<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, 1999

                         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.)

104 Windsor Center Drive, East Windsor, NJ                   08520
(Address of Principal Executive Offices)                     (Zip Code)

                                 (609) 443-9300
              (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.

Class                                                             May 14, 1999

Common Stock, $ .15 par value                                     15,646,360

<PAGE>   2
                               i-STAT CORPORATION

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                 PAGE
                                                                                                NUMBER

PART I     FINANCIAL INFORMATION

           Item 1 - Financial Statements

<S>                                                                                        <C>
           Consolidated Condensed Statements of Operations and Comprehensive Income
              for the three months ended March 31, 1999 and 1998 .....................           3
           Consolidated Condensed Balance Sheets
              as of March 31, 1999 and December 31, 1998 .............................           4
           Consolidated Condensed Statements of Cash Flows for the three
              months ended March 31, 1999 and 1998 ...................................           5
           Notes to Consolidated Condensed Financial Statements ......................         6 - 8
           Item 2 - Management's Discussion and Analysis of Financial
              Condition and Results of Operations ....................................         9 - 13

PART II    OTHER INFORMATION

           Item 1 - Legal Proceedings ................................................           14
           Item 2 - Changes in Securities and Use of Proceeds ........................           14
           Item 6 - Exhibits and Reports on Form 8-K .................................           15

SIGNATURES ...........................................................................           16
</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,

                                                         1999                1998
                                                         ----                ----
<S>                                                  <C>                 <C>         
Net sales (inclusive of related party sales of
     $8,596 and $963) ............................   $     10,337        $      8,786
Cost of sales ....................................          8,083               7,690
                                                     ------------        ------------
              Gross profit .......................          2,254               1,096
                                                     ------------        ------------
Operating expenses:
     Research and development ....................          1,930               1,769
     General and administrative ..................          2,934               1,855
     Consolidation of operations .................             24                 736
     Sales and marketing .........................          2,303               3,272
                                                     ------------        ------------
         Total operating expenses ................          7,191               7,632
                                                     ------------        ------------
              Operating loss .....................         (4,937)             (6,536)
                                                     ------------        ------------
Other income (expense), net ......................            446                 409
                                                     ------------        ------------
Net loss .........................................         (4,491)             (6,127)
                                                     ------------        ------------
Other comprehensive income (loss)
     Foreign currency translation ................            223                  (7)
                                                     ------------        ------------
Comprehensive loss ...............................   $     (4,268)       $     (6,134)
                                                     ============        ============
Basic and diluted net loss per share .............   $      (0.26)       $      (0.40)
                                                     ============        ============
Shares used in computing basic and
     diluted net loss per share ..................     17,473,965          15,355,804
                                                     ============        ============
</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,
                                                                                1999             1998
                                                                              ---------        ---------

         ASSETS
Current assets:
<S>                                                                           <C>              <C>      
     Cash and cash equivalents ........................................       $  33,808        $  38,390
     Accounts receivable, net .........................................             340            2,849
     Accounts receivable from related parties .........................           5,090            2,843
     Inventories ......................................................          10,174            8,296
     Prepaid expenses and other current assets ........................           1,746            1,473
                                                                              ---------        ---------
         Total current assets .........................................          51,158           53,851
Plant and equipment, net of accumulated depreciation of
     $20,934 and $19,721 ..............................................          14,417           13,336
Other assets ..........................................................           1,739            1,719
                                                                              ---------        ---------
         Total assets .................................................       $  67,314        $  68,906
                                                                              =========        =========
         LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable .................................................       $   2,742        $   2,684
     Accrued expenses .................................................           4,469            6,003
     Deferred revenue (inclusive of related party deferred revenue of
            $3,658 and $407) ..........................................           3,751              559
                                                                              ---------        ---------
         Total current liabilities ....................................          10,962            9,246
                                                                              ---------        ---------
     Deferred revenue from related party, non-current .................           5,000            5,000
                                                                              ---------        ---------
         Total liabilities ............................................          15,962           14,246
                                                                              ---------        ---------
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, issued and outstanding ..........             214              214
     Common Stock, $.15 par value, shares authorized 25,000,000:
         shares issued and outstanding 15,638,807 at March 31, 1999 and
         15,308,995 at December 31, 1998 ..............................           2,346            2,296
     Additional paid-in capital .......................................         233,425          230,328
     Unearned compensation ............................................          (2,356)            (169)
     Accumulated deficit ..............................................        (181,159)        (176,668)
     Accumulated other comprehensive loss related to
         foreign currency translation .................................          (1,118)          (1,341)
                                                                              ---------        ---------
         Total stockholders' equity ...................................          51,352           54,660
                                                                              ---------        ---------
         Total liabilities and stockholders' equity ...................       $  67,314        $  68,906
                                                                              =========        =========
</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,

                                                                           1999            1998
                                                                         --------        --------

Cash flows from operating activities:
<S>                                                                      <C>             <C>      
   Net loss ......................................................       $ (4,491)       $ (6,127)
   Adjustments to reconcile net loss to net cash used in operating
      activities .................................................          1,019             930
   Change in assets and liabilities ..............................            675           2,193
                                                                         --------        --------
      Net cash used in operating activities ......................         (2,797)         (3,004)
                                                                         --------        --------
Cash flows from investing activities:
   Purchase of equipment .........................................         (1,863)         (1,390)
   Other .........................................................            (45)            (45)
                                                                         --------        --------
      Net cash used in investing activities ......................         (1,908)         (1,435)
                                                                         --------        --------
Cash flows from financing activities:
   Proceeds from issuance of Common Stock ........................            105             288
   Other .........................................................             (2)             --
                                                                         --------        --------
      Net cash provided by financing activities ..................            103             288
                                                                         --------        --------
Effect of currency exchange rate changes on cash .................             20              (5)
                                                                         --------        --------
Net decrease in cash and cash equivalents ........................         (4,582)         (4,156)
Cash and cash equivalents at beginning of period .................         38,390          32,914
                                                                         --------        --------
Cash and cash equivalents at end of period .......................       $ 33,808        $ 28,758
                                                                         ========        ========
</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.       GENERAL

         Basis of Presentation

         The information presented as of March 31, 1999 and 1998, 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, 1998, including the Notes thereto, which were
         included as part of the Company's Annual Report on Form 10-K, File No.
         0-19841.

         Basic and Diluted Loss per Share

         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. 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.

         Options to purchase 2,841,495 shares of common stock at $1.50 - $32.58
         per share, which expire on various dates from May 1999 to February
         2009, were outstanding at March 31, 1999. 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:

         In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
         Instruments and Hedging Activities". SFAS No. 133 is effective for all
         fiscal quarters of all fiscal years beginning after June 15, 1999
         (January 1, 2000 for the Company). SFAS No. 133 requires that all
         derivative instruments be recorded on the balance sheet at their fair
         value. Changes in the fair value of derivatives are recorded each
         period in current earnings or other comprehensive income depending on
         whether a derivative is designated as part of a hedge transaction and,
         if it is, the type of hedge transaction. The Company presently does not
         have any derivative instruments or hedging activities and,
         consequently, SFAS No. 133 is not expected to have a material impact on
         the Company's results of operations, financial position or cash flow.

         Reclassification:

         Certain reclassifications have been made to 1998 amounts to conform
         them to the 1999 presentation.


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

                                   (unaudited)

                                   (continued)

2.         INVENTORIES

           Inventories consist of the following:

<TABLE>
<CAPTION>
                                                       March 31, 1999      December 31, 1998
                                                            (In thousands of dollars)
<S>                                                      <C>                   <C>       
           Raw materials                                 $   3,625             $    2,537
           Work in process                                   2,553                  3,206
           Finished goods                                    3,996                  2,553
                                                         ---------             ----------
                                                         $  10,174             $    8,296
                                                         ==========            ==========
</TABLE>

3.       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 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. The plaintiff has appealed, and appellate argument was
         held on May 5, 1999. The appellate court's opinion will be issued in
         due course. If the plaintiff should 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. 

         The Company is a defendant in a class action complaint entitled Susan
         Kaufman, on behalf of herself and all others 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 the defendants. The
         plaintiffs have appealed and appellate argument was held on March 8,
         1999. The appellate court's opinion will be issued in due course.
         Should the plaintiffs 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 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. The court has interpreted the Customedix patent in a way
         favorable to the Company and has denied Customedix's motion for
         reconsideration of that interpretation. 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.



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

                                   (unaudited)

                                   (continued)


4.       RELATED PARTY TRANSACTIONS

         On January 4, 1999, the Company received from Abbott Laboratories
         ("Abbott") its second installment of prepayments for guaranteed future
         incremental cartridge sales (as defined in the Distribution Agreement
         with Abbott), in the amount of $4 million. This amount is carried on
         the consolidated condensed balance sheet as deferred revenue, current,
         net of amortization of such prepayment to income as incremental
         cartridge sales are generated. 

         The Company generated $7,719,000 and $877,000 of net sales from Abbott
         and Hewlett-Packard Company ("HP") for the three months ended March 31,
         1999, and at March 31, 1999, had $4,601,000 and $489,000 of accounts
         receivable due from Abbott and HP, respectively. In addition, the
         Company had $3,658,000 and $407,000 of deferred revenue, current, from
         Abbott at March 31, 1999 and December 31, 1998, respectively.

5.       RESTRICTED STOCK

         On February 5, 1999, the board of directors awarded 310,000 shares of
         restricted Common Stock to four executive officers of the Company. The
         restricted Common Stock had a fair value at the date of grant of
         approximately $2,751,250. One executive officer was awarded 250,000
         shares of restricted Common Stock, 50,000 shares of which immediately
         vested on February 5, 1999, and the remaining 200,000 shares cliff vest
         on February 5, 2002. The 60,000 shares awarded to the other three
         executive officers vest over a three year period. Compensation expense
         in the amount of $587,000 was recorded in connection with this award
         during the three months ended March 31, 1999.


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


GENERAL

         The Company was incorporated in Delaware in 1983 and develops,
manufactures and markets medical diagnostic products for blood analysis that
provide health care professionals with immediate and accurate critical,
diagnostic information at the point of patient care. The Company's current
products, known as the i-STAT(R) System, consist of portable, hand-held
analyzers and single-use disposable cartridges, each of which simultaneously
performs different combinations of commonly ordered blood tests in approximately
two minutes. The i-STAT System also includes peripheral components that enable
the results of tests to be transmitted by infrared means to both a proprietary
information system for managing the user's point-of-care testing program and to
the user's information systems for billing and archiving.

         The i-STAT System currently performs blood tests for sodium, potassium,
chloride, glucose, creatinine, urea nitrogen, hematocrit, ionized calcium,
arterial blood gases, and bicarbonate, and to derive certain other values, such
as total carbon dioxide, base excess, anion gap, hemoglobin and O2 saturation,
by calculation from the tests performed. The Company continues to engage in
research and development in order to improve its existing products and develop
new products based on the i-STAT System technology. The Company currently is
developing a test for lactate and three tests for the measurement of
coagulation: partial thromboplastin time ("aPTT"), activated clotting time
("ACT") and prothombin time ("PT"). The Company is also studying the development
of cardiac marker tests, and other tests to measure enzymes and other analytes.
Subject to receipt of clearance to market by the FDA, the Company expects to
commence commercialization of its first coagulation test by the end of 1999.

         Prior to November 1, 1998, the Company marketed and distributed 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 Mexico, South America,
China, Australia, and certain other Asian and Pacific Rim countries, through
selected distribution channels. 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. On September 2, 1998, the Company entered
into a long-term sales, marketing and research alliance with Abbott Laboratories
("Abbott") which, among other things, is expected both to significantly affect
the Company's research and development programs and alter the manner in which
the Company markets and sells its products worldwide. Abbott commenced
distribution of the i-STAT System on November 1, 1998. The majority of the
Company's revenues are now derived from Abbott. Please see "Long-Term Sales and
Marketing Alliance with Abbott Laboratories" under Item 7 of the Company's
Annual Report on Form 10-K for the year ended December 31, 1998, for a
description of the Company's agreements with Abbott. Copies of such agreements
were filed with the Commission as exhibits to the Company's Quarterly Report on
Form 10-Q for the quarterly period ended June 30, 1998.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED MARCH 31, 1999

         The Company generated revenues of approximately $10.3 million and $8.8
million for the three months ended March 31, 1999 and 1998, respectively,
including international revenues (as a percentage of total revenues) of $2.3
million (21.9%) and $2.5 million (28.2%), respectively. Revenues from Abbott
represented approximately 74.7% and 0% of the Company's worldwide revenues for
the three months ended March 31, 1999 and 1998, respectively. Sales to the
Company's Japanese marketing partners represented approximately 8.1% and 10.9%
of the Company's worldwide sales for the three months ended March 31, 1999 and
1998, respectively. 

         The $1.6 million (17.7%) increase in revenues 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 34% to 1,722,100 units in the three months ended March 31,
1999, from 1,284,575 units in the three months ended March 31, 1998. Revenues
from the increased cartridge shipments were partially offset by lower worldwide
average selling prices per cartridge, 

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

                                   (continued)

which declined from approximately $4.90 to $4.22 per cartridge in the same
periods. Cartridge average selling prices are expected to continue to decline
because of the product transfer pricing arrangements between the Company and
Abbott. The increase in revenues also includes approximately $0.5 million from
Abbott to fund certain research and development and marketing expenses.

           Gross profit (as a percentage of sales) increased by approximately
$1.2 million to $2.3 million (21.8%) in the quarter ended March 31, 1999,
compared with a gross profit of $1.1 million (12.5%) in the quarter ended March
31, 1998. The improvement in gross margin was primarily due to increased
shipment volume of the Company's cartridges, which caused fixed manufacturing
costs to be spread over a larger number of product units, and the receipt of
approximately $0.5 million from Abbott to fund certain research and development
and marketing expenses. The increase in gross margin was partially offset by
lower average selling prices per cartridge and lower average selling prices for
analyzers, in each case because of the transfer pricing arrangements between the
Company and Abbott.

           The Company incurred research and development costs (as a percentage
of sales) of approximately $1.9 million (18.7%) and $1.8 million (20.1%) for the
three months ended March 31, 1999 and 1998, 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 lactate and
coagulation, which are expected to move into the commercialization phase by the
end of 1999. The Company also is studying the development of cardiac marker
tests, and other tests to measure enzymes and other analytes. Consequently,
research and development expenditures are expected to increase 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.
Some portion of these expenditures may be funded by Abbott, and revenues and
gross profit in the three months ended March 31, 1999, include approximately
$0.4 million of such funding.

           The Company incurred general and administrative expenses (as a
percentage of sales) of approximately $2.9 million (28.4%) and $1.9 million
(21.1%) for the three months ended March 31, 1999 and 1998, 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 fees of approximately $877,000 for special consulting
services to assist in the development of manufacturing strategies and capacity
plans, and to identify business development opportunities, and a non-cash
compensation expense of approximately $587,000 associated with grants to
employees of 310,000 restricted shares of Common Stock in the three months ended
March 31, 1999. Additional special consulting fees of approximately $200,000 are
anticipated in the quarter ending June 30, 1999. Stockholders' equity at March
31, 1999, includes unearned compensation of approximately $2.2 million in
respect of the above grants of restricted stock, which will be amortized to
expense over the restriction periods. Additional compensation expense of
approximately $214,000 per quarter is anticipated in the next three quarters of
1999 in respect of these grants.

           The Company incurred consolidation of operations expenses of
approximately $24,000 and $736,000 for the three months ended March 31, 1999 and
1998, respectively, in connection with the relocation of the Company's cartridge
operations from Plainsboro, New Jersey, to its manufacturing facility in
Ontario, Canada.

           The Company incurred sales and marketing expenses (as a percentage of
sales) of approximately $2.3 million (22.3%) and $3.3 million (37.2%) for the
three months ended March 31, 1999 and 1998, respectively, consisting primarily
of salaries, benefits, travel, and other expenditures for sales representatives,
implementation coordinators, international marketing support, order entry,
distribution, technical services, product literature, market research, clinical
studies and other sales infrastructure costs. A portion of the costs of the
implementation coordinators is reimbursed by Abbott, and revenues and gross
profit in the three months ended March 31, 1999, include approximately $0.1
million of such reimbursement. The dollar decrease from year to year is
primarily attributable to the reduction in field sales and sales management
personnel following the assumption by Abbott of principal responsibility for the
marketing and sales of the i-STAT System.

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

                                   (continued)

           Other income, net, of approximately $0.4 million for the three months
ended March 31, 1999 and for the three months ended March 31, 1998, primarily
reflects interest income earned on cash and cash equivalents balances.

           Net loss for the three months ended March 31, 1999 decreased 26.7
percent to approximately $4.5 million, or 26 cents per share, compared with a
net loss of approximately $6.1 million, or 40 cents per share, for the first
quarter of 1998. The weighted average number of shares used in computing basic
and diluted net loss per share was approximately 17.474 million and 15.356
million in the 1999 and 1998 periods, respectively. The increase in the number
of shares in 1998 primarily reflects the issuance of 2 million shares of Common
Stock to Abbott in September 1998.

LIQUIDITY AND CAPITAL RESOURCES

           At March 31, 1999, the Company had cash and cash equivalents of
approximately $33.8 million, a decline of approximately $4.6 million from the
December 31, 1998 balance of approximately $38.4 million. The decrease primarily
reflects approximately $2.8 million of cash used in operating activities, and
equipment purchases of approximately $1.9 million, during the three months ended
March 31, 1999. Working capital decreased by approximately $4.4 million from
$44.6 million to $40.2 million during the same period, primarily reflecting the
decrease in cash and cash equivalents. Changes in working capital during the
three months ended March 31, 1999, also reflect an increase of approximately
$1.9 million in inventories to meet the anticipated growth of customer sales, a
reduction of approximately $1.5 million in accrued expenses which primarily
reflects the payment of accrued 1998 sales commissions and management bonuses,
and the payment of accrued retention bonuses, severance payments and vacation
pay in connection with both a reduction in sales force following assumption by
Abbott of principal responsibility for marketing and sales, and the
consolidation of cartridge assembly operations in the Company's manufacturing
facility in Ontario, Canada. Changes in working capital also include an increase
of approximately $3.2 million in deferred revenue, which reflects the receipt of
$4.0 million from Abbott in January 1999, representing the second installment of
prepayments for guaranteed future incremental cartridge sales, partially offset
by the amortization of such prepayments to income as incremental cartridge sales
(as defined in the Distribution Agreement with Abbott) are generated, by the
amortization to income of approximately $0.4 million of deferred research and
development reimbursements from Abbott and by the amortization of deferred
service contract revenues. 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" or "Y2K" 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.

           The Company has identified its Year 2000 risks in five categories:
internal business operations software, internal manufacturing control software,
software used in computer controlled manufacturing equipment, software used in
computer-controlled products and external noncompliance by suppliers and
customers.

           INTERNAL BUSINESS OPERATIONS SOFTWARE: The Company runs its financial
and inventory operations using a commercially available package supplied by QAD
Inc. running on a UNIX operating system supplied by HP. The Company's computer
networks are controlled by software provided by Microsoft Corporation and
Novell(R) Inc., and applications used for miscellaneous business operations are
supplied by Microsoft Corporation. All the above mentioned products are
certified Year 2000 compliant by these vendors.

           INTERNAL MANUFACTURING CONTROL SOFTWARE: Certain manufacturing
operations are managed by internally developed software tools. Date handling
software operations in most of these tools utilize software routines that are
part of the software "platform" upon which these tools operate. These platforms,
primarily supplied by HP, are certified Y2K compliant. The Company has
identified only a few exceptions but has determined these tools either to be
compliant, not significant to the production process or require only minor
modifications included in planned upgrades. All upgrades are expected to be
completed during the first half of 1999.

           SOFTWARE USED IN COMPUTER CONTROLLED MANUFACTURING EQUIPMENT: The
Company has identified all pieces of computer controlled manufacturing equipment
used in production processes and determined that where date handling functions
are significant to the production process, the functions are Y2K compliant.

           SOFTWARE USED IN COMPUTER CONTROLLED PRODUCTS: Certain products made
by the Company have software components developed and maintained by the Company.
The Company has completed the software changes and testing necessary to certify
substantially all of these products as Y2K compliant, and expects to complete
the remaining changes and testing by mid-1999. The Company regularly distributes
software updates for these products as part of its normal business practices. To
date, the cost of providing the updated, Y2K compliant software to customers has
been at no incremental cost to the Company.

           EXTERNAL NON COMPLIANCE BY SUPPLIERS AND CUSTOMERS: The Company is
engaged in the process of monitoring the Y2K program status of critical
suppliers. The Company expects to establish the appropriate contingency plans
for suppliers that are not able to supply sufficient certification by early
1999. These contingency plans may include establishing alternative suppliers
and/or accumulating inventory as appropriate. By the year 2000 the Company's
revenues are expected to be substantially derived from a few authorized
distributors, including Abbott and HP. The Company believes that these companies
have adequate Y2K compliance programs in place. Accordingly, it has no reason to
believe that additional operational risks are presented by the Company's
relationship with its most significant customers.

           The cost of the Company's activities related to the Year 2000 project
have not been, nor are expected to be, material. Where modifications have been
required they have been incremental additions to software upgrades driven by
other business needs. The principal Company resource allocated to the Y2K issue
has been, and is expected to be, management time. Such internal personnel costs
allocated to the Y2K issue are estimated to have been less than $150,000 through
December 31, 1998, and are expected to be less than $50,000 in 1999.



                                       12
<PAGE>   13
                               i-STAT CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

                                   (continued)


           Despite the Company's activities in regards to the Year 2000 issue,
there can be no assurance that Year 2000 problems will not result in an
interruption in, or failure of, certain normal business activities or
operations, that may have a material adverse effect on the Company's results of
operations, liquidity or financial condition.

RECENT ACCOUNTING PRONOUNCEMENTS

           In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 is effective for all
fiscal quarters of all fiscal years beginning after June 15, 1999 (January 1,
2000 for the Company). SFAS 133 requires that all derivative instruments be
recorded on the balance sheet at their fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or other comprehensive
income, depending on whether a derivative is designated as part of a hedge
transaction and, if it is, the type of hedge transaction. The Company presently
does not have any derivative instruments or hedging activities and consequently,
SFAS No. 133 is not expected to have a material impact on the Company's results
of operations, financial position or cash flows.

SPECIAL NOTE ON FORWARD-LOOKING STATEMENTS

           CERTAIN STATEMENTS IN THIS "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS," RELATE TO FUTURE EVENTS AND
EXPECTATIONS AND AS SUCH CONSTITUTE "FORWARD-LOOKING STATEMENTS," WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE WORDS
"BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS," AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS WHICH MAY
CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO BE
MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS AND TO VARY
SIGNIFICANTLY FROM REPORTING PERIOD TO REPORTING PERIOD. SUCH FACTORS INCLUDE,
AMONG OTHERS, COMPETITION FROM EXISTING MANUFACTURERS AND MARKETERS OF BLOOD
ANALYSIS PRODUCTS WHO HAVE GREATER RESOURCES THAN THE COMPANY, ECONOMIC
CONDITIONS AFFECTING THE COMPANY'S TARGET MARKETS, THE UNCERTAINTY OF NEW
PRODUCT DEVELOPMENT INITIATIVES, THE ABILITY TO ATTRACT AND RETAIN KEY
SCIENTIFIC, TECHNOLOGICAL AND MANAGEMENT PERSONNEL, DEPENDENCE UPON LIMITED
SOURCES FOR PRODUCT MANUFACTURING COMPONENTS, UPON A SINGLE MANUFACTURING
FACILITY AND UPON INNOVATIVE AND HIGHLY TECHNICAL MANUFACTURING TECHNIQUES,
MARKET RESISTANCE TO NEW PRODUCTS AND POINT OF CARE BLOOD DIAGNOSIS,
INCONSISTENCY IN CUSTOMER ORDER PATTERNS, DOMESTIC AND INTERNATIONAL REGULATORY
CONSTRAINTS, UNCERTAINTIES OF INTERNATIONAL TRADE, PENDING AND POTENTIAL
DISPUTES CONCERNING OWNERSHIP OF INTELLECTUAL PROPERTY, AVAILABILITY OF CAPITAL
UPON FAVORABLE TERMS AND DEPENDENCE UPON AND CONTRACTUAL RELATIONSHIPS WITH
STRATEGIC PARTNERS, PARTICULARLY ABBOTT LABORATORIES. SEE ADDITIONAL DISCUSSION
UNDER "FACTORS THAT MAY AFFECT FUTURE RESULTS" IN THE COMPANY'S ANNUAL REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AND OTHER FACTORS DETAILED FROM
TIME TO TIME IN THE COMPANY'S OTHER FILINGS WITH THE SECURITIES AND EXCHANGE
COMMISSION.



                                       13
<PAGE>   14
                               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. The plaintiff has appealed, and appellate argument
was held on May 5, 1999. The appellate court's opinion will be issued in due
course. If the plaintiff should 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.

           The Company is a defendant in a class action complaint entitled Susan
Kaufman, on behalf of herself and all others 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 the
defendants. The plaintiffs have appealed and appellate argument was held on
March 8, 1999. The appellate court's opinion will be issued in due course.
Should the plaintiffs 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 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. The court has
interpreted the Customedix patent in a way favorable to the Company and has
denied Customedix's motion for reconsideration of that interpretation. 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.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

           The Company entered into a Stock Option Agreement with a nationally
recognized consulting firm (the "Consultant"), pursuant to which the Consultant
was granted an Option to purchase up to 100,000 shares of the Company's Common
Stock for $7.50 per share, as partial consideration for rendering the
consulting services described elsewhere in this Report. The Option is currently
exercisable and expires on January 4, 2001, which is the second anniversary of
the effective date of the Agreement. In issuing the Option, the Company relied
on the exemption from registration contained in Section 4(2) of the Securities
Act of 1933.                          



                                       14
<PAGE>   15
                               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)*

         10.50    i-STAT Corporation Equity Incentive Plan

         10.51    Form of Executive Officer Restricted Share Award Agreement
                  under Equity Incentive Plan

         10.52    Form of Restricted Share Award Agreement with President and
                  Chief Executive Officer

         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.


                                       15
<PAGE>   16
                               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 14, 1999

                                               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)


                                       16
<PAGE>   17
                                  EXHIBIT INDEX

EXHIBIT  DESCRIPTION
  NO.

10.50    i-STAT Corporation Equity Incentive Plan

10.51    Form of Executive Officer Restricted Share Award Agreement under Equity
         Incentive Plan

10.52    Form of Restricted Share Award Agreement with President and Chief
         Executive Officer

27       Financial Data Schedule

                                       17