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

                                    FORM 10-Q

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

FOR QUARTER ENDED JUNE 30, 1998                   COMMISSION FILE NUMBER 0-19373
                    -----------------------------------------

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

           DELAWARE                                       13-3058261
(State or other jurisdiction of                (IRS Employer Identification No.)
incorporation or organization)

                   65 Railroad Avenue, Ridgefield, N.J. 07657
               (Address of principal executive offices) (Zip Code)

                                 (201) 945-9550
              (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 the issuer's common stock as of the latest
practicable date:

                     Class                                      June 30, 1998
                     -----                                      -------------

        Common stock, $ 0.0001 par value                         11,350,425

<PAGE>   2




                                 BIOMATRIX, INC.

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                             PAGE NO.
                                                                                             --------

PART I.           FINANCIAL INFORMATION
<S>                                                                                          <C>
                  ITEM 1 - Unaudited Condensed Consolidated Financial Statements

                  Condensed Consolidated Balance Sheets as of
                  June 30, 1998 and December 31, 1997 (Unaudited)............................      3

                  Condensed Consolidated Statements of Operations for the
                  Three and Six Months Ended June 30, 1998 and 1997 (Unaudited)..............      4

                  Condensed Consolidated Statements of Cash Flows for the
                  Six Months Ended June 30, 1998 and 1997 (Unaudited)........................      5

                  Notes to Condensed Consolidated 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 4

                  Submission of matters to a vote of security holders........................     13

                  ITEM 6

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


                  Signatures.................................................................     14
</TABLE>



                                       2

<PAGE>   3



                        BIOMATRIX, INC. AND SUBSIDIARIES

                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                         June 30,          December 31,
                                                                           1998                1997
                                                                           ----                ----
<S>                                                                    <C>                 <C>         
     ASSETS
Current assets:
   Cash and cash equivalents ...................................       $ 18,919,524        $ 17,387,085
   Accounts receivable, less allowance for doubtful accounts
     of $25,500 in 1998 and 1997 ...............................          6,681,456           3,517,112
   Inventory, at lower of cost or market .......................          3,803,642           3,111,351
   Prepaid expenses and other current assets ...................          1,621,665           1,903,528
                                                                       ------------        ------------

          Total current assets .................................         31,026,287          25,919,076
Property, plant and equipment, net .............................         29,202,607          17,780,526
Other assets ...................................................          2,952,439             525,045
                                                                       ------------        ------------
          Total assets .........................................       $ 63,181,333        $ 44,224,647
                                                                       ============        ============

     LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
   Current portion of notes payable ............................       $    156,013        $    162,210
   Current portion of capital lease obligations ................             21,494              16,062
   Accounts payable ............................................          2,422,266             784,894
   Accrued expenses ............................................          3,640,925           3,053,770
                                                                       ------------        ------------

           Total current liabilities ...........................          6,240,698           4,016,936
Notes payable less current maturities ..........................         15,848,886             935,478
Capital lease obligations less current maturities ..............          4,651,439           4,663,715
                                                                       ------------        ------------
           Total liabilities ...................................         26,741,023           9,616,129
                                                                       ------------        ------------
Commitments and contingent liabilities
Shareholders' equity:
   Preferred stock, 3,000 shares authorized; none issued .......                 --                  --
   Common stock, $.0001 par value: 60,000,000 shares authorized;
     11,396,572 and 11,013,035 issued and 11,350,425 and
     10,966,888 outstanding in 1998 and 1997, respectively .....              1,139               1,101
   Additional paid-in capital ..................................         69,799,667          59,813,585
   Notes receivable - related parties ..........................        (12,653,663)         (2,868,538)
   Accumulated deficit .........................................        (17,891,232)        (19,826,634)
   Accumulated other comprehensive loss ........................         (1,874,690)         (1,570,085)
   Treasury stock, 46,147 shares of common stock at cost .......           (940,911)           (940,911)
                                                                       ------------        ------------

           Total shareholders' equity ..........................         36,440,310          34,608,518
                                                                       ------------        ------------
          Total liabilities and shareholders' equity ...........       $ 63,181,333        $ 44,224,647
                                                                       ============        ============
</TABLE>






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


                                       3

<PAGE>   4





                        BIOMATRIX, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)



<TABLE>
<CAPTION>

                                                           Three Months Ended                      Six Months Ended
                                                                June 30,                                June 30,

                                                        1998               1997                1998                1997
                                                        ----               ----                ----                ---- 
<S>                                                <C>                 <C>                 <C>                 <C>         
Revenues:
Net product sales ..........................       $  9,181,934        $  1,841,094        $ 13,746,988        $  3,743,050
Income from licenses, royalties,
  and research contracts ...................            493,520           3,136,488           3,426,874           7,277,332
                                                   ------------        ------------        ------------        ------------
         Total revenues ....................          9,675,454           4,977,582          17,173,862          11,020,382
                                                   ------------        ------------        ------------        ------------

Cost and expenses:
Cost of sales ..............................          2,303,469             604,091           3,817,964           1,477,827
Research and development expenses ..........          2,403,495           1,425,659           4,555,552           2,805,545
Selling, general and administrative expenses          3,522,107           1,883,320           6,440,403           3,300,576
                                                   ------------        ------------        ------------        ------------
         Total costs and expenses ..........          8,229,071           3,913,070          14,813,919           7,583,948
                                                   ------------        ------------        ------------        ------------

Income from operations .....................          1,446,383           1,064,512           2,359,943           3,436,434
Interest expense ...........................           (170,930)            (28,376)           (196,496)            (55,407)
Interest and miscellaneous income ..........            355,359             243,016             646,955             426,495
                                                   ------------        ------------        ------------        ------------
Income before taxes ........................          1,630,812           1,279,152           2,810,402           3,807,522
                                                   ------------        ------------        ------------        ------------

Provision for income taxes .................            500,000              61,000             875,000              61,000
                                                   ------------        ------------        ------------        ------------
Net income .................................       $  1,130,812        $  1,218,152        $  1,935,402        $  3,746,522
                                                   ============        ============        ============        ============

Net income per share:
     Basic .................................       $       0.10        $       0.11        $       0.17        $       0.35
                                                   ============        ============        ============        ============
     Weighted average shares outstanding ...         11,156,727          10,844,719          11,082,162          10,760,559
                                                   ============        ============        ============        ============

     Diluted ...............................       $       0.10        $       0.11        $       0.17        $       0.34
                                                   ============        ============        ============        ============
     Weighted average shares outstanding ...         11,705,190          11,158,598          11,622,706          11,077,380
                                                   ============        ============        ============        ============
</TABLE>




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

                                       4

<PAGE>   5



                        BIOMATRIX, INC. AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
                                                                                     Six Months Ended
                                                                                         June 30,

                                                                                 1998                1997
                                                                                 ----                ----
<S>                                                                          <C>                 <C>         
Cash flows from operating activities:
         Net income ..................................................       $  1,935,402        $  3,746,522
         Adjustments to reconcile net income to net cash
            (used for) provided by operating activities:
            Depreciation and amortization ............................            508,881             317,109
            Stock option compensation ................................              8,698              46,250
            Change in assets and liabilities:
               Accounts receivable ...................................         (3,228,827)           (252,688)
               Inventory .............................................           (773,012)         (1,037,121)
               Prepaid expenses and other current assets .............            243,794            (391,798)
               Other assets ..........................................         (1,769,275)           (150,184)
               Accounts payable and accrued expenses .................          2,111,623           1,475,086
                                                                             ------------        ------------

                  Net cash (used for) provided by operating activities           (962,716)          3,753,176
                                                                             ------------        ------------

Cash flows from investing activities:
         Maturity of held-to-maturity securities .....................                 --           7,002,264
         Capital expenditures ........................................        (12,021,865)         (2,120,430)
                                                                             ------------        ------------

                  Net cash (used for) provided by investing activities        (12,021,865)          4,881,834
                                                                             ------------        ------------

Cash flows from financing activities:
         Payments of notes payable and capital lease obligations .....            (72,987)            (74,376)
         Proceeds from issuance of convertible debt ..................         14,325,000                  --
         Sale of common stock to related parties .....................                 --           1,890,000
         Stock options exercised .....................................            192,748             543,334
                                                                             ------------        ------------

                  Net cash provided by financing activities ..........         14,444,761           2,358,958
                                                                             ------------        ------------

              Effect of exchange rate changes on cash ................             72,259              44,216
                                                                             ------------        ------------

Net increase in cash and cash equivalents ............................          1,532,439          11,038,184
Cash and cash equivalents at beginning of period .....................         17,387,085           3,034,764
                                                                             ------------        ------------
Cash and cash equivalents at end of period ...........................       $ 18,919,524        $ 14,072,948
                                                                             ============        ============

Non-cash financing activities:
     Sale of common stock financed with notes receivable (Note 3) ....       $  9,785,125        $    303,000
</TABLE>


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


                                       5

<PAGE>   6



                        BIOMATRIX, INC. AND SUBSIDIARIES

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - BASIS OF PRESENTATION

         The condensed consolidated financial statements at June 30, 1998 and
for the three and six months ended June 30, 1998 and 1997 are unaudited, but
include all adjustments which the Company considers necessary for a fair
presentation of the financial position at such date and the operating results
and cash flows for those periods. These condensed consolidated financial
statements should be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 1997, which were included
as part of the Company's Form 10-K, filed with the Securities and Exchange
Commission. Results for the interim periods are not necessarily indicative of
results for the entire year.

NOTE 2 - INVENTORIES

         Inventories at June 30, 1998 and December 31, 1997 consisted of :

<TABLE>
<CAPTION>
                                                                             June 30,         December 31,
                                                                                1998              1997
                                                                                ----              ----
<S>                                                                       <C>               <C>         
         Raw Materials.................................................   $  1,701,544      $    912,353
         Work-in-Process...............................................      1,673,580         1,568,682
         Finished Goods................................................        428,518           630,316
                                                                           -----------       -----------
                                                                           $ 3,803,642       $ 3,111,351
                                                                           ===========       ===========
</TABLE>

NOTE 3 - NOTES RECEIVABLE - RELATED PARTIES

         Notes receivable - related parties relate to the acquisition of common
stock of the Company at fair market value by certain officers and directors of
the Company. The notes are with full recourse, are secured by the shares of
common stock issued and are payable with simple interest upon maturity. The
notes mature in April 2000, May 2007, January 2008, March 2008, April 2008, and
June 2008 in the amounts of $2,450,000, $418,538, $888,750, $560,000,
$1,636,375, and $6,700,000, respectively, plus accrued interest. All notes
issued during 1997 and 1998 have been for common stock issued pursuant to the
Company's 1997 Restricted Stock Plan. In August 1998, a certain officer of the
Company repaid a note in the amount of $2,450,000 plus accrued interest. Such
note was originally scheduled to mature in April 2000.

NOTE 4 - NET INCOME PER COMMON SHARE

         The Company has adopted Statement of Financial Accounting Standards No.
128, "Earnings per Share" which requires the presentation of basic net income
per share and diluted net income per share. Basic net income per share is
computed by dividing net income by the weighted-average common shares
outstanding for the period. Diluted net income per share is reflective of all
common share equivalents. The subordinated debt outstanding at June 30, 1998
that is convertible into common shares at $40 per share was not included in
diluted earnings per share as the calculation under the if-converted method was
anti-dilutive. Prior periods have been restated to reflect the new standard. A
reconciliation of weighted average shares outstanding from basic to diluted for
the three and six months ended June 30, 1998 and 1997 is as follows:


<TABLE>
<CAPTION>
                                                             Three months ended              Six months ended
                                                                   June 30,                     June 30,
                                                                 1998         1997           1998         1997
                                                                 ----         ----           ----         ----
<S>                                                        <C>            <C>            <C>          <C>       
     Weighted average shares outstanding - Basic.....      11,156,727     10,844,719     11,082,162   10,760,559
     Dilutive effect of stock options................         548,463        313,879        540,544      316,821
                                                         ------------   ------------   ------------ ------------
     Weighted average shares outstanding - Diluted...      11,705,190     11,158,598     11,622,706   11,077,380
                                                           ==========     ==========     ==========   ==========
</TABLE>


                                       6

<PAGE>   7



                        BIOMATRIX, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 5 - COMPREHENSIVE INCOME

         In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive
Income." This statement establishes standards for the reporting and display of
comprehensive income and its components. Components of comprehensive income are
net income and all other non-owner changes in equity, such as the change in the
cumulative translation adjustment. This statement is effective for financial
statements issued for periods beginning after December 15, 1997. Presentation of
comprehensive income for earlier periods is required and is presented below. The
following table shows comprehensive income for the three and six months ended
June 30, 1998 and 1997:


<TABLE>
<CAPTION>
                                                               Three months ended           Six months ended
                                                                   June 30,                     June 30,
                                                                 1998         1997           1998          1997
                                                                 ----         ----           ----          ----
<S>                                                        <C>            <C>            <C>            <C>       
     Net income......................................      $1,130,812     $1,218,152     $1,935,402     $3,746,522
     Change in cumulative translation adjustment.....        (571,836)        (56,811)     (304,605)      (145,131)
                                                         ------------   -------------  ------------   ------------
     Comprehensive income............................      $  558,976     $1,161,341     $1,630,797     $3,601,391
                                                          ===========     ==========     ==========     ==========
</TABLE>

NOTE 6 - CONTINGENCIES

         In August 1990, the Company received a notice from the Pennsylvania
Department of Environmental Protection ("DEP") that it is one of approximately
1,000 potentially responsible parties ("PRPs") that may have clean-up
responsibility at the Industrial Solvents and Chemical Company site in York
Haven, Pennsylvania (the "Site"). During the late 1980s, the Company, through a
licensed waste disposal transport company, shipped industrial solvents to the
Site, which was operating as a recycling facility. The DEP reviewed hazardous
waste found at the Site as well as the DEP's own records in order to identify
additional PRPs and to quantify each PRP's volumetric contributions. The Company
is a member of a steering committee that consists of many PRPs. Although neither
the total clean-up cost nor the portion of the total clean-up cost assigned to
each PRP has been determined, the Company estimated, based upon the advice of a
consultant, that its liability would be approximately $780,000. Further, the
same consultant has reported to the Company that there is less than a 10% chance
that its liability might exceed $1,070,033. During the second quarter of 1995
the Company paid its first assessment for clean-up costs of $79,390.
Additionally, the Company paid $15,000 during the first quarter of 1997;
therefore, the reserve at June 30, 1998 was $685,610. The steering committee for
the PRPs has prepared a buy-out proposal pursuant to a consent order with the
DEP. This buy-out proposal identifies each PRP's assigned portion of assumed
total clean-up costs. The Company's assigned portion of the assumed clean-up
costs within the proposal is currently less than its reserve. When the final
remedy is selected by the DEP, the Company plans to settle out of the matter
pursuant to the buy-out proposal. The Company will monitor this situation and
make any necessary adjustments to the reserve once additional information is
available.

         In October 1996, Michael Jarcho ("Jarcho") filed suit in the United
States District Court for the Southern District of California seeking to recover
damages and declaratory judgment for the alleged breach by the Company of
Jarcho's consulting agreement. A consulting agreement had been entered into
between the Company and Jarcho on December 2, 1988. The agreement contains
certain royalty provisions for products that result from Jarcho's consultancy.
Jarcho contends, inaccurately in the Company's view, that Hylaform resulted from
his consultancy. Jarcho seeks compensatory damages of $300,000 plus a royalty on
the Company's net sales of Hylaform as well as punitive damages and recovery of
attorney fees. The Company believes that no royalties are owed Jarcho as a
result of Hylaform sales. Jarcho's case was dismissed on January 10, 1997, on
the grounds that the agreement requires such disputes to be brought exclusively
in New Jersey state court. Jarcho moved for a partial reconsideration of the
decision, the Company opposed that request, and the request was denied. On June
16, 1997 Jarcho filed suit in New Jersey state court. The Company intends to
defend this matter vigorously. The Company has not made any provision in the
accompanying consolidated financial statements for any liability that might
result.


                                       7

<PAGE>   8



                        BIOMATRIX, INC. AND SUBSIDIARIES

       NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)

NOTE 7 - START-UP COSTS

         In April 1998, the AICPA issued Statement of Position 98-5, "Reporting
on the Costs of Start-Up Activities," which requires companies to expense all
costs related to pre-operating and start-up of various activities. The Company
adopted this standard during the first quarter of 1998. As a result of adopting
this standard the Company expensed all pre-operating and start-up costs incurred
during the first and second quarters of 1998. The adoption of this standard did
not create a cumulative effect of a change in accounting principle.

NOTE 8 - CONVERTIBLE DEBT

         In May 1998, the Company issued $15,000,000 of subordinated convertible
debt to a third party. The debt has a five year term and a coupon rate of 6.9%
with interest payable on a semi-annual basis. The debt contains a conversion
feature that allows the third party to convert the debt into common shares at
$40 per share after one year. In addition, the Company can call the debt at par
after three years or after two years if certain conditions are satisfied. Debt
fees are included in other assets and are being amortized on a straight up
basis over the five year term of the debt.

NOTE 9 - CAPITAL STOCK TRANSACTION

         In April 1998, a Canadian venture capital firm exercised its right to
convert the 62,500 Class A shares it held in Biomatrix Medical Canada Inc.
("BMC") into 38,462 shares of Biomatrix, Inc. common stock. As a result, BMC is
now a wholly-owned subsidiary of Biomatrix, Inc. No gain or loss was recognized
on the conversion of shares.

NOTE 10 - IMPACT OF THE ADOPTION OF RECENTLY ISSUED ACCOUNTING STANDARDS

         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 enterprises
report information about operating segments, geographic areas, products and
major customers. The Company is required to adopt this standard at December 31,
1998 and is currently evaluating the effect of this standard.


                                       8

<PAGE>   9



                        BIOMATRIX, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
                OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

         Biomatrix, Inc., together with its subsidiaries Biomatrix Medical
Canada Inc. ("BMC"), Biomatrix Svenska AB ("Biomatrix Svenska"), Biomatrix
(U.K.) Limited ("Biomatrix UK"), Biomatrix Limited ("Biomatrix Hong Kong"),
Biomatrix France SARL ("Biomatrix France"), and Biomatrix Switzerland GmbH
("Biomatrix Switzerland") (together, "Biomatrix" or the "Company") develops,
manufactures, markets and sells a series of proprietary viscoelastic products
made of biological polymers called hylans for use in therapeutic medical
applications and skin care. Hylans are chemically modified forms of the
naturally occurring hyaluronan (also known as hyaluronic acid or sodium
hyaluronate). Hylans are the second generation of viscoelastics used in
medicine, and are characterized by significantly enhanced physical (rheological)
properties (elasticity, viscosity and pseudoplasticity) as compared to naturally
occurring hyaluronan, from which the first generation viscoelastics are made.
The discovery of hylans has allowed the Company to develop a range of patented
products with superior viscoelastic properties in the forms of fluids, gels and
solids.

         The Company's business is subject to significant risks. Certain
statements contained in this Form 10-Q are forward-looking within the meaning of
Section 27A of the Securities Act of 1933 and involve risks and uncertainties,
including, but not limited to, the regulatory approval process, obtaining and
enforcing patents, manufacturing capabilities, product liability, and other
risks detailed in the Company's reports filed under the Securities and Exchange
Act, including the Company's Form 10-K for the year ended December 31, 1997. As
a portion of the Company's future revenues may be based on payments from
corporate license and distribution agreements, the Company's total revenues and
net income will fluctuate from quarter to quarter. Some of these fluctuations
may be significant and, as a result, quarter to quarter comparisons may not be
meaningful.

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997

           REVENUES. Total revenues for the three months ended June 30, 1998
were $9,675,454, representing an increase of $4,697,872 over the same period of
the prior year. Net product sales for the three months ended June 30, 1998 were
$9,181,934, representing an increase of $7,340,840 or 399% over the same period
of 1997. This increase was primarily due to U.S. sales of Synvisc(R), which
received marketing approval from the U.S. FDA in August of 1997, and increased
sales of Hylaform(R). The market demand for Synvisc exceeded the Company's
ability to supply product during the second quarter. Income from licenses,
royalties and research contracts was $493,520 for the three months ended June
30, 1998 and included up-front license fees of $350,000 from Novartis Pharma AG
related to the distribution agreement for Synvisc in Central and South America.
The decrease in licenses, royalties and research contract revenues is due
primarily to an up-front, non-refundable license fee payment of $3,000,000
received from Bayer AG during the second quarter of 1997.


                                       9

<PAGE>   10



                        BIOMATRIX, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                                  (CONTINUED)

           COSTS AND EXPENSES. Total costs and expenses were $8,229,071 for the
three months ended June 30, 1998, representing an increase of $4,316,001 or 110%
over the same period of the prior year. Cost of goods sold for the second
quarter of 1998 and 1997 were $2,303,469 and $604,091, respectively, which
represented 25% and 33% of net product sales, respectively. The decrease in the
ratio of cost of goods sold to sales is due primarily to a higher average
selling price per unit and greater utilization of capacity at the Company's
Canadian manufacturing facility. Research and development expenses were
$2,403,495 for the second quarter of 1998, representing an increase of $977,836
or 69% over the second quarter of 1997. The increase in research and development
expenses is primarily related to process development costs associated with the
Company's new U.S. manufacturing facility. Selling, general and administrative
expenses for the second quarter of 1998 were $3,522,107, representing an
increase of $1,638,787 or 87%, over the second quarter of 1997. This increase is
primarily due to increased staffing needed to support the scope of the Company's
growing global activities.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

           REVENUES. Total revenues for the six months ended June 30, 1998 were
$17,173,862, representing an increase of $6,153,480 or 56% over the same period
of the prior year. Net product sales for the six months ended June 30, 1998 were
$13,746,988, representing an increase of $10,003,938 or 267% over the same
period of 1997. This increase was primarily due to U.S. sales of Synvisc, which
received marketing approval from the U.S. FDA in August of 1997. The market
demand for Synvisc exceeded the Company's ability to supply product during the
first six months of 1998. Income from licenses, royalties and research contracts
was $3,426,874 for the six months ended June 30, 1998 and included up-front
license fees of $3,100,000 from Novartis Pharma AG related to the distribution
of Synvisc in Central and South America. The decrease in licenses, royalties and
research contract revenues is due primarily to up-front, non-refundable license
fee payments of $4,000,000 and $3,000,000 from Wyeth Ayerst and Bayer AG,
respectively, which were received during the six months ended June 30, 1997.

         COSTS AND EXPENSES. Total costs and expenses were $14,813,919 for the
six months ended June 30, 1998, representing an increase of $7,229,971 or 95%
over the same period of the prior year. Cost of goods sold for the six months
ended June 30, 1998 and 1997 were $3,817,964 and $1,477,827, respectively, which
represented 28% and 39% of net product sales, respectively. The decrease in the
ratio of cost of goods sold to sales is due primarily to a higher average
selling price per unit and greater utilization of capacity at the Company's
Canadian manufacturing facility. Research and development expenses were
$4,555,552 for the first six months of 1998, representing an increase of
$1,750,007 or 62% over the comparable period in 1997. The increase in research
and development expenses is primarily related to process development costs
associated with the Company's new U.S. manufacturing facility. Selling, general
and administrative expenses for the first six months of 1998 were $6,440,403,
representing an increase of $3,139,827 or 95%, over the first six months of
1997. This increase is primarily due to increased staffing needed to support the
scope of the Company's growing global activities.


                                       10

<PAGE>   11




                        BIOMATRIX, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

INCOME TAXES

         During the three and six months ended June 30, 1998, the Company
recorded federal and state tax provisions of $500,000 and $875,000,
respectively, for alternative minimum federal and state taxes. The Company has
provided a full valuation allowance on its deferred tax assets due to the
uncertainty of realization.

LIQUIDITY AND CAPITAL RESOURCES

         The Company had cash and cash equivalents of $18,919,524 at June 30,
1998. Overall, the Company's cash position increased by $1,532,439 in the six
months ended June 30, 1998.

         The Company's operations over the past several years have been financed
primarily from up-front non-refundable license fee payments from corporate
partners and from the private placement of equity securities. Since January 1,
1995, the Company has received funding of $36,980,000 from non-refundable
license fee payments, $5,720,900 from the private placement of equity
securities, and $14,325,000 from the private placement of a convertible debt
security.

         For the six months ended June 30, 1998 the Company had cash outflows
from operations of $962,716 which primarily resulted from the timing of
collection of trade receivables and license fees offset by the timing of
payments made to vendors. During the six months ended June 30, 1998, the Company
invested $12,021,865 in property, plant, and equipment, primarily associated
with building manufacturing capacity in the United States. The Company continues
to lease a 93,000 square foot building in New Jersey in which the U.S.
manufacturing operations will reside. The Company has an option to acquire this
building at a price of approximately $4,600,000. Should the Company not exercise
its option by April 1999, the landlord has the right to require the Company to
purchase this building for approximately the same price.

         During the remainder of 1998, the Company expects to invest
approximately $6,200,000 to complete the initial phase of the build-out of
manufacturing capacity in the U.S. In addition, the Company intends to build
laboratories as part of the same project at an estimated cost of $7,000,000. The
Company expects to complete the laboratories by early 1999. The Company plans to
seek mortgage and equipment financing which, if obtained, could fund a portion
of these capital costs.

    During the remainder of 1998, the Company also expects to utilize cash for
the start-up of its medical manufacturing operations in the U.S., including, but
not limited to, funds for payroll and benefits, training and development,
materials and supplies, and working capital requirements. The Company also
expects to incur higher expenses in 1998 associated with developing its internal
infrastructure to support the administration of its various distribution
agreements and expanded global operations. The Company believes that its capital
needs, start-up costs, and higher operating expenses will be supported by its
operations, existing cash position, up-front license fee payments from the
potential completion of additional distribution agreements, milestone payments
from existing corporate partners and existing and potential financing
arrangements.


                                       11

<PAGE>   12



                        BIOMATRIX, INC. AND SUBSIDIARIES

                      MANAGEMENT'S DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)

         In May 1998, the Company issued $15,000,000 of subordinated convertible
debt to a third party. The debt has a five-year term and a coupon rate of 6.9%
with interest payable on a semi-annual basis. The debt contains a conversion
feature that allows the third party to convert the debt into common shares at
$40 per share after one year. In addition, the Company can call the debt at par
after three years or after two years if certain conditions are satisfied.

         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 enterprises
report information about operating segments, geographic areas, products and
major customers. The Company is required to adopt this standard at December 31,
1998 and is currently evaluating the impact of this standard.


                                       12

<PAGE>   13





                        BIOMATRIX, INC. AND SUBSIDIARIES


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

         On May 29, 1998, at the Company's Annual Meeting of Shareholders, the
Company's shareholders met to consider and vote upon the following proposal:

         (1)      A proposal to elect two Class 1 directors to hold office for a
                  three-year term and until their respective successors have
                  been duly qualified and elected.


         Results with respect to the voting on each of the above proposals were
as follows:

<TABLE>
<CAPTION>
<S>                                                  <C>               <C>   
         Proposal 1:    Endre A. Balazs              For - 9,310,994   Withheld Authority - 15,664
                                                     ---   ---------   ------------------   ------

                        Kurt Mark                    For - 9,310,994   Withheld Authority - 15,664
                                                     ---   ---------   ------------------   ------
</TABLE>

ITEM 6.    EXHIBITS AND REPORTS ON FORM 8-K

A.  EXHIBITS

         27.1              Financial Data Schedule

B.   REPORTS ON FORM 8-K

         None

                                       13
<PAGE>   14




                        BIOMATRIX, INC. AND SUBSIDIARIES




                                   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: August 14, 1998                     BIOMATRIX, INC.
                                          
                                          
                                          
                                          By: /s/Endre A. Balazs
                                             ----------------------------------
                                              Endre A. Balazs
                                              Chief Executive Officer and
                                              Chief Scientific Officer
                                          
                                          
                                          
                                          
                                          By: /s/Maxine Seifert
                                             ----------------------------------
                                               Maxine Seifert
                                               Vice President, Finance and Chief
                                               Financial Officer


                                       14