                                             

         The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $3.3 million (37.2%) and $2.7 million (35.0%) for the
three months ended March 31, 1998 and 1997, respectively, consisting primarily
of salaries, benefits, travel, and other expenditures for sales representatives,
product literature, market research, clinical studies, advertising and other
sales and marketing costs. The dollar increase from year to year is attributable
to increased sales and marketing personnel and other marketing costs necessary
to support the Company's growth in product sales.

         The increase in other income, net, to approximately $0.4 million for
the three months ended March 31, 1998, from approximately $0.3 million for the
three months ended March 31, 1997, primarily reflects higher interest income
earned on higher cash and cash equivalents balances.


                                       10
<PAGE>   11
                               i-STAT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)

         Net losses for the three months ended March 31, 1998 increased 53.4
percent to approximately $6.1 million, or 40 cents per share, compared with a
net loss of $4.0 million, or 30 cents per share, for the first quarter of 1997.
The weighted average number of shares used in computing basic and diluted net
loss per share was 15.356 million and 13.362 million in the 1998 and 1997
periods, respectively. The increase in the number of shares in 1998 primarily
reflects the private placement of 1.850 million shares in June 1997. The
increase in the net loss, in part reflects the reduction of deferred revenue
($0.8 million) and the charge for operations consolidation costs ($0.7 million)
discussed above.

Liquidity and Capital Resources

         At March 31, 1998, the Company had cash and cash equivalents of
approximately $28.8 million, a decline of approximately $4.1 million from the
December 31, 1997 balance of approximately $32.9 million, the decrease primarily
reflecting approximately $3.0 million of cash used in operating activities and
equipment purchases of approximately $1.4 million during the three months ended
March 31, 1998. Working capital decreased by approximately $6.2 million from
$38.7 million to $32.5 million during the same period, primarily reflecting the
decrease in cash and cash equivalents, and an increase of approximately $1.2
million in accrued expenses. The increase in accrued expenses includes the
charge for operations consolidation expenses of approximately $0.7 million. The
Company expects its existing funds to continue to decline until its revenues are
sufficient to support its growth, but to be sufficient to meet its obligations
and its liquidity and capital requirements for the near term. The Company
regularly monitors capital raising alternatives in order to take advantage of
opportunities to supplement its current working capital upon favorable terms,
including joint ventures, strategic corporate partnerships or other alliances
and the sale of equity and/or debt securities. The Company's need, if any, to
raise additional funds to meet its working capital and capital requirements will
depend upon numerous factors, including the results of its marketing and sales
activities, its new product development efforts, manufacturing efficiencies and
competitive conditions.

         The impact of inflation on the Company's business has been minimal and
is expected to be minimal for the near-term.


                                       11
<PAGE>   12
                               i-STAT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   (continued)

Impact of Year 2000

         The "Year 2000" issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have time-sensitive software may recognize a
date using "00" as the year 1900 rather than the year 2000. This could result in
a system failure or miscalculations causing disruptions of operations,
including, among other things, a temporary inability to process transactions,
send invoices, or engage in similar normal business activities.

         Based on a recent assessment, the Company determined that it will be
required to modify some portions of its software so that its computer systems
will function properly with respect to dates in the year 2000 and thereafter.
The Company presently believes that with modifications to existing software and
conversions to new software, the Year 2000 issue will not pose significant
operational problems for its computer systems. However, if such modifications
and conversions are not made, or are not completed timely, the Year 2000 issue
could have a material impact on the operations of the Company.

         The Company has initiated formal communications with all of its
significant suppliers to determine the extent to which the Company is vulnerable
to those third parties' failure to remediate their own Year 2000 issues.
However, there can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company or a conversion that is incompatible with the
Company's system would not have an adverse effect on the Company's systems. The
Company has determined that it has no exposure to contingencies related to the
Year 2000 issue for the products it has sold.

         The Company will utilize both internal and external resources to
reprogram and test its computer software for Year 2000 modifications. The
Company anticipates completing the Year 2000 project prior to any anticipated
impact on its operating systems. The cost of the Year 2000 project is not
expected to be material, as the required changes to internally supported
software are small relative to the updates performed in the normal course of
business and changes to externally supported software are covered by service
contracts. The assessment of the costs of the project and the timing of the
completion of Year 2000 modifications is based on management's best estimates,
which were derived utilizing numerous assumptions of future events, including
the continued availability of certain resources, third party modification plans
and other factors. However, there can be no guarantee that these estimates will
be achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes, and similar
uncertainties.

         All statements contained in this management's discussion and analysis
of financial condition and results of operation other than statements of
historical financial information, are forward looking statements. Forward
looking statements include statements concerning plans, objectives, goals,
strategies, future events or performance and underlying assumptions and other
statements which are other than historical facts. Although the Company believes
that its expectations are based on reasonable assumptions, the Company operates
in a high technology, emerging market environment that involves significant
risks and uncertainties which may cause actual results to vary from such forward
looking statements and to vary significantly from reporting period to reporting
period. These risks include, among others, competition from existing
manufacturers and marketers of blood analysis products who have greater
resources than the Company, the uncertainty of new product development
initiatives, difficulties in transferring new technology to the manufacturing
stage, market resistance to new products and point-of-care blood diagnosis,
domestic and international regulatory constraints, uncertainties of
international trade, pending and potential disputes concerning ownership of
intellectual property, dependence upon strategic corporate partners for
assistance in development of new markets and other risks detailed from time to
time in the Company's filings with the Securities and Exchange Commission. The
Company does not undertake to update the results discussed herein as a result of
changes in risks or operating results.


                                       12
<PAGE>   13
                               i-STAT CORPORATION

PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

The Company is a defendant in a case entitled Nova Biomedical Corporation,
Plaintiff v. i-STAT Corporation, Defendant. The Complaint, which was filed in
the United States District Court for the District of Massachusetts on June 27,
1995, alleges infringement by i-STAT of Nova's U.S. Patent No. 4,686,479. In
February 1998, the Court entered summary judgment in favor of the Company on
the issue of patent infringement. Accordingly, the Company has been found not to
infringe, either literally or under the patent law "doctrine of equivalents",
Nova's patent. However, if the plaintiff should appeal and prevail on this
issue, a prospect which the Company believes to be highly unlikely, it could
have a material impact on the financial position, results of operations and cash
flows of the Company. The Company had asserted and is pursuing counterclaims
under the antitrust laws alleging that Nova commenced the action knowing that
the patent was not infringed and that it has reason to believe that the patent
was invalid and unenforceable.

The Company is a defendant in a class action complaint entitled Susan Kaufman,
on behalf of herself and all other similarly situated, Plaintiff, v. i-STAT
Corporation, William P. Moffitt, Lionel M. Sterling, Imants R. Lauks and
Matthias Plum, Jr. The class action was brought by Susan Kaufman on her behalf
and on behalf of all purchasers of the Company's Common Stock between May 9,
1995 and March 19, 1996. The complaint, which was filed in the Superior Court of
New Jersey in Mercer County on June 19, 1996, alleges New Jersey common law
fraud and negligent misrepresentation, and is predicated on a "fraud on the
market" theory in connection with certain sales of i-STAT stock by the Company's
chief executive officer, chief technology officer and two outside directors
during a nine-month period. The plaintiffs seek unspecified compensatory
damages, interest and payment of all costs and expenses incurred in connection
with the class action. The Company believes the complaint is without merit and,
on April 28, 1998, the Court entered summary judgment in favor of all
defendants. However, if the plaintiff should appeal and prevail in this matter,
it could have a material impact on the financial position, results of operations
and cash flows of the Company.

The Company is a defendant in a case entitled Customedix Corporation, Plaintiff
v. i-STAT Corporation, Defendant. The Complaint, which was filed in the United
States District Court for the District of Connecticut on December 26, 1996,
alleges infringement by i-STAT of Customedix's U.S. Patent No. 4,342,964. The
Plaintiff seeks injunctive relief and an accounting for i-STAT's profits and the
damages to Customedix from such alleged infringement. The case currently is in
the preliminary stages of discovery. The Company intends to contest the case
vigorously and does not believe that it has infringed the Customedix patent. The
Company has obtained an opinion from recognized patent counsel to the effect
that no infringement has occurred. However, if the plaintiff should prevail in
this matter, it could have a material impact on the financial position, results
of operation and cash flows of the Company.


                                       13
<PAGE>   14
                               i-STAT CORPORATION

ITEM 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  3.1      Restated Certificate of Incorporation (Form S-8/S-3
                           Registration Statement, File No. 33-48889)*

                  3.2      By-Laws (Form 10-K for fiscal year ended December 31,
                           1996)*

                  3.3      Certificate of Designation, Preferences and Rights of
                           Series A Preferred Stock (Form 8-K, dated July 10,
                           1995 and amended on September 11, 1995)*

                  3.4      Certificate of Designation, Preferences and Rights of
                           Series B Preferred Stock (Form 8-K, dated July 10,
                           1995 and amended on September 11, 1995)*

                  4.1      Stockholder Protection Agreement, dated as of June
                           26, 1995, between Registrant and First Fidelity Bank,
                           National Association (Form 8-K, dated July 10, 1995
                           and amended on September 11, 1995)*

                  27       Financial Data Schedule

                   *       These items are hereby incorporated by reference from
                           the exhibits of the filing or report indicated
                           (except where noted, Commission File No. 0-19841) and
                           are hereby made a part of this Report.

         (b)      Reports on Form 8-K

                  During the quarter for which this Report on Form 10-Q is
                  filed, no reports on Form 8-K were filed.


                                       14
<PAGE>   15
                               i-STAT CORPORATION

                                   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.

DATE:   May 11, 1998

                                                i-STAT CORPORATION
                                                   (Registrant)

                                          BY:   /s/William P. Moffitt
                                                -----------------------
                                                William P. Moffitt
                                                President and Chief
                                                Executive Officer
                                                (Principal Executive Officer)

                                          BY:   /s/Roger J. Mason
                                                -----------------------
                                                Roger J. Mason
                                                Vice President of Finance,
                                                Treasurer and Chief
                                                Financial Officer
                                                (Principal Financial Officer and
                                                  Accounting Officer)




                                       15
<PAGE>   16
                                  EXHIBIT INDEX


EXHIBIT NO.     DESCRIPTION
-----------     -----------

    27          Financial Data Schedule